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