SecProbe.io

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PAPERCLIP SOFTWARE, INC.
611 ROUTE 46 WEST
HASBROUCK HEIGHTS, NJ  07604

September 7, 2005

VIA EDGAR

Mr. Stephen Krikorian, Branch Chief
Division of Corporation Finance
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, D.C. 20549

Re:     PaperClip Software, Inc. (the "Company")
        Form 10-KSB for the Fiscal Year Ended December 31, 2004
        Form 10-QSB for the Fiscal Quarter Ended March 31, 2005
        File No. 000-26598

Dear Mr. Krikorian:

     Set forth below are our  responses to the comments  contained in the letter
("Comment  Letter") of the staff (the  "Staff") of the  Division of  Corporation
Finance of the Securities and Exchange  Commission  dated August 18, 2005 to Mr.
William Weiss of the Company with respect to the  above-referenced  filings. The
following also reflects a telephone  conversation between Mr. Christopher White,
Staff Accountant, and the Company's accountant Andrew Freund, that took place on
Friday,  September 2, 2005. The numbered responses set forth below correspond to
the paragraphs of the Comment Letter, which bear the same numbers.

Annual Report on Form 10-KSB for the Year Ended December 31, 2004

Item 6. Management's Discussion and Analysis or Plan of Operation

Statement Regarding Critical Accounting Policies, page 17

     1. When  determining  the extent of disclosure  required  under SEC Release
33-8350 Sections I.E and V, the following was considered:

     The  allowance for doubtful  accounts as of December 31, 2004  consisted of
(a) a general  reserve for doubtful  accounts,  and (b) a reserve for litigation
relating to the payment of delinquent accounts  receivable.  The general reserve
portion was not  determined to be a significant  estimate,  nor would it require
separate  disclosure  as a critical  accounting  estimate.  The  reserve for the
aforementioned  litigation,  as disclosed in Note 7 to the financial statements,
reflects an isolated  situation  involving one customer.  As discussed  with Mr.
White on  September  2, 2005,  the Company  believes  that,  due to the specific
nature of this portion of the reserve,  this estimate,  while involving  matters
susceptible to change, does not reflect the type of systematic estimates typical
of  critical   accounting   estimates,   and  any  further   disclosure  in  the
"management's   discussion  and  analysis"   section  would  be  repetitive  and
duplicative  to  disclosures  made via  reference to the notes to the  financial
statements.

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     With  respect to the  recognition/realization  of  deferred  revenues,  the
Company  believes that the  underlying  calculations  for deferred  revenues are
generally  straightforward  (i.e., deferred revenues are generally recognized as
income over the course of the  applicable  contracts on a formulaic  basis).  In
general,  the only aspect of the  recognition/realization  of deferred  revenues
that is susceptible  to change is the  allocation of revenue to the  appropriate
fiscal period, and as such, does not involve the type of estimates indicative of
critical accounting estimates.

Note 5-Debt, page 10

     2. We have attached a copy of the opinion of counsel requested by the Staff
in the Comment Letter.

     We hope the above satisfactorily  responds to your comments.  Please do not
hesitate to contact Andrew Freund, the Company's  accountant,  at (718) 633-4680
should you have any questions regarding the foregoing.

                                                Very truly yours,
                                                /s/ William Weiss
                                                William Weiss,
                                                Chief Executive Officer and
                                                Principal Financial Officer

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ON DECHERT LLP LETTERHEAD

                                                September 7, 2005
Mr. William Weiss
Chief Executive Officer, Treasurer and Director
PaperClip Software, Inc.
611 Route 46 West
Hasbrouck Heights, NJ  07604
Re:     Statute of Limitations
Dear Mr. Weiss:

     In connection with the  extinguishment of a portion of the accounts payable
of PaperClip Software,  Inc., a Delaware corporation  ("PaperClip") with respect
to fiscal years 2003 and 2004,  you have asked whether the  enforcement  against
PaperClip  of its  accounts  payable  to certain  vendors  (the  "Vendors")  who
rendered  services to PaperClip  more than six years prior to the dates on which
such  accounts  payable were  extinguished  by PaperClip  would be barred by the
applicable  statute of limitations,  and whether a court of proper  jurisdiction
would find that PaperClip  could  successfully  avoid payment to such Vendors in
respect  of  such  accounts  payable  due  to the  statute  of  limitations.  We
understand from your representations to us that such services were in the nature
of printing services,  computer services, health insurance and public relations.

