SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C. 20549


Form
      10-Q





x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
      ACT
      OF 1934





For
      the
      quarterly period ended September 30, 2008





 ̈ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
      ACT OF 1934




For
      the
      transition period from _____ to _____





Commission
      File number: 0-25429





Diversified
      Product Inspections, Inc.


(Exact
        name of registrant as


specified
      in its charter)


Florida
            
            59-3087128(State
                of other jurisdiction of
            
            (IRS
                Employerincorporation
                or organization)
            
            Identification
                No.)





1059
      East
      Tri-County Blvd.,


Oliver
      Springs, TN 37840


(Address
        of principal executive offices)





(865)
      482-8480





(Registrant`s
      telephone number, including area code)





Not
      applicable





(Former
      name, former address, and former fiscal year,


if
      changed since last report)





Indicate
      by check mark whether the registrant (1) filed all reports required to be filed
      by Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for
      such shorter period that the registrant was required to file such reports),
      and
      (2) has been subject to such filing requirements for the past 90 days. Yes x No  ̈





Indicate
      by check mark whether the registrant is a larger accelerated filer, an
      accelerated filer, a non-accelerated filer, or a smaller reporting company.
      See
      the definitions of “large accelerated filer,” “accelerated filer,” and “small
      reporting company” in Rule 12b-2 of the Exchange Act.





Large
                accelerated filer** ̈**
            
            Accelerated
                filer** ̈**Non-accelerated
                filer**o**
            
            Smaller
                Reporting Company**x**





As
      of
      November 13, 2008, there were 20,105,867 shares of common stock, $0.01 par
      value, issued and outstanding.





Transitional
      Small Business Disclosure Format (check one): Yes  ̈ No x








INDEX
      TO
      FORM 10-Q


PAGEPART
                I
            FINANCIAL
                INFORMATIONItem
                1
            Financial
                StatementsCondensed
                Balance Sheets as of September 30, 2008 (Unaudited) and December
                31,
                2007
            3Condensed
                Statements of Income (Unaudited) for the three and nine months ended
                September 30, 2008 and 2007
            4Condensed
                Statements of Stockholders’ Equity for the year ended December 31, 2007
                and the nine months ended September 30, 2008 (Unaudited)
            5Condensed
                Statements of Cash Flows (Unaudited) for the nine months ended September
                30, 2008 and 2007
            6Notes
                to Condensed Financial Statements (Unaudited)
            7Item
                2
            Management's
                Discussion and Analysis of Financial Condition and Results of
                Operation
            10Item
                3
            Quantitative
                and Qualitative Disclosures About Market Risk
            11Item
                4
            Controls
                and Procedures
            11PART
                II
            OTHER
                INFORMATION
            12SIGNATURES
            14





CAUTIONARY
      STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" STATEMENT UNDER THE PRIVATE
      SECURITIES LITIGATION REFORM ACT OF 1995





This
      Form
      10-Q includes forward-looking statements. All statements, other than statements
      of historical facts, included or incorporated by reference in this Form 10-Q
      which address activities, events or developments which the Company expects
      or
      anticipates will or may occur in the future, including such things as future
      capital expenditures (including the amount and nature thereof), finding suitable
      merger or acquisition candidates, expansion and growth of the Company’s business
      and operations, and other such matters are forward-looking statements. These
      statements are based on certain assumptions and analyses made by the Company
      in
      light of its experience and its perception of historical trends, current
      conditions and expected future developments as well as other factors it believes
      are appropriate in the circumstances. However, whether actual results or
      developments will conform with the Company’s expectations and predictions is
      subject to a number of risks and uncertainties, general economic market and
      business conditions; the business opportunities (or lack thereof) that may
      be
      presented to and pursued by the Company; changes in laws or regulation; and
      other factors, most of which are beyond the control of the Company.
      Consequently, all of the forward-looking statements made in this Form 10-Q
      are
      qualified by these cautionary statements and there can be no assurance that
      the
      actual results or developments anticipated by the Company will be realized
      or,
      even if substantially realized, that they will have the expected consequence
      to
      or effects on the Company or its business or operations. The Company assumes
      no
      obligations to update any such forward-looking statements.


