UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14f-1
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Information Statement Pursuant to Section 14(f) of the
Securities Exchange Act of 1934 and Rule 14f-1 Thereunder
PAPERCLIP SOFTWARE, INC.
(Exact name of registrant as specified in charter)
Delaware 000-26598 22-3137907
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification No.)
1 University Plaza
Hackensack, New Jersey 07601
(Address of principal executive offices)
(201) 525-1221 (Registrant's
telephone Number)
PAPERCLIP SOFTWARE, INC.
Information Statement Pursuant to Section 14(f) of the
Securities Exchange Act of 1934 and Rule 14f-1 Thereunder
GENERAL
NO VOTE OR OTHER ACTION IS REQUIRED IN CONNECTION WITH THIS INFORMATION
STATEMENT. NO PROXIES ARE BEING SOLICITED.
This Information Statement is being mailed commencing on or about November
16, 2006 by Paperclip Software, Inc. (the "Company") to holders of record, as of
November 6, 2006, of the Company's voting stock, common stock, par value $0.01
per share, in accordance with the requirements of Section 14(f) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Securities
and Exchange Commission Rule 14f-1. This Information Statement is being sent as
notice of a proposed change in the majority of the directors of the Company's
Board of Directors (the "Board"). This Information Statement is being provided
for information purposes only. The Company is not soliciting proxies in
connection with the matters described in this Information Statement and no vote
or other action is required to be taken by the Company's shareholders.
CHANGE IN CONTROL TRANSACTION
On November 6, 2006 (the "Closing Date"), Paperclip Software, Inc., a
Delaware Corporation ("Paperclip", "PCLP", the "Company", "we", or "us"),
American Sunrise International, Inc., a Delaware Corporation ("ASI"), all ASI
Shareholders, and Jilin Dongsheng Weiye Science and Technology Co., Ltd., a
limited liability company of the People's Republic of China and wholly-owned
subsidiary of ASI ("Dongsheng"), entered into a Stock Purchase and Share
Exchange Agreement (the "Exchange Agreement") pursuant to which are to acquire
all of the issued and outstanding capital stock of ASI in exchange for the
issuance to the ASI Shareholders of (1) shares of Paperclip common stock and (2)
shares of Series B Preferred Stock, of which each share converts into five
hundred (500) shares, which will represent, and equate to, 98.7% of Paperclip's
issued and outstanding common stock after the transaction is closed (the "Share
Exchange"). Such shares will be restricted in accordance with Rule 144 of the
1933 Securities Act. As a result of the Share Exchange, ASI will become our
wholly-owned subsidiary.
We intend to discontinue our business of software development. Instead, we
will operate our business through ASI's wholly-owned subsidiary Dongsheng, which
develops and manufactures nutritional supplements and personal care products.
Effective on the Closing Date, our Board of Directors and executive
officers, William Weiss, Chief Executive Officer, Principal Financial Officer
and Director, D. Michael Bridges, Vice President Engineering, Secretary and
Director, and Michael Suleski, President, Director, shall simultaneously resign
from the Board of Directors and as an executive officer and appoint the
following officers and directors of PCLP:
Name Office
----------------- -----------------------------------------------------------
Aidong Yu Chairman, Chief Executive Officer, Chief Financial Officer,
Director
Huizhu Xie General Manager, Director
Dekui Wang Vice President, Director
VOTING SECURITIES OF THE COMPANY
Our authorized common stock consists of 30,000,000 shares, par value $0.01
per share. On November 6, 2006, prior to the closing, we had 8,196,523 shares of
common stock issued and outstanding and entitled to vote at a meeting of our
stockholders. Each share of common stock entitles the holder thereof to one
vote. We also have designated 3,649,543 shares of Series A Preferred Stock, of
which all shares are issued and outstanding and entitled to vote. Each share of
Series A Preferred Stock entitles the holder thereof to one vote for each share
of common stock into which Series A Preferred Stock could be converted.
As a result of the Share Exchange, ASI's Shareholders became our majority
shareholders. Our shares of common stock are quoted on the Over the Counter
(OTC) Bulletin Board under the symbol "PCLP".
