U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended: September 30, 2000
Commission file no.: 0-25657
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.)
3 Main Street
Oakridge, TN 37830
------------------------------------------ -----------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (865) 482-8480
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None None
----------------------------------- -----------------------------
Securities to be registered under Section 12(g) of the Act:
Common Stock, $.0001 par value per share
--------------------------------------------------------
(Title of class)
Copies of Communications Sent to:
Donald F. Mintmire
Mintmire & Associates
265 Sunrise Avenue, Suite 204
Palm Beach, FL 33480
Tel: (561) 832-5696 - Fax: (561) 659-5371
<PAGE>
Indicate by Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
As of September 30, 2000, there were 11,141,900 shares of the Common Stock
of the registrant issued and outstanding. There were also 5,100 shares to be
issued pursuant to the Company's ongoing offering and 75,000 shares to be issued
to Dean Madden pursuant to an employment contract.
PART I
Item 1. Financial Statements
INDEX TO FINANCIAL STATEMENTS
Consolidated Balance Sheets..................................................F-2
Consolidated Statements of Operations........................................F-3
Consolidated Statements of Stockholders' Equity (Deficiency).................F-4
Consolidated Statements of Cash Flows........................................F-5
Notes to Consolidated Financial Statements...................................F-6
F-1
<PAGE>
Diversified Product Inspections, Inc.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
<S> <C> <C>
September 30, December 31,
2000 1999
------------------- -------------------
(unaudited)
ASSETS
CURRENT ASSETS
Cash and equivalents $ 62,909 $53,335
Accounts receivable 95,220 69,226
Deferred tax assets 22,556 22,556
------------------- -------------------
Total current assets 180,685 145,117
------------------- -------------------
PROPERTY AND EQUIPMENT
Equipment 104,316 56,639
Vehicles 45,886 45,886
Less accumulated depreciation (52,858) (32,722)
------------------- -------------------
Net property and equipment 97,344 69,803
------------------- -------------------
OTHER ASSETS
Other assets 4,400 0
Deposit on real property 372,125 0
------------------- -------------------
Total other assets 376,525 0
------------------- -------------------
Total Assets $ 654,554 $214,920
=================== ===================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES
Accounts payable $ 326,594 $15,935
Accrued expenses
Income taxes 14,779 11,401
Salaries 362,932 298,275
Current portion of long-term debt 18,546 10,551
Line of credit payable 24,790 21,585
------------------- -------------------
Total current liabilities 747,641 357,747
------------------- -------------------
LONG-TERM DEBT
Deferred taxes 5,178 5,178
Notes payable, net of current portion 57,305 31,915
Loan from shareholder 4,025 4,025
------------------- -------------------
Total long-term debt 66,508 41,118
------------------- -------------------
Total Liabilities 814,149 398,865
------------------- -------------------
STOCKHOLDERS' EQUITY (DEFICIENCY)
Common stock, $0.0001 and $1.00 par value, authorized 50,000,000 and
10,000,000 shares; 11,160,200 and 9,000,000 issued and
outstanding shares 1,116 9,000,000
Additional paid-in capital 818,047 (8,639,900)
Accumulated deficit (978,758) (544,045)
------------------- -------------------
Total stockholders' equity (deficiency) (159,595) (183,945)
------------------- -------------------
Total Liabilities and Stockholders' Equity (Deficiency) $ 654,554 $214,920
=================== ===================
</TABLE>
The accompanying notes are an integral part of the financial statements
F-2
<PAGE>
Diversified Product Inspections, Inc.