2


Part
      I –
FINANCIAL INFORMATION




Item
      1.
      Financial Statements.





Diversified
      Product Inspections, Inc.





Condensed
      Balance Sheets





**September 30**
            
            **December 31****2008**
            
            **2007****(Unaudited)****Assets**Current
                assets:Cash
            
            **$****590,082**
            
            $462,442Accounts
                receivable, net of reserve for doubtful accounts of $30,000 in 2008
                and
                $50,000 in 2007
            
            **292,086**
            
            276,482Current
                portion of deferred income taxes
            
            **59,050**
            
            79,343Prepaid
                expenses and other current assets
            
            **23,579**
            
            18,655Total
                current assets
            
            **964,797**
            
            836,922Property
                and equipment:Land
            
            **96,250**
            
            96,250Building
                and building improvements
            
            **735,318**
            
            735,318Equipment,
                furniture and fixtures
            
            **412,441**
            
            402,058Vehicles
            
            **132,949**
            
            132,949**1,376,958**
            
            1,366,575Less
                accumulated depreciation and amortization
            
            **465,582**
            
            409,700Net
                property and equipment
            
            **911,376**
            
            956,875Other
                assets
            
            **5,000**
            
            5,000Deferred
                income taxes, less current portion
            
            **248,334**
            
            289,667Total
                assets
            
            **$****2,129,507**
            
            $2,088,464**Liabilities
                and stockholders’ equity**Current
                liabilities:Accounts
                payable and accrued expenses
            
            **$****96,407**
            
            $74,682Accrued
                salaries
            
            **44,874**
            
            28,783Accrued
                income taxes
            
            **3,741**
            
            3,741Accrued
                settlement of lawsuit
            
            **–**
            
            30,000Deferred
                revenues
            
            **124,000**
            
            127,000Capital
                lease obligation
            
            
            **–**
            
            
            1,933Current
                portion of long-term debt
            
            
            **49,028**
            
            
            52,626Total
                current liabilities
            
            
            **318,050**
            
            
            318,765Long-term
                debt, less current portion
            
            
            **677,170**
            
            
            716,181Total
                liabilities
            
            
            **995,220**
            
            
            1,034,946Stockholders’
                equity
            
            
            **1,134,287**
            
            
            1,053,518Total
                liabilities and stockholders’ equity
            
            **$**
            **2,129,507**
            
            $
            2,088,464




*See
      accompanying Notes to Condensed Financial Statements.*


3


Diversified
      Product Inspections, Inc.





Condensed
      Statements of Income (Unaudited)





**Three months ended**
            
            **Nine months ended****September 30**
            
            **September 30****2008**
            
            **2007**
            
            **2008**
            
            **2007**Revenues
            
            **$**
            **751,785**
            
            $
            681,000
            
            **$**
            **1,930,547**
            
            $
            1,894,004Operating
                expenses:Salaries
            
            
            **392,400**
            
            
            374,051
            
            
            **1,104,274**
            
            
            1,034,836Depreciation
                and amortization
            
            
            **17,546**
            
            
            16,867
            
            
            **57,282**
            
            
            52,909General
                and administrative
            
            
            **176,539**
            
            
            217,662
            
            
            **614,043**
            
            
            700,886Total
                operating expenses
            
            
            **586,485**
            
            
            608,580
            
            
            **1,775,599**
            
            
            1,788,631Operating
                income
            
            
            **165,300**
            
            
            72,420
            
            
            **154,948**
            
            
            105,373Other
                (expense) income:Interest
                expense
            
            
            **(11,475**
            **)**
            
            (11,765
            )
            
