SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   Form 10-QSB

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

For the quarterly period ended June 30, 2004

[_] 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 small business issuer as
                            specified in its charter)

          Florida                                              65-0832025
----------------------------------                       -----------------------
(State of other jurisdiction of                               (IRS Employer
incorporation or organization)                               Identification No.)

                                  3 Main Street
                               Oak Ridge, TN 37830
                  --------------------------------------------
                    (Address of principal executive offices)

                                 (865) 482-8480
                           ---------------------------
                           (Issuer`s telephone number)

                                 Not applicable
              -----------------------------------------------------
              (Former name, former address, and former fiscal year,
                          if changed since last report)

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

      As of August 13, 2004, there were 14,961,457 shares of common stock, $0.01
par value, issued and outstanding.


<PAGE>

<TABLE>
<CAPTION>

                              INDEX TO FORM 10-QSB
                                                                                     PAGE
PART I         FINANCIAL INFORMATION

<S>            <C>                                                                   <C>
Item 1         Financial Statements
               Condensed Consolidated Balance Sheet as of
               June 30, 2004 (unaudited)                                               3
               Condensed Consolidated Statements of Operations (unaudited) for
               the three and six months ended June 30, 2004 and 2003                   4
               Condensed Consolidated Statements of Cash Flows (unaudited) for
               The three and six months ended June 30, 2004 and 2003                   5
               Notes to Consolidated Financial Statements                              6

Item 2         Management's Discussion and Analysis or Plan of Operation               8

Item 3         Controls and Procedures                                                 9

PART II        OTHER INFORMATION

Item 6         Exhibits and Reports on Form 8-K                                       10

SIGNATURES                                                                            11

</TABLE>

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

      This Form 10-QSB includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements, other than
statements of historical facts, included or incorporated by reference in this
Form 10-QSB 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-QSB 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
<PAGE>

<TABLE>
<CAPTION>

                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

                      Diversified Product Inspections, Inc.

                      Condensed Consolidated Balance Sheets

                                                                              June 30       December 31
                                                                                2004          2003
                                                                             -----------    -----------
                                                                             (Unaudited)
<S>                                                                          <C>            <C>
Assets
Current assets:
   Cash                                                                      $   378,732    $   296,409
   Accounts receivable, net of reserve for doubtful accounts of
     $25,000 in 2004 and $35,000 in 2003                                         196,602        216,093
   Other receivable                                                                   --        100,000
   Current portion of deferred income taxes                                      143,485        143,485
   Prepaid expenses and other current assets                                       1,214          1,341
                                                                             -----------    -----------
 Total current assets                                                            720,033        757,328

Property and equipment:
   Equipment, furniture and fixtures                                             350,898        306,788
   Vehicles                                                                       96,200        128,061
   Leasehold improvements                                                         22,727         22,727
                                                                             -----------    -----------
                                                                                 469,825        457,576
   Less accumulated depreciation and amortization                                267,683        257,231
                                                                             -----------    -----------
Net property and equipment                                                       202,142        200,345

Other assets                                                                       4,400          4,400
Deferred income taxes, less current portion                                      263,797        277,089
                                                                             -----------    -----------
Total assets                                                                 $ 1,190,372    $ 1,239,162
                                                                             ===========    ===========

Liabilities and stockholders' equity
Current liabilities:
   Accounts payable and accrued expenses                                     $   154,240    $   147,963
   Accrued salaries                                                               16,843         14,445
   Deferred revenue                                                               41,667         91,667
   Current portion of notes payable                                                8,405         14,607
   Current portion of capital lease obligation                                     3,812          3,525
                                                                             -----------    -----------
Total current liabilities                                                        224,967        272,207

Notes payable, less current portion                                               25,167         36,598
Capital lease obligation, less current portion                                     4,862          6,842
Convertible debt, net of discount of $5,000                                      295,000        295,000
                                                                             -----------    -----------
Total liabilities                                                                549,996        610,647

Stockholders'equity:
   Common stock, par value $0.01 per share --authorized 50,000,000 shares,
     issued and outstanding 14,961,457 shares
                                                                                 149,615        149,615
   Additional paid-in capital                                                  1,620,328      1,620,328
   Accumulated deficit                                                        (1,129,567)    (1,141,428)
                                                                             -----------    -----------
Total stockholders' equity                                                       640,376        628,515
                                                                             ===========    ===========
Total liabilities and stockholders' equity                                   $ 1,190,372    $ 1,239,162
                                                                             ===========    ===========


                        See accompanying Notes to Condensed Consolidated Financial Statements.

</TABLE>


                                       3
<PAGE>

<TABLE>
<CAPTION>

                      Diversified Product Inspections, Inc.

