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, 2003
                                       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 4, 2002 of shares issued and  outstanding  of the  registrant's  common
stock $0.01 par value as of February 25, 2004 was: 2,097,550.

<PAGE>


CERTIFICATION OF CEO AND CFO PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT


In connection with the Annual Report of Default Proof Credit Card System,  Inc.,
a Florida corporation (the "Company"),  on Form 10-KSB for the fiscal year ended
December 31, 2003, as filed with the  Securities  and Exchange  Commission  (the
"Report"), Vincent Cuervo, Chief Executive Officer of the Company and Charles A.
Menendez, Chief Financial Officer of the Company, respectively, do each certify,
pursuant to ss. 906 of the Sarbanes-Oxley  Act of 2002 (18 U.S.C.ss.  1350) that
to his knowledge:

          (1)  The Report fully complies with the  requirements of section 13(a)
               or 15(d) of the Securities Exchange Act of 1934; and

          (2)  The information  contained in the Report fairly presents,  in all
               material  respects,   the  financial   condition  and  result  of
               operations of the Company.



/s/ Vincent Cuervo
------------------
Vincent Cuervo,
Chief Executive Officer
March 29, 2004


/s/ Charles A. Menendez
-----------------------
Charles A. Menendez
Chief Financial Officer
March 29, 2004



[A signed  original of this written  statement  required by Section 906 has been
provided to Default  Proof  Credit  Card  System,  Inc.  and will be retained by
Default  Proof Credit Card  System,  Inc. and  furnished to the  Securities  and
Exchange Commission or its staff upon request]





                                       2
<PAGE>



                                     PART I

ITEM 1: DESCRIPTION OF PRODUCTS & BUSINESS.
        ----------------------------------


     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  other  patents
pending related to prepaid debit and stored value cards.


THE COMPANY'S PATENTS AND PATENT PENDING APPLICATIONS


     On August 15, 2000 the U.S. Patent and Trademark  Office  ("USPTO")  issued
Patent No.  6,105,009 to Vincent Cuervo,  J.D.,  Inventor,  entitled  "Automated
Teller Machine Dispenser of Debit Cards"  ("ATMDDC").  On June 11, 2002 the U.S.
Patent Office granted Vincent Cuervo,J.D.,  inventor, U.S. Patent No. 6,405,182,
both of which were  assigned  to the  Company  in  accordance  with the  written
agreements  signed  between  the  Company  and the  inventor.  The  Company  has
purchased all worldwide  rights and licenses from it's inventor  Vincent Cuervo,
J.D., who is also the founder of Default Proof Credit Card System,  Inc.  Cuervo
is also the  inventor  of several  other  patent  pending  applications  such as
"INTERNET  WEBSITE  PROGRAM",  filed on November 29, 2001, which can be reviewed
under  patent  pending  application  Publication  No.  20010047342,   the  USPTO
published  the full text and image  database  for  "CREDIT OR DEBIT CARDS OF ALL
KINDS TO BE ISSUED WITH A BANK SAVINGS ACCOUNT ATTACHED".  On November 21, 2002,
under patent pending application Publication  No.20020174016 the USPTO published
the full text and image database of "Multiple  Accounts and Purposes Card Method
and System",  the "PREPAID  DEBIT CARD  SYSTEM"  through the Patent  Cooperation
Treaty with offices in Geneva,  Switzerland for the worldwide  protection of the
Company's patents and patent pending applications  priority date, and the latest
application   filed  on  January   2003  "System  and  Process  for  Debit  Card
Dispensing".  These patent pending applications relate 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. 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  are  all  continuation  in part  of  patent  application  number
08/877,006  that was filed on June 9, 1997 and now  abandoned.  All of the above
referenced Intellectual Property ("IP") is protected under the United States and
International  copyright  laws,  as well as nationwide  and inFlorida  trademark
rights. RESOURCE is a Registered Trademark of the Company.

     Utilizing its proprietary  Intellectual Property and the associated rights,
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  ("OTC") at stores,  through
the U.S. Postal Services, the Internet, etc. The Company's Intellectual Property
is strong as well as  efficient  and will prove to be a valuable  and  essential
element as the strong trend towards a "cashless" society continues to emerge.


                                       3
<PAGE>

     Portions of the Company' early patents relate to the Resource System. Under
the Resource  System,  applicants  who own life  insurance with a cash surrender
value, would assign to the Company,  as collateral,  the cash surrender value of
their life  insurance  policies.  In exchange,  the assignor  receives a line of
credit  equal to at least 80% of the  assigned  collateral  to be  granted  by a
participating  bank  through the  issuance  of a credit or a debit card,  or any
other credit instrument. The Company is no longer marketing the Resource System


U.S. PATENT NUMBER 6,105,009
----------------------------

     "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.  The  technology  provides  for
actual prepaid debit cards, vouchers or coupons, to be dispensed.

     The Default  Proof's  Prepaid  Debit  Card" U.S.  Patent #  6,405,182,  the
"UBUYDEBITCARDS"  patent  pending,  as  well  as the  remaining  patent  pending
applications,  are 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.  This system,  and its new technology,
incorporated into existing ATMs and installed as a feature in newly manufactured
ATMs,  will permit  consumers to purchase  and design a prepaid  debit card from
widely available ATMs by using cash, debit and/or credit cards.  Market research
indicate that several automated teller machine dispensers of prepaid debit cards
have been  manufactured  and are in use in the United States of America  without
requesting  or obtaining a company's  license.  More  information  and search is
required before considering pursuing litigation for patent infringement.


ATM DEBIT CARDS DISPENSER U.S. PATENT # 6,105,009 - POTENTIAL REVENUE
---------------------------------------------------------------------

     According  to  CARDWEB.com  trade  publications  and the U.S.  Payment Card
Information  Network,  "there  are  perhaps  as  many  as 60  million  un-banked
consumers in the USA. Analysts estimate this group of un-banked  consumers spend
over $15 billion annually in check cashing and other financial services". Those,
for a variety of reasons, such as: bad credit,  divorce,  students,  bankruptcy,
recent  immigrant,  etc.,  are unable to obtain credit,  debit or ATM cards.  It
would be reasonable to anticipate  that members of these segments should be some
of the first expected to purchase  prepaid debit cards.  The solution points out
to the prepaid debit card and or the payroll card.

     The Company's potential revenues are projections from the royalties or fees
generated  from  licenses,  and among other  activities  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. An upfront fee, a fee per
card purchased and  transactions  are among the projected  future revenue income
for the Company.


                                       4
<PAGE>


THE COMPANY'S PATENT NUMBER 6,405,182 AND POTENTIAL 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.

     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.  U.S. Patent No.  6,405,182,  issued June 11, 2002 for
the method and system of operation,  involving Prepaid Debit Card Programs for a
card that may be purchased at participating and licensed locations worldwide and
is not linked to a bank account or any other kind of bank credit instruments.

     The Prepaid Debit Card Program while in patent pending  application status,
has 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  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 CIT 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.

     This global  prepaid debit card may be easily and  conveniently  purchased,
loaded or  prepaid at the  counter of any  participating  merchant  or  retailer
utilizing their existing Point-of-Sale ("POS") terminals or cash registers. This
dynamic card will offer a wide variety of uses and global applications,  as well
as, several unique advantages that will benefit issuers, users, and merchants.

     The  acceptance  and  growth  of the  prepaid  debit  cards  has been  well
established with the higher volume merchants who are accepting PIN or signatures
transactions.  On December 1st, 2003 Wal-Mart Stores,  Inc., the world's biggest
retailer announced that as of February 1, 2004 will only accept debit cards with
a personal identification number, or PIN.

     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.  Prepaid  debit  cards,  soon may be
designed and obtained over the Internet by accessing the "Internet Prepaid Debit
Card  Website  Program"  that  should  be  available  in the  near  future.  The
Intellectual  Property  associated  with this method  simplifies  the  purchase,
issuance,  dispensing  and  activation of the debit cards,  gift cards,  payroll
cards, money transfer cards, and all prepaid cards,  regardless of denomination.