            **(35,053**
            **)**
            
            (36,799
            )Rent
                income
            
            
            **7,500**
            
            
            –
            
            
            **22,500**
            
            
            –Net
                other expense
            
            
            **(3,975**
            **)**
            
            11,765
            
            
            **(12,553**
            **)**
            
            36,799Income
                before income taxes
            
            
            **161,325**
            
            
            60,655
            
            
            **142,395**
            
            
            68,574Deferred
                income tax expense
            
            
            **(68,567**
            **)**
            
            (22,357
            )
            
            **(61,626**
            **)**
            
            (25,524
            )Net
                income
            
            **$**
            **92,758**
            
            $
            38,298
            
            **$**
            **80,769**
            
            $
            43,050Basic
                and diluted earnings per common share
            
            **$**
            **0.00**
            
            $
            0.00
            
            **$**
            **0.00**
            
            $
            0.00





*See
      accompanying Notes to Condensed Financial Statements.*


4


Diversified
      Product Inspections, Inc.





Condensed
      Statements of Stockholders’ Equity (Unaudited)





**Number of**
              **Shares**
              **Issued and**
              **Outstanding**
            
            **Common**
              **Stock**
            
            **Additional**
              **Paid-in**
              **Capital**
            
            **Accumulated**
              **Deficit**
            
            **Total**
              **Stockholders’**
              **Equity**Balance at January 1, 2007
            
            
            20,180,867
            
            $
            201,808
            
            $
            1,997,836
            
            $
            (1,190,876
            )
            $
            1,008,768Retired
                stock
            
            
            (75,000
            )
            
            (750
            )
            
            750
            
            
            –
            
            
            –Net
                income for 2007
            
            
            –
            
            
            –
            
            
            –
            
            
            44,750
            
            
            44,750Balance
                at December 31, 2007
            
            
            20,105,867
            
            
            201,058
            
            
            1,998,586
            
            
            (1,146,126
            )
            
            1,053,518Net
                income for nine months ended September 30, 2008
            
            
            **–**
            
            
            **–**
            
            
            **–**
            
            
            **80,769**
            
            
            **80,769**Balance
                at September 30, 2008
            
            
            **20,105,867**
            
            **$**
            **201,058**
            
            **$**
            **1,998,586**
            
            **$**
            **(1,065,357**
            **)**
            **$**
            **1,134,287**





*See
      accompanying Notes to Condensed Financial Statements.*


5





Diversified
      Product Inspections, Inc.





Condensed
      Statements of Cash Flows (Unaudited)





**Nine months ended**
              **September 30****2008**
            
            **2007****Operating
                activities**Net
                income
            
            **$**
            **80,769**
            
            $
            43,050Adjustments
                to reconcile net income to net cash provided by operating
                activities:Depreciation
                and amortization
            
            
            **57,282**
            
            
            52,909Deferred
                income tax expense
            
            
            **61,626**
            
            
            25,524Provision
                for bad debts
            
            
            **(20,000**
            **)**
            
            20,000Changes
                in operating assets and liabilities:Accounts
                receivable
            
            
            **4,396**
            
            
            (81,977
            )Prepaid
                expenses and other assets
            
            
            **(4,924**
            **)**
            
            (20,488
            )Accounts
                payable and accrued expenses
            
            
            **21,725**
            
            
            15,525Accrued
                salaries
            
            
            **16,091**
            
            
            2,060Accrued
                settlement of lawsuit
            
            
            **(30,000**
            **)**
            
            –Deferred
                revenues
            
            
            **(3,000**
            **)**
            
            (37,481
            )Net
                cash provided by operating activities
            
            
            **183,965**
            
            
            19,122**Investing
                activities**Purchases
                of equipment
            
            
            **(11,783**
            **)**
            
            (84,081
            )**Financing
                activities**Proceeds
                from long-term debt
            
            
            –
            
            
            56,513Principal
                payments on long-term debt and capital lease obligation
            
            
            **(44,542**
            **)**
            
            (44,671
            )Net
                cash (used in) provided by financing activities
            
            
            **(44,542**
            **)**
            
            11,842Net
                change in cash
            
            
            **127,640**
            
            
            (53,117
            )Cash
                at beginning of period
            
            
            **462,442**
            
            
            331,793Cash
                at end of period
            
            **$**
            **590,082**
            
            $
            278,676





*See
      accompanying Notes to Condensed Financial Statements.*


6


Diversified
      Product Inspections, Inc.





