SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES ACT OF 1934
For the quarterly period ended September 30, 1996
Commission file number 0-26598
PAPERCLIP IMAGING SOFTWARE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State of incorporation)
22-3137907
(IRS Employer ID number)
THREE UNIVERSITY PLAZA
HACKENSACK, NJ 07601
(Address of principal executive offices) (Zip Code)
(201)487-3503
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceeding 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 [ ].
(Applicable only to Corporate Issuers)
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the last practicable
date.
Class October 31, 1996
Common Stock, $.01 par value 7,722,188
Redeemable Class A Warrants 3,599,500
<PAGE>
<TABLE>
PAPERCLIP IMAGING SOFTWARE, INC.
CONDENSED BALANCE SHEETS -- SEPTEMBER 30, 1996 and DECEMBER 31, 1995
UNAUDITED
<CAPTION>
Sep 30, Dec 31,
1996 1995
<S> <C> <C>
ASSETS
CASH and CASH EQUIVALENTS $854,844 $3,661,009
ACCOUNTS RECEIVABLE (net of allowance
for doubtful accounts of $33,840 at Sept 30,
1996 and $40,000 at December 31, 1995) 386,276 267,024
PREPAID EXPENSES AND OTHER CURRENT ASSETS 76,283 2,767
Total current assets 1,312,403 3,930,800
EQUIPMENT, FURNITURE AND FIXTURES
Computer and office equipment 670,874 549,569
Furniture and fixtures 204,858 201,474
875,732 751,043
Less- Accumulated depreciation (380,498) (263,352)
495,234 487,691
OTHER ASSETS 48,007 48,466
Total assets $1,864,644 $4,466,957
LIABILITIES AND STOCKHOLDERS' EQUITY
ACCOUNTS PAYABLE AND ACCRUED EXPENSES $966,222 $565,936
DEFERRED REVENUE 70,120 58,400
CURRENT PORTION OF CAPITALIZED LEASE 49,807 49,807
Total current liabilities 1,086,149 674,143
CAPITAL LEASE, NET OF CURRENT PORTION 15,363 49,442
STOCKHOLDERS' EQUITY
Common stock, authorized 15,000,000 shares;
$.01 par value: issued and outstanding
7,722,188 at Sept 30, 1996 and
7,199,500 at Dec 31, 1995 77,222 71,995
Additional paid-in capital 16,362,395 15,753,539
Accumulated deficit (15,676,485) (12,046,165)
Total stockholders equity 763,132 3,743,372
Total liabilities and stockholders' equity $1,864,644 $4,466,957
</TABLE>
<PAGE>
<TABLE>
PAPERCLIP IMAGING SOFTWARE, INC.
CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
UNAUDITED
<CAPTION>
Three Months Ended Nine Months Ended
30 Sep 96 30 Sep 95 30 Sep 96 30 Sep 95
<S> <C> <C> <C> <C>
NET SALES $490,037 $443,541 $1,474,847 $1,057,796
OPERATING EXPENSES:
Salaries and related benefits 422,580 337,417 1,175,561 976,366
Research and development expenses 862,457 281,971 2,326,510 939,465
Selling expenses 313,057 170,760 909,647 740,154
General and administrative expenses 280,661 275,310 773,350 656,054
Total operating expenses 1,878,755 1,065,458 5,185,068 3,312,039
Loss from operations (1,388,718) (621,917) (3,710,221) (2,254,243)
OTHER INCOME (EXPENSE):
Interest income 16,339 1,905 84,323 7,506
Interest expense (1,275) (56,772) (4,424) (115,989)
Financing costs 0 (738,800) 0 (955,950)
15,064 (793,667) 79,899 (1,064,433)
Net loss (1,373,654) (1,415,584) (3,630,322) (3,318,676)
LOSS PER COMMON SHARE ($0.18) ($0.34) ($0.47) ($0.81)
WEIGHTED AVERAGE NUMBER COMMON
SHARES OUTSTANDING 7,721,538 4,190,376 7,643,333 4,109,982
</TABLE>
<PAGE>
<TABLE>
PAPERCLIP IMAGING SOFTWARE, INC.
