UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-KSB

          ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2002


                        Commission File Number 000-26598

                            PAPERCLIP SOFTWARE, INC.
             (Name of small business issuer in its charter)

                                    Delaware
              (State or other jurisdiction of incorporation or organization)

                                   22-3137907
                      (I.R.S. Employer Identification No.)

                                611 Route 46 West
                       Hasbrouck Heights, New Jersey        07604
               (Address of principal executive offices)   (Zip Code)

                              (201) 329-6300
                      (Issuer's  telephone number)

Securities registered pursuant to Section 12 (b) of the Act:

Title of each class: None             Name of exchange on which registered:N/A

Securities registered pursuant to Section 12 (g) of the Act:

                  Common Stock, Par Value $.01
                     (Title of each Class)


Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities 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












<PAGE>

     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of  Regulation  S-B  contained  in  this  form,  and no  disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any  amendment to this Form 10-KSB.  [X ]

     The  issuer's  revenue  for the fiscal  year ended  December  31,  2002 was
$1,443,797. As of March 18, 2003, the aggregate market value of the voting stock
held by  non-affiliates  of the registrant was $473,700 (based on the average of
the OTC  Bulletin  Board bid and asked  price on March  18,  2003).  As of March
18,2003,   there  were  8,196,521  shares  of  the  registrant's   common  stock
outstanding.


Documents Incorporated by Reference: None. Transitional Small
Business  Disclosure  Format  (check  one):  Yes  ___ No X



     Certain information included in this Annual 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,   product  development  or
enhancements,  the Company's  ability to generate  sufficient cash flow from the
sale of its products and its tax losses 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.  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.















<PAGE>
                                     PART I

Item 1.  Description of Business.

INTRODUCTION

     PaperClip Software, Inc. formerly known as PaperClip Imaging Software, Inc.
(the  "Company"  or  "PaperClip"),  a  Delaware  corporation,  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 is the successor by merger, in March 1992, to the original company which
had been incorporated in New Jersey in October 1991.



About the Company

     The  Company's  systems  allow users of  personal  computers  and  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 Company's 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,  or manually
searching for documents.

     The  Company  developed  and  markets  a line  of  software  consisting  of
Professional,  Workgroup and Enterprise  Editions (the  "Systems").  The Company
also markets  PaperClip COLD,  which captures batch file  information  before it
goes to paper and allows expeditious access,  retrieval, full text searching and
printing of COLD  documents.  "COLD"  refers to  Computer  Output to Laser Disk,
which relates to documents  that are archived in large volumes of formatted data
streams  directly to optical  media.  Instead of printing large paper reports or
producing microfilm or microfiche, data is stored on optical disks.

     The Company developed its WebServer(TM)  Product, which is an add-on to the
Systems. This product provides full security for documents stored on a PaperClip
System,  enables  users to make the  documents  available  to anyone  with a Web
Browser and makes a user's document repository  accessible via the Internet or a
private intranet. In November 1995, PaperClip acquired,  from Cheyenne Software,
Inc.  ("Cheyenne"),  the NOSS (Network Optical Storage System) product line. The
Company offers NOSS as part of its systems as well as a stand-alone product. The
Company has developed the next  generation of the NOSS product, which has  been
deployed on the Microsoft  Windows NT server  platform.  The Company markets the
Systems and associated products  domestically (i) through a mass distributor,  Z
Source,  which sells to a value added  reseller  ("VAR")  channel that currently
consists of  approximately 25 resellers and (ii) directly through such VARs. The
Company markets its products internationally through approximately 5 VARs.




                                          -1-


<PAGE>
Industry Background

     Many  businesses  must  manage,  exchange  and  process  large  amounts  of
information in their day to day activities.  Traditional data processing systems
have  automated the creation and  processing  of data and text,  but they do not
provide a means for storing and  retrieving  documents  that must be retained in
their original form and used in conjunction with the data.

     The greatest difficulty in dealing with paper documents is filing,  storing
and  retrieving  them  conveniently  and  cost-effectively.  In  the  course  of
performing  these  tasks  manually,  critical  documents  can  be  inadvertently
misfiled,  physically  damaged,  or lost. Manual handling is inefficient because
documents  can only be used by one  person  at a time and are also  inaccessible
during the time required to transport  them within the  organization.  Moreover,
significant time and resources are often spent storing and locating documents in
large filing  systems.  With the public  acceptance of document  management and,
more  importantly,  the imaged  document  as an  original  document,  exchanging
electronic documents is a marketing opportunity.

     The procedural steps involved in processing  incoming documents may include
sorting  documents as they are  received,  indexing  them for future  reference,
routing  them from one  employee to the next,  entering  information  from these
documents into computer systems,  collecting different documents for appropriate
action,  creating  letters  and forms of  response  and  queuing  documents  for
subsequent  filing. In order to improve the efficiency of the flow of documents,
manage  information,  and improve office  productivity and response times,  many
companies may seek to automate  their paper and electronic  document  management
procedures.

     Technological  developments in recent years have made possible the low cost
capture,  storage,  retrieval  and  processing  of paper  documents as digitized
images. In particular, the application of optical disk technology, which permits
digitized  document  images to be stored with  densities many times greater than
magnetic storage media,  has enabled the development of cost effective  computer
systems for document management.

     The Systems have been designed to provide  users of personal  computers and
computer  networks the ability to  exchange,  file,  retrieve and process  large
volumes of documents  quickly,  efficiently and at a low cost. The  enhancements
developed for the Systems have been designed to allow users to quickly implement
workflow technology in their existing  environments  without the need for costly
programming. The Company's Internet products give users the added flexibility of
exchanging, accessing and managing stored documents via the Internet.

     The Company  derives all of its revenues  from the licensing or sale of the
Systems and associated  products and services.  The Company's principal products
are the Professional, Workgroup and Enterprise Editions, as well as the Internet
Express and  eXpressLink  products (as described  below).  In 2000,  the Company
developed 4 new products, Internet Express ("IE"), eXpressLink ("XL"), WebServer
and DECS  (Document EDI Capture  Suite),  and  continued to further  enhance its
existing   products.   InternetExpress  is  an  extranet  designed  to  exchange
electronic  documents as an Application  Service Provider  ("ASP").  The Company

                                          -2-


<PAGE>

will derive  revenue  based on the  movement  of  Electronic  Document  Exchange
("EDX") packages across the Internet.  IE has expanded to four delivery options,
IE Client, Secure Email, Secure Hosting, and Secure Fax. eXpressLink is designed
to exchange  electronic  documents among  organizations  that are members of the
same private  intranet and connect to IE. The Company  provides XL as a product,
not a service.  This product  expands the user's  communications  options  while
maintaining a consistent  interface to a user's  document  management  solution.
WebServer  allows  users  across the World Wide Web to  retrieve  documents  and
conduct simple workflow tasks from their thin client  browser.  DECS is a remote
electronic  document EDX  packaging  system that  provides  scanning,  printing,
filing and Electronic Data Interchange  ("EDI") capture producing  capabilities,
and  creates  EDX  Packages  for IE, XL, the  Systems  and/or any EDX  compliant
solution.  There can be no assurance  that the  Company's  products will achieve
market  acceptance  or result in revenue  to the  Company.  In 2001 the  Company
released a new product called Clip-It,  a toolkit leveraging the Company's award
winning technology for no programming integration.


The Systems

     The  Systems  allow  users of  personal  computers  and  personal  computer
networks to scan, file, retrieve,  display,  print and route documents and other
software  objects  (collectively  "Documents"),  such as word processing  files,
spreadsheets  and  electronic  mail.  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 Systems range from single user, stand-alone products
to enterprise-wide document management solutions.

     Electronic  "file  folders" of Documents can be accessed at any time by the
user  with  only one key  stroke  combination.  Minimal  training  is  required.
Moreover,  all Documents  previously  attached to an electronic  file folder are
accessible as soon as each of the Systems is activated.  If a Document is not so
attached, it can be located by searching a Document list or by entering exact or
partial  identifying  information  into  the  folder's  index  fields.  Multiple
Documents can be viewed simultaneously in any of the Systems.

     Images displayed through any of the Systems are facsimiles of the Documents
that have been scanned,  and the Systems allow Documents to be scrolled  through
(i.e.,  moved on a display  screen to search for a particular  line or section),
enlarged,  reduced,  and rotated.  The Systems also allow stored Documents to be
reproduced  through a locally  connected laser printer,  or through shared laser
print servers on a network.



                                          -3-








<PAGE>
Professional Edition

     The Professional  Edition allows users to create "folders" of Documents and
attach or "clip" them to their  existing  application  software.  The additional
features available include the ability to scan, index, retrieve, display, print,
fax, import and export  Documents.  Storage of Documents is on multiple forms of
media and, in addition,  enables the user to store  Documents on a large variety
of optical  disk and  "jukebox"  storage  devices.  A "jukebox"  is a mechanical
device which allows for  multiple  optical disk  platters or tapes to be managed
and accessed by software. This allows the storage of millions of Documents while
maintaining  a high level of  performance.  The  Professional  Edition  works in
conjunction  with SQL database  products from  Microsoft  and Sybase.


Workgroup Edition

      Workgroup   Edition  provides  users  with  all  of  the  features  of
Professional  Edition,  and allows users to perform all of the  functions at the
same  time,  as well as to route  Documents  and  folders  to  other  users on a
network.

Enterprise Edition

     Enterprise  Edition provides all the features of the Workgroup  Edition and
provides for Wide Area Network operation using a client/server architecture. The
significant  difference  provided  to users by the  Enterprise  Edition  are the
improved  performance  in  networks  with more than 20 users and the  ability to
manage a greater number of folders and documents. To operate Enterprise Edition,
the user is  required  to obtain a  license,  which is  readily  available  from
various third parties,  for the desired SQL server.  The  Enterprise  Edition is
suited to large departmental and enterprise installations. The Company presently
offers its  Enterprise  Edition to work in  conjunction  with SQL  Servers  from
Microsoft, Sybase and Oracle.


Capture Product Line - DECS

     DECS (Document EDI Capture Suite) is a set of  applications  with which end
users and business  applications  will  collect  electronic  documents  and / or
Electronic Data  Interchange  (EDI) into an EDX V2.0 Package for transmission to
an IDM  solution  or EDI  application  or both.  DECS  provides  the  tools  for
collecting  scanned  images,  documents  printed to the DECS Print Driver,  file
import, keyed and file captured EDI. This data can be transformed,  packaged and
transported to the recipient for further processing as an EDX V2.0 Package.







                                          -4-




<PAGE>
The Cold Product

     PaperClip  COLD captures  formatted  print data  streams.  Once the data is
captured by the PaperClip COLD Extract Engine, it is automatically imported into
the user's  PaperClip  System and made available to the users by viewing through
the PaperClip  system.  Users can access folders  containing COLD data by simply
pressing a designated key from the applications that they choose.  They can also
access  folders  of  diverse  information  through  PaperClip's  intuitive  file
cabinet/folder  interface.  PaperClip  COLD can  print to any  standard  Windows
printers or fax and can display documents on conventional  80-column monitors in
132  column  format.  To further  facilitate  the  retrieval  and review of COLD
documents,  PaperClip  COLD supports full text  searching of COLD  documents and
forms  overlay,  and can add colored lines to the display to simulate  green bar
paper viewing.

The Noss Product Line

     NOSS is the  subsystem  for optical  storage and jukebox  management.  When
combined  with the  Workgroup and  Enterprise  Editions,  it provides a powerful
system that manages a range of mass storage devices. The acquisition of the NOSS
product  line (a  portion of which is subject  to an  exclusive,  royalty  free,
perpetual  license from  Cheyenne)  allows  PaperClip to fully take advantage of
NOSS's high-end  functionality  to further  develop  powerful  document  imaging
solutions for client/server network environments.  PaperClip is also making NOSS
available  as a separate  product for VARs,  integrators,  and  distributors  to
develop applications based on network optical storage.


Internet Product Line - Webserver

     WebServer(TM)  is an add-on  to the  Systems.  The  product  provides  full
security for  documents  stored on a PaperClip  System and enables users to make
documents  available  to anyone  with a Web Browser  and to make  available  the
user's document repository to both Internet and private intranet users.

Clipit Toolkit

     ClipIt is a new approach for legacy application  integration with any other
application(s).  ClipIt's  greatest  demand  is  found  in the new  thin  client
services.  By integrating ClipIt within thin client  applications,  users simply
hit a "Hot Key" to quickly view important  records and documents across the Web.
ClipIt is a Tool-kit  designed  to leverage  PaperClip's  award  winning  Visual
Context Processor (Clipping)  technology allowing developers and integrators the
ability to program ClipIt within their application or script within browsers.








                                          -5-



<PAGE>
Expresslink Communications

     PaperClip's  eXpressLink  (XL) is an electronic  document  package exchange
solution  designed to interconnect  dissimilar  Electronic  Document  Management
solutions  whereby  they can  exchange  documents  similar  to  electronic  data
interchange (EDI). Designed to transport electronic document packages across the
corporate  Intranet  or  Internet  providing   interoperability,   security  and
tracking. Utilizing the public standard Electronic Document eXchange version 2.0
for packaging electronic documents, any EDX V2.0 compliant system can connect to
the XL Server seamlessly with no programming.  A Company can now connect company
workflow and  integrate  dissimilar  document  management  solutions to business
partners and branch offices attached to the corporate  Intranet or Internet.  XL
significantly reduces document processing costs.  Standards driven, XL cuts cost
and reduces time to process.


