UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2006
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-26598
PAPERCLIP SOFTWARE, INC.
(Exact name of Small Business Issuer as specified in its Charter)
DELAWARE
(State of incorporation)
22-3137907
(IRS Employer ID number)
1 University Plaza
Hackensack, New Jersey 07601
(Address of principal executive offices) (Zip Code)
(201)525-1221
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No ___
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes ___ No X
(Applicable only to Corporate Issuers)
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Class August 10, 2006
Common Stock, $.01 par value 8,196,521
Transitional Small Business Disclosure Format (check one):
Yes ___ No X
PAPERCLIP SOFTWARE, INC.
INDEX
Page #
Part I. Financial Information
Item 1. Financial Statements
Condensed Balance Sheet 1
Condensed Statements of Operations 2
Condensed Statements of Cash Flows 3
Notes to Condensed Financial Statements 4
Item 2. Management's Discussion and Analysis
or Plan of Operation 7
Item 3. Controls and Procedures 11
Part II Other Information
Item 5. Other Information 12
Item 6. Exhibits 12
Signature 13
PAPERCLIP SOFTWARE, INC.
BALANCE SHEET
June 30,2006
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 154,041
Accounts receivable (net of
allowance for doubtful accounts
of $89,000) 173,571
Other Current Assets 4,028
-------------
Total Current Assets 331,640
-------------
EQUIPMENT, FURNITURE AND FIXTURES:
Computer and office equipment 54,220
Furniture and fixtures 6,056
-------------
60,276
Less- Accumulated depreciation 19,108
-------------
Equipment, Furniture, and Fixtures, Net 41,168
-------------
OTHER ASSETS 8,506
-------------
Total assets $ 381,314
=============
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 456,033
Taxes payable 13,500
Deferred revenue 399,700
Notes payable - current 129,691
-------------
Total Current Liabilities 998,924
Accrued compensation- related party 888,672
STOCKHOLDERS' DEFICIENCY:
Convertible Series A, preferred stock, authorized
10,000,000 shares; $.01 par value; 3,649,543 shares
issued and outstanding 36,495
Common stock, authorized 30,000,000
shares; $.01 par value; issued and
outstanding 8,196,521 shares 81,965
Additional paid-in capital 19,450,318
Accumulated deficit (21,075,060)
-------------
Total Stockholders' Deficiency (1,506,282)
-------------
Total liabilities and
stockholders' deficiency $ 381,314
=============
See notes to condensed financial statements
-1-
PAPERCLIP SOFTWARE, INC.
CONDENSED STATEMENTS OF OPERATIONS
UNAUDITED
THREE MONTHS ENDED JUNE SIX MONTHS ENDED JUNE 30
2006 2005 2006 2005
---------- ----------- ------------ -----------
NET SALES $443,175 $439,435 $791,426 $852,718
---------- ----------- ------------ -----------
OPERATING EXPENSES:
Research and development expenses 129,286 128,410 260,450 260,561
Selling expenses 175,139 221,255 390,392 452,281
General and administrative expenses 141,202 142,015 284,501 272,508
---------- ----------- ------------ -----------
Total operating expenses 445,627 491,680 935,343 985,350
---------- ----------- ------------ -----------
LOSS FROM OPERATIONS (2,452) (52,245) (143,917) (132,632)
---------- ----------- ------------ -----------
OTHER INCOME (EXPENSE):
Extinguishment of payable - - - 4,100
Settlement of loan payable, net 41,529 - 41,529 -
Interest expense (11,181) (18,462) (29,643) (22,262)
Interest income 1,026 162 2,979 293
---------- ----------- ------------ -----------
Total other income(expense),net 31,374 (18,300) 14,865 (17,869)
---------- ----------- ------------ -----------
NET INCOME (LOSS) BEFORE
PROVISION FOR INCOME TAXES 28,922 (70,545) (129,052) (150,501)
Provision for income taxes - - - -
---------- ----------- ------------ -----------
NET INCOME (LOSS) $28,922 ($70,545) ($129,052) ($150,501)
========== =========== ============ ===========
BASIC AND FULLT DILUTED
INCOME (LOSS) PER COMMON SHARE 0.00 (0.01) (0.02) (0.02)
========== =========== ============ ===========
WEIGHTED AVERAGE NUMBER
COMMON SHARES OUTSTANDING 8,196,521 8,196,521 8,196,521 8,196,521
========== =========== ============ ===========
See notes to condensed financial statements
-2-
PAPERCLIP SOFTWARE, INC.