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
UNAUDITED
<CAPTION>
1996 1995
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss ($3,630,321) ($3,318,676)
Adjustments to reconcile net loss to net cash
used in operating activities-
Depreciation 116,352 78,128
Capitalization of discount on warrants 0 645,000
Decrease (increase) in accounts receivable (118,992) (116,640)
(Increase) in prepaid expenses and other
current assets (70,000) (5,000)
Decrease (increase) in other assets 241 (45,500)
Increase (decrease) in accounts payable, accrue 418,457 (58,543)
expenses and deferred revenue
Net cash used in operating activities (3,284,263) (2,821,231)
INVESTING ACTIVITIES -- Purchases of equipment,
furniture and fixtures, net of capital lease (126,203) (288,634)
FINANCING ACTIVITIES:
Proceeds from borrowings from bridge notes payable 0 2,365,000
Payment ofbridge notes payable 0 (1,396,477)
Proceeds from issuance of stock in exchange
for Bridge Warrants and cash 616,456 0
Proceeds from issuance of stock in exchange
for Stock Options and cash 33,624 0
Proceeds from issuance of stock in public offering 0 7,921,788
Proceeds from borrowings on capitalized lease-net 0 110,222
Payment of notes payable to stockholders 0 (155,000)
Proceeds from common stock subscriptions receivab 0 100,000
Payments on capitalized leases (41,780) 0
Net cash provided by financing activities 608,300 8,945,533
Net (decrease) increase in cash (2,802,166) 5,835,668
CASH, beginning of year 3,661,009 134,359
CASH, end of year $858,844 $5,970,027
SUPPLEMENTAL DISCLOSURE
OF CASH FLOW INFORMATION
Interest paid $4,424 $18,854
</TABLE>
<PAGE>
PAPERCLIP IMAGING SOFTWARE, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 1996
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements
have been prepared in accordance with generally accepted
accounting principles for interim financial information, the
instructions to Form 10-QSB and item 310 (b) of Regulation
S-B. Accordingly, they do not include all the information
and footnotes required by generally accepted accounting
principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for fair
presentation have been included. For further information,
refer to the Financial Statements and footnotes thereto
included in the Company's Registration Statement and
Prospectus and Form 10-KSB and Form 10-KSB/A (for the year ended
December 31, 1995) as filed with the Securities and Exchange
Commission.
NOTE B -- LOSS PER SHARE
The loss per share amounts in the statement of operations
have been computed in accordance with a Staff Accounting
Bulletin (SAB) of the Securities and Exchange Commission and
reflect a 2 for 1 stock split effected in May, 1996 for all periods
presented. According to the SAB, common stock and common stock
warrants issued are to be treated as common stock equivalents
outstanding for all periods presented if such common stock
was issued or such common stock warrants may be exercised,
at a price substantially below the public offering price.
As a consequence of the Company's offering of 1,799,750
shares of its common stock at $5.00 per share in an initial
public offering, its warrants issued to the Bridge Note
holders, entitling the holders thereof to acquire an
aggregate of 430,000 shares of the Company's common stock at
an exercise price of $2.25, would have been treated as common stock
equivalents unless their inclusion would be antidilutive. The
unexercised Bridge Warrants have not been treated as common stock
equivalents at September 30, 1996 as their inclusion would be
antidilutive. The sharedata contained in this Note does not take into
account a 2 for 1 stock split effected as of May 1996.
<PAGE>
PAPERCLIP IMAGING SOFTWARE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
Three and Nine Months Ended September 30, 1996 Compared with Three and
Nine Months Ended September 30, 1995
Net sales for the three months ended September 30, 1996
increased by 10.5% over the three months ended September 30,
1995 (from $443,541 to $490,037) and net sales for the nine months
ended September 30, 1996 increased by 39.4% over the nine months ended
September 30, 1996 (from $1,057,796 to $1,474,847 due to greater
acceptance of the new Windows Network and SQL Editions, the
introduction of "View Only" licenses, a Maintenance
Program which guaranteed updated versions to end users, the
introduction of a COLD product (computer output to laser
disk), the initiation of a Business Services Department, and
sales from the recently acquired NOSS product line. Neither of
such increases was a result of increases in prices.
Salaries and related benefits increased for the three months ended
September 30, 1996 by 25% (from $337,417 to $422,580) and by 20% (from
$976,366 to $1,175,561) for the nine months ended September 30, 1996
due to the addition of administrative and sales personnel.
