UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington D.C. 20549

                                   FORM 10-KSB

(Mark One)

|X|   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
      ACT OF 1934

For the fiscal year ended: December 31, 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.
                 ----------------------------------------------
                 (Name of small business issuer in its charter)

           Florida                                             65-0877741
-------------------------------                            ----------------
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                             Identification No.)

1059 East Tri-County Blvd., Oliver Springs, TN                   37840
----------------------------------------------                 ----------
(Address of principal executive offices)                       (Zip Code)

Issuer's telephone number: (865) 482-8480

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class                                     Name of exchange on
                                                          which registered
      None                                                      None
      ----                                                      ----

Securities registered pursuant to Section 12(g) of the Exchange Act:

                          Common Stock, $0.01 Par Value
                          -----------------------------
                                (Title of Class)
<PAGE>

      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 |_|

      Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-K |X|

      State issuer's revenues for its most recent fiscal year: $2,094,083

      The aggregate market value of the voting stock held by non-affiliates of
the Company, computed by reference to the closing price of such stock as of
March 18, 2005 ($.17) was $723,409. For purposes of the computation we consider
all directors and holders of 10% or more of our common stock to be affiliates.
Therefore, the number of shares of our common stock held by non-affiliates as of
March 18, 2005 was 4,255,346.

      As of March 18, 2005, there were 19,135,920 shares of common stock, $0.01
par value, issued and outstanding.

Transmittal Small Business Disclosure Format (check one) Yes |_| No |X|
<PAGE>

                                     PART I

Item 1. Description of Business.

      This report includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. For example, statements included in this report regarding
our financial position, business strategy and other plans and objectives for
future operations, and assumptions and predictions about future product demand,
supply, manufacturing, costs, marketing and pricing factors are all
forward-looking statements. When we use words like "intend," "anticipate,"
"believe," "estimate," "plan" or "expect," we are making forward-looking
statements. We believe that the assumptions and expectations reflected in such
forward-looking statements are reasonable, based on information available to us
on the date hereof, but we cannot assure you that these assumptions and
expectations will prove to have been correct or that we will take any action
that we may presently be planning. We have disclosed certain important factors
that could cause our actual results to differ materially from our current
expectations elsewhere in this report. You should understand that
forward-looking statements made in this report are necessarily qualified by
these factors. We are not undertaking to publicly update or revise any
forward-looking statement if we obtain new information or upon the occurrence of
future events or otherwise.

Corporate Background

      We were organized as Fairfax Group, Inc. under the laws of the State of
Florida on April 23, 1998. We became the successor to Fairfax Group, Inc., a
Nevada corporation ("Fairfax Nevada") as a result of a merger consummated on
September 8, 1998. Prior to the merger, Fairfax Nevada had never engaged in any
substantive commercial business or other business operations, but had a
shareholder base of approximately 500 shareholders. Unless the context otherwise
requires, all references to the "Company" "we" "our" and other similar terms
means the corporation originally incorporated under the name Fairfax Group, Inc.
in Florida.

      On March 6, 2001, we, Diversified Product Investigations, Inc., a Florida
corporation, and the individual holders of the outstanding capital stock of
Diversified Product Investigations, Inc. (the "Holders") consummated a reverse
acquisition (the "Reorganization") pursuant to a certain Share Exchange
Agreement ("Agreement") of such date. Pursuant to the Agreement, the Holders
tendered to us all of the issued and outstanding shares of common stock of
Diversified Product Investigations, Inc. in exchange for 10,332,420 shares of
our common stock. The reorganization was accounted for as a reverse acquisition.
<PAGE>

      Simultaneously with the closing of the Reorganization, the then sole
officer and director of the Company resigned his positions in accordance with
the terms of the Agreement. John Van Zyll, Ann M. Furlong, Marvin Stacy, Dean
Madden and David Dowell were elected to serve on the Board of Directors of the
Company (the "Board"). The Board subsequently appointed John Van Zyll as
Chairman of the Board, President and Chief Executive Officer; Ann M. Furlong as
Secretary; Dean Madden as Chief Financial Officer and Treasurer; and Marvin
Stacy as Chief Operating Officer of the Company. The Board and the shareholders
of the Company also approved and filed an amendment of the Company's Articles of
Incorporation in order to change the name of the Company from Fairfax Group,
Inc. to Diversified Product Inspections, Inc.

Business

      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 subrogating claims to recover losses. 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 their
investigations. Additionally, we provide for the storage of evidence and derive
revenues from the secure storage of materials.

      We currently provide investigative services for over 2,000 insurance
adjusters in more than 40 states. At the present time we do not have any
contractual agreements with any particular insurance company. Our services are
provided on a case by case per their requests. Assignments are provided to us by
the individual insurance adjusters who are directed to use our services by their
management.

      We employ five (5) state-licensed private investigators who are trained as
"Cause and Origin" investigators, two apprentice private investigators who are
not yet state-licensed, six (6) laboratory technicians and one engineer. We also
have retained five people who provide us with engineering services on a
part-time consulting basis. Also, we offer pre-failure evaluations of
structures, building materials and appliances.

      Since 1994, we have been concentrating almost exclusively on defective
product investigations and we have accumulated a database of known defective
products. Our current database has key identifiers for over 300,000 products, a
library of over 300,000 photographs and documentation and hundreds of videos.
Generally, we conduct an on-site forensic investigation to identify the products
and materials involved in a claim loss and to determine the cause of the
failure. For smaller items, we provide insurance adjusters with evidence
collection kits and have the items shipped to our laboratories for testing.
Also, we provide in-depth indoor air quality analysis to determine airborne
contaminants that may be the causes of "sick" buildings.

      A crucial element of a subrogation claim is the maintenance of "chain of
custody" of the defective item. We maintain secure facilities and our personnel
are trained in procedures for the proper handling, storing and cataloging of the
evidence so that it is available at time of trial.

<PAGE>

Marketing

      We market our product by sponsoring seminars to over 140 insurance
companies and through our website located at dpi-inc.com. Our website provides
information for consumers, the insurance industry and manufacturers. We provide
our seminars at the offices of numerous insurance companies located throughout
the United States. Our seminar presentations are geared towards insurance claim
adjusters and our seminars include information about our company and information
teaching the adjusters how to locate and obtain faulty defective items, which
have created damage to the insured's residence. Our seminars also teach the
adjusters how to best secure a particular item for inspection to be conducted by
our company. At the time of the seminar training, the adjusters are equipped
with an adjusters use kit. This kit contains an instruction booklet on how to
use our services and it also contains the necessary materials for shipping
pieces of evidence involved in claims, to our Tennessee location.

      In addition to our industry services, for the consumer, we began providing
in 2004 a service called HomeCheckSafety.com. This is a way for the consumer to
identify and remove recalled products from their home. When a consumer
registers, items that are entered are monitored continuously. If at any time one
or all of these items are recalled, the consumer is notified. Some consumers
will have the added benefit of qualifying for a reduction in their homeowner
rates as several major insurance companies are evaluating our service for future
implementation.

      Also, we publish a monthly newsletter that appears on our website. Each
newsletter features a particular hazard or defective product reports or official
product recall notices.

Subrogation Claims and Other Investigations

      Below are samples of some of the actual cases in which our investigations
enabled the client to be successful in their subrogation claim.

*     Masonite Siding Class Action lawsuit. We were an expert witness
      in this lawsuit. We investigated and took samples from over
      2,000 homes in 20 states. The lawsuit covered 13.9 million homes
      in the United States and resulted in a $4.3 billion class action
      settlement. (1995)

*     Louisiana Pacific Class Action lawsuit regarding defective
      siding. We inspected 2,000 homes in 19 states. It was the
      defense's contention that the siding could not be positively
      identified once installed. We developed a method of positively
      identifying the product through visual inspection and
      demonstrated this during deposition. The result was a $750,000
      class action settlement. (1997)

*     Defective Battery Charger. A battery charger in California
      caused a fire in a strip mall causing heavy damage. We were able
      to positively identify the origin, cause and manufacturer.
      Reliance Insurance was able to subrogate a $1,000,000 claim.
      (1999)
<PAGE>

*     Ply-Gen (Hoover) vs. Pulte Home. Defective siding was installed
      in over 13,000 homes in Florida. Our investigations and lab
      analysis resulted in a $23.3 million settlement to the
      homeowners. (1997)

*     Auto accident in Orlando. Driver stated that she had applied
      brakes, but that they did not work. An independent mechanic
      inspected the brake system and reported that it was properly
      functioning and that the driver was at fault. The insurance
      company hired us to inspect the brakes. Our lab was able to
      determine that the brake pad material had non-uniform wear
      characteristics that resulted in high and low spots. The braking
      friction of the pads was only 30% of their design
      specifications. The insurance company successfully subrogated
      the claim. The driver was found to be "not at fault", thus
      saving her from points on her license and an increase in her
      insurance premium. (1996)

*     Lamborghini Automobile in Orlando that burned because of a
      failure of the rubber fuel lines. Our laboratory was able to
      determine that the rubber fuel lines were not defective. The
      owner had installed a high-pressure fuel pump that delivered a
      hydraulic pressure in excess of the fuel line manufacturer's
      recommendations. It was determined that the owner was at fault.
      (1995)