Objectives, Internal Sales Force And Risks

     Management's  marketing  objectives for the Systems and the Company's other
products are as follows:  (i) develop  strategic  relationships  with  prominent
software  organizations;  (ii)  introduce  the Systems and the  Company's  other
products to customers through VARs, original equipment  manufacturers  ("OEMs"),
distributors  and  other   distribution   networks;   (iii)  create  brand  name
recognition of its products by advertising  in appropriate  trade  magazines and
publications,  and by attending  and  participating  in  exhibitions,  shows and
seminars,  engaging  in  public  relations  campaigns,  and  conducting  its own
seminars and direct mail  campaigns;  and (iv) support the sales  efforts of its
resellers through sales tools and training.

     Marketing assistance,  training and technical support of VARs is a critical
component of the Company's  efforts with respect to its Workgroup and Enterprise
Editions.  Consequently,  the  Company  provides  technical  support  along with
on-going  communication  to its VARs.  Marketing  assistance  includes  hot line
access,  mailings of product and technical updates, joint cooperative marketing,
site visits and seminars.

     The  Company  has a sales  force of five  persons.  While  management  will
attempt to  encourage  VARs,  distributors  and other  resellers to focus on the
Company's  products,  management  is aware  that  VARs,  distributors  and other
resellers also represent other lines of products,  some of which may be, or are,
competitive with those of the Company. Accordingly, the VARs, OEMs, distributors
and other  resellers  may choose to give  higher  priority  to products of other
publishers, which would decrease potential sales by the Company.


Value Added Reseller Network

     To date, revenue sources are approximately evenly divided between VAR sales
and internal services. The Company currently has approximately 25 VARs, of which
approximately 22 VARs are in the United States and approximately 3 are abroad.



                                          -6-


<PAGE>
Business Services

     The Company's Business Services Department sells directly to major accounts
that want to work on a direct  basis with the  Company.  It also offers users of
its products and VARs, post-contract support, consulting services and assistance
in  the  form  of  training,  product  education  and  technical  support,  when
requested. The Business Services Department currently consists of 1 employee.


Customers And Sales

     The Company had net sales of  $1,443,797  in 2002 and  $1,249,285  in 2001.
Image  Tek, a VAR,  and BISYS,  a direct  customer,  accounted  for 16% and 16%,
respectively, of the Company's sales in 2002. Image Tek accounted for 19% of the
Company's sales in 2001. Two customers represented 48% of accounts receivable at
December 31, 2002, and three customers represented 72% of accounts receivable at
December 31, 2001.


Customer Support And Service

     The Company presently  provides telephone support to its VARs. The majority
of the Company's  service and support  activities  involve responses to customer
inquiries regarding use of the Workgroup,  Enterprise and Professional Editions,
which are provided by telephone  support  directly from the Company's  technical
support center.


Product Development

     At present,  the Company's  systems are being developed by a combination of
in house staff and, when  necessary,  outside  consultants.  PaperClip  expended
approximately  $288,335  and $270,309 on research  and  development  in 2002 and
2001, respectively.

     Existing and future competing products that may be offered at lower prices,
or that may have superior technological and performance  characteristics,  could
adversely  affect  sales of the Systems  and/or  other  products  offered by the
Company. Management expects that growing demand for efficient and cost-effective
solutions  for  document  management  and  imaging  will  continue  to drive the
developments  of new  technologies  that  may be  more  sophisticated  than  the
Company's products and that the Company's ability to continue to compete depends
upon its ability to continue to enhance  successfully its existing  products and
to develop  new  products  that meet the  changing  needs of  end-users.  If the
Company is unable to  successfully  enhance its existing  products or to develop
new products,  it may have a material adverse effect on the Company's operations
and profitability.




                                          -7-




<PAGE>
Production

     The Company has produced a set of master CD's and  documentation for all of
its  products.  The  Company  duplicates  the CD's and  assembles  and ships the
Systems at and from its  headquarters.  The  Company  has also  engaged  various
sources to  produce  and  assemble  the  product  and  documentation  (including
packaging  for  the  Systems  on  terms  management  believes  are  commercially
reasonable).


Product Protection

     The  Company  relies  on a  combination  of  copyright,  trade  secret  and
trademark laws and license  agreements to protect its proprietary  rights in its
technology.  The Company previously  obtained from the U.S. Patent and Trademark
Office a registered  trademark for PAPERCLIP  SOFTWARE AND DESIGN in August 1993
and obtained a registered trademark for PAPERCLIP IMAGING SOFTWARE AND DESIGN in
February 1993. Both of those  registrations  were allowed to expire because they
were  for  forms  of the  mark no  longer  in use.  The  Company  was  issued  a
Certificate of  Registration  for the Trademark  Paperclip on November 20, 2001.
Although to the best of  Company's  knowledge no other person or entity owns any
U.S.  registered  trademark for the mark "PaperClip" in connection with software
or  imaging  products,  there  is a  registration  filed  by a third  party  for
"Technology  As  Easy  To Use As A  PaperClip"(tm) for  consulting  on  computer
hardware,  software  and  systems  in the  fields  of  sales  automation,  order
processing,  voicemail, paging, dictation,  transcription and telecommunications
and  off-site  employee  programs  and  businesses.  While the Company  does not
believe there is any likelihood of confusion  raised by the use of such mark, if
such  confusion  were  alleged,  the Company  would rely on its prior common law
rights. There also was a prior U.S. registration for use of the "PaperClip" mark
in  connection  with   pre-recorded   word  processor   programs.   This  latter
registration was automatically  canceled on April 2, 1992 by the U.S. Patent and
Trademark  Office  because of the  registrant's  failure to file (as required by
statute) an affidavit,  during the year commencing with the fifth anniversary of
the registration,  stating that the mark was still in use. However,  the user of
the canceled  registration  might,  at some future time,  assert an infringement
claim in the  U.S.  based  on  alleged  common  law  rights.  If such a claim is
asserted, the Company may be forced to expend significant effort, time and funds
to defend against it. If the Company is not successful in defending against such
a claim, the Company would be required to adopt a different name and would incur
costs as a result thereof.

     The Company owns registrations for the trademark PAPERCLIP IMAGING SOFTWARE
& DESIGN in Germany and Canada,  but does not now own  registrations  or pending
applications for trademark  registration in other countries in which the Systems
and the Company's other products are sold.






                                          -8-



<PAGE>
     The  Company   distributes  its  products  under  signed  software  license
agreements,  which  grant  customers  perpetual  licenses  to use,  rather  than
ownership of, the Company's products and which contain  restrictions on copying,
disclosure, reverse engineering and transferability.  The source code for all of
the  Company's  products is protected  as a trade  secret and as an  unpublished
copyrighted  work.  In  addition,  the Company has  entered  into  nondisclosure
agreements with its employees. There can be no assurance that the steps taken by
the  Company in this  regard  will be  adequate  to deter  misappropriations  or
independent third-party development of its technology.

     The  Company  has no patents on its  proprietary  software  technology  and
existing copyright laws afford only limited practical  protection.  In addition,
the laws of some  foreign  countries  do not protect the  Company's  proprietary
rights in its products and technology to the same extent as U.S. laws.

     Although management  believes that the Company's  products,  trademarks and
other  proprietary  rights do not infringe on any existing  proprietary right of
others,   there  can  be  no  assurance  that  third  parties  will  not  assert
infringement claims in the future.


Components Provided By Others

     The Systems require licenses,  which the Company has obtained, from, Merant
AccuSoft Corporation, Sybase Inc., and Snowbound Software.

















                                          -9-













<PAGE>
Competition

     The document  management  software market is intensely  competitive.  Buyer
preferences  can  shift  quickly,   and  rapid  changes  in  technology  provide
opportunities  for new entrants into the market.  Management is not aware of any
product  line which  offers all of the  features  and  functions of the Systems.
However, a number of software companies offer products which compete with one or
more of the functions of the Systems.

     There are numerous companies that sell either stand-alone,  network and Web
based  systems with which the Company  competes.  Competition  for the Company's
products  include,  among others,  Hyland  Software and Optika  Imaging  Systems
Incorporated.  The Company also competes with more expensive  turnkey  solutions
such as those  produced  by FileNet  Corp.  and IBM  Corporation.  Many of these
companies have greater  financial  strength and resources than the Company,  and
there can be no assurance that these  competitors will not modify their existing
systems,  develop new products or systems or acquire  other  competitors  of the
Company to better compete with the Systems.  Nor can there by any assurance that
new companies will not introduce new systems with better  features and functions
than  the  Systems.  There  are a few  competitors  in the  electronic  document
exchange market.  This is a new extension of the Internet services  collectively
known  as  the  Business  to  Business  Electronic  Commerce  (B2B/ec).  Current
competition  is focused on  electronic  mail (Email) based  exchange  solutions,
which is different  from the  methodology  the Company has adopted.  Significant
email based competitors United Parcel Service and Pitney Bowes recently departed
the market,  stating that the market requires industry customization to be truly
effective  and that is beyond our scope.  In the life  insurance  industry,  one
competitor has emerged  utilizing a central  repository  for document  exchange.
Intellisys  provides a central repository and sells retrieval and communications
with selected  carriers as their service.  It contracts with the smaller brokers
where  outsourcing  to  the  broker  makes  more  sense.   PaperClip's  document
management  customers are the larger volume  brokers.  Intellisys is an Internet
Express customer.

     In addition to computer software for document management and imaging, there
is also a diverse  range of  alternative  types of tools and methods for storing
and retrieving  documents,  including microfilm,  microfiche and computer output
microfilm and microfiche machines. Moreover, management expects that the growing
demand for efficient and  cost-effective  solutions for document  management and
computer imaging will continue to drive the development of new technologies that
may be more sophisticated and cost-effective than the Systems. Many existing and
potential  competitors  have  considerably  greater  financial,   technological,
marketing and personnel resources than the Company.

     Management  believes that the principal  competitive  factors in the market
for the Company's products include product performance,  technology,  quality of
customer support, availability of training and consulting services, price, sales
and marketing strength,  corporate reputation and ongoing responsiveness to user
needs.

                                          -10-





<PAGE>
Employees

     As of March 18,  2003,  the  Company's  full-time  staff of 12  includes  4
employees  engaged  in  development  and  systems  testing,  5 engaged in sales,
marketing  and  technical  support,  1 in  Business  Services  and 2 engaged  in
administration.  The Company has no  collective  bargaining  agreements,  and no
employee  is  represented  by a labor  union.  The  Company has never had a work
stoppage and considers its  relationship  with its employees to be satisfactory.
The  Company   intends  to  utilize   consultants   to  supplement  its  systems
development, sales and marketing efforts, when necessary.

     The Company's success depends to a significant  extent upon a number of key
management  and technical  employees.  The loss of services of one or several of
these key  employees  could  have a  material  adverse  effect  on the  Company.
Management  believes that the future  success of the Company will also depend in
large  part upon the  Company's  ability to attract  and retain  highly  skilled
technical, managerial and marketing personnel. Competition for such personnel in
the software industry is intense.


Recent Developments

     On November 12, 1997, the Company and Access Solutions International,  Inc.
("Access"  or "ASI")  entered into a definitive  Merger  Agreement  (the "Merger
Agreement")  which  provided  that the Company would merge with and into a newly
formed wholly-owned subsidiary of Access. The merger consideration to be paid to
the  Company  was  1,544,438  shares  of the  common  stock  of  Access  plus an
equivalent  number of Class B Warrants.  Concurrent  with the  execution  of the
Merger  Agreement,  the  Company  and  Access  also  entered  into a  Management
Agreement pursuant to which Access assumed control of the day-to-day  operations
of the Company  and  advanced  funds to the  Company  pending the closing of the
transactions contemplated by the Merger Agreement (the "Management Agreement").
















                                          -11-





<PAGE>

     In August 1998,  Access  terminated the Merger Agreement in accordance with
its  terms due to the  failure  by Access to  satisfy  the  financing  condition
contained in the Merger  Agreement.  The Management  Agreement was terminated in
October 1998. In November  2000,  the Company and Access entered into a Series A
Preferred Stock Purchase Agreement (the "Purchase  Agreement") pursuant to which
the  Company  issued  3,649,543  shares of the  Company's  Series A  Convertible
Preferred Stock, $.01 par value per share (the "Series A Preferred  Stock"),  to
Access as payment in full of an amount  equal to  $2,305,506  which  represented
advances made to the Company by Access pursuant to the Management Agreement plus
accrued interest of $384,786 on such advances.  The shares of Series A Preferred
Stock were issued at the  equivalent  price of $0.71 per share.  Pursuant to the
Purchase  Agreement,  Access also agreed to waive unpaid  management fees in the
amount  of  $300,000  owed to  Access  by the  Company.  Each  share of Series A
Preferred  Stock is  convertible  into one share of the Company's  common stock,
subject to adjustment  and  anti-dilution  protection  upon certain  events.  In
addition,  in  connection  with the Purchase  Agreement,  the Company and Access
entered  into an  Agreement  (the  "Agreement"),  dated as of  November 1, 2000,
pursuant  to  which,  among  other  things,  the  Company  agreed to issue a new
Promissory  Note (the "New Note") in the amount of $405,530 in exchange  for the
cancellation of the promissory  note in the principal  amount of $300,000 issued
to Access by the Company on January 29, 1997 (the "Old Note") and Access and the
Company  agreed to release each other from certain  claims,  including,  but not
limited to,  claims under the Merger  Agreement,  Management  Agreement  and Old
Note.  Pursuant to the New Note issued to Access in November  2000,  the Company
was  required to repay the  $405,530  principal  amount over a 36-month  period.
There was no interest  on the New Note unless the Company did not pay  principal
when due.