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
UNAUDITED
2006 2005
--------- -----------
OPERATING ACTIVITIES:
Net loss $(129,052) $ (150,501)
Adjustments to reconcile net loss
to net cash used for
operating activities-
Depreciation 5,100 3,920
Extinguishment of accounts payable - (4,100)
Settlement of loan payable (41,529) -
Interest on loan payable 21,843 -
Increase in accrued compensation to related party 20,923 15,000
Interest on loan payable - 14,562
(Increase) decrease in:
Accounts receivable 26,482 (107,647)
Other current assets 268 (60,000)
Security deposit 13,500 -
Increase (decrease) in:
Accounts payable and accrued expenses 16,855 20,897
Accrued interest on convertible debt 3,900 7,800
Deferred revenues - 11,000
--------- -----------
Net cash used for
operating activities (61,710) (249,069)
--------- -----------
INVESTING ACTIVITIES-Purchases of
equipment, furniture and fixtures (11,288) (17,864)
--------- -----------
FINANCING ACTIVITIES:
Payment/proceeds of loan payable (157,500) 250,000
Deferred finance cost - (32,500)
--------- -----------
Net cash (used for) provided by financing
activities (157,500) 217,500
--------- -----------
DECREASE IN CASH (230,498) (49,433)
CASH AND CASH EQUIVALENTS
Beginning of period 384,539 374,931
--------- -----------
End of period $ 154,041 $ 325,498
--------- -----------
SUPPLEMENTAL DISCLOSURE
OF CASH FLOW INFORMATION
Interest paid - -
--------- -----------
Taxes paid - -
--------- -----------
See notes to condensed financial statements
-3-
PAPERCLIP SOFTWARE, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2006
NOTE A - NATURE OF THE BUSINESS AND BASIS OF PRESENTATION
PaperClip Software, Inc. (formerly known as PaperClip Imaging Software,
Inc.) located in Hackensack, New Jersey, ("PaperClip" or the "Company"),a
Delaware corporation, incorporated in October, 1991, is engaged in the
development and distribution of computer software for document management and
transport of electronic document packages across the public Internet or a
private Intranet with interoperability, security and tracking capabilities. The
Company's systems allow users of personal computer networks to scan, file,
retrieve, display, print and route documents and other software objects (such as
word processing files, spreadsheets and electronic mail), while continuing to
use their existing application software. The systems can be integrated with many
personal computer applications with little or no programming and can file and
retrieve documents without the time consuming step of manually labeling or
indexing each document.
The accompanying unaudited condensed financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information, the instructions to
Form 10-QSB and Regulation S-B. Accordingly, they do not include all the
information and footnotes required by accounting principles generally accepted
in the United States of America for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring accruals)
considered necessary for fair presentation have been included. The results of
operation for such interim periods are not necessarily indicative of results of
operation for a full year or for any other period. The unaudited financial
statements should be read in conjunction with the audited financial statements
and notes thereto and management's discussion and analysis of financial
conditions included in the Company's Annual Report on Form 10-KSB for the year
ended December 31, 2005 as filed with the Securities and Exchange Commission
(the "SEC").
NOTE B - Summary of Significant Accounting Policies
The significant accounting policies followed by the Company are set forth
in Note 2 to the Company's financial statements in the December 31, 2005 Form
10-KSB.
NOTE C - NET INCOME (LOSS) PER COMMON SHARE
Income(loss) per common share-basic is computed based upon the weighted
average number of common shares and common share equivalents outstanding, if
dilutive, during the period.
