<SEC-DOCUMENT>0001144204-14-075346.txt : 20141222
<SEC-HEADER>0001144204-14-075346.hdr.sgml : 20141222
<ACCEPTANCE-DATETIME>20141222162051
ACCESSION NUMBER:		0001144204-14-075346
CONFORMED SUBMISSION TYPE:	424B5
PUBLIC DOCUMENT COUNT:		3
FILED AS OF DATE:		20141222
DATE AS OF CHANGE:		20141222

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			DOCUMENT SECURITY SYSTEMS INC
		CENTRAL INDEX KEY:			0000771999
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373]
		IRS NUMBER:				161229730
		STATE OF INCORPORATION:			NY
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		424B5
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-191704
		FILM NUMBER:		141303257

	BUSINESS ADDRESS:	
		STREET 1:		36 WEST MAIN ST
		STREET 2:		SUITE 710
		CITY:			ROCHESTER
		STATE:			NY
		ZIP:			14614
		BUSINESS PHONE:		585 232 1500

	MAIL ADDRESS:	
		STREET 1:		36 W MAIN ST
		STREET 2:		SUITE 710
		CITY:			ROCHESTER
		STATE:			NY
		ZIP:			14614

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	NEW SKY COMMUNICATIONS INC
		DATE OF NAME CHANGE:	19920703

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	THOROUGHBREDS USA INC
		DATE OF NAME CHANGE:	19861118
</SEC-HEADER>
<DOCUMENT>
<TYPE>424B5
<SEQUENCE>1
<FILENAME>v394763_424b5.htm
<DESCRIPTION>424B5
<TEXT>
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<P STYLE="margin: 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; color: red"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; color: red"><B>THE INFORMATION IN THIS PRELIMINARY PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THIS PRELIMINARY PROSPECTUS AND THE ACCOMPANYING
PROSPECTUS ARE NOT AN OFFER TO SELL THESE SECURITIES AND ARE NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE OR OTHER
JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; color: red"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; color: red"><B>SUBJECT TO COMPLETION, DATED
DECEMBER 22, 2014 </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 3pt; text-align: right"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 3pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>Filed
Pursuant to Rule 424(b)(5)</B></FONT><BR>
<FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>Registration No. 333-191704</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>PRELIMINARY PROSPECTUS SUPPLEMENT</B><BR>
<B>(To the Prospectus dated November 1, 2013)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 12pt"><B>Document
Security Systems, Inc.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 3pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><IMG SRC="tlogo.jpg" ALT=""></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 3pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">[&bull;] <FONT STYLE="font-size: 12pt"><B>Shares
of Common Stock</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We are offering [&bull;] shares of our common stock at a price
of $[&bull;] per share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our common stock is listed on the NYSE
MKT under the symbol &ldquo;DSS&rdquo;. On December 19, 2014, the closing sale price of our common stock was $0.40 per
share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>Investing in our securities involves
a high degree of risk. See &ldquo;Risk Factors&rdquo; beginning on page S-5 of this prospectus supplement and on page 4 of the
accompanying prospectus and the documents incorporated by reference herein for a discussion of information that should be considered
in connection with an investment in our securities.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>Neither the Securities and Exchange
Commission nor any state securities commission has approved or disapproved of these securities or determined whether this prospectus
supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary is a criminal offense.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 75%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">Per Share</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">Total</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 64%; text-align: left">Price to the public</TD><TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 14%; text-align: right"></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 14%; text-align: right"></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Underwriting discounts and commissions</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Proceeds, before expenses, to us <SUP>(1)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.5pt; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><SUP>(1)</SUP></TD><TD>For additional information about the expenses
                                         for which we have agreed to reimburse the underwriter in connection with this offering,
                                         see &ldquo;Underwriting (Conflict of Interest)&rdquo; on page S-20 of this prospectus
                                         supplement.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.25in"><SUP>&nbsp;</SUP></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We have granted the underwriter an option
for a period of 45 days from the date of this prospectus supplement to purchase up to an additional [&bull;] shares of common
stock at the public offering price per share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The underwriter expects to deliver the
shares of common stock on or about December [&bull;], 2014.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" ALIGN="CENTER" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
    <TD STYLE="width: 100%; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>National Securities Corporation</B></FONT></td>
    </tr>
</table>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>The date of this prospectus supplement
is December [&bull;], 2014.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>TABLE OF CONTENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Prospectus Supplement</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
    <td style="width: 93%; padding-left: 10pt; text-indent: -10pt">&nbsp;</td>
    <td style="width: 7%; border-bottom: gray 1pt solid; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Page</FONT></td></tr>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-indent: -10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><A HREF="#s_001">About this Prospectus Supplement</A></FONT></td>
    <td style="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">ii</FONT></td></tr>
<TR STYLE="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-indent: -10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><A HREF="#s_002">Cautionary Statement Regarding Forward-Looking Statements</A></FONT></td>
    <td style="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">iii</FONT></td></tr>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-indent: -10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><A HREF="#s_003">Prospectus Supplement Summary</A></FONT></td>
    <td style="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">S-1</FONT></td></tr>
<TR STYLE="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-indent: -10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><A HREF="#s_004">Risk Factors</A></FONT></td>
    <td style="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">S-5</FONT></td></tr>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-indent: -10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><A HREF="#s_005">Use of Proceeds</A></FONT></td>
    <td style="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">S-17</FONT></td></tr>
<TR STYLE="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-indent: -10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><A HREF="#s_006">Dividend Policy</A></FONT></td>
    <td style="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">S-17</FONT></td></tr>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-indent: -10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><A HREF="#s_007">Dilution</A></FONT></td>
    <td style="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">S-18</FONT></td></tr>
<TR STYLE="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-indent: -10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><A HREF="#s_008">Description of Common Stock</A></FONT></td>
    <td style="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">S-19</FONT></td></tr>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-indent: -10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><A HREF="#s_009">Underwriting (Conflicts of Interest)</A></FONT></td>
    <td style="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">S-20</FONT></td></tr>
<TR STYLE="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-indent: -10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><A HREF="#s_010">Legal Matters</A></FONT></td>
    <td style="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">S-22</FONT></td></tr>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-indent: -10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><A HREF="#s_011">Experts</A></FONT></td>
    <td style="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">S-22</FONT></td></tr>
<TR STYLE="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-indent: -10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><A HREF="#s_012">Where You Can Find More Information</A></FONT></td>
    <td style="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">S-22</FONT></td></tr>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-indent: -10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><A HREF="#s_013">Incorporation of Certain Information By Reference</A></FONT></td>
    <td style="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">S-23</FONT></td></tr>
</table>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Prospectus</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="width: 93%; padding-left: 10pt; text-indent: -10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">About
    This Prospectus</FONT></td>
    <td style="width: 7%; padding-left: 10pt; text-align: right; text-indent: -10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">1</FONT></td></tr>
<TR STYLE="vertical-align: top; background-color: White">
    <td style="padding-left: 10pt; text-indent: -10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Our Business</FONT></td>
    <td style="padding-left: 10pt; text-align: right; text-indent: -10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">1</FONT></td></tr>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-indent: -10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Risk Factors</FONT></td>
    <td style="padding-left: 10pt; text-align: right; text-indent: -10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">4</FONT></td></tr>
<TR STYLE="vertical-align: top; background-color: White">
    <td style="padding-left: 10pt; text-indent: -10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Disclosure Regarding
    Forward-Looking Statements</FONT></td>
    <td style="padding-left: 10pt; text-align: right; text-indent: -10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">20</FONT></td></tr>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-indent: -10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Use of Proceeds</FONT></td>
    <td style="padding-left: 10pt; text-align: right; text-indent: -10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">21</FONT></td></tr>
<TR STYLE="vertical-align: top; background-color: White">
    <td style="padding-left: 10pt; text-indent: -10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">The Securities We
    May Offer</FONT></td>
    <td style="padding-left: 10pt; text-align: right; text-indent: -10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">22</FONT></td></tr>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-indent: -10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Description of Common
    Stock</FONT></td>
    <td style="padding-left: 10pt; text-align: right; text-indent: -10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">23</FONT></td></tr>
<TR STYLE="vertical-align: top; background-color: White">
    <td style="padding-left: 10pt; text-indent: -10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Description of Warrants</FONT></td>
    <td style="padding-left: 10pt; text-align: right; text-indent: -10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">24</FONT></td></tr>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-indent: -10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Plan of Distribution</FONT></td>
    <td style="padding-left: 10pt; text-align: right; text-indent: -10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">26</FONT></td></tr>
<TR STYLE="vertical-align: top; background-color: White">
    <td style="padding-left: 10pt; text-indent: -10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Legal Matters</FONT></td>
    <td style="padding-left: 10pt; text-align: right; text-indent: -10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">28</FONT></td></tr>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-indent: -10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Experts</FONT></td>
    <td style="padding-left: 10pt; text-align: right; text-indent: -10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">28</FONT></td></tr>
<TR STYLE="vertical-align: top; background-color: White">
    <td style="padding-left: 10pt; text-indent: -10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Where You Can Find
    More Information</FONT></td>
    <td style="padding-left: 10pt; text-align: right; text-indent: -10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">28</FONT></td></tr>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-indent: -10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Incorporation of
    Certain Documents by Reference</FONT></td>
    <td style="padding-left: 10pt; text-align: right; text-indent: -10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">28</FONT></td></tr>
</table>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="s_001"></A><B>ABOUT THIS PROSPECTUS SUPPLEMENT</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24.75pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24.75pt">On October 11, 2013, we filed
with the Securities and Exchange Commission, or SEC, a registration statement on Form S-3 (File No.&nbsp;333-191704)
utilizing a shelf registration process relating to the securities described in this prospectus supplement, which registration
statement, as amended, was declared effective on November 1, 2013. Under this shelf registration process, we may, from time
to time, sell up to 15,000,000 shares of our common stock and/or warrants to purchase common stock, of which, as of the date
of this prospectus supplement, we have sold 209,700 shares and are offering for resale on behalf of existing investors an
aggregate of 4,859,894 shares issuable upon the exercise of warrants with an exercise price of $4.80.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24.75pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24.75pt">This prospectus supplement describes
the specific terms of an offering of our securities and also adds to and updates information contained in the accompanying prospectus
and the documents incorporated by reference into the accompanying prospectus. The second part, the accompanying prospectus, provides
more general information. If the information in this prospectus supplement is inconsistent with the accompanying prospectus or
any document incorporated by reference therein filed prior to the date of this prospectus supplement, you should rely on the information
in this prospectus supplement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24.75pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24.75pt">In making your investment decision, you
should rely only on the information contained or incorporated by reference in this prospectus supplement and the accompanying
prospectus and any relevant free writing prospectus. We have not authorized anyone to provide you with any other information.
If you receive any information not authorized by us, you should not rely on it. We are not making an offer to sell the securities
in any jurisdiction where the offer or sale is not permitted. You should not assume that the information contained or incorporated
by reference in this prospectus supplement or the accompanying prospectus or any relevant free writing prospectus is accurate
as of any date other than its respective date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24.75pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24.75pt">It is important for you to read and consider
all of the information contained in this prospectus supplement and the accompanying prospectus in making your investment decision.
We include cross-references in this prospectus supplement and the accompanying prospectus to captions in these materials where
you can find additional related discussions. The table of contents in this prospectus supplement provides the pages on which these
captions are located. You should read both this prospectus supplement and the accompanying prospectus, together with the additional
information described in the sections entitled &ldquo;Where You Can Find More Information&rdquo; and &ldquo;Incorporation of Certain
Information by Reference&rdquo; of this prospectus supplement, before investing in our securities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24.75pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24.75pt">We are offering to sell, and seeking
offers to buy, our securities only in jurisdictions where offers and sales are permitted. The distribution of this prospectus
supplement and the accompanying prospectus and the offering of the securities in certain jurisdictions may be restricted by law.
Persons outside the United States who come into possession of this prospectus supplement and the accompanying prospectus must
inform themselves about, and observe any restrictions relating to, the offering of the securities and the distribution of this
prospectus supplement and the accompanying prospectus outside the United States. This prospectus supplement and the accompanying
prospectus do not constitute, and may not be used in connection with, an offer to sell, or a solicitation of an offer to buy,
any securities offered by this prospectus supplement and the accompanying prospectus by any person in any jurisdiction in which
it is unlawful for such person to make such an offer or solicitation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24.75pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24.75pt">Unless the context otherwise requires,
&ldquo;Document Security Systems&rdquo;, &ldquo;Document Security,&rdquo; &ldquo;DSS,&rdquo; &ldquo;we,&rdquo; &ldquo;us,&rdquo;
&ldquo;our&rdquo; or &ldquo;Company&rdquo; and similar names refer to Document Security Systems, Inc.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24.75pt">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24.75pt"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="s_002"></A><B>CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The SEC encourages companies to disclose
forward-looking information so that investors can better understand a company&rsquo;s future prospects and make informed investment
decisions. This prospectus supplement, the accompanying prospectus and the documents we have filed with the SEC that are incorporated
herein and therein by reference contain such &ldquo;forward-looking statements&rdquo; within the meaning of the Private Securities
Litigation Reform Act of 1995.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#9;Words such as &ldquo;may,&rdquo; &ldquo;might,&rdquo;
&ldquo;should,&rdquo; &ldquo;anticipate,&rdquo; &ldquo;estimate,&rdquo; &ldquo;expect,&rdquo; &ldquo;projects,&rdquo; &ldquo;intends,&rdquo;
&ldquo;plans,&rdquo; &ldquo;believes&rdquo; and words and terms of similar substance used in connection with any discussion of
future operating or financial performance, identify forward-looking statements. Forward-looking statements represent management&rsquo;s
current judgment regarding future events and are subject to a number of risks and uncertainties that could cause actual results
to differ materially from those described in the forward-looking statements. Please see the discussion of risks and uncertainties
under &ldquo;Risk Factors&rdquo; below, and contained in the accompanying prospectus and otherwise incorporated by reference herein,
and in our most recent annual report on Form&nbsp;10-K, as may be revised or supplemented by our most recent quarterly report
on Form&nbsp;10-Q, as well as any amendments thereto, as filed with the SEC and which are incorporated herein by reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 22.5pt">&#9;In light of these assumptions, risks
and uncertainties, the results and events discussed in the forward-looking statements contained in this prospectus supplement,
the accompanying prospectus or in any document incorporated herein or therein by reference might not occur. Investors are cautioned
not to place undue reliance on the forward-looking statements, which speak only as of the respective dates of this prospectus
supplement, the accompanying prospectus or the date of the document incorporated by reference in this prospectus supplement or
the accompanying prospectus. We expressly disclaim any obligation to update or alter any forward-looking statements, whether as
a result of new information, future events or otherwise, except as required by federal securities laws.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 22.5pt">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<DIV STYLE="padding: 5pt; border: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="s_003"></A><B>PROSPECTUS SUPPLEMENT SUMMARY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><I>The following summary is qualified in
its entirety by, and should be read together with, the more detailed information and financial statements and related notes thereto
appearing elsewhere or incorporated by reference in this prospectus supplement and the accompanying prospectus. Before you decide
to invest in our securities, you should read the entire prospectus supplement and the accompanying prospectus carefully, including
the risk factors and the financial statements and related notes included or incorporated by reference in this prospectus supplement
and the accompanying prospectus</I>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Overview</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Document Security Systems, Inc. (referred
to in this prospectus supplement as &ldquo;Document Security Systems&rdquo;, &ldquo;DSS&rdquo;, &ldquo;we&rdquo;, &ldquo;us&rdquo;,
&ldquo;our&rdquo; or &ldquo;Company&rdquo;) was formed in New York in 1984. We specialize in fraud and counterfeit protection
for all forms of printed documents and digital information. We hold numerous patents for optical deterrent technologies that provide
protection of printed information from unauthorized scanning and copying. We operate two production facilities, a combined security
and commercial printing and packaging facility, and a plastic card facility where we produce secure and non-secure documents for
our customers. We license our anti-counterfeiting technologies to printers and brand-owners. In addition, we have a digital division
which provides cloud computing services for our customers, including disaster recovery, back-up and data security services.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 15pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Prior to 2006, our primary revenue source
in our document security division was derived from the licensing of our technology. In 2006, we began a series of acquisitions
designed to expand our ability to produce products for end-user customers. In 2006, we acquired Plastic Printing Professionals,
Inc. (&ldquo;P3&rdquo;), a privately held plastic cards manufacturer located in the San Francisco, California area. P3 is also
referred to herein as the &ldquo;DSS Plastics Group&rdquo;. In 2008, we acquired substantially all of the assets of DPI of Rochester,
LLC, a privately held commercial printer located in Rochester, New York, referred to herein as &ldquo;Secuprint&rdquo; or &ldquo;DSS
Printing Group&rdquo;. In 2010, we acquired Premier Packaging Corporation (&ldquo;Premier Packaging&rdquo;), a privately held
packaging company located in the Rochester, New York area. Premier Packaging is also referred to herein as the &ldquo;DSS Packaging
Group.&rdquo; In May 2011, we acquired all of the capital stock of ExtraDev, Inc. (&ldquo;ExtraDev&rdquo;), a privately held information
technology and cloud computing company located in the Rochester, New York area. ExtraDev is also referred to herein as the &ldquo;DSS
Digital Group&rdquo;.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On July 1, 2013, we merged with DSS Technology
Management, Inc. (formerly known as Lexington Technology Group, Inc.), a private intellectual property monetization company. DSS
Technology Management is focused on extracting the economic benefits of intellectual property assets through acquiring or internally
developing patents or other intellectual property assets (or interests therein) and then monetizing such assets through a variety
of value enhancing initiatives, including, but not limited to:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 96%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">licensing,</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 96%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">customized
                                         technology solutions (such as applications for medical electronic health records),</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 96%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">strategic
                                         partnerships, and</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 96%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">litigation.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In October 2012, Bascom Research,
a subsidiary of Lexington Technology Group, Inc. (&ldquo;LTG&rdquo;), now known as DSS Technology Management, Inc., acquired
by us in July 2013, initiated litigation with Facebook, Inc., (&ldquo;Facebook&rdquo;), LinkedIn
Corporation (&ldquo;LinkedIn&rdquo;), and three other defendants in the U.S. District Court for the Eastern District of
Virginia. The complaint alleged infringement by the defendants of four patents that are instrumental to social and business
networking technology and related to the manner in which users and application developers on the Facebook and LinkedIn
platforms make connections between &ldquo;objects&rdquo; such as photos, people, events and pages. In January 2013, all five
cases were transferred to the U.S. District Court for the Northern District of California. In April and May of 2013, LTG
announced that Bascom Research had reached settlements with two of the named defendants. A third defendant was released from
the case as well in 2013. Currently, Facebook and LinkedIn remain as defendants in the litigation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On May 22, 2014, Facebook filed a
Petition for Covered Business Method (&ldquo;CBM&rdquo;), Patent Review with the USPTO&rsquo;s Patent Trial and Appeal Board
(&ldquo;PTAB&rdquo;). On September 3, 2014, Bascom Research filed a preliminary response to the CBM petition. On November 24,
2014, the PTAB ruled that the CBM will proceed forward.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On August 30, 2014, the parties held
a case management conference that set dates for a hearing to address Facebook&rsquo;s motion for summary judgment, which
alleges that the Bascom Research patents are invalid under the patent-eligibility (section 101) standard established in <I>Alice
Corp v. CLS Bank International</I>, and for the claims construction hearing (a &ldquo;Markman hearing&rdquo;). The summary
judgment hearing took place on December 2, 2014 and a decision is expected in 30 to 45 days. The Markman hearing for
the case is scheduled for February 26, 2015. &nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

</DIV>


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<DIV STYLE="padding: 5pt; border: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt">On July 8, 2013, DSS Technology Management
purchased two patents for $500,000 covering certain methods and processes related to Bluetooth devices (the &ldquo;Bluetooth Patents&rdquo;).
In conjunction with the patent purchases, DSS Technology Management entered into a Proceed Right Agreement with certain investors
whereby DSS Technology Management initially received $250,000 of a total of $750,000 it will ultimately receive thereunder, subject
to certain payment milestones, in exchange for 40% of the proceeds, if any, from the use, sale or licensing of the two patents.
On November 26, 2013, DSS Technology Management filed suit against Apple, Inc. (&ldquo;Apple&rdquo;) in the United States District
Court for the Eastern District of Texas, for patent infringement involving the Bluetooth Patents (the &ldquo;Apple Litigation&rdquo;).
DSS Technology Management is seeking a judgment for infringement, injunctive relief, and money damages from Apple in connection
with the Apple Litigation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.35pt">On November 29, 2013, DSS Technology
Management, Inc. (&ldquo;DSSTM&rdquo;), initiated litigation against Apple, Inc. (&ldquo;Apple&rdquo;) in the U.S. District Court
for the Eastern District of Texas. DSSTM&rsquo;s complaint alleges infringement by Apple of DSSTM patents that relate to systems
and methods of using low power wireless peripheral devices.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.35pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27pt">A Markman hearing in DSSTM&rsquo;s litigation
with Apple in the Eastern District of Texas had been scheduled for November 6, 2014. On October 28, 2014, the case was stayed
pending a determination of Apple&rsquo;s motion to transfer the case to the Northern District of California, which had been submitted
on March 3, 2014. On November 7, 2014, we learned that Apple&rsquo;s motion to transfer was granted. DSSTM anticipates that this
Markman hearing will now take place following the completion of the transfer of the case to the Northern District of California.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt">On September 27, 2013, DSS Technology
Management purchased 10 patents covering certain methods and processes in the semiconductor industry for $2,000,000 (the &ldquo;Semiconductor
Patents&rdquo;). On March 10, 2014, DSS Technology Management filed suit in the United States District Court for the Eastern District
of Texas against Taiwan Semiconductor Manufacturing Company, TSMC North America, TSMC Development, Inc. (referred to collectively
as TSMC), Samsung Electronics Co., Ltd., Samsung Electronics America, Inc., Samsung Telecommunications America L.L.C., Samsung
Semiconductor, Inc., Samsung Austin Semiconductor LLC (referred to collectively as Samsung), and NEC Corporation of America (referred
to as NEC), for patent infringement involving one of its Semiconductor Patents. In this case, DSS Technology Management is seeking
a judgment for infringement, injunctive relief, and money damages from each of the named defendants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt">On June 24, 2014, TSMC filed a petition
for Inter Partes Review (&ldquo;IPR&rdquo;), with the USPTO Patent Trial and Appeal Board, and DSSTM filed its preliminary response
to that petition on October 17, 2014.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt">On November 3, 2014, TSMC filed a motion
to transfer its case to the Northern District of California. A decision has not yet been rendered by the District Court for this
motion.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt; background-color: white">On February 13,
2014, DSS Technology Management entered into an agreement with investors to receive a series of advances up to $4,500,000 from
the investors in exchange for promissory notes, fixed return interests and contingent interests collateralized by certain of DSS
Technology Management&rsquo;s intellectual property. On February 13, 2014, we received $2,000,000 under the agreement and on March
27, 2014, we received an additional $1,000,000 under the agreement. On September 5, 2014, we received the remaining $1,500,000
under the agreement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In January and February 2014, DSS Technology
Management made investments of $100,000 and $400,000, respectively, to purchase an aggregate of 594,530 shares of common stock
of Express Mobile, Inc. (&ldquo;Express Mobile&rdquo;), which represented approximately 6% of the outstanding common stock of
Express Mobile at the time of investment. Express Mobile is a developer of custom mobile applications and websites.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On May 23, 2014, DSS Technology Management
purchased a portfolio of 115 patents for an aggregate cash purchase price of $1,150,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">To date, DSS Technology
Management has initiated patent infringement lawsuits against numerous defendants, including, but not limited to Facebook, Inc.,
Linkedin Corporation, Apple, Inc., Taiwan Semiconductor Manufacturing Company, Inc., Samsung, NEC Corporation of America, and
Lenovo (United States), Inc., seeking money damages and other relief.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

