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 SEPTEMBER 30, 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 0-17114_________________________________________
DEFAULT PROOF CREDIT CARD SYSTEM, INC.
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(Exact name of small business issuer as specified in its charter)
FLORIDA 59-2686523
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(State or other jurisdiction (I.R.S. Employer Identification
of incorporation) Number)
1545 MILLER ROAD, CORAL GABLES, FLORIDA 33146-2309
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(Address of principal executive offices) (Zip Code)
(305) 666-1460
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Registrant's telephone number, including area code
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(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 1,229,351 (as
of September 30, 1999).
Transitional Small Business Disclosure Format
Yes X No
--- ---
<PAGE>
DEFAULT PROOF CREDIT CARD SYSTEM, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
- -------------------------------------------------------------------------------
September 30, 1999
(Unaudited)
----------------------
ASSETS
------
Capitalized Patent Cost $ 1,161
----------------------
TOTAL ASSETS 1,161
======================
LIABILITIES AND DEFICIENCY IN ASSETS
------------------------------------
CURRENT LIABILITIES
Accrued Expenses 29,116
Due to Directors 78,003
----------------------
TOTAL CURRENT LIABILITIES 107,119
----------------------
DEFICIENCY IN ASSETS
- --------------------
Common Stock, $0.01 par value;
2,500,000 authorized shares;
1,229,351 shares issued and
Outstanding at September 30, 1999 12,294
Additional Paid-In Capital 3,981,160
Deficit accumulated during
the development stage (4,099,412)
---------------------
TOTAL DEFICIENCY IN ASSETS (105,958)
----------------------
TOTAL LIABILITIES AND
DEFICIENCY IN ASSETS $ 1,161
======================
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<PAGE>
DEFAULT PROOF CREDIT CARD SYSTEM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
- ----------------------------------------------------------------------------
ENDED
September 30, 1999
(UNAUDITED)
----------------------
OPERATING EXPENSES
Depreciation & Amortization $ -
Expired Public Offering Cost -
General & Administrative 50,921
Marketing -
Officer Salary -
----------------------
Total Expenses 50,921
----------------------
OTHER INCOME (EXPENSE)
Cancellation of Debt -
Litigation Settlements -
Interest & Other Income -
Loss on Marketable Securities -
Loss on Sale of Equipment -
----------------------
Total other income (expense) -
----------------------
NET GAIN (LOSS) $ (50,921)
----------------------
NET GAIN (LOSS) PER
COMMON SHARE (.0414)
----------------------
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 1,229,351
----------------------
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<PAGE>
DEFAULT PROOF CREDIT CARD SYSTEM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDER'S EQUITY
(DEFICIENCY IN ASSETS)
(UNAUDITED)
- -------------------------------------------------------------------------------
SEPTEMBER 30, 1999
(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.
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<PAGE>
DEFAULT PROOF CREDIT CARD SYSTEM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
(DEFICIENCY IN ASSETS)
(UNAUDITED)
- -------------------------------------------------------------------------------
<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 $3,959,560 $(4,045,707) $(74,103)
---------------- -------------- --------------- ------------- ----------
February 5, 1999 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)
================ =============== =============== ============= ==========
April 15, 1999
for Professional Services Rendered 5,000 50 3,050 3,100
(X)
Net Loss (9,933)
---------------- --------------- --------------- ------------- ----------
BALANCE - JUNE 30, 1999 1,224,351 $12,244 $3,973,710 $(4,075,420) $(79,533)
================ =============== =============== ============= ==========
September 30, 1999
for Professional Services Rendered
BALANCE - SEPTEMBER 30, 1999 5,000 50 7,450 (23,992) 7,500
---------------- --------------- --------------- ------------- -----------
1,229,351 $12,294 $3,981,160 $(4,099,412) $72,033
================ =============== =============== ============= ============
</TABLE>
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<PAGE>
DEFAULT PROOF CREDIT CARD SYSTEM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
- -----------------------------------------------------------------------------
Nine
Months Ended
September 30,
1999
(Unaudited)
-----------------
CASH FLOWS FROM OPERATING ACTIVITIES
- ------------------------------------
Net (Loss) $(50,921)
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 21,850
Stock Issued in lieu of Cash
for Waived Salaries -
Loss on Sale of Equipment -
Increase in Other Assets -
Increase (Decrease) in Accrued Expenses 2,800
-----------------
Total adjustments 24,650
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NET CASH USED BY OPERATING ACTIVITIES (26,271)
-----------------
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<PAGE>
DEFAULT PROOF CREDIT CARD SYSTEM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
- ---------------------------------------------------------------------------
Nine
Months Ended
September 30,1999
(Unaudited)
-----------------------
CASH FLOWS FROM INVESTING ACTIVITIES
- ------------------------------------
Purchases of Marketable Securities -
Purchases of Property & Equipment -
Patent License Expenditures -
Proceeds from Sale of Equipment -
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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 26,271
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NET CASH PROVIDED BY FINANCING ACTIVITIES 26,271
-----------------------
NET CHANGE IN CASH AND CASH EQUIVALENTS -
CASH-BEGINNING -
-----------------------
CASH-ENDING -
=======================
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<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.
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<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 - None
(b) Reports on Form 8-K - None
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<PAGE>
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: October 22, 1999 By: /s/ VINCENT CUERVO
-----------------------------
Vincent Cuervo, President and
Chief Executive Officer
DATE: October 22, 1999 By: /s/ PEDRO LLAGUNO
------------------------------
Pedro Llaguno, Secretary
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