                                       5
<PAGE>

     These  transactions  would be performed  on the  Internet at the  Company's
HTTP://UBUYDEBITCARDS.COM  and  HTTP://MEMBERS.AOL.COM/DPCCSYSTEM/  web sites as
soon as the "The Internet Prepaid Debit Card Program" patent pending application
receives a  Notification  of Patent  Allowance  from the  Patent and  Trademarks
Office. This prepaid debit card,  purchased over the Internet,  may be dispensed
at ATM  (ATMDDC,  U.S.  Patent  No.6,105,009)  at a location  convenient  to the
purchaser,(or  user if  different).  At  present,  plans  provide  that the card
purchased  through the Internet Prepaid Debit Card Program,  patent pending,  or
would be picked up at any branch of a participating  bank or retail store, or to
be mailed.  UBuyDebitCards.com should provide the solution to securing a prepaid
debit card. There is no assurance that a patent,  related to this patent pending
application,  will be issued.  Nevertheless,  the  probability  of  issuance  is
increased by the fact that it is also a  continuation-in-part  of the  Company's
U.S. Patent No. 6,105,009.


     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 small fee per card
transaction  or per card issued.

     The  entire  method  and  process  is  described  and  referred  to in  the
"Products" section at "The  Over-The-Counter  Prepaid Debit Cards" and it may be
viewed visiting HTTP://MEMBERS.AOL.COM/DPCCSYSTEM/ and/or at the both websites
of the Company.

     None of DPCCS' prepaid debit cards require previous banking  affiliation or
maintenance  of a checking,  savings  account or any other bank  credit  related
service.

     A licensed retailer, as well as a financial institution may offer and issue
the prepaid debit cards.  The issuers will also serve as the  depository for the
prepaid funds that represent the stored value in the cards.  The issuers and the
processors will also be responsible for payments of charges made by the consumer
for merchandise and services purchased with the card.


PENDING PATENT APPLICATIONS
---------------------------

     "Internet Website Program" is a patent pending application and continuation
in part of U.S. Patent No. 6,105,009.  The patent pending application  "Internet
Website Program" for the purchase, issuance,  activation and delivery of prepaid
debit cards was filed as a  continuation-in-part  of U.S. Patent No.  6,105,009.
This application illustrates,  in detail, fourteen (14) claims which are related
to prepaid  debit cards to be purchased by means of e-commerce  transactions  on
the Internet.

     By  accessing  the  Company's  web site,  WWW.UBUYDEBITCARDS.COM,  internet
applicants  will soon be able to apply for a self  designed,  prepaid debit card
for any dollar amount  and/or in any  currency.  Among its many and varied uses,
the card may be generated with a "twin" card for the safe transfer of funds,  to
purchase  merchandise  or  services  by more  than one  user,  or for any  other
purpose.

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

                                       6
<PAGE>


     On June,  2001,  the patent  application  for "CREDIT OR DEBIT CARDS OF ALL
KINDS ISSUED WITH A BANK SAVINGS  ACCOUNT  ATTACHED" was filed.  On November 29,
2001  the PTO  published  this  application  under  Patent  Pending  Application
Publication No.0010047342.

     Presently some retailers and service providers offer discounts,  rebates or
cash  rewards only to their own  cardholders.  Major  marketing  efforts will be
directed  toward  those  retailers  and  service  providers,  offering  them the
opportunity  to extend the same  discounts  and benefits to the  cardholders  of
these debit cards when issued.

     On  November  21,  2002 the U.S.  Patent and  Trademarks  office  published
another of DEFAULT PROOF CREDIT CARD SYSTEM Inc.  patent  pending  applications,
"Multiple Accounts and Purposes Card Method and System".  It relates to a single
card with a choice to be used in one or as  combination  of  operative  accounts
available,  such as a prepaid debit card, a bank card, an ATM,  "Smart",  Stored
Value Card,  a Gift Card,  a Check Card,  a Cash Card,  a Debit Card or a Credit
Card.

     On  January  15,  2003 the  application  number  10/342,991  was filed as a
continuation  in part of U.S.  patent  Numbers  6,405,182  and  6,105,009,  this
application  entitled "System & Process For Debit Cards Dispensing" is 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 OVERVIEW
-----------------

     Quoting: " The Perfect Present Is a Thing of the Past. The Gift Card Is the
Future". By Libby Copeland,  Washington Post Staff Writer Saturday, December 21,
2002; Page C01

         It is not, in short, a gift card.

     Gift cards -- those  high-tech  gift that are everywhere now -- are, by the
standards of the Perfect  Christmas Gift, a cop-out.  The gift card says, I have
no idea what to get you,  except you seem like a Gap kind of guy. Or it says,  I
just don't want to be wrong. The gift card ventures into the perilous terrain of
cold,  heartless cash. It is a sign of the growing materialism of a holiday that
once meant much more.

     Or so the argument goes, but perhaps the argument contains a fallacy. We'll
get to that in a moment.

     There's more than one way of looking at gift cards,  which seems  important
to  consider  given that  they're  not going  away.  Increasingly  popular  with
marketers and customers,  gift card sales this year is estimated.  to hit in the
neighborhood  of $45  billion -- are up 20 percent  from last year.  Unlike gift
certificates,  gift  cards are  credit-card-looking  things  that fit  easily in
wallets". End of Quote.

     As further  evidence of this strong trend away from credit  towards  debit,
the largest POS debit  networks  including  Concord  EFS,  VISA,  CIRRUS,  STAR,
Interlink,  Pulse and  others,  all  continued  reporting  substantial  gains in
transaction  volumes  in 2003.  During  the past year  major  retailers,  led by
Wal-Mart,  have been  emphasizing  PIN-based  debit  card  transactions  because
charges  from the  processing  network to the merchant are lower when a consumer
utilizes  a PIN.  Next  February  1, 2004 the  payment  industry  will  cross an
important  mark when Wal-Mart  Stores Inc., the nation's  largest  retailer will
stop accepting Master Card debit  transactions.

                                       7
<PAGE>
     Quoting portions of the article by Ed McKinley,  "Prepaid Gift Cards:  Wild
Growth Spurt Far from Finished":  "Legions of retailers are finding prepaid gift
cards too hot not to handle.  As of early March,  70% of Americans  had heard of
gift  cards,  up from 15% a year  ago.  As  recently  as 1998,  the  cards  were
virtually unknown."

     Use is burgeoning, too. By now, over 70% of the population has used prepaid
gift cards,  compared to 55% last year, according to a telephone survey of 1,000
persons in all nine U.S. Census Bureau Market Regions.  And from Card Marketing:
"Consumers who buy gift cards aren't cheapskates. Purchasers spent an average of
$250 last year,  up by $45 from the  previous 12 months.  In many cases,  people
bought more than one card".

     Gift cards  continue to increase  store  traffic.  About 60% of  recipients
needed  more  than one trip to the  store to use up the  value  stored on a gift
card.

     Most gift card  buyers  based their  purchase  decision  on  planning,  not
impulse.  A total of 75% say the purchases  were  planned.  Men were more likely
than women to buy gift cards on impulse.  While 16% of men attributed their gift
card purchases to impulse, just 2% of women did. Gift cards increase incremental
sales.  Among survey respondents 61% indicated that they spent more at the store
than the value of the card.

     The  Standard  Register  people  agreed  that gift  cards  offer  retailers
advantages over paper gift certificates. With paper certificates,  cashiers hand
the recipient the change.  With stored-value  cards, the unspent funds remain on
the card, ready for the next shopping trip.

     Another  significant  growth  market  being  targeted  by DPCCS is teenager
spending.  The general opinion is that a PIN and security information  available
to  protected  a  prepaid  debit  card is  particularly  well  suited  for  this
application.  Among its many  features,  the  Company's  proprietary  technology
consists of some highly suitable parental control functions.

     Debit  Cards are now the second  most  popular  form of payment  (second to
cash),  and since 1993 there is a large  number of debit cards linked or related
to bank  checking  accounts  in the hands of  consumers  who are also paying for
transactions  with this bank  account  linked  debit  card.  Charges by the card
reduces the balance in the checking account of the cardholder. The prepaid debit
card  programs  of Default  Proof are not  related to any bank  account or other
credit instrument.

     According  to  the  news  media,  in  2003,  about  well  over  26  billion
transactions  were carried out at ATMs and 60 percent of consumers  report using
ATMs (source:  Bank Technology  News), the Company's patent pending  application
"The  Internet  Prepaid  Debit  Card  Program"  (ubuydebitcards.com)  would be a
complement of its prepaid debit card program.

