UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 WASHINGTON,
D.C. 20549
 
 FORM
10-Q
 
 ý
              QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
 SECURITIES
EXCHANGE ACT OF 1934
 
 For the
quarterly period ended March 31, 2009
 
 OR
 
 o
              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)
 
 Delaware
              
              59-3087128(State
      or other jurisdiction of
              
              (I.R.S.
      Employerincorporation
      or organization)
              
              Identification
      No.)c/o
      Williams, Williams, Rattner & Plunkett, PC380
      North Old Woodward Ave.
                Suite
      300
                Birmingham,
      Michigan
              
              48009(Address
      of principal executive offices)
              
              (Zip
      Code)
 
 (248)
530-0725
 (Registrant’s
telephone number, including area code)
 
 1059
East Tri-County Blvd., Oliver Springs, TN 37840/December 31
 (Former
name, former address and former fiscal year, if changed since last
report)
 
 Indicate
by check mark whether the registrant (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  ý
              No  o
 
 Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files).
 Yes  o
              No  o
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting
company.  See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
 
 Large
      accelerated filer o
              Accelerated
      filer  oNon-accelerated
      filer  o  (Do
      not check if a smaller reporting company)
              Smaller
      reporting company  ý
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
 Yes  ý
              No  o
 
 Indicate
the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date.
 
 Class
              
              Outstanding
      at May 7, 2009Common
      Stock, $0.01 par value per share
              
              13,645,990
      shares


INDEX TO
FORM 10-Q




PAGEPART
      I FINANCIAL INFORMATIONItem
      1 Financial StatementsCondensed
      Balance Sheets as of March 31, 2009 (Unaudited) and December 31,
      2008
            
            
            3Condensed
      Statements of Operations (Unaudited) for the three months ended March 31,
      2009 and 2008
            
            
            4Condensed
      Statements of Stockholders’ Equity for the year ended December 31, 2008
      and the three months ended March 31, 2009 (Unaudited)
            
            
            5Condensed
      Statements of Cash Flows (Unaudited) for the three months ended March 31,
      2009 and 2008
            
            
            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
      4T Controls and Procedures
            
            
            11PART
      II OTHER INFORMATION
            
            
            12SIGNATURES
            
            
            14










Part I –
FINANCIAL INFORMATION




Item 1.
Financial Statements.





Diversified
Product Inspections, Inc.





Condensed
Balance Sheets





March
      31
            
            
            December
      312009
            
            
            2008(Unaudited)AssetsCash
            
            $
            493,011
            
            
            $
            505,812Accounts
      receivable, net of reserve for doubtful accounts of $30,000 in 2009 and
      2008
            
            
            293,843
            
            
            
            225,943Note
      receivable
            
            
            74,885
            
            
            
            74,885Prepaid
      expenses and other assets
            
            
            21,615
            
            
            
            32,615Property
      and equipment:Land
            
            
            96,250
            
            
            
            96,250Building
      and building improvements
            
            
            757,645
            
            
            
            757,645Equipment,
      furniture and fixtures
            
            
            361,360
            
            
            
            359,940Vehicles
            
            
            132,949
            
            
            
            132,9491,348,204
            
            
            
            1,346,784Less
      accumulated depreciation and amortization
            
            
            446,460
            
            
            
            430,437Net
      property and equipment
            
            
            901,744
            
            
            
            916,347Total
      assets
            
            $
            1,785,098
            
            
            $
            1,755,602


Liabilities
      and stockholders’ equityAccounts
      payable and accrued expenses
            
            $
            180,771
            
            
            $
            60,026Accrued
      salaries
            
            
            37,751
            
            
            
            27,631Accrued
      settlement of lawsuit
            
            
            230,000
            
            
            
            250,000Deferred
      revenues
            
            
            125,000
            
            
            
            130,000Notes
      payable
            
            
            701,426
            
            
            
            715,237Total
      liabilities
            
            
            1,274,948
            
            
            
            1,182,894Stockholders’
      equity
            
            
            510,150
            
            
            
            572,708Total
      liabilities and stockholders’ equity
            
            $
            1,785,098
            
            
            $
            1,755,602




See
accompanying Notes to Condensed Financial Statements.




3




Diversified
Product Inspections, Inc.