     Based upon your  representations to us, we have assumed the following,  for
purposes of this opinion:

1. that the laws of either New York or New Jersey would apply;

2. that any written  agreements  which may have been  entered  into between
PaperClip and any of the Vendors regarding the provision of such services,  were
dated  more than six years  prior to the  dates on which  the  related  accounts
payable were extinguished by PaperClip;

3. that the services  provided by the Vendors were  completed more than six
years prior to the dates on which the related accounts payable were extinguished
by PaperClip;

4. that there were no payments made against any of the outstanding accounts
payable  during the six years prior to the dates on which the  related  accounts
payable were extinguished by PaperClip;

5. that there were no written  acknowledgments  by  PaperClip to any of the
Vendors of the  amounts  owing or its intent to pay all or any portion of any of
the  accounts  payable  during  the six  years  prior to the  dates on which the
related accounts payable were extinguished by PaperClip;

6. that none of the accounts payable is evidenced by a written instrument
under seal; and

7. that PaperClip did not take steps to impede or prevent any Vendor from
identifying or asserting claims against PaperClip.

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Effect of the New York Statute of Limitations

     We  understand  from  your  representations  to  us  that  certain  of  the
arrangements  PaperClip  had with the Vendors may have been governed by New York
law.  The  provision  of the New York  statute of  limitations  that  applies to
contracts,  which would govern payables for services rendered,  provides that an
action based upon a contractual  obligation  or  liability,  express or implied,
must be commenced  within six years.  N.Y. Civil Practice Law and Rules Sec. 213
(McKinney  2003).  New York case law provides that the six year period runs from
the date the cause of action  accrues,  which in the case of the Vendors,  would
generally be the date the services were completed and payment was first due. See
Kramer,  Levin,  Nessen,  Kamin & Frankel  v.  Aronoff,  638 F. Supp.  714,  722
(S.D.N.Y.  1986) ("Both  account stated and quantum meruit are claims based on a
contract implied in law, and both are governed by N.Y. CPLR Sec. 213(2).").

     New York courts will dismiss actions seeking payment for services performed
as time barred where service providers, such as the Vendors, bring an action for
an account  stated or for  quantum  meruit more than six years after the date of
the statement or their  services were last  performed,  respectively.  Id. ("The
statute  of  limitations  begins to run on an  account  stated on the day of the
statement. It begins to run on a claim for quantum meruit when the final service
has  been  performed.").  In  Lord  Day &  Lord,  Barrett,  Smith  v.  Broadwall
Management,  Inc., 187 Misc. 2d 518, 713 N.Y.S.2d 629 (2001), the court affirmed
an order  granting  defendant's  motion to  dismiss  plaintiff's  action as time
barred where the services  were last  performed on September  30, 1993,  but the
plaintiff did not commence the action by September 30, 1999. See also Stewart v.
Stuart,  262 A.D.2d 396 (App. Div. 2d Dep't.  1999) ("Since the plaintiff failed
to commence an action based upon his account  stated  within six years after the
date upon which he completed his services for the  defendant and began  mailings
of the statements of account,  the court correctly  concluded that this cause of
action is time-barred.").

     We understand  from your  representations  to us that at the time PaperClip
extinguished a portion of its accounts  payable in March 2004 and March 2005 (as
reflected  on  its  financial   statements  for  fiscal  years  2003  and  2004,
respectively),  more than six years had  elapsed  from the dates  services  were
completed  and payment was due. If the Vendors  were to bring an account  stated
and/or  quantum  meruit  cause of action  after the  expiration  of the six year
period,  New York law would compel the  dismissal of their claim as time barred.
In Stewart,  the court rejected  plaintiff's  contention  that the "rendering of
bills subsequent to the date upon which services were complete began the Statute
of Limitations  running anew each time these bills were generated."  Stewart 262
A.D.2d at 397.  Thus,  applying the holding in Stewart,  even if the Vendors had
sent statements of account in the ensuing  period,  their cause of action would,
nonetheless,  be dismissed.  In short, with respect to arrangements  governed by
New York law,  PaperClip's  payment  obligations  to the Vendors  are  avoidable
because any action brought by the Vendors to enforce  payment would be dismissed
due to the statute of limitations for such actions having elapsed.

