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 March 31, 2008





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 small business issuer 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





(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 o





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).  Yes o No x





As
      of May
      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  o  No x





INDEX
      TO
      FORM 10-QSB




PAGEPART
                  I
              FINANCIAL
                  INFORMATIONItem
                  1
              Financial
                  StatementsCondensed
                  Balance Sheets as of March 31, 2008 (Unaudited) and December 31,
                  2007
              3Condensed
                  Statements of Operations (Unaudited) for the three months ended
                  March 31,
                  2008 and 2007
              4Condensed
                  Statements of Stockholders’ Equity for the year ended December 31, 2007
                  and the three months ended March 31, 2008
              5Condensed
                  Statements of Cash Flows (Unaudited) for the three months ended
                  March 31,
                  2008 and 2007
              6Notes
                  to Condensed Financial Statements (Unaudited)
              7Item
                  2
              Management's
                  Discussion and Analysis or Plan of Operation
              9Item
                  3
              Controls
                  and Procedures
              10PART
                  II
              OTHER
                  INFORMATION
              11SIGNATURES
              12





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. 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


Part
      I – FINANCIAL INFORMATION




Item
      1.
      Financial Statements.





Diversified
      Product Inspections, Inc.





Condensed
      Balance Sheets





**March 31**
            
            **December 31****2008**
            
            **2007****(Unaudited)****Assets**Current
                assets:Cash
            
            **$**
            **465,397**
            
            $
            462,442Accounts
                receivable, net of reserve for doubtful accounts of $30,000 in 2008
                and
                $50,000 in 2007
            
            
            **192,117**
            
            
            276,482Current
                portion of deferred income taxes
            
            
            **68,647**
            
            
            79,343Prepaid
                expenses and other current assets
            
            
            **42,159**
            
            
            18,655Total
                current assets
            
            
            **768,320**
            
            
            836,922Property
                and equipment:Land
            
            
            **96,250**
            
            
            96,250Building
                and building improvements
            
            
            **735,318**
            
            
            735,318Equipment,
                furniture and fixtures
            
            
            **412,536**
            
            
            402,058Vehicles
            
            
            **132,949**
            
            
            132,949**1,377,053**
            
            
            1,366,575Less
                accumulated depreciation and amortization
            
            
            **429,843**
            
            
            409,700Net
                property and equipment
            
            
            **947,210**
            
            
            956,875Other
                assets
            
            
            **5,000**
            
            
            5,000Deferred
                income taxes, less current portion
            
            
            **306,648**
            
            
            289,667Total
                assets
            
            **$**
            **2,027,178**
            
            $
            2,088,464


**Liabilities
                and stockholders’ equity**Current
                liabilities:Accounts
                payable and accrued expenses
            
            **$**
            **46,533**
            
            $
            74,682Accrued
                salaries
            
            
            **34,555**
            
            
            28,783Accrued
                income taxes
            
            
            **3,741**
            
            
            3,741Accrued
                settlement of lawsuit
            
            
            **30,000**
            
            
            30,000Deferred
                revenues
            
            
            **117,000**
            
            
            127,000Capital
                lease obligation
            
            
            **799**
            
            
            1,933Current
                portion of long-term debt
            
            
            **47,414**
            
            
            52,626Total
                current liabilities
            
            
            **280,042**
            
            
            318,765Long-term
                debt, less current portion
            
            
            **703,383**
            
            
            716,181Total
                liabilities
            
            
            **983,425**
            
            
            1,034,946Stockholders’
                equity
            
            
            **1,043,753**
            
            
            1,053,518Total
                liabilities and stockholders’ equity
            
            **$**
            **2,027,178**
            
            $
            2,088,464




*See
      accompanying Notes to Condensed Financial Statements.*


3


Diversified
      Product Inspections, Inc.





Condensed
      Statements of Operations (Unaudited)





**Three months ended****March 31****2008**
            
            **2007**Revenues
            
            **$**
            **567,612**
            
            $
            583,365Operating
                expenses:Salaries
            
            
            **352,465**
            
            
            317,268Depreciation
                and amortization
            
            
            **20,143**
            
            
            18,480General
                and administrative
            
            
            **206,610**
            
            
            228,711Total
                operating expenses
            
            
            **579,218**
            
            
            564,459Operating
                (loss) income
            
            
            **(11,606**
            **)**
            
            18,906Other
                (expense) incomeInterest
                expense
            
            
            **(11,944**
            **)**
            
            (12,070
            )Rent
                income
            
            
            **7,500**
            
            
            –Net
                other expense
            
            
            **(4,444**
            **)**
            
            (12,070
            )(Loss)
                income before income taxes
            
            
            **(16,050**
            **)**
            
            6,836Deferred
                income tax benefit (expense)
            
            
            **6,285**
            
            
            (2,893
            )Net
                (loss) income
            
            **$**
            **(9,765**
            **)**
            $
            3,943Basic
                and diluted (loss) earnings 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’**
              **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
                loss for three months ended March 31, 2008
            
            
            **–**
            
            
            **–**
            
            
            **–**
            
            
            **(9,765**
            **)**
            
            **(9,765**
            **)**Balance
                at March 31, 2008
            
            
            **20,105,867**
            
            **$**
            **201,058**
            
            **$**
            **1,998,586**
            
            **$**
            **(1,155,891**
            **)**
            **$**
            **1,043,753**





*See
      accompanying Notes to Condensed Financial Statements.*


5





Diversified
      Product Inspections, Inc.