</DIV>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We do business in four operating segments
as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>DSS Packaging and Printing Group</I></B>&nbsp;&mdash;&nbsp;Produces
custom paperboard packaging serving clients in the pharmaceutical, beverage, photo packaging, toy, specialty foods and direct
marketing industries, among others. The group also provides secure and commercial printing services for end-user customers along
with technical support for our technology licensees. The division produces a wide array of printed materials such as security
paper, vital records, prescription paper, birth certificates, receipts, manuals, identification materials, entertainment tickets,
secure coupons, parts tracking forms, brochures, direct mailing pieces, catalogs, business cards, etc. The division also provides
the basis of research and development for our security printing technologies.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>DSS Plastics Group</I></B>&nbsp;&mdash;&nbsp;Manufactures
laminated and surface printed cards which can include magnetic stripes, bar codes, holograms, signature panels, invisible ink,
micro fine printing, guilloche patterns, biometric, radio frequency identification (RFID) and watermarks for printed plastic documents
such as ID cards, event badges, and driver&rsquo;s licenses.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 15pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>DSS Digital Group</I></B>&nbsp;&mdash;&nbsp;Provides
data center centric solutions to businesses and governments delivered via the &ldquo;cloud&rdquo;. This division developed an
iPhone based application that integrates some of the our traditional optical deterrent technologies into proprietary digital data
security based solutions for brand protection and product diversion prevention.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>DSS Technology Management</I></B>&nbsp;&mdash;&nbsp;Acquires
or internally develops patented technology or intellectual property assets (or interests therein), with the purpose of monetizing
these assets through a variety of value-enhancing initiatives, including, but not limited to, investments in the development and
commercialization of patented technologies, licensing, strategic partnerships and commercial litigation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Recent Developments</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">DSS Technology Management, Inc., or DSSTM,
one of our wholly-owned subsidiaries, currently owns a 60% interest in VirtualAgility Technology Investment, LLC, or VATI. VATI&rsquo;s
assets consist of 657,119 shares of common stock of VirtualAgility, Inc., or VirtualAgility, and a series of preferred return
non-recourse notes tied to the performance of VirtualAgility&rsquo;s patent portfolio.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">VirtualAgility is currently the plaintiff
in a patent infringement lawsuit against Salesforce.com, Inc. <I>et al. </I>In May of 2014, Salesforce.Com, Inc., as Petitioner,
filed a petition with the United States Patent and Trademark Office&rsquo;s Patent Trial and Appeal Board, or PTAB, requesting
covered business method patent review of claims 1-21 of U.S. Patent No. 8,095,413 B1, which is the patent being asserted by VirtualAgility
in the lawsuit, referred to as the 413 Patent, alleging that claims 1-21 of the 413 Patent are unpatentable. On September 16,
2014, the PTAB issued a written decision holding that challenged claims 1-21 of the 413 Patent are unpatentable, and also denied
VirtualAgility&rsquo;s contingent motion to amend the challenged claims.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As a result of the PTAB&rsquo;s decision,
we incurred an impairment charge of approximately $11,750,000 in the third quarter of 2014 of which we had a 60% ownership interest
in VATI. We do not anticipate that such impairment charge will result in future cash expenditures by us relating to our investment
in VATI. Total impairment charges for the third quarter of 2014 were approximately $11,750,000, which reduced total assets to
approximately $54,400,000 and total stockholders&rsquo; equity to approximately $42,000,000, and increased our accumulated deficit
to approximately $58,300,000, all as of September 30, 2014. As a result, for the three months and nine months ended September
30, 2014 we had an operating loss of approximately $13,700,000 and $18,900,000, respectively, a net loss to common stockholders
of approximately $8,100,000 and $13,500,000, respectively, and a loss per share of $0.19 and $0.32, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In October 2011, we
initiated litigation against Coupons.com Incorporated (&ldquo;Coupons.com&rdquo;) alleging, among other things, that
Coupons.com misused certain of our proprietary technology in violation of the terms of a nondisclosure agreement between the
parties. On July 10, 2014 the U.S. District Court for the Western District of New York heard oral arguments in connection
with Coupons.com&rsquo;s motion for Summary Judgment, and on October 28, 2014, Coupons.com&rsquo;s motion was granted and the
case was dismissed. On November 25, 2014, we filed an appeal to the District Court&rsquo;s decision. Coupons.com has
indicated that it may file a separate claim for fees  and expenses in connection with our litigation against Coupons.com,
which is currently under appeal.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Corporate History and Information</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We are a New York corporation formed in
1984. On July 1, 2013, our wholly-owned subsidiary, DSSIP, Inc., a Delaware corporation, merged with and into Lexington Technology
Group, Inc., a Delaware corporation which, on August 2, 2013, changed its name to DSS Technology Management, Inc. We refer to
the merger of DSSIP and Lexington Technology Group as the &ldquo;Merger.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our executive offices are located at First
Federal Plaza, 28 East Main Street, Suite 1525, Rochester, New York 14614. Our telephone number is (585) 325-3610. Our website
address is www.dsssecure.com. Information contained in, or accessible through, our website does not constitute part of this prospectus
supplement or the accompanying prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

</DIV>


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<DIV STYLE="padding: 5pt; border: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 27.5pt"><B>The Offering</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 96%; border-collapse: collapse">
<tr style="vertical-align: top">
    <TD STYLE="width: 37%; padding-left: 9pt; text-indent: -9pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B><I>Common
    stock offered by us pursuant to this prospectus supplement</I></B></FONT></td>
    <TD STYLE="width: 3%">&nbsp;</TD>
    <TD STYLE="width: 60%"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">[&bull;] shares of common stock.</FONT></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt">&nbsp;</td>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</td></tr>
<tr style="vertical-align: top">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B><I>Share price</I></B></FONT></td>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">$[&bull;] per share.</FONT></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt">&nbsp;</td>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</td></tr>
<tr style="vertical-align: top">
    <TD><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 9pt; text-indent: -9pt"><B><I>Common stock to be
        outstanding after this offering</I></B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 9pt; text-indent: -9pt"><B>&nbsp;</B></P></td>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">[&bull;] shares of our common stock.</FONT></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt">&nbsp;</td>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</td></tr>
<tr style="vertical-align: top">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B><I>Overallotment
    option</I></B></FONT></td>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">We have granted the underwriter a 45-day option to purchase up
    to [&bull;] additional shares of common stock at the public offering price per share to cover over-allotments, if any.</FONT></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt">&nbsp;</td>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</td></tr>
<tr style="vertical-align: top">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B><I>Use of proceeds</I></B></FONT></td>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">We intend to use the net proceeds from
    this offering for working capital and other general corporate purposes. See &ldquo;Use of Proceeds&rdquo; on page S-17.</FONT></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt">&nbsp;</td>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B><I>Dividend policy</I></B></FONT></td>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">We do not anticipate paying any cash
    dividends on our common stock in the foreseeable future.</FONT></td></tr>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt"><B><I>Conflict of Interest (FINRA)</I></B></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify"><P STYLE="margin: 0pt 0">Because we are under common control with National Securities Corporation, National Securities
                                    Corporation is deemed to have a &ldquo;conflict of interest&rdquo; under Rule 5121(f)(5) of the Conduct Rules of FINRA.
                                    Accordingly, this offering will be made in compliance with Rule 5121(a)(2) of FINRA&rsquo;s Conduct Rules, which
                                    requires that a &ldquo;qualified independent underwriter,&rdquo; as defined by FINRA, participate in the preparation of the
                                    registration statement and the prospectus and exercise the usual standards of due diligence in respect thereto. We have
                                    engaged Chardan Capital Markets, LLC (&ldquo;Chardan&rdquo;), to render services as a &ldquo;qualified independent
                                    underwriter&rdquo; within the meaning of FINRA Rule 5121 and participate in the preparation of the registration statement and
                                    exercise the usual standards of due diligence in respect thereto. We will pay Chardan a fee of $50,000 in consideration for
                                    its services and expenses as a &ldquo;qualified independent underwriter.&rdquo; Chardan will receive no other compensation in
                                    connection with this offering.</P>


</TD></TR>
<tr style="vertical-align: top">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt">&nbsp;</td>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B><I>NYSE MKT listing</I></B></FONT></td>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Our common stock is listed on the NYSE MKT under the symbol &ldquo;DSS.&rdquo;</FONT></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt">&nbsp;</td>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</td></tr>
<tr style="vertical-align: top">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B><I>Risk factors</I></B></FONT></td>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">See &ldquo;Risk Factors&rdquo; beginning
    on page S-5 of this prospectus supplement and on page 4 of the accompanying prospectus and the documents incorporated
    by reference herein for a discussion of factors you should carefully consider before investing in our securities.</FONT></td></tr>
</table>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The number of shares of our common stock
to be outstanding immediately after this offering is based on 42,352,992 shares outstanding as of December 19, 2014, and does
not include, as of that date:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 96%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>6,631,941 shares of our common stock that have been reserved
                                         for issuance upon exercise of outstanding warrants with a weighted average exercise price
                                         of $4.69 per share;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 96%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>4,978,595 shares of our common stock subject to outstanding
                                         options with a weighted average exercise price of $2.46 per share;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 96%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>260,180 shares of our common stock reserved for issuance
                                         upon the conversion of an outstanding convertible promissory note dated December 30,
                                         2011; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 96%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>882,067 shares of our common stock reserved for issuance
                                         in connection with future awards under our 2013 Employee, Director and Consultant Equity
                                         Incentive Plan.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Unless otherwise indicated, the information
contained in this prospectus supplement assumes no exercise by the underwriter of its option to purchase up to an additional
[&bull;] shares of common stock to cover over-allotments, if any.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