Income (loss) per common share-fully diluted is computed based upon the
weighted average number of common shares, common share equivalents and Series A
Preferred Stock outstanding, if dilutive, during the period.
-4-
NOTE D - GOING CONCERN
As shown in the accompanying financial statements, the Company has a
history of significant operating losses and as of June 30, 2006, current
liabilities exceeded current assets by $667,284 and total liabilities exceeded
total assets by $1,506,282. These factors as well as uncertain conditions the
Company faces regarding continued negative trends for sales, operating income,
net income and cash flows, raise substantial doubt about the Company's ability
to continue as a going concern.
Note E- INVESTMENT BANKING AGREEMENT; TERMINATION OF LOAN PAYABLE:
On October 29, 2004, the Company signed an investment banking agreement
with Sloan Securities Corp. (together with its affiliates, "Sloan") to raise
capital for the Company. In connection with such engagement, the Company issued
two-year warrants to Sloan to purchase 500,000 shares of the Company's Common
Stock at an exercise price of $.10 per share. The warrants entitle the holder
thereof to certain registration rights. The warrants vested as to 425,000 shares
on the date of issuance, but will not vest as to the remaining 75,000 shares as
the requisite financing contemplated by the investment banking agreement was
never consummated. The Company recorded the 425,000 warrants on the balance
sheet as deferred financing costs at a value of $24,000.
On March 31, 2005 and April 8, 2005 the Company received funds from a group
of accredited investors in the amounts of $100,000 and $57,500, respectively, in
anticipation of the execution of definitive documentation with such investors.
Documents had been fully negotiated in anticipation of a financing for gross
proceeds of between $500,000 and $1,200,000. While the Company executed certain
documents prior to its receipt of the funds, the documents were to be held in
escrow pending a final transaction and the Company never received countersigned
agreements from the investors. Under the terms of the negotiated transaction,
the invested funds were to be in the form of a two year loan, secured by a lien
on the Company's assets, with interest at the rate of 12% per annum prepaid for
the entire period, and financing fees to Sloan in the aggregate amount equal to
13% of the gross proceeds raised. Warrants to purchase 200,000 shares and 50,000
shares were also to be issued to the investors and Sloan, respectively, for each
$100,000 of the financing. One half of such warrants were to be exercisable at
$0.20 per share, and the other half of such warrants were to be exercisable at
$0.25 per share. In a letter agreement dated March 31, 2005, Sloan and the
investors agreed that they would not enforce their registration rights related
to shares of common stock issuable upon exercise of the warrants until such time
as the Company had received an aggregate of $500,000 of gross proceeds through
the issuance of notes. The Company had been unable to obtain executed documents
from the investors or Sloan or definite confirmation of their intent regarding
the funds. The Company had accounted for the loan as short-term indebtedness.
-5-
On May 12, 2006, the Company, the investors and Sloan entered into a letter
agreement, pursuant to which the Company returned to the investors the aggregate
$157,500 amount that had been extended to the Company, in exchange for the
release by the investors of any interest they may have had under any documents
(whether in draft or executed form) relating to the $157,500 amount, including,
without limitation, any promissory note, warrant, securities purchase agreement,
security agreement and registration rights agreement. Any such agreements have
no force or effect from and after May 12, 2006.
Note F- Accounting for Share Based Payments:
Prior to 2006, the Company accounted for employee stock options under the
intrinsic method of APB No. 25, with fair value presented on a proforma basis,
as provided in SFA 123, as permitted under accounting principles generally
accepted in the United States of America. Beginning in 2006, the Company began
accounting for employee stock options as compensation expense, in accordance
with SFAS No. 123R, "Share Based Payments." SFAS No. 123R requires companies to
expense the value of employee stock options and similar awards for periods
beginning after December 15, 2005 and applies to all outstanding and invested
stock based awards at a company's adoption date. In computing the impact, the
fair value of each option is estimated at the date of grant based on the
Black-Scholes option-pricing model utilizing certain assumptions for a risk free
interest rate, volatility and expected remaining lives of the awards vesting.
