EXHIBIT 4.6
DIVERSIFIED PRODUCT INSPECTIONS, INC.
(Incorporated in the State of Florida)
Offing of No More than 800,000 Shares of Common Stock
Until October 31, 2000
Offering Price: $2.50 per Share
Minimum Subscription: 20,000 Shares ($50,000)
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. PROSPECTIVE PURCHASERS
SHOULD BE PREPARED TO SUSTAIN A LOSS OF THEIR ENTIRE INVESTMENT.
Reference is made to the information contained under the caption ARisk
Factors@ in this Memorandum. The Company does not guarantee or imply that there
is, or that there will be a market for the resale of these shares. In addition,
investors in the Common Stock must be willing and able to accept the lack of
liquidity inherent in an investment in high-risk securities.
THIS IS A "NO MINIMUM" STOCK OFFERING AND SHARES WILL BE ISSUED TO
PURCHASERS UPON ACCEPTANCE BY THE COMPANY OF EACH INDIVIDUAL
SUBSCRIPTION
The Company is offering 800,000 Shares of its Common Stock at $2.50 per
share to qualified investors pursuant to an exemption from registration under
the Securities Act of 1933. Each purchaser will be required to buy a minimum of
twenty thousand (20,000) Shares, for a minimum consideration of fifty thousand
dollars ($50,000). However, the Company reserves the right, in its sole
discretion, to sell less than the minimum subscription. (1)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Price to Public (2) Discounts and Proceeds to the
Commissions (3) Issuer (4)
----------------------------------- ----------------------------- ----------------------------- -------------------------
Per Share $2.50 $0.25 $2.25
----------------------------------- ----------------------------- ----------------------------- -------------------------
Per Minimum $50,000 $5,000 $45,000
Subscription
----------------------------------- ----------------------------- ----------------------------- -------------------------
Total Maximum Offering $2,000,000 $200,000 $1,800,000
----------------------------------- ----------------------------- ----------------------------- -------------------------
</TABLE>
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE ACCURACY OR ADEQUACY OF THIS
OFFERING MEMORANDUM BEEN CONSIDERED OR PASSED UPON BY ANY
REGULATORY AUTHORITY. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
(1) This offering is made by the Company on a "best efforts" basis, for a
period of 180 days from the date of this Memorandum and may be extended, at the
option of the Company for an additional period or periods not exceeding an
additional 180 days in the aggregate.
(2) No commissions will be paid in connection with sales which are made
directly by the management of the Company.
(3) Before deducting certain other consulting, organization and
preoperating cost(s) payable by the Company including legal and accounting
expenses.
The date of this Memorandum is August 1, 2000.
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TABLE OF CONTENTS
Page No.
Summary of Offering...........................................................11
Risk Factors..................................................................12
Dilution......................................................................13
Capitalization................................................................13
Use of Proceeds...............................................................13
Business......................................................................13
Management....................................................................13
Principal Shareholders........................................................14
Description of the Securities.................................................15
Plan of Distribution..........................................................15
EXHIBITS
Business Plan (Attached).......................................................A
Financial Projections (Attached)...............................................B
SEC 15c-211 (Separate Cover) ..................................................C
10QSB Filing of Financials for Period Ending June 30, 2000 (Separate Cover) ...D
TO BE COMPLETED AND RETURNED BY INVESTOR
SUBSCRIPTION DOCUMENTS (Separate Cover) ......................................E
INVESTOR SUITABILITY QUESTIONAIRE (Separate Cover) ............................F
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THE UNITS ARE BEING OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), AND WILL NOT BE
REGISTERED UNDER THE 1933 ACT, OR QUALIFIED UNDER THE SECURITIES LAW OF ANY
STATE AND THEREFORE CANNOT BE SOLD, TRANSFERRED OR PLEDGED IN THE ABSENCE OF
SUCH REGISTRATION AND QUALIFICATION, OR THE AVAILABILITY OF AN EXEMPTION
THEREFROM. THERE IS NO PUBLIC OR OTHER MARKET FOR SUCH UNITS.