</DIV>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="s_004"></A><B>RISK FACTORS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><I>Investing in our common stock involves
risk. Before deciding whether to invest in our common stock, you should consider carefully the risks and uncertainties described
below. You should also consider the risks, uncertainties and assumptions discussed under the heading &ldquo;Risk Factors&rdquo;
included in our most recent annual report on Form 10-K which is on file with the SEC and is incorporated herein by reference,
and which has been or may be amended, supplemented or superseded from time to time by other reports we file with the SEC in the
future. There may be other unknown or unpredictable economic, business, competitive, regulatory or other factors that could have
material adverse effects on our future results.&nbsp;If any of these risks actually occurs, our business, business prospects,
financial condition or results of operations could be seriously harmed. This could cause the trading price of our common stock
to decline, resulting in a loss of all or part of your investment. Please also read carefully the section above entitled &ldquo;Cautionary
Statement Regarding Forward-Looking Statements.&rdquo;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Risks Relating to our Business, including the Merger of
Document Security Systems and Lexington Technology Group</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We have identified the following risks
and uncertainties that may have a material adverse effect on our business, financial condition or results of operations in the
future. References to the &ldquo;combined company&rdquo; relate to the Merger, effective on July 1, 2013, of Document Security
Systems and Lexington Technology Group, Inc. whereby Lexington Technology Group became a wholly-owned subsidiary of Document Security
Systems. Additional risks not presently known to us or that we currently believe are immaterial may also significantly impair
our business operations.&nbsp;If any of these risks occur, our business, results of operations or financial condition could suffer,
the market price of our common stock could decline and you could lose all or part of your investment in our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>The failure to integrate successfully our businesses
and Lexington Technology Group in the expected timeframe could adversely affect the combined company&rsquo;s future results.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The success of the Merger will depend,
in large part, on the ability of the combined company to realize the anticipated benefits from combining our businesses and that
of Lexington Technology Group.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The failure to integrate successfully and
to manage successfully the challenges presented by the integration process may result in the combined company&rsquo;s failure
to achieve some or all of the anticipated benefits of the Merger.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Potential difficulties that may be encountered
in the integration process include the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>using the combined company&rsquo;s cash and other assets
                                         efficiently to develop the business of the combined company;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in; text-align: left">&bull;</TD><TD STYLE="text-align: left">appropriately
                                         managing the liabilities of the combined company;</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>potential unknown or currently unquantifiable liabilities
                                         associated with the Merger and the operations of the combined company;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in; text-align: left">&bull;</TD><TD STYLE="text-align: left">potential unknown
                                         and unforeseen expenses, delays or regulatory conditions associated with the Merger;
                                         and</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>performance shortfalls resulting from&nbsp;diversion of
                                         management&rsquo;s attention to the task of&nbsp;efficiently integrating the companies&rsquo;
                                         operations.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><B><I>We may not realize the potential
value and benefits created by the Merger.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The success of the Merger will depend,
in part, on our ability to realize the expected potential value and benefits created from integrating our existing business with
Lexington Technology Group&rsquo;s business, which includes the maximization of the economic benefits of the combined company&rsquo;s
intellectual property portfolio. The integration process may be complex, costly, and time-consuming. The difficulties of integrating
the operations of our businesses could include, among others:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>failure to effectively implement the&nbsp;&nbsp;business
                                         plan for the combined business;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>unanticipated issues in integrating the business of both
                                         companies;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>potential lost sales and customers if any of our customers
                                         decide not to do business with us after the Merger;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>loss of key employees with knowledge of our historical
                                         business and operations;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>unanticipated changes in applicable laws and regulations;
                                         and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>other unanticipated issues, expenses, or liabilities that
                                         could impact, among other things, our ability to realize any expected benefits on a timely
                                         basis, or at all.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 15pt">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We may not accomplish the integration of
Lexington Technology Group&rsquo;s business smoothly, successfully, or within the anticipated costs or time frame. The diversion
of the attention of management from our operations to the integration effort and any difficulties encountered in combining businesses
could prevent us from realizing the full expected potential value and benefits to result from the Merger and could adversely affect
our business. In addition, the integration efforts could divert the focus and resources of the management of the combined companies
from other strategic opportunities and operational matters during the integration process.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 15pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>If the Merger does not qualify as a &ldquo;reorganization&rdquo;
under Section 368(a) of the Internal Revenue Code (the &ldquo;Code&rdquo;), the stockholders of Lexington Technology Group may
be required to pay substantial United States federal income taxes as a result of the Merger.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Merger was intended to qualify as a
&ldquo;reorganization&rdquo; under Section 368(a) of the Code and that the United States holders of shares of Lexington Technology
Group capital stock generally should not recognize taxable gain or loss as a result of the Merger. However, neither company has
requested, or intends to request, a ruling from the IRS with respect to the tax consequences of the Merger, and there can be no
assurance that the companies&rsquo; position would be sustained if challenged by the IRS. Accordingly, if there is a final determination
that the Merger does not qualify as a &ldquo;reorganization&rdquo; under Section 368(a) of the Code and is taxable for United
States federal income tax purposes, Lexington Technology Group stockholders generally would recognize taxable gain or loss on
their receipt of equity securities of Document Security Systems in connection with the Merger equal to the difference between
such stockholder&rsquo;s adjusted tax basis in their shares of Lexington Technology Group capital stock and the fair market value
of the equity securities of Document Security Systems.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>We have a history of losses.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We have a history of losses. While
we had net income in 2013 of $2.6 million due to a one-time deferred tax benefit of approximately $11.0 million, we had
losses for the fiscal years of 2012, 2011, and 2010, of approximately $4.3 million, $3.2 million, and $3.5 million,
respectively, and a net loss to common stockholders of approximately $13.5 million for the nine months ended September 30,
2014. Our results of operations in the future will depend on many factors, but largely on our ability to successfully
market our anti-counterfeiting products, technologies and services and successfully monetize our IP assets. Failure
to achieve profitability in the future could adversely affect the trading price of our common stock and our ability to
raise additional capital and, accordingly, our ability to continue to grow our business. There can be no assurance that we
will succeed in addressing any or all of these risks, and the failure to do so could have a material adverse effect on
our business, financial condition and operating results.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>We have a significant amount of indebtedness, some of
which is secured by our assets, and we may be unable to satisfy our obligations to pay interest and principal thereon when due.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As of September 30, 2014, we had the following
significant amounts of outstanding indebtedness:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 27pt"></TD><TD STYLE="width: 27pt">(i)</TD><TD>$575,000 convertible promissory note bearing interest at 10%
                                         per annum due in full on December 29, 2015, or convertible into up to 260,180 shares
                                         of DSS common stock, secured by the assets of our wholly-owned subsidiary, Secuprint.
                                         Interest is due quarterly.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.75in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 27pt"></TD><TD STYLE="width: 27pt">(ii)</TD><TD>$125,000 due under a term loan with Citizens Bank which matures
                                         February 1, 2015 and is payable in monthly payments of $25,000 plus interest. Interest
                                         accrues at 1 Month LIBOR plus 3.75%. We subsequently entered into an interest rate swap
                                         agreement to lock into a 5.7% effective interest rate over the life of the term loan.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.75in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 27pt"></TD><TD STYLE="width: 27pt">(iii)</TD><TD>Up to $1,000,000 in a revolving line of credit with Citizens
                                         Bank available for use by Premier Packaging, subject to certain limitations, payable
                                         in monthly installments of interest only. Interest accrues at 1 Month LIBOR plus 3.75%.
                                         As of September 30, 2014, there was no indebtedness outstanding on the line.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.75in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 27pt"></TD><TD STYLE="width: 27pt">(iv)</TD><TD>$1,092,000 due under a promissory note with Citizens Bank used
                                         to purchase our packaging division facility. We are required to pay monthly installments
                                         of $7,658 plus interest until August 2021 at which time a balloon payment of the remaining
                                         principal balance of $919,677 is due. We entered into an interest rate swap agreement
                                         to lock into a 5.87% effective interest rate over the life of the term loan. The promissory
                                         note is secured by a first mortgage on our packaging division facility.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 27pt"></TD><TD STYLE="width: 27pt">(v)</TD><TD>$850,000 promissory note bearing interest at 9% per annum due
                                         in full on May 24, 2015 secured by certain equipment and the assets of our wholly-owned
                                         subsidiary, Secuprint. Interest is due quarterly.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 27pt"></TD><TD STYLE="width: 27pt">(vi)</TD><TD>$1,128,000 under an equipment note entered into by our subsidiary,
                                         Premier Packaging,&nbsp;with Peoples Capital. The note is secured by the equipment, bears
                                         interest at 4.84%, and is repayable over a 60-month period in monthly payments of $24,511
                                         commencing January 2014.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 27pt"></TD><TD STYLE="width: 27pt">(vii)</TD><TD>$443,000 under a promissory note entered into by our subsidiary,
                                         Premier Packaging, with Citizen&rsquo;s pursuant to which Premier Packaging made improvements
                                         and additions to its production facility.&nbsp;&nbsp;The promissory note is payable in
                                         monthly installments over a five-year period of $2,500 plus interest calculated at a
                                         variable rate of 1 Month Libor plus 3.15% (3.31% at September 30, 2014), which payments
                                         commenced on July 1, 2014. The note matures in July 2019 at which time a balloon payment
                                         of the remaining principal balance of $300,000 is due. The promissory note is secured
                                         by the assets of our packaging facility.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -27pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 27pt"></TD><TD STYLE="width: 27pt">(viii)</TD><TD>An aggregate of $4,071,000 including accrued interest, outstanding                                          under
                                                                promissory notes and $459,000 outstanding under fixed return equity interests and contingent equity interests pursuant to an
                                                                agreement with                                                                 Fortress
                                                                Credit                                                                                                           Corp
                                                                collateralized by                                                                 certain of
                                                                our                                                                                                    intellectual
                                                                property,                                                                 bearing interest at
                                                                1.95% payable in                                                                                      cash or in
                                                                kind in our discretion and                                                                 payable in February 2018.
                                                                The notes are subject to various                                                                 covenants and will also be
                                                                subject to a Make Whole Amount calculation (as defined in the loan agreement), which
                                                                will result in an effective annual interest rate of approximately 4.23% for the term
                                                                thereof, assuming no prepayments. The notes mature on February 13, 2018.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 15pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Citizens Bank obligations are secured
by all of the assets of Premier Packaging and are also secured through cross guarantees by us and our other wholly-owned subsidiaries,
P3 and Secuprint. Under the Citizens Bank credit facilities, our subsidiary, Premier Packaging Corporation is subject to various
covenants including fixed charge coverage ratio, tangible net worth and current ratio covenants. In March 2014, Premier Packaging
was notified that it was not in compliance with the required fixed charge coverage ratio as of December 31, 2013. In March 2014,
we received a waiver as of December 31, 2013 from Citizens Bank, relating to the above-mentioned financial covenant. For the quarters
ended September 30, 2014, June 30, 2014 and March 31, 2014, Premier Packaging was in compliance with the covenants. If we were
to default on any of the above indebtedness and not receive a waiver from the creditors and the creditors were to foreclose on
secured assets, this could have a material adverse effect on our business, financial condition and operating results.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Certain of our recently developed
products are not yet commercially accepted and there can be no assurance that those products will be accepted, which would adversely
affect our financial results.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Over the past several years, we have spent
significant funds and time to create new products by applying its technologies onto media other than paper, including plastic
and cardboard packaging, and delivery of our technologies digitally. We have had limited success to date in selling its products
that are on cardboard packaging and those that are delivered digitally. Our business plan includes plans to incur significant
marketing, intellectual property development and sales costs for these newer products, particularly the digitally delivered products.
If we are not able to sell these new products, our financial results will be adversely affected.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>The results of our research and development efforts are
uncertain and there can be no assurance of the commercial success of our products.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We believe that we will need to continue
to incur research and development expenditures to remain competitive. The products we are currently developing or may develop
in the future may not be technologically successful. In addition, the length of our product development cycle may be greater than
we originally expected and we may experience delays in future product development. If our resulting products are not technologically
successful, they may not achieve market acceptance or compete effectively with our competitors&rsquo; products.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Changes in document security technology and standards
could render our applications and services obsolete.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The market for document security products,
applications, and services is fast moving and evolving. Identification and authentication technology is constantly changing as
we and our competitors introduce new products, applications, and services, and retire old ones as customer requirements quickly
develop and change. In addition, the standards for document security are continuing to evolve. If any segments of our market adopt
technologies or standards that are inconsistent with our applications and technology, sales to those market segments could decline,
which could have a material adverse effect on us and our financial condition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>The market in which we operate is highly competitive,
and we may not be able to compete effectively, especially against established industry competitors with greater market presence
and financial resources.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our market is highly competitive and characterized
by rapid technological change and product innovations. Our competitors may have advantages over us because of their longer operating
histories, more established products, greater name recognition, larger customer bases, and greater financial, technical and marketing
resources. As a result, they may be able to adapt more quickly to new or emerging technologies and changes in customer requirements,
and devote greater resources to the promotion and sale of their products. Competition may also force us to decrease the price
of our products and services. We cannot assure you that we will be successful in developing and introducing new technology on
a timely basis, new products with enhanced features, or that these products, if introduced, will enable us to establish selling
prices and gross margins at profitable levels.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B>&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Our growth strategy depends, in
part, on us acquiring complementary businesses and assets and expanding our existing operations to include manufacturing capabilities,
which we may be unable to do.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our growth strategy is based, in part,
on our ability to acquire businesses and assets that are complementary to our existing operations and expanding our operations
to include manufacturing capabilities. We may also seek to acquire other businesses. The success of this acquisition strategy
will depend, in part, on our ability to accomplish the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>identify suitable businesses or assets to buy;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>complete the purchase of those businesses on terms acceptable
                                         to us;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>complete the acquisition in the time frame we expect;
                                         and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>improve the results of operations of the businesses that
                                         we buy and successfully integrate their operations into ours.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Although we have been able to make acquisitions
in the past, there can be no assurance that we will be successful in pursuing any or all of these steps on future transactions.
Our failure to implement our acquisition strategy could have an adverse effect on other aspects of our business strategy and our
business in general. We may not be able to find appropriate acquisition candidates, acquire those candidates that we find or integrate
acquired businesses effectively or profitably.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We have in the past used, and may continue
to use, our common stock as payment for all or a portion of the purchase price for acquisitions. If we issue significant amounts
of our common stock for such acquisitions, this could result in substantial dilution of the equity interests of our stockholders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>If we fail to retain certain of our key personnel and
attract and retain additional qualified personnel, we might not be able to pursue our growth strategy.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our future success depends upon the continued
service of certain of our executive officers and other key sales and research personnel who possess longstanding industry relationships
and technical knowledge of our products and operations. Although we believe that our relationship with these individuals is positive,
there can be no assurance that the services of these individuals will continue to be available to us in the future. There can
be no assurance that these persons will agree to continue to be employed by us after the expiration dates of their current contracts.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>If we do not successfully expand our sales force, we
may be unable to increase our revenues.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We must expand the size of our marketing
activities and sales force to increase revenues. We continue to evaluate various methods of expanding our marketing activities,
including the use of outside marketing consultants and representatives and expanding our in-house marketing capabilities. If we
are unable to hire or retain qualified sales personnel or if newly hired personnel fail to develop the necessary skills to be
productive, or if they reach productivity more slowly than anticipated, our ability to increase our revenues and grow could be
compromised. The challenge of attracting, training and retaining qualified candidates may make it difficult to meet our sales
growth targets. Further, we may not generate sufficient sales to offset the increased expense resulting from expanding our sales
force or we may be unable to manage a larger sales force.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Future growth in our business could make it difficult
to manage our resources.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our anticipated business expansion could
place a significant strain on our management, administrative and financial resources. Significant growth in our business may require
us to implement additional operating, product development and financial controls, improve coordination among marketing, product
development and finance functions, increase capital expenditures and hire additional personnel. There can be no assurance that
we will be able to successfully manage any substantial expansion of our business, including attracting and retaining qualified
personnel. Any failure to properly manage our future growth could negatively impact our business and operating results.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><B><I>We cannot predict our future
capital needs and we may not be able to secure additional financing.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 15pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We may need to raise additional funds in
the future to fund our working capital needs, to fund more aggressive expansion of our business, to complete development, testing
and marketing of our products and technologies, or to make strategic acquisitions or investments. We may require additional equity
or debt financings, collaborative arrangements with corporate partners or funds from other sources for these purposes. No assurance
can be given that necessary funds will be available for us to finance our development on acceptable terms, if at all. Furthermore,
such additional financings may involve substantial dilution of our stockholders or may require that we relinquish rights to certain
of our technologies or products. In addition, we may experience operational difficulties and delays due to working capital restrictions.
If adequate funds are not available from operations or additional sources of financing, we may have to delay or scale back our
growth plans.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>If we are unable to respond to regulatory or industry
standards effectively, our growth and development could be delayed or limited.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our future success will depend in part
on our ability to enhance and improve the functionality and features of our products and services in accordance with regulatory
or industry standards. Our ability to compete effectively will depend in part on our ability to influence and respond to emerging
industry governmental standards in a timely and cost-effective manner. If we are unable to influence these or other standards
or respond to these or other standards effectively, our growth and development of various products and services could be delayed
or limited.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Changes in the laws and regulations to which we are subject
may increase our costs.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 15pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We are subject to numerous laws and regulations,
including, but not limited to, environmental and health and welfare benefit regulations, as well as those associated with being
a public company. These rules and regulations may be changed by local, state, provincial, national or foreign governments or agencies.
Such changes may result in significant increases in our compliance costs. Compliance with changes in rules and regulations could
require increases to our workforce, and could result in increased costs for services, compensation and benefits, and investment
in new or upgraded equipment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Declines in general economic conditions or acts of war
and terrorism may adversely impact our business.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Demand for printing services is typically
correlated with general economic conditions. The recent declines in United States economic conditions have adversely impacted
our business and results of operations, and may continue to do so for the foreseeable future. The overall business climate of
our industry may also be impacted by domestic and foreign wars or acts of terrorism, which events may have sudden and unpredictable
adverse impacts on demand for our products and services.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>We have a large number of authorized but unissued shares
of common stock, which our management may issue without further stockholder approval, thereby causing dilution of your holdings
of our common stock.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As of December 19, 2014, we had approximately
158 million authorized but unissued shares of our common stock. Our management continues to have broad discretion to issue shares
of our common stock in a range of transactions, including capital-raising transactions, mergers, acquisitions, for anti-takeover
purposes, and in other transactions, without obtaining stockholder approval, unless stockholder approval is required for a particular
transaction under the rules of the NYSE MKT, state and federal law, or other applicable laws. If our board of directors determines
to issue additional shares of our common stock from the large pool of authorized but unissued shares for any purpose in the future
without obtaining stockholder approval, your ownership position would be diluted without your further ability to vote on such
transaction.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>The exercise of our outstanding options and warrants,
vesting of restricted stock awards and conversion of debt securities may depress our stock price.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As of December 19, 2014 there were 11,891,304
of common stock share equivalents potentially issuable under convertible debt agreements, employment agreements, options, warrants,
and restricted stock agreements that could potentially dilute basic earnings per share in the future. Sales of these securities
in the public market, or the perception that future sales of these securities could occur, could have the effect of lowering the
market price of our common stock below current levels and make it more difficult for us and our stockholders to sell our equity
securities in the future. Sale or the availability for sale of shares of common stock by stockholders could cause the market price
of our common stock to decline and could impair our ability to raise capital through an offering of additional equity securities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>We do not intend to pay cash dividends.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We do not intend to declare or pay cash
dividends on our common stock in the foreseeable future. We anticipate that we will retain any earnings and other cash resources
for investment in our business. The payment of dividends on our common stock is subject to the discretion of our board of directors
and will depend on our operations, financial position, financial requirements, general business conditions, restrictions imposed
by financing arrangements, if any, legal restrictions on the payment of dividends and other factors that our board of directors
deems relevant.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>We have had material weaknesses in our internal
control over financial reporting structure; any future material weaknesses may cause errors in our financial statements that
could require restatements of our financial statements and investors may lose confidence in our reported financial
information, which could lead to a decline in our stock price.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Section 404 of the Sarbanes-Oxley Act of
2002 requires us to evaluate the effectiveness of our internal control over financial reporting as of the end of each year, and
to include a management report assessing the effectiveness of our internal control over financial reporting in each Annual Report
on Form 10-K. We identified one material weakness in our internal control over financial reporting in our annual assessment of
internal controls over financial reporting that management performed for the year ended December 31, 2013; management has concluded
that we did not maintain a sufficient complement of qualified accounting personnel and controls associated with segregation of
duties, and that the foregoing represented material weakness in our internal control over financial reporting. While we believe
we remedied the identified material weakness as of September 30, 2014, there may not have been sufficient enough time to test
these controls. If our internal control over financial reporting or disclosure controls and procedures are not effective in the
future, there may be errors in our financial statements and in our disclosure that could require restatements. Investors may lose
confidence in our reported financial information and in our disclosure, which could lead to a decline in our stock price.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>The value of our intangible assets and investments may
not be equal to their carrying values.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;As of September 30, 2014, we had
approximately $42.4 million of net intangible assets, including goodwill, and $0.5 million of investments. A
significant amount of these intangible assets and investments derive their value, including goodwill, from patents or patent
rights, many of which are involved in litigation in order to derive license revenues or settlements from users of the
patents. If licensing efforts and litigation is not successful, the values of these assets could be reduced. We are required
to evaluate the carrying value of such intangibles and goodwill and the fair value of investments whenever events or changes
in circumstances indicate that the carrying value of an intangible asset, including goodwill, and investment may not
be recoverable, we will have to determine whether there has been impairment by comparing the anticipated undiscounted cash
flows (discounted cash flows for goodwill) from the operation and eventual disposition of the product line or asset with
our carrying value. If any of our intangible assets, goodwill or investments are deemed to be impaired then it will result in
a significant reduction of the operating results in such period. For example, on September 16, 2014, the Company determined
that as a result of a United States Patent and Trademark Office&rsquo;s Patent Trial and Appeal Board&nbsp;decision that
negatively affected one of the Company&rsquo;s investments, which caused the Company to reduce of the fair value of the
investment by approximately $11.7 million and incur a net impairment charge, net of taxes, of approximately $6,000,000. Any
future negative outcomes in our intellectual property monetization efforts could cause further impairment of our intangible
assets, goodwill and/or investments.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>If we are unable to adequately protect our intellectual
property, our competitive advantage may disappear.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our success will be determined in part
by our ability to obtain United States and foreign patent protection for our technology and to preserve our trade secrets. Because
of the substantial length of time and expense associated with developing new document security technology, we place considerable
importance on patent and trade secret protection. We intend to continue to rely primarily on a combination of patent protection,
trade secrets, technical measures, copyright protection and nondisclosure agreements with our employees and customers to establish
and protect the ideas, concepts and documentation of software and trade secrets developed by us. Our ability to compete and the
ability of our business to grow could suffer if these intellectual property rights are not adequately protected. There can be
no assurance that our patent applications will result in patents being issued or that current or additional patents will afford
protection against competitors. Failure of Our patents, copyrights, trademarks and trade secret protection, non-disclosure agreements
and other measures to provide protection of our technology and our intellectual property rights could enable our competitors to
more effectively compete with us and have an adverse effect on our business, financial condition and results of operations. In
addition, our trade secrets and proprietary know-how may otherwise become known or be independently discovered by others. No guarantee
can be given that others will not independently develop substantially equivalent proprietary information or techniques, or otherwise
gain access to Our proprietary technology.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In addition, we may be required to litigate
in the future to enforce our intellectual property rights, to protect our trade secrets, to determine the validity and scope of
the proprietary rights of others, or to defend against claims of infringement or invalidity. Any such litigation could result
in substantial costs and diversion of resources and could have a material adverse effect on our business, financial condition
or results of operations, and there can be no assurances of the success of any such litigation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We may face intellectual property
infringement or other claims against us, our customers or our intellectual property that could be costly to defend and result
in our loss of significant rights.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Although we have received patents with
respect to certain of our technologies, there can be no assurance that these patents will afford us any meaningful protection.
Although we believe that our use of the technology and products we have developed and other trade secrets used in our operations
do not infringe upon the rights of others, our use of the technology and trade secrets we developed may infringe upon the patents
or intellectual property rights of others. In the event of infringement, we could, under certain circumstances, be required to
obtain a license or modify aspects of the technology and trade secrets we developed or refrain from using the same. We may not
have the necessary financial resources to defend an infringement claim made against us or be able to successfully terminate any
infringement in a timely manner, upon acceptable terms and conditions or at all. Failure to do any of the foregoing could have
a material adverse effect on us and our financial condition. Moreover, if the patents, technology or trade secrets we developed
or use in our business are deemed to infringe upon the rights of others, we could, under certain circumstances, become liable
for damages, which could have a material adverse effect on DSS and our financial condition. As we continue to market our products,
we could encounter patent barriers that are not known today. A patent search may not disclose all related applications that are
currently pending in the United States Patent Office, and there may be one or more such pending applications that would take precedence
over any or all of our applications.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Furthermore, third parties may assert that
our intellectual property rights are invalid, which could result in significant expenditures by us to refute such assertions.
If we become involved in litigation, we could lose our proprietary rights, be subject to damages and incur substantial unexpected
operating expenses. Intellectual property litigation is expensive and time-consuming, even if the claims are subsequently proven
unfounded, and could divert management&rsquo;s attention from our business. If there is a successful claim of infringement, we
may not be able to develop non-infringing technology or enter into royalty or license agreements on acceptable terms, if at all.
If we are unsuccessful in defending claims that our intellectual property rights are invalid, we may not be able to enter into
royalty or license agreements on acceptable terms, if at all. This could prohibit us from providing our products and services
to customers, which could have a material adverse effect on us and our financial condition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B>&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>We have commenced legal proceedings against numerous
companies, including Facebook, Inc., LinkedIn Corporation, Apple, Inc, Samsung, TSMC and NEC, among others, and we expect such
litigation to be time-consuming and costly, which may adversely affect our financial condition and our ability to operate our
business.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">To monetize our patent assets, we have
commenced legal proceedings against numerous companies, including Facebook, Inc., LinkedIn Corporation, Apple, Inc, Samsung, TSMC
and NEC, among others alleging infringement of our patents. Our viability is partially dependent on the outcome of this litigation,
and there is a risk that we may be unable to achieve the results we desire from such litigation, which failure could significantly
harm our business. In addition, the defendants in this litigation are much larger than us and have substantially more resources
than us, which could make our litigation efforts more difficult.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 15pt">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">These legal proceedings may
continue for several years and may require significant expenditures for legal fees and other expenses. Disputes regarding
the assertion of patents and other intellectual property rights are highly complex and technical. Once initiated, we may
be forced to litigate against others to enforce or defend our intellectual property rights or to determine the validity
and scope of other parties&rsquo; proprietary rights. The defendants or other third parties involved in the lawsuits in which
we are involved may allege defenses and/or file counterclaims in an effort to avoid or limit liability and damages for
patent infringement. If such defenses or counterclaims are successful, they may have a great impact on the value of the
patents and preclude our ability to derive licensing revenue from the patents. Therefore, a negative outcome of any such
litigation, or one or more claims contained within any such litigation, could materially and adversely impact our business.
The defendants may also seek reimbursement of court costs, legal fees and other expenses, which, if awarded, could be
substantial and materially and adversely impact our cash positions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">An example of the risk involved
in these legal proceedings is the impairment charge that we took in the third quarter of 2014 as a result of the
court&rsquo;s decision in our Salesforce.com case that our patents were unpatentable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>While we believe that certain of our patents are being
infringed by the defendants named in our various litigation matters, there is a risk that a court will find the patents invalid,
not infringed or unenforceable and/or that the U.S. Patent and Trademark Office, or USPTO, will either invalidate the patents
or materially narrow the scope of their claims during the course of a re-examination. In addition, even with a positive trial
court verdict, the patents may be invalidated, found not infringed or rendered unenforceable on appeal. This risk may occur either
presently in our current litigation or from time to time in connection with future litigation we may bring. If this were to occur,
it would have a material adverse effect on our viability and operations.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Patent litigation is inherently risky and
the outcome is uncertain. Some of the parties we believe are infringing on our patents are large and well-financed companies with
substantially greater resources than ours. We believe that parties will devote a substantial amount of resources in an attempt
to avoid or limit a finding that they are liable for infringing our patents or, in the event liability is found, to avoid or limit
the amount of associated damages. In addition, there is a risk that these parties may file re-examinations or other proceedings
with the USPTO or other government agencies in an attempt to invalidate, narrow the scope or render unenforceable our patents.
It is also possible that a court may rule that we have violated statutory authority, regulatory authority, federal rules, local
court rules, or governing standards relating to the substantive or procedural aspects of such enforcement actions. In such event,
a court may issue monetary sanctions against us or award attorneys&rsquo; fees and/or expenses to one or more defendants, which
could be material, and if we are required to pay such monetary sanctions, attorneys&rsquo; fees and/or expenses, such payment
could materially harm our operating results and our financial position.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In addition, it is difficult in general
to predict the outcome of patent enforcement litigation at the trial level. There is a higher rate of appeals in patent enforcement
litigation than more standard business litigation. Such appeals are expensive and time-consuming, and the outcomes of such appeals
are sometimes unpredictable, resulting in increased costs and reduced or delayed revenue.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On June 19, 2014, the Supreme Court of
the United States decided the case of <I>Alice Corp. v. CSL Bank International</I>, or Alice. The Alice case was a legal case
about patentable subject matter, and pertains to software patents generally. The primary issue in the Alice case was the question
of whether claims to computer-implemented inventions, including claims to systems and machines, processes, and items of manufacture,
are directed to patent-eligible subject matter within the meaning of 35 U.S.C. &sect; 101. The Alice opinion provides that an
abstract idea coupled with a computer doing what a computer normally does is not something that the U.S. patent system was designed
to protect. The Alice court then provided some interpretive guidance to be considered by the federal trial courts when making
determinations as to whether certain patent claims constitute merely an abstract idea and, as such, are not patent-eligible subject
matter within the meaning of 35 U.S.C. &sect; 101. As a result of the Alice decision, the defendants in our Bascom case have argued
that the software patents involved in our infringement case against Facebook and LinkedIn should be invalidated based on the court&rsquo;s
reasoning in Alice. If this should happen the value of our patent could be impaired and would result in significant impairment
charge in the period of such invalidation. As of September 30, 2014, the net carrying value of our patents related to the Facebook
and LinkedIn case was approximately $23.2 million.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As described above, the Alice case applies
to software patents. Our current pending litigation matters against defendants Apple, Samsung, TSMC and NEC do not involve software
patents and, as such, are not impacted by the Alice decision.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><B><I>We may be unable to retain
key advisors and legal counsel to represent us in our patent infringement litigation.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The success of our pending legal proceedings
and future legal proceedings depends in part upon our ability to retain key advisors and legal counsel to represent us in such
litigation. The retention of such key advisors and legal counsel is likely to be expensive and we may not be able to retain such
key advisors and legal counsel on favorable economic terms. Therefore, an inability to retain key advisors and legal counsel to
represent us in our litigation could have a material adverse effect on our business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 15pt">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>We may seek to internally develop additional new inventions
and intellectual property, which would take time and would be costly. Moreover, the failure to obtain or maintain intellectual
property rights for such inventions would lead to the loss of our investments in such activities.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Members of our management team have significant
experience as inventors. As such, part of our business may include the internal development of new inventions and intellectual
property that we will seek to monetize. However, this aspect of our business would likely require significant capital and would
take time to achieve. Such activities could also distract our management team from our present business initiatives, which could
have a material and adverse effect on our business. There is also the risk that these initiatives would not yield any viable new
inventions or technology, which would lead to a loss our investments in time and resources in such activities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In addition, even if we are able to internally
develop new inventions, in order for those inventions to be viable and to compete effectively, we would need to develop and maintain,
and we would heavily rely on, a proprietary position with respect to such inventions and intellectual property. However, there
are significant risks associated with any such intellectual property we may develop principally including the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>patent applications we may file may not result in issued
                                         patents or may take longer than we expect to result in issued patents;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>we may be subject to interference proceedings;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>we may be subject to opposition proceedings in the U.S.
                                         or foreign countries;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>any patents that are issued to us may not provide meaningful
                                         protection;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>we may not be able to develop additional proprietary technologies
                                         that are patentable;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>other companies may challenge patents issued to us;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>other companies may design around technologies we have
                                         developed; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>enforcement of our patents would be complex, uncertain
                                         and very expensive.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We cannot be certain that patents will
be issued as a result of any future applications, or that any of our patents, once issued, will provide us with adequate protection
from competing products. For example, issued patents may be circumvented or challenged, declared invalid or unenforceable, or
narrowed in scope. In addition, since publication of discoveries in scientific or patent literature often lags behind actual discoveries,
we cannot be certain that it will be the first to make our additional new inventions or to file patent applications covering those
inventions. It is also possible that others may have or may obtain issued patents that could prevent us from commercializing our
products or require us to obtain licenses requiring the payment of significant fees or royalties in order to enable us to conduct
our business. As to those patents that we may license or otherwise monetize, our rights will depend on maintaining our obligations
