SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                 FORM 10 - KSB

[X]  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(D) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934[FEE REQUIRED]

                   For the fiscal year ended December 31, 2004
                                       OR

[ ]  TRANSITION  REPORT UNDER SECTION 13 OR 15(D) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934[NO FEE REQUIRED]
     For the transition period from       to
                                   ------   -------

                           COMMISSION FILE NO. 0-17114

                      DEFAULT PROOF CREDIT CARD SYSTEM, INC
                      -------------------------------------
                 (Name of small business issuer in its charter)

                 Florida                                59-2686523
                 -------                                ----------
         (State or other jurisdiction of                (I.R.S. Employer
         incorporation or organization)                Identification No.)

                  1545 Miller Road, Coral Gables, Florida 33146
                  ---------------------------------------------
               (Address of principal executive offices) (Zip Code)

                  Registrant's telephone number: (305)666-1460
                                                 -------------

Securities Registered pursuant to Section 12(b) of the Act:

         Title of each class     Name of each exchange on which registered
         -------------------     -----------------------------------------
                  None                                None

Securities Registered pursuant to Section 12(g) of the Act:

                         Common Stock, Par Value $ 0.01
                         ------------------------------
                                (Title of Class)

     Check whether the issuer (1) has filed all reports  required to be filed by
Section 13 or 15(d) of the Securities  Exchange Act of 1934 during the preceding
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 [ ]
                               ------     ------

     Check if there is no disclosure  of  delinquent  filers in response to item
405 of Regulation  S-B,  contained in this form 10-KSB and no disclosure will be
contained,  to the best of registrant's knowledge, in definite proxy information
statements  incorporated  by  reference  Part  III of this  Form  10-KSB  or any
amendment  to this Form  10-KSB [ ].

The issuer's revenue for its most recent fiscal year was: Nil

The aggregate market value of the voting stock held by non-affiliates of the
registrant (based upon the NASDAQ average bid and asked prices as of February
24, 2005 of shares issued and outstanding of the registrant's common stock $0.01
par value was $5,645,062.50 and as of February 24, 2005 the amount of shares
issued and outstanding was:2,150,550.


                           Forward-Looking Statements

This annual Report contains forward-looking statements about our business,
financial condition and prospects that reflect management's assumptions and
beliefs based on information currently available. We can give no assurance that
the expectations indicated by such forward-looking statements will be realized.
If any of our management's assumptions should prove incorrect, or if any of the
risks and uncertainties underlying such expectations should materialize, our
actual results may differ materially from those indicated by the forward-looking
statements.

The key factors that are not within our control and that may have a direct
bearing on operating results include, but are not limited to, acceptance of our
services, our ability to expand our customer base, managements' ability to raise
capital in the future, the retention of key employees and changes in the
regulation of our industry.

There may be other risks and circumstances that management may be unable to
predict. When used in this annual report, words such as, "believes," "expects,"
"intends," "plans," "anticipates," "estimates" and similar expressions are
intended to identify forward-looking statements, as defined in Section 21E of
the Securities Exchange Act of 1934, although there may be certain forward-
looking statements not accompanied by such expressions.

DEFAULT PROOF CREDIT CARD SYSTEM, Inc.

Management

<page>1

                                     PART I

ITEM 1: HISTORY OF THE COMPANY and BUSINESS

Operations commenced in 1986 with the license granted to it by the Company's
president ,Vincent Cuervo, of his early intellectual property referred to as
"The Resource Default Proof Method System" patents. Agreements and
considerations between him and the Company were executed and patent
applications, patents and other proprietary rights to the system, including the
right to use the registered trademark: RESOURCE, where among them.

Since inception, the Company has generated low revenues from operations and its
activities have consisted primarily of organizational activities, development of
the patented system, and preliminary marketing activities. During the period
from April 1989 through February 1995, the Company's marketing activities were
interrupted due to litigation involving the unauthorized use or disclosure of
the Company's proprietary information.  As a consequence the Company's cash flow
deteriorated.

The Company was listed with NASDAQ until June 1991. Due to the extraordinary
legal fees and expenses incurred during four years of litigation with a bank,
the Company was delisted at that time for falling below NASDAQ's minimum
financial requirements. Since then the common stock of the Company has been
traded on the over-the-counter market. The symbol is DPRS, and is quoted through
OTC:BB.

Default Proof Credit Card System, Inc. (the "Company" or "DPCCS"), was
incorporated in August 1985 under the laws of the State of Florida. The Company
engages in the development of proprietary methods and systems for issuing
secured, prepaid, stored value, gift, payroll, credit and debit cards, that are
a safer lending risk for the issuers.  The Company's first secured type cards
were marketed under the trademark RESOURCE.  Presently the Company owns patents
and other intellectual property as the U.S. Patent No. 6,105,009 "The Automated
Teller Machine Dispenser of Prepaid Debit Cards", "The Prepaid Debit Card
Dispensed at P-O-S Terminals, U.S. Patent No. 6,405,182,and agreements and
considerations on patents pending related to prepaid debit and stored value
cards.

THE COMPANY'S PATENTS AND PATENT PENDING APPLICATIONS

Default Proof Credit Card System, Inc. is a publicly held Florida Corporation
that was duly organized in 1985. Through the deployment of its patented ATM
Debit Card Dispenser (US Patent No. 6,105,009), the System for dispensing
Prepaid Debit Cards Through Point of Sale Terminals (US Patent No. 6,405,182
TM ), and has consideration and agreements which were mutually ratified between
the Company and the inventor, Vincent Cuervo.  The "Internet Website Program For
the Purchase, Issue and Dispensing of Debit Cards", US Patent Application
No.9,207,854 filed on December 8, 1998 fully described at the Company's website
UBUYDEBITCARDS.COM, which on January 28, 2005, Cuervo the inventor received from
the Board of Appeals and Interference of the United States Patent and Trademark
Office notice that on Appeal No.2005-0024 filed by Appellant Vincent Cuervo on
June 30, 2001 the examiner's rejection decision on this application #09.207,854
was reversed, consequently the issue of it's related US Patent  is expected
promptly.  The company is poised for delivery and issuance to the worldwide
market of Prepaid Debit Cards.

<page>2

On December 27, 2004 Vincent Cuervo the inventor received notice from the Mexico
Institute of Industrial Property, Directive Division of Patents ("Instituto
Mexicano de la Propiedad Industrial, Direccion Divisional de Patentes") granting
a Patent to his application "Prepaid Debit Cards System" in Mexico.

Some of these intellectual property patents and/or pending applications have
considerations and agreements to be mutually ratified for the assignment to
Default Proof Debit Card System, Inc., which will allow the offer for purchase,
issuance and delivery of prepaid debit cards that consumers will obtain from
their local stores, through the US Postal service, overnight delivery services
online, or at an ATM machine, at their convenience. The Company feels that these
products give it an important advantage in the debit card market.

"PREPAID DEBIT CARD SYSTEM" filed in the United Kingdom, Germany, Spain, Mexico
and Canada through the Patent Cooperation Treaty for the worldwide protection
of the Company's patents and patent pending applications priority date. On
December 2, 2004 the Company have received notice of the approval, issued and
patent certificate for the country of MEXICO.

The latest filed application took place on January 15, 2003 patent application
pending Number 10/342,991. These patent pending applications are related to
various aspects of the purchase, issuance, activation, delivery and dispensing
of Prepaid Debit Cards known as stored value cards, gift cards, payroll cards,
cash cards, debit cards, and other similar names. Most of these U.S. patents,
and patent pending applications are continuation in part of the Company's U.S.
Patent 6,405,182, and Patent 6,105,009 and most are continuation in part of
patent application number 08/877,006 that was filed on June 9, 1997 and now
abandoned. Most of the above referenced Intellectual Property are protected
under the United States and International copyright laws, as well as nationwide
and in Florida trademark rights. RESOURCE is a Registered Trademark of the
Company.

The Company offers licenses of it's patents and patent pending applications, the
prepaid debit cards to be sold via numerous innovative and traditional channels
including retailers and entities, Over-the-Counter at stores, through the U.S.
Postal Services, the Internet, and other ways.

"Automated Teller Machine Dispenser of Debit Cards", ("ATMDDC") U.S. Patent No.
6,105,009 is a patented system and technology for controlled purchase, issuance
and dispensing of prepaid debit cards. The consumer designs its own prepaid
debit card in accordance with his/her needs and economic means, or the spending
amount to be prepaid that is desired.

<page>3

The U.S. Patent # 6,405,182, the "UBUYDEBITCARDS" patent pending, as well as the
remaining patent pending applications, should be essential for maximizing the
potential of the ATMDDC and in the overall marketing plans of the Company.

These prepaid debit cards do not require a previous or formal banking
relationship with the issuer or sponsor. Market research indicates hat several
automated teller machine dispensers of prepaid debit cards have been
manufactured and are in use in the United States of America without a company's
license. Information and search is underway and when completed consideration
will be given to pursue litigation for patent infringement.

ATM DEBIT CARDS DISPENSER U.S. Patent # 6,105,009 - Potential Revenue

The Company's potential revenues  are projections from the royalties or fees
generated from licenses, and among others the manufacture, use, importation,
sale and/or offer for sale of patented ATMs and from licenses issued to
financial entities that own their own ATMs and would like to benefit by adding
the many features available in this patent. There are several options as an up
front fee, a fee per card purchased and transactions and others, are among the
projected future revenue income for the Company.

THE COMPANY'S PATENT NUMBER 6,405,182 and POTENCIAL REVENUE

"System for Dispensing Prepaid Debit Cards Through POS Terminals" U.S. patent
No. 6,405,182 is continuation in part of U.S. Patent No. 6,105,009 which is a
continuation in part of patent application number 08/877,006 now abandoned.
These Prepaid Debit Cards would be offered, sold, purchased, loaded and reloaded
at participating licensed retailer locations, such as supermarkets, pharmacies,
convenience stores, entities of any kind, as well as from merchants and retail
outlets. Virtually anyone, anywhere in the world could be a purchaser of one or
multiple cards.

The Company expects that the licenses for its U.S. Patent No. 6,405,182 that
will allow the offering and selling of cards at merchant's registers will
consist of an upfront amount per licensee agreement, a flat annual fee, a small
fee per card transaction or per card issued.

U.S. Patent No. 6,405,182, issued June 11, 2002 the prepaid debit card that
offers it is not linked to a bank account or any other kind of bank credit
instruments.

It appears that Prepaid Debit Card Program while in patent pending application
status, have been copied, sold, offered, and marketed under different names
(like Gift Card, Payroll Card, Stored Value Card, Prepaid Card, and several
others) without a license agreement with Default Proof Credit Card Systems;
regardless of efforts by Default Proof management to engage in license
agreements with several corporations and business entities. The program, now
protected under U.S. Patent Number 6,405,182, and by its Continuation In Part of
U.S. Patent 6,105,009, offers the debit card without a bank relation, money
transfers card to card, person to card, teenager programs, payroll, access to
college students, and many other features like the re-loading and replacement of
the card.  This prepaid debit card will not require to be linked to a bank
checking account, and may be reloaded and replaced if lost.