THE UNITS OFFERED HEREBY INVOLVE RISK AND SHOULD NOT BE PURCHASED BY ANYONE
WHO CANNOT AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. (SEE "RISK FACTORS.")
EACH RECIPIENT MUST RELY UPON HIS OR HER OWN REPRESENTATIVE AS TO LEGAL,
TAX AND RELATED MATTERS.
THE COMPANY INTENDS TO CONDUCT THE OFFERING THROUGH THE COMPANY IN SUCH A
MANNER THAT THE SHARES WILL BE SOLD ONLY TO "ACCREDITED INVESTORS" AS THAT TERM
IS DEFINED IN REGULATION D UNDER THE SECURITIES ACT OF 1933. THE REPRESENTATIONS
OF EACH INVESTOR WILL BE REVIEWED TO DETERMINE THE SUITABILITY OF PROSPECTIVE
INVESTORS (PARTICULARLY NONACCREDITED INVESTORS), AND THE COMPANY WILL HAVE THE
RIGHT TO REFUSE A SUBSCRIPTION FOR SHARES IF IN ITS SOLE DISCRETION THE COMPANY
BELIEVES THAT THE PROSPECTIVE INVESTOR DOES NOT MEET THE APPLICABLE SUITABILITY
REQUIREMENT OR THAT THE SHARES ARE OTHERWISE AN UNSUITABLE INVESTMENT FOR THE
PROSPECTIVE INVESTOR.
THE COMPANY SHALL PRIOR TO THE SALE OF ANY SECURITIES ALLOW EACH INVESTOR
OR HIS AGENT THE OPPORTUNITY TO ASK QUESTIONS OF AND RECEIVE ANSWERS FROM ANY
PERSON AUTHORIZED TO ACT ON BEHALF OF THE COMPANY CONCERNING ANY ASPECT OF THE
INVESTMENT AND TO OBTAIN ANY ADDITIONAL INFORMATION (TO THE EXTENT THE COMPANY
POSSESSES SUCH INFORMATION) NECESSARY TO VERIFY THE ACCURACY OF THE INFORMATION
CONTAINED IN THIS OFFERING MEMORANDUM. INVESTORS OR THEIR REPRESENTATIVES HAVING
QUESTIONS OR DESIRING ADDITIONAL INFORMATION SHOULD CONTACT MR. JOHN VAN ZYLL
(865) 482-8480.
<PAGE>
5
NOTICES TO RESIDENTS OF CERTAIN STATES
NOTICE TO ALABAMA RESIDENTS
THESE SECURITIES ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION UNDER THE
ALABAMA SECURITIES ACT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES
HAS NOT BEEN FILED WITH THE ALABAMA SECURITIES COMMISSION. THE COMMISSION DOES
NOT RECOMMEND OR ENDORSE THE PURCHASE OF ANY SECURITIES, NOR DOES IT PASS UPON
THE ACCURACY OR COMPLETENESS OF THIS OFFERING MEMORANDUM. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
ANYTHING TO THE CONTRARY HEREIN NOTWITHSTANDING, THE INVESTMENT OF AN
ALABAMA PURCHASER WHO IS NOT AN ACCREDITED INVESTOR MAY NOT EXCEED TWENTY (20%)
PERCENT OF SUCH PURCHASER'S NET WORTH, EXCLUSIVE OF PRINCIPAL RESIDENCE,
FURNISHINGS AND AUTOMOBILES.
NOTICE TO ALASKA RESIDENTS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE ALASKA SECURITIES ACT
AND MAY NOT BE SOLD WITHOUT REGISTRATION UNDER THAT ACT OR EXEMPTION THEREFROM.
NOTICE TO ARIZONA RESIDENTS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE ARIZONA SECURITIES ACT
AND ARE BEING SOLD IN RELIANCE UPON THE EXEMPTION CONTAINED IN SECTION
44-1844(1) OF SUCH ACT. THESE SECURITIES MAY NOT BE SOLD WITHOUT REGISTRATION
UNDER SUCH ACT OR EXEMPTION THEREFROM.