to the licensor under the applicable license agreement, and we may be unable to do so. Our failure to obtain or maintain intellectual
property rights for our inventions would lead to the loss of our investments in such activities, which would have a material and
adverse effect on our business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Moreover, patent application delays could
cause delays in recognizing revenue from our internally generated patents and could cause us to miss opportunities to license
patents before other competing technologies are developed or introduced into the market.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; color: red; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>New legislation, regulations or rules related to obtaining
patents or enforcing patents could significantly increase our operating costs and decrease our revenue.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We expect to spend a significant amount
of resources to enforce our patents. If new legislation, regulations or rules are implemented either by Congress, the USPTO, any
state or the courts that impact the patent application process, the patent enforcement process or the rights of patent holders,
these changes could negatively affect our expenses and revenue and any reductions in the funding of the USPTO could negatively
impact the value of our assets. United States patent laws have been amended by the Leahy-Smith America Invents Act, or the America
Invents Act. The America Invents Act includes a number of significant changes to U.S. patent law. In general, the legislation
attempts to address issues surrounding the enforceability of patents and the increase in patent litigation by, among other things,
establishing new procedures for patent litigation. For example, the America Invents Act changes the way that parties may be joined
in patent infringement actions, increasing the likelihood that such actions will need to be brought against individual parties
allegedly infringing by their respective individual actions or activities. At this time, it is not clear what, if any, impact
the America Invents Act will have on the operation of our enforcement business. However, the America Invents Act and its implementation
could increase the uncertainties and costs surrounding the enforcement of our patented technologies, which could have a material
adverse effect on our business and financial condition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">A number of states have adopted or are
considering legislation to make the patent enforcement process more difficult for non-practicing entities, such as allowing such
entities to be sued in state court and setting higher standards of proof for infringement claims. We cannot predict what, if any,
impact these state initiatives will have on the operation of our enforcement business. However, such legislation could increase
the uncertainties and costs surrounding the enforcement of our patented technologies, which could have a material adverse effect
on our business and financial condition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In addition, the U.S. Department of Justice,
or DOJ, has conducted reviews of the patent system to evaluate the impact of patent assertion entities on industries in which
those patents relate.&nbsp;It is possible that the findings and recommendations of the DOJ could impact the ability to effectively
license and enforce standards-essential patents and could increase the uncertainties and costs surrounding the enforcement of
any such patented technologies.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Finally, new rules regarding the burden
of proof in patent enforcement actions could significantly increase the cost of our enforcement actions, and new standards or
limitations on liability for patent infringement could negatively impact our revenue derived from such enforcement actions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Our acquisitions of patent assets
may be time consuming, complex and costly, which could adversely affect our operating results.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Acquisitions of patent or other intellectual
property assets, which are and will be critical to our business plan, are often time consuming, complex and costly to consummate.
We may utilize many different transaction structures in our acquisitions and the terms of such acquisition agreements tend to
be heavily negotiated. As a result, we expect to incur significant operating expenses and will likely be required to raise capital
during the negotiations even if the acquisition is ultimately not consummated. Even if we are able to acquire particular patent
assets, there is no guarantee that we will generate sufficient revenue related to those patent assets to offset the acquisition
costs. While we will seek to conduct confirmatory due diligence on the patent assets we are considering for acquisition, we may
acquire patent assets from a seller who does not have proper title to those assets. In those cases, we may be required to spend
significant resources to defend our interest in the patent assets and, if we are not successful, our acquisition may be invalid,
in which case we could lose part or all of our investment in the assets.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In addition, we may acquire patents and
technologies that are in the early stages of adoption in the commercial, industrial and consumer markets. Demand for some of these
technologies will likely be untested and may be subject to fluctuation based upon the rate at which licensees will adopt these
patents and technologies in their products and services. As a result, there can be no assurance as to whether technologies we
acquire or develop will have value that we can monetize.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 15pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>In certain acquisitions of patent
assets, we may seek to defer payment or finance a portion of the acquisition price. This approach may put us at a competitive
disadvantage and could result in harm to our business.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We have limited capital and may seek to
negotiate acquisitions of patent or other intellectual property assets where we can defer payments or finance a portion of the
acquisition price. These types of debt financing or deferred payment arrangements may not be as attractive to sellers of patent
assets as receiving the full purchase price for those assets in cash at the closing of the acquisition. As a result, we might
not compete effectively against other companies in the market for acquiring patent assets, many of whom have greater cash resources
than we have.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 15pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We may not be able to capitalize
on potential market opportunities related to our licensing strategy or patent portfolio.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In order to capitalize on our patent portfolio,
we intend to enter into licensing relationships. However, there can be no assurance that we will be able to capitalize on our
patent portfolio or any potential market opportunity in the foreseeable future. Our inability to generate licensing revenues associated
with potential market opportunities could result from a number of factors, including, but not limited to:<BR>
<BR></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>We may not be successful in entering into licensing relationships
                                         on commercially acceptable terms; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>Challenges from third parties as to the validity of our
                                         patents underlying licensing opportunities.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Weak global economic conditions
may cause infringing parties to delay entering into licensing agreements, which could prolong our litigation and adversely affect
our financial condition and operating results<FONT STYLE="color: red">.</FONT></I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our business plan depends significantly
on worldwide economic conditions, and the United States and world economies have recently experienced weak economic conditions.
Uncertainty about global economic conditions poses a risk as businesses may postpone spending in response to tighter credit, negative
financial news and declines in income or asset values. This response could have a material negative effect on the willingness
of parties infringing on our assets to enter into licensing or other revenue generating agreements voluntarily. Entering into
such agreements is critical to our business plan, and failure to do so could cause material harm to our business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Risks Related to This Offering</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Our management will have broad discretion
over the use of the net proceeds from this offering and we may use the net proceeds in ways with which you disagree or which do
not produce beneficial results.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We currently intend to use the net proceeds
from this offering for working capital and general corporate purposes. We have not allocated specific amounts of the net proceeds
from this offering for any of the foregoing purposes. Accordingly, our management will have significant discretion and flexibility
in applying the net proceeds of this offering. You will be relying on the judgment of our management with regard to the use of
these net proceeds, and you will not have the opportunity, as part of your investment decision, to assess whether the proceeds
are being used appropriately. It is possible that the net proceeds will be invested in a way that does not yield a favorable,
or any, return for us or our stockholders. The failure of our management to use such funds effectively could have a material adverse
effect on our business, prospects, financial condition, and results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>A substantial number of shares of
common stock may be sold in the market following this offering, which may depress the market price for our common stock.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Sales of a substantial number of shares
of our common stock in the public market following this offering could cause the market price of our common stock to decline.
A substantial majority of the outstanding shares of our common stock are, and the shares of common stock sold in this offering
upon issuance will be, freely tradable without restriction or further registration under the Securities Act. In addition, as of
December 19, 2014, an aggregate of 11,891,304 shares of our common stock are issuable upon exercise of outstanding options and
warrants and a convertible promissory note.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>You will experience immediate dilution in the book value
per share of the securities you purchase in this offering. </I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Because the price per share of our common
stock being offered is substantially higher than the net tangible book value per share of our common stock, you will suffer substantial
dilution in the net tangible book value of the common stock you purchase in this offering. Based on an offering price of $ [&bull;]
per share, and a net tangible book value per share of our common stock of $(0.01) as of September 30, 2014, if you purchase shares
of common stock in this offering, you will suffer immediate and substantial dilution of $[&bull;] per share in the net tangible
book value of the common stock you purchase. See &ldquo;Dilution&rdquo; for a more detailed discussion of the dilution you will
incur if you purchase our securities in this offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>If you purchase the securities sold
in this offering, you may experience dilution if we issue additional equity securities in future fundraising transactions.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If we issue additional common stock, or
securities convertible into or exchangeable or exercisable for common stock, whether in public offerings or private placements,
our stockholders, including investors who purchase shares in this offering, will experience dilution, and any such issuances may
result in downward pressure on the price of our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>If we fail to comply with the continued
listing standards of the NYSE MKT, it may result in a delisting of our common stock from the exchange.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our common stock is currently listed for
trading on the NYSE MKT, and the continued listing of our common stock on the NYSE MKT is subject to our compliance with a number
of listing standards. There can be no assurance that we will meet the continued listing standards of the NYSE MKT.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If our common stock were no longer listed
on the NYSE MKT, investors might only be able to trade on the OTC Bulletin Board &reg; or in the Pink Sheets &reg; (a quotation
medium operated by Pink Sheets LLC). This would impair the liquidity of our common stock not only in the number of shares that
could be bought and sold at a given price, which might be depressed by the relative illiquidity, but also through delays in the
timing of transactions and reduction in media coverage.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>If we are delisted from the NYSE
MKT, your ability to sell your shares of our common stock may be limited by the penny stock restrictions, which could further
limit the marketability of your shares.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If our common stock is delisted from the
NYSE MKT, it could come within the definition of &ldquo;penny stock&rdquo; as defined in the Exchange Act and could be covered
by Rule&nbsp;15g-9 of the Exchange Act. That Rule&nbsp;imposes additional sales practice requirements on broker-dealers who sell
securities to persons other than established customers and accredited investors. For transactions covered by Rule&nbsp;15g-9,
the broker-dealer must make a special suitability determination for the purchaser and receive the purchaser&rsquo;s written agreement
to the transaction prior to the sale. Consequently, Rule&nbsp;15g-9, if it were to become applicable, would affect the ability
or willingness of broker-dealers to sell our securities, and accordingly would affect the ability of stockholders to sell their
securities in the public market. These additional procedures could also limit our ability to raise additional capital in the future.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>If our common stock is not listed
on a national securities exchange, compliance with applicable state securities laws may be required for subsequent offers, transfers
and sales of the shares of common stock. </I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The shares of our common stock are being
offered pursuant to one or more exemptions from registration and qualification under applicable state securities laws. Because
our common stock is listed on The NYSE MKT, we are not required to register or qualify in any state the subsequent offer, transfer
or sale of the common stock. If our common stock is delisted from The NYSE MKT and is not eligible to be listed on another national
securities exchange, subsequent transfers of the shares of our common stock offered hereby by U.S. holders may not be exempt from
state securities laws. In such event, it will be the responsibility of the holder of shares to register or qualify the shares
for any subsequent offer, transfer or sale in the United States or to determine that any such offer, transfer or sale is exempt
under applicable state securities laws.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="s_005"></A><B>USE OF PROCEEDS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We estimate that the net proceeds
from this offering, after deducting underwriting discounts and commissions and estimated offering expenses payable by us,
will be approximately $[&bull;] million, or approximately $[&bull;] million if the underwriter exercises its overallotment
option in full. We intend to use the net proceeds from this offering for working capital and other general corporate
purposes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We have not yet determined the amount of
net proceeds to be used specifically for any of the foregoing purposes. Accordingly, our management will have significant discretion
and flexibility in applying the net proceeds from this offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="s_006"></A><B>DIVIDEND POLICY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We have never paid any cash dividends and
do not anticipate paying any cash dividends in the foreseeable future. We anticipate that we will retain any earnings and other
cash resources for investment in our business. The payment of dividends on our common stock is subject to the discretion of our
board of directors and will depend on our operations, financial position, financial requirements, general business conditions,
restrictions imposed by financing arrangements, if any, legal restrictions on the payment of dividends and other factors that
our board of directors deems relevant.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="s_007"></A><B>DILUTION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If you purchase shares of common stock
in this offering, your interest will be diluted to the extent of the difference between the offering price per unit of our common
stock and the net tangible book value per share of our common stock after this offering. Our net tangible book value as of September
30, 2014 was approximately $(335,000) or $(0.01) per share of common stock. &ldquo;Net tangible book value&rdquo; is total assets
minus the sum of liabilities and intangible assets. &ldquo;Net tangible book value per share&rdquo; is net tangible book value
divided by the total number of shares of common stock outstanding.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">After giving effect to the sale by us
of [&bull;] shares of our common stock in this offering at the public offering price of $[&bull;] per share, and after
deducting underwriting discounts and commissions, and $120,000 of estimated offering expenses payable by us, our net tangible
book value as of September 30, 2014 would have been approximately $[&bull;], or $[&bull;] per share of common stock. This
amount represents an immediate increase in net tangible book value of $[&bull;] per share to existing stockholders and an
immediate dilution of $[&bull;] per share to purchasers in this offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table
illustrates the dilution:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 93%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; margin-left: 0.5in">
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: bottom; width: 75%"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Public offering price
    per unit</FONT></td>
    <TD STYLE="vertical-align: bottom; width: 1%; text-align: left">&nbsp;</td>
    <TD STYLE="vertical-align: bottom; width: 10%; text-align: right">&nbsp;</td>
    <TD STYLE="vertical-align: bottom; width: 1%">&nbsp;</td>
    <TD STYLE="vertical-align: top; width: 1%">&nbsp;</td>
    <TD STYLE="vertical-align: bottom; width: 1%; text-align: left"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">$</FONT></td>
    <TD STYLE="vertical-align: bottom; width: 10%; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">_____</FONT></td>
    <TD STYLE="vertical-align: bottom; width: 1%">&nbsp;</td></tr>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Net tangible book value per share
    as of September 30, 2014</FONT></td>
    <TD STYLE="vertical-align: bottom; text-align: left"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">$</FONT></td>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">(0.01</FONT></td>
    <TD STYLE="vertical-align: bottom">)</td>
    <TD STYLE="vertical-align: top">&nbsp;</td>
    <TD STYLE="vertical-align: bottom; text-align: left">&nbsp;</td>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</td>
    <TD STYLE="vertical-align: bottom">&nbsp;</td></tr>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: bottom; border-bottom: white 1pt solid"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Increase
    in net tangible book value per share after this offering</FONT></td>
    <TD STYLE="vertical-align: bottom; border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">$</FONT></td>
    <TD STYLE="vertical-align: bottom; border-bottom: Black 1pt solid">&nbsp;</td>
    <TD STYLE="vertical-align: bottom; padding-bottom: 1pt">&nbsp;</td>
    <TD STYLE="vertical-align: top; border-bottom: white 1pt solid">&nbsp;</td>
    <TD STYLE="vertical-align: bottom; border-bottom: white 1pt solid; text-align: left">&nbsp;</td>
    <TD STYLE="vertical-align: bottom; border-bottom: white 1pt solid; text-align: right">&nbsp;</td>
    <TD STYLE="vertical-align: bottom; border-bottom: white 1pt solid">&nbsp;</td></tr>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: bottom; border-bottom: white 1pt solid"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Pro
    forma net tangible book value per share after this offering</FONT></td>
    <TD STYLE="vertical-align: bottom; border-bottom: white 1pt solid; text-align: left">&nbsp;</td>
    <TD STYLE="vertical-align: bottom; border-bottom: white 1pt solid; text-align: right">&nbsp;</td>
    <TD STYLE="vertical-align: bottom; border-bottom: white 1pt solid">&nbsp;</td>
    <TD STYLE="vertical-align: top; border-bottom: white 1pt solid">&nbsp;</td>
    <TD STYLE="vertical-align: bottom; border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">$</FONT></td>
    <TD STYLE="vertical-align: bottom; border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">(_____</FONT></td>
    <TD STYLE="vertical-align: bottom; padding-bottom: 1pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">)</FONT></td></tr>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: bottom">&nbsp;</td>
    <TD STYLE="vertical-align: bottom; text-align: left">&nbsp;</td>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</td>
    <TD STYLE="vertical-align: bottom">&nbsp;</td>
    <TD STYLE="vertical-align: top">&nbsp;</td>
    <TD STYLE="vertical-align: bottom; text-align: left">&nbsp;</td>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</td>
    <TD STYLE="vertical-align: bottom">&nbsp;</td></tr>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: bottom; padding-bottom: 2.5pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Dilution
    per share to new investors in this offering</FONT></td>
    <TD STYLE="vertical-align: bottom; padding-bottom: 2.5pt; text-align: left">&nbsp;</td>
    <TD STYLE="vertical-align: bottom; padding-bottom: 2.5pt; text-align: right"></td>
    <TD STYLE="vertical-align: bottom; padding-bottom: 2.5pt">&nbsp;</td>
    <TD STYLE="vertical-align: top; padding-bottom: 2.5pt">&nbsp;</td>
    <TD STYLE="vertical-align: bottom; border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">$</FONT></td>
    <TD STYLE="vertical-align: bottom; border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">_____</FONT></td>
    <TD STYLE="vertical-align: bottom; padding-bottom: 2.5pt">&nbsp;</td></tr>
</table>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If the underwriter&rsquo;s over-allotment
option is exercised in full, our net tangible book value at September 30, 2014 would have been approximately $[&bull;] million,
or approximately $[&bull;] per share of common stock, and the dilution to investors purchasing units in this offering would have
been approximately $[&bull;] per share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The above discussion and table is based
on 42,213,654 shares outstanding, and excludes, as of that date:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>6,851,941 shares of our common stock that have been reserved
                                         for issuance upon exercise of outstanding warrants with a weighted average exercise price
                                         of $4.65 per share (decreased to 6,631,941 shares, with a weighted average exercise price
                                         of $4.69 per share as of December 19, 2014);</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>4,945,095 shares of our common stock subject to outstanding
                                         options with a weighted average exercise price of $2.47 per share (increased to 4,978,595 shares with a weighted average price per share of $2.46 as of December 19, 2014);</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>260,180 shares of our common stock reserved for issuance
                                         upon the conversion of an outstanding convertible promissory note, dated December 30,
                                         2011;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&bull;</FONT></TD><TD STYLE="text-align: justify">243,750 restricted shares of common stock issued on
December 18, 2014 under our 2013 Employee, Director and Consultant Equity Incentive Plan; and</TD>
</TR></TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>1,034,317 shares of our common stock reserved for issuance
                                         in connection with future awards under our 2013 Employee, Director and Consultant Equity
                                         Incentive Plan (decreased to 882,067 shares as of December 19, 2014).</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The above illustration of dilution per
share to the investors participating in this offering assumes no exercise of outstanding options or warrants to purchase, and
no conversion of convertible debt into, shares of our common stock. To the extent that these outstanding options, warrants and
convertible debt securities, or options and warrants issued hereafter, have been or may be exercised or converted or other shares
issued, the investors purchasing shares of common stock in this offering may experience further dilution. In addition, we may
choose to raise additional capital due to market conditions or strategic considerations even if we believe we have sufficient
funds for our current or future operating plans. To the extent that additional capital is raised through the sale of equity or
convertible debt securities, the issuance of these securities could result in further dilution to our stockholders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="s_008"></A><B>DESCRIPTION OF COMMON STOCK</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The material terms and provisions of our
common stock are described under the caption &ldquo;Description of Common Stock&rdquo; beginning on page 23 of the accompanying
prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Arial, Helvetica, Sans-Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="s_009"></A><B>UNDERWRITING (CONFLICT OF INTEREST)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Conflict of Interest</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Robert Fagenson, our Board chairman, is
also the chairman of the board of directors of National Holdings Corporation, the parent company of National Securities Corporation.
Therefore, due to Mr. Fagenson holding those positions with our company and National Holdings Corporation, we are under common
control with National Securities Corporation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Because we are under common
control with National Securities Corporation, National Securities Corporation is deemed to have a &ldquo;conflict of
interest&rdquo; under Rule 5121(f)(5) of the Conduct Rules of FINRA. Accordingly, this offering will be made in compliance
with Rule 5121(a)(2) of FINRA&rsquo;s Conduct Rules, which requires that a &ldquo;qualified independent underwriter,&rdquo;
as defined by  FINRA, participate in the preparation of the registration statement and the prospectus and exercise the usual
standards of due diligence in respect thereto. We have engaged Chardan Capital Markets, LLC (&ldquo;Chardan&rdquo;), to
render services as a &ldquo;qualified independent underwriter&rdquo;  within the meaning of FINRA Rule 5121 and participate
in the preparation of the registration statement and exercise the usual standards of due diligence in respect thereto. We
will pay Chardan a fee of $50,000 in consideration for its services and expenses as a &ldquo;qualified independent
underwriter.&rdquo; Chardan will receive no other compensation in connection with this offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Underwriting</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We have entered into an underwriting agreement
with the underwriter named below (the &ldquo;Underwriter&rdquo;), pursuant to which the Underwriter has agreed to purchase
from us [&bull;] shares of our common stock to be sold in this offering at the public offering price set forth on the cover page
of this prospectus supplement, less the underwriting discount.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 70%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.5in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>Underwriter</B></FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Number of Shares</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 71%; text-align: left; padding-left: 0">National Securities Corporation</TD><TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left"></TD><TD STYLE="width: 25%; text-align: right"></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.75in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Underwriter is offering the shares,
subject to prior sale, when, as and if issued to and accepted by it, subject to approval of legal matters by its counsel,
including the validity of the shares, and other conditions contained in the underwriting agreement, such as the receipt by the
Underwriter of officer&rsquo;s certificates and legal opinions. The Underwriter reserves the right to withdraw, cancel or modify
offers to the public and to reject orders in whole or in part.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Underwriter has advised us that it
proposes to initially offer the shares of common stock to the public at $[&bull;]<FONT STYLE="font-family: Times New Roman, Times, Serif"> </FONT>per
share. The Underwriter proposes to offer the shares to certain dealers at the same price less a concession of not more than
$[&bull;]<FONT STYLE="font-family: Times New Roman, Times, Serif"> </FONT>per share. After the initial offering of the
shares, the Underwriter may from time to time vary the offering prices and other selling terms.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><I>Over-allotment option to purchase additional
shares</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We have granted to the Underwriter an
option to purchase up to [&bull;] additional shares of common stock from us at the same price to the public, less the same underwriting
discount, as set forth in the table below. The Underwriter may exercise this option any time during the 45-day period after the
date of this prospectus supplement, but only to cover over-allotments, if any, including as described below.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><I>Underwriting discount and expenses</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following table summarizes the underwriting
discounts and fees that we will pay to the Underwriter. These amounts are shown assuming both no exercise and full exercise of
the over-allotment option. We have also agreed to pay up to $90,000 of the out-of-pocket fees and expenses of the Underwriter,
which include the fees and expenses of counsel to the Underwriter. The fees and expenses of the Underwriter that we have agreed
to reimburse are not included in the underwriting discount set forth in the table below. The underwriting discount was determined
through arms&rsquo; length negotiations between us and the Underwriter.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
    <TD STYLE="padding-top: 0; padding-bottom: 3pt; padding-right: 0"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></td>
    <TD STYLE="padding-top: 0; text-align: center; padding-right: 0"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></td>
    <TD COLSPAN="5" STYLE="padding-top: 0; text-align: center; padding-right: 0"><FONT STYLE="font: 8pt Times New Roman, Times, Serif"><B>TOTAL
    FEES</B></FONT></td></tr>
<tr style="vertical-align: bottom">
    <TD NOWRAP STYLE="width: 21%; padding-top: 3pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></td>
    <TD NOWRAP STYLE="width: 1%; padding-top: 3pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></td>
    <TD NOWRAP STYLE="border-bottom: Black 1pt solid; padding-top: 3pt; text-align: center; width: 25%"><FONT STYLE="font: 8pt Times New Roman, Times, Serif">Per
    Share Underwriting</FONT><FONT STYLE="font-size: 8pt"><br>
    <FONT STYLE="font-family: Times New Roman, Times, Serif">Discount</FONT></FONT></td>
    <TD NOWRAP STYLE="padding-top: 3pt; text-align: center; width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></td>
    <TD NOWRAP STYLE="border-bottom: Black 1pt solid; padding-top: 3pt; text-align: center; width: 25%"><FONT STYLE="font: 8pt Times New Roman, Times, Serif">Without
    Exercise of Option to Purchase</FONT><FONT STYLE="font-size: 8pt"><br>
    <FONT STYLE="font-family: Times New Roman, Times, Serif">Additional Shares</FONT></FONT></td>
    <TD NOWRAP STYLE="padding-top: 3pt; text-align: center; width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></td>
    <TD NOWRAP STYLE="border-bottom: Black 1pt solid; padding-top: 3pt; text-align: center; width: 25%"><FONT STYLE="font: 8pt Times New Roman, Times, Serif">With
    Full Exercise of Option to Purchase</FONT><FONT STYLE="font-size: 8pt"><br>
    <FONT STYLE="font-family: Times New Roman, Times, Serif">Additional Shares</FONT></FONT></td></tr>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-top: 3pt"><FONT STYLE="font: 8pt Times New Roman, Times, Serif">Underwriting discount to be paid by us</FONT></td>
    <TD STYLE="padding-top: 3pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></td>
    <TD STYLE="padding-top: 3pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></td>
    <TD STYLE="padding-top: 3pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></td>
    <TD STYLE="padding-top: 3pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></td>
    <TD STYLE="padding-top: 3pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></td>
    <TD STYLE="padding-top: 3pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></td></tr>
</table>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We estimate that the total expenses of
the offering, excluding the underwriting discount, will be approximately $[&bull;]. This includes $90,000 of fees and expenses
of the underwriter. These expenses are payable by us.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We also have agreed to indemnify the Underwriter
and its officers, directors, principals, employees, affiliates and shareholders against certain liabilities, including
civil liabilities under the Securities Act, resulting from this offering and to contribute to payments the Underwriter may be
required to make in respect of such liabilities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">After deducting fees due to the Underwriter
and our estimated offering expenses, we expect the net proceeds from this offering to be approximately $[&bull;].</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Market for common stock</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our common stock is traded on the NYSE
MKT under the symbol &ldquo;DSS&rdquo;.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><I>Stabilization</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">To facilitate the offering, the Underwriter
may engage in transactions that stabilize, maintain or otherwise affect the price of the common stock during and after the offering.
Specifically, the Underwriter may over-allot or otherwise create a short position in the common stock for its own account
by selling more shares of common stock than have been sold to it by us. The Underwriter may elect to cover any such short position
by purchasing shares of common stock in the open market or by exercising the over-allotment option granted to the Underwriter.
In addition, the Underwriter may stabilize or maintain the price of the common stock by bidding for or purchasing shares of common
stock in the open market and may impose penalty bids. If penalty bids are imposed, selling concessions allowed to broker-dealers
participating in the offering are reclaimed if shares of common stock previously distributed in the offering are repurchased,
whether in connection with stabilization transactions or otherwise. The effect of these transactions may be to stabilize or maintain
the market price of the common stock at a level above that which might otherwise prevail in the open market. The imposition of
a penalty bid may also affect the price of the common stock to the extent that it discourages resales of the common stock. The
magnitude or effect of any stabilization or other transactions is uncertain. These transactions may be effected on the NYSE MKT,
in the over-the-counter market or otherwise and, if commenced, may be discontinued at any time. Neither we nor the Underwriter
make any representation or prediction as to the effect that the transactions described above may have on the price of our common
stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><I>Passive market making</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In connection with this offering, the Underwriter
(and any dealers that are members of the selling group) may also engage in passive market making transactions in the common stock.
Passive market making consists of displaying bids limited by the prices of independent market makers and effecting purchases limited
by those prices in response to order flow. Rule 103 of Regulation M promulgated by the SEC limits the amount of net purchases
that each passive market maker may make and the displayed size of each bid. Passive market making may stabilize the market price
of the common stock at a level above that which might otherwise prevail in the open market and, if commenced, may be discontinued
at any time.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><I>Electronic offer, sale and distribution
of shares</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">A prospectus supplement in electronic format
may be made available on the websites maintained by the Underwriter and the Underwriter may distribute prospectus supplements
electronically. In those cases, prospective investors may view offering terms and a prospectus supplement online and place orders
online or through their financial advisors. Other than the prospectus supplement in electronic format, the information on these
websites is not part of this prospectus supplement, the accompanying prospectus or the registration statement of which this prospectus
supplement and the accompanying prospectus form a part, has not been approved or endorsed by us or the Underwriter, and should
not be relied upon by investors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Offer restrictions outside the United States</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Other than in the United States, no action
has been taken by us or the Underwriter that would permit a public offering of the securities offered by this prospectus supplement
in any jurisdiction where action for that purpose is required. The securities offered by this prospectus supplement may not be
offered or sold, directly or indirectly, nor may this prospectus supplement or any other offering material or advertisements in
connection with the offer and sale of any such securities be distributed or published in any jurisdiction, except under circumstances
that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons who come into possession
of this prospectus supplement are advised to inform themselves about and to observe any restrictions relating to the offering
and the distribution of this prospectus supplement. This prospectus supplement does not constitute an offer to sell or a solicitation
of an offer to buy any securities offered by this prospectus supplement in any jurisdiction in which such an offer or a solicitation
is unlawful.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Lock-Up</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our officers and directors have agreed to
a 90-day &ldquo;lock-up&rdquo; with respect to shares of our common stock and other of our securities that they beneficially own,
including securities that are convertible into shares of common stock and securities that are exchangeable or exercisable for shares
of common stock. This means that, subject to certain exceptions, for a period of 90 days following the date of this prospectus
supplement, such persons may not offer, sell, pledge or otherwise dispose of these securities without the prior written consent
of National Securities Corporation. We agreed, subject to certain exceptions, for a period of 90 days following the date of this
prospectus supplement, not to offer, sell, pledge or otherwise dispose of shares of our common stock and other of our securities,
including securities that are convertible into shares of common stock and securities that are exchangeable or exercisable for shares
of common stock, without the prior written consent of National Securities Corporation.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="s_010"></A><B>LEGAL MATTERS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The validity of the securities being offered
hereby will be passed upon by Wyrick Robbins Yates&nbsp;&amp; Ponton, LLP, Raleigh, North Carolina. Duane Morris LLP is acting
as counsel for the Underwriter in connection with this offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="s_011"></A><B>EXPERTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The audited financial statements incorporated
by reference in this prospectus supplement have been so incorporated by reference in reliance upon the report of FreedMaxick CPAs,
P.C., independent registered public accountants, upon the authority of said firm as experts in accounting and auditing in giving
said report.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="s_012"></A><B>WHERE YOU CAN FIND MORE INFORMATION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We are subject to the reporting requirements
of the Securities Exchange Act of 1934, as amended, and file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy these reports, proxy statements and other information at the SEC&rsquo;s public
reference facilities at 100&nbsp;F Street, N.E., Room&nbsp;1580, Washington,&nbsp;D.C. 20549. You can request copies of these
documents by writing to the SEC and paying a fee for the copying cost. Please call the SEC at 1-800-SEC-0330 for more information
about the operation of the public reference facilities. SEC filings are also available at the SEC&rsquo;s web site at http://www.sec.gov.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">This prospectus supplement and the accompanying
prospectus are only part of a registration statement on Form&nbsp;S-3 that we have filed with the SEC under the Securities Act
of 1933, as amended, and therefore omit certain information contained in the registration statement. We have also filed exhibits
and schedules with the registration statement that are excluded from this prospectus supplement and the accompanying prospectus,
and you should refer to the applicable exhibit or schedule for a complete description of any statement referring to any contract
or other document. You may inspect a copy of the registration statement, including the exhibits and schedules, without charge,
at the public reference room or obtain a copy from the SEC upon payment of the fees prescribed by the SEC.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="s_013"></A><B>INCORPORATION OF CERTAIN INFORMATION
BY REFERENCE</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The SEC allows us
to &ldquo;incorporate by reference&rdquo; information that we file with them. Incorporation by reference allows us to
disclose important information to you by referring you to those other documents. The information incorporated by reference is
an important part of this prospectus supplement and the accompanying prospectus, and information that we file later with the
SEC will automatically update and supersede this information. We filed a registration statement on Form&nbsp;S-3 under
the Securities Act of 1933, as amended, with the SEC with respect to the securities being offered pursuant to this
prospectus supplement. This prospectus supplement and the accompanying prospectus  omit certain information contained in the
registration statement, as permitted by the SEC. You should refer to the registration statement, including the exhibits, for
further information about us and the securities being offered pursuant to this prospectus supplement. Statements in this
prospectus supplement and the accompanying prospectus regarding the provisions of certain documents filed with, or
incorporated by reference in, the registration statement are not necessarily complete and each statement is qualified in all
respects by that reference. Copies of all or any part of the registration statement, including the documents incorporated by
reference or the exhibits, may be obtained upon payment of the prescribed rates at the offices of the SEC listed above in
&ldquo;Where You Can Find More Information.&rdquo; The documents we are incorporating by reference are:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD><FONT STYLE="font-size: 10pt">our Annual Report on Form
                                         10-K for the fiscal year ended December 31, 2013, filed with the SEC on March 26, 2014;
                                         </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD><FONT STYLE="font-size: 10pt">our Quarterly Report on Form
                                         10-Q for the quarter ended March 31, 2014, filed with the SEC on May 13, 2014; </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD><FONT STYLE="font-size: 10pt">our Quarterly Report on Form
                                         10-Q for the quarter ended June 30, 2014, filed with the SEC on August 12, 2014; </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD><FONT STYLE="font-size: 10pt">our Quarterly Report on Form
                                         10-Q for the quarter ended September 30, 2014, filed with the SEC on November 13, 2014</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD><FONT STYLE="font-size: 10pt">our Current Reports on Form
                                         8-K filed with the SEC on February 18, May 7, June 5, June 13, September 22, October
                                         29,  November 6 and November 13, 2014;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD><FONT STYLE="font-size: 10pt">our definitive proxy statement
                                         on Schedule 14A for the 2014 Annual Meeting of Stockholders filed with the SEC on April
                                         21, 2014; and</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD><FONT STYLE="font-size: 10pt">the description of our Common
                                         Stock, which is registered under Section&nbsp;12 of the Exchange Act, in our registration
                                         statement on Form 8-A, filed with the SEC on April 19, 2004, including any amendments
                                         or reports filed for the purpose of updating such description.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48.95pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48.95pt">In addition, all documents (other than
current reports furnished under Item&nbsp;2.02 or Item&nbsp;7.01 of Form 8-K and exhibits filed in such forms that are related
to such items unless such Form 8-K expressly provides to the contrary) subsequently filed by us pursuant to Section&nbsp;13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, before the date our offering is terminated or completed
are deemed to be incorporated by reference into, and to be a part of, this prospectus supplement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48.95pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48.95pt">Any statement contained in
this prospectus supplement, the accompanying prospectus or in a document incorporated or deemed to be incorporated by
reference herein or therein will be deemed to be modified or superseded for purposes of this prospectus supplement and the
accompanying prospectus to the extent that a statement contained in this prospectus supplement, the accompanying prospectus
or any other subsequently filed document that is deemed to be incorporated by reference into this prospectus supplement or
the accompanying prospectus modifies or supersedes the statement. Any statement so modified or superseded will not be deemed,
except as so modified or superseded, to constitute a part of this prospectus supplement or the accompanying prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48.95pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48.95pt">We will furnish without charge to you,
on written or oral request, a copy of any or all of the documents incorporated by reference, including exhibits to these documents.
You should direct any requests for documents to Document Security Systems, Inc., First Federal Plaza, Suite 1525, Rochester, NY
14614, (585) 325-3610.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48.95pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48.95pt">You should rely only on information
contained in, or incorporated by reference into, this prospectus supplement and the accompanying prospectus. We have not
authorized anyone to provide you with information different from that contained in this prospectus supplement,
the accompanying prospectus or incorporated by reference herein or therein. We are not making offers to sell the securities
in any jurisdiction in which such an offer or solicitation is not authorized or in which the person making such offer
or solicitation is not qualified to do so or to anyone to whom it is unlawful to make such offer or solicitation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>PROSPECTUS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><IMG SRC="image_001.jpg" ALT="Description: logo_dss" STYLE="height: 73px; width: 183px"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>DOCUMENT SECURITY SYSTEMS,&nbsp;INC.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&nbsp;15,000,000 shares</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Common Stock</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Warrants</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>__________________________________</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We may offer and sell, from time to time
in one or more offerings up to 15,000,000 shares of our common stock and/or warrants to purchase common stock. <FONT STYLE="background-color: white">We
will provide more specific terms of such offering and sale of our common stock in supplements to this prospectus</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our common stock, is traded on The NYSE
MKT under the symbol DSS. On October 10, 2013, the last reported sale price of our common stock was $1.05.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The shares of common stock offered by us
may be sold directly by us, through dealers or agents designated from time to time, to or through underwriters or dealers or through
a combination of these methods on a continuous or delayed basis. &nbsp;See &ldquo;Plan of Distribution&rdquo; in this prospectus.
&nbsp;We may also describe the plan of distribution for any particular offering of our securities in a prospectus supplement. If
any agents, underwriters or dealers are involved in the sale of any securities in respect of which this prospectus is being delivered,
we will disclose their names and the nature of our arrangements with them in a prospectus supplement. The net proceeds we expect
to receive from any such sale will also be included in a prospectus supplement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>Investing in our securities involves
various risks. &nbsp;See &ldquo;Risk Factors&rdquo; contained herein for more information on these risks. &nbsp;Additional risks
will be described in the related prospectus supplements under the heading &ldquo;Risk Factors&rdquo;.&nbsp; You should review that
section of the related prospectus supplements for a discussion of matters that investors in our securities should consider.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>Neither the Securities and Exchange Commission
nor any state securities commission has approved or disapproved of these securities, or passed upon the adequacy or accuracy of
this prospectus or any accompanying prospectus supplement. &nbsp;Any representation to the contrary is a criminal offense.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The date of this prospectus is
November 1, 2013.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>