<page>4

Consumers receiving, shopping and/or prepaying, the DPCCS prepaid debit cards
will have the opportunity to select and design their cards with features that
would be unique to it, including the line of credit amount, which may be
associated to the "twin, or multiple cards" feature as an inexpensive and
convenient way to secure money transfers.

Also these transactions should be performed through the Internet
http://ubuydebitcards.com as soon after the "The Internet Prepaid Debit Card
Program for the puchase, issue and dispensing of debit cards" patent pending
application receives a Notification of Patent Allowance from the Patent and
Trademarks Office. This prepaid debit card, purchased over the Internet, in the
future, among other ways, may be dispensed at ATM (ATMDDC, U.S. Patent
No.6,105,009) at a location convenient to the purchaser,(or user if different),
been this one of many  ways of delivery or obtaining it since the card
purchasers through the Internet Prepaid Debit Card Program patent pending,
would will have different choices like to  picked it up at any branch of a
participating bank or retail store, or request that be mailed through the US
Postal Service or by overnight delivery at an indicated address,
ubuydebitcards.com should provide another solution to securing a prepaid debit
card. There is no assurance that a patent, related to this patent pending
application, will be issued.

Any licensed retailer, as well as a financial institution may offer and issue
the prepaid debit cards. The issuer will also serve as the depository for the
prepaid funds that represent the stored value in the cards.

MORE ON PENDING PATENT APPLICATIONS

"Internet Website Program For the Purchase, Issue and Dispensing of Debit Cards"
is a patent pending application. It was filed on December 8, 1998, now is
waiting for the decision at the US Patent and Trademark Office's Board of
Appeals and Interference reversing the examiner final rejection of all claims
over 3 years ago and the inventor and applicant of this application, Dr. Vincent
Cuervo, the Company's CEO is expecting that the examiner's decision is reverse.
This application illustrates, in detail, claims which are related to prepaid
debit cards to be purchased by means of e-commerce transactions, online on the
Internet.

When this patent is granted accessing the Company's web site,
http://ubuydebitcards.com, in the internet, applicants will soon be able to
apply for a self designed, prepaid debit card for any dollar amount and/or in
any international currency.

<page>5

The Patent Cooperation Treaty (PCT) application was filed by Cuervo to secure
the International Priority Claim for the prepaid debit card pending
applications. The countries selected are Canada, Mexico, Great Britain, Germany
and Spain.

On December 27, 2004 the following News Release was made: Default Proof Credit
Card System also congratulates Dr. Cuervo for the notice he just received from
the Mexico Institute of Industrial Property, Directive Division of Patents
("Instituto Mexicano de la Propiedad Industrial, Direccion Divisional de
Patentes") granting a Patent to his application "Prepaid Debit Cards System" in
Mexico.

The patent application "CREDIT OR DEBIT CARDS OF ALL KINDS ISSUED WITH A BANK
SAVINGS ACCOUNT ATTACHED" it is now abandoned, also the patent pending
application "Multiple Accounts and Purposes Card Method and System" it is now
abandoned.

On January 15,2003 Cuervo filed the now pendingapplication number

10/342,991 as a continuation in part of U.S. patent Numbers 6,405,182 and
6,105,009 which are continuation in part of application 08/877.006 file on June
1997 and abandoned, this application entitled "System & Process For Debit Cards
Dispensing" is still on patent pending status at the PTO.

The described Company's patents and patent pending applications represent the
methods and systems to solicit, purchase, deliver, activate and/or dispense
prepaid debit cards. There is no assurance that any of the above mentioned
patent pending applications will result in a grant of the related issued patent.

INDUSTRY REVIEW

Prepaid gift cards: Trendy, Practical, Popular-The Miami Herald, Miami, FL Nov.
25, 2004-

A growing number of shoppers are no longer worrying about the right color or
size. They're joining the latest gift-giving craze by going plastic. In amounts
ranging from $5 to $1,000, prepaid gift cards have become the shopping pick of
least resistance this holiday season. The pocket-sized presents, which are like
credit cards with predetermined dollar values paid by the gift buyer, can now be
purchased for restaurants, department stores, movie theaters, toy shops and even
hotels and airlines.

<page>6

''I really think it's the way to go,'' says Marisa Morse, who bought her sister-
in-law's Christmas present -- a prepaid gift card to AMC Theatres -- at her
neighborhood Publix in Southwest Miami-Dade County while grocery shopping
earlier this month. ``It's more practical than buying something that's going to
end up thrown in the back of a closet or never worn''.

The cards carry enormous appeal for gift givers because they cut down on
shipping and wrapping paper costs, not to mention shopping headaches. And they
enable the giver to skirt the slacker stigma of just handing over cash because
some thought goes into what kind of card is given.

FEATURE-GIFT cards' popularity changes U.S. holiday shopping-New York, Nov. 21,
2004 (Reuters) - Running out of ideas for presents, Renne Bettinger started
buying gift cards two years ago. This Holiday season, the cards will account
will count for half of the 20 gifts she expects to buy.

A survey released last week by the National Retail Foundation showed 74.3
percent of consumers will buy a gift card for the holidays, up from 69.9 percent
last year. "The cards had also become more attractive and more widely
available".

BANK TECHNOLOGY NEWS - December 2004

"For a lot of people, debit cards simplify their lives. They are much more
convenient than carrying large amount of cash across the border"-Carolyn Burke,
VP of payments and ECOMERCE for RBC.

item 2. DESCRIPTION OF PROPERTY

The Company's executive offices consisting of approximately 750 square feet, are
located at 1545 Miller Road, Coral Gables, FL 33146, the landlord is Vincent
Cuervo, J.D., who hasn't charged or received payment for the space occupied by
the Company since March 1995. Furniture, general office equipment, several
computers, printers, fax, scanner. Telephone number: (305) 666-1460; Fax
Number:(305) 665-3462.

E-Mail: dpccsystem@aol.com - Website: www.ubuydebitcards.com.  Domain names
owned: ubuydebitcards.com; resourcedebitcards.com. and OTCprepaiddebitcards.com.

Ownership of the patents and patent pending applications

<page>7

Default Proof Credit Card System holds the assignment and worldwide ownership of
U.S. Patent 6,405,182 issued to Vincent Cuervo, J.D., and related to patent
pending applications filed by Vincent Cuervo up to the date of this 10 KSB,
December 31, 2004, there are considerations at this time between the Company and
inventor Vincent Cuervo,J.D. if a related patent(s) is granted by the US Patent
Office,  There is no assurance that all or any of these patent pending
applications will receive patent allowance.

Under the Employment Agreement executed between the Company and Vincent Cuervo,
J.D. on August 1986 filed with the Securities and Exchange Commission
Registration Statement Under the Securities Act of 1933, and since renewed every
five years and presently in force until year 2010, there have never been
exclusions, limitations, conditions, discussions or waivers over Vincent Cuervo,
J.D. absolute ownership and freedom of disposition of his inventions, creations
or developed ideas, filed, registered or converted into patent applications from
which patents, trademark registrations, copyrights or other  type of national or
international rights he can, and has become recipient, as well as the right of
Vincent Cuervo, J.D. to dispose of the intellectual property created and owned
by him in whatever manner and to whom he may decide to sell, lease or license
his intellectual property.

Vincent Cuervo has offered, and keeps offering the first right of refusal to the
Company in exchange for Stock Option Grants. Vincent Cuervo when discussing the
stock option grants from the Company in exchange for the worldwide ownership of
all rights and licenses of his intellectual property, never took into
consideration the price of the shares at the time the Stock Option was granted,
which in most instances the price was at "a penny for the lot" or one or two
pennies per share.

Furthermore, on those patent pending applications which are under    agreement
between the Company and the Inventor Vincent Cuervo, the stock options will only
be granted to Cuervo if both Cuervo and the Company ratify the existing
agreement, if any, between them, and if a notice of patent allowance is issued
by the PTO and received by Vincent Cuervo. Some Patent pending applications not
mentioned in this filing and specially in this item above, are still subject to
ratification and/or the execution of the consideration/agreement between Cuervo
and the Company.

Item 3. 	Legal Proceedings.

The Company is involved in material litigation and it is aware of potential
claims that would give rise to material liability.

On July 1, 2002 the Company retained one of the nation's most successful patent
enforcement law firms, Niro, Scavone, Haller & Niro. Mr. Raymond P. Niro is the
senior partner of the law firm and the attorney who will lead Default Proof's
legal team. Mr. Niro has won 20 consecutive multi-million dollar verdicts
resulting in awards in excess of $400 million for his clients. According to the
New York Times, patent enforcement is a $150 billion per year business. The 28-
attorney, Chicago, IL based law firm specializes in intellectual property law
and has a broad client base that includes Fortune 500 companies.

<page>8

On August 2, 2002 an on, the Law Firm began addressing VIA FedEx  a few national
retailers proposing to them, in full settlement of any claims, a simple non-
exclusive license agreement that will fully release them from liability under
inventor Cuervo's patents.

Obviously, the Company would very much like to amicably and promptly resolve all
issues through a settlement, rather than through litigation.

Most, if not all, the letters were answered, some of the recipients have
requested additional input, some have asked for copies of the patents, and
others have asked for a copy of the license agreement for their consideration.

On January 15, 2003 the Niro, Scavone, Haller and Niro, Law Firm on behalf of
the Company filed a lawsuit. The Company contends in the lawsuit filed in
federal court in Miami, Florida that Home Depot, Wal-Mart, Sam's Club and
Starbucks are infringing on it's patent for the system that dispenses prepaid
debit cards. The lawsuit filed in U.S. District Court in Miami claims that the
corporate giants are all violating its patent by dispensing prepaid debit cards
without paying a licensing fee to the Company.

The Company is demanding "adequate" compensation for the alleged infringement, a
permanent injunction prohibiting further  infringement  and attorneys fees and
costs.

In 2004 it was learned by the Company Attorneys that two or three weeks after
receiving the early August 2002 letters and before January 15, 2003 date in
which it was filed the Law Suit, eighteen corporation or retailers organized
under the name "Cuervo Joint Defense/Common Interest Group" by William H. Baker
for the purpose and with the effect of refusing to deal independently with
plaintiff for a license. With what it was considered enough evidence on
September 27, 2004 the Company attorneys filed in the United States District
Court for the District of Delaware Civil Action No. 04-1302. This Complaint
claims for violation of the Anti Trust laws and state laws against interference
with business relationships.

On September 27, 2004 the Default Proof Credit Card System, Inc. ("plaintiff")
filed In The United States District Court For The District of Delaware the Civil
Action No.04-1302, complaining of defendants Home Depot U.S. A. Inc., Wal-Mart
Stores, Inc., Linens 'N Things, Inc., Barnes Noble, Inc., Burlington Coat
Factory Warehouse Corporation, Cumberland Farms, Inc., Starbucks Coffee Company,
Walgreen Company, Kohl's Corporation, Bed Bath & Beyond, Inc., and Pep-Boys-
Manny, Moe & Jack (collectively "defendants").