*     Home is Kissimmee, Florida that was being consumed by mold. The
      builder and several engineering firms had been unable to
      determine the cause. Upon inspecting the home, we determined
      that there was a hidden water leak in the walls. The builder
      insisted that this was impossible, as the water to the home was
      turned off at the main. Our technicians quickly located the leak
      using ultrasonic equipment. The plumbing contractor had
      installed an unused icemaker line on the city side of the meter.
      This line was slightly pierced by a nail during drywall
      installation, causing saturation inside the walls and the mold
      growth throughout the home. It was determined that the plumbing
      contractor was at fault. (1994)

*     Chevy Silverado burns in Orlando. We were able to determine that
      the cause and origin was due to a problem in the manufacturing
      process of the dipstick for the transmission. The dipstick would
      eject under pressure, allowing transmission fluid to spray on
      the exhaust and cause fires. The insurance company was able to
      successfully subrogate the claim and GM has since corrected the
      problem. (1997)

*     Pedestal fan failures. We assisted a television consumer
      investigative reporter in a report concerning a particular line
      of pedestal fans which had caused fires in the Seattle,
      Washington area. Our research department provided the reporter
      with information regarding failures of the same product in other
      areas of the country. (2004)
<PAGE>

Financings

      In April 2002, we entered into a subscription agreement with an investor
to sell up to $300,000 of our 6% convertible debentures. Under the terms of the
agreement, subject to the our satisfying certain conditions, the investor agreed
to purchase three separate tranches of debentures, each tranche in the principal
amount of $100,000 and to be payable three years after the issue date of the
debenture. The tranches were purchased in April 2002, June 2002 and October
2002, respectively. The principal amount of each of the debentures was
convertible at any time at the option of the investor into the Company's common
stock at a conversion rate equal to the lesser of (i) 110% of the average five
closing bid prices during the five trading days prior to the issuance date of
the debenture or (ii) 75% of the average of the five lowest closing bid prices
during the twenty trading days immediately prior to the conversion date. In the
event all or any portion of the debentures are outstanding at the end of three
years from the date of issuance, the debentures are subject to automatic
conversion into the Company's common stock based upon the conversion rate
described above.

      In connection with the sale of each tranche of the debentures, we issued
warrants to purchase 462,963 shares of our common stock at exercise prices of
$.2376, $.23 and $.088 per share, respectively. Each of the warrants is
exercisable for four years from the date each related debenture was purchased
under the agreement. The repayment of the debentures was also secured by a
pledge to the investor of an aggregate of 4,000,000 shares of common stock of
the Company owned by our majority stockholders.

      In 2004, the investor converted the entire $300,000 principal amount of
the debenture, plus accrued interest, into an aggregate of 4,173,857 shares of
the Company's common stock.

      During April 2002 we also entered into an equity line of credit investment
agreement with the investor which obligated the investor to purchase up to
$3,000,000 of our common stock at a price equal to 85% of the average trading
price of our common stock, subject to our fulfillment of certain terms and
conditions contained in the equity line of credit investment agreement. In
connection with the equity line of credit, we issued to the investor a warrant
to purchase 1,388,889 shares of our common stock exercisable at $.2376 per
share. The warrant is exercisable until April 2006. The equity line of credit
expired in April 2004 without being utilized.

Intellectual Property

      We currently hold a federal trademark registration from the United States
Patent and Trademark Office (Reg. No: 2206610) for our Diversified Products
Inspections, Inc. logo. We also maintain a registered domain name for our
Internet Web site located at http://www.dpi-inc.com and
http://www.homechecksafety.com.

Recent Activities

      On December 30, 2004, we entered into a joint venture agreement with two
other companies to form Vulnerability Assessment Group ("VAG"). We have a
one-third interest in VAG. The purpose of VAG is to provide comprehensive
assessment plans to individuals, businesses, industries, organizations and
institutions of their vulnerability to terrorism, external or internal sabotage,
employee assessment and safety, product safety and chemical and biological
safety. As of December 31, 2004, the Company had incurred no significant costs
related to VAG.
<PAGE>

      In December 2003, we entered into a Use and Consulting Agreement with GBC,
Inc. under which GBC, Inc. was granted the right to use our extensive database
of failed and recalled products for a fee of $100,000 per year over a ten year
term. The agreement was terminable on 30 days advance written notice. GBC, Inc.
paid to us the first annual fee. In February 2005 GBC, Inc. notified us that it
desired to terminate the agreement, but as of March 21, 2005, GBC, Inc. had not
returned all copies of our data in GBC, Inc.'s possession. We are considering
our alternatives regarding enforcement of the agreement.

Employees

      As of March 21, 2005, we have approximately 27 full time employees and
three part time employees. We have never experienced a work stoppage and we
believe that our employee relations are good. Our success depends to a large
extent upon the continued services of our key managerial employees and
investigators. The loss of such personnel could have a material adverse effect
on our business and our results of operations.

Transfer agent

      Our transfer agent is Interwest Transfer Co., 1981 East 4800 South, Salt
Lake City, Utah 84117.

Risk Factors

      You should carefully consider the following risks and the other
information contained in this report. The price of our common stock could
decline due to any of these risks, and you could lose all or part of your
investment. You also should refer to the other information included in this
report, including the financial statements and related notes thereto. In
addition, the risks described below are not the only ones facing us. We have
described only the risks we consider material. However, there may be additional
risks that we view as not material or of which we are not presently aware.

      If any of the events described below were to occur, our business,
prospects, financial condition or results of operations or cash flow could be
materially adversely affected. When we say that something could or will have a
material adverse effect on it, we mean that it could or will have one or more of
these effects.
<PAGE>

Special note regarding forward-looking statements

      This report may contain certain forward-looking statements and information
relating to us that are based on beliefs and its principals as well as
assumptions made by and information currently available to them. These
statements include, among other things, the discussions of our business strategy
and expectations concerning our market position, future operations, expansion
opportunities, and profitability. When used in these documents, the words
"anticipate," "feel," "believe," "estimate," "expect," "plan," and "intend" and
similar expressions, as they relate to us or our principals, are intended to
identify forward-looking statements. Such statements reflect the current view of
respecting future events and are subject to certain risks, uncertainties, and
assumptions, including the meaningful and important risks and uncertainties
noted, particularly those related to our operations, results of operations, and
growth strategy, liquidity, competitive factors and pricing pressures, changes
in legal and regulatory requirements, general economic conditions, and other
factors described in this report.

The loss of one or more of our key employees may adversely affect our growth
objectives.

      Our success in achieving our growth objectives depends upon the efforts of
our top management team including the efforts of Messrs. John Van Zyll, Marvin
Stacy and Ms. Ann M. Furlong. The loss of the services of any of these
individuals may have a material adverse effect on our business, financial
condition and results of operations. We do not have employment agreements with
Messrs. VanZyll, Stacy or Ms Furlong. We can give no assurance that we will be
able to maintain and achieve our growth objectives should we lose one or all of
these individuals' services.

Our current and potential competitors, some of whom have greater resources and
experience than we do, may develop products and technologies that may cause
demand for, and the prices of, our products to decline.

      The product investigation industry in regards to subrogation for product
failure is a new and growing market. While there may be several companies that
offer fire or product investigations which have achieved substantially greater
market share than we have, and have longer operating histories, have larger
customer bases, have substantially greater financial, development and marketing
resources than we do, to our knowledge there are few, if any, companies that
offer a full scope of services that are tailored to the insurance industry. Our
service includes fire investigation, product failure analysis, engineering and
air & mold contamination investigations. Existing or future competitors may
develop or offer products that are comparable or superior to ours at a lower
price, which could adversely harm our business, results of operations and
financial condition.

We may issue additional shares of our common stock which would reduce the
percent ownership of existing shareholders and also dilute the share value of
our common stock.

      Our certificate of incorporation authorizes the issuance of 50,000,000
shares of common stock, par value $.01 per share. Our certificate of
incorporation does not authorize us to issue shares of preferred stock. The
future issuance of all or part of our remaining authorized common stock may
result in substantial dilution in the percentage of our common stock held by our
then existing shareholders. We may value any common stock issued in the future
on an arbitrary basis. The issuance of common stock for future services or
acquisitions or other corporate actions may have the effect of diluting the
value of the shares held by our investors, and might have an adverse effect on
any trading market for our common stock.
<PAGE>

      Outstanding shares of our common stock that are restricted from immediate
resale, but which may be sold into the market in the future could cause the
market price of our common stock to drop significantly, even if our business is
doing well.

      As of March 21, 2005, we had 19,135,920 shares of our common stock issued
and outstanding. Of such shares, 13,463,553 shares of common stock were
restricted and 5,672,367 shares were free trading. Rule 144 provides, in
essence, that a person holding "restricted securities" for a period of one year
may sell only an amount every three months equal to the greater of (a) one
percent of a company's issued and outstanding shares, or (b) the average weekly
volume of sales during the four calendar weeks preceding the sale. The amount of
"restricted securities" which a person who is not an affiliate of our company
may sell is not so limited, since non-affiliates may sell without volume
limitation their shares held for two years if there is adequate current public
information available concerning our company. In such an event, "restricted
securities" would be eligible for sale to the public at an earlier date. The
sale in the public market of such shares of Common Stock may adversely affect
prevailing market prices of our Common Stock.

Our common stock may be affected by limited trading volume and may fluctuate
significantly.