     The  retailers and  financial  institutions  should be licensed by DPCCS to
issue,  offer  and sell the  patented  O-T-C  Prepaid  Debit  Cards or any other
Company's patented product.  Industry  statistics strongly support Default Proof
belief that stored  value  prepaid  debit cards are the most  exciting,  rapidly
growing  segment of the entire "charge card"  industry.  The Company's  patented
prepaid debit card products offer vastly improved  functionality.  The Company's
product  is one that is not  related  to a  checking  account  or any other bank
affiliation or credit instrument; Default Proof prepaid debit card does not have
limited functionality electronically, geographically or economically.

                                       8
<PAGE>


     A Payroll Prepaid Debit Card is a convenient and cost-effective alternative
to traditional  paper paychecks.  Each employee is issued a payroll card, in the
form of an ATM card,  a Cash Card,  etc.  Each  payday,  payroll is  transferred
directly to each employee's card. Employees can then shop with the card wherever
prepaid cards, debit cards, credit cards, ATM, Bank, or Cash Cards are accepted.

     The Payroll Prepaid Debit Card allows employers to deliver payroll deposits
or  commission  payments  to  employees  who may not  have an  existing  banking
relationship or who prefer to receive their pay outside of an existing financial
institution    account.    Issuers   can   also   opt   for   the   STAR-branded
MasterCard(R)/Visa(R)  payroll card to give  cardholders the same type of access
they have with signature debit cards.

     The Company's  Intellectual Property under its U.S. Patent Number 6,405,182
features  the Payroll  accounts  that can be reloaded via EFT or by the standard
direct deposit  process,  and  participate in all activities been offered today.
The  Payroll  Card  offers  the  employers  significant  cuts in  their  payroll
expenses.  It will virtually eliminate replacement of stolen or lost checks thus
reducing check fraud.

   According to the American Payroll Association:


     As much as 35% of the U.S.  population  does not have a bank account.  More
than four million  paychecks are lost or stolen each year. Cost of lost paycheck
replacement  are  estimated at $48 million  annually.  Companies  can save up to
$1.25 per  payment  using  electronic  disbursement  instead of  checks,  as per
WWW.DIRECTDEPOSIT.ORG


     The chance of having a problem  with a check is 20 times  greater than with
Direct  Deposit,  as per  WWW.DIRECTDEPOSIT.ORG  Studies show that employees may
spend the  equivalent  of three  work  days  each  year just  going to the bank,
www.directdeposit.org.


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:
htt://members.aol.com/dpccsystem/  and WWW.UBUYDEBITCARDS.COM.  The Company owns
these domain names:  ubuydebitcards.com-resourcedebitcards.com-OTCprepaid  debit
cards.com.

THE PATENTS PENDING STATUS
--------------------------

     The  patents  pending  application  are  waiting  for the U.S.  Patent  and
Trademark  Office to grant the patent Notices of Allowance for each one of them,
which  should  be  followed  by the  issue of their  corresponding  U.S.  Patent
certificates.


                                       9
<PAGE>

     For the International patent pending application the Company determined the
following  countries  that will be included in the patent when  issued,  Mexico,
Canada,  Germany,  Great Britain and Spain.  There is no assurance  that related
patents  will be granted  on all or any of the above  mentioned  patent  pending
applications,  however,  since all are  continuation in part of the Company's US
Patents  numbers  6,105,009 and 6,405,182 we keep  favorable  expectations.  The
three other patent pending  applications  are going through the usual process at
the U.S. Patent and Trademarks Office.

     There is no assurance that the Company's patent pending  applications  will
become patents.

OWNERSHIP OF THE PATENTS AND PATENT PENDING APPLICATIONS
--------------------------------------------------------

     As per  previous  agreements  and  assignments  the Company  holds the full
worldwide ownership of all the U.S. Patents issued to Vincent Cuervo,  J.D., and
those related to patent pending  applications  filed by Vincent Cuervo up to the
date of this 10 KSB,  December 31, 2003, if they are under agreement between the
Company and inventor  Vincent  Cuervo.  There is no assurance that all or any of
these patent pending applications will receive patent allowance.

     Patent  Assignments have been filed at the U.S. Patent and Trademark Office
for U.S. Patents numbers 6,405,182 and 6,105,009.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 in force,  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 this intellectual property.

     Vincent  Cuervo has always  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 between them, and if a notice of patent allowance is issued by the PTO
and received by the Company.  Some Patent pending  applications not mentioned in
this  filing  and  specially  in this item  above,  are still  subject to future
agreements between him and the Company.

                                       10
<PAGE>


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.

     On August  2002 the Law Firm  began  addressing  VIA Fed Ex 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.

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, 2003.

                                            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.

                                       11
<PAGE>


ITEM 6.   SELECTED FINANCIAL DATA
---------------------------------

FISCAL 2003    HIGH     CLOSE       FISCAL 2002            HIGH     LOW
-----------    ----     -----       -----------            ----     ---

02/03/03       1.60      1.60            02/02/02          4.75     4.75
03/03/03       1.60      1.35            03/01/02          3.80     3.80
04/07/03       1.35      1.65            04/01/02          4.00     4.00
05/05/03       1.90      2.48            05/01/02          5.75     5.75
06/02/03       1.60      1.50            06/04/02          4.55     4.55
07/07/03       1.45      1.45            07/06/01          4.25     4.25
08/04/03       1.25      1.50            08/05/02          4.00     4.00
09/02/03       0.60      0.60            09/06/02          2.85     2.85
10/06/03       0.65      0.65            10/01/02          2.45     1.85
11/03/03       0.70      0.70            11/07/02          1.50     1.50
12/01/03       0.75      0.75            12/02/02          3.25     3.25
12/31/03       0.60      0.60            12/28/02          1.75     1.75

     On December 31, 2003 the Company had approximately 643 holders of record of
the Company's common stock. A number of those 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
          ------------------------------------------------------------

     2003 was an intense year for Default Proof Credit Card System.  We couldn't
accomplish  the  targets  that  we  were  looking  for  but  we did  fulfill  an
unavoidable one.

     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 its patent for the system that  dispenses  prepaid
debit cards.  Claims in a lawsuit filed in U.S. District Court in Miami that the
corporate giants are all violating its patent by dispensing  prepaid debit cards
without them paying the Company a licensing fee for selling the cards.

     The  company  is  demanding   "adequate"   compensation   for  the  alleged
infringement,  a  permanent  injunction  prohibiting  further  infringement  and
attorneys  fees and costs.  On July 17, 2003,  under the Court orders  mediation
between the Plaintiff and Defendants took place at Coral Gables,  Florida during
which the  defendants  served the  Plaintiff  an  unexpected  Motion for Summary
Judgment.  The Court Ruling on the motion for Summary Judgment is expected early
in 2004.  The  result  is of  vital  importance  for the  Company's  future  and
stability.

     The  pending  litigation  has  been  the  primary  reason  for the  lack of
marketing and business  activity.  Retailers and other  marketers of the prepaid
debit card, have been awaiting for the outcome of the litigation developments.

                                       12
<PAGE>


     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  confidential used 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.

THE COMPANY
-----------

     The  Company's  operations  commenced  in 1986  with the  licensing  of the
default proof method and system,  all patents,  and other proprietary  rights to
the system,  and the right to use the  registered  trademark  Resource  from the
Company's President.

     Since  inception,  the  Company  has  invested  approximately  $121,000  in
developing  computer  software,  acquiring  computer  hardware,  and  paying for
technical  support for the  operation  of the Resource  System.  The Company has
expended  more than  $467,000  for  advertising  in  newspaper,  television,  in
production  of video tapes,  brochures,  printed  material,  personal  officers'
travel expenses to make  presentations,  and applications which were distributed
through the mail and as "take ones" on various stores and businesses.

     Patents filing fees, applications, Patent's attorneys legal fees, travel to
the Patent and Trademark Offices in Washington,  D.C.,  maintenance patent fees,
were close to $236,000 of the Company general expenses.  Expenses were well over
$345,000 in developing the Resource System, the ATM, Internet, and Prepaid Debit
Card Programs. Until 1993, the Company also spent over $ 1,000,000 in litigation
vs State Street Bank and Trust Company (State Street Bank), vs American  Express
over the use of the Company's RESOURCE registered  trademark,  in Securities and
patent  attorneys  legal  fees,  and  other  legal  and  C.P.A.'s  fees,  patent
attorneys, and patent application fees.