Consolidated Statements of Operations
(unaudited)
<TABLE>
<CAPTION>
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Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------------- ----------------------------------
2000 1999 2000 1999
-------------- -------------- -------------- ----------------
REVENUES $ 274,638 $ 208,572 $ 753,235 $ 503,647
OPERATING EXPENSES
Compensation:
Officers 45,000 45,000 135,000 135,000
Others 117,343 29,224 303,221 94,404
Depreciation 6,712 2,216 20,136 9,594
General and administrative 300,694 50,540 720,325 313,285
-------------- -------------- -------------- ----------------
Total operating expenses 469,749 126,980 1,178,682 552,283
-------------- -------------- -------------- ----------------
Operating Income (Loss) (195,111) 81,592 (425,447) (48,636)
-------------- -------------- -------------- ----------------
OTHER INCOME (EXPENSE)
Interest expense (3,825) (837) (9,266) (2,360)
-------------- -------------- -------------- ----------------
Total other income (expense) (3,825) (837) (9,266) (2,360)
-------------- -------------- -------------- ----------------
Net income (loss) before income tax (198,936) 80,755 (434,713) (50,996)
Income tax expense (benefit) 0 0 0 0
-------------- -------------- -------------- ----------------
Net income (loss) $ (198,936) $ 80,755 $ (434,713) ($50,996)
============== ============== ============== ================
Net income (loss) per common share $ (0.02) $ 0.01 $ (0.04) $ (0.01)
============== ============== ============== ================
Weighted average number of common shares
outstanding 11,138,550 9,000,000 11,084,441 9,000,000
============== ============== ============== ================
</TABLE>
The accompanying notes are an integral part of the financial statements
F-3
<PAGE>
Diversified Product Inspections, Inc.
Consolidated Statements of Stockholders' Equity (Deficiency)
<TABLE>
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Total
Additional Stockholders'
Number of Common Paid-in Equity
Shares Stock Capital Deficit (Deficiency)
------------ ------------- -------------- ------------ ---------------
BEGINNING BALANCE,
December 31, 1998 9,000,000 $ 9,000,000 $ (8,639,900) $ (530,576) $(170,476)
Year ended December 31, 1999:
Net loss 0 0 0 (13,469) (13,469)
------------ ------------- -------------- ------------ ---------------
BALANCE, December 31, 1999 9,000,000 9,000,000 (8,639,900) (544,045) (183,945)
Nine months ended September 30, 2000:
-------------------------------------
(unaudited)
1st qtr. shares issued for cash 241,900 241,900 123,760 0 365,660
Reverse merger 1,875,000 (9,240,788) 9,240,941 0 153
3rd qtr. shares issued for cash 43,300 4 93,246 0 93,250
Net income (loss) 0 0 0 (434,713) (434,713)
------------ ------------- -------------- ------------ ---------------
ENDING BALANCE, September 30, 2000
(unaudited) 11,160,200 $1,116 $818,047 $(978,758) $(159,595)
============ ============= ============== ============ ===============
</TABLE>
The accompanying notes are an integral part of the financial statements
F-4
<PAGE>
Diversified Product Inspections, Inc.
Consolidated Statements of Cash Flows
Nine Months Ended September 30,
(unaudited)
<TABLE>
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2000 1999
------------------ -------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (434,713) $(50,996)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation 20,136 9,594
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (25,994) (19,719)
Increase (decrease) in accounts payable 174,034 41,387
Accrued income taxes 3,378 0
Increase (decrease) accrued salaries 64,657 64,309
------------------ -------------------
Net cash provided (used) by operating activities (198,502) 44,575
------------------ -------------------
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of property and equipment (47,677) (37,886)
Other assets (4,400) 0
Deposit on real property (235,500) 0
------------------ -------------------
Net cash provided (used) by investing activities (287,577) (37,886)
------------------ -------------------
CASH FLOW FROM FINANCING ACTIVITIES:
Shareholder advances 0 0
Shareholder advance repayments 0 (13,500)
Common stock sold for cash, net 458,910 0
Proceeds of long-term debt 45,599 32,272
Debt payments (8,856) (4,008)
------------------ -------------------
Net cash provided by financing activities 495,653 14,764
------------------ -------------------
Net increase (decrease) in cash and equivalents 9,574 21,453
CASH and equivalents, beginning of period 53,335 20,700
------------------ -------------------
CASH and equivalents, end of period $62,909 $42,153
================== ===================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Interest paid in cash $9,266 $2,360
================== ===================
Non-Cash Investing Activity:
Rent payable added to deposit on real property $ 136,625 $ 0
================== ===================
</TABLE>
The accompanying notes are an integral part of the financial statements
F-5
<PAGE>
Diversified Product Inspections, Inc.