Notes
      to
      Condensed Financial Statements (Unaudited)





September
      30, 2008





**1.
      Basis of Presentation**





The
      accompanying unaudited condensed financial statements of Diversified Products
      Inspections, Inc. (the “Company”) have been prepared in accordance with
      accounting principles generally accepted in the United States of America
      (“GAAP”) for interim financial information and pursuant to the rules and
      regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they
      do not include all of the information and notes required by accounting
      principles generally accepted in the United States of America for complete
      financial statements. In the opinion of management, all adjustments (consisting
      of normal recurring accruals) considered necessary for a fair presentation
      have
      been included. Operating results for the three and nine month periods ended
      September 30, 2008 are not necessarily indicative of the results that may be
      expected for the year ended December 31, 2008.





The
      balance sheet at December 31, 2007 has been derived from the audited financial
      statements at that date but does not include all of the information and notes
      required by accounting principles generally accepted in the United States of
      America for complete financial statements.





For
      further information, refer to the financial statements and notes thereto
      included in the Company’s annual report on Form 10-KSB for the year ended
      December 31, 2007.





**2.
      Recent Accounting Pronouncements**





During
      September 2006, the Financial Accounting Standards Board (“FASB”)
      issued SFAS No. 157, *Fair
      Value Measurements* ,
      which
      is effective for fiscal years beginning after November 15, 2007, with
      earlier adoption encouraged. SFAS 157 defines fair value, establishes a
      framework for measuring fair value in GAAP, and expands disclosures about fair
      value measurements. In February 2008, the FASB issued FASB Staff Position FAS
      157-2, *Effective
      Date of FASB Statement No. 157* ,
      which
      delayed the effective date of SFAS 157 for all non-financial assets and
      liabilities, except those that are recognized or disclosed at fair value in
      the
      financial statements on a recurring basis, until January 1,
      2009.   The Company adopted SFAS 157 on January 1, 2008, for all
      financial assets and liabilities, but the implementation did not have a
      significant impact on the Company’s financial position or results of
      operations.  The Company has not yet determined the impact the
      implementation of SFAS 157 will have on the Company’s non-financial assets and
      liabilities which are not recognized or disclosed on a recurring
      basis.  However, the Company does not anticipate that the full
      adoption of SFAS 157 will significantly impact its financial
      statements.





During
      February 2007, the FASB issued SFAS No. 159, *The
      Fair Value Option for Financial Assets and Financial Liabilities—Including an
      Amendment of FASB Statement No. 115* ,
      which
      permits entities to choose to measure many financial instruments and certain
      other items at fair value. The objective of SFAS 159 is to improve financial
      reporting by providing entities with the opportunity to mitigate volatility
      in
      reported earnings caused by measuring related assets and liabilities differently
      without having to apply complex hedge accounting provisions. The Company adopted
      SFAS 159 on January 1, 2008, but the implementation of SFAS 159 did not have
      a
      significant impact on the Company's financial position or results of
      operations.


7


Diversified
      Product Inspections, Inc.





Notes
      to
      Condensed Financial Statements (Unaudited) (continued)





**3.**  **Proposed
      Restructuring**





During
      December 2008, the Company intends to merge into a newly formed Delaware
      corporation, Diversified Product Inspections, Inc. (“DPI”), which was recently
      formed exclusively for the purpose of merging with the Company. The merger
      will
      change the state of incorporation for the Company from Florida to Delaware
      through the execution of the Agreement and Plan of Merger (the “Merger
      Agreement”). Under the Merger Agreement, DPI will assume all of the Company’s
      assets and liabilities, including obligations under the Company’s outstanding
      indebtedness and contracts, and the Company will cease to exist as a corporate
      entity.