     The State Street Bank trade secrets violation litigation forced the Company
to attempt to raise  capital in order to implement a new strategy  that involved
the  consideration of the possible  purchase of its own bank. The litigation was
settled in 1993,  after  almost  five  years,  draining  the Company of economic
resources.

     Present  intellectual  property  along  with new  marketing  will allow the
Company  to offer the ATM and 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 after the pending litigation ends.

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.

                                       13
<PAGE>

ITEM 8   FINANCIAL STATEMENTS
         --------------------
                                    CONTENTS
                                                                   PAGE
                                                                   ----

         AUDITORS' REPORT...........................................F-2

         FINANCIAL STATEMENTS

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

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

                  STATEMENT OF STOCKHOLDERS' EQUITY/DEFICIENCY......F-5-F-10

                  STATEMENTS OF CASH FLOW...........................F-11

         NOTES TO FINANCIAL STATEMENTS..............................F-12-F-17


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, and they remain as the Company CPA Auditors.

                                    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.                               74                Director
Charles A. Menendez, President,CFO                   73                Director
Ciro B. Sosa, Vice President                         76                Director
Jose E. Aguirre                                      44                Director
Pedro P. Llaguno, Vice President                     73                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.

                                       14
<PAGE>

     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.

     JOSE E. AGUIRRE,  for the last five years rendering  several valuable jobs,
bringing  counseling  and help to  different  projects and  developments  of the
Company.  For over thirteen  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 20 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, 2002 exceeded one hundred thousand dollars.


                                       15
<PAGE>
<TABLE>
<CAPTION>

                           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($)    ($)      ($)
--------------------------------------------------------------------------------------------
<S>           <C>       <C>      <C>      <C>      <C>          <C>       <C>       <C>
V.CUERVO,CEO  2003      0        0        0        0            0         0         0
V.CUERVO,CEO  2002      0        0        0        0            0         0         0

</TABLE>

<TABLE>
<CAPTION>

                   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
----       ---------------    ------------------              -------------      -------------

<S>          <C>              <C>                           <C>
V.CUERVO     235,000          $  335,000                    225,000x1.50=337,500/

</TABLE>


ITEM 12. SECURITY  OWNERSHIP OF  CERTAIN  BENEFICIAL OWNERS
         AND MANAGEMENT
         --------------------------------------------------

     The  following  table sets forth  information  on early January 2002 and at
February 5, 2003 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.

NAME OF BENEFICIAL   AMOUNT AND NATURE OF          PERCENTAGE OF
      OWNER           BENEFICIAL OWNERSHIP     OUTSTANDING SHARES OWNED
------------------   ---------------------     ------------------------

VINCENT CUERVO
Miami, FL 33143                895,291                44.31%

CIRO B. SOSA
Miami, FL 33134                 23,476                 1.35%

PEDRO P. LLAGUNO
Miami, FL 33145                 44,000                 2.29%

JOSE E. AGUIRRE
Weston, FL 33327                11,000                 0.03%

CHARLES A. MENENDEZ
Miami, FL 33243                 12,000                 0.03%

OFFICERS/DIRECTORS,
AS A GROUP                     986,667                48.01%


                                       16
<PAGE>

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

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
           -----------------------------------------------

     On  November  1997  the  Company  acquired  from  Vincent  Cuervo,  all the
worldwide  rights,  licenses,  and  ownership  of the ATM Debit Card  Dispenser,
patent pending, filed with the US Patent and Trademark Office, Washington,  D.C.
earlier in 1997.  Under the  understanding  agreements  between  the Company and
Vincent  Cuervo,  the Company will issue to Vincent  Cuervo on issued patent no.
6,105,009,  225,000 Stock Option Shares of the Company's  Common Stock $0.01 par
value per Share at an exercising Option Price of $1.50 per share.

     On the Special  Meeting of the Company's Board of Directors that took place
on October 2, 1998, an agreement was unanimously approved between Vincent Cuervo
and the Company regarding the amount of money, the result of the numerous loans,
at no interest, made by V. Cuervo to the Company,  providing with them the funds
to satisfy  Company  expenses and providing the continuity of its operations and
existence. It was approved that Vincent Cuervo will have the choice of demanding
the full  payment in cash,  or to be issued in his name one Common  Stock  $0.01
(post split) par value per share for each one dollar the Company owes him at the
time he demands payment.

     On  December  1998  the  Company  acquired  from  Vincent  Cuervo,  all the
worldwide  rights,  licenses,  and  ownership of the INTERNET  WEBSITE  PROGRAM,
(WWW.UBUYDEBITCARDS.COM),  patent pending application filed by Vincent Cuervo at
his  expense  with the US Patent and  Trademark  Office,  Washington,  D.C.  and
continuation  in part of US Patent  6,105,009.  Under the agreement  between the
Company and Vincent  Cuervo,  the Company will issue to Vincent  Cuervo  300,000
Stock Option 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 and/or the Company that its patent application has been
allowed and subsequently a related Patent will be issued. There is not assurance
that the related patent will be granted.

     If the U.S.  Patent  and  Trademark  Office  does  not  issue  the  related
patent(s) and the  agreement is not ratified by both  parties,  the Company will
not issue the shares and the stock option grant will be void and null.  There is
no assurance that the U.S. Patent and Trademark Office will grant the patents on
any or all of the patents pending.

     On May  19th,  2000 the  Company  acquired  from  Vincent  Cuervo,  all the
worldwide rights,  licenses,  and ownership of the 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  continuation  in part of US Patent
6,105,009.  Under the  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 and/or the Company that
its patent  application  was allowed and  subsequently  a related Patent to this
patent will be issued. On this day 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.

                                       17
<PAGE>

SECURITIES  OUTSTANDING
-----------------------

     The Company has 2,500,000 authorized shares of $0.01 par value common stock
(the Shares). As of February 25, 2004 there are 2,097,550 Issued and outstanding
shares, of which 986,667 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.

STOCK OPTIONS
-------------

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

     On August 2, 1993 the  Company  issued  to its  principal  stockholder  Dr.
Vincent  Cuervo and to one of its  officers,  Pedro P. Llaguno,  Esquire,  Stock
Options to purchase stock of the Company's Common Stock $0.01 par value. Vincent
Cuervo to purchase 7,000 shares, and Pedro P. Llaguno 2,000 yearly for a term of
five years,  all  exercisable  during the following  five years from the date of
each Stock Option annual grant date. The Stock Option prices range from $0.50 to
$1.75.

     The Stock Option issued on August 2, 1993 to both, Vincent Cuervo and Pedro
P. Llaguno, were not exercised on August 2, 1998, their expiration date and were
forfeited and canceled.

     2,500 stock  options  have been  exercised  and the  remaining  outstanding
awards continue to be exercisable as of December 31, 2000.

     On February 1995, the Company issued to its principal  shareholder  Vincent
Cuervo and to one of its officers P. P. Llaguno, Stock Options to purchase stock
of the Company's  Common Stock,  $0.01 par value,  every year for a term of five
years:  Vincent Cuervo,  to purchase  20,000,  and Pedro P.Llaguno Esq.,  15,000
which will be  exercisable  for a term of five years from the date of each Stock
Option annual issue date.

     The  Stock  Option  exercising  prices  will be:  $0.10 and $0.15 per share
respectably,  15,000 stock  options have been  exercised  and the balance of the
outstanding awards continue to be exercisable as of December 31, 2002.

     On July 17,1998,  the Company issued to its principal  shareholder  Vincent
Cuervo and to one of its officers P. P. Llaguno, Stock Options to purchase stock
of the Company's  Common Stock,  $0.01 par value,  every year for a term of five
years:  Vincent  Cuervo,  to purchase  20,000 shares,  and Pedro P.Llaguno Esq.,
5,000 shares all of the  Company's  Common Stock $0.01 par value per share which
will be exercisable  for a term of five years from the date of each Stock Option
annual issue date. The Stock Option exercising price will be $0.14 per share. No
stock  options  have been  forfeited  or exercised  and all  outstanding  awards
continue to be exercisable as of December 31, 2002.