Notes to Consolidated Financial Statements
(Information with regard to the nine months ended September 30, 2000 and
1999 is unaudited)
(1) Summary of Significant Accounting Principles TheCompany Diversified
Product Inspections, Inc., (the "Company"), is a Florida chartered corporation
which conducts business from its offices in Oak Ridge, Tennessee. The Company
was incorporated on September 30, 1991. The Company is engaged primarily in the
inspection and investigation of product liability claims. All investigators are
licensed in the state where they practice.
The following summarize the more significant accounting and reporting
policies and practices of the Company:
a) Use of estimates In preparing the financial statements, management
is required to make estimates and assumptions that affect the reported
amounts of assets and liabilities as of the date of the statements of
financial condition, and revenues and expenses for the year then
ended. Actual results may differ significantly from those estimates.
b) Net income (loss) per common share Basic net income (loss) per
weighted average common share is computed by dividing the net income
(loss) by the weighted average number of common shares outstanding
during the period.
c) Property and equipment All property and equipment is recorded at
cost and depreciated over their estimated useful lives, generally 3, 5
or 7 years, using the straight-line method. Upon sale or retirement,
the costs and related accumulated depreciation are eliminated from
their respective accounts, and the resulting gain or loss is included
in the results of operations. Repairs and maintenance charges which do
not increase the useful lives of the assets are charged to operations
as incurred. Depreciation expense was $20,136 and $9,594 for the nine
months ended September 30, 2000 and 1999, respectively.
d) Cash and equivalents The Company considers investments with an
initial maturity of three months or less as cash equivalents.
e) Principles of consolidation The consolidated financial statements
include the accounts of Diversified Product Inspections, Inc. and its
wholly owned subsidiary. Inter-company balances and transactions have
been eliminated.
f) Significant acquisition In March 2000, Shoe Krazy, Inc. issued
9,241,900 shares of common stock to acquire all the issued and
outstanding shares of the common stock of Diversified Product
Inspections, Inc., a Florida corporation, in a reverse merger, which
was accounted for as a reorganization of Diversified Product
Inspections, Inc.
g) Interim financial information The financial statements for the nine
months ended September 30, 2000 and 1999 are unaudited and include all
adjustments which in the opinion of management are necessary for fair
presentation, and such adjustments are of a normal and recurring
nature. The results for the nine months are not indicative of a full
year's results.
(2) Stockholders' Equity The Company has authorized 10,000,000 shares of
$1.00 par value common stock. The Company has 9,000,000 and 11,160,200 shares of
common stock issued and outstanding at December 31, 1999 and September 30, 2000.
Diversified Product Inspections, Inc.
F-6
<PAGE>
Notes to Consolidated Financial Statements
(2) Stockholders' Equity (Continued) In September 1991, the Company issued
9,000,000 shares to its founder for cash of $100. Through September 1996, the
three principal officers and founders of the Company contributed their services
to the Company, in the amount of $24,000 each per year, totaling $72,000 per
year and $360,000 for the five years. The Company recorded contributed capital
and expense for each of those years.
In January and February 2000, the Company sold 241,900 shares of common
stock for $440,660 cash, net of offering costs, under a Regulation D
Rule 504 private placement. This offering was completed through a
registered broker/dealer. In the third quarter, the Company sold 43,300
shares of common stock for $93,250 cash.
(3) Income Taxes Deferred income taxes (benefits) are provided for certain
income and expenses which are recognized in different periods for tax
and financial reporting purposes. The Company had a net deferred income
tax asset of $22,556 at December 31, 1999 and September 30, 2000. The
deferred tax asset is composed of accruals not currently deductible,
net of valuation allowance.
(4) Going Concern As shown in the accompanying financial statements, the
Company incurred a net loss totaling $435,000 for the nine months ended
September 30, 2000, and reflects stockholders' deficit of approximately
$83,000 as of September 30, 2000. The Company has entered into a
conditional contract to purchase certain real estate at a price of
$1,800,000. These conditions raise substantial doubt as to the ability
of the Company to continue as a going concern. The ability of the
Company to continue as a going concern is dependent upon increasing
sales and obtaining additional capital and financing. The Company has
retained a registered broker/dealer to raise additional funds for the
Company. The financial statements do not include any adjustments that
might be necessary if the Company is unable to continue as a going
concern.