At
      the
      effective time of the reincorporation, each outstanding share of the Company’s
      common stock, $0.01 par value automatically will be converted into one share
      of
      common stock of DPI, $0.01 par value. Shareholders will not have to
      exchange their existing stock certificates for stock certificates of DPI.





Shareholders
      whose shares of common stock were freely tradable before the reincorporation
      will own shares of DPI that are freely tradable after the reincorporation.
      Similarly, any shareholders holding securities with transfer restrictions before
      the reincorporation will hold shares of DPI that have the same transfer
      restrictions after the reincorporation.




After
      the
      reincorporation, DPI will continue to be a publicly held corporation, with
      its
      common stock trading on the Over-the-Counter Bulletin Board. The trading symbol
      will remain the same. DPI will also file with the SEC and provide to our
      shareholders the same information that we have previously filed and
      provided


8


Diversified
      Product Inspections, Inc.





Notes
      to
      Condensed Financial Statements (Unaudited) (continued)





**4.
      Proposed Settlement**





During
      2006, the Company was named, along with its three largest shareholders, as
      a
      defendant in a lawsuit by certain related investment companies that are also
      shareholders of the Company. The lawsuit alleges, among other things, the
      defendants violated certain securities laws, misrepresented facts and breached
      certain contracts and fiduciary duties.





On
      September 29, 2008, the Company signed a Settlement Agreement and Asset Purchase
      Agreement (the “Agreement”) with the plaintiffs providing for DPI to transfer
      all of its assets, except $250,000 (the “Excluded Amount”), to a Tennessee
      limited liability company (the “Tennessee Company”) which will also assume all
      of the Company’s liabilities, on a future closing date, subject to approval by
      the Company’s shareholders.





The
      Tennessee Company will be owned by three of the Company’s current directors. As
      part of the settlement, the pending litigation against the Company and its
      directors discussed above will be dismissed and the Company’s management will
      cancel 5,983,170 shares of common stock of the Company and sell to the
      plaintiffs 3,000,000 shares of common stock for nominal consideration. Under
      the
      Agreement, the Company will pay the entire $250,000 Excluded Amount to one
      of
      the plaintiffs. Following the closing contemplated by the Agreement, the Company
      will have no assets and no liabilities and will have 14,122,697 shares of common
      stock outstanding in contrast to 20,105,867 outstanding as of the date of this
      10-Q filing. The plaintiffs in the litigation will designate the Company’s new
      officers and directors.





**5.
      Earnings per Share**





Basic
      earnings per share assumes no dilution and is computed by dividing income
      available to common stockholders by the weighted average number of common stock
      outstanding during each period. Diluted earnings per share reflect, in periods
      in which they have a dilutive effect, the effect of common shares issuable
      upon
      the exercise of stock options or warrants, using the treasury stock method
      of
      computing such effects and contingent shares, or conversion of convertible
      debt.





The
      following table sets forth the computation of basic and diluted earnings per
      share for the periods indicated:





**Three months ended**
            
            **Nine months ended****September 30**
            
            **September 30****2008**
            
            **2007**
            
            **2008**
            
            **2007**Basic and
                diluted:Net
                income
            
            **$**
            **92,758**
            
            $
            38,298
            
            **$**
            **80,769**
            
            $
            43,050Average
                shares outstanding
            
            
            **20,105,867**
            
            
            20,162,117
            
            
            **20,105,867**
            
            
            20,173,367Basic
                and diluted earnings per share
            
            **$**
            **0.00**
            
            $
            0.00
            
            **$**
            **0.00**
            
            $
            0.00


9


Item
      2.
      Management’s Discussion and Analysis of Financial Condition and Results of
      Operation





Introduction





This
      Quarterly Report on Form 10-Q for the period ended September 30, 2008, should
      be
      read in conjunction with our unaudited financial statements included as part
      of
      this Form 10-Q Report. This report contains forward-looking statements which
      are
      described and defined below.