     On March 20,  2003,  Access  sold the Series A  Preferred  Stock to William
Weiss,  the  Company's  Chief  Executive  Officer  ("Weiss") for an aggregate of
$106,986.29. In addition, on March 20, 2003, the Company and Access entered into
an agreement  (the "Note  Repayment  Agreement"),  pursuant to which the Company
paid Access an amount equal to $101,382.48 as payment in full of all obligations
arising  under  the New Note.  The  remaining  principal  amount on the New Note
immediately  prior to its  satisfaction  was  $135,176.64.  Pursuant to the Note
Repayment   Agreement,   the  parties  also  terminated  that  certain  Security
Agreement,  dated as of January 29, 1997 (the "Security  Agreement"),  which had
secured the  payments  of all  amounts  due under the New Note,  and the parties
released each other from certain claims, including claims under the New Note and
the Security Agreement.

     Since the  termination  of the  Management  Agreement in October 1998,  the
Company  has had no  sources of capital  other than  revenues  from sales of its
products  and the sale of New Jersey tax  credits.  From  January  1998 to March
2000, the Company did not have the funds  necessary to pay for the audits of its
statements or file reports  required under the Securities  Exchange Act of 1934,
as amended (the "Exchange Act"), and operated on a subsistence basis.





                                          -12-

<PAGE>

     In June 2000, the Company entered the residential  mortgage  industry.  The
Company's  solutions have been  successful in the broker  business and secondary
market.  In July 2000,  Sovereign  Bank began  utilizing the  Company's  hosting
services for the processing of secondary mortgage  transactions.  The Company at
the end of fiscal year 2002  released its mortgage  customization  module called
Mortgage  Information  Profile  Process  (MIPP).  This module  reflects  current
mortgage standards, best practices and leverages electronic document exchange.

     In June 2002, the Company  expanded the delivery means of Internet  Express
to include secure email, secure hosting and secure fax. These service extensions
have resulted in meeting our customers'  needs while expanding our revenue base.
Secure  email has been well  received,  filling a void left when  United  Parcel
Service (UPS) exited the email delivery  market in September 2002. The Company's
communication solutions support over a million documents per month currently.

     In September 2002, the Company joined Anoto, Inc. as a development  partner
applying  Anoto   functionality   to  the  document   management   industry  and
specifically to life insurance and mortgage vertical  applications.  The Company
during November 2002 launched several  initiatives  targeting the Life Insurance
ACORD  Unified Part One  Application  and the Mortgage  MISMO's  SmartDoc  XHTML
standards.  In addition, The Company has recently passed several security audits
from customers concerning HIPAA compliance as a trusted entity.

     In 1999,  2000,  2001 and 2002,  the Company  applied for a Technology  Tax
Certificate  with the State of New Jersey Economic  Development  Authority.  The
program  allowed  the  Company to sell its New Jersey tax losses to a New Jersey
company  that could  utilize the  losses.  The  Company  received  approximately
$351,000 in 2000,  $223,000 in 2001 and  $191,000  in 2002,  respectively,  from
selling a portion of its  losses.  The  Company  intends to file in 2003 to sell
additional tax losses of up to  approximately  $1.9 million , which could result
in net  proceeds to the  Company of  approximately  $130,000.  Due to the budget
deficit for the State of New Jersey,  this program may be  cancelled,  and there
can be no  assurance  if or when  the  Company  will  receive  such  amount.  In
addition,  there can be no assurance  that the Company  will receive  sufficient
funds to pay its creditors, file required documents with the Securities Exchange
Commission and maintain its existence.




                                          -13-













<PAGE>

ITEM 2.  Description of Property.

     The  Company's  principal  administrative,  sales  and  marketing,  product
development and support facilities are located in Hasbrouck Heights, New Jersey,
and  comprise  approximately  2,700  square  feet.  The Company  occupies  these
premises  pursuant to a lease,  the term of which  expires on November 30, 2005.
The fixed  rent is  approximately  $4,500  per month  plus  utilities,  plus its
proportionate share of any increase in operating costs.

ITEM 3.  Legal Proceedings.

     In 2002 the Company settled a copyright  infringement  suit against Tokairo
LTD, a UK Company, by receiving a payment of $62,500.

     The Company is not a party to any material pending legal proceedings.

ITEM 4.  Submission Of Matters To A Vote Of Security Holders.

     No matters were  submitted to a vote of security  holders during 2002.



                                          -14-































<PAGE>
                                     PART II

ITEM 5.  Market For Common Equity And Related Stockholder Matters.

                    Common                              Class A
                     Stock                              Warrants


2002              High     Low                       High     Low
First             0.05     0.02                      (Warrants Expired 8/9/01)
Second            0.19     0.03
Third             0.07     0.02
Fourth            0.07     0.03

2001              High      Low                      High      Low
First             0.25     0.06                      0.00     0.001
Second            0.12     0.02                      0.01     0.005
Third             0.12     0.07                      0.00     0.005
Fourth            0.08     0.05                      (Warrants Expired 8/9/01)

     The above  prices  per share  were the bid prices  during  such  periods as
reported by Bloomberg News Service for OTC market  quotations.  Such  quotations
reflect  interdealer prices without retail mark-up,  mark-down or commission and
may not necessarily represent actual transactions.

     The Company's securities are presently traded on the OTC Bulletin Board. As
of December  31,  2002,  there were  approximately  700 holders of record of the
Company's  shares of Common Stock. The Company has not paid cash dividends since
its  organization and does not anticipate the declaration or the payment of cash
dividends  in the  foreseeable  future.  In  addition,  the  Company's  Series A
Preferred Stock  Certificate of Designation  restricts the declaration,  payment
and  setting  aside of any  dividends  without the consent of the holders of the
Requisite  Percentage  (as  defined in such  Certificate)  of Series A Preferred
Stock.







                                           -15-













<PAGE>
ITEM 6.  Management's Discussion and Analysis or Plan of Operation

RESULTS OF OPERATIONS

Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

     Net sales of Paperclip  increased by $194,512 or 16% to $1,443,797  for the
year ended  December 31, 2002 from  $1,249,285  for the year ended  December 31,
2001.  The increase was due to an increase in sales of its Intranet
Express products  and an increase in revenues from customers upgrading to newer
versions of the Company's products.

     Salaries  and related  benefits  decreased by $67,735 or 8% to $794,286 for
the year ended  December 31, 2002 from $862,021 for the year ended  December 31,
2001.  The decrease was due to a decrease in sales  personnel used to market the
Company's product line, as well as general office personnel.

     Research and  development  expenses  increased by $18,026 or 7% to $288,335
for the year ended  December 31, 2002 from $270,309 for the year ended  December
31, 2001.  The increase  was due to purchase of software  used in the  Company's
research and development.

     Selling expenses decreased by $56,395 or 29% to $135,865 for the year ended
December  31, 2002 from  $192,260  for the year ended  December  31,  2001.  The
decrease resulted from the termination of an outside consultant.

     General and administrative  expenses increased by $14,923 or 8% to $196,447
for the year ended  December 31, 2002 from $181,524 for the year ended  December
31, 2001. The increase was due to an increase in professional fees.

     Provision for income taxes  increased by $11,900,  due to the suspension by
the State of New Jersey of the utilization of net operating losses  carryforward
in 2002 and 2003.

     Other income  decreased by $36,051 to $175,566 for the year ended  December
31, 2002 from  $211,617 for the year ended  December  31, 2001.  The decrease is
primarily due to a decrease in amounts  realized from the sale of tax credits in
2002 as compared to 2001.

     Net income  increased by $237,742 to $192,530  for the year ended  December
31, 2002 from  $(45,212) for the year ended  December 31, 2001. The increase was
due to an increase in  revenues,  a decrease  in expenses  resulting  from lower
selling  expenses and  salaries  offset by a decrease in the sale of tax credits
and an increase in the provision for income taxes.  During 2001, the Company had
signed a new five-year lease which reduced rent expense by $48,200 per year.



                                       -16-






<page>
LIQUIDITY AND CAPITAL RESOURCES
     For the year  ended  December  31,  2002,  the  Company's  net  income  was
$192,530.  For the year  ended  December  31,  2001,  the  Company's  operations
resulted in a net loss of $45,212.  As of December 31, 2002,  the Company had an
accumulated  deficit of  $20,958,264.  Although  the  Company  reported a modest
operating  income during  fiscal year 2002,  the Company may in the future incur
operating  losses.  The Company had negative  working  capital of $1,442,685 and
$1,649,209  as of December 31, 2002 and December  31,  2001,  respectively.  The
decrease  in negative  working  capital of  $206,524  was due to a reduction  in
expenses and an increase in sales. As a result of these factors,  as well as the
uncertain  conditions  the Company faces  regarding the  delinquency of accounts
payable and loans  payable,  the report of the  independent  public  accountants
contains explanatory language as to the Company's ability to continue as a going
concern.

     Presently, the Company funds working capital from revenues it receives from
the sale of its  products  and the sale of its tax losses.  As of  December  31,
2002,  the Company had aggregate  liabilities  in excess of $2.0  million.  Such
amount  of  aggregate  liabilities  includes  (i)  $392,900  in  annual  support
contracts,  which are recorded as deferred  revenue for accounting  purposes and
pro-ratably reclassified to sales as such contracts expire and income is earned,
(ii) $665,000 owed to the Company's Chief Executive Officer for deferred salary,
(iii) a $135,177  note  payable  that was  satisfied  in full on March 20,  2003
through a payment of  $101,382.48  and (iv)  $768,976  in  accounts  payable and
accrued  expenses,  of which  approximately  $150,000  - $200,000  consisted  of
accounts  payable  that  arose  over six  years  ago.  In view of the  Company's
liquidity  constraints,  the Company has not made  payments with respect to such
accounts payable  referenced in (iv) above,  and the creditors  relating to such
accounts  payable  have not sought  payment  over the last  several  years.  The
Company  does not have  sufficient  working  capital  to satisfy  its  remainder
liabilities.  While  the  Company  has been  successful  to date in  negotiating
arrangements with its creditors for the deferred payment of its liabilities, and
was able to  negotiate  a  settlement  agreement  with  Access,  there can be no
assurance that such  arrangements  will continue.  In addition,  there can be no
assurance  that the  Company's  creditors  will not  institute an action for the
repayment of such amounts and if such action is taken against the Company,  that
the Company would be able to satisfy such  amounts.  In the event such action is
brought  against the  Company,  it would have a material  adverse  effect on the
Company.

     At December  31,  2002,  the Company had net Federal  operating  loss carry
forwards ("NOL") of approximately  $20,200,000 for financial reporting purposes.
Due to losses  sustained  by the Company for both  financial  and tax  reporting
through 2001,  management  was unable to determine  that  realization of the tax
asset related to the NOL was more likely than not and, thus, has provided a full
valuation allowance.  The Company's NOL that would be available to offset future
income may be subject to annual limitations.  However,  due to a provision under
the laws of the State of New Jersey, the Company realized  $623,135,  $ 351,335,
$223,000 and $191,000 in 1999, 2000, 2001 and 2002  respectively,  from the sale
of some of its New Jersey net  operating  losses and research  tax credits.  The
Company  intends  to  file  in  2003 to  sell  additional  tax  losses  of up to
approximately  $1.9 million which could result in net proceeds to the Company of
approximately  $130,000.  There can be no  assurance if or when the Company will
receive  such amount.  If the Company is unable to realize such tax credits,  it
will have a material adverse effect on the Company.
                                     -17-

<page>

     For  2003,  the  Company   anticipates  that  it  will  need  approximately
$1,600,000 in order to fund its operations . The Company's  management  believes
that cash from the sale of its  products  and sale of its tax losses will enable
it to meet its anticipated cash  requirements for the next 12 months.  There can
be no assurance that the Company will generate  enough cash from the sale of its
products  or any cash from the sale of its tax  losses  to meet its  anticipated
cash  requirements  for the next 12 months.  If the  Company  does not  generate
enough cash to meet its  requirements  for the next 12 months,  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.



Statement Regarding Critical Accounting Policies

     The financial  statements  of the Company are prepared in  accordance  with
accounting  principles  generally  accepted in the United States of America that
require  the Company to make  estimates  and  assumptions.  The  Securities  and
Exchange   Commission  ("SEC")  has  recently  issued  disclosure  guidance  for
"critical accounting  policies." The SEC defines critical accounting policies as
those that require  application of management's  most  difficult,  subjective or
complex  judgments  that are  inherently  uncertain and may change in subsequent
periods.