This Complaint, file by the Niro, Scavone, Haller & Niro Law Firm, states claims
for violation of the antitrust laws and state laws against interference with
business relationships. At all times relevant to the claims made, defendants
have engaged in and affected interstate commerce, all within the meaning of
Sherman Act Sections 1 and 6(a)(15 U.S.C.Sections 2 and 6(a)).

<page>9

On September 30, 2004 Case No.03-20094-Civil-ALTONAGA/BANDSTRA at the U.S.
District Court Southern District of Florida Miami Division, Filed Under Seal
Ordered And Adjudged that Home Depot's Motion for an Order Construing Claim 1 of
U.S. Patent No. 6,405,182 are invalid is GRANTED in part. Home Depot's Motion
for Summary Judgment that the Claims of U.S. Patent No. 6,405,182 are Invalid is
GRANTED in part. 13-This Order does not find all of the claims of the '182
Patent Invalid.

That Starbucks and Wal-Mart's Motion for Summary Judgment of Non-infringement,
filed under seal, is DENIED as moot.

That Home Depot's Motion for Summary Judgment that its Gift-Card Program does
not Infringe any Claim of U.S. Patent No. 6,405,182, filed under seal is DENIED
as moot.

The Clerk of Court is instructed to CLOSE this case, and all pending motions not
otherwise ruled upon herein DENIED as moot.

On October 4, 2004 at the same District Court of Delaware, the attorneys filed
Notice of Voluntary Dismissal under Federal Rule Of Civil Procedure 41(a)(1) of
Complaint No. 04-1302.

A voluntary dismissal under Federal Rule of Civil Procedure is without
prejudice, which means that we can re-file the complaint if the district court's
decision on invalidity of Claim 1 is reversed.

On October 20, 2004 the US District Court for the Southern District Of Florida
Case No.03-20094-Civil Altonaga/Bandstra Done and Ordered GRANTING DEFENDANT'S
UNOPPOSSED MOTION FOR AN ORDER TO UNSEAL THE ORDER ON PENDING MOTIONS entered
September 30, 2004.

In the News Release published on October 27, 2004 Default Proof Credit Card
System, Inc. owner of intellectual property related to the Prepaid Debit Cards
announced that notice was given that Default Proof Credit Card System, Inc.,
plaintiff in the Civil Action 03-20094-CIV, has appeal to the United States
Court of Appeals for the Federal Circuit from the (a) Final Judgment dated and
entered on October 14, 2004; (b) the (Filed Under Seal) September 30, 2004 Order
Invalidating Claim 1 of US Patent No. 6,405,182 on summary judgment on grounds
of indefiniteness under 35 U.S.C.Section 112, paragraph2; and (c) all other
decisions or orders supporting the above judgment.

LISTING OF BRIEFS - U.S. Court of Appeals for the Federal Circuit
CASE No. 05-1069

<page>10

On December 15, 2004 BRIEF FOR PLAINTIFF-APPELLANT DEFAULT PROOF CREDIT CARD
SYSTEM, INC. BY DEFAULT PROOF CREDIT CARD SYSTEM, INC. (APPELLANT). SERVED BY
MAIL ON 12.15/2004, FILED ON 12/15/2004. ( NON-CONFIDENTIAL ).

On January 25, 2005 BRIEF OF APPELLEE HOME DEPOT U.S.A. INC. BY HOME DEPOT
U.S.A. INC. (APPELLEE). SERVED BY MAIL ON 1/25/2005. FILED ON 1/25/2005. ( NON-
CONFIDENTIAL).

On January 25, 2005 BRIEF OF APPELLEES SAM'S EAST, INC., STARBUCKS COFFEE
COMPANY, URBAN COFFEE OPPORTUNITIRD, LLC, WAL-MART STORES, INC., AND WAL-MART
STORES EAST, LP. BY SAM'S EAST INC, STARBUCKS COFFEE COMPANY ET AL ( APPELLEES).
SERVED BY MAIL ON 1/25/2005. FILED 1/25/2005. ( NON-CONFIDENTIAL .

On February 11, 2005 REPLY BRIEF OF PLAINTIFF-APPELLANT DEFAULT PROOF CREDIT
CARD SYSTEM INC.  BY DEFAULT PROOF CREDIT CARD SYSTEM, INC. (APPELLANT). SERVED
BY MAIL ON 2/11/2005. FILED ON 2/11/2005 ( CONFIDENTIAL ) .

On February 18, 2005 APPENDIX. BY DEFAULT PROOF CREDIT CARD SYSTEM, INC.
(APPELLANT). SERVED BY MAIL ON 2/18/2005. FILED ON 2/18/2005. ( CONFIDENTIAL &
NON-CONFIDENTIAL VERSIONS ).

The ruling by the Washington Court of Appeals should take some time. The
Company's Management is not only positive and optimistic of the outcome, but
also expects that the result will take place in the near future.

Today we feel very positive about the outcome and have been for the past two and
a half years, from the moment when we retained the Law Firm of NIRO, SCAVONE,
HALLER and NIRO and they started offering their services from July 1, 2002.
They have been representing us against those retailers and corporations who have
ignored the intellectual property rights of Default Proof and are marketing,
offering, selling and dispensing Prepaid Debit Cards under various names as GIFT
CARDS, PAYROLL CARDS, STORE VALUE CARDS, CASH CARDS, ETC., and refused to
negotiated a license offered to several dozen of them in letters mailed after
August 2, 2002.

Item 4. Submission of Matters to a Vote of Security Holders.

No matters were submitted to a vote of the security holders during the twelve
months ended December 31, 2004.

<page>11

					PART II

ITEM 5. Market for Common Equity and Related Stockholders Matters.

The Company's common stock is traded in the over-the-counter bulletin Board
market and prices are quoted on the National Association of Securities Dealers
Automated Quotation System (NASDAQ) Small Cap Market, the OTC:BB under the
Symbol "DPRS".

The following table sets forth the high and low bid information for the
Company's common stock monthly during 2003. The quotations provided below
reflect inter-dealer prices, without mark ups, mark downs or commission and may
not represent actual transactions.

Item 6.   SELECTED FINANCIAL DATA

Fiscal 2004   High     Close           Fiscal 2003    High     Close
---------------------------------      -------------------------------
04/05/04     1.50	 1.05		04/07/03       1.35	 1.65
03/01/04     1.70	 1.70		03/03/03       1.60      1.35
02/02/04     2.10	 1.50		02/02/03       1.60	 1.60
05/03/04     1.45        1.05		05/05/03       1.90  	 2.48
06/01/04     0.95        0.75		06/02/03       1.60      1.50
07/06/04     0.51	 0.51		07/07/03       1.45	 1.45
08/09/04     0.95	 0.95		08/04/03       1.25      1.50
09/06/04     1.15	 1.15		09/03/03       0.60	 0.60
10/04/04     2.45	 2.25		10/06/03       0.65      0.65
11/01/04     1.20	 0.85		11/03/03       0.70      0.70
12/06/04     0.73	 0.73		12/01/03       0.75      0.75
12/27/04     1.15        0.75		12/31/03       0.60      0.60

On December 31, 2004 the Company had approximately 651 holders of record of the
Company's common stock. A large number of the 651 shareholders are brokers and
other institutions holding shares in "street name" for one or more than one
beneficial owner.

Dividends

The Company has never paid any cash dividend on its common stock and does not
anticipate paying cash dividends in the near future. The dividend payment will
depend on its earnings, financial condition and other business and economic
factors affecting the Company at that time which the Board of Directors may
consider relevant.

ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
                           AND RESULTS OF OPERATIONS

Year 2004  was an intense and disappointed year for Default Proof Credit Card
System Inc. we couldn't accomplish the targets that we were looking for, but we
did maintained our will to keep fighting for our rights, protecting the
company's intellectual property, taking every possible legal step to obtain the
recognizing of our rights and defending the Company's shareholders. In Item 3 -
Legal Proceedings it can be found a detailed information.

<page>12

The pending litigation has been the primary reason for the lack of marketing and
business activity. Retailers and other marketers of the prepaid debit cards,
have been awaiting for the outcome of the litigation developments, those visited
wanted to wait for the litigation results.

The Company continues to be fully committed to entering into Licensing
Agreements with all interested and qualified parties, including those who have
ignored the "Patent Pending" disclosures that have been printed as a warning on
all of our marketing material, website pages, on Non Disclosure Agreements , on
brochures marked confidentialused for presentations, and even with those who
have marketed as their own flagrant copies of our programs, as well as with
those interested in starting-off with one or more of the Default Proof programs.

Once the litigation is over and if the appeal reversed the present intellectual
property along with new marketing will allow the Company to offer its valuable
Prepaid Debit Cards Programs to merchants and retailers who will be licensed to
offer, sell, and distribute prepaid debit cards under U.S. Patents No.6,405,182
and 6,105,009. Fees and income revenue should be expected then.

Employees

The Company isn't a manufacturing corporation, no products are manufacture by
Default Proof Credit Card, Inc., its main source of revenue would be originated
by the royalties and fees earned from the licenses sold. Its is expected than
soon the Company would require administration personnel for office and daily
duties, and added in time as the growth demand. As of this date, the Company has
five employees, 3 serving also as officers, like the CEO, the Counsel and
Company's Secretary, and Charles A. Menendez, C.P.A, newly appointed President
and C.F.O. On December 1, 2004 Board of Directors Meeting and by the unanimous
vote of all its members, Vincent Cuervo, C.E.O and Chairman  of the Company was
ratified in his positions and his Employment Agreement was renewed for another
five years term until February 1, 2010.

<page>13
                            CONTROLS AND PROCEDURES.

 Based on an evaluation conducted within 90 days prior to the filing date of
 this Annual Report on Form 10-KSB, our Chief Executive Officer and Chief
 Financial Officer concluded that we maintain effective disclosure controls and
 procedures that ensure information required to be disclosed in our reports
 under the Securities Exchange Act of 1934 is recorded, processed, summarized
 and reported within the time periods specified in the SEC's rules and forms.
 Specifically, the disclosure controls and procedures assure that information is
 accumulated and communicated to our management, including our Chief Executive
 Officer and Chief Financial Officer, as appropriate, to allow timely decisions
 regarding required disclosure.  There have been no significant changes in our
 internal controls or in other factors that could significantly affect these
 controls subsequent to the date of management's evaluation.

ITEM 8   FINANCIAL STATEMENTS


                                C O N T E N T S

AUDITORS REPORT...................................F-1

FINANCIAL STATEMENTS..............................F-2

BALANCE SHEET.....................................F-3

STATEMENTS OF OPERATIONS..........................F-4

STATEMENT OF STOCKHOLDERS' EQUITY/DEFICIENCY......F-10

STATEMENTS OF CASH FLOWS..........................F-11

NOTES TO FINANCIAL STATEMENTS.....................F-12


                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors Default Proof Credit Card System, Inc.