The impact of applying SFAS No. 123R was deemed negligible during the first six
months of 2006.
-6-
PAPERCLIP SOFTWARE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Certain information included in this Quarterly Report may be deemed to
include forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended, that involve risk and uncertainty, such as information
relating to the acceptance and sale of the Company's products, the Company's
ability to successfully market and distribute its products, the Company's
ability to generate sufficient cash flow from the sale of its products to meet
the Company's cash requirements and to pay its liabilities when due, the
Company's ability to protect its proprietary property and the Company's ability
to attract and retain key employees. Further, the results of operation for the
second quarter period are not necessarily indicative of results of operation for
a full year or any other period. In addition, certain statements may involve
risk and uncertainty if they are preceded by, followed by, or that include the
words "intends," "estimates," "believes," expects," "anticipates," "should,"
"could," or similar expressions, and other statements contained herein regarding
matters that are not historical facts. Although we believe that our expectations
are based on reasonable assumptions, we can give no assurance that our
expectations will be achieved. We do not undertake any obligation to release
publicly any revisions to such forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
Results of Operations
Three Months and Six Months Ended June 30, 2006 Compared with Three Months
and Six Months Ended June 30, 2005
Net sales of the Company increased by $3,740 or 1% to $443,175 for the
three months ended June 30, 2006 from $439,435 for the three months ended June
30, 2005 and decreased by $61,292 or 7% to $791,426 for the six months ended
June 30, 2006 from $852,718 for the six months ended June 30, 2005. The decrease
for the six months ended June 30, 2006 was due to a decrease in sales of the
Company's products.
-7-
Research and development expenses increased by $876 or 1% to $129,286 for
the three months ended June 30, 2006 from $128,410 for the three months ended
June 30, 2005 and decreased by $111 or .04% to $260,450 for the six months ended
June 30, 2006 from $260,561 for the six months ended June 30, 2005. The changes
are not considered significant.
Selling expenses decreased by $46,116 or 21% to $175,139 for the three
months ended June 30, 2006 from $221,255 for the three months ended June 30,
2005 and decreased by $61,889 or 14% to $390,392 for the six months ended June
30, 2006 from $452,281 for the six months ended June 30, 2005. The decrease
resulted from a decrease in commissions and exhibition expenses.
General and administrative expenses decreased by $813 or .5% to $141,202
for the three months ended June 30, 2006 from $142,015 for the three months
ended June 30, 2005 and increased by $11,993 or 4% to $284,501 for the six
months ended June 30, 2006 from $272,508 for the six months ended June 30, 2005.
The increase for the six month period was primarily due to an increase in
employee benefits expense partially offset by a decrease in rent expense.
Other income (expense) increased by $49,674 to $31,374 for the three months
ended June 30, 2006 from ($18,300) for the three months ended June 30, 2005, and
increased by $32,734 to $14,865 for the six months ended June 30, 2006 from
$(17,869) for the six months ended June 30, 2005. The increases were primarily
due to the settlement of a loan payable.
For the three and six months ended June 30, 2006 and for the three and six
months ended June 30, 2005, there was no provision for income taxes, as the
Company had a net operating loss in each such period.
Net income (loss) increased by $99,467 to a net income of $28,922 for the
three months ended June 30, 2006 from a net loss of ($70,545) for the three
months ended June 30, 2005 and increased by $21,449 to ($129,052) for the six
months ended June 30, 2006 from ($150,501) for the six months ended June 30,
2005. The increases were primarily due to decreases in commission and exhibition
expense, and settlement of a loan payable.
-8-
Liquidity and Capital Resources
June 30, 2006 Compared with December 31, 2005
As of June 30, 2006, the Company had an accumulated deficit of
$21,075,060. The Company had a working capital deficit of $667,284 and $601,781
as of June 30, 2006, and December 31, 2005, respectively. Included in current
liabilities are deferred revenues of approximately $399,700, as of
June 30, 2006, and December 31, 2005, respectively, such amounts representing
liabilities that will not require the use of cash. If such non-cash amounts were
not included in current liabilities, then current liabilities would exceed
current assets by approximately $267,584 and $202,081,as of June 30, 2006, and
December 31, 2005, respectively.