General





We
      specialize in conducting investigations and laboratory analysis of a wide
      variety of products to determine the cause and origin of product failures.
      Our
      primary customers consist of national insurance companies that are interested
      in
      pursuing claims to which they have become subrogated. Subrogation is a legal
      principle, which provides that, to the extent an insurer has paid for a loss,
      the insurer receives the policyholder’s right to recover from any third party
      that caused the loss. We have accumulated a large database of known defective
      products that includes photos and other documentation that are used in our
      clients’ investigations. Additionally, we provide for the storage of evidence
      collected during an investigation, until our customer requests that it be
      disposed.





Results
      of Operations





Nine
      Months Ended September 30, 2008, Compared to Nine Months Ended September 30,
      2007





Our
      revenues increased from $1,894,004 for the nine months ended September 30,
      2007
      to $1,930,547 for the nine months ended September 30, 2008, or by 1.9% due
      to
      increases in level II and III inspections over the same period in 2007 offset
      by
      a decrease in use agreement revenue during the same period.




Our
      total
      operating expenses for the nine months ended September 30, 2008, were
      $1,775,599, a decrease of $13,032, or 0.7% compared to the same period in 2007.
      Salary expense increased by $69,438 or 6.7%, primarily due to additional
      personnel added in the second half of 2007. This increase is offset by a
      decrease in general and administrative expenses of $86,843 or 12.4%, mainly
      due
      to a reduction in our reserve for bad debts and lower office and computer supply
      expense.





As
      a
      result of the increased revenue and slightly lower operating expenses, our
      net
      income of $80,769 for the nine months ended September 30, 2008, increased
      compared to our net income of $43,050 for the nine months ended September 30,
      2007.





Financial
      Position





Our
      net
      accounts receivable increased by $15,604 or 5.6%, between December 31, 2007,
      and
      September 30, 2008, primarily due to increased third quarter revenue. Our
      accounts payable and accrued expenses increased by $21,725, or 29.1%, between
      December 31, 2007, and September 30, 2008, primarily due to timing of payments
      on related liabilities. Purchases of equipment totaling $11,783 in 2008 consist
      mainly of computer equipment and an emergency generator. As a result of these
      items combined with our year to date net income, our cash balance has increased
      by $127,640 between December 31, 2007, and September 30, 2008.


10


Liquidity
      and Capital Resources





At
      September 30, 2008, we had $400,000 available under our $400,000 revolving
      line
      of credit. We anticipate that our internal cash flow, supplemented by our
      revolving credit agreement, will be sufficient to fund operations for the next
      12 months. During the current quarter, we entered into a Settlement Agreement
      and Asset Purchase Agreement that, if consummated, will result in the
      distribution of all assets and liabilities of the Company to a separate company
      owned by the Company’s directors. Whether or not the agreement is consummated,
      we are not aware of any material trend, event or capital commitment, which
      would
      potentially adversely affect our liquidity. In the event such a trend develops,
      we believe that we will have sufficient funds available to satisfy working
      capital needs through lines of credit and the funds expected from equity
      sales.





Critical
      Accounting Policies





The
      preparation of financial statements and related disclosures requires management
      to make judgments, assumptions and estimates that affect the amounts in the
      financial statements and accompanying notes. Item 6. Management’s Discussion and
      Analysis or Plan of Operation contained in the Company’s Annual Report on Form
      10-KSB for the year ended December 31, 2007, describes these critical accounting
      policies.





Item
      3.
      Quantitative and Qualitative Disclosures About Market Risk





Not
      applicable.





Item
      4.
      Controls and Procedures.