      There has been a limited public market for our common stock and there can
be no assurance that an active trading market for our common stock will develop.
As a result, this could adversely affect our shareholders' ability to sell our
common stock in short time periods, or possibly at all. Our common stock has
experienced, and is likely to experience in the future, significant price and
volume fluctuations which could adversely affect the market price of our common
stock without regard to our operating performance. In addition, we believe that
factors such as quarterly fluctuations in our financial results and changes in
the overall economy or the condition of the financial markets could cause the
price of our common stock to fluctuate substantially.

      Since we have not paid any dividends on our common stock and do not intend
to do so in the foreseeable future, a purchaser of our common stock will only
realize an economic gain on his or her investment from an appreciation, if any,
in the market price of our common stock.

      The application of "penny stock rules" could adversely affect the market
price of our common stock.
<PAGE>

      Our securities are deemed to be penny stock. Penny stocks generally are
equity securities with a price of less than $5.00 per share other than
securities registered on certain national securities exchanges or quoted on the
NASDAQ Stock Market, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system. Our securities may be subject to "penny stock rules" that impose
additional sales practice requirements on broker-dealers who sell such
securities to persons other than established customers and accredited investors
(generally those with assets in excess of $1,000,000 or annual income exceeding
$200,000 or $300,000 together with their spouse). For transactions covered by
these rules, the broker-dealer must make a special suitability determination for
the purchase of such securities and have received the purchaser's written
consent to the transaction prior to the purchase. Additionally, for any
transaction involving a penny stock, unless exempt, the "penny stock rules"
require the delivery, prior to the transaction, of a disclosure schedule
prescribed by the Commission relating to the penny stock market. The
broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative and current quotations for the
securities. Finally, monthly statements must be sent disclosing recent price
information on the limited market in penny stocks. Consequently, the "penny
stock rules" may restrict the ability of broker-dealers to sell our securities
and may have the effect of reducing the level of trading activity of our common
stock in the secondary market. The foregoing required penny stock restrictions
will not apply to our securities if such securities maintain a market price of
$5.00 or greater. We can give no assurance that the price of our securities will
reach or maintain such a level.

Item 2. Properties.

      In December 2004 we purchased an approximately 45,000 square foot facility
located at 1059 East Tri-County Blvd., Oliver Springs, Tennessee 37840 which we
now use as our corporate headquarters and as our warehouse. The facility was
purchased for $800,000. The entire purchase price was financed by a mortgage
loan from a bank. The loan is repayable in monthly installments of interest only
at the rate of 6% per annum through June 2005; thereafter, in monthly
installments of $6,751 through May 2010, including interest at 6% per annum,
with the remaining balance due June 2010.

      We also lease facilities located at 3 East Main Street, Oak Ridge,
Tennessee 37830 which premises were formerly used as our corporate headquarters.
The lease expires in December 2005 and provides for rental payments of $18,125
per month. We are in negotiations with the landlord regarding an earlier
termination of the lease.

Item 3. Legal Proceedings.

      As of the date hereof, we are not a party to any material legal
proceedings, nor are we aware of any threatened litigation of a material nature.

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

      There were no matters submitted during the fourth quarter of the fiscal
year covered by this report to a vote of security holders, through the
solicitation of proxies or otherwise.

                                     PART II

Item 5. Market for Common Equity, Related Stockholders Matters and Small
Business Issuer Purchases of Equity Securities.
<PAGE>

Market Information

      Our common stock is quoted on the OTC Bulletin Board under the symbol
"DPRI". The following table sets forth the range of high and low bid quotations
of our common stock, as reported on the OTC Bulletin Board, for the periods
indicated. The prices represent inter-dealer quotations, which do not include
retail markups, markdowns or commissions, and may not represent actual
transactions.

                                                          Common Stock
                                                      High Bid   Low Bid
                                                      --------   -------

First Quarter 2003                                     $0.17      $0.13
Second Quarter 2003                                    $0.18      $0.11
Third Quarter 2003                                     $0.25      $0.14
Fourth Quarter 2003                                    $0.33      $0.12

First Quarter 2004                                     $0.50      $0.28
Second Quarter 2004                                    $0.49      $0.28
Third Quarter 2004                                     $0.47      $0.13
Fourth Quarter 2004                                    $0.28      $0.12

Security Holders

            At March 18, 2005 there were 19,135,920 shares our common stock
outstanding which were held by approximately 520 stockholders of record.

Dividend Policy

      We have not paid any dividends on our common stock, and it is not
anticipated that any dividends will be paid in the foreseeable future. Our Board
of Directors intends to follow a policy of using retained earnings, if any, to
finance our growth. The declaration and payment of dividends in the future will
be determined by our Board of Directors in light of conditions then existing,
including our earnings, if any, financial condition, capital requirements and
other factors.

Recent Sales of Unregistered Securities

      In the fourth quarter of 2004, the holder of convertible notes converted
the entire $300,000 principal amount of such notes, plus accrued interest, into
an aggregate of 4,173,857 shares of our common stock. The certificates for such
shares were issued in the first quarter of 2005. We believe that the issuance of
the shares was exempt from the registration requirements under the Securities
Act of 1933, as amended, by virtue of an exemption provided under Section
3(a)(9) of the Act. Except for the foregoing, we did not issue shares of our
common stock during the fourth quarter of the year ended December 31, 2004.
<PAGE>

Item 6. Management's Discussion and Analysis or Plan of Operation

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.

Critical Accounting Policies

      Our significant accounting policies are discussed in Note 1 to the
financial statements. We consider the following accounting policies to be the
most critical:

      o     Revenue Recognition - We recognize revenue when the earnings process
            is completed. This typically occurs after our final written report
            has been reviewed, approved and submitted. We have no further
            obligation to the customer at this time.

      o     Stock Options - We account for our stock options under the intrinsic
            value method in accordance with Accounting Principles Board Opinion
            No. 25, "Accounting for Stock Issued to Employees" and related
            interpretations. We have adopted the disclosure-only provisions of
            the Financial Accounting Standards Board ("FASB") Statement No.123,
            "Accounting for Stock Based Compensation" as amended by FASB
            Statement No. 148, "Accounting for Stock-Based Compensation -
            Transition and Disclosure".

      o     Property and Equipment - Our property and equipment is recorded at
            cost and depreciation is computed using the straight-line method
            over the estimated useful lives of the assets. We charge repairs and
            maintenance to expense as it is incurred.

      o     Estimates - The preparation of financial statements requires us to
            make estimates and judgments that affect the reported amounts of
            assets and liabilities and the disclosure of contingent assets and
            liabilities at the date of the financial statements and the reported
            amounts of revenues and expenses during the reported periods. We
            base our estimates and judgments on historical experience and on
            various other factors that we believe to be reasonable under the
            circumstances, the results of which form the basis for making
            judgments about the carrying values of assets and liabilities that
            are not readily apparent from other sources. There can be no
            assurances that actual results will not differ from those estimates.
            On an ongoing basis, we evaluate our accounting policies and
            disclosure practices. In our opinion, the critical accounting
            estimates which are more complex in nature and require a higher
            degree of judgment include the collectibility of accounts receivable
            and the valuation of our deferred income tax assets and liabilities.
<PAGE>

Results of Operations for the Fiscal Year Ended December 31, 2004 as Compared to
the Fiscal Year Ended December 31, 2003

      Our revenues for 2004 decreased $338,313 or 13.9% to $2,094,083 from
$2,432,396 in 2003. This decrease is primarily due to a significant spike in
revenues during the third quarter of 2003, followed by a 2004 trend of 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
believe this downward trend has stabilized during the third quarter of 2004. We
have offset this decrease somewhat during the periods with our use agreement
revenues. Under the terms of our 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;
however, this use agreement was terminated effective December 2004.
Additionally, we are expanding our customer base to include smaller and newer
insurance companies, which we anticipate will increase comparative revenues in
2005.

      Our total operating expenses for 2004 were $2,028,234, a decrease of
$35,278, or approximately 1.7% compared to the same period in 2003. Salary
expense decreased by $17,919, or approximately 1.6%, primarily due to our
efforts to reduce personnel to a level more appropriate for 2004 revenues. In
total, other operating expenses for 2004 remained relatively consistent with
2003 with an increase in professional fees of $44,203, mainly due to higher
legal costs, offset somewhat by reductions in other operating expense
classifications.

      Interest expense for 2004 decreased $9,850 or 33.1% to $19,900 from
$29,750 in 2003 mainly due to the retirement of higher interest lines of credit
in 2003 and early payoff of notes payable in 2004.

      During 2002, the Company incurred $191,393 in deferred stock issuance
costs associated with the establishment of an equity line of credit. This amount
was reported as a component of our stockholders deficit at December 31, 2002,
pending future funding under this agreement. During 2003 our financial condition
improved significantly and we determined we would not utilize this equity line
of credit. Accordingly, we expensed these deferred stock issuance costs in 2003.
No such cost existed in 2004.

      During 2003, mainly due to the significant improvement in earnings trend,
the Company reversed its valuation allowance for deferred tax assets and
recognized a deferred tax benefit of $420,574. Deferred tax expense recognized
in 2004 approximated the federal and state statutory rates.