             Condensed Consolidated Statements of Income (Unaudited)

                                                  Three months ended            Six months ended
                                                        June 30                      June 30
                                                  2004           2003           2004          2003
                                               -----------    -----------    -----------   -----------

<S>                                            <C>            <C>            <C>            <C>
Revenues                                       $   529,564    $   602,139    $ 1,119,815    $ 1,168,869

Operating expenses:
   Salaries                                        263,202        276,449        567,911        539,179
   Depreciation and amortization                    13,897         17,317         30,897         34,936
   General and administrative                      243,528        231,414        483,730        416,797
                                               -----------    -----------    -----------   -----------
 Total operating expenses                          520,627        525,180      1,082,538        990,912
                                               -----------    -----------    -----------   -----------

 Operating income                                    8,937         76,959         37,277        177,957

 Interest expense                                   (6,379)        (7,364)       (12,124)       (17,111)
                                               -----------    -----------    -----------   -----------

Income before income taxes                           2,558         69,595         25,153        160,846

Deferred income tax expense                          1,000             --         13,292             --
                                               -----------    -----------    -----------   -----------

Net income                                     $     1,558    $    69,595    $    11,861    $   160,846
                                               ===========    ===========    ===========    ===========

 Basic and diluted earnings per common share   $      0.00    $      0.00    $      0.00    $      0.01
                                               ===========    ===========    ===========    ===========

                        See accompanying Notes to Condensed Consolidated Financial Statements.

</TABLE>



                                       4
<PAGE>

<TABLE>
<CAPTION>

                      Diversified Product Inspections, Inc.

           Condensed Consolidated Statements of Cash Flows (Unaudited)

                                                                 Six months ended
                                                                     June 30
                                                                2004         2003
                                                              ---------    ---------
<S>                                                           <C>          <C>
Operating activities
Net income                                                    $  11,861    $ 160,846
Adjustments to reconcile net income to net cash provided by
   operating activities:
     Depreciation and amortization                               30,897       34,936
     Deferred tax expense                                        13,292           --
     Loss on sale of vehicles                                       916           --
     Changes in operating assets and liabilities:
       Accounts receivable                                      119,491      (53,600)
       Prepaid expenses and other assets                            127           --
       Accounts payable and accrued expenses                      6,277      (42,521)
       Accrued salaries                                           2,398      (14,741)
       Deferred revenue                                         (50,000)          --
                                                              ---------    ---------
Net cash provided by operating activities                       135,259       84,920

Investing activities
Proceeds from sale of vehicles                                   10,500           --
Purchases of property and equipment                             (44,110)     (60,069)
                                                              ---------    ---------
Net cash used in investing activities                           (33,610)     (60,069)

Financing activities
Payment on shareholder advance                                       --      (12,731)
Net payments on lines of credit                                      --      (49,723)
Principal payments on notes payable and capital
   lease obligation                                             (19,326)      (8,577)
                                                              ---------    ---------
Net cash used in financing activities                           (19,326)     (71,031)
                                                              ---------    ---------

Net increase (decrease) in cash                                  82,323      (46,180)

Cash at beginning of period                                     296,409      115,018
                                                              ---------    ---------
Cash at end of period                                         $ 378,732    $  68,838
                                                              =========    =========

Supplemental disclosure of cash flow information

Cash paid for interest during the period                      $  12,124    $  17,111
                                                              =========    =========

                See accompanying Notes to Condensed Consolidated Financial Statements.

</TABLE>


                                       5
<PAGE>

                      Diversified Product Inspections, Inc.

        Notes to Condensed Consolidated Financial Statements (Unaudited)

1.  Basis of Presentation

The  accompanying  unaudited  condensed  consolidated  financial  statements  of
Diversified  Product  Inspections,  Inc. (the  "Company")  have been prepared in
accordance with accounting principles generally accepted in the United States of
America  for  interim  financial  information  and  pursuant  to the  rules  and
regulations of the Securities and Exchange Commission.  Accordingly, they do not
include all of the information and footnotes  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  six-month period ended June 30,
2004 are not necessarily  indicative of the results that may be expected for the
year ended December 31, 2004.

The  balance  sheet at  December  31,  2003 has been  derived  from the  audited
financial  statements  at that date but does not include all of the  information
and footnotes required by accounting principles generally accepted in the United
States of America for complete financial statements.

For further  information,  refer to the  consolidated  financial  statements and
footnotes thereto included in the Company's annual report on Form 10-KSB for the
year ended December 31, 2003.

2.    Commitments and Contingencies

The  Company  currently  leases  its  office and  warehouse  under an  agreement
classified as an operating lease.  Under the terms of the lease  agreement,  the
Company is obligated to purchase the office and warehouse for  $1,607,640 if the
Company receives $3,000,000 in proceeds from a private placement offering.  This
purchase obligation expires on December 31, 2004.