     On June 29,1999 on a Special  Meeting of the Company's  Board Of Directors,
David J. Koss,  newly  appointed  President  and Chief  Financial  Officer,  was
granted  25,000 Stock Option to purchase  Shares of the Company's  Common Stock,
$0.01  par  value  each year for four  years at an  exercise  price of $0.38 per
shares.  David J. Koss will receive the Option Shares each year up to, and until
such time as he would cease  providing  services  to the  Company  for  whatever
reason,  including the year in which his services to the Company are terminated.
The  Option  Shares  shall be deemed  "restricted  stock"  pursuant  to Rule 144
promulgated under the Securities Act of 1933, as amended.

                                       18
<PAGE>

     During  2001 Stock  Option  Shares in the amount of 170,000  were  granted.
Recipients were Rosa Scavo, Esq., Jose E. Aguirre,  Pedro Emilio Llaguno,  David
J. Koss,  and J.  Sanchelima,  Esq. for past present and future  services to the
Company.

     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  2003 there were  74,500  Stock
Option Shares that were not exercised, consequently void.

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 SALES OF UNREGISTERED SECURITIES
---------------------------------------

     On January  16,  1999  offered to David J. Koss the issued of 10,000 of the
Company's Common Stock at $0.01 par value per share,  half of the amount on that
date the balance ninety days later and subject to his continue cooperation, work
and dedication.  On 1/16/99 the Company issued half of the amount,  5,000 shares
of the  Company's  Common Stock $0.01 par value per share to David J. Koss,  The
shares were deemed restricted shares.

     On April 15,  1999 the  Company  issued  the  balance  of the total  amount
offered in 1/16/99,  5,000 shares of the Company's  Common Stock $0.01 par value
per share to David J. Koss,  for his continue  present and future  dedication to
the Company and his  interest in its growth.  The shares were deemed  restricted
shares.

     On January 11,  2001 the Company  issued  14,000  restricted  shares of the
Company's  Common Stock $0.01 par value per share to Francisco de Monteverde and
Benito  de Lugo in  payment  for  their  continuous  services,  interviews  with
officers of the Spain Banking Industry, traveling and entertainment at their own
personal  expenses to several meetings during the last four years, and including
the valuable  service of having the Company's  programs  translated into Spanish
(Castilian) printing and copying those in floppies, and CDs.

                                       19
<PAGE>

     On July 30, 2001 the Company  issued 3,000  shares to Maria T. C.  Schafer,
Webmaster;  5,000 shares to David J. Koss, President, and 1,000 shares to Robert
A. Schreiber,  Esquire,  all of these shares were Company Common Stock $0.01 par
value per share and deemed restricted.

     On November  22, 2002 the Company  issued 5,000 shares to Ana M. Cuervo for
developing investors interests with South American prospects throughout the past
three years,  and 5,000 to Pedro Emilio Llaguno for his continued  assistance in
the updating and maintenance of the Company's  Computers  hardware and software,
and the above  mentioned  2,000 shares to Charles A.  Menendez,  all  restricted
shares.

     All the shares are Company's  Common Stock,  $0.01 par value per share, and
they are all in payment  for these  individuals  past,  present,  and  continued
services to the Company.

                                     PART IV

ITEM 14. PRINCIPAL ACCOUNT FEES AND SERVICES,
         EXHIBITS AND REPORTS OF FORM  8-K
         ----------------------------------

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,  2003 and 2002,  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, 2003 and 2002, 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, 2003 and 2002 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

         EXHIBITS:
         ---------

          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.

                                       20
<PAGE>

          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.

          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

          **   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.

The Exhibits described above are incorporated by reference here: Incorporated by
reference to the Company's Annual Report on Form 10KSB, file No.33-9185A for the
fiscal year ended December 31, 1999.

                                       21
<PAGE>

FORM 8 - K
----------

EXHIBIT #1.
-----------
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 8 - K
                                 CURRENT REPORT
               PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
                            AND EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported):
                                February 1, 1999

                     DEFAULT PROOF CREDIT CARD SYSTEM, INC.
                     --------------------------------------
             (Exact Name of Registrant as Specified in its Charter)

         FLORIDA                                     0-17114
         -------                                     -------
(State or other Jurisdiction                   (Commission File No.)
Of Incorporation or Organization)
                                   59-2686523
                                   ----------
                     (I.R.S. Employer Identification Number)

         1545 Miller Road  Coral Gables, Florida             33146-2309
         ---------------------------------------             ----------
         (Address of Principal                               (Zip Code)
         (Executive Offices)

         Registrant's Telephone Number, including Area Code:  (305) 666-1460
                                                              --------------

ITEM 5. Registrant's Reverse Stock Split of Corporation's Common Stock Shares
        ---------------------------------------------------------------------

     The  Board  of  Directors  of  Default  Proof  Credit  Card  System,   Inc.
(OTC-BB:DPRS) on an Extraordinary Meeting held today February 1, 1999, after the
casting and tallying of the votes  submitted  from January 14. 1999 to this date
by the Company's  shareholders resulting in the approval of the proposed ten-for
one reverse split by a 99% of all the votes received,  has unanimously  voted to
implement a ten-for-one reverse split of the Company's Common Stock. The reverse
stock  split will  become  effective  as of the close of business on February 4,
1999.  On February 5, 1999 for each  pre-split  ten (10) shares of the Company's
Common Stock  $0.001 par value the holder of record will receive one  post-split
share of the  Company's  Common stock $0.01 par value per post split share.  The
new stock certificates will have a new cusip number 244626 40 4.

     The new  certificates  will be issued  in the  normal  course  of  business
whenever the appropriate  transfer is requested by the shareholders.  Fractional
shares  resulting  from the  reverse  stock split will be settled in cash at the
shares  closing  price of the  shares  traded  at the close of  business  of the
effective  date February 4, 1999.  The reverse split will decrease the number of
shares  outstanding,  but not the  value  of  shares  held by the  shareholders.
Shareholders  will  maintain the same  percentage of equity as before the split.
The Company will make a news release through the news media, Business Wire, Wall
Street Journal, etc., for the general public information.

                                   SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant has duly caused this report on its behalf by the undersigned hereunto
duly authorized.

                                  Default Proof Credit Card System, Inc.
                                  (Registrant)

Date: February 1, 1999            By: VINCENT CUERVO
                                      ---------------
                                      Vincent Cuervo, President & CEO


                                       22
<PAGE>
EXHIBIT #2.
-----------

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 8 - K

                                 CURRENT REPORT

               PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
                            AND EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): February 12, 2000


                     DEFAULT PROOF CREDIT CARD SYSTEM, INC.
                     --------------------------------------
             (Exact Name of Registrant as Specified in its Charter)

          FLORIDA                                     0-17114
          -------                                     -------
(State or other Jurisdiction                   (Commission File No.)
Of Incorporation or Organization)

                                   59-2686523
                     (I.R.S. Employer Identification Number)

         1545 Miller Road Coral Gables, Florida         33146-2309
         --------------------------------------         ----------
         (Address of Principal                          (Zip Code)
         Executive Offices)

         Registrant's Telephone Number, including Area Code: (305) 666-1460

     The  Board  of  Directors  of  Default  Proof  Credit  Card  System,   Inc.
(OTC-BB:DPRS)  on this  Extraordinary  Meeting  held  today  February  12,  2000
approves this unanimously  resolution terminating the services of Infante, Lagos
and Company as the Company's  certified public  accountants who were responsible
for the preparation and completion of Default Proof Credit Card System, Inc. for
the year ended December 31, 1998 audited  balance sheet and financials  filed on
1999. The end of their services to be effective on this February 11th, 2000. The
reason for this  change is their  expensive  fees and  charges at times when the
Company could not afford such expenses.

     At this  above  mentioned  Meeting of the Board of  Directors,  it was also
Unanimously  approved,  effective February 11th., 2000 the engagement  agreement
with Joel S. Baum, C.P.A.,  President of BAUM & COMPANY, P.A. at 1515 University
Drive,  Suite  209,  Coral  Spring,  Florida  33071.  The new  certified  public
accountants  firm will be  responsible  for the audit of the  balance  sheet and
financials  of Default  Proof Credit Card System,  Inc.,  for the year ending on
December 31, 1999 and the related statements of income,  retained earnings,  and
cash  flows  for  the  year  then  ended.  The  new  engaged   certified  public
accountants,  while promising the same quality services,  offered reasonable and
accessible cost to the Company.