      Net income for 2004 was $27,777 or $0.00 per share compared to a 2003 net
income of $568,315 or $0.04 reflecting the 2004 decline in revenues and
operating results, and the 2003 recognition of the deferred tax benefit
partially offset by the write-off of deferred stock issuance costs as previously
discussed.
<PAGE>

Results of Operations for the Fiscal Year Ended December 31, 2003 as Compared to
the Fiscal Year Ended December 31, 2002

      Revenues for 2003 increased $432,421 or 21.6% to $2,432,396 from
$1,999,975 in 2002. This increase was mainly attributable to increased market
awareness of the Company's inspection services and the positive result of these
services.

      Operating expenses for 2003 increased by $19,732 or 1.0% to $2,063,512
from $2,043,780 in 2002. Operating expenses have remained relatively consistent
mainly due to an offsetting of an increase in salaries and a decrease in
professional fees. Changes in our shipping and handling vendors allowed us to
decrease these costs even though related revenue increased.

      Interest expense for 2003 decreased $76,015 or 71.9% to $29,750 from
$105,765 in 2002. During 2002, we recognized $63,955 in interest expense as a
result of obtaining $300,000 in convertible debt with a conversion rate less
than the stock price on the funding date. We did not incur any interest expense
of this type in 2003. This, along with our successful effort to pay off our
lines of credit, resulted in this significant decrease in interest expense in
2003.

      During 2002, the Company incurred $191,393 in deferred stock issuance
costs associated with the establishment of an equity line of credit. This amount
was reported as a component of our stockholders deficit at December 31, 2002,
pending future funding under this agreement. During 2003 our financial condition
improved significantly and we determined we would not utilize this equity line
of credit. Accordingly, we expensed these deferred stock issuance costs in 2003.

      During 2003, mainly due to the significant improvement in earnings trend,
the Company reversed its valuation allowance for deferred tax assets and
recognized a deferred tax benefit of $420,574. No deferred tax benefit was
recognized in 2002.

      Net income for 2003 was $568,315 or $.04 per share compared to a 2002 loss
of $149,570 or $.01 per share reflecting our ability to increase 2003 revenues
while maintaining 2003 operating expenses at a level consistent with 2002 along
with the recognition of the deferred tax benefit partially offset by the
write-off of deferred stock issuance costs as previously discussed.

Liquidity and Capital Resources

      During 2004, our cash flow was sufficient to fund operating costs and
reduce current liabilities. During 2004 and 2003, our operations provided
positive cash flow that allowed us to pay off previously existing lines of
credit and notes payable, purchase property and equipment and significantly
increase our cash on hand. This is reflected in our statement of cash flows that
shows that net cash provided by operating activities was $123,396 and $412,883
in 2004 and 2003, respectively. The $289,487 decrease between 2004 and 2003 is
due to lower operating results previously discussed.

      Additionally, during 2004, our investing and financing activities reflect
new borrowings of $800,000 to purchase our new office and warehouse space. Debt
service on our new borrowings will reflect a savings of approximately $135,000
annually versus our 2004 rental agreement payments.
<PAGE>

Impact of Inflation

Inflationary factors have not had a significant effect on our operations.

Other

      Except for historical information contained herein, the matters set forth
above are forward-looking statements that involve certain risks and
uncertainties that could cause actual results to differ from those in the
forward-looking statements. Potential risks and uncertainties include such
factors as the level of business and consumer spending, the amount of sales of
the Company's products, the competitive environment within the investigative
services industry, the ability of the Company to continue to expand its
operations, the level of costs incurred in connection with the Company's
expansion efforts, economic conditions and the financial strength of the
Company's customers and suppliers. Investors are directed to consider other
risks and uncertainties discussed in documents filed by the Company with the
Securities and Exchange Commission.

Item 7. Financial Statements.

                          Index to Financial Statements

                     Years ended December 31, 2004 and 2003

                                                                        Page No.
                                                                        --------

Report of Independent Registered Public Accounting Firm ...............   F-1

Audited Financial Statements

Balance Sheets ........................................................   F-2
Statements of Income ..................................................   F-4
Statements of Stockholders' (Deficit) Equity ..........................   F-5
Statements of Cash Flows ..............................................   F-6
Notes to Financial Statements .........................................   F-7

<PAGE>

                   Report of Registered Public Accounting Firm

The Board of Directors and Stockholders
Diversified Product Inspections, Inc.

We have audited the accompanying balance sheets of Diversified Product
Inspections, Inc. (the "Company"), as of December 31, 2004 and 2003, and the
related statements of income, stockholders' (deficit) equity and cash flows for
the years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States of America). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion the financial statements referred to above present fairly, in all
material respects, the financial position of Diversified Product Inspections,
Inc. as of December 31, 2004 and 2003, and the results of its operations and its
cash flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.


                                              /s/ Coulter & Justus, P.C.

Knoxville, Tennessee
February 10, 2005


                                       F-1
<PAGE>

                      Diversified Product Inspections, Inc.

                                 Balance Sheets

<TABLE>
<CAPTION>
                                                                    December 31
                                                                 2004         2003
                                                             -----------------------
<S>                                                          <C>          <C>
Assets
Current assets:
   Cash                                                      $  328,048   $  296,409
   Accounts receivable, net of reserve for doubtful
     accounts of $25,000 in 2004 and $35,000 in 2003
                                                                146,272      216,093
   Other receivable                                                  --      100,000
   Current portion of deferred income taxes                      27,656      143,485
   Prepaid expenses and other current assets                     13,007        1,341
                                                             -----------------------
 Total current assets                                           514,983      757,328

Property and equipment:
   Equipment, furniture and fixtures                            336,208      306,788
   Vehicles                                                      88,200      128,061
   Leasehold improvements                                        22,727       22,727
                                                             -----------------------
                                                                447,135      457,576
   Less accumulated depreciation and amortization               278,030      257,231
                                                             -----------------------
   Net property and equipment presently used in operations
                                                                169,105      200,345
   Land, building and improvements not presently used
     in operations                                              836,318           --
                                                             -----------------------
Net property and equipment                                    1,005,423      200,345

Other assets                                                         --        4,400
Deferred income taxes, less current portion                     374,746      277,089
                                                             -----------------------
Total assets                                                 $1,895,152   $1,239,162
                                                             =======================
</TABLE>


                                      F-2
<PAGE>

<TABLE>
<CAPTION>
                                                                     December 31
                                                                 2004           2003
                                                             --------------------------
<S>                                                          <C>            <C>
Liabilities and stockholders' equity:
Current liabilities:
   Accounts payable and accrued expenses                     $    44,026    $   147,963
   Accrued salaries                                               29,019         14,445
   Deferred revenue                                                   --         91,667
   Current portion of notes payable                               25,248         14,607
   Current portion of capital lease obligations                       --          3,525
                                                             --------------------------
Total current liabilities                                         98,293        272,207

Notes payable, less current portion                              804,021         36,598
Capital lease obligations, less current portion                       --          6,842
Convertible debt, net of discount of $5,000 in 2003                   --        295,000
                                                             --------------------------
Total liabilities                                                902,314        610,647

Stockholders' equity:
   Common stock:
     Par value--$0.01 per share
     Authorized shares--50,000,000
     Issued and outstanding shares--19,135,314 in 2004 and
       14,961,457 in 2003                                        191,353        149,615
   Additional paid-in capital                                  1,915,136      1,620,328
   Accumulated deficit                                        (1,113,651)    (1,141,428)
                                                             --------------------------
 Net stockholders' equity                                        992,838        628,515

                                                             --------------------------
Total liabilities and stockholders' equity                   $ 1,895,152    $ 1,239,162
                                                             ==========================
</TABLE>

See accompanying Notes to Financial Statements.


                                      F-3
<PAGE>

                      Diversified Product Inspections, Inc.

                              Statements of Income

                                                        Year ended December 31
                                                         2004            2003
                                                     ---------------------------

Revenues                                             $ 2,094,083     $ 2,432,396

Operating expenses:
   Salaries and related benefits                       1,135,961       1,153,880
   Professional fees                                     170,376         126,173
   Rent                                                  210,000         212,283
   Shipping and handling costs                           167,218         191,202
   Depreciation and amortization                          55,977          67,997
   Other general and administrative                      288,702         311,977
                                                     ---------------------------
Total operating expenses                               2,028,234       2,063,512
                                                     ---------------------------
Operating income                                          65,849         368,884

Other expenses:
   Interest                                               19,900          29,750
   Write-off of deferred stock issuance costs                 --         191,393
                                                     ---------------------------
Total other expenses                                      19,900         221,143
                                                     ---------------------------

Income before income taxes                                45,949         147,741

Deferred income tax (expense) benefit                    (18,172)        420,574
                                                     ---------------------------
Net income                                           $    27,777     $   568,315
                                                     ===========================

Earnings per share:
   Basic                                             $      0.00     $      0.04
                                                     ===========================
   Diluted                                           $      0.00     $      0.03
                                                     ===========================

See accompanying Notes to Financial Statements.


                                      F-4
<PAGE>

                      Diversified Product Inspections, Inc.