<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>TABLE OF CONTENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 95%">&nbsp;</TD>
    <TD STYLE="width: 5%; border-bottom: Black 1pt solid; text-align: center"><B>Page</B></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: #cceeff">
    <TD>About this Prospectus</TD>
    <TD STYLE="text-align: right">1</TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: #cceeff">
    <TD>Our Business</TD>
    <TD STYLE="text-align: right">1</TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: #cceeff">
    <TD>Risk Factors</TD>
    <TD STYLE="text-align: right">4</TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: #cceeff">
    <TD>Disclosure Regarding Forward-Looking Information</TD>
    <TD STYLE="text-align: right">20</TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: #cceeff">
    <TD>Use of Proceeds</TD>
    <TD STYLE="text-align: right">21</TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: #cceeff">
    <TD>The Securities We May Offer</TD>
    <TD STYLE="text-align: right">22</TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: #cceeff">
    <TD>Description of Common Stock</TD>
    <TD STYLE="text-align: right">23</TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: #cceeff">
    <TD>Description of Warrants</TD>
    <TD STYLE="text-align: right">24</TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: #cceeff">
    <TD>Plan of Distribution</TD>
    <TD STYLE="text-align: right">26</TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: #cceeff">
    <TD>Legal Matters</TD>
    <TD STYLE="text-align: right">28</TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: #cceeff">
    <TD>Experts</TD>
    <TD STYLE="text-align: right">28</TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: #cceeff">
    <TD>Where You Can Find More Information</TD>
    <TD STYLE="text-align: right">28</TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: #cceeff">
    <TD>Incorporation of Certain Documents By Reference</TD>
    <TD STYLE="text-align: right">28</TD></TR>
</TABLE>