Research and development expenses increased for the three months ended
September 30, 1996 by 206% (from $281,971 to $862,457) and by 148%
(from $939,465 to $2,326,510) for the nine months ended September 30,
1996 due to increased internal staffing to complete Version 4.0 and
4.1 of the document and imaging management products, continued
development of Version 6.0, a Windows `95 32-bit document and imaging
management product, increased purchases of computer software,
supplies and support for the increased staff and utilization of
external consultants to continue the development of WebClip (an
Internet browser enhancement product) and development of an Internet
Web server product to be used with the Company's Windows `95 32-bit
document and imaging management products, and continued development of
a Windows `95 32-bit Workflow product.
Selling expenses increased for the three months ended
September 30, 1996 compared to the three months ended September 30,
1995 by 83% (from $170,760 to $313,057) and by 23% (from $740,154 to
$909,647) for the nine months ended September 30, 1996 compared to the
nine months ended September 30, 1995 primarily due to increased
consulting fees, increased expenditures on exhibitions and seminars,
and increased expenditures for advertising and public relations to
support the launch of the Company's WebClip product.
General and administrative expenses increased for the three months
ended September 30, 1996 by 2% (from $275,310 to $280,661) compared to
the three months ended September 30, 1995 and by 18% (from $656,054 to
$773,350) for the nine months ended September 30, 1996 compared to the
nine months ended September 30, 1995 primarily due to increased
professional fees and increased recruiting fees.
The net loss from operations for the three months ended September 30,
1996 compared to the three months ended September 30, 1995 increased
by 123% (from $621,917 to $1,388,718) and by 65% for the nine months
ended September 30, 1996 over the nine months ended September 30, 1995
(from $2,254,243 to $3,710,221) primarily due to the increase in
research and development expenses partially offset by the increase in
sales.
Liquidity and Capital Resources
September 30, 1996 Compared with December 31, 1995
For the nine months ended September 30, 1996 the Company
incurred a net loss of $3,630,322. As of September 30, 1996, the
Company had an accumulated deficit of $15,676,485. The
Company continues to incur operating losses. The Company had
positive working capital of $3,256,657 and $235,254 as of
December 31, 1995 and September 30, 1996, respectively. For the
nine month period ended September 30, 1996 the Company received
proceeds of approximately $616,456 from the exercise of
Bridge Warrants for Common Stock and $33,624 from the
exercise of stock options for common stock.
In connection with obligations owed by the Company to a software
developer, during October 1996 the Company entered into an agreement
which provides for the rescheduling of payments owed by the Company to
the developer. The Company paid $150,000 upon signing such agreement
and agreed to pay an additional amount aggregating approximately
$200,000 (the "Remaining Amount") in three monthly installments
commencing January 1, 1997. The Remaining Amount will be due and
payable earlier if the Company receives net proceeds of at least
$250,000 in a capital transaction, with the amount of the prepayment
depending upon the proceeds raised. The Company pledged substantially
all of its assets to secure the repayment of the Remaining Amount.
Failure to raise the additional capital referred to below could result
in a default under this agreement.
The Company anticipates that its existing working capital will be
sufficient to fund its operations at least through the end of the
year. The Company is currently exploring a variety of options to
raise additional capital.
The Company has had discussions with a number of its shareholders who
are in the process of selling a portion of their shares of the
Company's common stock pursuant to Rule 144, promulgated under the
Securities Act of 1933, as amended, as to their willingness to invest
the proceeds of such sales in debt or equity securities of the
Company. The Companybelieves that it may be able to raise between
$500,000 and $700,000 over the next 60 days through investments by
such shareholders. Even if the Company is successful in raising such
capital, it will require additional capital to meet its anticipated
needs over the next twelve months. The Company is exploring a number
of options to raise such additional capital. There can be no
assurance that the Company will be successful in raising all or any
portion of the initial capital or the additional capital necessary to
sustain its business over the next twelve months.
The above discussion contains forward-looking statements. There are
certain important factors that could cause results to differ
materially from those anticipated by the statements made above. These
factors incude, but are not limited to, market conditions, the
willingness of certain existing shareholders or others to invest in
the Company and the Company's business performance.
<PAGE>
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 10 - Reschedule Agreement dated October 21, 1996,
by and between the Company
and NCC Export Systems 1995 LTD.