     The  preparation  of financial  statements  in conformity  with  accounting
principles   generally  accepted  in  the  United  States  of  America  requires
management to make estimates and assumptions that affect the reported amounts of
assets and  liabilities  and disclosure of contingent  assets and liabilities at
the date of the financial  statements  and the reported  amounts of revenues and
expenses  during the reporting  period.  Actual  results could differ from those
estimates.   Notwithstanding  the  foregoing,  the  Company  believes  that  the
Company's  operations  are of such a nature that  management  is not required to
make  estimates  and  assumptions  about  highly  uncertain  matters  such  that
differences in such estimates would have a material  impact on the  presentation
of the Company's financial  statements.  Accordingly,  the Company believes that
none of its  significant  accounting  policies  (see  Note 2 in the Notes to the
Financial   Statements)   require  additional   disclosure  as  being  "critical
accounting policies."









                                          -18-





<page>

ITEM 7.  Financial Statements.

        The Financial Statements can be found following Part III of this Report.

Review of Interim Financial Statements

     Item 310(b) of Regulation  S-B,  promulgated by the Securities and Exchange
Commission,  requires the interim financial information filed with Forms 10-Q or
10-QSB to be reviewed by an independent  accountant  under SAS 71 beginning with
fiscal quarters ending on or after March 15, 2000. Due to financial constraints,
the Company's  independent  accountants were not engaged to review the quarterly
financial  statements during fiscal year 2000, as required by Item 310(b).  This
resulted in a material  compliance  deficiency  with the Securities and Exchange
Commission.

     The  Company's  independent  accountants  performed  the  requisite  SAS 71
reviews of the interim financial statements included in the quarterly reports on
Form 10-QSB filed with the SEC during fiscal years 2001 and 2002.




ITEM 8.  Changes In And Disagreements With Accountants On Accounting And
         Financial Disclosure.

           None

                                          -19-



























<PAGE>


PART III

ITEM 9.  Directors, Executive Officers, Promoters and Control
         Persons; Compliance with Section 16(a) of the Exchange Act

Executive Officers and Directors

     The directors and executive officers of the Company as of March 1, 2003 are
as follows:
Name                       Age          Position

William Weiss              59           Chief Executive Officer; Treasurer;
                                        Director

D. Michael Bridges         48           President, Director

Michael Suleski            42           Vice President, Engineering; Secretary;
                                        Director


     The Company does not have any independent  directors and therefore does not
have an audit committee. The full Board of Directors is performing the functions
of the audit committee.

     WILLIAM WEISS, a founder of the Company,  has been Chief Executive  Officer
and a director of the Company since its formation in October 1991. Since January
1980, Mr. Weiss has also been an executive officer (and President since November
1988) and a director of Medical  Registry  Services,  Inc., a computer  software
company which sells and services a computerized system for cancer record keeping
in  hospitals.  Mr.  Weiss  devotes  approximately  10-15  hours per week to the
Company and  approximately  40-50 hours per week to Medical  Registry  Services,
Inc. From April 1974 to December 1979, Mr. Weiss was Executive Vice President of
Numerax, Inc., a public company specializing on computerized freight billing and
payment. From December 1969 to March 1974, Mr. Weiss served as an Executive Vice
President of a division of Automatic  Data  Processing,  Inc.,  the purchaser of
MSM,  Inc.,  a company he founded  which  provided  a computer  service  for the
investment advisory industry.  Mr. Weiss received a B.S. from the Wharton School
of the University of Pennsylvania and a J.D. from New York Law School.

     D. MICHAEL  BRIDGES,  President,  rejoined  PaperClip in March,  2000 after
providing consulting services to the Company from August 1998 to March 2000. Mr.
Bridges served as the Company's Vice President of Marketing & Sales and Director
of  Corporate  Services  from  February  1995 to August  1998.  Mr.  Bridges was
Executive Vice President and co founder of CMF Design System,  a custom software
and systems  integration  firm from May 1988 to February 1995. From July 1983 to
May 1988, Mr. Bridges was an integration consultant to Mr. Summers,  Director of
Dynamic and Systems,  EBASCO to deal with  migration  of real time  computing to
distributed  infrastructures.  Mr. Bridges received a B.S. from Rowan University
and served as a Captain in the United States Marine Corps.

                                -20-




<PAGE>

     MICHAEL  SULESKI,  a  founder  of the  Company,  has been  Vice  President,
Engineering  of the Company since August 1992,  and its Director of Research and
Development  from its  inception in October  1991 to August 1992.  He has been a
director of the Company since May 1995,  and Secretary of the Company since July
1995.  From July 1991 through October 1991, Mr. Suleski worked with a founder to
develop the DOS Network  Edition and helped found the  Company.  From April 1989
through  July  1991,  he was a  Senior  Engineer  with  Synercon  Corp.,  a firm
specializing in computer based solutions for the medical profession.  From April
1988  to  March  1989,  Mr.  Suleski  was a  software  engineer  with  Henderson
Industries,  a developer  and  manufacturer  of  commercial  industrial  control
systems and military electronics.  From July 1986 to March 1988, Mr. Suleski was
employed as software  engineer with  Singer/Kerfott,  a defense  contractor  for
guidance  and  navigation  systems.  He received a B.S.  and a M.S.  degree from
Fairleigh Dickenson University College of Science and Engineering.

     The Company's  directors are elected at the annual meeting of  stockholders
and hold office until the next annual meeting of the stockholders or until their
successors are elected and qualified. Directors are not currently compensated or
reimbursed  for expenses  incurred by them in connection  with their services as
directors, except for travel to Board of Directors meetings.

     There are no family relationships among any of the directors or officers.

     The  Company's  officers are chosen by the Board of Directors  and serve at
the pleasure of the Board. The loss of the services of any one of William Weiss,
D. Michael  Bridges or Michael  Suleski could have a material  adverse effect on
the Company.

Limitation of Liability and Indemnification Matters

    Insofar as indemnification for liabilities arising under the Securities Act
of 1933,  as  amended,  may be  permitted  to  directors,  officers,  or persons
controlling the Company  pursuant to the foregoing  provisions,  the Company has
been informed that in the opinion of the Securities and Exchange Commission such
indemnification  is  against  public  policy  as  expressed  in the  Act  and is
therefore unenforceable.


Compliance with Section 16
     Section 16(a) of the Exchange Act requires certain  persons,  including the
Company's directors and executive  officers,  and beneficial owners of more than
10% of the Company's equity securities,  to file reports with the Securities and
Exchange Commission  regarding  beneficial ownership of equity securities of the
Company.  Based on material provided to the Company by such directors,  officers
and beneficial owners of more than 10% of the Company's equity  securities,  the
Company  believes that during the fiscal year ended December 31, 2002, there was
compliance with all such filing requirements.

                                       -21-






<PAGE>
ITEM 10.  Executive Compensation.

     The Summary  Compensation  Table below sets forth  compensation paid by the
Company for the last three fiscal years ended December 31, 2002 for all services
in all  capacities  for its Chief  Executive  Officer and each of its  principal
executive  officers whose total annual salary and bonus exceeded  $100,000.  The
Board determines the compensation of the Company's executive  officers,  each of
whom did not receive increases in their salaries, nor a bonus, in 2002.
<TABLE>
<CAPTION>

                           Summary Compensation Table
--------------------------------------------------------------------------------------------------------------------------
                             Annual Compensation                                Long Term Compensation
--------------------------------------------------------------------------------------------------------------------------
                                                                                    Securities
                                                  Other           Restricted       Underlying    LTIP
    Name and                          Bonus       Annual            Stock         Options/SARs (#)Payouts    All
Other
    Position      Year    Salary ($)    ($)    Compensation       Awards ($)                        ($)
Compensation
--------------------------------------------------------------------------------------------------------------------------
<S>               <C>       <C>          <C>         <C>               <C>          <C>             <C>        <C>
William Weiss     2002      120,000   0           0                 0                0               N/A         N/A
CEO (1)(3)        2001      120,000   0           0                 0                0               N/A         N/A
                  2000      120,000   0           0                 0           481,000(2)(4)        N/A         N/A

--------------------------------------------------------------------------------------------------------------------------
Michael Suleski   2002      105,000   0           0                 0                0  (2)          N/A         N/A
Vice President    2001      105,000   0           0                 0                0  (2)          N/A         N/A
Engineering (1)   2000      105,000   0           0                 0            481,000(2)(4)       N/A         N/A
--------------------------------------------------------------------------------------------------------------------------

D Michael Bridges 2002      107,800   0           0                 0                0               N/A         N/A
President         2001      107,800   0           0                 0                0               N/A         N/A
                  2000      103,000   0           0                 0           400,000(6)           N/A         N/A
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
     (1) The Company presently has no employment  contract with William Weiss or
Michael  Suleski.

     (2) Granted  pursuant to an automatic  grant provision in the
1995 Stock Plan (as  defined  herein) for  services  rendered as a member of the
Board in the prior year.

     (3)As of February  29,  2003, $665,000 is owed to William  Weiss for past
salaries accrued but not paid.

     (4)Options  to  purchase  400,000  shares of  common  stock  were  granted,
pursuant  to the 1995  Stock  Option  Plan on July 27,  2000.

     (6)The  Company issued Mr.  Bridges  options to purchase  400,000 shares of
common stock pursuant to Mr. Bridges employment  agreement,  which also provides
for an annual salary of $107,800.


                                  -22-









<PAGE>

Option/SAR Grants

     During  the fiscal  year ended  December  31,  2002,  there were no options
granted to either the Company's Chief Executive  Officer or any of its principal
officers.

     The table below indicates that no options/SARs were exercised during fiscal
year 2002 by the  Company's  Chief  Executive  Officer and each of its principal
executive officers and shows the value of their unexercised options/SARs.

               AGGREGATED  OPTION/SAR  EXERCISES IN FISCAL YEAR 2002
                  AND OPTION/SAR VALUES AT DECEMBER 31, 2002


<TABLE>
<CAPTION>


                                                                                   Value of Unexercised
                                                            Number of Securities   In-the-Money
                                                            Underlying             Options/
                                                            Unexercised Options/   SARs at
                                                             SArs at FY-end        FY-End
                        Shares Acquired On    Value         Exercisable/           Exercisable/
         Name             Exercise (#)        Realized ($)  Unexercisable (#) 1)   Unexercisable($)
----------------------- ------------------- ------------------------------------ ---------------------
<S>                               <C>                 <C>      <C>                     <C>
William Weiss                     0                   0       770,921/0                  0/0
D. Michael Bridges (2)            0                   0       409,000/0                  0/0
Michael Suleski                   0                   0       744,921/0                  0/0

</TABLE>


     (1) The Company does not have a stock appreciation  rights ("SAR") plan and
does not have any SARs outstanding.

     The Company  presently  has no employment  contracts  with William Weiss or
Michael Suleski. The Company does not have any pension, profit sharing, or bonus
plan except that it has  established  a 1993 Option  Stock Plan and a 1995 Stock
Option Plan, each of which is described below.









                                          -23-








<PAGE>

     The Company entered into an Employment Agreement with David Michael Bridges
effective as of January 1, 2000 (the  "Employment  Agreement").  The  Employment
Agreement provides that Mr. Bridges will serve as the Company's President and as
a member of the Company's Board of Directors, subject to stockholder vote, for a
term of three  years,  subject  to  automatic  one  year  extensions  and  early
termination,  at an initial base salary of $107,800. The  Employment  Agreement
provides  that Mr.  Bridges  shall not  compete  with the Company in the product
lines under  development  by the Company or use or disclose any trade secrets of
the  Company  during the term of the  Employment  Agreement.  In  addition,  the
Employment  Agreement  provides that Mr. Bridges shall not solicit  employees of
the Company or induce any employee to terminate his or her relationship with the
Company  during the term and for a period of 24 months after  termination of the
Employment Agreement unless the Company terminates Mr. Bridges without cause (as
defined in the  Employment  Agreement),  the  Company  fails to satisfy  certain
conditions or if William Weiss or Michael  Suleski shall leave the employment of
the Company other than by reason of death or disability.  Mr. Bridges may not be
terminated  prior to the end of the term  except  with cause (as  defined in the
Employment  Agreement) and Mr.  Bridges may terminate the  Employment  Agreement
prior to the end of the term by  giving  the  Company  at least 90 days  written
notice. In the event that there is a transfer of control, defined as 50%, of the
Company within 6 months of the termination of Mr. Bridges,  Mr. Bridges shall be
entitled to his base salary,  vacation and other  benefits for the  remainder of
the  term  of the  Employment  Agreement  and any  difference  in  value  of the
Company's  capital stock owned by Mr. Bridges at the time of his termination and
the value of such stock after  transfer of control as valued in accordance  with
the terms of the Employment  Agreement.  The Employment  Agreement also provides
for the grant of options to  purchase  400,000  shares of the  Company's  common
stock.  Mr.  Bridges is also entitled to  indemnification  to the fullest extent
permitted  under New Jersey law. In the event that Mr.  Bridges'  employment  is
terminated  without  cause prior to the end of the term or any  extension of the
term or because of a disability (as defined in the Employment Agreement),  he is
entitled  to receive his base salary for 6 months,  at his then  current  annual
rate paid in a lump sum within 10 days of termination, plus a payment for unused
vacation.   The  Employment   Agreement  also  provides  that  Mr.  Bridges  may
independently  develop  intellectual  property  outside of his regular  hours of
employment  with the Company and maintain  full  ownership of such  intellectual
property but provides for the  Company's  use of certain  intellectual  property
owned by Mr. Bridges.  The Employment Agreement restricts Mr. Bridges from using
certain  intellectual  property  owned by him to compete with the Company during
the term of the Employment Agreement.