We have audited the accompanying balance sheet of Default Proof Credit Card
System, Inc., (a development stage company) as of December 31, 2004, and the
related statements of operations, stockholders' deficiency and cash flows for
the year then ended.  These financial statements are the responsibility of the
Company's management.  Our responsibility is to express an opinion on the
financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Default Proof Credit Card
System, Inc. (a development stage company) as of December 31, 2004 and the
results of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern.  As discussed in Note 2 to the
financial statements the Company's dependence on outside financing, lack of
existing commitments from lenders to provide necessary financing, lack of
sufficient working capital, and losses since inception raise substantial doubts
about its ability to continue as a going concern.  Management's plans concerning
these matters are also described in Note 2.  The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.

Coral Springs, Florida
March 22, 2005

BAUM & COMPANY, P.A.
Certified Public Accountants
1515 University Drive - Suite 209
Coral Springs, Florida  33071

<page>F-1


                   DEFAULT PROOF CREDIT CARD SYSTEM, INC.
                         (A DEVELOPMENT STAGE COMPANY)

                                  BALANCE SHEET

                                December 31, 2004



                                     ASSETS
                                     ------

CURRENT ASSETS
   Cash                                                      $           473
                                                             ---------------
               Total Current Assets                                      473


PROPERTY AND EQUIPMENT (Net of
   Accumulated Depreciation of $9,862)                                   766

OTHER ASSETS
   Deferred Patent Costs, Net                                          1,161
                                                             ---------------
               TOTAL ASSETS                                  $         2,400
                                                             ===============


                    LIABILITIES AND STOCKHOLDERS' DEFICIENCY
                    ----------------------------------------

CURRENT LIABILITIES
      Accounts Payable                                       $         3,600
      Accrued Expenses                                               115,098
      Due to Related Party                                            49,203
                                                             ----------------
Total Liabilities                                                    167,901
                                                             ----------------
STOCKHOLDERS' DEFICIENCY
      Common Stock, $0.01 Par Value, 2,500,000
         Shares Authorized, 2,150,550 Issued and Outstanding           21,505
      Additional Paid-In Capital                                    4,705,183
      Deficit Accumulated During Developmental Stage               (4,892,189)
                                                             ----------------
               TOTAL STOCKHOLDERS' EQUITY                            (165,501)
                                                             ----------------
                  TOTAL LIABILITY AND STOCKHOLDERS EQUITY    $          2,400
                                                             ================

                 See Accompanying Notes to Financial Statements

<PAGE>F-2





                     DEFAULT PROOF CREDIT CARD SYSTEM, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                           STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
<S>                                                                   <C>                   <C>            <C>
                                                                      CUMULATIVE FROM
                                                                       AUGUST 14, 1985        FOR THE YEARS ENDED
                                                                        (INCEPTION)                DECEMBER 31,
                                                                          THROUGH                --------------
                                                                      DECEMBER 31, 2004         2004          2003
                                                                      -----------------     -------------  ------------
EXPENSES
    General & Administrative                                          $ 5,426,536           $     214,829       143,999
    Depreciation & Amortization                                           107,298                  1, 271        1, 603
    Expired Public Offering Costs                                         179,211                     -             -
                                                                      -----------           -------------  ------------
    Total Expenses                                                      5,535,106                 216,100       145,602
                                                                      ------------          -------------  ------------

OTHER INCOME (EXPENSE)
    Litigation Settlements (Note 7)                                       (90,000)                    -             -
    Interest & Other Income(Expense)                                      420,590                   (512)         (512)
    Loss on Marketable Securities                                         (96,529)                    -             -
    Loss on Sale of Equipment                                             (34,144)                    -             -
                                                                      -----------           -------------  ------------
    Total Other Income (Expense)                                          199,917                   (512)         (512)
                                                                      -----------           -------------  ------------
Net Loss before Income Taxes and Extraordinary Item                    (5,335,189)              (218,219)     (146,114)
Income tax benefit                                                         25,436                     -             -
                                                                      -----------           -------------  ------------
Net Loss before Extraordinary Item                                      (5,309,753)             (218,218)     (146,114)

Extraordinary item - Gain from restructuring of
    debt (net of Income Taxes of $165,200)                                277,800                20,000             -
Benefit from utilization of net operating loss carryforward               139,764                     -             -
                                                                      -----------           -------------  ------------
NET (LOSS) INCOME                                                     $(4,892,189)          $   (198,218)     (146,114)
                                                                      ===========           =============  ============

Net (Loss) Earnings per Common Share                                                        $      (0.10)        (0.08)
                                                                                            =============  ============

Weighted Average Number of  Common
    Shares Outstanding                                                                         2,084,665     1,844,466
                                                                                            =============  ============


</TABLE>

                 See Accompanying Notes to Financial Statements

<PAGE>F-3





                     DEFAULT PROOF CREDIT CARD SYSTEM, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                 STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
<TABLE>
<CAPTION>
<S>                                                 <C>              <C>           <C>             <C>            <C>
                                                                                                     DEFICIT
                                                            COMMON STOCK                            ACCUMULATED
                                                     ------------------------       ADDITIONAL       DURING THE
                                                     # OF SHARES                     PAID-IN         DEVELOPMENT
                                                        ISSUED         AMOUNT        CAPITAL           STAGE         TOTAL
                                                     -----------   ------------    ------------    ------------   ----------
To a Director, for Cash & Other Property
 (A, B, C)                                             2,518,000          2,518         11,705               -        4,223
To Directors & Officers for non-Cash
 Considerations Received (A, B, D)                       582,750            583         16,900               -       17,483
To Others for non-Cash Considerations
 Received (A, B, D)                                       49,250             49          1,428               -        1,477
                                                    ------------    -----------    ------------    -----------    ---------
BALANCE - DECEMBER 31, 1985                            3,150,000          3,150         30,033               -       33,183
Private Placement Offering, Net of
 Issuance Costs of $16,453 (A, E)                        312,500            312        108,235               -      108,547
Patent License Costs (M)                                       -             -        (125,000)              -     (125,000)
Dec. 31/86--Net Loss                                           -             -               -         (44,461)     (44,461)
                                                    ------------    -----------    ------------    -----------    ---------
BALANCE - DECEMBER 31, 1986                            3,462,500          3,462         13,268         (44,461)     (27,731)
May 7/87-- to a Director/Officer for Property
 (A, B, C)                                               500,000            500           (500)              -            -
May 12/87-- to a Director/Officer for Cash
 (A, F)                                                  100,000            100         39,900               -       40,000
Reversal of Accrued License Costs (M)                          -              -         25,000               -       25,000
Capital Contribution by Principal Stockholder                  -              -         78,076               -       78,076

Oct. 12/87-- Public Offering, net of Costs               $76,314      1,131,010          1,132       1,336,318    1,337,450
Dec. 31/87--Net Loss                                           -              -              -        (176,052)    (176,052)
                                                    ------------    -----------    ------------     -----------   ---------
BALANCE - DECEMBER 31, 1987                            5,193,510          5,194      1,492,062        (220,513)   1,276,743
Apr. 7/88-- to Directors/Officers for Property
 (A, G)                                                  800,000            800              -               -          800
May 1/88-- to Others for non-Cash Considerations
 Received (A, H)                                          95,750             96            (96)              -            -
May 19/88-- Proceeds from Public Offering, net of
 Public Offering Costs of                               $487,287      2,300,000          2,300       1,810,413    1,812,713
Patent License Costs (M)                                       -              -       (100,000)              -     (100,000)
Warrants Converted at $1.25 per Share                    128,300            128        160,247               -      160,375
Dec. 31/88--Net Loss                                           -              -              -        (405,875)    (405,875)
                                                    ------------    -----------    -----------     -----------    ---------
BALANCE - DECEMBER 31, 1988                            8,517,560          8,518      3,362,626        (626,388)   2,744,756
Warrants Converted at $2.00 per Share                      3,000              3          5,997               -        6,000
Issuance of Stock by Principal Stockholder                     -              -        110,000               -      110,000
Dec. 31/89--Net Loss                                          -               -              -      (1,129,559)  (1,129,559)
                                                    ------------    -----------    -----------     ------------  ----------
BALANCE - DECEMBER 31, 1989                            8,520,560        $ 8,521    $ 3,478,623     ($1,755,947)  $1,731,197
Dec. 31/90--Net Loss                                                                                (1,175,201)  (1,175,201)
                                                    ------------    -----------    -----------     ------------  -----------
BALANCE - DECEMBER 31, 1990                            8,520,560          8,521      3,478,623       (2,931,148)    555,996
Jul. 10/91--to Various Parties for Professional
  Services Rendered (A, I)                               125,000            125          7,375            7,500
Oct. 3/91-- To Directors & Officers for non-Cash
 Considerations Received (A, J)                           85,000             85          5,015            5,100
Dec. 31/91--Net Loss                                                                                   (430,800)   (430,800)
                                                    ------------    -----------    -----------     ------------  ----------
BALANCE - DECEMBER 31, 1991                            8,730,560          8,731      3,491,013       (3,361,948)    137,796


</TABLE>

                 See Accompanying Notes to Financial Statements

<PAGE>F-4





                     DEFAULT PROOF CREDIT CARD SYSTEM, INC.
                          (A DEVELOPMENT STAGE COMPANY)

           STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY) (CONTINUED)

<TABLE>
<CAPTION>
<S>                                                   <C>              <C>             <C>             <C>            <C>
                                                                                                     DEFICIT
                                                            COMMON STOCK                            ACCUMULATED
                                                     ------------------------       ADDITIONAL       DURING THE
                                                     # OF SHARES                     PAID-IN         DEVELOPMENT
                                                        ISSUED         AMOUNT        CAPITAL           STAGE         TOTAL
                                                     -----------   ------------    ------------    ------------   ----------
BALANCE - DECEMBER 31, 1991                            8,730,560          8,731      3,491,013       (3,361,948)     137,796
Aug. 12/92-- to an Individual for Professional
  Services Rendered (A, K)                                50,000             50          2,950            3,000
Dec. 31/92--Net Loss                                                                                   (173,144)    (173,144)
                                                    ------------    ------------   -----------     ------------   -----------
BALANCE - DECEMBER 31, 1992                            8,780,560          8,781      3,493,963       (3,535,092)     (32,348)
Feb. 12/93-- to a Related Entity in Consideration
  for Deferral of Loan Repayment (A, L)                   46,850             47          2,753            2,800
Dec. 31/93--Net Loss                                                                                   (450,366)    (450,366)
                                                    ------------   ------------    -----------     ------------   -----------
BALANCE - DECEMBER 31, 1993                            8,827,410          8,828      3,496,716       (3,985,458)    (479,914)
Feb. 22/94-- to Various Parties for Professional
  Services Rendered (A, N)                                75,000             75          7,425            7,500
Jul. 25/94--to an Individual for Professional
  Services Rendered (A, O)                                30,000             30          5,970            6,000
Jul. 25/94-- to Various Parties for Secretarial
  Services Rendered (A, P)                                10,000             10          1,990            2,000
Dec. 31/94--Net Loss                                                                                   (198,366)    (198,366)
                                                    ------------   ------------    -----------     ------------   -----------
BALANCE - DECEMBER 31, 1994                            8,942,410          8,943      3,512,101       (4,183,824)    (662,780)
Jul. 25/95--to an Individual for Professional
  Services Rendered (A, Q)                               125,000            125         18,625           18,750
Dec. 31/95--Net Loss                                                                                   (103,635)    (103,635)
                                                    ------------   ------------    -----------     ------------   -----------
BALANCE - DECEMBER 31, 1995                            9,067,410        $ 9,068    $ 3,530,726     ($ 4,287,459)  ($ 747,665)
Jul. 12/96--to an Individual for Professional
  Services Rendered (A, R)                                25,000             25          3,725            3,750
Jul. 12/96--to an Individual for Professional
  Services Rendered (A, K)                                60,000             60          8,940            9,000
Aug. 28/96--to an Individual for Professional
  Services Rendered (A, S)                                30,000             30          4,470            4,500
Aug. 28/96--to an Individual for Professional
  Services Rendered (A, T)                                50,000             50          7,450            7,500
Sep. 13/96--to the President/Principal Shareholder
  in Exchange for Accrued Salaries Waiver up to
  12/31/96 (A, U)                                      2,000,000          2,000        298,000          300,000
Dec. 31/96--Net Loss                                                                                    (39,711)     (39,711)
                                                    ------------  -------------    -----------     ------------   -----------
BALANCE - DECEMBER 31, 1996                           11,232,410         11,233      3,853,311       (4,327,170)    (462,626)
Feb. 26/97--to Director/Officer for Professional
  Services Rendered (A, V)                                50,000             50          8,950            9,000
Feb. 26/97-- to an Individual for Professional
  Services Rendered (A, W)                                15,000             15          2,685            2,700
Nov. 5/97-- to an Individual for Professional
  Services Rendered (A, P)                                20,000             20          2,980            3,000
Nov. 5/97--to a Financial Public Relations Company
  for  Professional Services Rendered (A, X)             226,100            226         24,634           24,860
Nov. 5/97-- to a Consulting Company for Professional
  Services Rendered (A, Y)                               100,000            100         10,900           11,000
Dec. 31/97--Net Gain                                                                   349,910          349,910
                                                    ------------    -----------    -----------      -----------   -----------
BALANCE - DECEMBER 31, 1997                           11,643,510         11,644      3,903,460       (3,977,260)     (62,156)