Condensed
      Statements of Cash Flows (Unaudited)





**Three months ended**
              **March 31****2008**
            
            **2007****Operating
                activities**Net
                (loss) income
            
            **$**
            **(9,765**
            **)**
            $
            3,943Adjustments
                to reconcile net (loss) income to net cash provided by operating
                activities:Depreciation
                and amortization
            
            
            **20,143**
            
            
            18,480Deferred
                income tax (benefit) expense
            
            
            **(6,285**
            **)**
            
            2,893Provision
                for bad debts
            
            
            **(20,000**
            **)**
            
            –Changes
                in operating assets and liabilities:Accounts
                receivable
            
            
            **104,365**
            
            
            (9,214
            )Prepaid
                expenses and other assets
            
            
            **(23,504**
            **)**
            
            1,457Accounts
                payable and accrued expenses
            
            
            **(28,149**
            **)**
            
            (23,138
            )Accrued
                salaries
            
            
            **5,772**
            
            
            11,303Deferred
                revenues
            
            
            **(10,000**
            **)**
            
            (3,333
            )Net
                cash provided by operating activities
            
            
            **32,577**
            
            
            2,391**Investing
                activities**Purchases
                of equipment
            
            
            **(10,478**
            **)**
            
            (10,703
            )**Financing
                activities**Principal
                payments on long-term debt and capital lease obligation
            
            
            **(19,144**
            **)**
            
            (11,258
            )Net
                change in cash
            
            
            **2,955**
            
            
            (19,570
            )Cash
                at beginning of period
            
            
            **462,442**
            
            
            331,793Cash
                at end of period
            
            **$**
            **465,397**
            
            $
            312,223





*See
      accompanying Notes to Condensed Financial Statements.*


6


Diversified
      Product Inspections, Inc.





Notes
      to
      Condensed Financial Statements (Unaudited)





March
      31,
      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. 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 month period ended March 31, 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
      footnotes 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 footnotes 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** **.**  **Contingencies**





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. A reasonable estimate of any possible
      future liability related to this lawsuit is not presently determinable, and
      accordingly, the Company has not recorded a liability related to this
      matter.





**4.
      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****March 31****2008**
            
            **2007**Basic
                and diluted:Net
                (loss) income
            
            **$**
            **(9,765**
            **)**
            $
            3,943Average
                shares outstanding
            
            
            **20,105,867**
            
            
            20,180,867Basic
                and diluted (loss) earnings per share
            
            **$**
            **(0.00**
            **)**
            $
            0.00


8


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





Introduction





This
      Quarterly Report on Form 10-QSB for the period ended March 31, 2008, 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





Three
      Months Ended March 31, 2008 ,
      Compared to Three Months Ended March 31, 2007





Our
      revenues decreased slightly from $583,365 for the three months ended March
      31,
      2007 to $567,612 for the three months ended March 31, 2008, or by 2.7%. Our
      revenues for the quarter were consistent with the previous three quarters.




Our
      total
      operating expenses for the three months ended March 31, 2008, were $579,218,
      an
      increase of $14,759, or 2.6% compared to the same period in 2007. Salary expense
      increased by $35,197 or 11.1%, primarily due to additional personnel added
      in
      the second half of 2007 to support increased revenue levels. This increase
      is
      offset somewhat by a decrease in general and administrative expenses of $22,101
      or 9.7% mainly due to a reduction in our reserve for bad debts.





As
      a
      result of the decreased revenues, offset somewhat by the decrease in operating
      costs, our net loss of $9,765 for the three months ended March 31, 2008, is
      comparable to our net income of $3,943 for the three months ended March 31,
      2007.





Financial
      Position





Our
      net
      accounts receivable decreased by $84,365 or 30.5%, between December 31, 2007,
      and March 31, 2008, primarily due to increased collection efforts during the
      quarter. Our accounts payable and accrued expenses decreased by $28,149, or
      37.7%, between December 31, 2007, and March 31, 2008, primarily due to timing
      of
      payments on related liabilities. Purchases of equipment totaling $10,478 in
      2008
      consist mainly of computer equipment and an emergency generator. As a result
      of
      these items combined with our year to date net loss, our cash balance has
      increased by $2,955 between December 31, 2007, and March 31,
      2008.


9


Liquidity
      and Capital Resources





At
      March
      31, 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. 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.
      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.





(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.


10





Part
      II – OTHER INFORMATION





Item
      1.
      Legal Proceedings.





During
      the quarter ended March 31, 2008, and from April 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
      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





None.





Item
      5.
      Other Information





None





Item
      6.
      Exhibits.





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.


11


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:
                May 15, 2008
            /s/
                John Van ZyllJohn
                Van ZyllPresident,
                Chief Executive Officer and Chairman(Principal
                Executive Officer andPrincipal
                Accounting Officer)


12