(5) Long-Term Debt The Company is committed to two auto loans with
remaining balances of $3,900 and $17,000 at September 30, 2000. The
Company makes monthly loan payments of $200 and $600 on those loans.
(6) Commitments The Company leased two facilities in Florida and North
Carolina. In addition, the Company leases warehouse storage space in
Florida and Tennessee. The Florida office lease is a month-to-month
lease at $920 per month. The Company is responsible for insuring the
premises. The North Carolina office lease was $900 per month and
expired May 1, 2000. The lease is now on a month-to-month basis. The
warehouse storage lease is also month to month, and the storage
facility bills the Company monthly for space utilized.
The Company is obligated under three capitalized equipment leases with
remaining balances of $8,500, $4,300 and $34,900 at September 30, 2000.
Under those leases, the Company is obligated to payments totaling
$10,000, $16,000 and $22,400 for the twelve months ending June 30,
2001, 2002 and 2003, respectively, and none thereafter.
In February, the Company entered into a lease on a building in
Tennessee comprised with a floor area of approximately 30,000 square
feet. The lease expires December 20, 2000 and the fixed minimum rent is
$30,000 per month (based on $12.00 per square foot per annum). The
lessee has also entered into an agreement to purchase the facility.
Lessee and lessor agree that portions of the fixed minimum payments
shall be applied to the purchase price under the agreement of sale that
follows.
Diversified Product Inspections, Inc.
Notes to Consolidated Financial Statements
F-7
<PAGE>
(6) Commitments (Continued) If the closing and the settlement date is set for
any date within the specified periods:
(a) December 20, 1999 and March 31, 2000, then 100%, or (b) April 1,
2000 and June 30, 2000, then 85%, or (c) July 1, 2000 and September 3,
2000, then 75%, or
(d) October 1, 2000 and December 31, 2000, then 50% of all fixed
minimum rent payments paid prior to closing shall be applied
toward the purchase price.
The Company is responsible for taxes, maintenance and insurance of the
premises under the terms of the lease.
(7) Subsequent Events
a) Commitments - related party Effective October 1, 2000, the Company
and its CFO entered into a one-year employment contract. Under this
contract, the CFO earns 6,250 shares of common stock in lieu of cash
payment for each month of service provided to the Company. The 75,000
shares of common stock underlying this contract have been issued and
are held in escrow by the Company's counsel.
b) Accrued salaries payable On November 14, 2000, the Board of
Directors approved the payment of the accrued salaries payable by
issuing approximately 363,000 shares of common stock.
F-8
<PAGE>
Item 2. Management's Plan of Operation
General
Diversified Products Inspections, Inc., a Florida corporation of which
Diversified Product Investigations, a Florida corporation is a wholly owned
subsidiary, (the "Company") relied upon Section 4(2) of the Securities Act of
1933, as amended (the "Act") and Rule 506 of Regulation D promulgated thereunder
("Rule 506") for several transactions. The facts relied upon the by the Company
to make the federal exemption available include the following: (i) the aggregate
offering price for the offering of the shares of Common Stock did not exceed
$5,000,000, less the aggregate offering price for all securities sold within the
twelve months before the start of and during the offering of the shares in
reliance on any exemption under Section 3(b) of, or in violation of Section 5(a)
of the Act; (ii) no general solicitation or advertising was conducted by the
Company in connection with the offering of any of the shares; (iii) there were
no more than 35 purchasers from the Issuer in the offering; (iv) the purchasers
were all accredited investors and the books and records of the Company were
available and reviewed by each investor; and, (v) the required number of
manually executed originals and true copies of Form D were duly and timely filed
with the U.S. Securities and Exchange Commission.