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
The Company has not filed any reports on Form 8-K for the three months
ended September 30, 1996.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
PAPERCLIP IMAGING SOFTWARE, INC.
BY /s/ William Weiss
William Weiss, Chief Executive Officer and
Principal Financial Officer
Date: November 4, 1996
RESCHEDULE AGREEMENT
This Reschedule Agreement is made effective and entered into
for all purposes and in all respects as of this 21st day of
October, 1996, by and between PaperClip Imaging Software,
Inc., with a principal place of business at Three University
Plaza, Hackensack Avenue, Hackensack, New Jersey 07601, USA
("PCLIP") and NCC Export Systems 1995 LTD., an Israeli
corporation with a principal place of business at 20 Shenkar
Street, Beit Hatikva 49130, Israel ("NCC").
WHEREAS, PCLIP and NCC have entered into that certain Master
Agreement, dated November 1, 1995, that certain Agreement
for the Supply of the WebClip Product, dated November 1,
1995, that certain Agreement for the supply of WebClip
Product, dated February 1, 1996 and that certain MOU for
continuation of the WebClip Development Project (the "MOU"),
dated April 22, 1996 (collectively, the "Effective
Agreements");
WHEREAS, the terms and conditions set forth in the Effective
Agreements govern the relationship of the parties and are
hereby incorporated by reference herein, except as
specifically provided herein; and
WHEREAS, NCC is willing to reschedule the payments due
according to the terms and conditions set forth in this
Reschedule Agreement.
NOW, THEREFORE, in consideration of the foregoing, of the
mutual covenants, undertaking and promises contained herein,
and of other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the
parties, intending legally to be bound, agree as follows:
1. PAYMENT SCHEDULE
Simultaneously with its execution of this Reschedule
Agreement, PCLIP shall pay and actually deliver to NCC One
Hundred Fifty Thousand U.S. Dollars ($150,000) by certified
check or federal wire-transfer of funds. This payment to
NCC is an absolute and primary condition precedent to this
Reschedule Agreement and no other term or condition of this
Reschedule Agreement shall be effective in any manner
whatsoever without the fulfillment of this condition.
The balance of One Hundred Fifty-Three Thousand U.S. Dollars
($153,000), plus charges for any additional work done,
and/or maintenance services rendered, by NCC in accordance
with Section 4 herein, shall be paid at the earlier of:
(a) Three equal installments on (or, if not a business day,
on the first business day thereafter) each of January 1,
1997, February 1, 1997 and March 1, 1997, or
(b) Within three (3) business days of the completion of any
fund raising resulting in at least Two Hundred Fifty
Thousand U.S. Dollars ($250,000) of net proceeds to PCLIP,
either by private placement or by public offering, as
follows:
(i) As to such proceeds in excess of $250,000 but less than
$600,000, 15% thereof shall be paid to NCC for and with
respect to PCLIP's indebtedness to NCC, in inverse order of
maturity of installments due under this Reschedule
Agreement, and 15% thereof shall be paid to NCC for Product
version upgrades (if requested by PCLIP), on a time and
materials basis; and
(ii) As to such proceeds in excess of $600,000, the same
shall be applied to fully pay any amounts due and payable to
NCC.
2. TRANSFER OF RIGHTS.
(a) For purposes of this Reschedule Agreement, the term
"Product" shall mean and include (without limitation as to
the generality of the foregoing) any and all software and/or
derived software products created or developed under the
Effective Agreements, including any and all object and/or
source code created or developed under the Effective
Agreements and/or related Technical Information (as such
term is defined in the Master Agreement) under the Effective
Agreements. In the event that PCLIP shall breach any of its
covenants, representation or agreements under this
Reschedule Agreement, all rights, title and interest in and
to the Product, as expansively defined hereinabove, shall
automatically be transferred to, and ipso facto, become
owned by, and shall be deemed to be, and shall be, the sole,
absolute, unconditional and irrevocable property of NCC
without any further action on the part of NCC or PCLIP,
notwithstanding any provision in the Effective Agreements to
the contrary.
(b) In the event that the rights in the Product shall be
transferred to NCC according to this Reschedule Agreement,
the parties agree that if NCC shall sell the rights to the
Product to any third party, NCC will deduct any indebtedness
of PCLIP to NCC under this Reschedule Agreement and any and
all other expenses and taxes (other than income taxes) that
NCC incurred as a result of such sale. The remainder of the
proceeds from such sale, after the above deduction, shall be
distributed equally between NCC and PCLIP.