                                       -24-













<PAGE>
1993 Stock Option Plan

     In March 1993,  the Company  adopted its 1993 Stock  Option Plan (the "1993
Stock Plan") covering 68,912 shares of Common Stock, pursuant to which employees
(other than  directors) of the Company were  eligible to receive stock  options.
The 1993 Stock Plan,  expired on February 1, 2003.
As of December 31, 2002,  all of the options  under the 1993 Stock Plan had been
granted.  At  such  date,  48,729  options  had  expired,  20,183  options  were
outstanding and none had been exercised.

1995 Stock Option Plan

     The 1995 Stock Plan,  approved by  shareholders  of the Company in May 1995
and amended in 1996 and 2000,  provides for  incentive and  non-qualified  stock
options to purchase the  Company's  common stock to be issued to key  employees,
directors,  former  directors,  consultants and other persons who have conferred
substantial  benefit upon the  Company,  in order to attract and retain such key
personnel and  executives  with the ability to achieve the corporate  objectives
necessary to increase shareholder value. Such incentives encourage the holder of
stock  options  to  manage  the  Company's  business  in the best  interests  of
shareholders by creating an identity of interest with the shareholders.

     The 1995 Stock Plan provides that the aggregate  number of shares of common
stock for which options may be granted  thereunder  is 4,000,000  shares and the
maximum  number of shares  underlying  stock options which may be granted to any
person under the 1995 Stock Plan is 500,000 shares per year. The 1995 Stock Plan
provides  that  it  shall  be  administered  by a  committee  (the  "Committee")
consisting of either the full Board of Directors or at least two directors, each
of whom is an "outside director" as that term is defined for purposes of Section
162(m) of the Internal Revenue Code of 1986, as amended. Until there are members
of the Board of Directors who qualify as "outside  directors," the full Board of
Directors will administer the 1995 Stock Plan.

     The Committee has the full power and  authority,  subject to the provisions
of the 1995 Stock Plan, to designate  participants,  grant options and determine
the terms of all options.  The terms of specific  options granted under the 1995
Stock Plan are determined by the Committee.  The per share exercise price of the
common  stock  subject to an option may not be less than 100% of the fair market
value of the  common  stock on the date of grant,  unless,  with  respect  to an
option that is not an incentive stock option,  the Board of Directors approves a
lower  percentage  with  respect  to such  option.  However,  in the  case of an
incentive  stock option granted to a holder of shares  representing at least 10%
of the total combined voting power of all classes of stock of the Company or the
parent or a  subsidiary  thereof (a  "Substantial  Shareholder"),  the per share
exercise  price may not be less than 110% of the fair market value of the common
stock on the  date of  grant.  The  term of each  option  is  determined  by the
Committee,  but no option may be  exercisable  after ten years have elapsed from
the date upon which the option is granted. However, if an incentive stock option
is granted to a Substantial Shareholder,  the term of such option may not exceed
five years.



                                          -25-


<PAGE>


     Upon the exercise of an option,  the option holder must pay the Company the
exercise  price plus the amount of the  required  federal and state  withholding
taxes,  if any. The 1995 Stock Plan allows an  optionee,  subject to approval of
the Committee, to pay the exercise price in shares of common stock, only if such
shares of common stock have been held by the optionee for the  requisite  period
necessary to avoid a charge to the Company's  earnings for  financial  reporting
purposes (and otherwise  meeting any other  requirements  to avoid such charge).
The 1995  Stock  Plan also  allows  an  Optionee,  subject  to  approval  of the
Committee,   to  pay  the   exercise   price   pursuant  to  a   broker-assisted
cashless-exercise  program  established by the Committee;  provided in each case
that such methods  avoid  "short-swing"  profits to the optionee  under  Section
16(b) of the Exchange Act.  Withholding taxes due upon such exercise may also be
satisfied pursuant to such broker-assisted  cashless-exercise  program. The 1995
Stock Plan limits the  availability of the alternative to pay the exercise price
pursuant to a broker-assisted cashless-exercise program so that such alternative
is not  available  with respect to incentive  stock  options  outstanding  as of
October 29, 1996. The 1995 Stock Plan permits limited  transferability  of stock
options primarily for estate planning purposes. As of December 31, 2002, options
to acquire  3,669,222  shares of Common  Stock had been  granted  under the 1995
Stock Plan. At such date,  435,372 options had expired,  95,508 options had been
exercised and 3,138,342 options were outstanding.


Long-Term Incentive Plan

     The  Company  did not grant  any  awards to  executive  officers  under any
long-term incentive plan during fiscal year 2002.


Compensation of Directors

     Directors are not currently compensated or reimbursed for expenses incurred
by them in connection  with their  services as  directors,  except for travel to
Board of Directors meetings.



                                           -26-
















<PAGE>

ITEM 11.  Security Ownership of Certain Beneficial Owners and Management.

     The following table sets forth, as of March 20,2003 the number of shares of
Common Stock beneficially owned by each director, by the directors and executive
officers of the  Company as a group and by each holder of at least five  percent
of Common Stock known to the Company and the respective  percentage ownership of
the outstanding Common Stock held by each such holder and group:



Name and Address                            Number         Percentage
of Beneficial Owner                       of Shares (1)     of Class
----------------------------------      ----------------  ------------


William Weiss   (2)                       4,685,317(3)        37.13%
PaperClip Software, Inc.
611 Route 46 West
Hasbrouck Heights, NJ 07604

Michael Suleski (2)                         780,936(4)         8.73%
PaperClip Software, Inc.
611 Route 46 West
Hasbrouck Heights, NJ 07604

D. Michael Bridges                          410,500(5)         4.77%
PaperClip Software, Inc.
611 Route 46 West
Hasbrouck Heights, NJ 07604


A11 Officers and Directors
as a group (3 persons)                     5,876,753           42.68%


     (1) Unless otherwise indicated below, all shares are owned beneficially and
of record.

     (2) William Weiss and Michael Suleski are founders of the Company.

     (3) Includes (a) 770,921  shares of Common Stock issuable upon the exercise
of options  currently  exercisable  under the 1995 Stock  Option  Plan,  and (b)
3,649,543  shares of common  stock  issuable  upon the  conversion  of 3,649,543
shares of Series A Preferred Stock.

     (4) Includes  744,921  shares of Common Stock issuable upon the exercise of
options currently exercisable under the 1995 Stock Option Plan.

     (5) Includes  409,000  shares of Common Stock issuable upon the exercise of
options currently exercisable under the 1995 Stock Option Plan.

                                          -27-



<PAGE>


                        EQUITY COMPENSATION PLAN INFORMATION

     The following table provides  information,  as of December 31, 2002,  about
the  Company's  1993 Stock Option Plan and 1995 Stock Option Plan.  The material
features  of the 1993  Stock  Option  Plan and the 1995  Stock  Option  Plan are
described in this report under "Item 10-Executive  Compensation." The 1993 Stock
Option Plan  expired in February  2003.  All  outstanding  awards  relate to the
Company's common stock.

<TABLE>
<CAPTION>
                                Number of securities                                   Number of securities remaining
                                  to be issued upon           Weighted-average         available for future issuance
                                      exercise of             exercise price of        under equity compensation
                                outstanding options,          outstanding options,     (excluding securities
                                warrants and rights           warrants and rights      reflected in column (a))
                                               (a)                       (b)                    (c)
-------------------     --------------------------------    ------------------------ ------------------------------
<S>                              <C>                                     <C>                 <C>
Equity compensation               3,158,525(1)                           $.38             824,879(2)
plans approved by
security holders


Equity compensation
plans not approved by
security holders

-------------------       ------------------------------     --------------------------  ---------------------------

     Total                         3,158,525                                               824,879
===================       ==============================     ==========================  ===========================
</TABLE>





     (1) Represents  3,138,342 shares of Common Stock issuable upon the exercise
of outstanding  options  previously granted under the 1995 Stock Option Plan and
20,183 shares of Common Stock issuable upon the exercise of outstanding  options
previously  granted under the 1993 Stock Option Plan,  which expired on February
1, 2003.

     (2) Represents 776,150 shares of Common Stock available for future issuance
under the 1995 Stock Option Plan and 48,729 shares of Common Stock available for
future  issuance under the 1993 Stock Option Plan,  which expired on February 1,
2003.








                                          -28-







<PAGE>

ITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     As described in this report under "Item  1-Description  of  Business-Recent
Developments,"  Weiss and Access entered into a Stock Purchase Agreement,  dated
as of March 20, 2003,  pursuant to which Weiss  purchased from Access  3,649,543
shares of Series A Preferred  Stock of the  Company,  par value $0.01 per share,
(the "Preferred Shares").  Weiss is the Chief Executive Officer and Treasurer of
the Company as well as a director and 10% beneficial  owner of the Company.  The
Preferred  Shares  are  convertible  into  shares of Common  Stock at a ratio of
one-to-one,  subject to certain customary anti-dilution adjustments as set forth
in the Certificate of Designations governing the Preferred Shares. Upon purchase
of the Preferred  Shares,  Weiss became a successor to Access under that certain
Registration Rights Agreement,  dated as of November 1, 2000, by and between the
Company and Access,  thereby conferring upon Weiss certain  registration  rights
relating to the shares of Common Stock issuable upon conversion of the Preferred
Shares.  The consideration for the Preferred Shares was $106,986.29 and was paid
using Weiss' personal funds. Such consideration  represents a discount to market
which  takes into  account  the fact that the  Preferred  Shares are  restricted
securities and are not freely tradeable.

     In addition,  Mr. Weiss receives  compensation of $10,000 per month as part
of an  oral  employment  arrangement.  However,  in lieu  of  receiving  current
compensation  payments,  Mr.  Weiss has agreed to the  deferred  payment of such
compensation.  During  2002 and 2001,  Mr.  Weiss has  assigned  payment  of the
compensation to another company he is affiliated with. At December 31, 2002, the
Company has accrued  $665,000 in deferred  compensation  to Mr. Weiss,  which is
recorded as accounts payable - related party on the balance sheet.






Item 13.  Exhibits List, and Reports on Form 8-K.


                                          -29-
















<PAGE>
(a)       Exhibits:

3.1      Certificate of Incorporation of Registrant, as amended.(1)
3.1(a)   Certificate of Amendment to Certificate of Incorporation.(3)
3.1(b)   Series A Preferred Stock Certificate of Designations.(3)
3.2      By-Laws of Registrant, as amended. (1)
3.3      Registrant's Authorization to do Business in New Jersey. (1)
3.5      Form of Common Stock Certificate. (1)
4.1      Promissory Note issued on November 1, 2000 to Access Solutions
                  International, Inc.
10.1     1993 Stock Option Plan. (1)
10.2     1995 Stock Option Plan, as amended (2)
10.3     Form of End User License. (1)
10.4    (a)  Reschedule  Agreement  with NCC Export  Systems 1995 LTD ("NCC"),
        dated as of October 21, 1996  (incorporated  by reference from Exhibit
        10 of the Registrant's  Form 10-QSB for the quarter ended September 30,
        1996), (b) Receipt of full payment and  termination  of the  Reschedule
        Agreement  from NCC, dated January 29 , 1997.(2)
10.5    License  Agreement with Cheyenne  Software,  Inc.,  dated November 10,
        1995  (incorporated  by reference from Exhibit 10.12(c) of the
        Registrant's Form 10-KSB for the fiscal year ended December 31, 1995)
10.6    Security  Agreement,  dated January 29, 1997, by and between Access
        Solutions  International,  Inc. and PaperClip Software, Inc. (2)
10.7    Agreement  dated as of November 1, 2000 between  Access  Solutions
        International,  Inc.  and  PaperClip Software, Inc.(3)
10.8    Series A Preferred  Stock  Purchase  Agreement  dated as of November 1,
        2000  between  Access  Solutions International, Inc. and PaperClip
        Software, Inc. (3)
10.9    Registration  Rights  Agreement  dated as of November 1, 2000 between
        Access Solutions International, Inc. and PaperClip Software, Inc. (3)
10.10   Employment  Agreement  dated as of January 1, 2000  between  Paperclip
        Software,  Inc.  and D.  Michael Bridges. (3)
10.11   Agreement,  dated March 20, 2003,  by and between  Access  Solutions
        International,  Inc. and PaperClip Software, Inc.
23.1    Consent of Sobel & Co., LLC
99.1    Certification  pursuant  to 18  U.S.C.  Section  1350,  as  adopted
        pursuant  to  Section  906  of  the Sarbanes-Oxley Act of 2002.


---------------



(1)      Incorporated by reference from the Registrant's  Registration Statement
         on Form SB-2 (File No. 33-92768NY).
(2)      Incorporated  by reference  from the  Registrant's  Form 10-KSB for the
         fiscal year ended December 31, 1997 (File No. 000-26598).
(3)      Incorporated by reference from the Registrant's Form 10-KSB for the
           Fiscal year December 31, 2000 (File No. 000-26598)


                                          -30-




<PAGE>
(a)       Reports on Form 8-K.

     The Company did not file any reports on Form 8-K during the period  covered
by this report.

ITEM 14    CONTROLS AND PROCEDURES.

     The Chief Executive  Officer/Principal Financial Officer of the Company has
concluded, based on his evaluation as of a date within 90 days prior to the date
of the  filing  of 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 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.

     There were no significant  changes in the Company's internal controls or in
other factors that could  significantly  affect these controls subsequent to the
date of such evaluation.