2
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of our common stock prior to the Closing Date on November 6, 2006, by: (i) each
director; (ii) each person who is known to us to be the beneficial owner of more
than five percent of our outstanding common stock; (iii) each of our executive
officers named in the Summary Compensation Table; and (iv) all our current
executive officers and directors of as a group. Except as otherwise indicated in
the footnotes, all information with respect to share ownership and voting and
investment power has been furnished to us by the persons listed. Except as
otherwise indicated in the footnotes, each person listed has sole voting power
with respect to the shares shown as beneficially owned.
Amount and Nature
Name and Address of of Percent of Class
Title of Class Beneficial Owner Beneficial Owner (2)
------------------------------ ------------------- ------------------
Common Stock William Weiss (1) ((3)) 3,569,643(4) 43.55%
Common Stock Michael Suleski (1) ((3)) 780,936(5) 9.53%
Common Stock D. Michael Bridges (1) ((3)) 556,500 6.79%
Common Stock All officers and directors 4,911,079 59.92%
as a group (3 in number)
Series A Preferred Stock William Weiss (1) ((3)) 2,533,869 69.43%
Series A Preferred Stock D. Michael Bridges (1) ((3)) 150,000 4.11%
Series A Preferred Stock All officers and directors 2,683,869 73.54%
as a group (3 in number)
----------------
(1) The address for each beneficial owner is 1 University Plaza, Hackensack, New
Jersey 07601.
(2) Based on 8,196,523 shares of common stock issued and outstanding as of
November 6, 2006.
(3) The person listed is an officer and/or director of the Company.
(4) Includes (a) 770,921 shares of Common Stock issuable upon the exercise of
options currently exercisable under the 1995 Stock Option Plan, and (b)
approximately 2.8 million shares of Common Stock issuable upon the conversion of
2,533,869 shares of Series A Preferred Stock.
(5) Includes 744,921 shares of Common Stock issuable upon the exercise of
options currently exercisable under the 1995 Stock Option Plan.
(6) Includes 405,000 shares of Common Stock issuable upon the exercise of
options currently exercisable under the 1995 Stock Option Plan, and
approximately 160,000 shares of Common Stock issuable upon the conversion of
150,000 shares of Series A Preferred Stock.
3
DIRECTORS AND EXECUTIVE OFFICERS
Pre-Share Exchange Directors and Executive Officer
--------------------------------------------------
The following tables set forth information regarding the Company's current
executive officer and directors prior to the closing of the Share Exchange. The
directors hold offices for their respective terms and until their successors are
duly elected and qualified. Vacancies in the existing Board are filled by a
majority vote of the remaining directors. The officers serve at the will of the
Board of Directors.
Name Age Office
------------------- ------ -----------------------------------------------------
William Weiss 63 Chief Executive Officer, Principal Financial Officer,
Director
Michael Suleski 52 President, Director
D. Michael Bridges 46 Vice President Engineering, Secretary, Director
Set forth below is certain information with respect to the current officers
and directors, including their names, principal occupations for the past five
years, and their directorships with other corporations.
WILLIAM WEISS, a founder of the Company, has been Chief Executive Officer,
Principal Financial Officer and a director of the Company since its formation in
October 1991. From January 1980 until March 31, 2003 Mr. Weiss had also been an
executive officer and President 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 40 hours per week
to the Company. 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, our President, rejoined the Company in March 2000 after
providing consulting services to the Company from August 1998 to March 2000. He
has been a director of the Company since 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 received a B.S. from Rowan
University and served as a Captain in the United States Marine Corps.
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. He received a B.S. and a M.S. degree from Fairleigh Dickenson University
College of Science and Engineering.
Director Terms of Office
In accordance with the terms of the Company's articles of incorporation,
the directors hold office for the term for which they are elected and until
their successors are duly elected and qualified. Vacancies in the existing Board
are filled by a majority vote of the remaining directors. The officers serve at
the will of the Board of Directors.