<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>ABOUT THIS PROSPECTUS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: black">This prospectus
is part of a shelf registration statement that we filed with the Securities and Exchange Commission (the &ldquo;SEC&rdquo;) using
a &ldquo;shelf&rdquo; registration process. Under this shelf registration process, we may sell up to </FONT>15,000,000 <FONT STYLE="color: black">shares
of our common stock and /or warrants to purchase common stock in one or more offerings from time to time</FONT>. This prospectus
provides you with a general description of the securities we may offer. Each time we offer securities, we will provide you
with a prospectus supplement that describes the specific amounts, prices and terms of the securities we offer. The prospectus
supplement also may add, update or change information contained in this prospectus. You should read carefully both this prospectus
and any prospectus supplement together with additional information described below under the caption &ldquo;Where You Can Find
More Information.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">This prospectus does not contain all the
information provided in the registration statement we filed with the SEC. You should read both this prospectus, including the section
titled &ldquo;Risk Factors,&rdquo; and the accompanying prospectus supplement, together with the additional information described
under the heading &ldquo;Where You Can Find More Information.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">You should rely only on the information
contained or incorporated by reference in this prospectus or a prospectus supplement. We have not authorized any other person to
provide you with different information. If anyone provides you with different or inconsistent information, you should not rely
on it. This prospectus is not an offer to sell securities, and it is not soliciting an offer to buy securities in any jurisdiction
where the offer or sale is not permitted. You should assume that the information appearing in this prospectus or any prospectus
supplement, as well as information we have previously filed with the SEC and incorporated by reference, is accurate as of the date
on the front of those documents only. Our business, financial condition, results of operations and prospects may have changed since
those dates.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>OUR BUSINESS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>General</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">This summary highlights selected information
about us, but may not contain all information that may be important to you. The following summary is qualified in its entirety
by the more detailed information included in or incorporated by reference into this prospectus. Before making your investment decision,
you should carefully read this entire prospectus, any applicable prospectus supplement, and the documents referred to in the following
sections &ldquo;<I>Incorporation of Certain Information by Reference</I>&rdquo; and &ldquo;<I>Where You Can Find More Information</I>&rdquo;.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As used in this prospectus, references to
&ldquo;the Company&rdquo;, &ldquo;we&rdquo;, &ldquo;our&rdquo;, &ldquo;ours&rdquo; and &ldquo;us&rdquo; refer to Document Security
Systems, Inc. and consolidated subsidiaries, unless otherwise indicated. References to &ldquo;DSS&rdquo; refer to Document Security
Systems, Inc. In addition, references to our &ldquo;financial statements&rdquo; are to our consolidated financial statements except
as the context otherwise requires.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We prepare our financial statements in United
States dollars and in accordance with generally accepted accounting principles as applied in the United States, referred to as
U.S. GAAP. In this prospectus, references to &ldquo;$&rdquo; and &ldquo;dollars&rdquo; are to United States dollars.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 3pt"><B>Overview</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We were formed in New York in 1984 and,
in 2002, chose to strategically focus on becoming a developer and marketer of secure technologies. We specialize in fraud and counterfeit
protection for all forms of printed documents and digital information. The Company holds numerous patents for optical deterrent
technologies that provide protection of printed information from unauthorized scanning and copying. We operate three production
facilities, a security and commercial printing facility, a packaging facility and a plastic card facility- where we produce secure
and non-secure documents for our customers. We license our anti-counterfeiting technologies to printers and brand-owners. In addition,
we have a digital division which provides cloud computing services for its customers, including disaster recovery, back-up and
data security services.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Prior to 2006, the Company&rsquo;s primary
revenue source in its document security division was derived from the licensing of its technology. In 2006, the Company began a
series of acquisitions designed to expand its ability to produce its products for end-user customers. In 2006, we acquired Plastic
Printing Professionals, Inc. (&ldquo;P3&rdquo;), a privately held plastic cards manufacturer located in the San Francisco, California
area. P3 is also referred to herein as the &ldquo;DSS Plastics Group&rdquo;. In 2008, we acquired substantially all of the assets
of DPI of Rochester, LLC, a privately held commercial printer located in Rochester, New York, referred to herein as &ldquo;Secuprint&rdquo;
or &ldquo;DSS Printing Group&rdquo;. In 2010, the Company acquired Premier Packaging Corporation (&ldquo;Premier Packaging&rdquo;),
a privately held packaging company located in the Rochester New York area. Premier Packaging is also referred to herein as the
&ldquo;DSS Packaging Group&rdquo;. In May 2011, we acquired all of the capital stock of ExtraDev, Inc. (&ldquo;ExtraDev&rdquo;),
a privately held information technology and cloud computing company located in the Rochester, New York area. ExtraDev is also referred
to herein as &ldquo;DSS Digital Group&rdquo;.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In October 2012, the Company introduced
AuthentiGuard&reg;, an iPhone application for authentication, targeted to major pharmaceutical and other companies worldwide. The
application is a cloud-enabled solution that permits efficient and cost effective authentication for packaging, documents and credentials.
The solution embeds customizable, covert AuthentiGuard&reg; Prism technology that resists duplication on copiers and scanners in
a product's packaging. Product verification using the iPhone application creates real-time, accurate authentication results for
brand owners that can be integrated into existing information systems.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Company does business in four operating
segments as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>DSS Printing Group</I></B>&nbsp;&mdash;&nbsp;Provides
secure and commercial printing services for end-user customers along with technical support for the Company&rsquo;s technology
licensees. The division produces a wide array of printed materials such as security paper, vital records, prescription paper, birth
certificates, receipts, manuals, identification materials, entertainment tickets, secure coupons, parts tracking forms, brochures,
direct mailing pieces, catalogs, business cards, etc. The division also provides the basis of research and development for the
Company&rsquo;s security printing technologies.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>DSS Plastics Group</I></B>&nbsp;&mdash;&nbsp;Manufactures
laminated and surface printed cards which can include magnetic stripes, bar codes, holograms, signature panels, invisible ink,
micro fine printing, guilloche patterns, Biometric, Radio Frequency Identification (RFID) and watermarks for printed plastic documents
such as ID cards, event badges, and driver&rsquo;s licenses.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>DSS Packaging Group</I></B>&nbsp;&mdash;&nbsp;Produces
custom paperboard packaging serving clients in the pharmaceutical, beverage, photo packaging, toy, specialty foods and direct marketing
industries, among others. The division incorporates our security technologies into printed packaging to help companies prevent
or deter brand and product counterfeiting.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>DSS Digital Group</I></B>&nbsp;&mdash;&nbsp;Provides
data center centric solutions to businesses and governments delivered via the &ldquo;cloud&rdquo;. This division developed the
Company&rsquo;s iPhone based application that integrates some of the Company&rsquo;s traditional optical deterrent technologies
into proprietary digital data security based solutions for brand protection and product diversion prevention.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Completion of Merger with DSS Technology
Management, Inc. </I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On July 1, 2013 (the &ldquo;<U>Closing Date</U>&rdquo;),
DSSIP, Inc., a Delaware corporation (&ldquo;<U>Merger Sub</U>&rdquo;) and a wholly-owned subsidiary of <U>DSS</U> merged with and
into DSS Technology Management., Inc. (<I>f/k/a</I> Lexington Technology Group, Inc.<B><I>)</I></B>, a Delaware corporation (&ldquo;<U>DSSTM</U>&rdquo;),
pursuant to the terms and conditions of the previously announced Agreement and Plan of Merger, dated as of October 1, 2012 (as
amended, the &ldquo;<U>Merger Agreement</U>&rdquo;), by and among the Company, DSSTM, Merger Sub and Hudson Bay Master Fund Ltd.
(&ldquo;<U>Hudson Bay</U>&rdquo;), as representative of DSSTM&rsquo;s stockholders (the &ldquo;<U>Merger</U>&rdquo;). Effective
on July 1, 2013 (the &ldquo;Closing Date&rdquo;), as a result of the Merger, DSSTM became a wholly-owned subsidiary of DSS. In
connection with the Merger, the Company issued on the Closing Date, its securities to DSSTM&rsquo;s stockholders in exchange for
the capital stock owned by DSSTM&rsquo;s stockholders, as follows (the &ldquo;<U>Merger Consideration</U>&rdquo;): (i) an aggregate
of 16,558,387 shares of the Company&rsquo;s common stock, par value $0.02 per share (the &ldquo;<U>Common Stock</U>&rdquo;)&nbsp;(which
includes 2,500,000 Additional Shares and 240,559 Exchanged Shares, as such terms are defined in the Merger Agreement); (ii) 7,100,000
shares of the Company&rsquo;s Common Stock to be held in escrow pursuant to an escrow agreement, dated July 1, 2013, entered into
by and among the Company, Hudson Bay and American Stock Transfer &amp; Trust Company, LLC, as escrow agent (the &ldquo;<U>Escrow
Agreement</U>&rdquo;); (iii) warrants to purchase up to an aggregate of 4,859,894 shares of the Company&rsquo;s Common Stock, at
an exercise price of $4.80 per share and expiring on July 1, 2018; and (iv) warrants to purchase up to an aggregate of 3,432,170
shares of the Company&rsquo;s Common Stock, at an exercise price of $0.02 per share and expiring on July 1, 2023 (the &ldquo;<U>$.02
Warrants</U>&rdquo;), to DSSTM&rsquo;s preferred stockholders that would beneficially own more than 9.99% of the shares of the
Company&rsquo;s Common Stock as a result of the Merger (the &ldquo;<U>Beneficial Ownership Condition</U>&rdquo;). In addition,
the Company assumed options to purchase an aggregate of 2,000,000 shares of the Company&rsquo;s Common Stock at an exercise price
of $3.00 per share, in exchange for 3,600,000 outstanding and unexercised stock options to purchase shares of DSSTM&rsquo;s common
stock. In addition, the Company issued an aggregate of 786,678 shares of Common Stock to Palladium Capital Advisors, LLC as compensation
for their services in connection with the transactions contemplated by the Merger Agreement. Of those shares issued to Palladium
Capital Advisors, LLC, 400,000 are held in escrow pursuant to the same terms and conditions as those set forth in the Escrow Agreement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As a result of the consummation of the Merger,&nbsp;as
of the Closing Date,&nbsp;the former stockholders of DSSTM own approximately 51% of the outstanding common stock of the combined
company and the stockholders of the Company prior to the completion of the Merger own approximately 49% of the outstanding common
stock of the combined company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Pursuant to the Escrow Agreement, the shares
of the Company&rsquo;s Common Stock deposited in the escrow account will be released to the holders of the DSSTM common stock (pro
rata on a fully-diluted basis as of the effective time of the Merger) if and when the closing price per share of the Company&rsquo;s
Common Stock exceeds $5.00 per share (as adjusted for stock splits, stock dividends and similar events) for 40 trading days within
a continuous 90 trading day period following the closing of the Merger. If within one year following the closing of the Merger,
such threshold is not achieved, the shares of the Company&rsquo;s Common Stock held in escrow shall be cancelled and returned to
the treasury of the Company. DSSTM stockholders will have voting rights with respect to the Company&rsquo;s shares owned by such
stockholders and held in escrow for one year following the closing of the Merger even though such shares may be cancelled and returned
to the treasury of the Company if the condition for release of the shares held in escrow is not met.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If after one year, the shares held in escrow
are cancelled because the conditions discussed above were not met, the former stockholders of DSSTM are expected to own approximately
45% of the outstanding common stock of the combined company and the stockholders of the Company prior to the completion of the
Merger are expected to own approximately 55% of the outstanding common stock of the combined company (without taking into account
any shares of the Company&rsquo;s Common Stock held by DSSTM&rsquo;s stockholders prior to the completion of the Merger, and excluding
the exercise of any options and warrants).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The transaction will be accounted for as
a business combination in accordance with the Business Combination Topic of the FASB ASC 805. Under the guidance, the assets and
liabilities of the acquired business, DSSTM, are recorded at their fair value at the date of acquisition. The excess of the purchase
price over the estimated fair values is recorded as goodwill, if any. If the fair value of the assets acquired exceeds the purchase
price and the liabilities assumed, then a gain on acquisition is recorded.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">DSSTM is a private intellectual property
monetization company that recently acquired a patent portfolio of six patents and four pending patent applications relating to
technology invented by Thomas Bascom (the &ldquo;Bascom Portfolio&rdquo;) and invested in VirtualAgility, a developer of user-friendly
programming platforms that facilitate the creation of sophisticated business applications without programming or coding. DSSTM
is focused on the economic benefits of intellectual property assets through acquiring or internally developing patents or other
intellectual property assets (or interests therein) and then monetizing such assets through a variety of value enhancing initiatives,
including, but not limited to:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 3%">&middot;</TD>
    <TD STYLE="width: 95%">Licensing, </TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&middot;</TD>
    <TD>customized technology solutions (such as applications for medical electronic health records),</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&middot;</TD>
    <TD>strategic partnerships, and</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&middot;</TD>
    <TD>litigation.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Our Corporate Information</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 15pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We are headquartered in Rochester, New York
and were incorporated in New York in 1984. Our principal offices are located at 28 East Main Street, Suite 1525, Rochester, New
York 14614 and our telephone number is (585) 325-3610. Our principal website is <I>www.dsssecure.com</I>. The information on or
that can be accessed through our website is not part of this prospectus.<FONT STYLE="color: black"> We have included our website
address as a factual reference and do not intend it to be an active link to our website.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 15pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>RISK FACTORS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><I>You should carefully consider the risks
described below before buying Common Stock offered in this offering. The risks and uncertainties described below are not the only
risks we face. Additional risks and uncertainties not currently known to us or that we currently deem immaterial may impair our
business operations. If any of the adverse events described in this risk factors section actually occur, our business, results
of operations and financial condition could be materially adversely affected, the trading price of our Common Stock could decline
and you might lose all or part of your investment. We have had operating losses from time to time and cannot assure that we will
be profitable in the foreseeable future. We make various statements in this section which constitute &ldquo;forward-looking&rdquo;
statements under Section 27A of the Securities Act.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><I>We have identified the following additional
risks and uncertainties that may have a material adverse effect on our business, financial condition or results of operations in
the future.&nbsp; &nbsp; References to the &ldquo;combined company&rdquo; made in this registration statement relate to the recent
business combination of DSS and DSSTM, whereby DSSTM became a wholly-owned subsidiary of DSS effective on July 1, 2013. Our business
faces significant risks, and the risks described below may not be the only risks we face.&nbsp; Additional risks not presently
known to us or that we currently believe are immaterial may also significantly impair our business operations.&nbsp; If any of
these risks occur, our business, results of operations or financial condition could suffer, the market price of our common stock
could decline and you could lose all or part of your investment in our common stock.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24pt"><B><I>The failure to integrate successfully
the businesses of DSS and DSSTM in the expected timeframe could adversely affect the combined company&rsquo;s future results.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The success of the recently closed Merger
will depend, in large part, on the ability of the combined company to realize the anticipated benefits from combining the businesses
of DSS and DSSTM.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The failure to integrate successfully and
to manage successfully the challenges presented by the integration process may result in the combined company&rsquo;s failure to
achieve some or all of the anticipated benefits of the Merger.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Potential difficulties that may be encountered
in the integration process include the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 3%">&bull;</TD>
    <TD STYLE="width: 95%">using the combined company&rsquo;s cash and other assets efficiently to develop the business of the combined company;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&bull;</TD>
    <TD>appropriately managing the liabilities of the combined company;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&bull;</TD>
    <TD>potential unknown or currently unquantifiable liabilities associated with the Merger and the operations of the combined company;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&bull;</TD>
    <TD>potential unknown and unforeseen expenses, delays or regulatory conditions associated with the Merger; and</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&bull;</TD>
    <TD>performance shortfalls resulting from &nbsp;diversion of management&rsquo;s attention to the task of&nbsp;&nbsp;efficiently integrating the companies&rsquo; operations.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>DSS may not realize the potential value and benefits created
by the Merger.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The success of the Merger will depend, in
part, on DSS&rsquo;s ability to realize the expected potential value and benefits created from integrating DSS&rsquo;s existing
business with DSSTM&rsquo;s business, which includes the maximization of the economic benefits of the combined company&rsquo;s
intellectual property portfolio. The integration process may be complex, costly, and time-consuming. The difficulties of integrating
the operations of DSSTM&rsquo;s business could include, among others:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 3%">&bull;</TD>
    <TD STYLE="width: 95%">failure to effectively implement the &nbsp;business plan for the combined business;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&bull;</TD>
    <TD>unanticipated issues in integrating the business of both companies;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&bull;</TD>
    <TD>potential lost sales and customers if any customer of DSS decides not to do business with DSS after the Merger;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&bull;</TD>
    <TD>loss of key employees with knowledge of DSS&rsquo;s historical business and operations;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&bull;</TD>
    <TD>unanticipated changes in applicable laws and regulations; and</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&bull;</TD>
    <TD>other unanticipated issues, expenses, or liabilities that could impact, among other things, DSS&rsquo;s ability to realize any expected benefits on a timely basis, or at all.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">DSS may not accomplish the integration of
DSSTM&rsquo;s business smoothly, successfully, or within the anticipated costs or time frame. The diversion of the attention of
management from DSS&rsquo;s current operations to the integration effort and any difficulties encountered in combining businesses
could prevent DSS from realizing the full expected potential value and benefits to result from the Merger and could adversely affect
its business. In addition, the integration efforts could divert the focus and resources of the management of DSS and DSSTM from
other strategic opportunities and operational matters during the integration process.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>If the Merger does not qualify as a &ldquo;reorganization&rdquo;
under Section 368(a) of the Internal Revenue Code (the &ldquo;Code&rdquo;), the stockholders of DSSTM may be required to pay substantial
United States federal income taxes as a result of the Merger.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">DSS and DSSTM intend that the Merger will
qualify as a &ldquo;reorganization&rdquo; under Section 368(a) of the Code. DSS and DSSTM currently anticipate that the United
States holders of shares of DSSTM capital stock generally should not recognize taxable gain or loss as a result of the Merger.
However, neither DSS nor DSSTM has requested, or intends to request, a ruling from the IRS with respect to the tax consequences
of the Merger, and there can be no assurance that the companies&rsquo; position would be sustained if challenged by the IRS. Accordingly,
if there is a final determination that the Merger does not qualify as a &ldquo;reorganization&rdquo; under Section 368(a) of the
Code and is taxable for United States federal income tax purposes, DSSTM stockholders generally would recognize taxable gain or
loss on their receipt of equity securities of DSS in connection with the Merger equal to the difference between such stockholder&rsquo;s
adjusted tax basis in their shares of DSSTM capital stock and the fair market value of the equity securities of DSS.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>The combined company will be dependent on certain key
personnel, and the loss of these key personnel could have a material adverse effect on the combined company&rsquo;s business, financial
conditions and results of operations.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The success and future prospects of the
combined company largely depend on the skills, experience and efforts of its key personnel, including Jeffrey Ronaldi, Peter Hardigan
and Robert Bzdick. The loss of Messrs. Ronaldi, Hardigan and/or Bzdick, or other executives and managers of the combined company,
or the combined company&rsquo;s failure to retain other key personnel, could jeopardize the combined company&rsquo;s ability to
execute its strategic plan and materially harm its business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I></I></B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>The Merger resulted in changes to the DSS board of directors
and the combined company may pursue different strategies than either DSS or DSSTM may have pursued independently.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The board of directors of DSS following
the Merger consists of eight (8) directors, four designated by DSSTM and four designated by DSS. Currently, it is anticipated that
the combined company will maximize the economic benefits of its intellectual property portfolio, add significant talent in technological
innovation and potentially enhance its opportunities for revenue generation through the monetization of the combined company&rsquo;s
assets. However, because the composition of the board of directors of the combined company will consist of directors from both
DSS and DSSTM, the combined company may determine to pursue certain business strategies that neither DSS nor DSSTM would have pursued
independently.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>The success of the combined company will depend in part
on relationships with third parties, which relationships may be affected by third-party preferences or public attitudes about the
Merger. Any adverse changes in these relationships could adversely affect the combined company&rsquo;s business, financial condition,
or results of operations.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The combined company&rsquo;s success will
be dependent on its ability to maintain and renew the business relationships of both DSS and DSSTM and to establish new business
relationships. There can be no assurance that the management of the combined company will be able to maintain such business relationships,
or enter into or maintain new business contracts and other business relationships, on acceptable terms, if at all. The failure
to maintain important business relationships could have a material adverse effect on the business, financial condition, or results
of operations of the combined company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Future results of the combined company may differ materially
from the unaudited pro forma financial statements presented in the Company&rsquo;s proxy statement/prospectus and the financial
forecasts prepared by DSS and DSSTM in connection with discussions concerning the Merger.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The future results of the combined company
may be materially different from those shown in the unaudited pro forma combined financial statements presented in the proxy statement/prospectus
filed by the Company with the SEC, which show only a combination of the historical results of DSS and DSSTM, prepared by DSS and
DSSTM in connection with the Merger. DSS expects to incur significant costs associated with combining the operations of the two
companies. The exact magnitude of these costs are not yet known, but are estimated to be approximately $1,000,000. Furthermore,
these costs may decrease the capital that the combined company could use for continued development of the combined company&rsquo;s
business in the future or may cause the combined company to seek to raise new capital sooner than expected.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>The combined company may require additional capital to
support its present business plan and its anticipated business growth, and such capital may not be available on acceptable terms,
or at all, which would adversely affect the combined company&rsquo;s ability to operate.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">DSS believes that the Bascom intellectual
property will significantly augment the scope and value of DSS&rsquo;s litigation and licensing business without impacting its
current operations or resource allocation plan.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Bascom Portfolio will expand upon DSS&rsquo;s
licensing potential and ability to compete within its current areas of commercial focus. DSS&rsquo;s primary commercial focus is
to develop integrated security solutions for authentication and brand protection that incorporate DSS&rsquo;s proprietary print
and digital technologies such as its suite of AuthentiGuard patents, the DSS Digital Group&rsquo;s cloud computing platform and
intellectual property, and customized software that delivers digital security solutions via standard handheld devices (such as
the apple iPhone) and the cloud. DSS anticipates that this commercial focus will benefit from the integration of technical &ldquo;know-how&rdquo;
from Thomas Bascom, the President and Chief Technology Officer of Bascom Research, as well as from the ability to use the current
Bascom Portfolio and any potential new derivative technologies that may be co-developed and licensed. DSS initially will be the
only competitor in the marketplace that is a licensee of the Bascom Portfolio, which may lead to additional licensing opportunities
for DSS with customers or competitors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Bascom Research intellectual property
licensing program provides a significant new potential income stream for DSS&rsquo;s litigation and licensing business that will
be funded by DSSTM, and as such, will not alter the current resource allocation for DSS&rsquo;s existing litigation and licensing
business. DSSTM has delivered approximately $6.25 million in capital (net of transaction fees) in connection with the Merger, which
will be used in part to fund the Bascom Research licensing effort. We do not expect that DSS capital resources will initially be
used for Bascom Research, and the Bascom Research effort will not initially divert other DSS resources aside from requiring some
oversight by the current DSS General Counsel, who will be involved in all ongoing litigation and licensing matters for the combined
company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The combined company may require additional
funds to further develop its business plan. Based on current operating plans of DSS and DSSTM, the current resources of the combined
company are expected to be sufficient to fund its planned operations into the fourth quarter of 2014. Since it is impossible to
predict the timing and amount of any recovery, if any, resulting from the DSSTM litigation, we anticipate that we will need to
raise additional funds through equity offerings in order to meet our liquidity requirements in the fourth quarter of 2014. However,
if revenues of DSS do not meet expectations or if operating expenses exceed expectations, or a combination of both, then the combined
company may require additional resources prior to the fourth quarter of 2014. Any such financing that DSS undertakes will likely
be dilutive to DSS&rsquo;s current stockholders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The combined company intends to continue
to make investments to support its business growth, including patent or other intellectual property asset creation. In addition,
the combined company may also need additional funds to respond to business opportunities and challenges, including its ongoing
operating expenses, protecting its assets, satisfying debt payment obligations, developing new lines of business and enhancing
its operating infrastructure. While the combined company may need to seek additional funding for such purposes, it may not be able
to obtain financing on acceptable terms, or at all. In addition, the terms of the combined company&rsquo;s financings may be dilutive
to, or otherwise adversely affect, holders of its common stock. The combined company may also seek additional funds through arrangements
with collaborators or other third parties. The combined company may not be able to negotiate any such arrangements on acceptable
terms, if at all. If the combined company is unable to obtain additional funding on a timely basis, it may be required to curtail
or terminate some or all of its business plans.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Risks Related to DSS&rsquo;s Business</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">DSS is currently subject to the additional
risks described below.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>DSS has a history of losses.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">DSS has a history of losses. In first six
months of 2013 and for the fiscal years of 2012, 2011, and 2010, DSS incurred losses of approximately $3.1 million, $4.3 million,
$3.2 million, and $3.5 million, respectively. DSS&rsquo;s results of operations in the future will depend on many factors, but
largely on DSS&rsquo;s ability to successfully market DSS&rsquo;s anti-counterfeiting products, technologies and services. DSS&rsquo;s
failure to achieve profitability in the future could adversely affect the trading price of its common stock and its ability to
raise additional capital and, accordingly, its ability to continue to grow its business. There can be no assurance that DSS will
succeed in addressing any or all of these risks, and the failure to do so could have a material adverse effect on DSS&rsquo;s business,
financial condition and operating results.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>DSS has a significant amount of indebtedness, some of
which is secured by its assets, and may be unable to satisfy its obligations to pay interest and principal thereon when due.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As of June 30, 2013, DSS has the following
significant amounts of outstanding indebtedness:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 5%">(i)</TD>
    <TD STYLE="width: 95%">$648,000 convertible promissory note bearing interest at 10% per annum due in full on December 29, 2015, or convertible into up to 260,180 shares of DSS Common Stock, secured by the assets of DSS&rsquo;s wholly-owned subsidiary, Secuprint. Interest is due quarterly.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 5%">(ii)</TD>
    <TD STYLE="width: 95%">$500,000 due under a term loan with Citizens Bank which matures February 1, 2015 and is payable in monthly payments of $25,000 plus interest. Interest accrues at 1 Month LIBOR plus 3.75%. DSS subsequently entered into an interest rate swap agreement to lock into a 5.7% effective interest rate over the life of the term loan.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 5%">(iii)</TD>
    <TD STYLE="width: 95%">Up to $1,000,000 in a revolving line of credit with Citizens Bank available for use by Premier Packaging, subject to certain limitations, payable in monthly installments of interest only. Interest accrues at 1 Month LIBOR plus 3.75%. As of June 30, 2013, there was approximately $70,000, net of the sweep account, outstanding on the line.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 5%">(iv)</TD>
    <TD STYLE="width: 95%">$1,159,000 due under a promissory note with Citizens Bank used to purchase DSS&rsquo;s packaging division facility. DSS is required to pay monthly installments of $7,658 plus interest until August 2021 at which time a balloon payment of the remaining principal balance of $919,677 is due. DSS subsequently entered into an interest rate swap agreement to lock into a 5.865% effective interest rate over the life of the term loan. The promissory note is secured by a first mortgage.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 5%">(v)</TD>
    <TD STYLE="width: 95%">$850,000 promissory note bearing interest at 9% per annum due in full on May 24, 2014 secured by certain equipment and the assets of DSS&rsquo;s wholly-owned subsidiary, Secuprint. Interest is due quarterly.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">All of the Citizens Bank credit facilities
are subject to various covenants including a fixed charge coverage ratio, tangible net worth and current ratio. The Citizens Bank
obligations are secured by all of the assets of Premier Packaging and are also secured through cross guarantees by DSS and its
other wholly-owned subsidiaries, P3 and Secuprint.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If DSS were to default on any of the above
indebtedness, and the creditors were to foreclose on secured assets, this could have a material adverse effect on DSS&rsquo;s business,
financial condition and operating results.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>If DSS is unable to adequately protect its intellectual
property, its competitive advantage may disappear.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The success of DSS will be determined in
part by its ability to obtain United States and foreign patent protection for its technology and to preserve its trade secrets.
Because of the substantial length of time and expense associated with developing new document security technology, DSS places considerable
importance on patent and trade secret protection. DSS intends to continue to rely primarily on a combination of patent protection,
trade secrets, technical measures, copyright protection and nondisclosure agreements with its employees and customers to establish
and protect the ideas, concepts and documentation of software and trade secrets developed by DSS. DSS&rsquo;s ability to compete
and the ability of its business to grow could suffer if these intellectual property rights are not adequately protected. There
can be no assurance that DSS&rsquo;s patent applications will result in patents being issued or that current or additional patents
will afford protection against competitors. Failure of DSS&rsquo;s patents, copyrights, trademarks and trade secret protection,
non-disclosure agreements and other measures to provide protection of its technology and its intellectual property rights could
enable DSS&rsquo;s competitors to more effectively compete with it and have an adverse effect on DSS&rsquo;s business, financial
condition and results of operations. In addition, DSS&rsquo;s trade secrets and proprietary know-how may otherwise become known
or be independently discovered by others. No guarantee can be given that others will not independently develop substantially equivalent
proprietary information or techniques, or otherwise gain access to DSS&rsquo;s proprietary technology.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In addition, DSS may be required to litigate
in the future to enforce its intellectual property rights, to protect its trade secrets, to determine the validity and scope of
the proprietary rights of others, or to defend against claims of infringement or invalidity. Any such litigation could result in
substantial costs and diversion of resources and could have a material adverse effect on DSS&rsquo;s business, financial condition
or results of operations, and there can be no assurances of the success of any such litigation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>DSS may face intellectual property infringement or other
claims against it, its customers or its intellectual property that could be costly to defend and result in its loss of significant
rights.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Although DSS has received patents with respect
to certain of its technologies, there can be no assurance that these patents will afford DSS any meaningful protection. Although
DSS believes that its use of the technology and products it has developed and other trade secrets used in its operations do not
infringe upon the rights of others, DSS&rsquo;s use of the technology and trade secrets it developed may infringe upon the patents
or intellectual property rights of others. In the event of infringement, DSS could, under certain circumstances, be required to
obtain a license or modify aspects of the technology and trade secrets it developed or refrain from using the same. DSS may not
have the necessary financial resources to defend an infringement claim made against it or be able to successfully terminate any
infringement in a timely manner, upon acceptable terms and conditions or at all. Failure to do any of the foregoing could have
a material adverse effect on DSS and its financial condition. Moreover, if the patents, technology or trade secrets DSS developed
or uses in its business are deemed to infringe upon the rights of others, DSS could, under certain circumstances, become liable
for damages, which could have a material adverse effect on DSS and its financial condition. As DSS continues to market its products,
DSS could encounter patent barriers that are not known today. A patent search may not disclose all related applications that are
currently pending in the United States Patent Office, and there may be one or more such pending applications that would take precedence
over any or all of DSS&rsquo;s applications.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Furthermore, third parties may assert that
DSS&rsquo;s intellectual property rights are invalid, which could result in significant expenditures by DSS to refute such assertions.
If DSS becomes involved in litigation, DSS could lose its proprietary rights, be subject to damages and incur substantial unexpected
operating expenses. Intellectual property litigation is expensive and time-consuming, even if the claims are subsequently proven
unfounded, and could divert management&rsquo;s attention from DSS&rsquo;s business. If there is a successful claim of infringement,
DSS may not be able to develop non-infringing technology or enter into royalty or license agreements on acceptable terms, if at
all. If DSS is unsuccessful in defending claims that its intellectual property rights are invalid, DSS may not be able to enter
into royalty or license agreements on acceptable terms, if at all. This could prohibit DSS from providing its products and services
to customers, which could have a material adverse effect on DSS and its financial condition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>The value of DSS&rsquo;s intangible assets may not be
equal to their carrying values.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As of June 30, 2013, DSS had approximately
$5.1 million of net intangible assets, including goodwill. DSS is required to evaluate the carrying value of such intangibles.
Whenever events or changes in circumstances indicate that the carrying value of an intangible asset, including goodwill, may not
be recoverable, DSS will have to determine whether there has been impairment by comparing the anticipated undiscounted cash flows
(discounted cash flows for goodwill) from the operation and eventual disposition of the product line with its carrying value. If
any of DSS&rsquo;s intangible assets are deemed to be impaired then it will result in a significant reduction of the operating
results in such period. No impairments were recognized during the six months ended June 30, 2013 and the year ended December 31,
2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Certain of DSS&rsquo;s recently developed products are
not yet commercially accepted and there can be no assurance that those products will be accepted, which would adversely affect
DSS&rsquo;s financial results.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Over the past several years, DSS has spent
significant funds and time to create new products by applying its technologies onto media other than paper, including plastic and
cardboard packaging, and delivery of DSS&rsquo;s technologies digitally. DSS has had limited success to date in selling its products
that are on cardboard packaging and those that are delivered digitally. DSS&rsquo;s business plan for the remainder of 2013 and
beyond includes plans to incur significant marketing, intellectual property development and sales costs for these newer products,
particularly the digitally delivered products. If DSS is not able to sell these new products, its financial results will be adversely
affected.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>The results of DSS&rsquo;s research and development efforts
are uncertain and there can be no assurance of the commercial success of its products.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">DSS believes that it will need to continue
to incur research and development expenditures to remain competitive. The products DSS is currently developing or may develop in
the future may not be technologically successful. In addition, the length of DSS&rsquo;s product development cycle may be greater
than it originally expected and DSS may experience delays in future product development. If DSS&rsquo;s resulting products are
not technologically successful, they may not achieve market acceptance or compete effectively with DSS&rsquo;s competitors&rsquo;
products.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Changes in document security technology and standards
could render DSS&rsquo;s applications and services obsolete.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The market for document security products,
applications, and services is fast moving and evolving. Identification and authentication technology is constantly changing as
DSS and its competitors introduce new products, applications, and services, and retire old ones as customer requirements quickly
develop and change. In addition, the standards for document security are continuing to evolve. If any segments of DSS&rsquo;s market
adopt technologies or standards that are inconsistent with DSS&rsquo;s applications and technology, sales to those market segments
could decline, which could have a material adverse effect on DSS and its financial condition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>The market in which DSS operates is highly competitive,
and DSS may not be able to compete effectively, especially against established industry competitors with greater market presence
and financial resources.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">DSS&rsquo;s market is highly competitive
and characterized by rapid technological change and product innovations. DSS competitors may have advantages over DSS because of
their longer operating histories, more established products, greater name recognition, larger customer bases, and greater financial,
technical and marketing resources. As a result, they may be able to adapt more quickly to new or emerging technologies and changes
in customer requirements, and devote greater resources to the promotion and sale of their products. Competition may also force
DSS to decrease the price of DSS&rsquo;s products and services. DSS cannot assure you that it will be successful in developing
and introducing new technology on a timely basis, new products with enhanced features, or that these products, if introduced, will
enable DSS to establish selling prices and gross margins at profitable levels.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>DSS&rsquo;s growth strategy depends, in part, on DSS acquiring
complementary businesses and assets and expanding DSS&rsquo;s existing operations to include manufacturing capabilities, which
DSS may be unable to do.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">DSS&rsquo;s growth strategy is based, in
part, on its ability to acquire businesses and assets that are complementary to its existing operations and expanding DSS&rsquo;s
operations to include manufacturing capabilities. DSS may also seek to acquire other businesses. The success of this acquisition
strategy will depend, in part, on DSS&rsquo;s ability to accomplish the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 3%">&bull;</TD>
    <TD STYLE="width: 95%">identify suitable businesses or assets to buy;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 3%">&bull;</TD>
    <TD STYLE="width: 95%">complete the purchase of those businesses on terms acceptable to DSS;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 3%">&bull;</TD>
    <TD STYLE="width: 95%">complete the acquisition in the time frame DSS expects; and</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 3%">&bull;</TD>
    <TD STYLE="width: 95%">improve the results of operations of the businesses that DSS buys and successfully integrate their operations into DSS&rsquo;s.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Although DSS has been able to make acquisitions
in the past, there can be no assurance that DSS will be successful in pursuing any or all of these steps on future transactions.
DSS&rsquo;s failure to implement its acquisition strategy could have an adverse effect on other aspects of DSS&rsquo;s business
strategy and its business in general. DSS may not be able to find appropriate acquisition candidates, acquire those candidates
that DSS finds or integrate acquired businesses effectively or profitably.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">DSS has in the past used, and may continue
to use, its common stock as payment for all or a portion of the purchase price for acquisitions. If DSS issues significant amounts
of its common stock for such acquisitions, this could result in substantial dilution of the equity interests of DSS stockholders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>If DSS fails to retain certain of its key personnel and
attract and retain additional qualified personnel, DSS might not be able to pursue its growth strategy.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">DSS&rsquo;s future success depends upon
the continued service of certain of its executive officers and other key sales and research personnel who possess longstanding
industry relationships and technical knowledge of DSS products and operations. Although DSS believes that its relationship with
these individuals is positive, there can be no assurance that the services of these individuals will continue to be available to
DSS in the future. There can be no assurance that these persons will agree to continue to be employed by DSS after the expiration
dates of their current contracts.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>If DSS does not successfully expand its sales force, it
may be unable to increase its revenues.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">DSS must expand the size of its marketing
activities and sales force to increase revenues. DSS continues to evaluate various methods of expanding its marketing activities,
including the use of outside marketing consultants and representatives and expanding its in-house marketing capabilities. If DSS
is unable to hire or retain qualified sales personnel or if newly hired personnel fail to develop the necessary skills to be productive,
or if they reach productivity more slowly than anticipated, DSS&rsquo;s ability to increase its revenues and grow could be compromised.
The challenge of attracting, training and retaining qualified candidates may make it difficult to meet DSS&rsquo;s sales growth
targets. Further, DSS may not generate sufficient sales to offset the increased expense resulting from expanding DSS&rsquo;s sales
force or DSS may be unable to manage a larger sales force.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Future growth in DSS&rsquo;s business could make it difficult