ARIZONA RESIDENTS MUST HAVE EITHER (i) A MINIMUM NET WORTH OF AT LEAST
SEVENTY- FIVE THOUSAND ($75,000) DOLLARS [EXCLUDING HOME, HOME FURNISHINGS AND
AUTOMOBILES] AND A MINIMUM ANNUAL GROSS INCOME OF SEVENTY-FIVE THOUSAND
($75,000) DOLLARS; OR (ii) A NET WORTH OF AT LEAST TWO HUNDRED TWENTY-FIVE
THOUSAND ($225,000) DOLLARS [AS COMPUTED ABOVE].
NOTICE TO ARKANSAS RESIDENTS
THESE SECURITIES ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION UNDER SECTION
14(b)(14) OF THE ARKANSAS SECURITIES ACT AND SECTION 4(2) OF THE SECURITIES ACT
OF 1933. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS NOT BEEN
FILED WITH THE ARKANSAS SECURITIES DEPARTMENT OR WITH THE SECURITIES AND
EXCHANGE COMMISSION. NEITHER THE DEPARTMENT NOR THE COMMISSION HAS PASSED UPON
THE VALUE OF THESE SECURITIES, MADE ANY RECOMMENDATIONS AS TO THEIR PURCHASE,
APPROVED OR DISAPPROVED THE OFFERING, OR PASSED UPON THE ADEQUACY OR ACCURACY OF
THIS OFFERING MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
6
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NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, AN INVESTMENT BY A NON-
ACCREDITED INVESTOR MAY NOT EXCEED TWENTY (20%) PERCENT OF THE INVESTOR'S NET
WORTH AT THE TIME OF PURCHASE, ALONE OR JOINTLY WITH SPOUSE.
NOTICE TO CALIFORNIA RESIDENTS
IF THE COMPANY ELECTS TO SELL SHARES IN THE STATE OF CALIFORNIA, IT IS
UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SHARES, OR OTHER Unit THEREIN,
OR TO RECEIVE ANY CONSIDERATION THEREFORE WITHOUT THE PRIOR WRITTEN CONSENT OF
THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED
IN THE COMMISSIONER'S RULES. NOTICE TO CONNECTICUT RESIDENTS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE CONNECTICUT SECURITIES
ACT AND MAY NOT BE SOLD OR TRANSFERRED WITHOUT REGISTRATION OR EXEMPTION
THEREFROM.
NOTICE TO DELAWARE RESIDENTS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE DELAWARE SECURITIES ACT
AND MAY NOT BE SOLD OR TRANSFERRED WITHOUT REGISTRATION OR EXEMPTION THEREFROM.
NOTICE TO FLORIDA RESIDENTS
THE SHARES REFERRED TO HEREIN WILL BE SOLD TO, AND ACQUIRED BY, THE HOLDER
IN A TRANSACTION EXEMPT UNDER SECTION 517.061 OF THE FLORIDA SECURITIES ACT. THE
SHARES HAVE NOT BEEN REGISTERED UNDER SAID ACT IN THE STATE OF FLORIDA. IN
ADDITION, ALL FLORIDA RESIDENTS SHALL HAVE THE PRIVILEGE OF VOIDING THE PURCHASE
WITHIN THREE (3) DAYS AFTER THE FIRST TENDER OF CONSIDERATION IS MADE BY SUCH
PURCHASER TO THE ISSUER, AN AGENT OF THE ISSUER, OR AN ESCROW AGENT OR WITHIN
THREE (3) DAYS AFTER THE AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED TO SUCH
PURCHASER, WHICHEVER OCCURS LATER.
NOTICE TO GEORGIA RESIDENTS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE GEORGIA SECURITIES ACT
OF 1973, AS AMENDED, IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION SET FORTH
IN SECTION 9(m) OF SUCH ACT AND THE SECURITIES CANNOT BE SOLD OR TRANSFERRED
EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT OR PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR IN A TRANSACTION WHICH IS
OTHERWISE IN COMPLIANCE WITH SAID ACT.
