NOTE 7 - SHORT TERM AND LONG TERM DEBT

Revolving Credit Lines - The Company's subsidiary Premier Packaging Corporation has a revolving credit line with RBS Citizens, N.A. ("Citizens Bank") of up to $1,000,000 that bears interest at 1 Month LIBOR plus 3.75% (3.93% as of December 31, 2013) and matures on May 31, 2014. As of December 31, 2013, the revolving line had a balance of $158,087 ($194,680, net of sweep account of $349,976 as of December 31, 2012). The Company's subsidiary, ExtraDev, Inc. has a $100,000 revolving line of credit with a bank that bears interest at 4.75% that is secured by personal guarantees of the former ExtraDev owners. As of December 31, 2013, the balance of the ExtraDev credit line was $0 ($43,560 -December 31, 2012).

Short-Term Debt - On May 24, 2013, the Company entered into a promissory note in the principal sum of $850,000 to purchase three printing presses that were previously leased by the Company's wholly-owned subsidiary, Secuprint, Inc. The Note is secured by all of the assets of Secuprint, Inc., including the equipment. The note matures on May 24, 2014, and carries an interest rate of 9% per annum. Interest is payable quarterly, in arrears. On May 24, 2013, as additional consideration for the loan, the Company issued the lender a five-year warrant to purchase up to 60,000 shares of the Company's common stock at an exercise price of $3.00 per share. The warrant was valued at approximately $69,000 using the Black-Scholes-Merton option pricing model with a volatility of 60.0%, a risk free rate of return of 0.89% and zero dividend and forfeiture estimates. In conjunction with the issuance of the warrants, the Company recorded a discount on debt of approximately $69,000, which is being amortized over the term of the note. As of December 31, 2013, short-term debt had a carrying value of $824,857 with an outstanding balance of $850,000 net of unamortized discount of $25,143.

Long-Term Debt - On December 30, 2011, the Company issued a $575,000 convertible note that was due on December 29, 2013, and carries an interest rate of 10% per annum. Interest is payable quarterly, in arrears. The convertible note can be converted at any time during the term at lender's option into a total of 260,180 shares of the Company's common stock at a conversion price of $2.21 per share. In conjunction with the issuance of the convertible note, the Company determined a beneficial conversion feature existed amounting to approximately $88,000, which was recorded as a debt discount to be amortized over the term of the note. The note is secured by all of the assets (excluding assets leased) of Secuprint Inc., a subsidiary of the Company, is subject to various events of default. On May 24, 2013, the Company amended the convertible note to extend the maturity date of the note from December 29, 2013 to December 29, 2015. The change in the fair value of the embedded conversion option exceeded 10% of the carrying value of the original debt, therefore the Company accounted for this restructuring as an extinguishment in accordance with FASB ASC 470-50 "Debt Modifications and Extinguishments" and recognized a loss on extinguishment of $26,252. The note was written up to its fair value on the date of modification of approximately $650,000 and the premium recorded in excess of its face value will be amortized over the remaining life of the note. The carrying amount of the note on December 31, 2013 was approximately $633,000 ($575,000 - December 31, 2012).

Term Loan Debt - On February 12, 2010, in conjunction with the credit facility agreement with Citizens Bank, Premier Packaging entered into a term loan with Citizens Bank for $1,500,000. As amended on July 26, 2011, the term loan requires monthly principal payments of $25,000 plus interest through maturity of February 2015. Interest accrues at 1 Month LIBOR plus 3.75% (3.92% at December 31, 2013). The Company entered into an interest rate swap agreement to lock into a 5.7% effective interest rate over the remaining life of the amended term loan. As of December 31, 2013, the balance of the term loan was $350,000 ($650,000 - December 31, 2012).

On October 8, 2010, Premier Packaging amended its credit facility Agreement with Citizens Bank to add a standby term loan note pursuant to which Citizens Bank will provide Premier Packaging with up to $450,000 towards the funding of eligible equipment purchases. In October 2011, the standby term loan note was converted into a term note payable in monthly installments of $887 plus interest at LIBOR plus 3% (3.17% at December 31, 2013) over 5 years. As of December 31, 2013, the balance under this term note was $30,171 ($40,819 - December 31, 2012).

On July 19, 2013, Premier Packaging, entered into a Master Loan and Security Agreement (the "Master Agreement") with People's Capital and Leasing Corp. ("Peoples Capital") pursuant to which Premier Packaging purchased a 2006 Heidelberg Model XL105-6LX CP2000 printing press for use in its Victor, New York facility. Pursuant to the Master Agreement, People's Capital provided Premier Packaging with a loan in the principal amount of $1,303,900, repayable over a 60-month period in monthly payments will commence when the equipment is placed in service. The repayment of the loan is secured by a security interest in (i) the equipment; and (ii) all proceeds obtained from the sale of the equipment. The note bears interest at 4.84% and is payable in equal monthly installments of $24,511 commencing January 6, 2014 through December 6, 2018. As of December 31, 2013, the note had a balance of $1,303,900.

Promissory Notes - On August 30, 2011, Premier Packaging purchased the packaging plant it occupies in Victor, New York for $1,500,000, which was partially financed with a $1,200,000 promissory note obtained from Citizens Bank ("Promissory Note"). The promissory note calls for monthly payments of principal and interest in the amount of $7,658, with interest calculated as 1 month LIBOR plus 3.15% (3.32% at December 31, 2013). Concurrently with the transaction, the Company entered into an interest rate swap agreement to lock into a 5.865% effective interest rate for the life of the loan. The Promissory Note matures in August 2021 at which time a balloon payment of the remaining principal balance of $919,677 is due. As of December 31, 2013, the Promissory Note had a balance of $1,132,998 ($1,170,831 - December 31, 2012).

On December 6, 2013, Premier Packaging entered in to a Construction to Permanent Loan with Citizens Bank for up to $450,000 that will convert into a Promissory Note upon the completion and acceptance of building improvements to the Company's packaging plant in Victor, New York. The Promissory Note will be payable in monthly installments over a 15 year period at an interest to be determined at the date of conversion by the choice of the borrower on either a fixed rate of 3.89% or variable rate based on the then applicable LIBOR rate. As of December 31, 2013, Premier Packaging had borrowed $250,464 of the available $450,000 and expects the construction to be completed in the first half of 2014.

Under the Citizens Bank credit facilities, the Company's 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, the Company received a waiver as of December 31, 2013 from Citizens Bank, relating to the above-mentioned financial covenant. 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.

A summary of scheduled principal payments of long-term debt, not including revolving lines of credit, premiums or discounts subsequent to December 31, 2013 are as follows:

2014			1,434,281
2015			952,181
2016			310,587
2017			316,820
2018			332,690
Thereafter			1,146,145
			4,492,704