3.    Income Tax Provision

No provision for income taxes was required for the three- and  six-months  ended
June 30, 2003 due to the use of net operating loss  carryforwards  for which the
benefit had not previously been recorded.

4.    Employee Stock Options

The Company  accounts for its stock options under the intrinsic  value method in
accordance with Accounting Principles Board Opinion No. 25, Accounting for Stock
Issued to  Employees,  ("APB 25") and related  interpretations.  The Company has
adopted the  disclosure-only  provisions of the Financial  Accounting  Standards
Board ("FASB") Statement No. 123, Accounting for Stock-Based  Compensation ("FAS
123")  as  amended  by  FASB  Statement  No.  148,  Accounting  for  Stock-Based
Compensation - Transition and Disclosure ("FAS 148").  Under APB 25, because the
exercise price of the Company's  employee  stock  options,  which were issued in
2002,  is equal to or greater than the market price of the  underlying  stock on
the grant date, no compensation expense is generally recognized.


                                       6
<PAGE>

                      Diversified Product Inspections, Inc.

  Notes to Condensed Consolidated Financial Statements (continued) (Unaudited)

4.       Employee Stock Options (continued)

Pro forma  information  regarding  net  income,  as  presented  below,  has been
determined as if the Company had accounted for its employee  stock options under
the fair value method of FAS 123.
<TABLE>
<CAPTION>

                                       Three months ended            Six months ended
                                             June 30                      June 30
                                        2004          2003            2004           2003
                                    -----------    -----------   -----------    -----------
Basic:
<S>                                 <C>            <C>           <C>            <C>
  Net income, as reported           $     1,558    $    69,595   $    11,861    $   160,846
  Employee compensation, net of tax       6,465          6,465        12,931         12,931
                                    -----------    -----------   -----------    -----------
  Total                             $    (4,907)   $    63,130   $    (1,070)   $   147,915
                                    ===========    ===========   ===========    ===========
Earnings per share:
  Basic, as reported                $      0.00    $      0.00   $      0.00    $      0.01
                                    ===========    ===========   ===========    ===========
  Diluted, as reported              $      0.00    $      0.00   $      0.00    $      0.01
                                    ===========    ===========   ===========    ===========
  Basic, pro forma                  $      0.00    $      0.00   $      0.00    $      0.01
                                    ===========    ===========   ===========    ===========
  Diluted, pro forma                $      0.00    $      0.00   $      0.00    $      0.01
                                    ===========    ===========   ===========    ===========
</TABLE>

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:

<TABLE>
<CAPTION>

                                                  Three months ended            Six months ended
                                                        June 30                     June 30
                                                  2004          2003          2004          2003
                                               -----------   -----------   -----------   -----------
Basic:
<S>                                            <C>           <C>           <C>           <C>
   Net income                                  $     1,558   $    69,595   $    11,861   $   160,846
   Average shares outstanding                   14,961,457    14,961,457    14,961,457    14,961,457
                                               -----------   -----------   -----------   -----------
   Basic earnings per share                    $      0.00   $      0.00   $      0.00   $      0.01
                                               ===========   ===========   ===========   ===========
Diluted:
   Net income                                  $     1,558   $    69,595   $    11,861   $   160,846
   Add interest on convertible debt                  2,700         1,500         2,700         3,000
                                               -----------   -----------   -----------   -----------
   Total                                       $     4,258   $    71,095   $    14,561   $   163,846
                                               ===========   ===========   ===========   ===========

   Average shares outstanding                   14,961,457    14,961,457    14,961,457    14,961,457
   Effect of dilutive stock options - based
     on treasury stock method                    2,770,253       133,333     2,770,253       133,333
   Assumed conversion of 6% convertible debt     1,992,022       191,358     1,992,022       191,358
                                               -----------   -----------   -----------   -----------
   Total                                        19,723,732    15,286,148    19,723,732    15,286,148
                                               ===========   ===========   ===========   ===========

   Diluted earnings per share                  $      0.00   $      0.00   $      0.00   $      0.01
                                               ===========   ===========   ===========   ===========
</TABLE>


                                       7
<PAGE>

Item 2. Management`s Discussion and Analysis or Plan of Operation.

Introduction

This  Quarterly  Report on Form 10-QSB for the period ended June 30, 2004 should
be read in conjunction with our unaudited financial  statements included as part
of this Form 10-QSB  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

Six Months Ended June 30, 2004 Compared to Six Months Ended June 30, 2003

Our revenues decreased from $1,168,869 for the six months ended June 30, 2003 to
$1,119,815  for the six months ended June 30, 2004,  or by  approximately  4.2%,
primarily  due  to  insurers  having  less  subrogated  claims  as a  result  of
homeowners  filing fewer  insurance  claims due to fears of increased  insurance
rates or policy  cancellation.  We have offset this decrease somewhat during the
periods  with our use  agreement  revenues.  Under the terms of our ten-year use
agreement,  the user is allowed exclusive use of certain of our research data on
product  failure  or  failure  patterns  and  quarterly  updates of such data in
exchange  for an annual fee of  $100,000.  Additionally,  we are  expanding  our
customer  base to  include  smaller  and  newer  insurance  companies,  which we
anticipate will increase comparative revenues in the third and fourth quarters.