NOTICE TO IDAHO RESIDENTS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE IDAHO SECURITIES ACT
AND MAY NOT BE SOLD OR TRANSFERRED WITHOUT REGISTRATION OR EXEMPTION THEREFROM.
ANYTHING TO THE CONTRARY NOTWITHSTANDING, THE INVESTMENT BY AN NON-
ACCREDITED INVESTOR MAY NOT EXCEED TEN (10%) PERCENT OF THE INVESTOR'S NET
WORTH.
7
<PAGE>
NOTICE TO INDIANA RESIDENTS
EACH INVESTOR PURCHASING SHARES MUST WARRANT THAT HE HAS EITHER (i) A NET
WORTH (EXCLUSIVE OF HOME, HOME FURNISHINGS AND AUTOMOBILES) EQUAL TO AT LEAST
THREE (3) TIMES THE AMOUNT OF HIS INVESTMENT BUT IN NO EVENT LESS THAN
SEVENTY-FIVE THOUSAND ($75,000) DOLLARS OR (ii) A NET WORTH (EXCLUSIVE OF HOME,
HOME FURNISHINGS AND AUTOMOBILES OF TWO (2) TIMES HIS INVESTMENT BUT IN NO EVENT
LESS THAN THIRTY THOUSAND ($30,000) DOLLARS AND A GROSS INCOME OF THIRTY
THOUSAND ($30,000) DOLLARS.
NOTICE TO IOWA RESIDENTS
IOWA RESIDENTS MUST HAVE EITHER (i) A NET WORTH OF AT LEAST FORTY THOUSAND
($40,000) DOLLARS [EXCLUDING HOME, HOME FURNISHINGS AND AUTOMOBILES] AND A
MINIMUM ANNUAL GROSS INCOME OF FORTY THOUSAND ($40,000) DOLLARS, OR (ii) A NET
WORTH OF AT LEAST ONE HUNDRED TWENTY-FIVE THOUSAND ($125,000) DOLLARS AS
COMPUTED ABOVE.
NOTICE TO KANSAS RESIDENTS
AN INVESTMENT BY AN NON-ACCREDITED INVESTOR SHALL NOT EXCEED TWENTY (20%)
PERCENT OF THE INVESTOR'S NET WORTH; EXCLUDING PRINCIPAL RESIDENCE, FURNISHINGS
THEREIN AND PERSONAL AUTOMOBILES.
NOTICE TO KENTUCKY RESIDENTS
THESE SECURITIES REPRESENTED BY THIS CERTIFICATE (OR OTHER DOCUMENT), HAVE
BEEN ISSUED PURSUANT TO A CLAIM OF EXEMPTION FROM THE REGISTRATION OR
QUALIFICATION PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS AND MAY NOT BE
SOLD OR TRANSFERRED WITHOUT COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION
PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE
EXEMPTIONS THEREIN.
ANYTHING TO THE CONTRARY HEREIN NOTWITHSTANDING, THE INVESTMENT BY A NON-
ACCREDITED INVESTOR MAY NOT EXCEED TEN (10%) PERCENT OF THE INVESTOR'S NET
WORTH.
NOTICE TO MAINE RESIDENTS
THESE SECURITIES ARE BEING SOLD PURSUANT TO AN EXEMPTION FROM REGISTRATION
WITH THE BANK SUPERINTENDENT OF THE STATE OF MAINE UNDER SECTION 10520(2)(R) OF
TITLE 32 OF THE MAINE REVISED STATUTES. THESE SECURITIES MAY BE DEEMED
RESTRICTED SECURITIES AND AS SUCH THE HOLDER MAY NOT BE ABLE TO RESELL THE
SECURITIES UNLESS PURSUANT TO REGISTRATION UNDER STATE OR FEDERAL SECURITIES
LAWS OR UNLESS AN EXEMPTION UNDER SUCH LAWS EXIST.