                  Statements of Stockholders' (Deficit) Equity

<TABLE>
<CAPTION>

                                                  Number of                                               Deferred        Total
                                                   Shares                    Additional                     Stock      Stockholders'
                                                 Issued and      Common        Paid-in     Accumulated     Issuance      (Deficit)
                                                 Outstanding      Stock        Capital       Deficit        Costs         Equity
                                                 ----------------------------------------------------------------------------------
<S>                                               <C>          <C>           <C>           <C>            <C>           <C>
Balance at January 1, 2003                        14,961,457   $   149,615   $ 1,620,328   $(1,709,743)   $  (191,393)  $  (131,193)
   Elimination of deferred stock issuance costs           --            --            --            --        191,393       191,393
   Net income for 2003                                    --            --            --       568,315             --       568,315
                                                 ----------------------------------------------------------------------------------
 Balance at December 31, 2003                     14,961,457       149,615     1,620,328    (1,141,428)            --       628,515
   Stock issued for convertible debt               4,173,857        41,738       294,808            --             --       336,546
   Net income for 2004                                    --            --            --        27,777             --        27,777
                                                 ----------------------------------------------------------------------------------
Balance at December 31, 2004                      19,135,314   $   191,353   $ 1,915,136   $(1,113,651)   $        --   $   992,838
                                                 ==================================================================================
</TABLE>

See accompanying Notes to Financial Statements.


                                      F-5
<PAGE>

                      Diversified Product Inspections, Inc.

                            Statements of Cash Flows

                                                          Year ended December 31
                                                            2004         2003
                                                         ----------------------
Operating activities
Net income                                               $  27,777    $ 568,315
Adjustments to reconcile net income to net cash
   provided by operating activities:
     Deferred income taxes                                  18,172     (420,574)
     Provision for bad debt                                (10,000)          --
     Write-off of deferred stock issuance costs                 --      191,393
     Depreciation                                           54,141       62,460
     Amortization                                            1,836        5,537
     Gain on sale of vehicles                               (1,601)          --
     Changes in operating assets and liabilities:
       Accounts and other receivables                      179,821      (56,452)
       Prepaid expenses and other assets                    (7,266)         880
       Accounts payable and accrued expenses               (62,391)     (22,227)
       Accrued salaries                                     14,574       (8,116)
       Deferred revenue                                    (91,667)      91,667
                                                         ----------------------
Net cash provided by operating activities                  123,396      412,883

Investing activities
Proceeds from sale of vehicles                              20,973           --
Purchases of property and equipment                       (880,427)    (111,509)
                                                         ----------------------
Net cash used in investing activities                     (859,454)    (111,509)

Financing activities
Repayments to shareholder                                       --      (14,000)
Net payments on lines of credit                                 --      (83,863)
Proceeds from note payable                                 800,000           --
Principal payments on notes payable and capital lease
   obligations                                             (32,303)     (22,120)
                                                         ----------------------
Net cash provided by (used in) financing activities        767,697     (119,983)
                                                         ----------------------

Net increase in cash                                        31,639      181,391

Cash at beginning of year                                  296,409      115,018
                                                         ----------------------
Cash at end of year                                      $ 328,048    $ 296,409
                                                         ======================

Supplemental disclosures of cash flow information
Cash paid for interest                                   $   5,855    $  29,750

Supplemental disclosures of noncash activity
Convertible debt and related accrued interest
   converted to stock                                    $ 336,546    $      --
Equipment purchases financed by seller                          --       30,324

See accompanying Notes to Financial Statements.


                                      F-6
<PAGE>

                      Diversified Product Inspections, Inc.
                          Notes to Financial Statements
                                December 31, 2004

1. Significant Accounting Policies

Description of Business

Prior to December 31, 2003,  the financial  statements  included the accounts of
Diversified  Product  Inspections,  Inc.  ("Inspections")  and its  wholly-owned
subsidiary,   Diversified  Product  Investigations,   Inc.   ("Investigations").
Effective  December 31, 2003,  these  companies  were merged with the  surviving
company being Diversified Product  Inspections,  Inc. (the "Company").  Prior to
this merger, all intercompany balances and transactions were eliminated.

The Company specializes in conducting  investigations and laboratory analysis of
a wide  variety of  products  to  determine  the  "cause and  origin" of product
failures.   The  Company's  primary  customers  consist  of  national  insurance
companies  that  are  interested  in  subrogating   claims  to  recover  losses.
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.  The Company has  accumulated a large
database  of  known   defective   products  that   includes   photos  and  other
documentation that are used in their  investigations.  The Company also provides
storage  of  the  evidence  collected  during  the  investigation,  until  it is
requested by the customer to be disposed.

Major Customers and Credit Concentration

The Company's largest customers are national insurance customers.  Revenues from
the Company's largest individual  customers accounted for approximately 25%, 13%
and 10% in 2004 and 27%, 15% and 12% in 2003 of total revenues.

Revenue Recognition

The Company recognizes  revenue when the earnings process is complete,  which is
typically after an investigation has been completed and the final written report
has been submitted,  reviewed and approved by management.  Once the final report
has been approved, the Company has no further obligation to the customer.

Advertising Costs

Advertising  costs are  expensed  as incurred  and  totaled  $28,321 in 2004 and
$11,563 in 2003.

Accounts Receivable

Certain  customers  have accounts  receivable  balances of 10% or greater of the
total at December 31, 2004 and 2003. A single customer accounts for 44% of total
accounts  receivable at December 31, 2004. Three customers  account for 40%, 13%
and 10% of total accounts  receivable at December 31, 2003. The Company performs
ongoing credit evaluations of its customers' financial  condition,  but does not
require collateral to support customer receivables. The Company charges accounts
to bad debt  expense as they are  determined  to be  uncollectible  based upon a
review of aging and collections.  Credit losses, when realized, have been within
the  range  of the  Company's  expectations  and,  historically,  have  not been
significant.


                                      F-7
<PAGE>

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

1. Significant Accounting Policies (continued)

Property and Equipment

Property and equipment is carried at cost.  Repairs and  maintenance are charged
to expense as incurred.  Depreciation is computed using the straight-line method
over the estimated useful lives of the assets as follows:

      Building                                                     40 years
      Equipment, furniture and fixtures                           3-7 years
      Vehicles                                                      5 years
      Leasehold improvements                                        3 years

During December 2004, the Company  purchased land and a building to serve as the
Company's office and warehouse.  At December 31, 2004, this property was not yet
being used in the  Company's  operations.  Subsequent  to year-end,  the Company
moved their office and warehouse to this new location.

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"). Had the Company elected to
adopt the fair value recognition provisions of FAS 123, pro forma net income and
earnings per share would be as follows for the years ended December 31:

                                                            2004          2003
                                                       -------------------------

      Net income, as reported                          $    27,777   $   568,315
      Employee compensation, net of tax                     25,861        25,861
                                                       -------------------------
      Pro forma net income                             $     1,916   $   542,454
                                                       =========================

      Earnings per share:
        Basic, as reported                             $      0.00   $      0.04
                                                       =========================
        Diluted, as reported                           $      0.00   $      0.03
                                                       =========================
        Basic, pro forma                               $      0.00   $      0.04
                                                       =========================
        Diluted, pro forma                             $      0.00   $      0.03
                                                       =========================


                                      F-8
<PAGE>

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

Significant Accounting Policies (continued)

Stock Options (continued)

During  December  2004,  the FASB revised FAS 123. This revision  eliminates the
alternative to use APB 25's intrinsic value method that was previously  provided
under FAS 123 and requires  companies to recognize the cost of employee services
received in exchange for awards of equity  instruments,  such as stock  options,
based on the grant-date  fair value of those awards.  This revision is effective
for the Company as of January 1, 2006. As no awards of equity  instruments  were
granted  by the  Company  in 2003  or  2004,  the  application  of this  revised
statement would have had no effect on the accompanying financial statements.

Fair Value of Financial Instruments

The  fair  value  of the  Company's  financial  instruments  approximates  their
carrying value based upon the type and nature of the financial instruments.

Estimates

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates and assumptions  that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.

2. Convertible Debt and Equity Line of Credit Agreement

During April 2002,  the Company  entered into a  subscription  agreement  with a
company (the "Investor") in which the Company  ultimately  received $300,000 (in
$100,000  tranches)  from the Investor in return for a  corresponding  amount of
convertible   debentures  and  related  warrants.   The  debentures  accrued  6%
cumulative  interest.  During April, June and October 2002, the Company received
each of its $100,000  tranches  under the terms of the  agreement.  In 2004, the
Investor  exercised its right and converted this $300,000 of debt,  plus accrued
interest, into 4,173,857 shares of the Company's common stock in accordance with
the terms of the related agreement.

Upon  funding of the first  tranche in April  2002,  the  Company  issued to the
Investor  warrants to purchase the  resulting  number of shares of the Company's
stock that equals the total amount being funded in all three  tranches,  divided
by the share price (five day average  closing bid price prior to  closing).  The
warrants are exercisable for four years from the  corresponding  closing date of
that tranche being funded, at 110% of the five day average closing bid price for
the five  trading  days prior to the closing  date of each  funding  tranche and
carry a cashless  provision  only at the  option of the  Company.  As such,  the
Company issued warrants to the Investor to purchase an additional 462,963 shares
of stock at an exercise price of $0.2376, 462,963 shares of stock at an exercise
price of $0.23,  and 462,963 shares of stock at an exercise price of $0.088,  on
each of the tranche dates.


                                      F-9
<PAGE>

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

2. Convertible Debt and Equity Line of Credit Agreement (continued)

Also  during  April  2002,  the  Company  entered  into an equity line of credit
investment  agreement with the Investor that provided for the purchase of shares
of the Company's  common stock. The effective date of this equity line of credit
investment  agreement  was October 2002 and it expired in April 2004.  Under the
terms of the equity line of credit  investment  agreement,  the  Company  issued
warrants  enabling  the  Investor  to purchase  1,388,889  shares of stock at an
exercise  price of $0.2376 per share,  which was above the trading  value of the
stock at the date the warrants were issued. These warrants expire in April 2006.

