FORM 10 QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 14(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the transition period from_______________to__________________
Commission File Number 017114
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DEFAULT PROOF CREDIT CARD SYSTEM, INC.
--------------------------------------
(Exact name of small business issuer as specified in its charter
Florida 59-2686523
------- ----------
(State or other jurisdiction (I.R.S. Employer Identification
of incorporation) Number)
1545 Miller Road, Coral Gables, Florida 33146-2309
--------------------------------------------------
(Address of principal executive offices) (Zip Code)
(305) 666-1460
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Registrant's telephone number, including area code
----------------------------------------------------
(Former name,former address and fiscal year, if changed since last report.)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements of the past 90 days.
Yes X No _
The number of shares outstanding of the registrant common stock is 1,219,351 (as
of March 31, 1999).
Transitional Small Business Disclosure Format
Yes X No _
<PAGE>
DEFAULT PROOF CREDIT CARD SYSTEM, INC.
(A DEVELOPMENT STAGE COMPANY)
INDEX
Page
----
PART 1 FINANCIAL STATEMENTS
ITEM 1.
Balance Sheets (unaudited)As of March 31, 1999 4
Statements of Operations (unaudited)
For the Three months ended March 31, 1999 5
Statements of Stockholders' Equity (Deficiency in
Assets)(unaudited) For the Three months ended
March 31, 1999 6
Statements of Cash Flows (unaudited)
For the Three months ended
March 31, 1999 7
ITEM 2.
Management's Discussion and Analysis or Plan of Operations 9
PART II Other Information
Other Information 10
Signatures 10
<PAGE>
Accountants' Report
We have compiled the accompanying balance sheet of Default Proof Credit Card
System, Inc. as of March 31, 1999, and the related statements of income,
retained earnings, and cash flows for the years then ended, in accordance with
Statements on Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. We have not audited or
reviewed the accompanying financial statements and accordingly, do not express
an opinion or any other form of assurance on them.
Management has elected to omit substantially all of the disclosures required by
generally accepted accounting principles. If the omitted disclosures were
included in the financial statements, they might influence the user's
conclusions about the company's financial position, results of operations, and
cash flows. Accordingly, these financial statements are not designed for those
who are not informed about such matters.
Eduardo Garcia & Associates
June 28, 1999
<PAGE>
DEFAULT PROOF CREDIT CARD SYSTEM, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
- --------------------------------------------------------------------------------
March 31, 1999
(Unaudited)
--------------
ASSETS
------
Capitalized Patent Cost $ 3,945
------------
Total Assets 3,945
============
LIABILITIES AND DEFICIENCY IN ASSETS
------------------------------------
Current Liabilities
- -------------------
Accrued Expenses 26,516
Due to Directors 60,062
------------
Total Current Liabilities 86,578
Deficiency in Assets
- --------------------
Common Stock, $0.01 par value;
2,500,000 authorized shares;
1,219,351 shares issued and
outstanding at March 31, 1999 12,194
Additional Paid-In Capital 3,970,660
Deficit accumulated during
the development stage (4,065,487)
------------
Total Deficiency in Assets (82,633)
------------
Total Liabilities and
Deficiency in Assets $ 3,945
============
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<PAGE>
DEFAULT PROOF CREDIT CARD SYSTEM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
THREE MONTHS
ENDED
March 31, 1999
(UNAUDITED)
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OPERATING EXPENSES
Depreciation and Amortization $ -
Expired Public Offerring Cost -
General & Administrative 19,780
Marketing -
Officer Salary -
-------------
Total Expenses 19,780
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OTHER INCOME (EXPENSE)
Cancellation of Debt -
Litigation Settlements -
Interest & Other Income -
Loss on Marketable Securities -
Loss on Sale of Equipment -
-------------
Total other income(expense) -
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NET GAIN (LOSS) $ (19,780)
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NET GAIN (LOSS) PER COMMON SHARE (0.016)
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WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 1,219,351
-------------
-5-
<PAGE>
DEFAULT PROOF CREDIT CARD SYSTEM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDER'S EQUITY
(DEFICIENCY IN ASSETS)
(UNAUDITED)
MARCH 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Deficit
Common Stock Accumulated
------------------------- Additional During the
# of shares par Paid-In Development
issued value Capital Stage Total
------ ----- ------- ----- -----
<S> <C> <C> <C> <C> <C>
Balance - December 31, 1998 12,043,510 $ 12,044 $3,459,560 $(4,045,707) $(74,103)
February 5,1999 Reverse Stock
Split 10:1 New Balance 1,204,351 12,044 3,959,560 (4,045,707) (74,103)
----------- ----------- ----------- ------------- ----------
February 5,1999
for Professional
Services Rendered(X) 10,000 100 7,400 - 7,500
February 18,1999
for Professional
Services Rendered(X) 5,000 50 3,700 - 3,750
Net Loss - - - (19,780) (19,780)
------------ ---------- ----------- ------------- ----------
BALANCE-MARCH 31, 1999 1,219,351 $ 12,194 $3,970,660 $(4,065,487) $(82,633)
------------ ---------- ----------- ------------- ----------
</TABLE>
(X) Non-cash consideration received consisted of services related to
communications relating to investor relations. The shares of stock issued
for non-cash services were recorded at the fair market value of the shares
at the date of service.