                                     -31-




























<PAGE>

                                   SIGNATURES

     Pursuant to the  requirements of Section 13 or 15 (d) of the Securities and
Exchange Act of 1934,  the Registrant has caused this Report to be signed on its
behalf by the undersigned, hereunto duly authorized.
                                  PAPERCLIP SOFTWARE, INC.


                                  By: /s/ William Weiss
                                  William Weiss, Chief Executive Officer


                                  Date: March 28,2003


     Pursuant to the  requirements  of the  Exchange  Act,  this Report has been
signed below by the  following  persons on behalf of the  Registrant  and in the
capacities and on the date indicated.
Signature                 Title                           Date

/s/ William Weiss
William Weiss             Director and Chief Executive    March 28, 2003
                          Officer (Principal Executive,
                          Financial and Accounting Officer)

/s/ D Michael Bridges     Director, President             March 28, 2003
D Michael Bridges

/s/ Michael Suleski
Michael Suleski           Director, Vice President,       March 28, 2003
                          Engineering and Secretary
















                                        -32-







<PAGE>
                              CERTIFICATION
I, William Weiss, certify that:
     1) I have reviewed this annual report on Form 10-KSB of PaperClip Software,
Inc.;

     2) Based on my  knowledge,  this annual  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 annual
report;

     3) Based on my knowledge,  the financial  statements,  and other  financial
information  included  in this annual  report,  fairly  present in all  material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this annual report;

     4) The  registrant's  other  certifying  officers and I are responsible for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a) Designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entities,  particularly  during the
period in which this annual report is being prepared;

     b) Evaluated the effectiveness of the registrant's  disclosure controls and
procedures  as of a date  within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and

     c) Presented in this annual report our conclusions  about the effectiveness
of the  disclosure  controls and  procedures  based on our  evaluation as of the
Evaluation Date;

     5) The registrant's other certifying  officers and I have disclosed,  based
on our most  recent  evaluation,  to the  registrant's  auditors  and the  audit
committee  of  registrant's  board  of  directors  (or  persons  performing  the
equivalent functions):

     a) All  significant  deficiencies  in the design or  operation  of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and have  identified  for the
registrant's auditors any material weaknesses in internal controls; and

     b) Any fraud,  whether or not material,  that involves  management or other
employees who have a significant role in the registrant's internal controls; and

     6) The registrant's other certifying  officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date:    March 28, 2003                  By: /s/ William Weiss
                                         William Weiss
                                         Chief Executive Officer
                                         Principal Financial Officer
<PAGE>










                             PAPERCLIP SOFTWARE, INC.

                             FINANCIAL STATEMENTS

                            DECEMBER 31, 2002 AND 2001









































<PAGE>
PAPERCLIP SOFTWARE, INC.

DECEMBER 31, 2002 AND 2001



TABLE OF CONTENTS


                                                             Page

Independent Auditors' Report                                    1


Financial Statements:

    Balance Sheet                                               2


     Statements of Operations For The Years Ended
       December 31, 2002 And 2001                               3


    Statements of Changes in Stockholders' Deficiency
       For The Years Ended December 31, 2002 And 2001           4

     Statements of Cash Flows For The Years Ended
       December 31, 2002 And 2001                               5


Notes to Financial Statements                                   6

























<PAGE>
INDEPENDENT AUDITORS' REPORT




To the Board of Directors
PaperClip Software, Inc.

     We have audited the accompanying balance sheet of PaperClip Software,  Inc.
(a Delaware corporation) as of December 31, 2002 , and the related statements of
operations,  changes in stockholders' deficiency, and cash flows for each of the
years ended  December  31, 2002 and 2001.  These  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

     We conducted our audits in accordance  with  auditing  standards  generally
accepted in the United States of America.  Those standards  require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

     In our opinion,  the financial statements referred to above present fairly,
in all material respects, the financial position of PaperClip Software,  Inc. as
of December 31, 2002 , and the results of its  operations and its cash flows for
the years  ended  December  31, 2002 and 2001,  in  conformity  with  accounting
principles generally accepted in the United States of America.

     The accompanying  financial statements have been prepared assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in Note 10 to the
financial statements,  the Company has suffered significant negative cash flows,
has  incurred  significant  losses  from  operations  since  inception  and  has
substantial  deficiencies in working capital and net worth.  These factors raise
substantial  doubt about the Company's  ability to continue as a going  concern.
Management's  plans regarding those matters are also described in Note 10. These
financial  statements do not include any  adjustment  that might result from the
outcome of this uncertainty.
                                                   /s/ Sobel & Co., LLC
                                                   Certified Public Accountants
March 25, 2003
Livingston, New Jersey











<PAGE>
PAPERCLIP SOFTWARE, INC.
BALANCE SHEET
December 31, 2002

ASSETS
  CURRENT ASSETS:
    Cash and cash equivalents                                $        368,472
    Accounts receivable (net of
      allowance for doubtful accounts
      of $55,000)                                                     280,587
                                                                --------------
      Total Current Assets                                            649,059
                                                                --------------
  EQUIPMENT, FURNITURE AND FIXTURES:
    Computer and office equipment                                      57,967
    Furniture and fixtures                                            204,858
    Leasehold improvements                                             12,000
                                                                --------------
                                                                      274,825
    Less- Accumulated depreciation                                    259,126
                                                                --------------
      Equipment, Furniture, and Fixtures, Net                          15,699
                                                                --------------
  OTHER ASSETS                                                         13,500
                                                                --------------
Total assets                                                 $        678,258
                                                                ==============
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
  CURRENT LIABILITIES:
    Accounts payable and accrued expenses                    $        768,976
    Accounts payable- related party                                   665,000
    Deferred revenue                                                  392,900
    Notes payable - current                                           129,691
    Notes payable - ASI, current                                      135,177
                                                                --------------
      Total Current Liabilities                                     2,091,744
                                                                --------------
STOCKHOLDERS' DEFICIENCY:
Convertible Series A, preferred stock, authorized
  10,000,000 shares;  $.01 par value; issued and
  outstanding 3,649,543 shares                                         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                                         19,426,318
Accumulated deficit                                               (20,958,264)
                                                                --------------
  Total Stockholders' Deficiency                                   (1,413,486)
                                                                --------------
Total liabilities and
  stockholders' deficiency                                   $        678,258
                                                                ==============
See independent auditor's report and notes to financial statements

                                -2-

<PAGE>
PAPERCLIP SOFTWARE, INC.
 STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED
DECEMBER 21, 2002 AND 2001
<TABLE>
<CAPTION>
                                                       Year Ended December 31,
                                                      2002           2001
                                                   ----------   --------------
<S>                                                <C>          <C>
NET SALES                                        $ 1,443,797  $     1,249,285
                                                   ----------   --------------

OPERATING EXPENSES:
Salaries and related benefits                        794,286          862,021
Research and development expenses                    288,335          270,309
Selling expenses                                     135,865          192,260
General and administrative expenses                  196,447          181,524
                                                   ----------   --------------
     Total operating expenses                      1,414,933        1,506,114
                                                   ----------   --------------


   Income (loss) from operations                      28,864         (256,829)
                                                   ----------   --------------

OTHER INCOME (EXPENSE):
Interest income                                                         3,279
Interest expense financing costs                     (15,500)         (15,600)
Income from sale of state NOL's and tax credits      191,066          223,938
                                                   ----------   --------------
      Total other income (expense), net              175,566          211,617
                                                   ----------   --------------

NET INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES  204,430         (45,212)

Provision for income taxes                           (11,900)           -
                                                   ----------   --------------

Net income (loss)                                $   192,530  $       (45,212)
                                                   ==========   ==============

INCOME (LOSS) PER COMMON SHARE                   $      0.02  $         (0.01)
                                                   ==========   ==============

WEIGHTED AVERAGE NUMBER COMMON
SHARES OUTSTANDING                                 8,196,521        8,121,726
                                                   ==========   ==============
</TABLE>
See independent auditor's report and notes to financial statements


                                                    -3-



<PAGE>
PAPERCLIP SOFTWARE, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS'DEFICIENCY
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
<TABLE>
<CAPTION>
                          Preferred Stock      Common Stock
                                                                   Additional  Accumulated   Stockholders'
                          Number of Par Value  Number of Par Value Paid-in     Deficit       Deficiency
                          Shares               Shares              Capital
                          ---------------------------------------------------------------------------------
<S>                       <C>       <C>        <C>       <C>       <C>         <C>           <C>
BALANCE, December 31,2000 3,649,543    $36,495 8,121,521   $81,215 $19,423,318  ($21,105,582)  ($1,564,554)

Issuance of common stock
  for compensation                                75,000       750       3,000                       3,750

NET LOSS, 2001                                                                       (45,212)      (45,212)
                          ---------------------------------------------------------------------------------
BALANCE, December 31,2001 3,649,543     36,495 8,196,521    81,965  19,426,318   (21,150,794)   (1,606,016)


NET INCOME, 2002                                                                     192,530       192,530

                          ---------------------------------------------------------------------------------
BALANCE, December 31,2002 3,649,543    $36,495 8,196,521   $81,965 $19,426,318  ($20,958,264)  ($1,413,486)
                          =================================================================================
</TABLE>


See independent auditor's report and notes to financial statements

                                    -4-
































<PAGE>
PAPERCLIP SOFTWARE, INC.
 STATEMENTS OF CASH FLOWS
FOR THE YEAR  ENDED DECEMBER 31, 2002 AND 2001
<TABLE>
<CAPTION>
                                                       Year Ended December 31,
                                                      2002           2001
                                                   ----------   --------------
<S>                                                <C>          <C>
CASH FLOW PROVIDED BY :
  OPERATING ACTIVITIES:
    Net income (loss)                            $   192,530  $       (45,212)
    Adjustments to reconcile net loss to
    net cash provided by (used for) operating activities:
      Depreciation                                    20,051           35,252
      Issuance of stock as compensation                                 3,750
    Decrease (increase) in:
      Accounts receivable, net                      (107,124)           4,527
      Other assets                                                      5,742
    Increase (decrease) in:
      Accounts payable and accrued expenses         (138,990)        (103,758)
      Accrued interest on convertible note            15,500           15,563
      Due to related party                           105,000          105,000
      Deferred revenue                               156,900           86,000
                                                   ----------   --------------
Net cash provided by operating activities            243,867          106,864
                                                   ----------   --------------
  INVESTING ACTIVITIES -- Purchases of
    equipment, furniture and fixtures                 (6,057)         (14,393)
                                                   ----------   --------------

  FINANCING ACTIVITIES:
    Principal payments on note payable - ASI        (135,175)        (123,923)
                                                   ----------   --------------

INCREASE ( DECREASE) IN CASH                         102,635          (31,452)

CASH AND CASH EQUIVALENTS:

Beginning of year                                    265,837          297,289
                                                   ----------   --------------
End of year                                      $   368,472  $       265,837
                                                   ==========   ==============

</TABLE>






See independent auditors' report and notes to financial statements

                                   5


<page>
PAPERCLIP SOFTWARE, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001

NOTE 1  -  ORGANIZATION:

     PaperClip  Software,  Inc.  (formerly known as PaperClip  Imaging Software,
Inc.),located in Hasbrouck Heights, NJ, (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  Company  sells its  products  worldwide  to twenty  five  Value  Added
Resellers ("VAR's") and original equipment  manufacturers  ("OEM's") of personal
computers and personal computer networks utilized on a corporate level.

NOTE 2  -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Basis of Accounting:
     The Company's policy is to prepare its financial  statements on the accrual
basis of accounting.

Revenue Recognition:
     The  Company  generates  revenues  from  licensing  the  rights  to use its
software  products  directly  to  distributors,  resellers,  original  equipment
manufacturers, and end users.

     Revenues  from  licenses are  recognized  upon  shipment of the software if
there are no significant  post delivery  obligations,  if collection is probable
and if payment is due within one year. The Company provides telephone support at
no additional  charge for periods not exceeding one year.  The estimated cost of
providing such support is not significant. Revenues from consulting services are
recognized as services are performed.

     The Company also offers post contract  services,  which  includes  software
version  upgrades and consulting and training  services  related to installation
and implementation of the Company's product. Revenues paid by the customer prior
to  performance of post contract  services are deferred and recognized  over the
term of the post contract service agreement, usually one year.

Use of Estimates:
     The  preparation  of financial  statements  in conformity  with  accounting
principles  generally  accepted  in  the  United  States  of  America,  requires
management to make estimates and assumptions that affect the reported amounts of
assets and  liabilities  and disclosure of contingent  assets and liabilities at
the date of the financial  statements  and the reported  amounts of revenues and
expenses  during the reporting  period.  Actual  results could differ from those
estimates.
                                          6


<page>
NOTE 2  -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)

Advertising:
Advertising costs are expensed as incurred.

Cash and Cash Equivalents:
     Cash and cash  equivalents  consist  primarily  of cash at banks and highly
liquid investments with maturities of three months or less.

Equipment, Furniture and Fixtures:
     Equipment,  furniture  and  fixtures are stated at cost,  less  accumulated
depreciation.  Depreciation  expense is computed using the straight-line  method
over the  estimated  useful  lives of the assets  which range from five to seven
years.