(a)
      Evaluation of Disclosure Controls and Procedures





As
      of the
      end of the period covered by this report, we conducted an evaluation, under
      the
      supervision and with the participation of our chief executive officer, who
      is
      also the chief financial officer, of our disclosure controls and procedures
      (as
      defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act
      of 1934). Based on this evaluation, our chief executive officer concluded that
      our disclosure controls and procedures are not effective to ensure that
      information required to be disclosed by us in reports that we file or submit
      under the Exchange Act is recorded, processed, summarized and reported within
      the time periods specified in Securities and Exchange Commission rules and
      forms.





The
      Company is currently reviewing its policies and is evaluating its disclosure
      controls and procedures so that it will be able to determine the changes it
      can
      and should make to make such controls more effective.





(b)
      Changes in Internal Controls over Financial Reporting





There
      were no changes in our internal controls over financial reporting since our
      most
      recently completed 10-KSB that have materially affected, or are reasonably
      likely to materially affect, our internal control over financial reporting.


11





Part
      II –
OTHER INFORMATION





Item
      1.
      Legal Proceedings.





During
      2006, the Company was named, along with its three largest shareholders, as
      a
      defendant in a lawsuit by Sofcon, Ltd., EIG Venture Capital, Ltd., and EIG
      Capital Investments, Ltd. (investment companies that are also shareholders
      of
      the Company). The lawsuit alleges, among other things, the defendants violated
      certain securities laws, misrepresented facts and breached certain contracts
      and
      fiduciary duties.





On
      September 29, 2008, the Company signed a Settlement Agreement and Asset Purchase
      Agreement (the “Agreement”) providing for it to transfer all of its assets,
      except $250,000 (the “Excluded Amount”), to a Tennessee limited liability
      company (the “Tennessee Company”) which will assume all of the Company’s
      liabilities. The closing date of the Agreement is expected to be on or about
      December 15, 2008. The closing of the Agreement is conditioned upon, among
      other
      things, the approval of the Agreement by the shareholders of the
      Company.





Under
      the
      Agreement, the Tennessee Company will be owned by the Company’s current
      directors, the pending litigation against the Company and its directors will
      be
      dismissed and the Company’s current management will cancel 5,983,170 shares of
      common stock of the Company and sell to the plaintiffs 3,000,000 shares of
      common stock for a nominal consideration. In addition, the Company will pay
      the
      entire $250,000 Excluded Amount to one of the plaintiffs. Following the closing
      contemplated by the Agreement, the Company will have no assets and no
      liabilities and will have 14,122,697 shares of common stock outstanding in
      contrast to 20,105,867 outstanding as of the date of this 10-Q filing. The
      plaintiffs in the litigation will designate the new officers and directors
      of
      the Company.





Other
      than the settlements described above, and from October 1, 2008, to the date
      of
      filing of this Quarterly Report, there have been no material developments in
      any
      of the matters discussed in Item 3 of the Company’s Annual Report on Form 10-KSB
      for the fiscal year ended December 31, 2007, and no other reportable legal
      proceedings have been commenced by or against the Company.





Item
      1A.
      Risk Factors





Not
      applicable





Item
      2.
      Unregistered Sales of Equity Securities and Use of Proceeds.





None





Item
      3.
      Defaults Upon Senior Securities





None


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





None.





Item
      5.
      Other Information





None





Item
      6.
      Exhibits.





10.1
            
            Settlement
                Agreement and Asset Purchase Agreement dated as of September 29,
                2008
                among Diversified Product Inspections, LLC, the Company, John Van
                Zyll,
                Ann Furlong, Marvin Stacy, Sofcon, Limited, EIG Venture Capital,
                Limited
                and EIG Capital Investments, Limited.31.1
            
            Certification
                of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley
                Act.32.1
            
            Certification
                of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
                adopted
                pursuant to Section 906 of Sarbanes-Oxley
                Act.


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SIGNATURES


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





Diversified
                Product Inspections, Inc.(Registrant)Date:
                November 19, 2008
            /s/
                John Van ZyllJohn
                Van ZyllPresident,
                Chief Executive Officer and Chairman(Principal
                Executive Officer andPrincipal
                Accounting Officer)


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