-6-
<PAGE>
DEFAULT PROOF CREDIT CARD SYSTEM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
- --------------------------------------------------------------------------------
Three
Months Ended
March 31, 1999
(Unaudited)
-----------
CASH FLOWS FROM OPERATING ACTIVITIES
- ------------------------------------
Net (Loss) $ (19,780)
Adjustments to Reconcile
Net (Loss) to Net Cash
Used in Operating Activities:
Depreciation & Amortization -
Loss on Marketable Securities -
Expired Public Offering Costs -
Cancellation of Stockholder Note Receivable -
Stock Issued in lieu of Cash
for Professional Services 11,250
Stock Issued in lieu of Cash
for Waived Salaries -
Loss on Sale of Equipment -
Increase in Other Assets -
Increase (Decrease) in Accrued Expenses 200
-----------
Total adjustments 11,450
-----------
Net Cash Used By Operating Activities (8,330)
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-7-
<PAGE>
DEFAULT PROOF CREDIT CARD SYSTEM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
- --------------------------------------------------------------------------------
Three
Months Ended
March 31, 1999
(Unaudited)
-----------
CASH FLOWS FROM INVESTING ACTIVITIES
- ------------------------------------
Purchases of Marketable Securities -
Purchases of Property & Equipment -
Patent License Expenditures -
Proceeds from Sale of Equipment -
------------
Net Cash Used By Financing Activities -
------------
CASH FLOWS FROM FINANCING ACTIVITIES
- ------------------------------------
Proceeds from Issuance of Stock
-Private Offerings -
Proceeds from Issuance of Stock
-Public Offerings -
Proceeds from Issuance of Stock
-Exercise of Warrants -
Proceeds from
Capital Contributions -
Advances (to) from shareholder 8,330
-----------
Net Cash Provided By Financing Activities 8,330
-----------
NET CHANGE IN CASH AND CASH EQUIVALENTS -
CASH-BEGINNING -
-----------
CASH-ENDING -
-----------
-8-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Default Proof Credit Card System, Inc. (the Company) was incorporated on August
14, 1985 under the laws of the State of Florida. For the period from August 14,
1985 (inception) to December 31, 1985, the Company was promoting and marketing
the Resource System ( a Registered Servicemark). In 1997, the Company filed for
a new patent. The patent pending, as well as the original Resource System, has
generated interest and the Company is now engaged in discussions with several
financial institutions for licensing or joint venture of this product.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. The Company suffered losses prior to
commencement of operations and has a working capital deficiency. Management
intends to actively market the Resource System and a new (patent pending) Line
of Credit system. The Company is now engaged in discussions with several
financial institutions for its development. In the absence of achieving
profitable operations, or obtaining debt or equity financing, the Company may
not have sufficient funds to continue operations.
-9-
<PAGE>
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Not Applicable.
Item 2. Changes in Securities
Not Applicable.
Item 3. Defaults upon Senior Securities
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable.
Item 5. Other Information
Not Applicable.
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits No. 1 ( 2-1-1999 8-k)
(b) Reports on Form 8-K - Reverse Stock Split 10 for 1
SIGNATURES
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 hereunto duly authorized.
DEFAULT PROOF CREDIT CARD SYSTEM, INC.
(Registrant)
DATE: June 28, 1999 By: /s/ Vincent Cuervo
-------------------------------------
Vincent Cuervo, Chairman
Chief Executive Officer
DATE: June 28, 1999 By: /s/ Pedro P.Llaguno
---------------------------------------
Pedro P.Llaguno, Secretary
-10-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8 - K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
February 1, 1999
DEFAULT PROOF CREDIT CARD SYSTEM, INC.
(Exact Name of Registrant as Specified in its Charter)
Florida 0-17114
(State or other Jurisdiction of (Commission File No.)
Incorporation or Organization)
59-2686523
(I.R.S. Employer Identification Number)
1545 Miller Road
Coral Gables, Florida 33146-2309
(Address of Principal (Zip Code)
Executive Offices)
Registrant's Telephone Number, including Area Code: (305) 666-1460
Item 5. Registrant's Reverse Stock Split of Corporation's
Common Stock Shares
The Board of Directors of Default Proof Credit Card System, Inc.
(OTC-BB:DPRS) on an Extraordinary Meeting held today February 1, 1999, after
the casting and tallying of the votes submitted from January 14. 1999 to
this date by the Company's shareholders resulting in the approval of the
proposed ten-for one reverse split by a 99% of all the votes received, has
unanimously voted to implement a ten-for-one reverse split of the Company's
Common Stock. The reverse stock split will become
<PAGE>
effective as of the close of business on February 4, 1999. On February 5,
1999 for each pre-split ten (10) shares of the Company's Common Stock $0.001
par value the holder of record will receive one post-split share of the
Company's Common stock $0.01 par value per post split share. The new stock
certificates will have a new cusip number 244626 40 4. The new certificates
will be issued in the normal course of business whenever the appropriate
transfer is requested by the shareholders. Fractional shares resulting from
the reverse stock split will be settled in cash at the shares closing price
of the shares traded at the close of business of the effective date February
4, 1999. The reverse split will decrease the number of shares outstanding,
but not the value of shares held by the shareholders. Shareholders will
maintain the same percentage of equity as before the split. The Company will
make a news release through the news media, Business Wire, Wall Street
Journal, etc., for the general public information.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report on its behalf by the undersigned
hereunto duly authorized.
Default Proof Credit Card System,Inc.
(Registrant)
Date: February 1, 1999
By: /s/ Vincent Cuervo
--------------------------------
Vincent Cuervo,President & CEO