                                   SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
Registrant has duly caused this report on its behalf by the undersigned hereunto
duly authorized.

                                       DEFAULT PROOF CREDIT CARD SYSTEM, INC.
                                      (Registrant)

Date: FEBRUARY 11, 2000                By: VINCENT CUERVO
      -----------------                   -----------------
                                           Vincent Cuervo
                                           President & CEO

                                       23
<PAGE>

CERTIFICATION BY CORPORATE SECRETARY

     I  hereby  certify  that the  following  is a true  and  correct  copy of a
resolution  duly and  regularly  passed by the Directors of DEFAULT PROOF CREDIT
CARD SYSTEM, INC., at a extraordinary  meeting of the Board of Directors held on
the 11th.,  day February,  2000 at the Corporate  offices situated at 2050 Coral
Way, Suite # 404, City of Miami, County of Miami-Dade,  Florida,  33145 and that
as such  meeting a quorum of  Directors  was present  and voting;  and I further
certify  that  said  Resolution  is still in force and  effect  and has not been
revoked, modified nor changed in any manner.

RESOLVED:

     The  Board  of  Directors  of  Default  Proof  Credit  Card  System,   Inc.
(OTCBB:DPRS)  on this  Extraordinary  Meeting  held  today  February  11,  2000,
approved this unanimously  resolution  terminating the services of Infante, Lago
and Company as the Company's  certified public  accountants who were responsible
for the  preparation  and completion of Default Proof Credit Card System,  Inc.,
for the year ended December 31, 1998 audited balance sheet and financials  filed
on 1999.  The end of their  services to be effective on this February 11th 2000.
The reason for this change is their expensive fees and charges at times when the
Company could not afford such expenses.  On this above mentioned  Meeting of the
Board of Directors,  it was also unanimously approved,  effective February 11th,
2000 the  engagement  agreement with Joel S. Baum,  C.P.A.,  President of BAUM &
COMPANY,  P.A. at 1515  University  Drive,  Suite #209,  Coral Springs,  Florida
33071.  The new certified  public  accountants  firm will be responsible for the
audit of the balance  sheet of Default  Proof  Credit Card System,  Inc.,  as of
December 31, 1999 and the related statements of income,  retained earnings,  and
cash  flows  for  the  year  then  ended.  The  new  engaged   certified  public
accountants, while promising the same quality service, offered a more reasonable
and accessible cost to the Company.

Dated at the City of Miami, Florida this 12th. February, 2000.


                                      By: PEDRO P. LLAGUNO, ESQ.
                                          ----------------------
                                          Pedro P.Llaguno, Secretary

                                   SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
Registrant has duly caused this report on its behalf by the undersigned hereunto
duly authorized.

                              DEFAULT PROOF CREDIT CARD SYSTEM, INC.
                              (Registrant)

Date: March 4, 2002           By: VINCENT CUERVO
                                  -----------------
                                  Vincent Cuervo, CEO

                              By: PEDRO P. LLAGUNO, ESQ.
                                  ----------------------
                                  Pedro P. Llaguno, Secretary


                                       24
<PAGE>

EXHIBIT #4
----------

January 29, 2003


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 8 - K

                                 CURRENT REPORT

                     PURSUANT TO SECTION 13 OR 15 (D) OF THE
                       SECURITIES AND EXCHANGE ACT OF 1934

                DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED):
                                January 29, 2003

                    DEFAULT PROOF CREDIT CARD SYSTEM, INC.
                    --------------------------------------
             (Exact Name of Registrant as Specified in its Charter)

            FLORIDA                                     0-17114
            -------                                     -------
 (State or other Jurisdiction                   (Commission File No.)
 of Incorporation or Organization)

                                   59-2686523
                                   ----------
                     (I.R.S. Employer Identification Number)

       1545 Miller Road Coral Gables, Florida         33146-2309
     (Address of Principal Executive Offices)         (Zip Code)
     ----------------------------------------         ----------

       Registrant's Telephone Number, including Area Code: (305) 666-1460
                                                            -------------

ITEM 5.  OTHER EVENTS.
         ------------

     On January 15, 2003 in the United  States  District  Court for the Southern
District  of  Florida   DEFAULT  PROOF  CREDIT  CARD  SYSTEM,   INC.  a  Florida
corporation,  Plaintiff,  through counsel,  filed Case Number:  03-20094 v. HOME
DEPOT U.S.A, INC. d/b/a THE HOME DEPOT, a Delaware corporation, SAM'S EAST, INC.
d/b/a SAM'S CLUB,  an  Arkansas  corporation,  STARBUCKS  COFFEE  COMPANY  a/k/a
STARBUCKS CORPORATION, a Washington corporation, URBAN COFFEE OPPORTUNITIES, LLC
d/b/a  STARBUCKS  COFFEE,  a Washington  corporation,  WAL-MART  STORES,  INC. a
Delaware  corporation,  and WAL-MART  STORES EAST. LP d/b/a  WAL-MART a Delaware
corporation, Defendants.

                                       25
<PAGE>

     This a claim for patent  infringement  arising under the patent laws of the
United States, Title 35 of the United States Code.

                                       -2-

                                   SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
Registrant has duly caused this report on its behalf by the undersigned hereunto
duly authorized. DEFAULT PROOF CREDIT CARD SYSTEM, INC. (Registrant)

January 29, 2003
                                            By:VINCENT CUERVO
                                               --------------
                                               Vincent Cuervo, CEO


                                            By:PEDRO P. LLAGUNO
                                               ----------------
                                               Pedro P. Llaguno, Secretary


EXHIBIT #5
----------

                      SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 8 - K

                                 CURRENT REPORT

                     PURSUANT TO SECTION 13 OR 15 (D) OF THE
                       SECURITIES AND EXCHANGE ACT OF 1934

                DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED):
                                September 25, 2003

                    DEFAULT PROOF CREDIT CARD SYSTEM, INC.
                    --------------------------------------
             (Exact Name of Registrant as Specified in its Charter)

            FLORIDA                                     0-17114
            -------                                     -------
 (State or other Jurisdiction                   (Commission File No.)
 of Incorporation or Organization)

                                   59-2686523
                                   ----------
                     (I.R.S. Employer Identification Number)

       1545 Miller Road Coral Gables, Florida         33146-2309
     (Address of Principal Executive Offices)         (Zip Code)
     ----------------------------------------         ----------

       Registrant's Telephone Number, including Area Code: (305) 666-1460
                                                            -------------

ITEM 5.  OTHER EVENTS AND REGULATION FD DISCLOSURE.
         -----------------------------------------

     On September 5, 2003,  counsel for Scott Roderick  ("Roderick")  advised us
that on or before September 10, 2003, Roderick would file a legal action against
each of our executive officers and directors and the spouse of Vincent Cuervo in
the Circuit Court in Miami-Dade County, Florida.  According to such counsel, the
action  will be brought  directly  by Roderick  and by us  derivatively  through
Roderick.  The action  will  allege  breaches of  fiduciary  duties,  wrongfully
obtained profits obtained from us by Mr. Cuervo through  "self-dealing,"  filing
of false and misleading  periodic  reports by us with the SEC,  illegal sales of
unregistered securities by Mr. Cuervo and fraud by Mr. Cuervo in connection with
his sale of certain intellectual property rights to us.


                                       26
<PAGE>


     The  relief  to  be  sought  from  the  prospective   defendants   includes
unspecified  damages and other relief,  attorneys'  fees,  pre and post judgment
interest and reimbursement of certain alleged bonuses and profits.

     Roderick's  counsel has also advised us that  Roderick  intends to assert a
derivative  claim on our behalf against Mr. Cuervo for  disgorgement  of certain
short swing profits allegedly obtained by Mr. Cuervo. We believe that Roderick's
claims are wholly without merit and we and the prospective  defendants intend to
vigorously contest and defend the proposed legal actions. We intend to indemnify
our executive  officers and directors in connection with Roderick's legal action
to the full extent permitted by law.

                                   SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned hereunto duly authorized.