Director Compensation
The Company's directors did not receive any compensation for their services
rendered to the Company, have not received such compensation in the past, and
are not accruing any compensation pursuant to any agreement with the Company.
Meetings and Committees of the Board
The Board held no meetings during the Company's fiscal year ended December
31, 2005. 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.
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Compensation of Executive Officers
The following summary compensation table sets forth all compensation paid
by us during the fiscal years ended December 31, 2006, 2005 and 2004 in all
capacities for the accounts of our executives, including the Chief Executive
Officer (CEO) and Chief Financial Officer (CFO):
Summary Compensation Table
ANNUAL COMPENSATION LONG-TERM COMPENSATION
AWARDS PAYOUTS
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARD(S) OPTIONS/SARS PAYOUTS COMPENSATION
POSITION YEAR ($) ($) ($) ($) (#) ($) ($)
Wiliam Weiss(1) 2006 $120,000 0 0 0 -- -- --
Chief Executive 2005 $120,000 0 0 0 -- -- --
Officer,
Principal Financial
Officer
2004 $120,000 0 0 0 -- -- --
Michael Suleski 2006 $105,000 0 0 0 -- -- --
Vice President, 2005 $105,000 0 0 0 -- -- --
Engineering
2004 $105,000 0 0 0 -- -- --
D. Michael Bridges 2006 $107,800 0 0 0 -- -- --
President 2005 $107,800 0 0 0 -- --
2004 $107,800 0 0 0 -- --
--------------------
(1) As of December 31, 2005, approximately $868,000 is owed to William Weiss for
past salaries accrued but not paid.
Option Grants Table. There were no individual grants of stock options to
purchase our common stock made to the executive officer named in the Summary
Compensation Table during the fiscal year ended December 31, 2005, and the
subsequent period up to the date of the filing of this Information Statement.
Aggregated Option Exercises and Fiscal Year-End Option Value Table. There were
no stock options exercised by the executive officers named in the Summary
Compensation Table during the fiscal year ended December 31, 2005, and the
subsequent period up to the date of the filing of this Information Statement.
Long-Term Incentive Plan ("LTIP") Awards Table. There were no awards made to a
named executive officer in the last completed fiscal year under any LTIP.
Compensation Pursuant To Plans
The following table provides information, as of December 31, 2005, about
the Company's 1995 Stock Option Plan and 2004 Stock Incentive Plan, the material
features of which are described below. Although the 1995 Stock Option Plan
expired on March 1, 2005, the options with unexercised terms remain outstanding
under such plan and are included in the table below.
Equity Compensation Plan Information
Number of securities
remaining available for
future issuance under
Number of securities to Weighted-average equity compensation
be issued upon exercise exercise price of plans (excluding
of outstanding options, outstanding options, securities reflected in
warrants and rights warrants and rights column (a))
Plan category (a) (b) (c)
------------------------- ----------------------- -------------------- ------------------------
Equity compensation plans
approved by security
holders 2,980,842 (1) $0.31 0 (2)
Equity compensation plans
not approved by security
holders 100,000 (3) 0 500,000 (4)
Total 3,080,842 0 500,000
---------
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(1) Represents 2,980,842 shares of Common Stock issuable upon the exercise of
outstanding options previously granted under the 1995 Stock Option Plan
(2) The 1995 Stock Option Plan expired on March 1, 2005.
(3) Represents 100,000 shares of Common Stock issuable upon the exercise of
outstanding options granted under the 2004 Stock Incentive Plan.
(4) Represents 500,000 shares of Common Stock available for future issuance
under the 2004 Stock Incentive Plan.
For the fiscal year ended December 31, 2005, and the subsequent period up
to the date of the filing of this Information Statement, the Company did not
adopt any plans.
2004 Stock Option Plan
In February 2004, the Board of Directors of the Company adopted a stock
incentive plan (the "2004 Stock Incentive Plan"). Only consultants and members
of the Board of Advisors are eligible to participate in this plan. The 2004
Stock Incentive Plan provides that the aggregate number of shares of common
stock for which options may be granted thereunder is 600,000 shares. The 2004
Stock Incentive Plan provides that it shall be administered by a committee (the
"Committee") consisting of either the full Board of Directors or a committee
consisting of at least two directors.