3.  Notes Payable

Notes payable are summarized as follows as of December 31:

                                                              2004          2003
                                                          ----------------------
Note payable, secured by land and a
      building, due in monthly installments
      of interest only at 6% through June
      2005, thereafter, in monthly
      installments of $6,751 through May
      2010, including interest at 6%, with
      the remaining balance due June 2010                 $800,000      $     --

Note payable, secured by a vehicle, due in
      monthly installments of $665,
      including interest at 11.21%, through
      February 2009                                         25,643        30,324

Note payable, secured by a vehicle, due in
      monthly installments of $348,
      including interest at 11%, through
      November 2005 3,626 7,188

Notes payable repaid in 2004                                    --        13,693
                                                          ----------------------
                                                           829,269        51,205
Less portion classified as current                          25,248        14,607
                                                          ----------------------
Long-term portion                                         $804,021      $ 36,598
                                                          ======================

Land and building securing the note payable has a carrying amount of $836,318 at
December 31, 2004.  Vehicles  securing  notes payable have a carrying  amount of
$27,040 and $53,676 as of December 31, 2004 and 2003, respectively.

Aggregate maturities of the Company's notes payable as of December 31, 2004, are
as follows:

         2005                                       $ 25,248
         2006                                         40,924
         2007                                         43,784
         2008                                         46,861
         2009                                         42,500
         Thereafter                                  629,952
                                                    --------
                                                    $829,269
                                                    ========


                                      F-10
<PAGE>

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

4.  Lease Obligations

The Company  leases office and warehouse  space,  along with certain  equipment,
under agreements  classified as operating  leases.  An early  termination of the
office and  warehouse  lease,  which is currently  set to expire on December 31,
2005 and provides for monthly payments of $18,125, is currently being negotiated
between the Company and the landlord.  Future minimum payments for these leases,
including the office and warehouse space, by year and in the aggregate,  consist
of the following as of December 31, 2004:

         2005                                       $230,048
         2006                                         11,312
         2007                                         11,312
         2008                                          5,656
                                                    --------
         Total minimum lease payments               $258,328
                                                    ========

5. Deferred Revenue

In December 2003, the Company entered into a $1,000,000,  ten-year use agreement
whereby  the user is  allowed  exclusive  use of  certain  research  data of the
Company on product  failure or failure  patterns and  quarterly  updates of such
data. The use agreement called for ten $100,000 annual payments  starting at the
date of the  agreement.  Either party could  terminate the use agreement with 30
days written notice.  This agreement is in the process of being  terminated.  At
December 31, 2003,  the Company has recorded  deferred  revenue of $91,667 and a
receivable  of  $100,000  related  to this use  agreement.  The  receivable  was
collected and the remaining revenue recognized in 2004.


                                      F-11
<PAGE>

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

6. Income Taxes

For tax purposes the Company has net operating loss ("NOL") carryovers which are
available  to offset  future  taxable  income.  These NOL  carryovers  expire as
follows:

                   Year          Year of                NOL
                Generated       Expiration           Carryover
                ----------------------------------------------
                  1995             2010               $ 10,943
                  1996             2011                  1,704
                  1997             2012                  1,979
                  1998             2018                 99,100
                  1999             2019                109,805
                  2000             2020                111,450
                  2001             2021                 89,766
                  2002             2022                109,525
                  2004             2024                 63,003
                                                      --------
                                                      $597,275
                                                      ========

Deferred  income  taxes  reflect  the net tax effects of  temporary  differences
between the carrying  amounts of assets and liabilities for financial  reporting
purposes and the amounts used for income tax purposes.

Significant  components of the Company's deferred tax assets and liabilities are
as follows as of December 31:

                                                          2004          2003
                                                       -----------------------
Deferred tax assets:
  NOL carryovers                                       $ 228,697     $ 243,078
  Expenses not currently deductible                      172,817       172,817
  Reserve for doubtful accounts                            9,573        13,402
  Other                                                      523           523
                                                       -----------------------
Net deferred tax assets                                  411,610       429,820
Deferred tax liability - tax over book depreciation       (9,208)       (9,246)
                                                       -----------------------
Net deferred tax assets (including $27,656
  classified as current)                               $ 402,402     $ 420,574
                                                       =======================

The ultimate  realization  of these assets is dependent  upon the  generation of
future  taxable  income  sufficient  to offset the  related  deductions  and NOL
carryovers  within the  applicable  carryover  periods as previously  described.
During 2003,  it was  determined  that  generation of such income is more likely
than not.  Accordingly,  the valuation  allowance of $552,189 as of December 31,
2002, was reversed.


                                      F-12
<PAGE>

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

6. Income Taxes (continued)

The reconciliation of income tax attributable to continuing  operations computed
at the U.S. federal statutory tax rates to the income tax benefit recorded is as
follows for the years ended December 31:

                                                           2004          2003
                                                        -----------------------

      Tax at U.S. statutory rates of 34%                $  15,622     $  50,232
      Effect of permanent  differences
        (primarily  write-off of deferred stock
        issuance costs in 2003)
                                                            2,237        75,046
      Reverse prior year valuation allowance                   --      (552,189)
      Other                                                   313         6,337
                                                        =======================
                                                        $  18,172     $(420,574)
                                                        =======================

7. Company Stock Transactions

As  discussed  in Note 2, in 2002,  the Company  entered  into an equity line of
credit investment  agreement with the Investor.  Related to this agreement,  the
Company issued shares of common stock and paid cash to satisfy costs  associated
with the potential of raising capital. At January 1, 2003, the Company presented
these costs  totaling  $191,393 as a reduction of equity  pending future funding
under this agreement.  During 2003,  management determined the Company would not
draw on this equity line of credit and these costs were expensed.

As a result of the warrants  related to the convertible  debt and equity line of
credit  discussed in Note 2 and the employee stock options  discussed in Note 8,
the Company has reserved 10,792,778 shares of common stock for future issuance.

8. Employee Stock Options

The Company  follows APB 25 and related  interpretations  in accounting  for its
employee  stock  options.  Under  APB 25,  because  the  exercise  price  of the
Company's employee stock options is equal to or greater than the market price of
the  underlying  stock on the grant date, no  compensation  expense is generally
recognized.

Pro forma information  regarding net income, as presented in Note 1, is required
by FAS 123, as amended by FAS 148, and has been determined as if the Company had
accounted for its employee stock options under the fair value method of FAS 123.
The fair value for these options, which were issued in 2002, was estimated using
a Black-Scholes option pricing model with the following  assumptions:  risk-free
interest rates of 3.05%, expected lives of 5 years, expected volatility of 43.9%
and no expected dividends.


                                      F-13
<PAGE>

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

8. Employee Stock Options (continued)

The Company has no formal  stock  option  plan,  however in November  2002,  the
Company issued to employees options to acquire 8,028,000 shares of the Company's
common  stock  (8,000,000  of which were issued to five  employees  who are also
board members).  These options vest at the rate of 20% annually beginning at the
grant date and expire upon termination of employment. A summary of the Company's
stock option activity,  and related  information for the years ended December 31
is as follows:

<TABLE>
<CAPTION>
                                                           2004                                 2003
                                            ---------------------------------      --------------------------------
                                                                   Weighted                             Weighted
                                                                    Average                             Average
                                                                   Exercise                             Exercise
                                               Options              Price             Options            Price
                                            ---------------------------------      --------------------------------
<S>                                             <C>             <C>                    <C>            <C>
      Outstanding at beginning of year
                                                8,028,000       $        0.11          8,028,000      $        0.11
      Forfeited                                   (13,000)                 --                 --                 --
                                            ---------------------------------      --------------------------------
      Outstanding at end of year                8,015,000       $        0.11          8,028,000      $        0.11
                                            =================================      ================================

      Exercisable at end of year                4,815,000                             3,228,000
      Fair value of options granted         $          --                          $         --
</TABLE>

Exercise  prices for options  outstanding  as of December 31,  2004,  range from
$0.11 (8,000,000 shares) to $0.18 (15,000 shares).

9. Related Party Transaction

In 2003, the $14,000 balance of an advance from a stockholder of the Company was
repaid.

10. Concentration of Risks

Periodically, the Company has cash on deposits with financial institutions which
exceed Federal Deposit Insurance Corporation ("FDIC") limits. Balances in excess
of the insurance  limits are subject to the risk the financial  institution will
not pay upon demand.  At December 31, 2004, the Company's  balances on hand with
financial institutions exceed the FDIC coverage by approximately $159,000.


                                      F-14
<PAGE>

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

11. Earnings Per Share Data

Basic  earnings  per share  assumes no dilution  and is computed by dividing net
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 and  warrants,  using the treasury
stock  method of  computing  such  effects  and  contingent  shares  related  to
potential conversion of convertible debt.