In July 2000, the Company sold 25,000 shares of its Common Stock to one (1)
investor for $50,000. The Company actually received $45,000, as $5,000 was
deducted as an agent fee. The Company also issued warrants to purchase an
additional 12,500 shares exercisable at a price of $0.01 per share for a period
of three (3) years in connection with such sale. Both the shares and the shares
underlying the warrants carry mandatory registration rights. For such offering,
the Company relied upon Section 4(2) of the Act and Rule 506. No state exemption
was necessary, as the purchaser is located in Canada.
In August 2000, the Company initiated an offering of its restricted Common
Stock at a price of $2.50 per share. Since that time, 5,520 shares have been
sold to ten (10) investors for a total of $13,800. The offering is ongoing. For
such offering, the Company relied upon Section 4(2) of the Act, Rule 506,
Section 25102.1 of the California Code, Section 517.061(11) of the Florida Code
and Section 48-2-125 of the Tennessee Code.
The facts relied upon to make the California Exemption include the
following: (i) the Company filed a completed SEC Form D with the California
Department of Corporations; (ii) the Company executed a Form U-2 consent to
service of process in the state of California; (iii) the Forms were filed not
later than 15 days after the first sale of the securities in California; and (v)
the Company paid an appropriate filing fee.
The facts relied upon to make the Florida exemption available are: (i)
sales of the shares of Common Stock were not made to more than 35 persons; (ii)
neither the offer nor the sale of any of the shares was accomplished by the
publication of any advertisement; (iii) all purchasers either had a preexisting
personal or business relationship with one or more of the executive officers of
the
1
<PAGE>
Company or, by reason of their business or financial experience, could be
reasonably assumed to have the capacity to protect their own interests in
connection with the transaction; (iv) each purchaser represented that he was
purchasing for his own account and not with a view to or for sale in connection
with any distribution of the shares; and (v) prior to sale, each purchaser had
reasonable access to or was furnished all material books and records of the
Company, all material contracts and documents relating to the proposed
transaction, and had an opportunity to question the executive officers of the
Company. Pursuant to Rule 3E-500.005, in offerings made under Section
517.061(11) of the Florida Statutes, an offering memorandum is not required;
however each purchaser (or his representative) must be provided with or given
reasonable access to full and fair disclosure of material information. An issuer
is deemed to be satisfied if such purchaser or his representative has been given
access to all material books and records of the issuer; all material contracts
and documents relating to the proposed transaction; and an opportunity to
question the appropriate executive officer.
The facts relied upon to make the Tennessee Exemption include the
following: (i) the Company filed a completed SEC Form D with the Tennessee
Division of Securities; (ii) the Form was filed not later than 15 days after the
first sale; (iii) the Company provided the Tennessee Division of Securities a
copy of the information furnished by the Company to the offerees, (iv) the
Company executed a Form U-2 consent to service of process; and (v) the Company
paid an appropriate filing fee.
In September 2000, the Company entered into an employment agreement with
Dean Madden to be the Chief Financial Officer of the Company. The agreement is
for a period of one (1) year. Compensation is in the form of shares of the
Company's restricted Common Stock. Mr. Madden earns 6,250 shares of stock each
month, however the stock is subject to an escrow agreement which provides for
its release in October 2001. The stock has not yet been issued. For such
offering, the Company relied upon Section 4(2) of the Act, Rule 506 and Section
48-2-125 of the Tennessee Code.
The facts relied upon to make the Tennessee Exemption include the
following: (i) the Company filed a completed SEC Form D with the Tennessee
Division of Securities; (ii) the Form was filed not later than 15 days after the
first sale; (iii) the Company provided the Tennessee Division of Securities a
copy of the information furnished by the Company to the offerees, (iv) the
Company executed a Form U-2 consent to service of process; and (v) the Company
paid an appropriate filing fee.
In October 2000, the Board of Directors elected to extend termination of
the Company's ongoing private offering, which was to terminate on or before
October 31, 2000 to December 31, 2000.