</TABLE>

                 See Accompanying Notes to Financial Statements

<PAGE>F-5





                     DEFAULT PROOF CREDIT CARD SYSTEM, INC.
                          (A DEVELOPMENT STAGE COMPANY)

           STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY) (CONTINUED)

<TABLE>
<CAPTION>
<S>                                                  <C>           <C>             <C>             <C>            <C>
                                                                                                      DEFICIT
                                                            COMMON STOCK                            ACCUMULATED
                                                     ------------------------       ADDITIONAL       DURING THE
                                                     # OF SHARES                     PAID-IN         DEVELOPMENT
                                                        ISSUED         AMOUNT        CAPITAL           STAGE         TOTAL
                                                     -----------   ------------    ------------    ------------   ----------
BALANCE - DECEMBER 31, 1997                           11,643,510       11,644        3,903,460      (3,977,260)     (62,156)
Jan. 22/98--to a Financial Public Relations Co.
  for Professional Services Rendered (X)                 200,000          200           21,800                       22,000
Apr. 13/98--for Professional Services Rendered (X)       100,000          100           14,900                       15,000
Jun. 4/98--for Professional Services Rendered (Y)         50,000           50            8,950                        9,000
Aug. 4/98--for Professional Services Rendered (R)         50,000           50            7,950                        8,000
Dec. 31/98--Net Loss                                                                                   (71,231)     (71,231)
                                                     -----------   ----------      -----------     ------------   ----------
BALANCE - DECEMBER 31, 1998                           12,043,510     $ 12,044       $3,959,560     ($4,048,491)    ($76,887)
Feb. 1/99--10 to 1 Reverse Stock Split               (10,839,159)                                               (10,839,129)
Various/99--for Professional Services Rendered            66,000          660           22,825                       23,485
Dec. 31/99--Net Loss                                                                                   (64,319)     (64,319)
                                                     -----------   ----------      -----------     ------------   ----------
BALANCE - DECEMBER 31, 1999                            1,270,351       12,304        3,982,385      (4,112,810)    (118,121)
Feb. 28/00--for Professional Services Rendered             7,000           70           26,180                       26,250
Apr. 2/00--for Professional Services Rendered              4,000           40            8,680                        8,720
Apr. 12/00--for Professional Services Rendered               500            5            1,245                        1,250
Jul. 26/00--for Professional Services Rendered             2,500           25            1,850                        1,875
Nov./00--for Exercise of Stock Options in Exchange
  for Extingment of Debt                                 140,283        1,403          146,380                      147,783
Dec. 31/00--Net Loss                                                                                   (58,999)     (58,999)
                                                     -----------   ----------      -----------     ------------   ----------
BALANCE - DECEMBER 31, 2000                            1,424,634       14,247        4,166,720      (4,171,809)       9,158
Jan 11/01-for Professional Services Rendered              14,500          145           67,355                       67,500
Jan/Apr 01 Stock Options for Services                                                   34,500                       34,500
Jan 31/ 01-Exercise of Stock Options for Cash             35,000          350           34,650                       35,000
May 11/01Exercise of Stock Options for Cash               25,000          250            9,125                        9,375
 July 31/01 for Professional Services Rendered             9,000           90           80,910                       81,000
Dec 31/01 Net Loss                                                                                    (217,357)    (217,357)
                                                     -----------   ----------      -----------     ------------   ----------
BALANCE -DECEMBER 31, 2001                             1,508,134       15,082        4,393,260      (4,389,166)      19,176
Jan/Nov 02 Stock for Services                             12,750          127           26,362                       26,489
July 02 Stock Options for Services                                                      87,555                       87,555
Aug 14/02 Exercise of Stock Options for Cash             265,000        2,650           23,850                       26,500
Dec 31/02 Net Loss                                                                                    (158,691)    (158,691)
                                                      ----------   ----------      -----------     ------------   ----------
BALANCE -DECEMBER 31, 2002                             1,785,784       17,859        4,531,027      (4,547,857)       1,029
Mar/Nov 03 Stock for Services                             30,000          300           27,300                       27,600
July 22/03 Exercise of Stock Options for Cash            235,000        2,350           21,150                       23,500
   Dec 31/03 Net Loss                                                                                 (146,114)    (114,114)
                                                      ----------   ----------      -----------     ------------   ----------
BALANCE -DECEMBER 31,2003                             2,050,784        20,509        4,579,477      (4,693,971)    $(93,985)
                                                      ----------   ----------      -----------     ------------   ----------
Feb 6/03--stock for Payables                             46,666           466           69,036                       69,502
July/Sept04--Stock for Professional Services             53,000           530           56,670                       57,200
Dec.31/04--Net Loss                                                                                   (198,218)    (198,218)
                                                     -----------   ----------      -----------     ------------   -----------
BALANCE-DECEMBER 31, 2004                             2,150,550        21,505        4,705,183    $ (4,892,189)    (165,501)
                                                     ===========   ==========      ===========     ============   ==========
</TABLE>
<PAGE>F-6

                 See Accompanying Notes to Financial Statements

(A)	The shares are subject to restrictions on transfers imposed by Rule 144
of the Securities Act of 1993, as amended.

(B)	In addition to the shares of common stock issued, the same number of
warrants were issued entitling the shareholder to purchase one share of common
stock at $1.50 	per share until April 12, 1990 (extended to August 2, 1991).  On
May 4, 1990 the Company, pursuant to a Resolution adopted by its Board of
Directors at a special 	meeting of its Board of Directors, terminated and
canceled the warrants.

(C)	Other property consisted of an exclusive license to a patent and a
service mark recorded at par value ($.001) of the shares of common stock issued.
At the time of 	issuance of the shares, the fair market value of the property
exchanged was not determinable.

(D)	Non-cash consideration received consisted of professional services
rendered in connection with the organization and development of the Company.
The shares of 	stock issued for non-cash services were recorded at the fair
market value of the services rendered.

(E)	The Company sold 312,500 shares of $.001 par value common stock at $.40
per share in a private placement offering during August 1986.

(F)	In addition to the shares of common stock issued, the shareholder
received three hundred thousand warrants, each entitling him to purchase one
share of common stock 	at $1.50 per share until April 12, 1990 (extended to
August 2, 1991).  On May 4, 1990 the Company, pursuant to a Resolution adopted
by its Board of Directors at a Special Meeting of its Board of Directors,
terminated and canceled the warrants.

(G)	Property consists of an exclusive license Patent No. 4,718,009, a
Registered Trademark "Resource", and a Continuation-In-Part of a patent
application called "Debit 	Card".  The Canadian patent for Default Proof
Credit Card System was granted and the Company was advised that fees for
issuance of such patent were due before 	December 12, 1990.  The Company
paid such fees on October 30, 1990.  The shares of common stock were recorded at
fair market value ($1.00 per share).  Additional 	paid-in capital was
reduced by $799,200 to adjust for the excess of the fair market value of the
shares issued over the contributors' cost of the license agreement.

<PAGE>F-7

(H)	Non-cash consideration received consisted of services rendered in
connection with the Company's 1987 self-underwriting public offering. The shares
of common stock were recorded at fair market value at the date of issuance, net
of discounts for restricted stock (approximately $1.00 per share).  A
corresponding charge was made to additional paid-in capital to reflect the
public offering costs.

(I)	Non-cash consideration received consisted of professional services
rendered in connection with the lawsuit between the Company and State Street
Bank & Trust Company.  The shares of stock issued for non-cash services were
recorded at the fair market value at the date of issuance.

(J)	Shares were issued to the directors and officers of the Company as
consideration for their services as directors of the Company.  The shares of
stock issued for non-cash services were recorded at the fair market value
of the shares at the date of issuance.

(K)	Non-cash consideration received consisted of professional services
rendered for software consulting.  The shares of stock issued for non-cash
services were recorded 	at the fair market value of the shares at the date of
issuance.

(L)	Non-cash consideration received consisted of a deferral on a loan
repayment to an entity controlled by the Company's principal stockholder.  The
shares of stock issued 	for non-cash consideration were recorded at the fair
market value of the shares at the date of issuance.

(M)	In connection with a license agreement between the Company and its
principal stockholder, the stockholder was paid a fee in the amount of $200,000
from the proceeds  	and earnings of the Company's October 1987 self-
underwriting public offering.  The $200,000 fee was charged to additional paid-
in capital.

(N)	Non-cash consideration received consisted of promotion efforts with
Credit Union officers.  The shares of stock issued for non-cash services were
recorded at the fair market value of the shares at the date of issuance.

<PAGE>F-8

(O)	Non-cash consideration received consisted of arranging meetings and an
agreement.  The shares of stock issued for non-cash services were recorded at
the fair market value of the shares at the date of issuance.

(P)  	Non-cash consideration received consisted of secretarial and typing
services.  The shares of stock issued for non-cash services were recorded at the
fair market value of the shares at the date of service.

(Q)	Non-cash consideration received consisted of arranging various meetings
with bankers, investors etc.   The shares of stock issued for non-cash services
were recorded 	at the fair market value of the shares at the date of service.