The following  table sets forth the  computation of basic earnings per share for
the years ended December 31:

                                                           2004          2003
                                                      -------------------------
      Basic:
        Net income                                    $    27,777   $   568,315
        Average shares outstanding                     15,953,692    14,961,457
                                                      -------------------------
        Basic earnings per share                      $      0.00   $      0.04
                                                      ===========---===========

      Diluted:
        Net income                                    $    27,777   $   568,315
        Add interest on convertible debt                       --        18,000
                                                      -------------------------
        Diluted net income                            $    27,777   $   586,315
                                                      ===========---===========

        Average shares outstanding                     15,953,692    14,961,457
        Effect of dilutive stock options and
          warrants - based on treasury stock method     2,935,962     1,734,059
        Assumed conversion of 6% convertible debt              --     1,992,022
                                                      -------------------------
        Diluted shares outstanding                     18,889,654    18,687,538
                                                      ===========---===========

        Diluted earnings per share                    $      0.00   $      0.03
                                                      ===========---===========

12. Joint Venture

On December 30, 2004,  the Company  entered into a joint venture  agreement with
two other companies to form Vulnerability  Assessment Group ("VAG"). The Company
has a one-third interest in VAG. The purpose of VAG is to provide  comprehensive
assessment  plans to  individuals,  businesses,  industries,  organizations  and
institutions of their vulnerability to terrorism, external or internal sabotage,
employee  assessment  and safety,  product  safety and chemical  and  biological
safety.  As of December 31, 2004, the Company had incurred no significant  costs
related to VAG.


                                      F-15
<PAGE>

Item  8.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
          Financial Disclosure.

      There were no changes in or  disagreements  with accountants on accounting
and financial disclosure for the period covered by this report.

Item 8A. Controls and Procedures.

      We maintain disclosure controls and procedures that are designed to ensure
that  information  required  to be  disclosed  in our  Exchange  Act  reports is
recorded,  processed,  summarized and reported within the time periods specified
in the SEC's  rules and forms,  and that such  information  is  accumulated  and
communicated  to our  management to allow timely  decisions  regarding  required
disclosure.  Management  necessarily applied its judgment in assessing the costs
and benefits of such  controls  and  procedures,  which,  by their  nature,  can
provide only reasonable assurance regarding management's control objectives.

      In connection with this report, John Van Zyll, our Chief Executive Officer
and Chief  Financial  Officer,  evaluated  the  effectiveness  of the design and
operation of our disclosure controls and procedures.  Based upon that evaluation
he concluded  that our  disclosure  controls and  procedures  were  effective in
alerting him in a timely manner to information  relating to the Company required
to be disclosed in this report.

Item 8B. Other Information

Reports on Form 8-K.

      During the period  commencing  the last  quarter of the period  covered by
this Report  until the date of filing of this  Report,  the Company did not file
any Current Reports on Form 8-K.

<PAGE>

                                    PART III

Item 9. Directors and Executive Officers of the Registrant.

(a) Identity of our current directors and executive officers.

Name                     Age      Positions with the Company
----                     ---      --------------------------

John Van Zyll            64       Chairman of the Board, Chief Executive Officer

Marvin Stacy             71       Chief Operating Officer and Director

Ann M. Furlong           52       Secretary and Director

Warren Wankelman         61       Director

Matt Walters             33       Director

      John Van Zyll  currently  serves  as the  Chairman  of the Board and Chief
Executive Officer. Mr. Van Zyll has served in this capacity since March 2001 and
previously served in similar capacities with Diversified Product Investigations,
Inc.,  the Company's  subsidiary  since its formation in 1991.  Mr. Van Zyll has
over 10 years of construction and  investigation  experience.  He is a member of
the  Southern  Building  Code  Congress  International  and  the  National  Fire
Protection  Association  and  is  a  licensed  Private  Investigator.  He  holds
certificates  from the National  Association of  Investigative  Specialists with
specialties in Insurance  Claim  Investigation  and Advanced Fire  Investigation
Techniques.  Mr. Van Zyll is considered an expert in the field of  investigation
and  subrogation  by the insurance  industry and has conducted over 100 training
seminars and trained over 1900 insurance adjusters.

      Marvin  Stacy  currently  serves as a  Director  and the  Company's  Chief
Operating Officer. Mr. Stacy has served in these capacities since March 2001 and
previously served in similar capacities with Diversified Product Investigations,
Inc.,  the  Company's  subsidiary  since  1991.  Mr.  Stacy has over 40 years of
experience in all aspects of electrical and mechanical  engineering  and design.
As a  licensed  private  investigator  he  assists  with  the  operation  of the
laboratory  and  has  designed  custom  testing  equipment.  Mr.  Stacy  assists
Engineers  with design  solutions  for  manufacturers.  Mr. Stacy is a member of
IAMPO, the International  Association of Mechanical and Plumbing Officials.  Mr.
Stacy   assists  in  the  Human   Resource   Dept.,   with   regards  to  hiring
qualified-professional personnel.

      Ann M. Furlong currently serves as a Director and the Company's Secretary.
Ms.  Furlong  has served in these  capacities  since  March 2001 and  previously
served in similar capacities with Diversified Product Investigations,  Inc., the
Company's subsidiary since 1991. With over 29-years of management experience Ms.
Furlong has provided  administrative and organizations  expertise. As a licensed
private  investigator  she assists with research  projects.  She has traveled to
assist  with  stock  promotional  shows  for  the  Company  along  with  seminar
presentations to the Insurance Industry. Ms. Furlong focuses on special projects
and assists in the operations of the Company.

      Warren Wankelman  currently serves as a Director and as the Vice President
of Marketing for the Company. Mr. Wankelman has served in these capacities since
March 2001 and previously served in similar capacities with Diversified  Product
Investigations,  Inc., the Company's  subsidiary  since 2001. Mr.  Wankelman has
over 25 years of experience in  Sales/Marketing  and  Operations  Management.  A
graduate of Northwestern University, Mr. Wankelman has consistently demonstrated
effective marketing and management ability in a career of leadership  positions,
including  Executive  Vice President of Punta Gorda Isles,  Inc.,  President and
owner of  Wankelman-  Swen &  Associates,  Inc. and  Director of  Marketing  for
Saddlebrook, Inc. of Knoxville, Tennessee.
<PAGE>

      Matt Walters currently serves as a Director and Chief Information  Officer
of the Company.  Mr.  Walters has served in this  capacity  since May 2001.  Mr.
Walters  has  over  10  years  experience  in IT  (Information  Technology)  and
Facilities  Management.  He is a  graduate  of  Tusculum  College  with  a BS in
Organizational  Management  and gas  recently  attended  New  Horizons  Computer
Learning Center. As a Microsoft Certified Professional, his client list includes
TVA,  SAIC,  Lockheed-Martin,  Pfizer  Pharmaceuticals,  Philips  Magnavox,  and
BellSouth.Net.

      Mr.  Walters has  implemented  various IT quality  controls  and  security
measures for the company and is responsible for  implementation of a new company
service,  the  HomeCheckSafety.com.  He also  assisted  with  designing a custom
database and instituting  digital  photography and he has enhanced the Company's
investigation reports.

Executive Officers

      All of our executive  officers also serve as our directors.  The executive
officers serve at the pleasure of our board of directors and our chief executive
officer.

Section 16 Reporting

      No person who,  during the year ended  December 31, 2004,  was a director,
officer or  beneficial  owner of more than ten percent of the  Company's  Common
Stock (which is the only class of  securities  of the Company  registered  under
Section 12 of the  Securities  Exchange  Act of 1934 (the  "Act") (a  "Reporting
Person") failed to file on a timely basis, reports required by Section 16 of the
Act during the most recent  fiscal year or prior years.  The  foregoing is based
solely  upon a review by the Company of Forms 3 and 4 during such fiscal year as
furnished  to the Company  under Rule  16a-3(d)  under the Act,  and Forms 5 and
amendments  thereto  furnished  to the Company with respect to such fiscal year,
and any representation received by the Company from any reporting person that no
Form 5 is required.

Code of Ethics

      The Company has not yet adopted a Code of Ethics applying to its executive
officers. The Company intends to adopt a Code of Ethics applying to such persons
during the first quarter of the fiscal year ending December 31, 2005.

Item 10. Executive Compensation.

      The following Summary Compensation Table sets forth summary information as
to  compensation  received by the  Company's  Executive  Officers  as  executive
officers of the Company  through  December  31, 2004  (collectively,  the "named
executive  officers")  for  services  rendered to the Company in all  capacities
during the three calendar years ended December 31, 2004.
<PAGE>

<TABLE>
<CAPTION>
                                 ANNUAL COMPENSATION                                            LONG TERM COMPENSATION

                                                                                           Awards                  Payouts

    Name                                                              Other        Restricted    Securities
    and                                                              Annual          Stock       Underlying                 All
 Principal                        Year                               Compen-         Awards       Options/     LTIP        Other
  Position        Position       Ended       Salary($)   Bonus($)   sation($)          $            SARS      Payouts   Compensation
  --------        ---------      -----       ---------   --------   ---------          -            ----      -------   ------------
<S>               <C>          <C>            <C>            <C>        <C>            <C>           <C>         <C>         <C>

  John Van          Chief      12/31/2004     $57,538        0          0              0             0           0           0
    Zyll          Executive    12/31/2003     $49,000        0          0              0             0           0           0
                   Officer     12/31/2002     $40,323        0          0              0             0           0           0

Marvin Stacy        Chief      12/31/2004     $53,479        0          0              0             0           0           0
                  Operating    12/31/2003     $49,000        0          0              0             0           0           0
                   Officer     12/31/2002     $41,020        0          0              0             0           0           0

Ann Furlong       President    12/31/2004     $52,309        0          0              0             0           0           0
                               12/31/2003     $49,000        0          0              0             0           0           0
                               12/31/2002     $40,321        0          0              0             0           0           0
</TABLE>

Compensation of Directors

      During the fiscal year ended  December 31,  2004,  no officer or directo r
received  any type of  compensation  from our Company  for  serving as such.  No
arrangements  are  presently in place  regarding  compensation  to directors for
their  services  as  directors  or  for  committee   participation   or  special
assignments.