In November 2000 the Board of Directors elected to convert a total of
$362,932 in accrued unpaid salaries to 362,992 shares of the Company's
restricted Common Stock. The individuals owed such salaries agreed to such
shares of stock in lieu of such salary. Marvin Stacy, the current Vice-
President of the Company received 120,997 of such shares. John VanZyll, the
President received 120,997 of such shares. Ann Furlong, the Company's current
Secretary, received 120,998 of such shares. For such offering, the Company
relied upon Section 4(2) of the Act, Rule 506 and Section 517.061(11) of the
Florida Code and Section 48-2-125 , as interpreted by Rule 0780-4-2-.11 of the
Tennessee Securities Act of 1980.
The facts relied upon to make the Florida exemption available are: (i)
sales of the shares of Common Stock were not made to more than 35 persons; (ii)
neither the offer nor the sale of any of the shares was accomplished by the
publication of any advertisement; (iii) all purchasers either had a preexisting
personal or business relationship with one or more of the executive officers of
the Company or, by reason of their business or financial experience, could be
reasonably assumed to have the capacity to protect their own interests in
connection with the transaction; (iv) each purchaser represented that he was
purchasing for his own account and not with a view to or for sale in connection
with any distribution of the shares; and (v) prior to sale, each purchaser had
reasonable access to or was furnished all material books and records of the
Company, all material contracts and documents relating to the proposed
transaction, and had an opportunity to question the executive officers of the
Company. Pursuant to Rule 3E-500.005, in offerings made under Section
517.061(11) of the Florida Statutes, an offering memorandum is not required;
however each purchaser (or his representative) must be provided with or given
reasonable access to full and fair disclosure of material information. An issuer
is deemed to be satisfied if such purchaser or his representative has been given
access to all material books and records of the issuer; all material contracts
and documents relating to the proposed transaction; and an opportunity to
question the appropriate executive officer.
The facts relied upon to make the Tennessee Exemption include the
following: (i) the Company filed a completed SEC Form D with the Tennessee
Division of Securities; (ii) the Form was filed not later than 15 days after the
first sale; (iii) the Company provided the Tennessee Division of Securities a
copy of the information furnished by the Company to the offerees, (iv) the
Company executed a Form U-2 consent to service of process; and (v) the Company
paid an appropriate filing fee.
Plan of Operation
The Company was initially a development stage company with limited assets
or capital, with significant initial operations but no operations or income
since approximately 1995 when it acquired its subsidiary in March 2000.
In the coming months, the Company will focus its efforts on marketing its
newly acquired primary business, subrogation recovery. This business entails the
determination of the "Origin and Cause" of property damages and the
identification of the defective product which caused such loss. The Company's
proprietary Origin and Cause data on over 300,000 products enables it to quickly
identify a manufacturer of a defective product which it can sell to market
participants in the Insurance Industry at cost-effective levels.
<PAGE>
Results of Operations for the Six Months Ended September 30, 2000 and 1999
Financial Condition, Capital Resources and Liquidity
At September 30, 2000, the Company had assets totaling $654,554 and
$814,149 in liabilities. The Company has $62,909 in working capital on hand in
cash and cash equivalents as of September 30, 2000. A discussion of the
Company's financial condition, capital resources and liquidity as of September
30, 1999 would not be material due to its developmental stage status and recent
reorganization.
It is the Company's intention to raise up to $2,000,000 in cash through the
sale of additional equity capital pursuant to an ongoing Regulation D, 506
Private Placement Offering, however, the can be no assurance that they will be
successful in their efforts. The ability of the Company to continue as a going
concern is dependent upon the availability of obtaining additional capital.
Net Operating Losses
The Company has incurred a net operating loss of $198,936 for the three
months ended September 30, 2000.
Forward-Looking Statements
This Form 10-QSB includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements, other than
statements of historical facts, included or incorporated by reference in this
Form 10-QSB which address activities, events or developments which the Company
expects or anticipates will or may occur in the future, including such things as
future capital expenditures (including the amount and nature thereof), finding
suitable merger or acquisition candidates, expansion and growth of the Company's
business and operations, and other such matters are forward-looking statements.
These statements are based on certain assumptions and analyses made by the
Company in light of its experience and its perception of historical trends,
current conditions and expected future developments as well as other factors it
believes are appropriate in the circumstances. However, whether actual results
or developments will conform with the Company's expectations and predictions is
subject to a number of risks and uncertainties, general economic market and
business conditions; the business opportunities (or lack thereof) that may be
presented to and pursued by the Company; changes in laws or regulation; and
other factors, most of which are beyond the control of the Company.