to manage DSS&rsquo;s resources.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">DSS&rsquo;s anticipated business expansion
could place a significant strain on its management, administrative and financial resources. Significant growth in DSS&rsquo;s business
may require it to implement additional operating, product development and financial controls, improve coordination among marketing,
product development and finance functions, increase capital expenditures and hire additional personnel. There can be no assurance
that DSS will be able to successfully manage any substantial expansion of its business, including attracting and retaining qualified
personnel. Any failure to properly manage its future growth could negatively impact its business and operating results.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>DSS cannot predict its future capital needs and DSS may
not be able to secure additional financing.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">DSS may need to raise additional funds in
the future to fund its working capital needs, to fund more aggressive expansion of its business, to complete development, testing
and marketing of its products and technologies, or to make strategic acquisitions or investments. DSS may require additional equity
or debt financings, collaborative arrangements with corporate partners or funds from other sources for these purposes. No assurance
can be given that necessary funds will be available for DSS to finance its development on acceptable terms, if at all. Furthermore,
such additional financings may involve substantial dilution of DSS stockholders or may require that DSS relinquish rights to certain
of its technologies or products. In addition, DSS may experience operational difficulties and delays due to working capital restrictions.
If adequate funds are not available from operations or additional sources of financing, DSS may have to delay or scale back its
growth plans.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>If DSS is unable to respond to regulatory or industry
standards effectively, its growth and development could be delayed or limited.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">DSS&rsquo;s future success will depend in
part on its ability to enhance and improve the functionality and features of its products and services in accordance with regulatory
or industry standards. DSS&rsquo;s ability to compete effectively will depend in part on its ability to influence and respond to
emerging industry governmental standards in a timely and cost-effective manner. If DSS is unable to influence these or other standards
or respond to these or other standards effectively, its growth and development of various products and services could be delayed
or limited.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Changes in the laws and regulations to which DSS are subject
may increase DSS&rsquo;s costs.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">DSS is subject to numerous laws and regulations,
including, but not limited to, environmental and health and welfare benefit regulations, as well as those associated with being
a public company. These rules and regulations may be changed by local, state, provincial, national or foreign governments or agencies.
Such changes may result in significant increases in DSS&rsquo;s compliance costs. Compliance with changes in rules and regulations
could require increases to DSS&rsquo;s workforce, and could result in increased costs for services, compensation and benefits,
and investment in new or upgraded equipment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Declines in general economic conditions or acts of war
and terrorism may adversely impact DSS&rsquo;s business.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Demand for printing services is typically
correlated with general economic conditions. The recent declines in United States economic conditions have adversely impacted DSS&rsquo;s
business and results of operations, and may continue to do so for the foreseeable future. The overall business climate of DSS&rsquo;s
industry may also be impacted by domestic and foreign wars or acts of terrorism, which events may have sudden and unpredictable
adverse impacts on demand for DSS&rsquo;s products and services.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Post-Merger Risks Related to DSSTM&rsquo;s Business, which,
effective on July 1, 2013, operates as a wholly-owned subsidiary of DSS.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>DSSTM&rsquo;s limited operating history makes it difficult
to evaluate its current business and future prospects.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">DSSTM is a newly formed development stage
company and has generated minimal revenue to date and has incurred expenses which exceed its revenues. DSSTM was incorporated in
May 2012 and acquired a portfolio of patents from <B>T</B>homas Bascom in July 2012, and also invested in VirtualAgility in March
2013 and again in August 2013. Therefore, DSSTM not only has a very limited operating history, but also a very limited track record
in executing its business model which includes, among other things, creating, prosecuting, licensing, litigating or otherwise monetizing
its patent assets. DSSTM&rsquo;s limited operating history makes it difficult to evaluate its current business model and future
prospects.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 20pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In light of the costs, uncertainties, delays
and difficulties frequently encountered by companies in the early stages of development with limited operating history, there is
a significant risk that DSSTM will not be able to:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 20pt">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 3%">&bull;</TD>
    <TD STYLE="width: 95%">implement or execute its current business plan, or show that its business plan is sound; and/or</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 3%">&bull;</TD>
    <TD STYLE="width: 95%">obtain sufficient funding, long-term, &nbsp;to effectuate its business plan.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 20pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If DSSTM cannot execute any one of the foregoing
or similar matters relating to its operations, its business may fail.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 20pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>DSSTM is presently reliant primarily on the patent assets
it recently acquired. If DSSTM is unable to license or otherwise monetize such assets and generate revenue and profit through those
assets or by other means, there is a significant risk that DSSTM&rsquo;s business would fail.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In July 2012, DSSTM acquired a portfolio
of patent assets from Thomas Bascom that DSSTM plans to license or otherwise monetize. If DSSTM&rsquo;s efforts to generate revenue
from such assets fail, DSSTM will have incurred significant losses and may be unable to acquire additional assets. If this occurs,
DSSTM&rsquo;s business would likely fail.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>DSSTM has commenced legal proceedings against five companies,
including Facebook, Inc. and LinkedIn Corporation, and DSSTM expects such litigation to be time-consuming and costly, which may
adversely affect DSSTM&rsquo;s financial condition and its ability to operate its business.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">To license or otherwise monetize the patent
assets DSSTM acquired from Thomas Bascom, DSSTM commenced legal proceedings against five companies, including Facebook, Inc. and
LinkedIn Corporation, pursuant to which DSSTM alleges that such companies infringe on one or more of DSSTM&rsquo;s patents. DSSTM&rsquo;s
viability is highly dependent on the outcome of this litigation, and there is a risk that DSSTM may be unable to achieve the results
it desires from such litigation, which failure would harm DSSTM&rsquo;s business to a great degree. In addition, the defendants
in this litigation are much larger than DSSTM and have substantially more resources than DSSTM does, which could make DSSTM&rsquo;s
litigation efforts more difficult.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">DSSTM anticipates that these legal proceedings
may continue for several years and may require significant expenditures for legal fees and other expenses. Disputes regarding the
assertion of patents and other intellectual property rights are highly complex and technical. Once initiated, DSSTM may be forced
to litigate against others to enforce or defend DSSTM&rsquo;s intellectual property rights or to determine the validity and scope
of other parties&rsquo; proprietary rights. The defendants or other third parties involved in the lawsuits in which DSSTM is involved
may allege defenses and/or file counterclaims in an effort to avoid or limit liability and damages for patent infringement. If
such defenses or counterclaims are successful, they may have a great impact on the value of the patents and preclude DSSTM&rsquo;s
ability to derive licensing revenue from the patents, or any revenue. Therefore, a negative outcome of any such litigation, or
one or more claims contained within any such Litigation, could materially and adversely impact DSSTM&rsquo;s business. Additionally,
DSSTM anticipates that its legal fees and other expenses will be material and will negatively impact DSSTM&rsquo;s financial condition
and results of operations and may result in its inability to continue its business. DSSTM estimates that its legal fees over the
next twelve months will be approximately $2,000,000. Expenses thereafter are dependent on the outcome of the litigation; in the
event the case is appealed, legal fees over the course of the subsequent twelve months would be approximately $2,000,000. The costs
of enforcing DSSTM&rsquo;s patent rights may exceed its recoveries from such enforcement activities. In addition, the primary law
firm being utilized by DSSTM for such litigation would be entitled to a certain percentage of any recoveries from the litigation
or licensing of the patents. The inventor of the patents is likewise entitled to a percentage of such recoveries, as is IP Navigation
Group, the intellectual property consulting firm engaged by DSSTM in connection with its efforts to acquire and monetize this portfolio
of patents. Accordingly, in order for DSSTM to generate a profit from its patent enforcement and monetization activities, the revenues
from such enforcement and monetization activities must be high enough to offset both the cash outlays and the contingent fees payable
from such revenues. DSSTM&rsquo;s failure to monetize its patent assets would significantly harm its business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>While DSSTM believes that the patents acquired from Thomas
Bascom are infringed by the defendants in the Litigation, there is a risk that a court will find the patents invalid, not infringed
or unenforceable and/or that the US Patent and Trademark Office (USPTO) will either invalidate the patents or materially narrow
the scope of their claims during the course of a re-examination. In addition, even with a positive trial court verdict, the patent
may be invalidated, found not infringed or rendered unenforceable on appeal. This risk may occur either presently in DSSTM&rsquo;s
initial litigation or from time to time in connection with future litigations DSSTM may bring. If this were to occur, it would
have a material adverse effect on the viability of its company and its operations.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">DSSTM believes that certain social and business
networking and other companies infringe on at least four of its patents, but recognizes that obtaining and collecting a judgment
against such infringers may be difficult or impossible. Patent litigation is inherently risky and the outcome is uncertain. Some
of the parties DSSTM believes infringe on DSSTM&rsquo;s patents are large and well-financed companies with substantially greater
resources than DSSTM. DSSTM believes that these parties will devote a substantial amount of resources in an attempt to avoid or
limit a finding that they are liable for infringing DSSTM&rsquo;s patents or, in the event liability is found, to avoid or limit
the amount of associated damages. In addition, there is a risk that these parties may file re-examinations or other proceedings
with the USPTO or other government agencies in an attempt to invalidate, narrow the scope or render unenforceable the patents DSSTM
acquired from Thomas Bascom. As of the date of this registration statement, DSSTM has settled with two defendants, and is legally
precluded from disclosing other developments in the cases.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">At this time, DSSTM cannot predict the outcome
of such potential litigation or administrative action, and if DSSTM is unsuccessful in its litigation efforts for any reason, the
value of the patents acquired from Thomas Bascom, which are DSSTM&rsquo;s most significant assets, would be significantly reduced
and DSSTM&rsquo;s business, financial condition and results of operations would be significantly harmed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Moreover, in connection with any of DSSTM&rsquo;s
present or future patent enforcement actions, it is possible that a defendant may request and/or a court may rule that DSSTM has
violated statutory authority, regulatory authority, federal rules, local court rules, or governing standards relating to the substantive
or procedural aspects of such enforcement actions. In such event, a court may issue monetary sanctions against DSSTM or its operating
subsidiaries or award attorneys&rsquo; fees and/or expenses to one or more defendants, which could be material, and if DSSTM or
its subsidiaries are required to pay such monetary sanctions, attorneys&rsquo; fees and/or expenses, such payment could materially
harm DSSTM&rsquo;s operating results and its financial position.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In addition, it is difficult in general
to predict the outcome of patent enforcement litigation at the trial level. There is a higher rate of appeals in patent enforcement
litigation than more standard business litigation. Such appeals are expensive and time-consuming, and the outcomes of such appeals
are sometimes unpredictable, resulting in increased costs and reduced or delayed revenue.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Finally, DSSTM believes that the more prevalent
patent enforcement actions become, the more difficult it will be for DSSTM to license its patents without engaging in litigation.
As a result, DSSTM may need to increase the number of its patent enforcement actions to cause infringing companies to license the
patent or pay damages for lost royalties. This will adversely affect DSSTM&rsquo;s operating results due to the high costs of litigation
and the uncertainty of the results.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>If DSSTM is unsuccessful in its pending litigation or
is unable to adequately protect its patent rights, the value of such patents would be significantly reduced and DSSTM&rsquo;s business
would be negatively impacted.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">DSSTM believes its patents are valid, enforceable
and valuable. Notwithstanding this belief, third parties may make claims of infringement or invalidity claims with respect to DSSTM&rsquo;s
patents and such claims could give rise to material costs for defense or settlement or both, jeopardize or substantially delay
a successful outcome of litigation DSSTM is or may become involved in, or otherwise materially and adversely affect its business.
At this time, DSSTM cannot predict the outcome of its current pending patent infringement litigation. If DSSTM is unsuccessful
in its litigation efforts for any reason or is otherwise unable to protect its patent rights, the value of the patents acquired
from Thomas Bascom, which are DSSTM&rsquo;s most significant assets, would be significantly reduced and DSSTM&rsquo;s business,
financial condition and results of operations would be significantly harmed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>DSSTM may be unable to retain key advisors and legal counsel
to represent DSSTM in the current patent infringement Litigation and in future legal proceedings.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The success of DSSTM&rsquo;s pending legal
proceedings and future legal proceedings depends in part upon DSSTM&rsquo;s ability to retain key advisors and legal counsel to
represent DSSTM in such litigation. The retention of such key advisors and legal counsel is likely to be expensive and DSSTM may
not be able to retain such key advisors and legal counsel on favorable economic terms. Therefore, DSSTM may be unable to retain
key advisors and legal counsel to represent DSSTM in its litigation, which could have a material adverse effect on DSSTM&rsquo;s
business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>The patent infringement cases initiated by DSSTM will
likely take longer and be more expensive in the United States District Court in the Northern District of California than if the
cases were litigated in the United States District Court for the Eastern District of Virginia.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">DSSTM&rsquo;s wholly-owned subsidiary, Bascom
Research LLC, initiated its patent infringement litigation in the United States District Court for the Eastern District of Virginia.
It is difficult to predict the length of time it will take to complete such litigation. In December, 2012, the lawsuits were transferred
to the United States District Court in the Northern District of California. As of the date of this Registration Statement, DSSTM
has settled with two defendants, and is legally precluded from disclosing certain other developments in the cases. As of October
11, 2013, Bascom Research has reached settlements with two defendants in connection with its ongoing litigation in the Northern
District of California and the case against Salesforce.com was dismissed. Bascom Research is precluded from releasing the specific
terms and in certain cases, the existence of its settlements as a result of confidentiality provisions contained in the various
settlement agreements. The litigation is still pending against the other defendants (including Facebook, Inc. and LinkedIn Corporation).
DSSTM believes that as a result of the transfer to California, the patent infringement litigation may take significantly longer,
become more expensive, and possibly adversely impact the financial position of DSSTM moving forward.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>DSSTM may seek to internally develop additional new inventions
and intellectual property, which would take time and would be costly. Moreover, the failure to obtain or maintain intellectual
property rights for such inventions would lead to the loss of DSSTM&rsquo;s investments in such activities.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Members of DSSTM&rsquo;s management team
have significant experience as inventors. As such, part of DSSTM&rsquo;s business may include the internal development of new inventions
and intellectual property that DSSTM will seek to monetize. However, this aspect of DSSTM&rsquo;s business would likely require
significant capital and would take time to achieve. Such activities could also distract DSSTM&rsquo;s management team from its
present business initiatives, which could have a material and adverse effect on DSSTM&rsquo;s business. There is also the risk
that DSSTM&rsquo;s initiatives in this regard would not yield any viable new inventions or technology, which would lead to a loss
of DSSTM&rsquo;s investments in time and resources in such activities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In addition, even if DSSTM is able to internally
develop new inventions, in order for those inventions to be viable and to compete effectively, DSSTM would need to develop and
maintain, and it would heavily rely on, a proprietary position with respect to such inventions and intellectual property. However,
there are significant risks associated with any such intellectual property DSSTM may develop principally including the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 3%">&bull;</TD>
    <TD STYLE="width: 95%">patent applications DSSTM may file may not result in issued patents or may take longer than DSSTM expects to result in issued patents;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 3%">&bull;</TD>
    <TD STYLE="width: 95%">DSSTM may be subject to interference proceedings;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 3%">&bull;</TD>
    <TD STYLE="width: 95%">DSSTM may be subject to opposition proceedings in the U.S. or foreign countries;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 3%">&bull;</TD>
    <TD STYLE="width: 95%">any patents that are issued to DSSTM may not provide meaningful protection;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 3%">&bull;</TD>
    <TD STYLE="width: 95%">DSSTM may not be able to develop additional proprietary technologies that are patentable;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&bull;</TD>
    <TD>other companies may challenge patents issued to DSSTM;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 3%">&bull;</TD>
    <TD STYLE="width: 95%">other companies may design around technologies DSSTM has developed; and</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 3%">&bull;</TD>
    <TD STYLE="width: 95%">enforcement of DSSTM&rsquo;s patents would be complex, uncertain and very expensive.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">DSSTM cannot be certain that patents will
be issued as a result of any future applications, or that any of DSSTM&rsquo;s patents, once issued, will provide DSSTM with adequate
protection from competing products. For example, issued patents may be circumvented or challenged, declared invalid or unenforceable,
or narrowed in scope. In addition, since publication of discoveries in scientific or patent literature often lags behind actual
discoveries, DSSTM cannot be certain that it will be the first to make its additional new inventions or to file patent applications
covering those inventions. It is also possible that others may have or may obtain issued patents that could prevent DSSTM from
commercializing DSSTM&rsquo;s products or require DSSTM to obtain licenses requiring the payment of significant fees or royalties
in order to enable DSSTM to conduct its business. As to those patents that DSSTM may license or otherwise monetize, DSSTM&rsquo;s
rights will depend on maintaining its obligations to the licensor under the applicable license agreement, and DSSTM may be unable
to do so. DSSTM&rsquo;s failure to obtain or maintain intellectual property rights for DSSTM&rsquo;s inventions would lead to the
loss of DSSTM&rsquo;s investments in such activities, which would have a material and adverse effect on DSSTM&rsquo;s company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Moreover, patent application delays could
cause delays in recognizing revenue from DSSTM&rsquo;s internally generated patents and could cause DSSTM to miss opportunities
to license patents before other competing technologies are developed or introduced into the market.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>New legislation, regulations or court rulings related
to enforcing patents could harm DSSTM&rsquo;s business and operating results.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If Congress, the United States Patent and
Trademark Office or courts implement new legislation, regulations or rulings that impact the patent enforcement process or the
rights of patent holders, these changes could negatively affect DSSTM&rsquo;s business model. For example, limitations on the ability
to bring patent enforcement claims, limitations on potential liability for patent infringement, lower evidentiary standards for
invalidating patents, increases in the cost to resolve patent disputes and other similar developments could negatively affect DSSTM&rsquo;s
ability to assert its patent or other intellectual property rights.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In addition, on September 16, 2011, the
Leahy-Smith America Invents Act (or the Leahy-Smith Act), was signed into law. The Leahy-Smith Act includes a number of significant
changes to United States patent law. These changes include provisions that affect the way patent applications will be prosecuted
and may also affect patent litigation. The U.S. Patent and Trademark Office is currently developing regulations and procedures
to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith
Act will not become effective until one year or 18 months after its enactment. Accordingly, it is too early to tell what, if any,
impact the Leahy-Smith Act will have on the operation of DSSTM&rsquo;s business. However, the Leahy-Smith Act and its implementation
could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of
DSSTM&rsquo;s issued patents, all of which could have a material adverse effect on DSSTM&rsquo;s business and financial condition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Further, and in general, it is impossible
to determine the extent of the impact of any new laws, regulations or initiatives that may be proposed, or whether any of the proposals
will become enacted as laws. Compliance with any new or existing laws or regulations could be difficult and expensive, affect the
manner in which DSSTM conducts its business and negatively impact DSSTM&rsquo;s business, prospects, financial condition and results
of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>DSSTM&rsquo;s acquisitions of patent assets may be time
consuming, complex and costly, which could adversely affect DSSTM&rsquo;s operating results.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Acquisitions of patent or other intellectual
property assets, which are and will be critical to DSSTM&rsquo;s business plan, are often time consuming, complex and costly to
consummate. DSSTM may utilize many different transaction structures in its acquisitions and the terms of such acquisition agreements
tend to be heavily negotiated. As a result, DSSTM expects to incur significant operating expenses and will likely be required to
raise capital during the negotiations even if the acquisition is ultimately not consummated. Even if DSSTM is able to acquire particular
patent assets, there is no guarantee that DSSTM will generate sufficient revenue related to those patent assets to offset the acquisition
costs. While DSSTM will seek to conduct confirmatory due diligence on the patent assets DSSTM is considering for acquisition, DSSTM
may acquire patent assets from a seller who does not have proper title to those assets. In those cases, DSSTM may be required to
spend significant resources to defend DSSTM&rsquo;s interest in the patent assets and, if DSSTM is not successful, its acquisition
may be invalid, in which case DSSTM could lose part or all of its investment in the assets.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">DSSTM may also identify patent or other
intellectual property assets that cost more than DSSTM is prepared to spend with its own capital resources. DSSTM may incur significant
costs to organize and negotiate a structured acquisition that does not ultimately result in an acquisition of any patent assets
or, if consummated, proves to be unprofitable for DSSTM. These higher costs could adversely affect DSSTM&rsquo;s operating results,
and if DSSTM incurs losses, the value of its securities will decline.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 20pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In addition, DSSTM may acquire patents and
technologies that are in the early stages of adoption in the commercial, industrial and consumer markets. Demand for some of these
technologies will likely be untested and may be subject to fluctuation based upon the rate at which DSSTM&rsquo;s licensees will
adopt its patents and technologies in their products and services. As a result, there can be no assurance as to whether technologies
DSSTM acquires or develops will have value that it can monetize.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 20pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>In certain acquisitions of patent assets, DSSTM may seek
to defer payment or finance a portion of the acquisition price. This approach may put DSSTM at a competitive disadvantage and could
result in harm to DSSTM&rsquo;s business.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">DSSTM has limited capital and may seek to
negotiate acquisitions of patent or other intellectual property assets where DSSTM can defer payments or finance a portion of the
acquisition price. These types of debt financing or deferred payment arrangements may not be as attractive to sellers of patent
assets as receiving the full purchase price for those assets in cash at the closing of the acquisition. As a result, DSSTM might
not compete effectively against other companies in the market for acquiring patent assets, many of whom have greater cash resources
than DSSTM has. In addition, any failure to satisfy DSSTM&rsquo;s debt repayment obligations may result in adverse consequences
to its operating results.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Any failure to maintain or protect DSSTM&rsquo;s patent
assets or other intellectual property rights could significantly impair its return on investment from such assets and harm DSSTM&rsquo;s
brand, its business and its operating results.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">DSSTM&rsquo;s ability to operate its business
and compete in the intellectual property market largely depends on the superiority, uniqueness and value of DSSTM&rsquo;s acquired
patent assets and other intellectual property. To protect DSSTM&rsquo;s proprietary rights, DSSTM relies on and will rely on a
combination of patent, trademark, copyright and trade secret laws, confidentiality agreements with its employees and third parties,
and protective contractual provisions. No assurances can be given that any of the measures DSSTM undertakes to protect and maintain
its assets will have any measure of success.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Following the acquisition of patent assets,
DSSTM will likely be required to spend significant time and resources to maintain the effectiveness of those assets by paying maintenance
fees and making filings with the United States Patent and Trademark Office. DSSTM may acquire patent assets, including patent applications,
which require DSSTM to spend resources to prosecute the applications with the United States Patent and Trademark Office. Further,
there is a material risk that patent related claims (such as, for example, infringement claims (and/or claims for indemnification
resulting therefrom), unenforceability claims, or invalidity claims) will be asserted or prosecuted against DSSTM, and such assertions
or prosecutions could materially and adversely affect DSSTM&rsquo;s business. Regardless of whether any such claims are valid or
can be successfully asserted, defending such claims could cause DSSTM to incur significant costs and could divert resources away
from DSSTM&rsquo;s other activities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Despite DSSTM&rsquo;s efforts to protect
its intellectual property rights, any of the following or similar occurrences may reduce the value of DSSTM&rsquo;s intellectual
property:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 20pt">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 3%">&bull;</TD>
    <TD STYLE="width: 95%">DSSTM&rsquo;s applications for patents, trademarks and copyrights may not be granted and, if granted, may be challenged or invalidated;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 3%">&bull;</TD>
    <TD STYLE="width: 95%">issued trademarks, copyrights, or patents may not provide DSSTM with any competitive advantages versus potentially infringing parties;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 3%">&bull;</TD>
    <TD STYLE="width: 95%">DSSTM&rsquo;s efforts to protect its intellectual property rights may not be effective in preventing misappropriation of DSSTM&rsquo;s technology; or</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 3%">&bull;</TD>
    <TD STYLE="width: 95%">DSSTM&rsquo;s efforts may not prevent the development and design by others of products or technologies similar to or competitive with, or superior to those DSSTM acquires and/or prosecutes.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Moreover, DSSTM may not be able to effectively
protect its intellectual property rights in certain foreign countries where DSSTM may do business in the future or from which competitors
may operate. If DSSTM fails to maintain, defend or prosecute its patent assets properly, the value of those assets would be reduced
or eliminated, and DSSTM&rsquo;s business would be harmed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 20pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>DSSTM may not be able to capitalize on potential market
opportunities related to its licensing strategy or patent portfolio.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In order to capitalize on its patent portfolio,
DSSTM intends to enter into licensing relationships. However, there can be no assurance that DSSTM will be able to capitalize on
its patent portfolio or any potential market opportunity in the foreseeable future. DSSTM&rsquo;s inability to generate licensing
revenues associated with potential market opportunities could result from a number of factors, including, but not limited to:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 3%">&bull;</TD>
    <TD STYLE="width: 95%">DSSTM may not be successful in entering into licensing relationships on commercially acceptable terms; and</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 2%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 3%; font-size: 10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&bull;</FONT></TD>
    <TD STYLE="width: 95%; font-size: 10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">challenges from third parties as to the validity of DSSTM&rsquo;s patents underlying DSSTM&rsquo;s licensing opportunities.&nbsp;</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Weak global economic conditions may cause infringing parties
to delay entering into licensing agreements, which could prolong DSSTM&rsquo;s litigation and adversely affect its financial condition
and operating results<FONT STYLE="color: #E72625">.</FONT></I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 4pt 0pt 0; text-indent: 0.5in">DSSTM&rsquo;s business plan depends
significantly on worldwide economic conditions, and the United States and world economies have recently experienced weak economic
conditions. Uncertainty about global economic conditions poses a risk as businesses may postpone spending in response to tighter
credit, negative financial news and declines in income or asset values. This response could have a material negative effect on
the willingness of parties infringing on DSSTM&rsquo;s assets to enter into licensing or other revenue generating agreements voluntarily.
Entering into such agreements is critical to DSSTM&rsquo;s business plan, and DSSTM&rsquo;s failure to do so could cause material
harm to its business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 4pt 0pt 0; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Risks Related to Ownership of our Common Stock</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 4.4pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>DSS has a large number of authorized but unissued shares
of common stock, which DSS&rsquo;s management may issue without further stockholder approval, thereby causing dilution of your
holdings of DSS common stock.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As of July 1, 2013, after the Company&rsquo;s
merger with DSSTM, there were approximately 154 million authorized but unissued shares of DSS common stock. DSS management continues
to have broad discretion to issue shares of its common stock in a range of transactions, including capital-raising transactions,
mergers, acquisitions, for anti-takeover purposes, and in other transactions, without obtaining stockholder approval, unless stockholder
approval is required for a particular transaction under the rules of the NYSE MKT, state and federal law, or other applicable laws.
If DSS&rsquo;s board of directors determines to issue additional shares of DSS common stock from the large pool of authorized but
unissued shares for any purpose in the future without obtaining stockholder approval, your ownership position would be diluted
without your further ability to vote on such transaction.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>The exercise of DSS&rsquo;s outstanding options and warrants,
vesting of restricted stock awards and conversion of debt securities may depress DSS&rsquo;s stock price.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As of June 30, 2013 and 2012, there were
up to 4,286,534 and 4,225,691, respectively, of shares potentially issuable under convertible debt agreements, options, warrants,
restricted stock agreements and employment agreements that could potentially dilute basic earnings per share in the future. These
shares were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive to
the Company&rsquo;s losses in the respective periods. On July 1, 2013, in connection with the Merger, the Company issued the following:
(i) 16,558,387 shares of the Company&rsquo;s common stock (including exchange shares), (ii) 7,100,000 shares of the Company&rsquo;s
Common Stock to be held in escrow pursuant to an escrow agreement, dated July 1, 2013, (iii) warrants to purchase up to an aggregate
of 4,859,894 shares of the Company&rsquo;s Common Stock, at an exercise price of $4.80 per share and expiring on July 1, 2018,
and (iv) warrants to purchase up to an aggregate of 3,432,170 shares of the Company&rsquo;s Common Stock, at an exercise price
of $0.02 per share and expiring on July 1, 2023. In addition, the Company assumed options to purchase an aggregate of 2,000,000
shares of the Company&rsquo;s Common Stock at an exercise price of $3.00 per share, in exchange for 3,600,000 outstanding and unexercised
stock options to purchase shares of DSSTM&rsquo;s common stock. The Company also issued an aggregate of 786,678 shares of Common
Stock to Palladium Capital Advisors, LLC as compensation for their services in connection with the transactions contemplated by
the Merger Agreement. Of those shares issued to Palladium Capital Advisors, LLC, 400,000 are held in escrow pursuant to the same
terms and conditions as those set forth in the Escrow Agreement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Sales of these securities in the public
market, or the perception that future sales of these securities could occur, could have the effect of lowering the market price
of DSS common stock below current levels and make it more difficult for DSS and DSS&rsquo;s stockholders to sell DSS&rsquo;s equity
securities in the future.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Sale or the availability for sale of shares
of common stock by stockholders could cause the market price of DSS common stock to decline and could impair DSS&rsquo;s ability
to raise capital through an offering of additional equity securities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>DSS does not intend to pay cash dividends.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">DSS does not intend to declare or pay cash
dividends on its common stock in the foreseeable future. DSS anticipates that it will retain any earnings and other cash resources
for investment in its business. The payment of dividends on DSS&rsquo;s common stock is subject to the discretion of its board
of directors and will depend on DSS&rsquo;s operations, financial position, financial requirements, general business conditions,
restrictions imposed by financing arrangements, if any, legal restrictions on the payment of dividends and other factors that its
board of directors deems relevant.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>DSS has material weaknesses in its internal control over
financial reporting structure, which, until remedied, may cause errors in its financial statements that could require restatements
of its financial statements and investors may lose confidence in DSS&rsquo;s reported financial information, which could lead to
a decline in DSS&rsquo;s stock price.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Section 404 of the Sarbanes-Oxley Act of
2002 requires DSS to evaluate the effectiveness of its internal control over financial reporting as of the end of each year, and
to include a management report assessing the effectiveness of DSS&rsquo;s internal control over financial reporting in each Annual
Report on Form 10-K.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">DSS has identified two material weaknesses
in its internal control over financial reporting in its annual assessment of internal controls over financial reporting that management
performed for the year ended December 31, 2012. Those identified material weaknesses remain as of the date of this registration
statement. Management has concluded that (i) DSS did not maintain a sufficient complement of qualified accounting personnel and
controls associated with segregation of duties; and (ii) DSS lacks sufficient resources within the accounting department to have
effective controls associated with identifying and accounting for complex and non-routine transactions in accordance with United
States generally accepted accounting principles, and that the foregoing represented material weaknesses in its internal control
over financial reporting. DSS is uncertain at this time of the costs to remediate all of the above listed material weaknesses,
however, DSS anticipates the cost to be in the range of $200,000 to $400,000 (including the cost of hiring additional qualified
accounting personnel to eliminate segregation of duties issues and using the services of accounting consultants for complex and
non-routine transactions if and when they arise). DSS cannot guarantee that the actual costs to remediate these deficiencies will
not exceed this amount. If DSS&rsquo;s internal control over financial reporting or disclosure controls and procedures are not
effective, there may be errors in DSS&rsquo;s financial statements and in DSS&rsquo;s disclosure that could require restatements.
Investors may lose confidence in DSS&rsquo;s reported financial information and in DSS&rsquo;s disclosure, which could lead to
a decline in DSS&rsquo;s stock price.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">DSS&rsquo;s management, including its Chief
Executive Officer and Chief Financial Officer, does not expect that DSS&rsquo;s internal control over financial reporting will
prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not
absolute, assurance that the control system&rsquo;s objectives will be met. Further, the design of a control system must reflect
the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Controls
can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the
controls. Over time, controls may become inadequate because changes in conditions or deterioration in the degree of compliance
with policies or procedures may occur. Because of the inherent limitations in a cost-effective control system, misstatements due
to error or fraud may occur and not be detected.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As a result, DSS cannot assure you that
significant deficiencies or material weaknesses in its internal control over financial reporting will not be identified in the
future. Any failure to maintain or implement required new or improved controls, or any difficulties DSS encounters in their implementation,
could result in significant deficiencies or material weaknesses, cause DSS to fail to timely meet DSS&rsquo;s periodic reporting
obligations, or result in material misstatements in DSS&rsquo;s financial statements. Any such failure could also materially adversely
affect the results of periodic management evaluations regarding disclosure controls and procedures and the effectiveness of DSS&rsquo;s
internal control over financial reporting required under Section 404 of the Sarbanes-Oxley Act of 2002 and the rules promulgated
thereunder.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>If securities or industry analysts do not publish research
or reports about our business, or if they change their recommendations regarding our stock adversely, our stock price and trading
volume could decline.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The trading market for our common stock
will be influenced by the research and reports that industry or securities analysts publish about us or our business. We do not
currently have and may never obtain research coverage by industry or financial analysts. If no or few analysts commence coverage
of us, the trading price of our stock would likely decrease. Even if we do obtain analyst coverage, if one or more of the analysts
who cover us downgrade our stock, our stock price would likely decline. If one or more of these analysts cease coverage of our
company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause
our stock price or trading volume to decline.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;<B><I>A sale of a substantial number
of shares of our common stock may cause the price of our common stock to decline and may impair our ability to raise capital in
the future.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our common stock is traded on The NYSE MKT
and, despite certain increases of trading volume from time to time, there have been periods when it could be considered &ldquo;thinly-traded,&rdquo;
meaning that the number of persons interested in purchasing our common stock at or near bid prices at any given time may be relatively
small or non-existent. Finance transactions resulting in a large amount of newly issued shares that become readily tradable, or
other events that cause current stockholders to sell shares, could place downward pressure on the trading price of our stock. In
addition, the lack of a robust resale market may require a stockholder who desires to sell a large number of shares of common stock
to sell the shares in increments over time to mitigate any adverse impact of the sales on the market price of our stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If our stockholders sell, or the market
perceives that our stockholders intend to sell for various reasons, including the ending of restriction on resale, substantial
amounts of our common stock in the public market, including shares issued upon the exercise of outstanding options or warrants,
the market price of our common stock could fall. Sales of a substantial number of shares of our common stock may make it more difficult
for us to sell equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate. We
may become involved in securities class action litigation that could divert management&rsquo;s attention and harm our business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Our common stock is subject to volatility.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 28.6pt">There can be no assurance that the market
price for our common stock will remain at its current level and a decrease in the market price could result in substantial losses
for investors. The market price of our common stock may be significantly affected by one or more of the following factors:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.1pt; text-indent: -27.5pt"><FONT STYLE="font-family: Symbol">&middot;</FONT>announcements
or press releases relating to the industry or to our own business or prospects;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.1pt; text-indent: -27.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.1pt; text-indent: -27.5pt"><FONT STYLE="font-family: Symbol">&middot;</FONT>regulatory,
legislative, or other developments affecting us or the industry generally;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.1pt; text-indent: -27.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 31.5pt; text-indent: -2.9pt"><FONT STYLE="font-family: Symbol">&middot;</FONT>sales
by holders of restricted securities pursuant to effective registration statements or exemptions from registration; and</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.1pt; text-indent: -27.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 31.5pt; text-indent: -2.9pt"><FONT STYLE="font-family: Symbol">&middot;</FONT>market
conditions specific to biopharmaceutical companies, the healthcare industry and the stock market generally.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>DISCLOSURE REGARDING FORWARD-LOOKING
STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">This prospectus contains forward-looking
statements. Such forward-looking statements include those that express plans, anticipation, intent, contingency, goals, targets
or future development and/or otherwise are not statements of historical fact. These forward-looking statements are based on our
current expectations and projections about future events and they are subject to risks and uncertainties known and unknown that
could cause actual results and developments to differ materially from those expressed or implied in such statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In some cases, you can identify forward-looking
statements by terminology, such as &ldquo;expects,&rdquo; &ldquo;anticipates,&rdquo; &ldquo;intends,&rdquo; &ldquo;estimates,&rdquo;
&ldquo;plans,&rdquo; &ldquo;believes,&rdquo; &ldquo;seeks,&rdquo; &ldquo;may,&rdquo; &ldquo;should&rdquo;, &ldquo;could&rdquo;
or the negative of such terms or other similar expressions. &nbsp;Accordingly, these statements involve estimates, assumptions
and uncertainties that could cause actual results to differ materially from those expressed in them.&nbsp; Any forward-looking
statements are qualified in their entirety by reference to the factors discussed throughout this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">You should read this prospectus and any
accompanying prospectus supplement and the documents that we reference herein and therein and have filed as exhibits to the registration
statement, of which this prospectus is part, completely and with the understanding that our actual future results may be materially
different from what we expect.&nbsp; You should assume that the information appearing in this prospectus and any accompanying prospectus
supplement is accurate as of the date on the front cover of this prospectus or such prospectus supplement only.&nbsp; Because the
risk factors referred to above, as well as the risk factors referred to on page&nbsp;4 of this prospectus and incorporated herein
by reference, could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements
made by us or on our behalf, you should not place undue reliance on any forward-looking statements. &nbsp;Further, any forward-looking
statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement
to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated
events.&nbsp; New factors emerge from time to time, and it is not possible for us to predict which factors will arise.&nbsp; In
addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors,
may cause actual results to differ materially from those contained in any forward-looking statements.&nbsp; We qualify all of the
information presented in this prospectus and any accompanying prospectus supplement, and particularly our forward-looking statements,
by these cautionary statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.2pt"></P>