Presently, the Company funds working capital from revenues it receives from
the sale of its products. For the remainder of 2006, the Company anticipates
that it will need approximately $1,000,000 in order to fund its operations. The
Company's management believes that the Company will be able to meet its
anticipated cash requirements through the end of 2006 through a combination of
cash from the sale of its products, cost reduction initiatives to be implemented
as necessary (which initiatives the Company expects would be primarily related
to the Company's sales and marketing activities), and cash on hand. With respect
to such cost reduction initiatives, the Company eliminated one sales position
and one technical support position after the conclusion of the second quarter.
The Company's ability to fund its operations is subject to broader acceptance of
its product lines, its ability to continue to realize revenues from its largest
customers, product performance, competitive forces, sales efforts of resellers,
the absence of unanticipated expenses and other factors identified herein. There
can be no assurance that the Company will generate enough cash from the sale of
its products, or that the Company will be successful in implementing any cost
reduction initiatives that may be undertaken, to meet its anticipated cash
requirements for the remainder of 2006. If the Company does not generate enough
cash to meet its requirements for the remainder of 2006, the Company will not
have sufficient working capital to satisfy its liabilities, develop new products
or implement its marketing and sales initiatives, which may result in a loss of
sales and would have a material adverse effect on the Company.
-9-
As of June 30, 2006, the Company had aggregate liabilities of approximately
$1.9 million. Such amount of aggregate liabilities includes (i) $399,700 in
annual support contracts, which are recorded as deferred revenue, a non-cash
item, for accounting purposes and reclassified on a pro rata basis to sales as
such contracts expire and income is earned, (ii) $469,533 in accounts payable,
accrued expenses, and taxes payable, and (iii) $129,691 in notes payable which
were issued more than six years ago. Such liabilities also include loans
payable-related party, which relates to deferred compensation of approximately
$888,672 payable to Mr. Weiss. Mr. Weiss has entered into a written agreement
with the Company in which he agreed not to demand payment on $ 888,672 of his
deferred compensation until subsequent to August 1, 2007.
See Note E to the Financial Statements for a description of certain capital
raised by the Company during 2005. As described in greater detail therein, on
March 30, 2005 and April 8, 2005, the Company received funds from a group of
accredited investors in the net amounts of $100,000 and $57,500, respectively,
in connection with an investment in the Company in the aggregate principal
amount of $250,000. On May 12, 2006, the Company, the investors and Sloan
entered into a letter agreement, pursuant to which the Company returned to the
investors the aggregate $157,500 amount that had been extended to the Company,
in exchange for the release by the investors of any interest they may have had
under any documents (whether in draft or executed form) relating to the $157,500
amount, including, without limitation, any promissory note, warrant, securities
purchase agreement, security agreement and registration rights agreement. Any
such agreements have no force or effect from and after May 12, 2006.
-10-
Item 3. Controls and Procedures
Disclosure Controls and Procedures
The Chief Executive Officer/Principal Financial Officer of the Company has
concluded, based on his evaluation as of the end of the fiscal period covered by
this Report, that the Company's disclosure controls and procedures are effective
to ensure that information required to be disclosed by the Company in the
reports filed or submitted by it under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), is recorded, processed, summarized and reported
within the time periods specified in the SEC's rules and forms, and include
controls and procedures designed to ensure that information required to be
disclosed by the Company in such reports is accumulated and communicated to the
Company's management, including the Chief Executive Officer/Principal Financial
Officer, as appropriate to allow timely decisions regarding required disclosure.
Internal Control Over Financial Reporting
During the quarter ended June 30, 2006, there has been no change in the
Company's internal control over financial reporting that has materially
affected, or is reasonably likely to materially affect, the Company's internal
control over financial reporting.