(c) PCLIP shall receive the rights to the Product according
to the Master Agreement Section 3 upon presentation of full
payment as per Section 1 above.
3. ADDITIONAL COLLATERAL.
(a) To further secure the payment of the indebtedness of
PCLIP to NCC according to this Reschedule Agreement, PCLIP
hereby pledges, assigns, grants and conveys to NCC a
security interest and a lien on (i) the accounts receivable
of PCLIP, and all of PCLIP's computer equipment and
inventory (collectively, the "April Collateral") and (ii)
all third-party licenses to any PCLIP software (to the
extent permitted by such licenses), and the source codes in
respect to any software and/or derived software developed
and/or owned by PCLIP, providing an unabridged, human
readable version of any such software and/or derived
software, whether on paper or store on magnetic media,
together with such documentation that is sufficient in
scope, content and level of detail to enable a person with
appropriate training and programming experience with
software of comparable complexity to modify and maintain
same solely by reference to such version thereof and such
documentation (the "July Collateral") (the April Collateral
and July Collateral, collectively, the "Additional
Collateral").
(b) In the event that PCLIP shall breach any of its
covenants, representations or agreements under this
Reschedule Agreement, on April 1, 1996, as to the April
Collateral, and on July 1, 1996, as to the July Collateral,
NCC shall have and enjoy the rights of a secured creditor
under the New Jersey Uniform Commercial Code.
(c) A Security Agreement shall be attached to this
Reschedule Agreement and incorporated herein. The security
interest created herein shall be perfected according to the
New Jersey Uniform Commercial Code and other laws of the
State of New Jersey. In this connection, NCC shall exercise
good faith efforts to sell the Product and/or Additional
Collateral transferred to NCC under such Security Agreement
and shall apply the proceeds from the sale of the Product in
accord with the provisions of Section 2(b) above and the
Proceeds from the sale of the Additional Collateral to the
obligations provided in Section 1 above, with the return of
net excess proceeds to PCLIP.
4. WORK TO BE PERFORMED BY NCC.
After the payment of the first One Hundred Fifty Thousand
U.S. Dollars ($150,000) upon the execution of this
Reschedule Agreement, NCC will continue the development work
according to the MOU ($55/hour), such work not to exceed the
amount of Forty Thousand U.S. Dollars ($40,000). Upon
completion of such work, NCC shall deliver a copy of the
source code thereto to PCLIP, which source code shall be
deemed to be, and shall be, an addition to the Product.
5. CONSTRUCTION.
Notwithstanding any provision in the Effective Agreements to
the contrary, except for the work to be performed pursuant
to as provided in Section 4 above and any additional
upgrades in accordance with Section 1(b)(i) above, PCLIP
hereby waives and releases any claim and/or defense against
NCC arising under the Effective Agreements and/or this
Reschedule Agreement. Except as stated herein, this
Reschedule Agreement shall not be deemed or construed to be
a recession or modification of the Effective Agreements. In
the event that there shall be any conflict between any
provision of the Effective Agreements and any provision of
this Reschedule Agreement, such provision of this Reschedule
Agreement shall govern and control.
6. FURTHER COVENANTS AND AGREEMENTS
PCLIP further covenants and agrees that:
(a) PCLIP shall take any steps deemed reasonably necessary
or advisable to preserve the rights of NCC against prior or
subsequent parties in and to the Product, Technical
Information and/or Additional Collateral and hereby waives
any obligation of NCC to do so;
(b) NCC may exercise its rights with respect to the
Product, Technical Information and/or Additional Collateral
without any necessity on its part or on the part of the
holder of any obligation secured hereby first to realize
upon or enforce any of the security now or hereafter held
for any such obligation, and PCLIP hereby waives (i) any
right to require NCC to proceed against any person or to
pursue any other remedy, and (ii) all suretyship defenses or
other defenses in the nature thereof.
(c) At the request of NCC, PCLIP shall immediately join
with NCC in executing a Financing Statement pursuant to the
New Jersey Uniform Commercial Code in a form satisfactory to
NCC.
(d) PCLIP shall exercise good faith efforts to maintain,
preserve and protect the Product, Technical Information
and/or Additional Collateral.