Accounting for Stock-Based Compensation:
     The Company adopted  Statement of Financial  Accounting  Standards No. 123,
"Accounting  for  Stock-Based  Compensation"  (SFAS 123).  As  permitted by this
statement,  the Company has chosen to account for stock based compensation using
the intrinsic value method.  The adoption of this pronouncement had no impact on
the Company's financial condition or results of operations,  however, additional
disclosures have been included in the financial statements.

Federal Income Taxes:
     The Company has adopted Statement of Financial  Accounting  Standards Board
No. 109,  "Accounting  for Income  Taxes"  (SFAS 109),  which  provides  for the
recognition of deferred tax assets,  net of an applicable  valuation  allowance,
related to net operating loss carryforwards and certain temporary differences.

Income(Loss) Per Common Share:
     Income(Loss)  per common share is computed based upon the weighted  average
number of common  shares and common share  equivalents  outstanding  if dilutive
during each year.

Research and Development Costs:
     The costs  incurred in  establishing  the  technological  feasibility  of a
computer  software product that is to be sold,  leased or otherwise  marketed by
the Company is accounted for as Research & Development costs and expensed in the
period incurred. The amount charged against income was $288,335 and $270,309 for
the years ended December 31, 2002 and 2001, respectively.


                                         7











<page>
NOTE 3  -  INCOME TAXES:

     For tax return  purposes,  the Company has the following net operating loss
carry forwards as of December 31, 2002 and 2001 for Federal and State purposes:

             Federal
     Net Operating Loss    Year Incurred      Expiration Date

        $2,110,824       December 31, 1992      December 31, 2007
        $2,790,034       December 31, 1993      December 31, 2008
        $2,880,756       December 31, 1994      December 31, 2009
        $3,648,749       December 31, 1995      December 31, 2010
        $4,660,613       December 31, 1996      December 31, 2011
        $2,707,112       December 31, 1997      December 31, 2017
        $  880,373       December 31, 1998      December 31, 2018
        $   33,735       December 31, 1999      December 31, 2019
        $  487,500       December 31, 2000      December 31, 2020

                  State
   Net Operating Loss     Year Incurred          Expiration Date

       $  288,350      December 31, 1997              December 31, 2004
       $  879,754      December 31, 1998              December 31, 2005
       $   33,735      December 31, 1999              December 31, 2006
       $  635,000      December 31, 2000              December 31, 2007
       $   45,000      December 31, 2001              December 31, 2008


     As stated in Note 13, the State of New Jersey has  allowed in recent  years
the sale of state net operating  losses and research tax credits.  At this time,
it is it is  uncertain  how long the  State of New  Jersey  will  continue  this
program, as well as what amounts will be sold under the Program.

     The  Company  also  has tax  credits  related  to  research  activities  of
approximately $326,000 for Federal  purposes at December 31, 2002.

     The  Company's  total  deferred  tax  liabilities,  deferred tax assets and
valuation allowance consists of the following at December 31:

                                         2002                 2001
                                   --------------------------------------
Total deferred tax liabilities     $      -                  $     -
Total deferred tax assets             6,055,000             6,118,000
Total valuation allowance             6,055,000             6,118,000
                                   -------------------------------------
                                   $     -                 $     -
                                  ======================================


                                             8





<page>
NOTE 4  -  DEBT:
Note payable, convertible into common stock at .30
per share,  12% interest,  matured  December 31, 1999,
and as of December 31, 2002, the note  remains in default.        $129,691
                                                                ============

     Note payable - related  party(the  "New Note"),  issued in exchange for the
cancellation of the existing $300,000 note plus accrued interest,  payable in 36
monthly  payments,  no stated  interest  unless payment terms are not being met.
Interest on any late payments accrues at a rate of 15% per annum.

Current maturities                                                $135,177
                                                                ============

     On March 20, 2003,  the Company and Access  Solutions  International,  Inc.
("ASI") entered into an agreement (the "Note Repayment Agreement"),  pursuant to
which the Company paid ASI an amount equal to  $101,382.48 as payment in full of
all obligations  arising under the New Note. The remaining  principal  amount on
the New Note immediately  prior to its  satisfaction  was $135,177.  The Company
will account for this transaction in the first quarter of 2003, by recognizing a
net gain on the  extinguishment of debt in accordance with SFAS 145. Pursuant to
the Note Repayment Agreement,  the parties also terminated that certain Security
Agreement,  dated as of January 29, 1997 (the "Security  Agreement"),  which had
secured the  payments  of all  amounts  due under the New Note,  and the parties
released each other from certain claims, including claims under the New Note and
the Security Agreement.

     Of the  $768,976  reported on the balance  sheet as  "Accounts  payable and
accrued  expenses,"approximately  $150,000-$200,000 consists of accounts payable
that arose over six years ago. In view of the Company's  liquidity  constraints,
the Company has not made payments with respect to such accounts payable, and the
creditors  relating to such  accounts  payable have not sought  payment over the
last several years.

NOTE 5  -  PREFERRED STOCK:

     The Company  authorized  ten  million  shares of  preferred  stock $.01 par
value.  The Company has  designated  Series A Preferred  Stock,  with  3,649,543
shares  constituting  such  Series.  Each share of Series A  Preferred  Stock is
convertible   into  one  share  of  common  stock  subject  to  adjustment   and
anti-dilution  protection upon certain events.  On November 2, 2000, the Company
issued 3,649,543  shares of preferred stock in exchange for the  extinguishments
of debt to ASI.  The  total  debt  extinguished  amounted  to  $2,990,292  which
included  operating  advances,   management  fees,  notes  payable  and  accrued
interest.

     On March 20,  2003,  ASI sold all  shares of  Series A  Preferred  Stock to
William Weiss, the Company's chief executive officer.


                                           9





<page>


NOTE 6  -  COMMITMENTS AND CONTINGENCIES:

     On December 31, 2001,  the Company issued 75,000 shares of its common stock
to a former consultant of the Company, as compensation for services.  The shares
were  valued  based on fair  market  value on that  date,  and are  included  as
compensation for services rendered in the 2001 financial statement at $3,750.

     During 2002, the Company settled a copyright  infringement suit for $62,500
related to licensing  fees. This amount is included in sales on the statement of
operations.

NOTE 7  -  LEASES:

     The Company leases its office space under a non-cancelable operating lease.
Rent expense was approximately  $56,200 and $51,600 for the years ended December
31, 2002 and 2001, respectively.

     Future minimum  rental payment  required under these leases are as follows:
Year Ended December 31,
--------------------------
    2003                     $ 54,000
    2004                       54,000
    2005                       47,250
                             ---------
                             $155,250
                             =========

     The Company has two operating  leases for office  equipment.  Lease expense
amounts to approximately  $4,000 for the years ended December 31, 2002 and 2001,
respectively.  Future  minimum  lease  payments  under these  agreements  are as
follows:

   Year ended December 31,
   -----------------------
                        2003                         $3,996
                        2004                          3,400
                        2005                            637
                                                  ---------
                                                     $8,033
                                                  =========

                                         10












<page>


NOTE 8  -  EMPLOYMENT AGREEMENT:

     Effective  January 2000, the Company  entered into an employment  agreement
with Michael Bridges,  the Company's President who is also a member of the Board
of  Directors.  The term is for  three  years,  subject  to  automatic  one-year
extensions  and early  terminations  at an initial base salary of $107,800.  The
agreement  also provides for options to purchase  400,000 shares of common stock
at $0.25 per share with immediate vesting, which was subsequently granted at the
fair market value of the Company's  stock at the time of issuance which was $.25
per share. In addition, the agreement has specific clauses including not limited
to  covenants  not to compete  with  company's  product  line,  solicitation  of
employees of the Company upon termination and a severance package for six months
if there is a transfer of control of 50% or more.

NOTE 9  -  CONCENTRATION OF RISK:

     The Company  maintains its cash balances and certificates of deposit at one
financial  institution.  This  account is insured by the FDIC  (Federal  Deposit
Insurance  Corporation) up to $100,000. The Company routinely maintains balances
in excess of $100,000 in the ordinary course of business.


NOTE 10  -  GOING CONCERN:

     As  shown in the  accompanying  financial  statements,  the  Company  has a
history of  significant  operating  losses and as of December 31, 2002,  current
liabilities  exceed current assets by $1,442,685  and total  liabilities  exceed
total assets by $1,413,486.  These factors, as well as the uncertain  conditions
the Company  faces  regarding  the  delinquency  of  accounts  payable and loans
payable,  raise  substantial  doubt about the Company's ability to continue as a
going concern.

     The Company is continuing to develop and market its products.  In addition,
management has taken steps to aggressively  cut costs.  During 2001, the Company
signed a new five-year  lease which reduced rent expense by $48,200 per year. As
discussed  in Note 5, the Company has reduced its existing  liabilities  through
the  issuance of preferred  stock.  As  discussed  in Note 13,  management  will
continue  to seek to sell State net  operating  losses in order to provide  cash
flow if the State of New Jersey continues this program. The financial statements
do not include any adjustments  that might be necessary if the Company is unable
to continue as a going concern.





                                    11







<page>

NOTE 11  -  MAJOR CUSTOMERS:

     The Company  sells its products  primarily  through mass  distributors  and
approximately  25 independent  VARS. The VARS sell and install these products at
end user sites.

     Sales to two major  customers  for the year ended  December  31,  2002 were
approximately  32%.  Sales to one major customer for the year ended December 31,
2001 was approximately 19%.

     Two and  three  customers  make up 48% and 72% of  accounts  receivable  at
December 31, 2002 and 2001, respectively.


NOTE 12  -  STOCK OPTIONS:

1993 Stock Option Plan

     The Company  adopted a stock  option plan (the "1993 Stock  Option  Plan"),
effective March 8, 1993, pursuant to which employees of the Company are eligible
to receive incentive stock options. The 1993 Stock Option Plan,  expired on
February 1, 2003.  Stock option  transactions for the 1993 Stock Option Plan are
summarized as follows:

                                         Year Ended December 31,
                                            Exercise             Exercise
                                    2002     Price      2001     Price
                                 ---------------------------------------
Outstanding, beginning of year      20,183   $2.60      20,183    $2.60
Granted                               -        -          -         -
Exercised                             -        -          -         -
Canceled or expired                   -        -          -         -
                                 ---------------------------------------
Outstanding, end of year            20,183   $2.60      20,183    $2.60
                                 =======================================


1995 Stock Option Plan -

     In May 1995,  the  Company  adopted a stock  option  plan (the "1995  Stock
Option  Plan"),  pursuant to which  officers,  directors  and  employees  of the
Company and certain  other persons  conferring  benefit upon the Company will be
eligible to receive stock options.  The 1995 Stock Option Plan, which expires on
March 1, 2005,  is  administered  by the Board of  Directors.  The  selection of
participants,  allotment of shares,  determination  of price,  vesting and other
conditions of purchase of options is determined by the Board of Directors.



                                    12






<page>

     Stock option  transactions for the 1995 Stock Option Plan are summarized as
follows:


                                   Year Ended December 31,
                                         Exercise             Exercise
                                2002      Price        2001    Price
                           ----------------------------------------------
Outstanding, beginning of
year                         3,138,342  $.06-2.50    3,219,842  $.06-2.50
Granted                          -          -             -         -
Exercised                        -          -             -         -
Canceled or expired              -          -          (81,500)  .25-2.375
                           ----------------------------------------------
Outstanding, end of year     3,138,342   $.06-2.50   3,138,342  $.06-2.50
                           ==============================================



NOTE 13  -  INCOME FROM SALE OF TAX CREDITS:

     In June 1999,  the State of New Jersey passed  legislation  allowing  small
businesses  to sell State of New  Jersey Net  Operating  Loss and  Research  Tax
credit carryforwards to companies that could utilize the losses. The Company was
authorized  to sell in 2002 and  2001,  $127,500,and  $2,609,800  of  State  net
operating  losses  arising  during 1992 to 1997.  In  addition,  the Company was
allowed to sell in 2002,  $126,000 of research tax credits.  The net proceeds to
the  company  for the sale of these net  operating  losses  were  $191,066,  and
$223,938 in the years ending  December 31, 2002,  and 2001 ,  respectively.  The
Company has approximately $1,900,000 of State net operating losses available for
future sale, if the State of New Jersey continues this program.

     The State of New Jersey has suspended the use of net operating losses to be
carried over to 2002 this  resulted in a $11,900  provision for income taxes for
2002.
                                          13
















<page>

NOTE 14  -  RELATED PARTY TRANSACTIONS:

     Mr. William Weiss, ("Weiss"),  Chief Executive Officer and Treasurer of the
Company,  receives  compensation  of  $10,000  per  month  as  part  of an  oral
employment  arrangement.  However,  in lieu of  receiving  current  compensation
payments,  Mr.  Weiss has agreed to the deferred  payment of such  compensation.
During 2002 and 2001,  Mr. Weiss has  assigned  payment of the  compensation  to
another  company he is affiliated  with.  At December 31, 2002,  the Company has
accrued  $665,000 in deferred  compensation  to Mr. Weiss,  which is recorded as
accounts payable - related party on the balance sheet.

     As  described  above  in Note 5,  Weiss  and  Access  entered  into a Stock
Purchase  Agreement,  dated as of  March  20,  2003,  pursuant  to  which  Weiss
purchased  from  Access  3,649,543  shares  of  Series A  Preferred  Stock  (the
"Preferred Shares").  The Preferred Shares are convertible into shares of Common
Stock at a ratio of  one-to-one,  subject  to  certain  customary  anti-dilution
adjustments  as set  forth in the  Certificate  of  Designations  governing  the
Preferred Shares. The consideration for the Preferred Shares was $106,986.29 and
was paid using Weiss's personal funds. Such consideration  represents a discount
to market  which  takes  into  account  the fact that the  Preferred  Shares are
restricted securities and are not freely tradeable.