The Committee has the full power and authority, subject to the provisions
of the 2004 Stock Incentive Plan, to designate participants, grant options and
determine the terms of all options. The terms of specific options granted under
the 2004 Stock Incentive Plan are determined by the Committee. The term of each
option is also determined by the Committee, but no option may be exercisable
after ten years have elapsed from the date upon which the option is granted. As
of December 31, 2005, 100,000 options under the 2004 Stock Incentive Plan were
outstanding.
1995 Stock Option Plan
In May 1995, the Company adopted a stock option plan (the "1995 Stock
Plan"), pursuant to which officers, directors and employees of the Company and
certain other persons conferring benefit upon the Company were eligible to
receive stock options. The 1995 Stock Plan terminated on March 1, 2005. All
options thereunder outstanding at the time of such termination shall continue in
full force and effect according to the terms of the option agreements governing
such options. As of December 31, 2005, options to acquire 3,969,222 shares of
Common Stock had been granted under the 1995 Stock Plan. At such date, 892,872
options had expired, 95,508 options had been exercised and 2,980,842 options
were outstanding.
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, and all the outstanding options
expired in 2005.
There is no other compensation to the Company's executives pursuant to a
stock option plan or any other plans.
6
Employment Agreements
The Company does not have employment agreements with William Weiss or
Michael Suleski. The Company does not have any pension, profit sharing, or bonus
plan, other than the 2004 Stock Incentive Plan for consultants and members of
the Board of Advisors, which is described above.
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 provided
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.
Compensation of Directors
For the fiscal year ended December 31, 2005, and the subsequent period
up to the date of the filing of this Information Statement, the Company did not
compensate directors for their services. Directors are reimbursed for travel
expenses to Board of Directors meetings.
Designees to Serve As Officers and Directors Post-Share Exchange
Pursuant to the terms of the Exchange Agreement, the individuals listed
below have been designated to serve as officers and directors of the Company
following the closing of the Share Exchange. The following table sets forth
information regarding the members of the Company's Board of Directors and its
executive officers following the Closing Date. The directors listed below will
serve until the next annual meeting of the Company's stockholders.
7
The directors hold offices for their respective terms and until their
successors are duly elected and qualified. Vacancies in the existing Board are
filled by a majority vote of the remaining directors. The officers serve at the
will of the Board of Directors.
Name Age Office
----------- ------- -----------------------------------------------------------
Aidong Yu 47 Chairman, Chief Executive Officer, Chief Financial Officer,
Director
Huizhu Xie 54 General Manager, Director
Dekui Wang 53 Vice President, Director
Set forth below is certain information with respect to the designated
officers and directors, including their names, principal occupations for the
past five years, and their directorships with other corporations.
Aidong Yu, Chairman, Chief Executive Officer, Chief Financial Officer,
Director
Mr. Yu founded Dongsheng and has been its Chairman since 2001. Mr. Yu has
led the development of Dongsheng into a leading enterprise in the health
products industry. Mr. Yu has a deep understanding of the health care industry,
and was awarded the honor of "Entrepreneur of Jilin Province" in 2003. In 2004,
Mr. Yu was appointed advanced researcher of the Society for International
Industry Organization Studies of China. Mr. Yu is also a representative in the
National People's Congress.
Huizhu Xie, General Manager, Director
Ms. Xie has been the General Manager of Dongsheng since 2003, and is
responsible for the training of the distribution team and general operations.
Ms. Xie has also served as a Director of the Harbin Wang Gang Hospital for 10
years, and has an extensive background in the health care and health products
industry. Ms. Xie received her bachelor's degree from Harbin Medical University.
Dekui Wang, Vice President, Director
Mr. Wang has been the Secretary and Assistant General Manager of Dongsheng
since October 2005. Prior to joining Dongsheng, Mr. Wang served as Assistant to
the General Manager at Jilin Huana Investment Company, as Manager at Jilin City
Senxin Decoration Company, as Deputy Director General at Jilin City Longtan
District Bureau of Quality and Technical Supervision, and as Deputy Director at
the Jilin City Bureau of Standards.