(R)	Non-cash consideration received consisted of accounting services
performed to date.  The shares of stock issued for non-cash services were
recorded at the fair market value of the shares at the date of service.

(S)	Non-cash consideration received consisted of introductions to investors
in Ecuador.  The shares of stock issued for non-cash services were recorded at
the fair market value of the shares at the date of service.

(T)	Non-cash consideration received consisted of work related to possible
infringement on Company's patent.  The shares of stock issued for non-cash
services were 	recorded at the fair market value of the shares at the date of
service.

(U)	Non-cash consideration received consisted of waiver of accrued salaries
up to 12/31/96.  The shares of stock issued for non-cash services were recorded
at the fair market value of the shares at the date of service.

(V)	Non-cash consideration received consisted of advertising and marketing
services supplied at no charge since 1995.  The shares of stock issued for non-
cash services 	were recorded at the fair market value of the shares at the date
of service.

(W)     Non-cash consideration received consisted of security legal advice since
May 1995.  The shares of stock issued for non-cash services were recorded at the
fair market value of the shares at the date of service.

(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.

<PAGE>F-9

(Y)	Non-cash consideration received consisted of consulting services related
to the preparation of 10K filing.  The 	shares of stock issued for non-cash
consideration were 	recorded at the fair market value of the shares at the
date of issuance.

(Z)     In 2001, 25,500 shares of common stock, valued at $148500 and stock
options to outside consultants for 69,000 shares, valued at $34,500 were issued
for services.

(A1)    In 2002, 12,750 shares of common stock, valued at $26,489 and stock
options to outside consultants for 275,000 shares, valued at $87,555 were issued
for services.

(A2)    In 2003, 30,000 shares of common stock, valued at $ 27,600 were issued
for services.  In exercise of stock options, the company issued 235,000 shares
of common stock for $ 23,500.

(A3)    In February 2004, the company issued 46,666 shares of common stock in
settlement of accounts payable of $69,503.  In July 2004, 25,000 shares of
common stock, valued at $25,000 were issued for services.  In September 2004,
28,000 shares of common stock, valued at $32,200 were issued for services.


                     DEFAULT PROOF CREDIT CARD SYSTEM, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
<S>                                                                    <C>            <C>           <C>

                                                                    CUMULATIVE FROM           YEARS ENDED
                                                                    AUG. 14, 1985 TO          DECEMBER 31
                                                                      DEC. 31, 2004       2004          2003
                                                                    ----------------  -----------   -----------
OPERATING ACTIVITIES
Net loss                                                               $(4,892,189)   $ (198,219)   $ (146,114)
Adjustments to Reconcile Net loss                                                -             -             -
    Net Cash Used in Operating Activities:
    Depreciation & Amortization                                            107,503         1,271         1,603
    Loss on Marketable Securities                                          130,741             -             -
    Expired Public Offering Costs                                          110,000             -             -
    Gain on Restructuring Debt                                             (20,000)      (20,000)            -
    Cancellation of Stockholder Note Receivable                             55,490             -             -
    Stock & Options Issued in lieu of Cash for Services                    954,166        57,200        27,600
    Loss on Sale of Equipment                                               34,144             -             -
    Decrease (Increase) in Other Assets                                     (1,161)            -             -
    Decrease (Increase) in Prepaid Expenses                                      -             -        20,092
    Increase in Due to Related Party                                        69,204        38,596         8,685
    Increase (Decrease) in Payables & Accrued Expenses                     191,083       121,615        65,403
                                                                    ----------------  -----------   -----------
    NET CASH )USED) IN OPERATING ACTIVITIES                             (3,261,019)          463       (22,731)
                                                                    ----------------  -----------   -----------

INVESTING ACTIVITIES
Purchases of Marketable Securities                                        (130,741)           -             -
Purchases of Property & Equipment                                         (126,062)           -          (835)
Patent License Expenditures                                               (201,864)           -             -
Proceeds from Sale of Equipment                                             22,994            -             -
                                                                    ----------------  -----------   -----------
    NET CASH USED IN INVESTING ACTIVITIES                                 (435,673)           -          (835)
                                                                    ----------------  -----------   -----------
FINANCING ACTIVITIES
Proceeds from Issuance of Stock-Private Offerings                          234,783            -             -
Proceeds from Issuance of Stock-Public Offerings                         3,150,163            -             -
Proceeds from Issuance of Stock-Exercise of Warrants                       334,733            -        23,500
Capital Contributions                                                       78,076            -             -
Net Receipts/Advances to Stockholder                                      (100,600)           -	            -
                                                                    ----------------  -----------   -----------
    NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES                     3,697,155            -        23,500
                                                                    ----------------  -----------   -----------
    NET INCREASE (DECREASE) IN CASH                                            463          463           (66)
    CASH - BEGINNING                                                            10           10            76
                                                                    ----------------  -----------   -----------
    CASH - ENDING                                                      $       473   $      473    $       10
                                                                    ================ ============  ============

</TABLE>

<PAGE>F-10
                         NOTES TO FINANCIAL STATEMENTS
                               DECEMBER 31, 2004

NOTE 1.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Business Activity

Default Proof Credit Card System, Inc. (the "Company") was incorporated on
August 14, 1985 under the laws of the State of Florida.  The Company owns the
intellectual property of several U.S. Patents and patent pending applications
and is engaged in the marketing of secured credit cards and of the ATM Prepaid
Debit Cards Dispenser for which received notice of patent allowance on April 24,
2000, the over the counter sale and dispensing of prepaid debit cards (patent
pending) and the e-commerce internet dispensed of prepaid debit cards under the
Domain name ubuydedbitcards.com also patent pending.  The Company's offices are
located in Coral Gables, Florida.  The Company is in the development stage and
its operation to date has largely consisted of the research, marketing and
development of its products.

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Earnings (Loss) Per Common Share

In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per
Share" which simplifies the standards for computing earnings per share ("EPS")
previously found in APB No. 15, "Earnings Per Share".  It replaces the
presentation of primary EPS with a presentation of basic EPS.  It also requires
dual presentation of basic and diluted EPS on the face of the income statement
for all entities with complex capital structures and requires a reconciliation
of the numerator and denominator of the diluted EPS computation.  The Company
adopted SFAS No. 128 in January 1998 and its implementation did not have an
effect on the financial statements.  EPS has been restated for all prior periods
presented.  Net loss per common share (basic and diluted) is based on the net
loss divided by the weighted average common shares outstanding during each year.
The Company's potentially issuable shares of common stock pursuant to
outstanding stock options has been excluded from the calculation of diluted loss
per share in 2004 and 2003 since the effect would have been anti-dilutive to the
Company's net loss per common share.

<PAGE>F-11

Patent Costs

Costs incurred in connection with obtaining the license agreement of a patent
have been capitalized and are being amortized using the straight-line method
over 17 years from the date of issuance of the patents.

Income Taxes

The Company accounts for income taxes pursuant to the provisions of FASB No. 109
"Accounting for Income Taxes", which requires, among other things, a liability
approach to calculating deferred income taxes.  The asset and liability approach
requires the recognition of deferred tax liabilities and assets for the expected
future tax consequences of temporary differences between the carrying amounts
and the tax bases of assets and liabilities.  The Company has had operating
losses since inception and accordingly has not provided for income taxes.
Realization of the benefits related to the net operating loss carryforwards may
be limited in any one year due to IRS Code Section 382, change of ownership
rules.

Reclassification

Certain items were reclassified for presentation in the Statement of Operations
for the year ended December 30, 2004 as compared to the prior year. There was no
effect in income (loss).

NOTE 2.	GOING CONCERN CONSIDERATION

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern.  The Company has suffered $4,892,189 in losses
since inception 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 through December 31, 2005.

NOTE 3.	DUE FROM STOCKHOLDER

Due from stockholder consisted of various non-interest bearing and due upon
demand advances.

<PAGE>F-12


NOTE 4.	LICENSE AGREEMENT AND PATENTS ISSUED

The Company's C.E.O. and principal stockholder was issued two U.S. patents and
one Canadian patent between January 1988 and February 1991, and also registered
in the U.S.  the trademark "Resource".  On February 9, 1993, the Company entered
into a license agreement which revoked the prior agreement dated January 8,
1991, which provides the Company the exclusive rights and use of the
aforementioned patents and trademark for an indefinite period of time in return
for nominal consideration to the stockholder.  The Company C.E.O. has
transferred to the Company all the worldwide rights and ownership of three
patent applications for stock options to purchase shares of the Company, the
stock options to be granted if the patent applications received from the U.S.
Patent and Trademarks offices the related patent allowances.  On April 24, 2000
the U.S. Patent and Trademarks Office notice of allowance of the patent
application ATM Prepaid Debit Cards Dispenser notifying that all its eight
claims were allowed.  The other patents pending, the sale, dispensed and
activated over the counter  prepaid debit cards, as well as the purchase, sale
and dispensed through the Internet-e-commerce, known as the domain name
ubuydebitcards.com are now in process of receive patent allowances.

NOTE 5.	EMPLOYMENT AGREEMENT

On September 1, 1988, the president/principal stockholder entered into an
employment agreement with the Company.  Pursuant to the agreement, the
stockholder is to receive an annual salary of $144,000, increased annually by
the greater of 5% or the increase in the consumer price index.  However, rights
to this salary and its increases have been permanently waived by the stockholder
until such time as the Company's cash flows improve.  The agreement terminates
upon the stockholder's seventy-sixth birthday, or his death or disability,
whichever occurs first.  The agreement also provides that in the event of a
termination for other than cause, death or disability, he shall receive
severance pay in the amount equal to his salary, payable during the remainder of
his employment term.

NOTE 6.	STOCK OPTIONS

1988 STOCK OPTION PLAN

In August 1988, the Company adopted the 1988 Stock Option Plan.  Under this
plan, stock options to purchase 600,000 shares of common stock may be granted to
employees, officers and other persons providing services to the Company, a
parent or a subsidiary of the Company.

The 1988 Stock Option Plan is intended to qualify as an "Incentive Stock Option
Plan" under Section 422A of the Internal Revenue Code.  Under the Stock Option
Plan, incentive stock options may be granted at not less than 100 percent of the
fair market value of the Company's common stock at the date the option is
granted (110% of fair market value for 10% or greater shareholders) and options
granted to any one participant may not exceed $100,000 in option price per year.
Options may be granted within ten (10) years from the adoption of the 1988 Stock
Option Plan.  Each option granted under the 1988 Stock Option Plan must be
exercised within ten (10) years from the date of grant.  No options were granted
under the 1988 Stock Option Plan.

<PAGE>F-15

OTHER STOCK OPTIONS

During 1998, five-year non-plan options to purchase 695,000 shares of common
stock at prices ranging between $0.14 and $1.50 per share were granted to the
President and Vice President of the Company.  These options were fully vested at
the date of grant.

During 1997 five-year non-plan options to purchase 445,000 shares of common
stock, at prices ranging between $0.15 and $1.25 per share were granted to the
President and Vice President of the Company.  These options were fully vested at
the date of grant.