Condensed
Statements of Operations (Unaudited)





Three
      months endedMarch
      312009
              
              
              2008Revenues
              
              $
              676,870
              
              
              $
              567,612Operating
      expenses:Salaries
              
              
              380,593
              
              
              
              352,465Depreciation
      and amortization
              
              
              16,023
              
              
              
              20,143General
      and administrative
              
              
              332,752
              
              
              
              206,610Total
      operating expenses
              
              
              729,368
              
              
              
              579,218Operating
      loss
              
              
              (52,498
              )
              
              
              (11,606
              )Other
      (expense) incomeInterest
      expense
              
              
              (10,060
              )
              
              
              (11,944
              )Rent
      income
              
              
              –
              
              
              
              7,500Net
      other expense
              
              
              (10,060
              )
              
              
              (4,444
              )Loss
      before income taxes
              
              
              (62,558
              )
              
              
              (16,050
              )Deferred
      income tax benefit
              
              
              –
              
              
              
              6,285Net
      loss
              
              $
              (62,558
              )
              
              $
              (9,765
              )Basic
      and diluted loss per common share
              
              $
              (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’
              EquityBalance
      at January 1, 2008
            
            
            20,105,867
            
            
            $
            201,058
            
            
            $
            1,998,586
            
            
            $
            (1,146,126
            )
            
            $
            1,053,518Net
      loss for 2008
            
            
            –
            
            
            
            –
            
            
            
            –
            
            
            
            (480,810
            )
            
            
            (480,810
            )Balance
      at December 31, 2008
            
            
            20,105,867
            
            
            
            201,058
            
            
            
            1,998,586
            
            
            
            (1,626,936
            )
            
            
            572,708Net
      loss for three months ended March 31, 2009
            
            
            –
            
            
            
            –
            
            
            
            –
            
            
            
            (62,558
            )
            
            
            (62,558
            )Balance
      at March 31, 2009
            
            
            20,105,867
            
            
            $
            201,058
            
            
            $
            1,998,586
            
            
            $
            (1,689,494
            )
            
            $
            510,150




See
accompanying Notes to Condensed Financial Statements.





5





Diversified
Product Inspections, Inc.





Condensed
Statements of Cash Flows (Unaudited)


Three
      months ended
              March
      312009
            
            
            2008Operating
      activitiesNet
      loss
            
            $
            (62,558
            )
            
            $
            (9,765
            )Adjustments
      to reconcile loss to net cash provided by operating
      activities:Depreciation
      and amortization
            
            
            16,023
            
            
            
            20,143Deferred
      income tax benefit
            
            
            –
            
            
            
            (6,285
            )Provision
      for bad debts
            
            
            –
            
            
            
            (20,000
            )Changes
      in operating assets and liabilities:Accounts
      receivable
            
            
            (67,900
            )
            
            
            104,365Prepaid
      expenses and other assets
            
            
            11,000
            
            
            
            (23,504
            )Accounts
      payable and accrued expenses
            
            
            120,745
            
            
            
            (28,149
            )Accrued
      salaries
            
            
            10,120
            
            
            
            5,772Accrual
      for settlement of lawsuit
            
            
            (20,000
            )
            
            
            –Deferred
      revenues
            
            
            (5,000
            )
            
            
            (10,000
            )Net
      cash provided by operating activities
            
            
            2,430
            
            
            
            32,577Investing
      activitiesPurchases
      of equipment
            
            
            (1,420
            )
            
            
            (10,478
            )Financing
      activitiesPrincipal
      payments on notes payable and capital lease obligation
            
            
            (13,811
            )
            
            
            (19,144
            )Net
      change in cash
            
            
            (12,801
            )
            
            
            2,955Cash
      at beginning of period
            
            
            505,812
            
            
            
            462,442Cash
      at end of period
            
            $
            493,011
            
            
            $
            465,397




See
accompanying Notes to Condensed Financial Statements.





6




Diversified
Product Inspections, Inc.





Notes to
Condensed Financial Statements (Unaudited)





March 31,
2009




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.   Accordingly, they do not include all of the
information and notes required by GAAP 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 month period ended
March 31, 2009 are not necessarily indicative of the results that may be
expected for the year ended December 31, 2009.





The
balance sheet at December 31, 2008 has been derived from the audited financial
statements at that date but does not include all of the information and notes
required by GAAP 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-K for the year ended December
31, 2008.





7





Diversified
Product Inspections, Inc.





Notes to
Condensed Financial Statements (Unaudited) (continued)




2.
Going Concern





The
accompanying financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business. As described in Note 5, the Company has
disposed of its operating business. The Company will continue to incur costs
that are necessary for it to remain an active public company. These ongoing
costs are expected to be funded by a related party, and the resultant
obligations will accrue interest until repaid.





The
Company’s primary plan and objective going forward is to seek out and pursue a
transaction with a business enterprise that might have a desire to take
advantage of the Company’s status as a public corporation. There is no assurance
that the Company will acquire a favorable business opportunity through such a
transaction. In addition, even if the Company is involved in such a business
opportunity, there is no assurance that it will generate revenues or profits, or
that the market price of the Company’s common stock will be increased
thereby.