Our  total  operating  expenses  for the  six-months  ended  June 30,  2004 were
$1,082,538,  an increase of $91,926,  or approximately 9.3% compared to the same
period in 2003.  Salary  expense  increased by $28,372,  or  approximately  5.3%
primarily  due to a greater  number of employees  during the first half of 2004.
General and administrative  expenses increased by $66,933 or approximately 16.1%
primarily  as a result of an increase in  expenses  associated  with our outside
contractors  and  engineers.  During the second  quarter of 2004 we reduced  our
personnel to a level more appropriate for current revenues.


                                       8
<PAGE>

As a result of the  reduction  in our  revenues  and  increase in our  operating
expenses,  our net income  decreased from $160,846 for the six months ended June
30, 2003 to $11,861 for the six months ended June 30, 2004, or by  approximately
92.6%.

Financial Position

Our net accounts receivable decreased by $19,491, or approximately 9.0%, between
December  31, 2003 and June 30, 2004,  primarily  as a result of our  successful
efforts in collecting past due amounts.  Additionally,  during the first quarter
of 2004 we collected $100,000 in other receivables related to our use agreement.
During the six months ended June 30, 2004 we purchased  additional  computer and
other equipment with a total cost of  approximately  $44,000.  As expected,  our
deferred  revenues,  which is all  related to our use  agreement,  decreased  by
$50,000 during the first six months of 2004 as that revenue was recognized. As a
result of our net income and related positive cash flows for the period our cash
has increased and we have continued our  successful  efforts to reduce our notes
payable and capital leases balances. Accordingly, our cash balance has increased
by approximately $80,000 and our notes payable and capital leases have decreased
by approximately $19,000 since December 31, 2003.

Liquidity and Capital Resources

As  previously  discussed,  cash flow  results for the six months ended June 30,
2004  were  sufficient  to  fund  operating  costs  and to  reduce  our  current
liabilities.  We  anticipate  that our internal  cash flow will be sufficient to
fund operations for the next 12 months.

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  consolidated  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, 2003
describes these critical accounting policies.

Item 3.  Controls and Procedures.

DISCLOSURE CONTROLS AND PROCEDURES


                                       9
<PAGE>

The Company's Chief Executive  Officer is also its Chief Accounting  Officer and
Chief  Financial  Officer.  He is primarily  responsible for the accuracy of the
financial information that is presented in this Quarterly Report on Form 10-QSB.
He has,  within 90 days of the filing date of this Quarterly  Report,  evaluated
the Company's disclosure controls and procedures, as defined in the rules of the
SEC, and has  determined  that such controls and  procedures  were  effective in
ensuring that material  information relating to the Company and its consolidated
subsidiaries  was made known to him during the period  covered by this Quarterly
Report.

INTERNAL CONTROLS

To meet his responsibility for financial reporting,  the CEO/CFO has established
internal  controls  and  procedures  which he believes  are  adequate to provide
reasonable assurance that the Company's assets are protected from loss.

There were no significant changes in the Company's internal controls or in other
factors that could significantly affect internal controls subsequent to the date
of the CEO/CFO's most recent evaluation.

                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

The Company knows of no legal proceedings to which it is a party or to which any
of its property is the subject which are pending,  threatened or contemplated or
any unsatisfied judgments against the Company.

Item 2. Changes in Securities.

No shares of the Company`s  common stock or other equity  securities were issued
by the Company during the three month period ended June 30, 2004.

Item 3. Defaults in Senior Securities

        None

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

        None.

Item 5. Other Information

        None

Item 6. Exhibits and Reports on Form 8-K

(a)  Exhibits


                                       10
<PAGE>

     31 Certification of Chief Financial Officer pursuant to Section 302 of
Sarbanes-Oxley Act.

      32 Certification of Chief Executive Officer pursuant to 18 U.S.C.  Section
1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act.

      (b) The Company  did not file any  Current  Reports on Form 8-K during the
quarter ended June 30, 2004.


                                   SIGNATURES

      In accordance  with the  requirements  of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                Diversified Product Inspections, Inc.
                                         (Registrant)


Date: August 13, 2004           /s/ John Van Zyll
                                ----------------------------------------
                                John Van Zyll
                                President, Chief Executive Officer and Chairman
                                (Principal Executive Officer and
                                Principal Accounting Officer)


                                       11