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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>USE OF PROCEEDS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Except as otherwise provided in the applicable
prospectus supplement, we intend to use the net proceeds from the sale of the securities offered by us in this prospectus for general
corporate purposes, which may include working capital, capital expenditures, research and development expenditures, regulatory
affairs expenditures, clinical trial expenditures, acquisitions of new technologies and investments, and the repayment, refinancing,
redemption or repurchase of future indebtedness or capital stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The intended application of proceeds from
the sale of any particular offering of securities using this prospectus will be described in the accompanying prospectus supplement
relating to such offering. The precise amount and timing of the application of these proceeds will depend on our funding requirements
and the availability and costs of other funds.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>THE SECURITIES WE MAY&nbsp;OFFER</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The descriptions of the securities contained
in this prospectus, together with the applicable prospectus supplements, summarize all the material terms and provisions of the
various types of securities that we may offer. We will describe in the applicable prospectus supplement relating to any securities
the particular terms of the securities offered by that prospectus supplement. If we indicate in the applicable prospectus supplement,
the terms of the securities may differ from the terms we have summarized below. We will also include in the prospectus supplement
information, where applicable, about material United States federal income tax considerations relating to the securities, and the
securities exchange, if any, on which the securities will be listed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 28.6pt">We may sell from time to time, in one or
more offerings:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.1pt; text-indent: -27.5pt"><FONT STYLE="font-family: Symbol">&middot;</FONT><FONT STYLE="font-size: 10pt">
</FONT>shares of our common stock;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.1pt; text-indent: -27.5pt"><FONT STYLE="font-family: Symbol">&middot;</FONT><FONT STYLE="font-size: 10pt">&nbsp;</FONT>warrants
to purchase common stock; and/or</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.1pt; text-indent: -27.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.1pt; text-indent: -27.5pt"><FONT STYLE="font-family: Symbol">&middot;</FONT>units
consisting of any of the securities listed above.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 27.5pt; text-indent: -13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 27.5pt; text-indent: -13.2pt"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 27.5pt; text-indent: -13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.2pt">The terms of any securities we offer will
be determined at the time of sale. We may issue securities that are exchangeable for or convertible into common stock or any of
the other securities that may be sold under this prospectus. When particular securities are offered, a supplement to this prospectus
will be filed with the SEC, which will describe the terms of the offering and sale of the offered securities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>DESCRIPTION OF COMMON STOCK</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>General</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following description of common stock,
together with the additional information we include in any applicable prospectus supplements, summarizes the material terms and
provisions of the common stock that we may offer under this prospectus but is not complete. For the complete terms of our common
stock, please refer to our certificate of incorporation, as amended, (the &ldquo;Certificate of Incorporation&rdquo;) which may
be further amended from time to time, and our amended and restated bylaws, as amended from time to time (the &ldquo;Bylaws&rdquo;).
New York Business Corporation Law (&ldquo;NYBCL&rdquo;) may also affect the terms of these securities. While the terms we have
summarized below will apply generally to any future common stock that we may offer, we will describe the particular terms of any
series of these securities in more detail in the applicable prospectus supplement. If we so indicate in a prospectus supplement,
the terms of any common stock we offer under that prospectus supplement may differ from the terms we describe below.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As of October 11, 2013, our authorized
capital stock consisted of 200,000,000 shares of common stock, $0.02 par value per share, 49,230,159 of which are issued and outstanding.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Common Stock</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Holders of our common stock: (i) have equal
rights to dividends from funds legally available therefore, ratably when as and if declared by the Company&rsquo;s Board of Directors;
(ii) are entitled to share ratably in all assets of the Company available for distribution to holders of common stock upon liquidation,
dissolution, or winding up of the affairs of the Company; (iii) do not have preemptive, subscription or conversion rights and there
are no redemption or sinking fund provisions applicable thereto; (iv) are entitled to one non-cumulative vote per share of common
stock, on all matters which stockholders may vote on at all meetings of stockholders; and (v) the holders of common stock have
no conversion, preemptive or other subscription rights.&nbsp;&nbsp;There is no cumulative voting for the election of directors.&nbsp;&nbsp;Each
holder of our common stock is entitled to one vote for each share of our common stock held on all matters submitted to a vote of
stockholders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 27.5pt; text-indent: 0.5in">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Anti-Takeover Effects of Certain Provisions of our Certificate
of Incorporation, Bylaws and the BCL</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 27.5pt"><B><I>New York Law</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 27.5pt; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Section 912 of the NYBCL generally provides
that a New York corporation may not engage in a business combination with an interested stockholder for a period of five years
following the interested stockholder&rsquo;s becoming such. Such a business combination would be permitted where it is approved
by the board of directors before the interested stockholder&rsquo;s becoming such. Covered business combinations include certain
mergers and consolidations, dispositions of assets or stock, plans for liquidation or dissolution, reclassifications of securities,
recapitalizations and similar transactions. An interested stockholder is generally a stockholder owning at least 20% of a corporation&rsquo;s
outstanding voting stock. In addition, New York corporations may not engage at any time with any interested stockholder in a business
combination other than: (i) a business combination approved by the board of directors before the stock acquisition, or where the
acquisition of the stock had been approved by the board of directors before the stock acquisition; (ii) a business combination
approved by the affirmative vote of the holders of a majority of the outstanding voting stock not beneficially owned by the interested
stockholder at a meeting called for that purpose no earlier than five years after the stock acquisition; or (iii) a business combination
in which the interested stockholder pays a formula price designed to ensure that all other stockholders receive at least the highest
price per share that is paid by the interested stockholder and that meets certain other requirements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 15pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">A corporation may opt out of the interested
stockholder provisions described in the preceding paragraph by expressly electing not to be governed by such provisions in its
bylaws, which must be approved by the affirmative vote of a majority of votes of the outstanding voting stock of such corporation
and is subject to further conditions. However, DSS&rsquo;s Bylaws do not contain any provisions electing not to be governed by
Section 912 NYBCL. Under DSS&rsquo;s bylaws, any corporate action other than the election of directors (which requires the affirmative
vote of a plurality of shares entitled to vote) to be taken by vote of the shareholders, shall be authorized by a majority of
votes cast at a meeting of shareholders by the holders of shares entitled to vote thereon.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Transfer Agent and Registrar</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Transfer Agent and Registrar for our
common stock is American Stock Transfer and Trust Company, LLC.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>DESCRIPTION OF WARRANTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following description, together with
the additional information we may include in any applicable prospectus supplements, summarizes the material terms and provisions
of the warrants that we may offer under this prospectus and the related warrant agreements and warrant certificates. While the
terms summarized below will apply generally to any warrants that we may offer, we will describe the particular terms of any series
of warrants in more detail in the applicable prospectus supplement. If we indicate in the prospectus supplement, the terms of any
warrants offered under that prospectus supplement may differ from the terms described below.&nbsp; If there are differences between
that prospectus supplement and this prospectus, the prospectus supplement will control.&nbsp; Thus, the statements we make in this
section may not apply to a particular series of warrants.&nbsp; Specific warrant agreements will contain additional important terms
and provisions and will be incorporated by reference as an exhibit to the registration statement which includes this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 11pt; text-indent: -11pt"><B>General</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 11pt; text-indent: -11pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We may issue warrants for the
purchase of common stock. We may issue warrants independently or together with common stock or debt, and the warrants may be
attached to or separate from these securities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We will evidence each series of warrants
by warrant certificates that we may issue under a separate agreement. We may enter into the warrant agreement with a warrant agent.
Each warrant agent may be a bank that we select which has its principal office in the United States and a combined capital and
surplus of at least $50,000,000.&nbsp; We may also choose to act as our own warrant agent.&nbsp; We will indicate the name and
address of any such warrant agent in the applicable prospectus supplement relating to a particular series of warrants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We will describe in the applicable prospectus
supplement the terms of the series of warrants, including:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.2pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in; text-align: left"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">the offering price and aggregate number of warrants
offered;</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in; text-align: left"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">the currency for which the warrants may be purchased;</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 70.4pt; text-indent: -27.5pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in; text-align: left"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">if applicable, the designation and terms of the securities
with which the warrants are issued and the number of warrants issued with each such security or each principal amount of such
security;</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 70.4pt; text-indent: -27.5pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in; text-align: left"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">if applicable, the date on and after which the warrants
and the related securities will be separately transferable;</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 70.4pt; text-indent: -27.5pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in; text-align: left"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">in the case of warrants to purchase common stock, the
number of shares of common stock, as the case may be, purchasable upon the exercise of one warrant and the price at which these
shares may be purchased upon such exercise;</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 70.4pt; text-indent: -27.5pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in; text-align: left"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">the warrant agreement under which the warrants will
be issued;</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 70.4pt; text-indent: -27.5pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in; text-align: left"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">the effect of any merger, consolidation, sale or other
disposition of our business on the warrant agreement and the warrants;</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 70.4pt; text-indent: -27.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 70.4pt; text-indent: -27.5pt"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 70.4pt; text-indent: -27.5pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in; text-align: left"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">anti-dilution provisions of the warrants, if any;</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 70.4pt; text-indent: -27.5pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in; text-align: left"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">the terms of any rights to redeem or call the warrants;</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 70.4pt; text-indent: -27.5pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in; text-align: left"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">any provisions for changes to or adjustments in the
exercise price or number of securities issuable upon exercise of the warrants;</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 70.4pt; text-indent: -27.5pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in; text-align: left"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">the dates on which the right to exercise the warrants
will commence and expire or, if the warrants are not continuously exercisable during that period, the specific date or dates on
which the warrants will be exercisable;</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 70.4pt; text-indent: -27.5pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in; text-align: left"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">the manner in which the warrant agreement and warrants
may be modified;</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 70.4pt; text-indent: -27.5pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in; text-align: left"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">the identities of the warrant agent and any calculation
or other agent for the warrants;</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 70.4pt; text-indent: -27.5pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in; text-align: left"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">federal income tax consequences of holding or exercising
the warrants;</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 70.4pt; text-indent: -27.5pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in; text-align: left"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">the terms of the securities issuable upon exercise
of the warrants;</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 70.4pt; text-indent: -27.5pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in; text-align: left"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">any securities exchange or quotation system on which
the warrants or any securities deliverable upon exercise of the warrants may be listed; and</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 70.4pt; text-indent: -27.5pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in; text-align: left"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">any other specific terms, preferences, rights or limitations
of or restrictions on the warrants.</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 27.5pt; text-indent: -13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Before exercising their warrants, holders
of warrants will not have any of the rights of holders of the securities purchasable upon such exercise, including in the case
of warrants to purchase common stock, the right to receive dividends, if any, or, payments upon our liquidation, dissolution or
winding up or to exercise voting rights, if any.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Exercise of Warrants</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Each warrant will entitle the holder to
purchase the securities that we specify in the applicable prospectus supplement at the exercise price that we describe in the applicable
prospectus supplement. Unless we otherwise specify in the applicable prospectus supplement, holders of the warrants may exercise
the warrants at any time up to 5:00&nbsp;p.m. Eastern Time on the expiration date that we set forth in the applicable prospectus
supplement. After the close of business on the expiration date, unexercised warrants will become void.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Holders of the warrants may exercise the
warrants by delivering the warrant certificate representing the warrants to be exercised together with specified information, and
paying the required amount to the warrant agent in immediately available funds, as provided in the applicable prospectus supplement.
We will set forth on the reverse side of the warrant certificate, and in the applicable prospectus supplement, the information
that the holder of the warrant will be required to deliver to the warrant agent.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Until the warrant is properly exercised,
no holder of any warrant will be entitled to any rights of a holder of the securities purchasable upon exercise of the warrant.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Upon receipt of the required payment and
the warrant certificate properly completed and duly executed at the corporate trust office of the warrant agent or any other office
indicated in the applicable prospectus supplement, we will issue and deliver the securities purchasable upon such exercise. If
fewer than all of the warrants represented by the warrant certificate are exercised, then we will issue a new warrant certificate
for the remaining amount of warrants. If we so indicate in the applicable prospectus supplement, holders of the warrants may surrender
securities as all or part of the exercise price for warrants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.2pt"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Enforceability of Rights By Holders of Warrants</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Any warrant agent will act solely as our
agent under the applicable warrant agreement and will not assume any obligation or relationship of agency or trust with any holder
of any warrant. A single bank or trust company may act as warrant agent for more than one issue of warrants. A warrant agent will
have no duty or responsibility in case of any default by us under the applicable warrant agreement or warrant, including any duty
or responsibility to initiate any proceedings at law or otherwise, or to make any demand upon us. Any holder of a warrant may,
without the consent of the related warrant agent or the holder of any other warrant, enforce by appropriate legal action its right
to exercise, and receive the securities purchasable upon exercise of, its warrants in accordance with their terms.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Warrant Agreement Will Not Be Qualified Under Trust Indenture
Act</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">No warrant agreement will be qualified as
an indenture, and no warrant agent will be required to qualify as a trustee, under the Trust Indenture Act. Therefore, holders
of warrants issued under a warrant agreement will not have the protection of the Trust Indenture Act with respect to their warrants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Governing Law</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Each warrant agreement and any warrants
issued under the warrant agreements will be governed by New York law.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Calculation Agent</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Calculations relating to warrants may be
made by a calculation agent, an institution that we appoint as our agent for this purpose.&nbsp; The prospectus supplement for
a particular warrant will name the institution that we have appointed to act as the calculation agent for that warrant as of the
original issue date for that warrant. We may appoint a different institution to serve as calculation agent from time to time after
the original issue date without the consent or notification of the holders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The calculation agent&rsquo;s determination
of any amount of money payable or securities deliverable with respect to a warrant will be final and binding in the absence of
manifest error.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>PLAN OF DISTRIBUTION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">We may sell
shares of our common stock from time to time pursuant to underwritten public offerings, negotiated transactions, block trades
or a combination of these methods. We may sell the securities through underwriters or dealers,
through agents, or directly to one or more purchasers. We may distribute shares of our
common stock from time to time in one or more transactions:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 0.5in">&nbsp;</TD>
    <TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>at a fixed price or prices, which may be changed;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 0.5in">&nbsp;</TD>
    <TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>at market prices prevailing at the time of sale;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 0.5in">&nbsp;</TD>
    <TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>at prices related to such prevailing market prices; or</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 0.5in">&nbsp;</TD>
    <TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>at negotiated prices.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in; background-color: white">A prospectus supplement
or supplements will describe the terms of the offering of our common stock, including:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in; background-color: white">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 0.5in">&nbsp;</TD>
    <TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>the name or names of any underwriters, if any;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 0.5in">&nbsp;</TD>
    <TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>the purchase price of the shares of our common stock and the proceeds we will receive from the sale;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 0.5in">&nbsp;</TD>
    <TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>any over-allotment options under which underwriters may purchase additional shares from us;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 0.5in">&nbsp;</TD>
    <TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>any agency fees or underwriting discounts and other items constituting agents&rsquo; or underwriters&rsquo; compensation;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 0.5in">&nbsp;</TD>
    <TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>any public offering price;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 0.5in">&nbsp;</TD>
    <TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>any discounts or concessions allowed or re-allowed or paid to dealers; and</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 0.5in">&nbsp;</TD>
    <TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>any securities exchange or market on which the shares of common stock may be listed.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">Only underwriters
named in the prospectus supplement are underwriters of the shares of common stock offered by the prospectus supplement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">If underwriters
are used in the sale, they will acquire the shares of common stock for their own account and may resell the shares from time to
time in one or more transactions at a fixed public offering price or at varying prices determined at the time of sale.&nbsp; The
obligations of the underwriters to purchase the shares will be subject to the conditions set forth in the applicable underwriting
agreement.&nbsp; We may offer the shares of common stock to the public through underwriting syndicates
represented by managing underwriters or by underwriters without a syndicate.&nbsp; Subject to certain conditions, the underwriters
will be obligated to purchase all of the shares offered by the prospectus supplement, other than shares covered by any over-allotment
option.&nbsp; Any public offering price and any discounts or concessions allowed or re-allowed or paid to dealers may change from
time to time.&nbsp; We  may use underwriters with whom we have a material relationship.&nbsp;
We will describe in the prospectus supplement, naming the underwriter, the nature of any such relationship.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">We may sell shares of our common stock directly or through agents we designate from time to time. We will name any agent
involved in the offering and sale of shares and we will describe any commissions we will pay the agent in the
prospectus supplement.&nbsp; Unless the prospectus supplement states otherwise, any such agent will act on a best-efforts basis
for the period of its appointment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">We may authorize agents or underwriters to solicit offers by certain types of institutional investors to purchase shares
of common stock from us at the public offering price set forth in the prospectus supplement pursuant to
delayed delivery contracts providing for payment and delivery on a specified date in the future.&nbsp; We will describe the conditions
to these contracts and the commissions we or the stockholders must pay for solicitation of these contracts in the prospectus supplement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">We
may provide agents and underwriters with indemnification against civil liabilities, including liabilities under the
Securities Act, or contribution with respect to payments that the agents or underwriters may make with respect to
these liabilities.&nbsp; Agents and underwriters may engage in transactions with, or perform services for, us in the ordinary
course of business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">Any underwriter
may engage in overallotment, stabilizing transactions, short covering transactions and penalty bids in accordance with Regulation
M under the Exchange Act.&nbsp; Overallotment involves sales in excess of the offering size, which create a short position.&nbsp;
Stabilizing transactions permit bids to purchase the underlying shares so long as the stabilizing bids do not exceed a specified
maximum price.&nbsp; Short covering transactions involve purchases of the securities in the open market after the distribution
is completed to cover short positions.&nbsp; Penalty bids permit the underwriters to reclaim a selling concession from a dealer
when the common stock originally sold by the dealer is purchased in a covering transaction to cover short positions.&nbsp; Those
activities may cause the price of the common stock to be higher than it would be otherwise.&nbsp; If commenced, the underwriters
may discontinue any of the activities at any time.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">Any underwriters
that are qualified market-makers on the NYSE MKT may engage in passive market-making transactions in the common stock on the NYSE
MKT in accordance with Regulation M under the Exchange Act, during the business day prior to the pricing of the offering, before
the commencement of offers or sales of the common stock.&nbsp; Passive market-makers must comply with applicable volume and price
limitations and must be identified as passive market-makers.&nbsp; In general, a passive market-maker must display its bid at a
price not in excess of the highest independent bid for such shares; if all independent bids are lowered below the passive market-maker&rsquo;s
bid, however, the passive market-maker&rsquo;s bid must then be lowered when certain purchase limits are exceeded.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">In addition, we
will be subject to applicable provisions of the Exchange Act and the associated rules&nbsp;and regulations under the Exchange
Act, including Regulation M, which provisions may limit any timing of our purchases and sales of the shares.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">Certain
underwriters, dealers or agents and their associates may engage in transactions with and perform services for us in the
ordinary course of our business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white; text-indent: 0.5in">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>LEGAL MATTERS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The validity of the issuance of the securities
offered hereby will be passed upon for us by Sichenzia Ross Friedman Ference LLP, New York, New York.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>EXPERTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The financial statements as of and for the
years ended December 31, 2012 and 2011 incorporated by reference in this prospectus have been so incorporated in reliance on the
report of FREED MAXICK CPAs, P.C., independent registered public accountants, incorporated herein by reference, given on the authority
of said firm as experts in auditing and accounting.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>WHERE YOU CAN FIND MORE INFORMATION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">This prospectus constitutes a part of a
registration statement on Form&nbsp;S-3 filed under the Securities Act.&nbsp; As permitted by the SEC&rsquo;s rules, this prospectus
and any prospectus supplement, which form a part of the registration statement, do not contain all the information that is included
in the registration statement.&nbsp; You will find additional information about us in the registration statement.&nbsp; Any statements
made in this prospectus or any prospectus supplement concerning legal documents are not necessarily complete and you should read
the documents that are filed as exhibits to the registration statement or otherwise filed with the SEC for a more complete understanding
of the document or matter.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We file annual, quarterly and current reports,
proxy statements and other information with the SEC.&nbsp; You may read, without charge, and copy the documents we file at the
SEC&rsquo;s public reference rooms in Washington, D.C. at 100 F Street, NE, Room&nbsp;1580, Washington, DC 20549.&nbsp; You can
request copies of these documents by writing to the SEC and paying a fee for the copying cost.&nbsp; Please call the SEC at 1-800-SEC-0330
for further information on the public reference rooms. &nbsp;Our SEC filings are also available to the public at no cost from the
SEC&rsquo;s website at http://www.sec.gov.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 13.2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>INCORPORATION OF DOCUMENTS BY REFERENCE</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We have filed a registration statement on
Form&nbsp;S-3 with the Securities and Exchange Commission under the Securities Act. This prospectus is part of the registration
statement but the registration statement includes and incorporates by reference additional information and exhibits. The Securities
and Exchange Commission permits us to &ldquo;incorporate by reference&rdquo; the information contained in documents we file with
the Securities and Exchange Commission, which means that we can disclose important information to you by referring you to those
documents rather than by including them in this prospectus. Information that is incorporated by reference is considered to be part
of this prospectus and you should read it with the same care that you read this prospectus. Information that we file later with
the Securities and Exchange Commission will automatically update and supersede the information that is either contained, or incorporated
by reference, in this prospectus, and will be considered to be a part of this prospectus from the date those documents are filed.
We have filed with the Securities and Exchange Commission, and incorporate by reference in this prospectus:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<!-- Field: Page; Sequence: 54; Value: 19 -->
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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<TR>
    <TD STYLE="width: 0.5in">&nbsp;</TD>
    <TD STYLE="vertical-align: top; width: 0.5in"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">&bull;</FONT></TD>
    <TD STYLE="vertical-align: top"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Our Annual Report on Form 10-K for the fiscal year ended December&nbsp;31, 2012 filed with the SEC onMarch 6, 2013;</FONT></TD></TR>
<TR>
    <TD>&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD></TR>
<TR>
    <TD>&nbsp;</TD>
    <TD STYLE="vertical-align: top"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">&bull;</FONT></TD>
    <TD STYLE="vertical-align: top"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Our Annual Report on Form 10-K/A for the fiscal year ended December&nbsp;31, 2012 filed with the SEC on April 26, 2013;</FONT></TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 0.5in">&nbsp;</TD>
    <TD STYLE="width: 0.5in"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">&bull;</FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Our Current Reports on Form 8-K or 8-K/A, filed with the SEC on:</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">January 22, 2013;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">March 6, 2013;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">March 15, 2013;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">April 16, 2013;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">April 30, 2013;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">May 1, 2013;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">May 15, 2013;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">May 28, 2013;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">June 21, 2013;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">July 1, 2013;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">July 25, 2013;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">August 13, 2013; and</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">September 13, 2013</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">&bull;</FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Our Quarterly Report on Form 10-Q for the period ended March 31, 2013, filed with the SEC on May 15, 2013;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">&bull;</FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Our Quarterly Report on Form 10-Q for the period ended June 30, 2013, filed with the SEC on August 13, 2013;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">&bull;</FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">The description of our Common Stock, which is registered under Section&nbsp;12 of the Exchange Act, in our registration statement on Form 8-A, filed with the SEC on April 19, 2004, including any amendments or reports filed for the purpose of updating such description.</FONT></TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We also incorporate by reference all additional
documents that we file with the Securities and Exchange Commission under the terms of Sections 13(a), 13(c), 14 or 15(d)&nbsp;of
the Exchange Act that are made after the initial filing date of the registration statement of which this prospectus is a part until
the offering of the particular securities covered by a prospectus supplement or term sheet has been completed. We are not, however,
incorporating, in each case, any documents or information that we are deemed to furnish and not file in accordance with Securities
and Exchange Commission rules.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 26.4pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">You may request a copy of these filings
at no cost, by writing or telephoning us at the following address or telephone number:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white">Jeffrey D&rsquo;Angelo,
VP and General Counsel</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white">Document Security
Systems, Inc.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">First Federal Plaza, Suite 1525</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">28 East Main Street</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Rochester, NY 14614</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Tel: (585) 325-3610</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><IMG SRC="tlogo.jpg" ALT=""></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 12pt"><B>Document
Security Systems, Inc.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>[&bull;] Shares of Common Stock </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" ALIGN="CENTER" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 100%; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>National Securities Corporation</B></FONT></TD>
    </TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Prospectus Supplement dated December [&bull;],
2014</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>



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`
end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