At December 31, 1998 and 1997 total non-plan options outstanding were 2,125,000
and 1,525,000, respectively.  At December 31, 1998 and 1997 2,125,000 and
1,525,000, options respectively, of the non-plan options were fully vested.

As of December 31, 1998 and 1997 the Company has agreed to grant its President
other five-year non qualified options plan of 3,000,000 and 2,250,000,
respectively, contingent upon the issuance of certain patents.  These options
will have exercise prices of $0.10 and $0.15, respectively.

As of May 19, 2000 the Company has agreed to grant its C.E.O. and inventor over
ten year non-plan options to purchase the Company's Common Stock $0.01 par value
per share in the amount of 500,000 shares, contingent upon the issuance of
patent allowance related to a certain patent application. In February 2002, the
patent was granted.

In 2001, 69,000 options, at exercise prices ranging from $4.75 to $11.00, were
issued for outside services.  The company also granted corporate officers
options for 101,000 shares at prices of $4.75 to $12.00 per share.

In 2002, 195,000 options at an exercise price of $4.00 were issued for outside
services.  The company also granted corporate officers options for 304,000
shares at prices of $4.75 to $12.00 per share.

In October 2002, as part of the termination settlement of the former President
of the company 285,000 options at prices from $0.50 to $6.50 were issued, which
were offset by 350,000 forfeited options at prices of $0.38 to $4.75.

As of November 22, 2002, the Company has agreed to grant its C.E.O. and inventor
over ten year non-plan options to purchase the Company's Common Stock at $1.00
per share in the amount of 150,000 shares, contingent upon the issuance of
patent allowance related to a certain patent application.

<PAGE>F-16

On June 18, 2003 the Company granted its C.E.O. options to purchase 300,000
shares of common stock at an exercise price of $1.85, contingent on the issuance
by the U.S. Patent and Trademark office of patent application No. 10/342,991.

As required by Statement of Financial Accounting Standards ("SFAS") 123, pro-
forma information regarding net loss and loss per share has been determined as
if the Company had accounted for its employee stock options under the fair value
method of that statement.  The fair value for these options was estimated at the
date of grant using a Black-Scholes option pricing model.

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options that have not vesting restriction and are fully
transferable.  In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility.  Because
the Company's stock options have characteristics significantly different from
traded options, and because changes in the subjective input assumptions can
materially affect the fair value estimate, the existing models, in management's
opinion, do not necessarily provide a reliable single measure of the fair value
of its stock options.  The charge for options issued in 2001 would increase the
loss by $ 50,500 or $0.03 per share and options issued in 2002 would increase
the loss by $130,491 or $0.08 per share.

A summary of the status of the Company's fixed stock option plan and non-plan
options as of December 31, 2004 and 2003, and changes during the years then
ended is presented below:

NOTE 7.	COMMON STOCK SPLIT

On February 1, 1999, the Board of Directors of the company approved a 10 to 1
reverse stock split. All financial data has been appropriately adjusted.

NOTE 8.	INCOME TAXES

At December 31, 2004, the Company had a net operating loss carry forward of
approximately $4.8 million, that expires through 2018.

The Company has a deferred tax asset of approximately $1.6 million as a result
of net operating loss carry forwards, which is offset by a valuation allowance
of the same amount due to the uncertainties behind its realization.

In accordance with FASB 109, deferred income taxes and benefits are provided for
the results of operations of the Company. The principle temporary differences
that will result in deferred tax assets and liabilities are certain expenses and
losses accrued for financial reporting purposes not deductible for tax purposes
until paid. The differences between Federal income tax rate and the effective
income tax rate as reflected in the accompanying  statement of operations are:

	                         December 31, 2004	December 31, 2003
                                 ------------------     -------------------
Statutory federal income tax rate	34%	               34%
Valuation allowance	               (34)	              (34)
Effective tax rate	                 -%	               -%

<PAGE>F-17

NOTE 9.	PATENT ISSUED

On August 15, 2000, the U.S. Patent and Trademark Office issued the Patent
Number 6,105,009, the Automated Teller Machine Dispenser of Debit Cards.  The
Patent Certificate was received on August 23, 2000.

On June 11, 2002, the U.S. Patent and Trademark Office issued the Patent Number
6,405,182, the System for Dispensing Prepaid Debit Cards Through Point-Of-Sale
Terminals.

In January 8, 2003 the Company received the complete assignments of Patents
numbers6,105,009 and 6,405,182.  The patents assignments to the company by the
Inventor and CEO and majority stockholder have been registered at the U.S.
Patent and Trademark Office.

In 2004, various patent rights were transferred to the CEO. (see Note 10)


NOTE 10.		DUE TO RELATED PARTY

This balance represents net cash advances, made by the CEO and majority
stockholder, in contemplation of exercising stock options in 2004.

The Company has transferred the right, title and interest and  rights to sue for
patent infringement damages for Patent Applications 10/342991, 09/524496, and
09/128.088 and 8/877,006 for the "System and Process for Debit Card Dispensing"
to the CEO of the Company, in consideration for a $20,000 reduction in the
amount owed to the President.

NOTE 11.		LITIGATION

In January 2003, in the United States District Court for the Southern District
of Florida,

Company filed a patent infringement case (Number 03-020094) against Home Depot
USA Inc., d/b/a/ Sam's East Inc., d/b/a/ Sam's Club, Starbucks Coffee Company,
Urban Coffee Opportunities LLC and Wal-Mart Stores Inc.  On September 30, 2004,
the court ruled in favor of the defendants.  The company is appealing the
decision.

NOTE 12.		PROPERTY AND EQUIPMENT

Property and Equipment are recorded at cost.  Expenditures for major additions
and improvements are capitalized and minor replacements, maintenance, and
repairs are charged to expense as incurred. The following is a summary of
property and equipment, at December 30, 2004 and 2003:

	                 December 31, 2004
                        --------------------
Office Furniture & Equip.      $ 10,628
Accumulated Depreciation	 (9,862)
Net Property & Equip.          $   766

Depreciation expense for the years ending December 31, 2004 and 2003 were $ 1,
271 and  $1,603 respectively.

NOTE 13.NEW ACCOUNTING PRONOUNCEMENTS

In November 2004, the FASB issued Statement of Financial Accounting  Standards
(SFAS) No. 151, Inventory Costs, which clarifies the accounting for abnormal
amounts of idle facility expense, freight, handling costs, and wasted material.
SFAS No. 151 will be effective for inventory costs incurred during fiscal years
beginning after June 15, 2005. We do not believe the adoption of SFAS No. 151
will have a material impact on our financial statements.

In December 2004, the FASB issued SFAS No. 153, Exchanges of  Nonmonetary
Assets, which eliminates the exception for nonmonetary exchanges of similar
productive assets and replaces it with a general exception for exchanges of
nonmonetary assets that do not have commercial substance. SFAS No. 153 will be
effective for nonmonetary asset exchanges occurring in fiscal periods beginning
after June 15, 2005. We do not believe the adoption of SFAS No. 153 will have a
material impact on our financial statements.

In December 2004, the FASB issued SFAS No. 123(R), Share-Based Payment, which
establishes standards for transactions in which an entity exchanges its equity
instruments for goods or services. This standard requires a public entity to
measure the cost of employee services received in exchange for an award of
equity instruments based on the grant-date fair value of the award. This
eliminates the exception to account for such awards using the intrinsic method
previously allowable under APB Opinion No. 25. SFAS No. 123(R) will be effective
for interim or annual reporting periods beginning on or after June 15, 2005. We
previously adopted the fair value recognition provisions of SFAS No. 123,
Accounting for Stock-Based Compensation, on July 1, 2003 and have accounted for
all awards granted to employees in recent years using the fair value recognition
method.. Accordingly we believe SFAS No. 123(R) will not have a material impact
on financial statements.


<PAGE>F-18

ITEM 9. Changes in and Disagreements With Accountants On

Accounting  And Financial Disclosure

On February 9, 2000, the Company engaged Joel S. Baum, CPA, President of BAUM &
Co., P.A., 1515 University Drive, Suite 209, Coral Springs, FL 33071 as its
independent certified public accountants.  Joel S. Baum, CPA, and his Company
have audited the Company's Consolidated Financial Statements for the years 1999,
2000, 2001, 2002, 2003 and  remain as the Company CPA Auditors. Eduardo Garcia
and Susan M. Garcia, CPA, 901 Ponce De Leon Blvd., Suite 606, Coral Gables,
Florida 33134 are the company's accounts.

                                    PART III

ITEM 10. Directors, Executive Officers, Promoters and Control
         Persons; Compliance with Section 16(a) of the Exchange Act

The directors and executive officers of the Company are as follows:

Name				       Age		Position
------------------------------------------------------------------
Vincent Cuervo, C.E.O.			75		Director
Charles A. Menendez, President,CFO      75		Director
Ciro B. Sosa, Vice President		78		Director
Jose E. Aguirre				45	        Director
Pedro P. Llaguno, Esq., Secretary	75		Director

All directors hold office until the next annual meeting of stockholders and the
election and qualification of their successors. Officers are elected annually by
the Board of Directors to serve at the discretion of the Board.

Vincent Cuervo has been Chief Executive Officer and Chairman of the Board of
Directors of the Company since its inception in August 1985. From January 1984
until March 1986 he was the general managing agent for Travelers Life Insurance
Co., O. Ltd., and Summit National Life Insurance Company. From September 1962
through December 1983, he was general managing agent for Crown Life Insurance
Company for South Florida. Mr. Cuervo holds a Jurist Doctor Degree from the
University of Havana, Cuba.

Ciro B. Sosa has been a Vice-President and a Director of the Company since
January 1986. Since 1964, Mr. Sosa has been the successful owner and operator of
Futura Advertising, an advertising agency located in Coral Gables, Florida.

Pedro P.Llaguno has been Secretary and a Director of the Company since January
1986. Since 1977 Mr. Llaguno has been an attorney at Law and very active and
successful in his practice.

Charles A. Menendez, C.P.A., appointed unanimously by the Board of Directors on
December 6, 2002 as President and CFO. For 22 years the Assistant Administrator
and Controller of South Miami Hospital, Miami, Florida, and for over 19 years, a
successful Certified Public Accountant with offices in Miami-Dade County, Miami,
Florida.

<PAGE>14

Jose E. Aguirre, for the last five years rendering several valuable help,
bringing counseling and support to different projects and developments of the
Company. For over foutteen years, an executive of Cordis Corp., now a wholly
owned corporation of Johnson & Johnson.

Mr. Cuervo may be deemed a "parent" or "promoter" of the Company, as those terms
are defined under the federal securities laws.

There is a family relationship between two of the Company's directors or
executive officers: for the last 21 years, Mr. V. Cuervo has been the father in
law of Jose E. Aguirre.

During the last ten years none of the following events occurred with respect to
any executive officer or director of the Company:

(i)   Any bankruptcy petition was filed by or against any business of which such
person was a general partner or an executive officer at or within two years
before the time of such filing;

(ii)   Any conviction in a criminal proceeding or being subject of a pending
criminal proceeding (excluding traffic violations and other minor offenses);

(iii)  Being subject to any order, judgment or decree, not subsequently
reserved, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise limiting
his involvement in any type of business, securities or banking activities; and

(iv)   Being found by a court of competent jurisdiction (in a civil action), the
Securities and Exchange Commission or the Commodity Futures Trading Commission
to have violated a federal or state securities or commodities law, and the
judgment has not been reversed, suspended or vacated.