Consequently, all of the forward-looking statements made in this Form 10-QSB are
qualified by these cautionary statements and there can be no assurance that the
actual results or developments anticipated by the Company will be realized or,
even if substantially realized, that they will have the expected consequence to
or effects on the Company or its business or operations.
<PAGE>
PART II
Item 1. Legal Proceedings.
The Company knows of no legal proceedings to which it is a party or to
which any of its property is the subject which are pending, threatened or
contemplated or any unsatisfied judgments against the Company.
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults in Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) The exhibits required to be filed herewith by Item 601 of Regulation
S-B, as described in the following index of exhibits, are incorporated herein by
reference, as follows:
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Exhibit No. Description
----------------------------------------------------------------------
3(i).1 [1] Articles of Incorporation filed October 17, 1994
3(i).2 [1] Articles of Amendment filed December 15, 1998.
3(i).3 [3] Articles of Amendment changing the Company name from Shoe Crazy, Inc. to
Diversified Product Inspections, Inc. filed May 19, 2000.
3(i).4 [3] Articles of Amendment changing the name of the Company's subsidiary from
Diversified Product Inspections, Inc. to Diversified Product Investigations, Inc. filed
May 19, 2000.
3(ii).1 [1] By-laws.
4.1 [2] Share Exchange Agreement between the Company, Diversified Product Inspections,
Inc. and the holders of 100% of the Common Stock of Diversified Product
Inspections, Inc. dated March 13, 2000.
</TABLE>
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<TABLE>
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4.2 * Common Stock Purchase Agreement with Thomson Kernaghan & Co., Ltd., as
Agent dated July 2000.
4.3 * Registration Rights Agreement with Thomson Kernaghan & Co., Ltd. dated July
2000.
4.4 * Agent's Warrant in favor of Thomson Kernaghan & Co., Ltd. dated July 2000.
4.5 * Purchaser's Warrant in favor of Thomson Kernaghan & Co., Ltd. dated July 2000.
4.6 * Form of Private Placement offering dated August 1, 2000.
10.1 * Employment Agreement between the Company and Dean Madden dated September
23, 2000.
10.2 * Conversion by John Van Zyll of unpaid salary to shares of the Company's Common
Stock.
10.3 * Conversion by Marvin Stacy of unpaid salary to shares of the Company's Common
Stock.
10.4 * Conversion by Ann Furlong of unpaid salary to shares of the Company's Common
Stock.
27.1 * Financial Data Schedule.
-----------------------------------
[1] Incorporated herein by reference to the Company's Registration
Statement on Form 10-SB filed March 29, 1999.
[2] Incorporated herein by reference to the Company's Current Report on
Form 8K filed March 21, 2000.
[3] Incorporated herein by reference to the Company's Quarterly Report for
the quarter ended March 30, 2000 on Form 10 QSB filed May 22, 2000.
* Filed herewith
(b) The Company filed a report on Form 8K on March 21, 2000 in connection with the
Company's acquisition of Diversified Product Inspections, Inc., a Florida corporation.
The Company filed a report on Form 8K on May 22, 2000 with the required
financial statements pursuant to its first report on Form 8K filed
March 21, 2000 and also changed its fiscal year to that of its
subsidiary, December 31.
The Company filed a report on Form 8KA on May 26, 2000.
The Company filed a report on Form 8KA on May 26, 2000.
</TABLE>
<PAGE>
SIGNATURES
----------
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
DIVERSIFIED PRODUCT INSPECTIONS, INC.
(Registrant)
Date: November 20, 2000 BY: /s/ John Van Zyll
--------------------------------
John Van Zyll, Chairman, President and Chief Executive
Officer
BY: /s/ Ann Furlong
--------------------------------
Ann Furlong, Secretary and Director
BY: /s/ Dean Madden
--------------------------------
Dean Madden, Chief Financial Officer, Treasurer and
Director
BY: /s/ David Dowell
--------------------------------
David Dowell, Director