Employee/Consultant Stock Compensation Plan

      We maintain an  employee/consultant  stock  compensation plan (the "Plan")
pursuant  to which the  maximum  number  of  shares of common  stock as to which
awards may be granted is 1,400,000  shares.  Our board of directors may increase
the maximum  number of shares of common  stock as to which awards may be granted
at such time as it deems advisable. Awards under the Plan may be granted only to
our employees and consultants.

Item 11.  Security  Ownership of Certain  Beneficial  Owners and  Management and
Related Stockholder Matters.

      The following  table sets forth certain  information  as of March 18, 2005
regarding  the  beneficial  ownership  of our  common  stock held by each of our
executive officers and directors, individually and as a group and by each person
known to us which  beneficially  owns in excess of five  percent  of the  common
stock.  Unless otherwise  indicated,  each of the persons listed has sole voting
and dispositive power with respect to the shares shown as beneficially owned.

                                       Number of Shares of     Percent of
                                       Common  Stock           Common Stock
   Name of                             Beneficially            Beneficially
Beneficial Owner                       Owned  (1)              Owned
-----------------                      -------------------     ------------

Jan Telander                           8,159,475(2)              37.2%

John Van Zyll                          6,654,011(3)              32.2%

EIG Capital, Ltd.                      4,445,815(4)              23.2%

EIG Venture
  Capital Ltd.                         4,125,815                 21.6%

Ann M. Furlong                         3,725,811(3)              18.1%

Marvin Stacy                           3,619,055(3)              17.5%

Sofcon Ltd.                            3,542,360(5)              16.2%

Warren Wankelman                         150,000(6)                *

Matt Walters                             155,000(6)                *

All Executive Officers and
Directors  as a Group
(five (5) persons)                    14,303,877(7)              59.8%

----------
* Represents less than one percent (1%) of the outstanding  shares of our common
stock.

      (1)  Based  upon  19,135,920   shares  of  our  common  stock  issued  and
outstanding  as of March  18,  2005.  The  number  of  shares  of  common  stock
beneficially  owned by each  person  or  entity  is  determined  under the rules
promulgated  by the SEC.  Under such rules,  beneficial  ownership  includes any
shares as to which  the  person or  entity  has sole or shared  voting  power or
investment power and shares which such person or entity has the right to acquire
within  sixty days after  March 18,  2005.  The  inclusion  herein of any shares
deemed  beneficially  owned does not  constitute  an admission by such person of
beneficial ownership of such shares.

      (2) Includes  all shares  beneficially  owned by EIG Capital  Investments,
Ltd.,  EIG Venture  Capital,  Ltd. and Sofcon,  Ltd.,  including an aggregate of
2,777,778 shares issuable to Sofcon, Ltd. upon exercise of currently exercisable
warrants.  Mr.  Telander  is  President  and a director  of each of EIG  Capital
Investments, Ltd., EIG Venture Capital, Ltd. and Sofcon, Ltd.

      (3)  Includes  options  to  purchase  1,500,000  shares  of  common  stock
currently exercisable at $.108 per share.
<PAGE>

      (4) Includes an aggregate of 320,100  shares owned directly by EIG Capital
Investments Ltd. and an aggregate of 4,125,815 shares  beneficially owned by EIG
Venture Capital Ltd. EIG Capital Ltd. owns all of the outstanding  capital stock
of each of such entities.

      (5) Includes  warrants to purchase an aggregate of 2,777,778 shares of our
common stock.

      (6)  Includes  options to  purchase  150,000  shares of our  common  stock
currently exercisable at $.108 per share.

      (7) Includes  options to purchase an aggregate of 4,800,000  shares of our
common stock currently exercisable at $.108 per share.

Item 12. Certain Relationships and Related Transactions.

Not Applicable.

Item 13. Exhibits.

Exhibit
Number      Description
-------     -----------

2.1         Share   Exchange   Agreement   between  with   Diversified   Product
            Inspections,  Inc., a Florida  corporation filed with the Commission
            on Form 8-K on March 6, 2001 and incorporated herein by reference.

3.1         Articles of Incorporation and Amendment to Articles of Incorporation
            are incorporated  herein by reference to the Company's  Registration
            Statement  on Form 10-SB filed with the  Commission  on February 23,
            1999.

3.2         Bylaws of the Company are  incorporated  herein by  reference to the
            Company's  Registration  Statement  on Form  10-SB  filed  with  the
            Commission on February 23, 1999.

3.3         Articles of Incorporation and Amendment to Articles of Incorporation
            are incorporated  herein by reference to the Company's  Registration
            Statement  on Form 10-SB filed with the  Commission  on February 23,
            1999.

3.4         Bylaws of the Company are  incorporated  herein by  reference to the
            Company's  Registration  Statement  on Form  10-SB  filed  with  the
            Commission on February 23, 1999.
<PAGE>

10.1        Articles of Merger and Agreement and Plan of Merger are incorporated
            herein by reference to the Company's  Registration Statement on Form
            10-SB filed with the Commission on February 23, 1999.

10.2        Diversified Product Inspections,  Inc. Year 2001 Employee/Consultant
            Stock  Compensation  Plan  filed  as an  Exhibit  to  the  Company's
            registration  statement  on Form S-8 filed  with the  Commission  on
            March 6, 2001 and incorporated herein by reference.

10.3        Purchase  and Sale  Agreement  and Escrow  Instructions  dated as of
            December 21, 2004 between TN-801 Tri-County, LLC and the Company.*

10.4        Note  for  Business  and  Commercial  Loans  (Non-Revolving)  in the
            principal  amount  of  $800,000  dated  December  21,  2004 from the
            Company to AmSouth Bank.*

31.1        Certification of Principal Executive Officer and Principal Financial
            Officer Pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant
            to Section 302 of the Sarbanes-Oxley Act of 2002.*

32.1        Certification of Principal Executive Officer and Principal Financial
            Officer  Pursuant to 18 U.S.C.  1350, as adopted pursuant to Section
            906 of the Sarbanes-Oxley Act of 2002.*

*Filed herewith

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

      The following  table sets forth the fees billed to us for the fiscal years
ended December 31, 2004 and December 31, 2004 by Coulter & Justus, P.C. ("C&J"):

                                     Fiscal Year             Fiscal Year
                                     Ended                   Ended
                                     December 31, 2003       December 31, 2004

      Audit Fees (1)                     $40,389                  $32,615
      Audit Related Fees (2)             $     0                  $     0
      Tax Fees (3)                       $ 4,509                  $ 5,837
      All Other Fees (4)                       0                  $ 1,087

      (1)  Consists of fees billed for  professional  services  rendered for the
audit of the  financial  statements  of the Company as of December  31, 2003 and
December  31,  2004 and  reviews of the  financial  statements  included  in the
Company's  Quarterly  Reports on Form 10-QSB for the quarters during such fiscal
years.
<PAGE>

      (2)  Consists of fees for  services  relating to  accounting  consultation
related to the performance of the audit that are not reported as audit fees.

      (3) Consists of tax filing and tax related  compliance  and other advisory
services.

      (4) Represents  the sale price of a fixed asset  software  package sold to
the Company.

      Our  Board  of  Directors  determined  that  the  provision  of the  above
non-audit services was compatible with C&J maintaining its independence.

Pre-Approval of Services by the Independent Auditor

      The Board of Directors has  established  policies and  procedures  for the
approval and  pre-approval of audit services and permitted  non-audit  services.
The  Board  has  the  responsibility  to  engage  and  terminate  the  Company's
independent  registered public accountants,  to pre-approve their performance of
audit services and permitted non-audit services and to review with the Company's
independent  registered public accountants their fees and plans for all auditing
services.  All services  provided by and fees paid to Coulter & Justus,  P.C. in
2004 were pre-approved by the Board of Directors.
<PAGE>

                                   SIGNATURES

      In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized

Dated: March 30, 2005
                                          Diversified Product Inspections, Inc.


                                          By: /s/ John Van Zyll
                                          ----------------------
                                              John Van Zyll
                                              Chief Executive Officer
                                              (Principal Executive Officer and
                                              Principal Accounting Officer)

      In accordance  with the Exchange Act, this report has been signed below by
the following  persons on behalf of the  Registrant and in the capacities and on
the dates indicated.


/s/ John Van Zyll
--------------------
John Van Zyll              Chairman of the Board                  March 30, 2005


/s/ Marvin Stacy
--------------------
Marvin Stacy               Chief Operating Officer and Director   March 30, 2005


/s/ Ann M. Furlong
--------------------
Ann M. Furlong             Secretary and Director                 March 30, 2005


/s/ Warren Wankelman
--------------------
Warren Wankelman           Director                               March 30, 2005


/s/ Matt Walters
--------------------
Matt Walters               Director                               March 30, 2005