The
financial statements do not include any adjustments relating to the
recoverability of assets and the classification of liabilities that might be
necessary should the Company be unable to continue as a going
concern.





3.
Income Taxes





The
Company has not recorded any income tax benefit for the three months ended March
31, 2009. The Company has recorded an income tax valuation allowance equal to
the benefit of income tax carryforward because of the uncertain nature of
realization.





4. Loss
per Share





Basic
loss 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 loss per share reflects, 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 endedMarch
      312009
              
              
              2008Basic and diluted:Net loss
              
              $
              (62,558
              )
              
              $
              (9,765
              )Average shares outstanding
              
              
              20,105,867
              
              
              
              20,105,867Basic and diluted loss per
      share
              
              $
              (0.00
              )
              
              $
              (0.00
              )






8




Diversified
Product Inspections, Inc.
 
 Notes to
Condensed Financial Statements (Unaudited) (continued)





5. Settlement
Agreement and Discontinued Operations
 
 During
2006, the Company was named, along with its three executive officers, as a
defendant in a lawsuit by certain related investment companies that are also
stockholders of the Company. The lawsuit alleged, among other things, the
defendants violated certain securities laws, misrepresented facts and breached
certain contracts and fiduciary duties.




On April
30, 2009, the Company closed on its Settlement Agreement and Asset Purchase
Agreement (the “Agreement”).  In accordance with the Agreement, the
Company discontinued operations and transferred all of its assets, except
$250,000 (the “Excluded Amount”), to a Tennessee limited liability company (the
“Tennessee Company”) which also assumed all of the Company’s
liabilities.  All officers and directors resigned as of April 30th, and a
representative of the plaintiffs became the sole officer and
director.





The
Tennessee Company is owned by the three former executive officers. As part of
the settlement, the pending litigation against the Company and its executive
officers discussed above was dismissed and the Company’s management canceled
6,459,877 shares of common stock of the Company and sold to the plaintiffs
3,000,000 shares of common stock for nominal consideration. Under the Agreement,
the Company paid at closing the entire remaining Excluded Amount of $230,000
($20,000 was disbursed during the quarter) to one of the
plaintiffs.  Accordingly, the Company has a liability of $230,000
related to this matter recorded as of March 31, 2009





Following
the closing on April 30, 2009, the Company had no assets and no liabilities and
had 13,645,990 shares of common stock outstanding in contrast to 20,105,867
outstanding as of March 31, 2009.





9





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





Overview





This
Quarterly Report on Form 10-Q for the period ended March 31, 2009 should be read
in conjunction with our unaudited financial statements included as part of this
Form 10-Q Report.





As more
fully described in Note 5 of our financial statements above, on April 30, 2009,
we ceased operations and closed on our Settlement Agreement and Asset Purchase
Agreement pursuant to which $230,000 was paid to a plaintiff to settle material
litigation,   and our remaining assets and liability were
transferred to a separate entity owned by the previous executive officers of the
Company.





As a
shell corporation controlled by the former plaintiffs in the now settled
litigation, the current officer and director expects to make one or more
acquisitions in order to seek to provide shareholdervalue. He may or may not
have an interest in any future companies acquired by the Company. There can be
no assurances any acquisitions will be consummated or, if they are, successful.
Regardless, any acquisitions will dilute existing shareholders.





The
following paragraphs relate to our prior business and have no relevance to our
current or future operations.





Results of Discontinued
Operations





Three
Months Ended March 31, 2009, Compared to Three Months Ended March 31,
2008





Our
revenues increased from $567,612 for the three months ended March 31, 2008 to
$676,870 for the three months ended March 31, 2009, or by 19.5% due to our
performing more engineering investigations over the same period in 2008,
continuing our trend of the past two quarters.





Our total
operating expenses for the three months ended March 31, 2009, were $729,368, a
increase of $150,150, or 25.9% compared to the same period in
2008.  Salary expense increased $28,128 or 8.0%, primarily due to
additional employees needed to support additional investigations. Our general
and administrative expenses increased $126,142 or 61.1%, mainly due to
professional fees related to the Settlement Agreement and Asset Purchase
Agreement previously discussed.





Net loss
for the three months ended March 31, 2009 was $62,558 or less than $0.01 per
share compared to a net loss of $9,765 or less than $0.01 per share for the
three months ended March 31, 2008, mainly reflecting our increased professional
fees offset somewhat by our increase in revenues.