Compensation of Executive Officers
The following summary compensation table sets forth all compensation paid
by Dongsheng during the fiscal years ended December 31, 2006, 2005 and 2004 in
all capacities for the accounts of Dongsheng's executives:
Summary Compensation Table
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------- -------------------------------------
AWARDS PAYOUTS
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARD(S) OPTIONS/SARS PAYOUTS COMPENSATION
POSITION YEAR ($) ($) ($) ($) (#) ($) ($)
-------------------
Aidong Yu 2006 $50,000 0 0 0 -- -- --
Chairman Chief
Executive 2005 $37,500 0 0 0 -- -- --
Officer,
Principal Financial 2004 $25,000 0 0 0 -- -- --
Officer
Huizhu Xie 2006 $30,000 0 0 0 -- -- --
General Manager 2005 $22,500 0 0 0 -- -- --
2004 $15,000 0 0 0 -- -- --
Dekui Wang 2006 $30,000 0 0 0 -- -- --
Vice President 2005 $22,500 0 0 0 -- --
2004 $15,000 0 0 0 -- --
----------------------------------------------------------------------------------------------------------------------------
8
Option Grants Table. There were no individual grants of stock options to
purchase our common stock made to the executive officer named in the Summary
Compensation Table during the fiscal year ended December 31, 2005, and the
subsequent period up to the date of the filing of this Information Statement.
Aggregated Option Exercises and Fiscal Year-End Option Value Table. There were
no stock options exercised by the executive officers named in the Summary
Compensation Table during the fiscal year ended December 31, 2005, and the
subsequent period up to the date of the filing of this Information Statement.
Long-Term Incentive Plan ("LTIP") Awards Table. There were no awards made to a
named executive officer in the last completed fiscal year under any LTIP.
Compensation Pursuant To Plans
For the fiscal year ended December 31, 2005, and the subsequent period up
to the date of the filing of this Information Statement, Dongsheng did not adopt
any plans, and therefore there is no compensation to the Dongsheng executives
pursuant to a stock option plan or any other plans.
Employment Agreements
None.
Board of Directors Composition and Committees
Immediately following the Share Exchange, the Company's Board of Directors
is comprised of three directors: Aidong Yu, Huizhu Xie and Dekui Wang.
Audit Committee Financial Expert
Within 90 days of the closing of the Share Exchange, the Company will
appoint an independent director to serve on the Company's Audit Committee as an
audit committee financial expert. This person shall be independent, as such term
is used in Item 7(d)(3)(iv) of Schedule 14A under the Exchange Act.
Director Compensation
Following the Share Exchange, the Company may compensate non-management
directors through the issuance of stock awards including, without limitation,
stock options, restricted stock awards, stock grants and/or stock appreciation
rights. The Company intends to make such awards pursuant to a stock option plan
or employee incentive plan to be approved by the Company.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
None.
LEGAL PROCEEDINGS
No director, nominee for director, or executive officer of the Company has
appeared as a party in any legal proceeding material to an evaluation of his/her
ability or integrity during the past five years.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than ten percent of a registered class of
the Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers, directors and
greater than ten-percent shareholders are required to furnish the Company with
copies of Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company, all reports under Section 16(a) required to be
filed by its officers and directors and greater than ten percent beneficial
owners were not timely filed as of the date of this filing.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
The Company is subject to the information and reporting requirements of the
Securities Exchange Act of 1934 and, in accordance with that act, files periodic
reports, documents and other information with the SEC relating to its business,
financial statements and other matters. These reports and other information may
be inspected and are available for copying at the offices of the SEC, 450 Fifth
Street, N.W., Washington, D.C. 20549 and are available on the SEC's website at
www.sec.gov.
9
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Information Statement to be signed on its behalf
by the undersigned hereunto duly authorized.
PAPERCLIP, INC.
By: /s/ William Weiss
---------------------
WILLIAM WEISS
Dated: November 6, 2006 Chief Executive Officer
Principal Financial Officer
10