NOTE 15  -  ROYALTIES:

     During  2002 and 2001,  the  Company  had  licensing  agreements  with five
vendors to distribute various software products.  The agreements require royalty
payments to vendors  based on sales  volume.  At December 31, 2002,  all amounts
outstanding  in  regards  to  these   agreements   have  been  included  in  the
accompanying financial statements.


NOTE 16  -  EXPORT SALES:

     Export sales were  approximately  2% and 10% of the Company's net sales for
the years ended December 2002 and 2001, respectively. The foreign countries that
the  Company  primarily  deals with are  Indonesia,  Italy,  and  various  other
European countries.


NOTE 17  -  SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:

                                             2002           2001
                                   ------------------------------------

  Cash paid for interest                 $    -           $    -
                                   ====================================

 Non-cash investing activities:
    Stock issued in lieu
    of compensation                      $    -           $3,750
                                   ====================================

                                         14


<page>
Exhibit 10.11

                                    AGREEMENT

     AGREEMENT  (this  "Agreement"),  dated as of March 20, 2003, by and between
PaperClip  Software,  Inc.,  a Delaware  corporation  ("PaperClip"),  and Access
Solutions International, Inc., a Delaware corporation ("ASI"). PaperClip and ASI
are sometimes  individually  referred to herein as a "Party" and together as the
"Parties."

     WHEREAS,  a promissory  note in the  principal  amount of  $405,530.00  was
issued by PaperClip to ASI on November 1, 2000 (the "Note");

     WHEREAS, PaperClip and ASI are parties to a Security Agreement, dated as of
January 29, 1997 (the "Security  Agreement"),  which secures the payments of all
amounts due under the Note;

     WHEREAS,  the remaining  principal amount on the Note as of the date hereof
is $135,176.64; and

     WHEREAS, PaperClip has offered to prepay the Note for the consideration set
forth herein in complete  satisfaction of the Note, and ASI is willing to accept
such amount,  as payment in full of all obligations  arising under the Note, and
ASI wishes to release PaperClip from any and all claims and obligations  arising
under the Note and the Security Agreement.

     NOW,  THEREFORE,  in  consideration  of the  foregoing  and other  good and
valuable  consideration,   the  receipt  and  sufficiency  of  which  is  hereby
acknowledged, the parties hereto do hereby agree as follows:

1. Note Repayment.
     1.01. Repayment. On the date hereof,  PaperClip shall pay to ASI an amount,
in cash,  equal to  $101,382.48  as payment in full of all  obligations  arising
under the Note.  Such payment shall be made in  immediately  available  funds by
wire  transfer to an account  specified in writing by ASI. In  consideration  of
such  payment,  ASI  shall  deliver  to  PaperClip  an  Affidavit  of  Loss  and
Indemnification  for the original  Note and ASI  authorizes  the filing of UCC-3
financing  statements  amendments  and  any  other  documentation  necessary  in
connection with the termination of any UCC-1 financing  statements filed against
PaperClip in favor of ASI.

     1.02.  Termination  of  Security  Agreement.  Upon  receipt  by ASI of such
payment,  the  Security  Agreement  is  terminated  and of no further  force and
effect.

     1.03. Termination of Financing Statements.  ASI hereby covenants and agrees
to assist in all  reasonable  respects  PaperClip's  endeavors to terminate  any
UCC-1 financing statements filed against PaperClip in favor of ASI.








<page>


     2.  Representations  and  Warranties  of ASI.  ASI  hereby  represents  and
warrants  to  PaperClip  as  follows:

     2.01. Authority. ASI is a corporation organized under the laws of the State
of  Delaware.  ASI has all  necessary  power and  authority  to enter  into this
Agreement,  to  carry  out  its  obligations  hereunder  and to  consummate  the
transactions  contemplated  hereby.  ASI  has  taken  all  necessary  action  to
authorize the execution, delivery and performance by it of this Agreement.

     2.02.  Binding  Obligation.  This  Agreement  has been  duly  executed  and
delivered by ASI and, and assuming due authorization,  execution and delivery of
the Agreement by PaperClip,  this  Agreement  constitutes  the legal,  valid and
binding obligation of ASI enforceable  against ASI in accordance with its terms,
except as such  enforceability  may be subject to the effects of any  applicable
bankruptcy,  insolvency,  fraudulent conveyance,  reorganization,  moratorium or
similar laws affecting creditors' rights generally and subject to the effects of
general equitable principles.

     2.03. No Consent; No Conflict. The execution and delivery of this Agreement
by ASI do not, and the  performance of this  Agreement by ASI will not,  require
any prior consent,  approval,  authorization or other action by, or prior filing
with  or  notification  to,  any  governmental  or  regulatory  authority.   The
execution, delivery and performance of this Agreement by ASI do not (i) conflict
with or violate the  organizational  documents of ASI, or (ii)  conflict with or
violate any law, rule, regulation,  order, writ, judgment,  injunction,  decree,
determination, award or agreement applicable to ASI.

     2.04. Ownership.  ASI owns, beneficially and of record, and has good, valid
and marketable  title to the Note,  free and clear of any and all liens,  claims
and encumbrances.


3. Representations and Warranties of PaperClip.
      PaperClip hereby represents and warrants to ASI as follows:

     3.01. Authority. PaperClip is a corporation organized under the laws of the
State of Delaware. PaperClip has all necessary power and authority to enter into
this  Agreement,  to carry out its  obligations  hereunder and to consummate the
transactions  contemplated  hereby.  PaperClip has taken all necessary action to
authorize the execution, delivery and performance by it of this Agreement.

     3.02.  Binding  Obligation.  This  Agreement  has been  duly  executed  and
delivered by  PaperClip  and, and  assuming  due  authorization,  execution  and
delivery of the Agreement by ASI, this Agreement  constitutes  the legal,  valid
and binding obligation of PaperClip  enforceable against PaperClip in accordance
with its terms,  except as such  enforceability may be subject to the effects of
any applicable bankruptcy,  insolvency,  fraudulent conveyance,  reorganization,
moratorium or similar laws affecting  creditors' rights generally and subject to
the effects of general equitable principles.





<page>
     3.03. No Consent; No Conflict. The execution and delivery of this Agreement
by PaperClip do not, and the  performance  of this  Agreement by PaperClip  will
not, require any prior consent,  approval,  authorization or other action by, or
prior filing with or notification to, any governmental or regulatory  authority.
The  execution,  delivery and  performance of this Agreement by PaperClip do not
(i) conflict with or violate the organizational  documents of PaperClip, or (ii)
conflict  with or violate any law,  rule,  regulation,  order,  writ,  judgment,
injunction, decree, determination, award or agreement applicable to PaperClip.

     4. Release. Except for any claims, actions or causes of action with respect
to this  Agreement,  each of the Parties does hereby for itself,  its respective
successors,  assigns and affiliates  release and discharge the other Party,  and
its successors, assigns and affiliates of any and all claims, actions, causes of
action,  liabilities,  obligations or demands of any kind and nature whatsoever,
whether at law or in equity,  whether known or unknown, which such Party now has
or hereafter may have against the other Party with respect to events, matters or
transactions  arising  out of or in  connection  with  related  to,  directly or
indirectly, the Note, the Security Agreement and any other documents, agreements
or  understandings  executed in connection  therewith or demands of any kind and
nature whatsoever which ASI now has or hereafter may have against PaperClip.

5. Miscellaneous.

     5.01.  Expenses.  Each Party shall pay all costs and  expenses  incurred by
such Party in respect of the transactions contemplated hereby.

     5.02. Entirety of Agreement.  This Agreement states the entire agreement of
the Parties,  merges all prior negotiations,  agreements and understandings,  if
any,  and  states  in  full  all  representations,  warranties,  covenants,  and
agreements  which have induced this Agreement.  No Party shall make any contrary
representations  in dealing with third parties.  There are no representations or
warranties,  express  or  implied,  except  as  specifically  set  forth in this
Agreement.

     5.03. Notices.  All notices and other communications given or made pursuant
hereto  shall be in writing  and shall be deemed to have been duly given or made
if and when delivered  personally or by overnight  courier to the Parties at the
following  addresses  or  sent by  electronic  transmission,  with  confirmation
received,  to the telecopy numbers  specified below (or at such other address or
telecopy number for a Party as shall be specified by like notice):
                  (a)      If to ASI:
                           Access Solutions International Inc.
                           c/o Point Gammon Corporation
                           One Providence Washington Plaza, 4th Floor
                           Providence, RI  02903
                           Attn:  Thomas E. Gardner, Chairman
                           Telecopy:  (401) 885-8504
                           Confirm: (401) 854-0520 ext. 17

                           With a copy to:
                           Edwards & Angell, LLP
                           2800 Financial Plaza
                           Providence, RI  02903
                           Attn: John E. Ottaviani, Esq.
                           Telecopy: (401) 276-6611
                           Confirm: (401) 274-9200
<page>                  (b)      If to PaperClip:
                           PaperClip Software, Inc.
                           611 Route 46 West
                           Hasbrouck Heights, NJ 07604
                           Attn: William Weiss, Chief Executive Officer
                           Telecopy:  (201) 487-5184
                           Confirm:  (201) 487-2266 ext. 209

                           With a copy to:
                           Swidler Berlin Shereff Friedman, LLP
                           The Chrysler Building
                           405 Lexington Avenue
                           New York, NY  10174
                           Attn: Richard A. Goldberg, Esq.
                           Telecopy:  (212) 891-9598
                           Confirm:  (212) 973-0111

     5.04.  Waiver.  No waiver by any Party of any term,  provision,  agreement,
representation,  or warranty contained in this Agreement (or any breach thereof)
shall be effective  unless it is in writing  executed by the Party against which
such  waiver is to be  enforced.  No waiver  shall be deemed or  construed  as a
further  or  continuing   waiver  of  any  such  term,   provision,   agreement,
representation  or warranty (or breach) on any other  occasion or as a waiver of
any other term,  provision,  agreement,  representation  or warranty  (or of the
breach of any other term,  provision,  agreement,  representation  or  warranty)
contained in this Agreement on the same or any other occasion.

     5.05. Further Assurances. Each of the Parties agrees to execute and deliver
such other  documents or  agreements  as may be  necessary or desirable  for the
implementation  of this  Agreement  and  the  consummation  of the  transactions
contemplated hereby.

     5.06. Assignment; Binding Nature; No Beneficiaries.  This Agreement may not
be assigned by any Party without the prior written consent of ASI and PaperClip.
This  Agreement  shall  be  binding  upon,  inure  to  the  benefit  of,  and be
enforceable  by  the  parties  hereto  and  their  respective  heirs,   personal
representatives,  legatees,  successors  and permitted  assigns.  This Agreement
shall not confer any rights or remedies  upon any Person  other than the parties
hereto  and  their  respective  heirs,   personal   representatives,   legatees,
successors and permitted assigns.

     5.07.   Severability.   If  any  provision  of  this   Agreement  is  found
unenforceable by a court of competent jurisdiction, such unenforceable provision
shall not affect the other provisions but shall be deemed modified to the extent
necessary to render it enforceable, preserving to the fullest extent permissible
the intent of the Parties.

     5.08.  Governing Law. This Agreement shall be governed by, and construed in
accordance  with,  the  internal  laws of the State of  Delaware  applicable  to
contracts executed and fully performed within the State of Delaware.

     5.09. Execution and Delivery. This Agreement may be executed in two or more
counterparts,  each of which when executed shall be deemed to be an original but
all of which taken together shall  constitute one and the same  agreement.  This
Agreement may be delivered by facsimile  transmission with the same legal effect
as if delivery of an original were made in person.
          [Signatures Appear on Following Page.]







<page>

     IN WITNESS  WHEREOF,  the Parties  hereto have duly  executed and delivered
this Agreement as of the date first set forth above.

                                    PAPERCLIP SOFTWARE, INC.


                                    By:_/s/ William Weiss
                                    Name:  William Weiss
                                 Title:  Chief Executive Officer



                                    ACCESS SOLUTIONS INTERNATIONAL, INC.


                                    By:_/s/ Thomas E. Gardner
                                    Name:  Thomas E. Gardner
                                    Title:  Chairman






























<page>

Exhibit 23.1


                         CONSENT OF INDEPENDENT AUDITORS

     We consent to the incorporation by reference in the Registration  Statement
on Form S-8  (Registration  No.  333-04245)  of our report dated March 25, 2003,
with respect to the financial statements of PaperClip Software, Inc. included in
the Annual Report on Form 10-KSB of PaperClip Software,  Inc. for the year ended
December 31, 2002.

                                          /s/ Sobel & Co., LLC
                                          Certified Public Accountants
March 25, 2003
Livingston, New Jersey








































<page>

Exhibit 99.1

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 Annual Report on Form 10-KSB of the Company for the year ended December
31, 2002 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 Annual  Report on Form 10-KSB of the
Company for the year ended  December 31, 2002 fairly  presents,  in all material
respects, the financial condition and results of operations of the Company.


March 28, 2003                                           By: /s/ William Weiss