10




Liquidity and Capital
Resources





As more
fully described in Note 5 of our financial statements above, on April 30, 2009,
we closed on our Settlement Agreement and Asset Purchase Agreement (the
“Agreement”) pursuant to which all assets and liabilities of the Company were
distributed to a separate company owned by the Company’s directors leaving the
Company as a public shell.





The
Company’s future expected sources of working capital  will be loans or
equity investments from our  majority
shareholders.  These  expenses will primarily consist of
legal and accounting and auditing expenses  incurred by the Company to
make all necessary filings with the Securities and Exchange Commission and
related public company expenses as well as any necessary due diligence expenses
related to future acquisitions.




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 7.  Management’s
Discussion and Analysis or Plan of Operation contained in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2008, describes these
critical accounting policies.Going forward, future
accounting estimates will depend upon the nature of any acquisitions we
make.





Item
3. Quantitative and Qualitative Disclosures About Market Risk





Not
applicable to smaller reporting companies.





Item
4. Controls and Procedures.





Not
applicable to smaller reporting companies.





Item
4T. 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 then principal 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. Presently with the lack of operations, the current principal
executive officer believes that the disclosure controls and procedures in place
are effective.





(b)
Changes in Internal Controls over Financial Reporting





During
the three months ended March 31, 2009, the Company made no changes in the
control procedures related to financial reporting.




11




Part II –
OTHER INFORMATION





Item 1.
Legal Proceedings.





The
Company was sued during 2008 in Alabama state court by two individuals alleging
multiple theories of liability pertaining to a faulty clothes
dryer.  On March 30, 2009, the Company settled the lawsuit for
$20,000, which sum was credited against the $250,000 the Company was required to
pay to settle the 2006 lawsuit discussed below.





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 alleged, 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 the Agreement providing for it to
transfer all of its assets, except $250,000, to a Tennessee corporation (the
“Tennessee Corporation”) which will assume all liabilities. The Agreement was
finalized on April 30, 2009. See Note 5 of the financial statements for further
information on the Agreement.





Item 1A.
Risk Factors





Not
applicable to smaller reporting companies.





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





None





Item 3.
Defaults Upon Senior Securities





None





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





On March
26, 2009, a special meeting of the shareholders was held to approve the sale of
substantially all of the assets of the Company to its then current management,
which would then operate the business as a private company. For further details
on the matter, please see the Schedule 14A issued on February 13,
2009.





The
matter was passed with 15,856,886 votes for the matter and 241,916 votes against
the matter.





Item 5.
Other Information





None





12





Item 6.
Exhibits.




Certain
material agreements contain representations and warranties, which are qualified
by the following factors: (1) the representations and warranties contained in
any agreements filed with this Report were made for the purposes of allocating
contractual risk between the parties and not as a means of establishing facts;
(2) the agreement may have different standards of materiality than standards of
materiality under applicable securities laws; (3) the representations are
qualified by a confidential disclosure schedule that contains some nonpublic
information that is not material under applicable securities laws; (4) facts may
have changed since the date of the agreements; and (5) only parties to the
agreements and specified third-party beneficiaries have a right to enforce the
agreements.





No.
            
            Description
            
            Incorporated
      by Reference10.1
            
            Settlement
      and Asset Purchase Agreement dated September 30, 2009
            
            Contained
      as Annex A to the Schedule 14A filed on February 13,
  200910.2
            
            Bill
      of Sale
            
            Contained
      as Exhibit A to Annex A to the Schedule 14A filed on February 13,
      200910.3
            
            First
      Amendment to the Settlement and Asset Purchase Agreement dated September
      30, 2009
            
            Contained
      as Annex B to the Schedule 14A filed on February 13,
  200910.4
            
            Second
      Amendment to the Settlement and Asset Purchase Agreement dated September
      30, 2009
            
            Contained
      as Annex C to the Schedule 14A filed on February 13,
  200931.1
            
            Certification
      of Principal Executive and Financial Officer pursuant (Section
      302)
            
            Furnished
      with this Report32.1
            
            Certification
      of Principal Executive and Financial Officer (Section 906)
            
            Filed
      with this Report99.1
            
            Mortgage
      Release
            
            Filed
      with this Report99.2
            
            Mortgage
      Release
            
            Filed
      with this Report99.3
            
            Acknowledgement
      of Payment of Line of Credit and Note
            
            Filed
      with this Report





13




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, thereunto
duly authorized.




Diversified
      Product Inspections, Inc.(Registrant)Date:
      May 15, 2009
              
              /s/
      Jan TelanderJan
      TelanderPresident,
      Chief Executive Officer(Principal
      Executive Officer andPrincipal
      Accounting Officer)
  14