Default Proof Credit Card System, Inc.

Date: September 8, 2003

/s/ Vincent Cuervo
---------------------
Vincent Cuervo, Chief Executive Officer


                                       27
<PAGE>




                                 C O N T E N T S


                                                                 PAGE
                                                                 ----

AUDITORS' REPORT..................................................F-2

FINANCIAL STATEMENTS

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

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

         STATEMENT OF STOCKHOLDERS' EQUITY/DEFICIENCY.............F-5 - F-10

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

NOTES TO FINANCIAL STATEMENTS.....................................F-12 - F-17



                                       F-1


<PAGE>


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





                          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, 2003, 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, 2002 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
February 10, 2004

                 See Accompanying Notes to Financial Statements

                                       F-2

<PAGE>


CERTIFICATION OF CEO AND CFO PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT

     In  connection  with the Annual Report of Default Proof Credit Card System,
Inc., a Florida  corporation (the "Company"),  on Form 10-KSB for the year ended
December 31, 2003, as filed with the  Securities  and Exchange  Commission  (the
"Report"), Vincent Cuervo, Chief Executive Officer of the Company and Charles A.
Menendez, Chief Financial Officer of the Company, respectively, do each certify,
pursuant to ss. 906 of the Sarbanes-Oxley  Act of 2002 (18 U.S.C.ss.  1350) that
to his knowledge:

     (2)  The Report fully  complies with the  requirements  of section 13(a) or
          15(d) of the Securities Exchange Act of 1934; and

     (2)  The  information  contained  in the  Report  fairly  presents,  in all
          material respects, the financial condition and result of operations of
          the Company.


/s/ Vincent Cuervo
------------------
Vincent Cuervo,
Chief Executive Officer
March 29, 2004

/s/ Charles A. Menendez
-----------------------
Charles A. Menendez
Chief Financial Officer
March 29, 2004

[A signed  original of this written  statement  required by Section 906 has been
provided to Default  Proof  Credit  Card  System,  Inc.  and will be retained by
Default  Proof Credit Card  System,  Inc. and  furnished to the  Securities  and
Exchange Commission or its staff upon request]


<PAGE>



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




                                  BALANCE SHEET

                                December 31, 2003



                                     ASSETS
                                     ------

CURRENT ASSETS
   Cash                                                      $            10
                                                             ---------------
               Total Current Assets                                       10


PROPERTY AND EQUIPMENT (Net of
   Accumulated Depreciation of $8,591)                                 2,037

OTHER ASSETS
   Deferred Patent Costs, Net                                          1,161
                                                             ---------------
               TOTAL ASSETS                                  $         3,208
                                                             ===============


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

CURRENT LIABILITIES
       Accounts Payable & Accrued Expenses                   $         66,586
      Due to Related Party                                             30,607
                                                             ----------------

Total Liabilities                                                      97,193

STOCKHOLDERS' DEFICIENCY
      Common Stock, $0.01 Par Value, 2,500,000
         Shares Authorized, 2,050,884 Issued and Outstanding           20,509
      Additional Paid-In Capital                                    4,579,477
      Deficit Accumulated During Developmental Stage               (4,693,971)
                                                             ----------------
               TOTAL STOCKHOLDERS' EQUITY                          (   93,985)
                                                             ----------------
                  TOTAL LIABILITY AND STOCKHOLDERS EQUITY    $          3,208
                                                             ================

                 See Accompanying Notes to Financial Statements

                                       F-3


<PAGE>


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



                            STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                                                      CUMULATIVE FROM
                                                                       AUGUST 14, 1985        FOR THE YEARS ENDED
                                                                        (INCEPTION)                DECEMBER 31,
                                                                          THROUGH                --------------
                                                                      DECEMBER 31, 2003         2003          2002
                                                                      -----------------     -------------   ----------------------

<S>                                                                   <C>                   <C>             <C>
EXPENSES
    General & Administrative                                          $ 3,652,583           $     143,999   $    156,796
    Officer Salary                                                        986,556                     -              -
    Marketing                                                             393,358                     -              -
    Depreciation & Amortization                                           107,298                  1, 603          1,895
    Expired Public Offering Costs                                         179,211                     -              -
                                                                      -----------           -------------   ------------
    Total Expenses                                                       5,319,006                145,602        158,691
                                                                      ------------          -------------   ------------

OTHER INCOME (EXPENSE)
    Litigation Settlements (Note 7)                                       (90,000)                    -              -
    Interest & Other Income                                               422,708                   (512)            -
    Loss on Marketable Securities                                         (96,529)                    -              -
    Loss on Sale of Equipment                                             (34,144)                    -              -
                                                                      -----------           -------------   ------------
    Total Other Income (Expense)                                          202,035                   (512)            -
                                                                      -----------           -------------   ------------
Net Loss before Income Taxes and Extraordinary Item                    (5,116,971)              (146,114)       (158,691)
Income tax benefit                                                         25,436                     -              -
                                                                      -----------           -------------   ------------
Net Loss before Extraordinary Item                                      (5,091535)              (146,114)       (158,691)

Extraordinary item - Gain from restructuring of
    debt (net of Income Taxes of $165,200)                                257,800                     -              -
Benefit from utilization of net operating loss carryforward               139,764                     -              -
                                                                      -----------           -------------   ------------
NET (LOSS) INCOME                                                     $(4,693,971)          $   (146,114)   $  (158,691)
                                                                      ===========           =============   ============

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

Weighted Average Number of  Common
    Shares Outstanding                                                                         1,844,466      1,585,170
                                                                                            =============   ===========


</TABLE>

                 See Accompanying Notes to Financial Statements

                                       F-4


<PAGE>


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


                 STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
<TABLE>
<CAPTION>

                                                                                                     DEFICIT
                                                            COMMON STOCK                            ACCUMULATED
                                                     ------------------------       ADDITIONAL       DURING THE
                                                     # OF SHARES                     PAID-IN         DEVELOPMENT
                                                        ISSUED         AMOUNT        CAPITAL           STAGE         TOTAL
                                                     -----------   ------------    ------------    ------------   ----------


<S>                                                 <C>              <C>           <C>             <C>            <C>
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

                                       F-5


<PAGE>


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


           STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY) (CONTINUED)

<TABLE>
<CAPTION>

                                                                                                     DEFICIT
                                                            COMMON STOCK                            ACCUMULATED
                                                     ------------------------       ADDITIONAL       DURING THE
                                                     # OF SHARES                     PAID-IN         DEVELOPMENT
                                                        ISSUED         AMOUNT        CAPITAL           STAGE         TOTAL
                                                     -----------   ------------    ------------    ------------   ----------

<S>                                                 <C>              <C>           <C>             <C>            <C>
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

                                       F-6


<PAGE>


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


           STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY) (CONTINUED)

<TABLE>
<CAPTION>

                                                                                                     DEFICIT
                                                            COMMON STOCK                            ACCUMULATED
                                                     ------------------------       ADDITIONAL       DURING THE
                                                     # OF SHARES                     PAID-IN         DEVELOPMENT
                                                        ISSUED         AMOUNT        CAPITAL           STAGE         TOTAL
                                                     -----------   ------------    ------------    ------------   ----------
<S>                                                  <C>           <C>             <C>             <C>            <C>
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)
                                                      ==========   ==========      ===========     ============   ==========
</TABLE>


                 See Accompanying Notes to Financial Statements

                                       F-7


<PAGE>


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


           STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY) (CONTINUED)

(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.

(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.


                 See Accompanying Notes to Financial Statements

                                       F-8

<PAGE>


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






(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.

(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.

                 See Accompanying Notes to Financial Statements

                                       F-9


<PAGE>


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



(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.

(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  $148,500  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.