-11-
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
In 2004, the Company commenced a lawsuit against Lumtron, one of the
largest customers of the Company, in the Superior Court of the State of New
Jersey for payment of delinquent accounts receivable approximating $93,000. The
Company has set up what it believes is an adequate bad debt reserve to cover
this dispute. An arbitration proceeding relating to this dispute concluded in
late July 2006, and the Company is awaiting the results of such proceeding.
Item 5. Other Information
See Note E to the Financial Statements for a description of certain capital
raised by the Company during 2005. As described in greater detail therein, on
March 30, 2005 and April 8, 2005, the Company received funds from a group of
accredited investors in the net amounts of $100,000 and $57,500, respectively,
in connection with an investment in the Company in the aggregate principal
amount of $250,000. On May 12, 2006, the Company, the investors and Sloan
entered into a letter agreement , pursuant to which the Company returned to the
investors the aggregate $157,500 amount that had been extended to the Company,
in exchange for the release by the investors of any interest they may have had
under any documents (whether in draft or executed form) relating to the $157,500
amount, including, without limitation, any promissory note, warrant, securities
purchase agreement, security agreement and registration rights agreement. Any
such agreements have no force or effect from and after May 12, 2006.
Item 6. Exhibits
10.1 Agreement, dated July 1, 2006, by and between PaperClip Software,
Inc. and William Weiss.
31.1 Certification Pursuant to Rule 13a-14(a) Promulgated under the
Securities Exchange Act of 1934.
32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
-12-
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
PAPERCLIP SOFTWARE, INC.
BY /s/ William Weiss
William Weiss, Chief Executive
Officer and Principal
Financial Officer
Date: August 10, 2006
-13-
EXHIBIT 10.15
WILLIAM WEISS
July 1, 2006
PaperClip Software, Inc.
611 Route 46 West
Hasbrouck Heights, NJ 07604
Reference is hereby made to the $888,672 in "accrued compensation-related
party" recorded on the balance sheet appearing in the Quarterly Report on Form
10-QSB of PaperClip Software, Inc. for the quarter ended June 30, 2006. Such
payables relate to deferred compensation for services previously performed by
William Weiss ("Weiss") as an officer of the Company pursuant to an oral
employment arrangement and are payable to Weiss and/or his affiliated company.
Weiss hereby agrees that neither Weiss nor such affiliated company shall demand
payment of such payables prior to August 1, 2007.
Sincerely,
BY /s/ William Weiss
William Weiss
Exhibit 31.1
CERTIFICATION
I, William Weiss, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of PaperClip
Software, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the small business
issuer as of, and for, the periods presented in this report;
4. The small business issuer's other certifying officer(s) and I are
responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small
business issuer and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the small business issuer,
including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being
prepared;
(b) Evaluated the effectiveness of the small business issuer's disclosure
controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
(c) Disclosed in this report any change in the small business issuer's
internal control over financial reporting that occurred during the small
business issuer's most recent fiscal quarter (the small business issuer's fourth
fiscal quarter in the case of an annual report) that has materially affected, or
is reasonably likely to materially affect, the small business issuer's internal
control over financial reporting; and
5. The small business issuer's other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the small business issuer's auditors and the audit
committee of the small business issuer's board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the small business issuer's ability to record,
process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the small business issuer's internal
control over financial reporting.
Date: August 10, 2006 By: /s/ William Weiss
William Weiss
Chief Executive Officer
Principal Financial Officer
EXHIBIT 32.1
CERTIFICATION OF
CHIEF EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER OF
PAPERCLIP SOFTWARE, INC.
(Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code)
The undersigned, William Weiss, Chief Executive Officer and Principal
Financial Officer of PaperClip Software, Inc. (the "Company"), certifies that:
The Quarterly Report on Form 10-QSB of the Company for the three months
ended June 30, 2006 fully complies with the requirements of Section 13(a)
or 15(d) of the Securities Exchange Act of 1934; and
The information contained in the Quarterly Report on Form 10-QSB of the
Company for the three months ended June 30, 2006 fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
August 10, 2006 BY /s/ William Weiss
William Weiss
Chief Executive Officer
Principal Financial Officer