(e) PCLIP shall not create, incur or permit to exist any
lien, charge, mortgage, security interest or other
encumbrance on the Product, Technical Information and/or
Additional Collateral, other than pursuant to this
Reschedule Agreement.
(f) PCLIP shall be responsible for and shall pay (i) all
costs of NCC, including attorneys' fees and expenses not to
exceed Ten Thousand U.S. Dollars ($10,000), provided,
however, that, with respect to any such attorneys' fees and
expenses, NCC shall present PCLIP with such invoices, in
such detail and with such receipts, as are reasonably
necessary to substantiate same, incurred in connection with
the Reschedule Agreement and/or (ii) all costs relative to
the enforcement of any of NCC's rights and remedies under
the Effective Agreements and/or this Reschedule Agreement.
7. REPRESENTATIONS AND WARRANTIES.
As a material inducement to NCC to enter into this
Reschedule Agreement, PCLIP and William Weiss hereby
represent and warrant to NCC that PCLIP has good and valid
title to the Product currently in existence, Technical
Information and Additional Collateral, free and clear of any
lien, charge or encumbrance, other than pursuant to this
Reschedule Agreement.
8. ESCROW.
As a material inducement to NCC to enter into this
Agreement, it is understood and agreed that upon its
execution hereof, PCLIP shall place a copy of the source
codes to the software and/or derived software, as
contemplated hereinabove, in escrow with Yoram Yossifoff, as
escrow agent, in furtherance of this Agreement and as
partial collateral securing PCLIP's obligations and
covenants herein.
9. MISCELLANEOUS.
(a) This Reschedule Agreement may be executed in any number
of counterparts each of which shall be deemed an original,
but all of which together shall constitute one and the same
instrument.
(b) This Reschedule Agreement sets forth the entire
understanding of the parties as to its subject matter. No
waiver by NCC of any default hereunder shall be effective
unless in writing and signed by NCC, nor shall any effective
waiver operate as a waiver of any other default or of the
same default on a prior or subsequent occasion. This
Reschedule Agreement may not be changed or modified orally,
but only by an agreement in writing and signed by the party
(or all of the parties) against whom enforcement of such
change or modification is sought.
(c) All notices permitted or required by this Reschedule
Agreement shall be deemed duly given if sent by certified
mail, return receipt requested, to the parties at the
respective addresses set forth above.
(d) Except as otherwise provided herein relating to the
Uniform Commercial Code, this Reschedule Agreement and
performance hereunder shall be governed by the laws of the
State of New York.
(e) PCLIP may not assign its rights, duties or obligations
under this Reschedule Agreement, in whole or in part, to any
other person or entity without the prior written consent of
NCC.
(f) The headings of the Sections herein are inserted for
convenience in reference only and are not intended by the
parties to be a part of or affect the meaning or
interpretation of this Agreement.
(g) If any provision of this Reschedule Agreement is held
invalid or otherwise unenforceable, the enforceability of
the remaining provisions shall not be impaired thereby.
IN WITNESS WHEREOF the parties have executed this Reschedule
Agreement on the date first set forth above.
NCC EXPORT SYSTEMS 1995 LTD PAPERCLIP IMAGING
SOFTWARE INC.
By:/s/ Meir Alter By:/s/ William Weiss
Meir Alter, Managing Director Title: Corporate Executive Officer
The undersigned hereby executes this Reschedule Agreement to
confirm his representations and warranties set forth in
Section 7 hereof.
/s/ William Weiss
WILLIAM WEISS
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 858,844
<SECURITIES> 0
<RECEIVABLES> 420,116
<ALLOWANCES> 33,840
<INVENTORY> 0
<CURRENT-ASSETS> 1,321,403
<PP&E> 875,732
<DEPRECIATION> 380,498
<TOTAL-ASSETS> 1,864,644
<CURRENT-LIABILITIES> 1,086,149
<BONDS> 0
0
0
<COMMON> 77,222
<OTHER-SE> 16,362,395
<TOTAL-LIABILITY-AND-EQUITY> 1,864,644
<SALES> 1,474,847
<TOTAL-REVENUES> 1,474,847
<CGS> 0
<TOTAL-COSTS> 5,185,068
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,424
<INCOME-PRETAX> (3,630,322)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,630,322)
<DISCONTINUED> 0
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<CHANGES> 0
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