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Effect of the New Jersey Statute of Limitations

     We  understand  from  your  representations  to  us  that  certain  of  the
arrangements PaperClip had with the Vendors may have been governed by New Jersey
law. The  provision  of the New Jersey  statute of  limitations  that applies to
contracts,  which  would  govern  payables  to vendors  for  services  rendered,
provides that an action "for  recovery  upon a  contractual  claim or liability,
express or implied  ..shall be commenced  within 6 years next after the cause of
any such action shall have accrued." N.J.S.A.  2A:14-1. Statutes of limitations,
in the words of one New Jersey  court,  "are vital to the welfare of society and
are  consequently  favored in the law,  and are to be found and  approved in all
systems  of  enlightened  jurisprudence.  They  promote  repose  by  giving  the
necessary  security and stability to human  affairs."  Gilliam v. Admiral Corp.,
111 N.J. Super. 370, 374 (Law. Div. 1970).

     New Jersey  case law  provides  that the six year period runs from the date
the cause of action accrues,  which in the case of the Vendors,  would generally
be the date the services  were  completed  and payment was first due.  "[C]ourts
have generally stated that a claim accrues, for statute of limitations purposes,
on the date on which the right to institute  and  maintain a suit first  arose."
County of Morris v. Fauver,  153 N.J. 80, 108 (N.J.  1998)  (internal  citations
omitted); see also Smith v. Dowden, 7 Gummere 317, 319 (N.J. Sup. 1919) (stating
that it is a "settled rule of law that the statute of limitations  begins to run
the moment that a right of action accrues.") "For purposes of determining when a
cause of action accrues so that the applicable period of limitation commences to
run,  the  relevant  question is when did the party  seeking to bring the action
have an enforceable  right."  Metromedia Co. v. Hartz Mountain  Associates,  139
N.J. 532, 534 (N.J. 1995),  citing Andreaggi v. Relis, 171 N.J. Super. 203, 235-
236 (Ch. Div. 1979). In a contract  action,  the six year statute of limitations
commences  when the debt becomes due and  payable.  Guerin v.  Cassidy,  38 N.J.
Super.  454, 460 (Ch. Div. 1955); see also Haardt v. Farmer's Mut. Fire Ins. Co.
of Salem County, 796 F. Supp. 804, 807 (D.N.J. 1992) (affirming summary judgment
dismissing  breach of contract claim on the ground that it was barred by the six
year statute of limitations  governing contract actions). In short, with respect
to arrangements  governed by New Jersey law,  PaperClip's payment obligations to
the Vendors are avoidable  because any action  brought by the Vendors to enforce
payment  would be dismissed due to the statute of  limitations  for such actions
having elapsed.

     We express no opinion herein as to, or the effect or applicability  of, any
laws other than the laws of the State of New York and the State of New Jersey.

     On  the  basis  of  the   foregoing,   and  subject  to  the   assumptions,
qualifications  and  limitations  set forth in this opinion,  we are of the view
that the  enforcement  of the claims of the Vendors  described  in this  opinion
would be  barred  by the  statute  of  limitations,  and that a court of  proper
jurisdiction  would find that PaperClip could successfully avoid payment to such
Vendors due to the statute of limitations.

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     This  opinion is rendered to you as of the date hereof and we  undertake no
obligation to advise you of any change in any matters  herein,  whether legal or
factual,  after the date  hereof.  This  opinion is not to be used,  circulated,
quoted or otherwise  referred to for any other purpose without our express prior
written  consent,  and no  party  other  than  you is  entitled  to  rely on it.
Notwithstanding the foregoing,  however,  copies of this opinion in its entirety
may be provided  to  PaperClip's  auditors,  Sobel & Co.,  LLC,  and to the U.S.
Securities and Exchange  Commission  pursuant to a request contained in a letter
to you dated August 18, 2005.
Very truly yours,

DECHERT LLP

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