Item 11.     Executive Compensation

General. The following table sets forth the total annual compensation paid or
accrued by the Company to or for the account of the Company's chief executive
officer and any other executive officer whose total compensation for the fiscal
year ended December 31, 2004 exceeded one hundred thousand dollars.


<PAGE>15

<TABLE>
<CAPTION>
<S>           <C>       <C>      <C>      <C>      <C>          <C>       <C>       <C>
                           SUMMARY COMPENSATION TABLE

                                          LONG-TERM COMPENSATION
                                         -----------------------------------
                       ANNUAL COMPENSATION            AWARDS         PAYOUTS
--------------------------------------------------------------------------------------------
(A)          (B)    (C)     (D)        (E)        (F)         (G)      (H)         (1)
NAME                                  OTHER                 SECURITIES
ANDCOMPEN-                            ANNUAL   RESTRICTED   UNDER
PRINCIPAL                             COMPEN-  STOCK        LYING      LTIP     ALL OTHER
POSITION      YEAR   SALARY   Bonus   SATION   AWARDS       OPTIONS / PAYOUTS   COMPENSATION
                       ($)      ($)     ($)      ($)        SARS($)    ($)      ($)
--------------------------------------------------------------------------------------------
V.CUERVO,CEO  2003      0        0        0        0            0         0         0
V.CUERVO,CEO  2002      0        0        0        0            0         0         0

----------------------------------------------------------------------------------------------
                   AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
                                        AND FY-END OPTION/SAR VALUES
-----------------------------------------------------------------------------------------------

(a)                  (b)              (c)                   (d)                   (e)
                                                               NUMBER OF
                                                               SECURITIES        Value of
                                                               UNDERLYING        UNEXERCISED
                                                               UNEXERCISED       IN-THE-M
                                                               OPTIONS/SARS      OPTIONS/SAR AT
                                                               FY-END ($)        FY-END ($)

                    Shares Acquired                           Exercisable/       Exercisable/
Name       On Exercise (#)    Value Realized ($)              Unexercisable      Unexercisable
----       ---------------    ------------------              -------------      -------------
V.CUERVO     nil                  nil                            nil/nil              nil/nil

</TABLE>



ITEM 12. SECURITY  OWNERSHIP OF  CERTAIN  BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information on early January 2005 and at February
23, 2005 based on information obtained from the persons named below, with
respect to the beneficial ownership of shares of Common Stock by (i) each person
known by the Company to be owner of more than 5% of the outstanding shares of
Common Stock. (ii) each director, and (iii) all officers and directors as a
group. The filing by a shareholder of Schedule 13D related to the number of
shares beneficially owned by this shareholders exceeding 5% of the Company
outstanding shares.

<page>16

Name of Beneficial    Amount and Nature of          Percentage of
      Owner           Beneficial Ownership     Outstanding Shares Owned
--------------------------------------------------------------------------
Vincent Cuervo
Miami, FL 33143		    895,291			41.63%

Ciro B. Sosa
Miami, FL 33134		     29,476			 1.37%

Pedro P. Llaguno
Miami, FL 33145		     60,000	      	         2.80%

Jose E. Aguirre
Weston, FL 33327	     36,000		         1.67%

Charles A. Menendez
Miami, FL 33243		     18,000			 0.83%

Officers/directors,
as a group		  1,038,767			48.30%

The Company is not aware of any arrangements that may result in a change of
control of the Company.

ITEM 13. Certain Relationships and Recent Related Transactions.

SYSTEM FOR DISPENSING PREPAID DEBIT CARDS THROUGH MERCHANTS POS TERMINALS (The
OTC Prepaid Debit Card), patent pending application filed with the US Patent and
Trademark Office, Washington, D.C. by Vincent Cuervo at his expense, and a
continuation in part of US Patent 6,105,009, and U.S. Patent No. 6,405,182.
Under another consideration- agreement between the Company and Vincent Cuervo,
the Company will issue to Vincent Cuervo 500,000 shares of the Company's Common
Stock $0.01 par value per share, at an exercising Option Price of $0.10 per
share, the day after the Company receives from the US Patent and Trademark
Office the Notice of Allowance notifying Vincent Cuervo that his patent
application was allowed a  related Patent was issued and the
consideration/agreement is ratified by both parties. On June 11, 2002 U.S.
Patent No.6,405,182 have been issued it is now the property of the Company and
the stock option grant exercised in full by Cuervo, the consideration/agreement
was jointly ratified by both parties.

On December 27, 2004 the company announced in following News Release: Default
Proof Credit Card System also congratulates Dr. Cuervo for the notice he just
received from the Mexico Institute of Industrial Property, Directive Division of
Patents ("Instituto Mexicano de la Propiedad Industrial, Direccion Divisional de
Patentes") granting a Patent to his application "Prepaid Debit Cards System" in
Mexico.

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Securities Outstanding

The Company has 2,500,000 authorized shares of $0.01 par value common stock (the
Shares).  As of March 28, 2005 there are 2,150,550

Issued and outstanding shares, of which 1,038,767 or 48.30% are restricted
shares.

The holders of Common Stock are entitled to one vote for each share held of
record on all matters to be voted on by shareholders. There is no cumulative
voting with respect to the election of directors, with the result that the
holders of more than 50% of the shares voted can elect all the directors.

Securities Transfer Agent

The Transfer Agent for the Company's Securities is the same: Registrar and
Transfer Company, 10 Commerce Dr., Cranford, NJ 07016.

Recent Stock Options Grants

The following are the non-qualified Stock Options Grants issued:

During 2002 the Company issued these non-qualified Stock Option Grants: On July
2002 to David J. Koss, at that time President and CFO 200,000 Stock Opton
Shares; to Pedro P. Llaguno; to Jose E. Aguirre 80,000, and to Ciro B. Sosa
80,000 Stock Option Shares to each one othem, and to Maria T.C. Schafer 25,000
shares. All these stock option shares at the stock option exercising price of
$4.00 per share. Also, on November 22, 2002 on the acceptance of he appointment
of Charles A. Menendez as Company's President and CFO, he was issued 2,000
shares of the Company's Common Stock, $0.01 par value and a non-qualified Stock
Option Grant for 24,000 shares of the Company's Common Stock $0.01 par value, at
the stock option price at the stock closing price on the date of the stock
option granted, $1.77 per shares, 11/22/02.

All the above Stock Option shares are Company's Common Stock $0.01 par value per
share. With the exception of the new (consolidated) "Replacement Stock Option
Grant" issued to Mr. Koss in accordance with the October 4th, 2002 Termination
Agreement. Most of the above stock options are available and contingent upon the
individuals providing their continuing services to the Company. In the event of
termination, options exercisable in the termination year but before the
termination date will be exercisable.

All of the options are deemed "restricted stock" pursuant to Rule 144 of the
Securities Act of 1933 as amended. During 2004 there were 74,500 Stock Option
Shares that were not exercised, consequently forfeit and void.

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	      			PART IV

Item 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees. The Aggregate fees billed by our auditors, for professional services
rendered for the audit of the Company's annual financial statements for the
years ended December 31, 2004, and 2003, and for the reviews of he financial
statements included in the Company's Quarterly Reports on Form 10-QSB during the
fiscal years were $4,000 and $3,900, respectively.

Audit Related Fees. For the years ended December31, 2004 and 2003, the Company
incurred fees to auditors of $1,200 and $1,200 for audit related fees,
respectively.

All Other Fees. The aggregate fees billed by auditors for service rendered to
the Company, other than the services covered in "Audit Fees" and for the fiscal
year ended December 31, 2004 and 2003 were $5,200 and $5,100, which fees
primarily related to the Company's tax return.

The Board of Directors has considered whether the provision of no-audit services
is compatible with maintaining the principal accountant's independence


Item 15. EXHIBITS

a)   Exhibits

  Exhibit        Description
  --------       ------------
  3.1* Certificate of Incorporation of Registrant

  3.2* By-Laws of Registrant

  4.1** Form of Certificate evidencing Common Stock, $.001 par value

  4.2**Form of  Redeemable  Common Stock  Purchase  Warrant (1988 Public
       Offering)

  4.3**Form of Warrant  Agreement  between  Registrant,  the Underwriter
       (Normandy  Securities,  Inc.) and Continental  Transfer and Trust
       Company. (1988 Public Offering)

  4.6**** Form of Option  Agreement  for 60,000 Stock Option  shares for
       Marina S. Klein.

  10.1*License  Agreement  between  Vincent  Cuervo  and the  Registrant
       dated August 14, 1985

  10.2**Amendments to License  Agreement  between Vincent Cuervo and the
       Registrant

  10.3*Agreement  dated August 14, 1986 between  Vincent  Cuervo and SSS
       Associates and Felix Guardiola.

  10.4**Lease between  Registrant and Douglas  Entrance  Restoration and
       Development Group.

 <PAGE>19

  10.4(a)Lease between Registrant and Miami Board of Realtors.

  10.5***Employment Agreement between the Company and Vincent Cuervo.


  10.6**Employment Agreement between the Company and Hugh Vanhoose.

  10.7**Sales Agreement between the Company and James Branam Jr.

  10.8**Form of 1988 Stock Option Plan.

  14****Material  Foreign  Patents - Notice of Allowance for Patent from
       Canada's Consumer and Corporate Affairs.

  28****Minutes  of  Special  meeting  of the  Board of  Directors  of
       Default Proof Credit Card System, Inc. for January 9, 1990

 31.1      Rule 13a-14(a)/15d-14(a) CEO Certifications

 32.1      Section 1350 CEO Certifications

 31.1      Rule 13a-14(a)/15d-14(a) CFO Certifications

 32.1      Section 1350 CFO Certifications


 The Exhibits described above are incorporated by reference

  **   Incorporated by reference to the Company's Registration Statement
       on Form S-1, File No.  33-22677,  filed with the SEC on August 3,
       1988, and incorporated by reference herein.

  ***  Previously  filed as an exhibit the  Company's  Annual  Report on
       form 10-K, File No. 90-17114,  for the fiscal year ended December
       31, 1988.

  **** Previously  filed as an Exhibit the  Company's  Annual  Report in
       Form 10-K, File No.0-7114, for the fiscal year ended December 31,
       1990.

  *****Form 10-SB\A filed  November  1994 General Form for  Registration
       of Small Business Issuers Pursuant to Section 12(b) or (g) of The
       Securities and Exchange Commission.


b)FORM 8 - K-Filed-October 7, 2004; Item 5. Other Events


SIGNATURES

Pursuant to the requirements of the Securities 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.

Date: March 28, 2005
By:
	VINCENT CUERVO
        ----------------
	Vincent Cuervo,
	Chief Executive Officer

Date: March 28, 2005

By:
      CHARLES A. MENENDEZ
      --------------------
      Charles A. Menendez,
      President and Chief Financial Officer

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