                 See Accompanying Notes to Financial Statements

                                      F-10


<PAGE>


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



                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>


                                                                    CUMULATIVE FROM           YEARS ENDED
                                                                    AUG. 14, 1985 TO          DECEMBER 31
                                                                      DEC. 31, 2003       2003          2002
                                                                    ----------------  -----------   -----------
OPERATING ACTIVITIES

<S>                                                                    <C>            <C>           <C>
Net (Loss) Gain                                                        $ (4,693971)   $ (146,114)   $  (158,691)
Adjustments to Reconcile Net (Loss) Gain to
    Net Cash Used in Operating Activities:
    Depreciation & Amortization                                            106,231         1,603         1,895
    Loss on Marketable Securities                                          130,741             -             -
    Expired Public Offering Costs                                          110,000             -             -
    Cancellation of Stockholder Note Receivable                             55,490             -             -
    Stock Issued in lieu of Cash for Prof. Services                        531,144        27,600        26,489
    Stock  Options Issued in lieu of Cash for Prof. Services               122,035             -        87,555
    Stock Issued in lieu of Cash for Waived Salaries                       294,000             -             -
    Loss on Sale of Equipment                                               34,144             -             -
    Decrease (Increase) in Other Assets                                     (1,161)            -             -
    Decrease (Increase) in Prepaid Expenses                                      -        20,092       (20,092)
    Increase (Decrease) in Due to Related Party                             30,607         8,685         21,922
    Increase (Decrease) in Payables & Accrued Expenses                      66,586        65,403            384
                                                                    ----------------  -----------   -----------
    NET CASH USED IN OPERATING ACTIVITIES                               (3,311,238)      (22,731)      (40,538)
                                                                    ----------------  -----------   -----------

INVESTING ACTIVITIES
Purchases of Marketable Securities                                        (130,741)           -              -
Purchases of Property & Equipment                                         (124,392)        (835)             -
Patent License Expenditures                                               (152,098)           -              -
Proceeds from Sale of Equipment                                             22,994            -              -
                                                                    ----------------  -----------   -----------
    NET CASH USED IN INVESTING ACTIVITIES                                 (385,907)        (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        26,500
Capital Contributions                                                       78,076            -             -
Net Receipts/Advances to Stockholder                                      (100,600)           -
                                                                    ----------------  -----------   -----------
    NET CASH PROVIDED BY FINANCING ACTIVITIES                             3,697,155      23,500        26,500
                                                                    ----------------  -----------   -----------
    NET INCREASE (DECREASE) IN CASH                                             10          (66)      (14,038)
    CASH - BEGINNING                                                             -           76        14,114
                                                                    ----------------  -----------   -----------
    CASH - ENDING                                                      $        10   $       10      $     76
                                                                    ================ ============   ===========

</TABLE>


                 See Accompanying Notes to Financial Statements

                                      F-11
<PAGE>


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


                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 2003

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
               have 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 2003 and 2002 since the effect would
               have been  anti-dilutive  to the  Company's  net loss per  common
               share.

               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


                                      F-12


<PAGE>


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



                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                December 31, 2003

NOTE 1.        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
               INCOME TAXES (CONTINUED)

               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.


NOTE 2.        GOING CONCERN CONSIDERATION

               The accompanying financial statements have been prepared assuming
               the  Company  will  continue  as a  going  concern.  The  Company
               suffered  losses prior to  commencement  of operations  and has a
               working capital deficiency. Management intends to actively market
               the  Resource  System and a new (patent  pending)  Line of Credit
               system.  The Company is now engaged in  discussions  with several
               financial  institutions  for its  development.  In the absence of
               achieving  profitable  operations,  or  obtaining  debt or equity
               financing,  the Company may not have sufficient funds to continue
               through December 31, 2004.

NOTE 3.        DUE FROM STOCKHOLDER

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

NOTE 4.        LICENSE AGREEMENT

               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
               Trademark  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.






                                      F-13


<PAGE>


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


                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                December 31, 2003


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 tne (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.

               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,  respectively, of the non- plan
               options were fully vested.






                                      F-14


<PAGE>


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


                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                December 31, 2003

      OTHER STOCK OPTIONS (Continued)


               As of December  31, 1998 and 1997 the Company has agreed to grant
               its President other five-year  non-plan  options 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 $1.77 to $4.00
               per share.

               In October  2002.  as part of the  termination  settlement of the
               former  President of the company  285,000  options at prices from
               $.50  to $  6.50  were  issued,  which  were  offset  by  350,000
               forfeited Options at prices of $.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.

               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 to employees  in 2001 would  increase the loss.by $ 50,500
               or $ .03 per share and options  issued in 2002 would increase the
               loss by $130,491 or $ .08 per share






                                      F-15


<PAGE>


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


                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                December 31, 2003

      OTHER STOCK OPTIONS (Continued)

               A summary of the status of the Company's  fixed stock option plan
               and  non-plan  options  as of  December  31,  2002 and 2003,  and
               changes during the years then ended is presented below:
<TABLE>
<CAPTION>

                                                                               Year Ended December 31,
                                                                           2002                       2003
                                                              --------------------------   ------------------------------
                                                                               Weighted                         Weighted
                                                                               Average                          Average
                                                                               Exercise                         Exercise
                                                                 SHARES         PRICE               SHARES*      PRICE
                                                              ------------   -----------         ------------  ---------

               <S>                                              <C>         <C>                    <C>           <C>

               Outstanding at beginning of year                 1,327,500   $  2.50                1,427,000     $ 3.33
               Granted                                            754,000   $  3.34                        -          -
               Exercised                                         (265,000)        -                 (235,000)         -
               Forfeited/Expired                                 (389,500)        -                 (138,000)         -
                                                              -----------                        -----------
               Outstanding at end of year                       1,427,000    $ 3.33                1,054,000     $ 2.74
                                                              ===========                        ===========

</TABLE>


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, 2003,  the Company had a net operating loss carry
               forward of approximately $4.6 million, that expires through 2017.

               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.

NOTE 9.        PATENTS 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.

               In June  2002 the U S Patent  and  Trademark  Office  issued  the
               Patent Number 6,405,185,  the System for Dispensing prepaid DebiT
               Cards Through Point-Of-Sale Terminals

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.




                                      F-16


<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                December 31, 2003

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)  vs.  Home  Depot USA Inc. , Sam's East
               Inc..d/b/a/  Sam's Club,  Starbucks Coffee Company,  Urban Coffee
               Opportunities  LLC and Wal- Mart Stores Inc. The litigation is in
               process.



NOTE 12. NEW ACCOUNTING PRONOUNCEMENTS

               The FASB issued Statement of Financial  Accounting  Standards No.
               148,  "ACCOUNTING FOR STOCK- BASED COMPENSATION -- TRANSITION AND
               DISCLOSURE AN AMENDMENT OF FASB  STATEMENT NO. 123" (SFAS 148) in
               December  2002..   SFAS  148  amends  SFAS  123  "ACCOUNTING  FOR
               STOCK-BASED  COMPENSATION,"  providing an  alternative  method of
               transition for a voluntary changes to the fair value based method
               of accounting for stock-based employee  compensation.  Also, SFAS
               148 amends  the  disclosure  requirements  of SFAS 123 to require
               prominent  disclosures  in  both  annual  and  interim  financial
               statements  about  the  method of  accounting  for  stock-  based
               employee  compensation  and  the  effect  of the  method  used on
               reported  results.   SFAS  148  is  effective  for  fiscal  years
               beginning  after  December  15,  2002.  The  interim   disclosure
               provisions  are  effective  for  financial   reports   containing
               financial statements for interim periods beginning after December
               15, 2002.  The adoption of the interim  disclosure  provisions of
               SFAS 148 did not affect our financial statements

               The FASB issued FASB  Interpretation  No. 46,  "CONSOLIDATION  OF
               VARIABLE  INTEREST  ENTITIES"  (FIN 46). In January 2003.  FIN 46
               requires that if an entity has a controlling  financial  interest
               in a  variable  interest  entity,  the  assets,  liabilities  and
               results of activities of the variable  interest  entity should be
               included in the consolidated  financial statements of the entity.
               This FASB is not applicable to the company since the company does
               not have any variable interest entities.

               In May 2003,  the FASB issued  Statement of Financial  Accounting
               Standards No. 150, "Accounting for Certain Financial  Instruments
               with  Characteristics of both Liabilities and Equity" (SFAS 150).
               SFAS 150 sets  standards  for an issuer as to how to classify and
               measure  financial   instruments  with  characteristics  of  both
               liabilities  and  equity.  SFAS 150 is  effective  for  financial
               instruments  entered  into after May 31,  2003,  and is effective
               after June 15, 2003. Adoption of SFAS 150 is not expected to have
               a material effect on the Company.





                                      F-17


<PAGE>