NOTICE TO MARYLAND RESIDENTS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE MARYLAND SECURITIES ACT
IN RELIANCE UPON THE EXEMPTION FROM REGISTRATION SET FORTH IN SECTION 11-602(9)
OF SUCH ACT. UNLESS THESE SECURITIES ARE REGISTERED, THEY MAY NOT BE REOFFERED
FOR SALE OR RESOLD IN THE STATE OF MARYLAND, EXCEPT AS A SECURITY, OR IN A
TRANSACTION EXEMPT UNDER SUCH ACT.
8
<PAGE>
NOTICE TO MASSACHUSETTS RESIDENTS
MASSACHUSETTS RESIDENTS MUST HAVE HAD EITHER (i) A MINIMUM NET WORTH OF AT
LEAST FIFTY THOUSAND ($50,000) DOLLARS [EXCLUDING HOME, HOME FURNISHINGS AND
AUTOMOBILES] AND HAD DURING THE LAST YEAR, OR IT IS ESTIMATED THAT THE
SUBSCRIBER WILL HAVE DURING THE CURRENT TAX YEAR, TAXABLE INCOME OF FIFTY
THOUSAND ($50,000) DOLLARS OR (ii) A NET WORTH OF AT LEAST ONE HUNDRED FIFTY
THOUSAND ($150,000) DOLLARS [AS COMPUTED ABOVE].
NOTICE TO MICHIGAN RESIDENTS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE MICHIGAN SECURITIES ACT
AND MAY NOT BE SOLD OR TRANSFERRED WITHOUT REGISTRATION UNDER THAT ACT OR
EXEMPTION THEREFROM.
THE COMPANY SHALL PROVIDE ALL MICHIGAN INVESTORS WITH A DETAILED WRITTEN
STATEMENT OF THE APPLICATION OF THE PROCEEDS OF THE OFFERING WITHIN SIX (6)
MONTHS AFTER COMMENCEMENT OF THE OFFERING OR UPON COMPLETION, WHICHEVER OCCURS
FIRST, AND WITH ANNUAL CURRENT BALANCE SHEETS AND INCOME STATEMENTS THEREAFTER.
NOTICE TO MINNESOTA RESIDENTS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER CHAPTER 80 OF THE MINNESOTA
SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED FOR VALUE
EXCEPT PURSUANT TO REGISTRATION OR OPERATION OF LAW.
NOTICE TO MISSISSIPPI RESIDENTS
THESE SECURITIES ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION UNDER THE
MISSISSIPPI SECURITIES ACT. A REGISTRATION STATEMENT RELATING TO THESE
SECURITIES HAS NOT BEEN FILED WITH THE MISSISSIPPI SECRETARY OF STATE OR WITH
THE SECURITIES AND EXCHANGE COMMISSION, NEITHER THE SECRETARY OF STATE NOR THE
COMMISSION HAS PASSED UPON THE VALUE OF THESE SECURITIES, NOR HAS APPROVED OR
DISAPPROVED THE OFFERING. THE SECRETARY OF STATE DOES NOT RECOMMEND THE PURCHASE
OF THESE OR ANY OTHER SECURITIES.
THERE IS NO ESTABLISHED MARKET FOR THESE SECURITIES AND THERE MAY NOT BE
ANY MARKET FOR THESE SECURITIES IN THE FUTURE. THE SUBSCRIPTION PRICE OF THESE
SECURITIES HAS BEEN ARBITRARILY DETERMINED BY THE ISSUER AND IS NOT AN
INDICATION OF THE ACTUAL VALUE OF THESE SECURITIES.
THE PURCHASER OF THESE SECURITIES MUST BEEN CERTAIN SUITABILITY STANDARDS
AND MUST BE ABLE TO BEAR THE ENTIRE LOSS OF HIS INVESTMENT. ADDITIONALLY, ALL
PURCHASERS WHO ARE NOT ACCREDITED INVESTORS MUST HAVE A NET WORTH OF AT LEAST
THIRTY THOUSAND ($30,000) DOLLARS AND INCOME OF THIRTY THOUSAND ($30,000)
DOLLARS OR A NET WORTH OF SEVENTY FIVE THOUSAND ($75,000) DOLLARS. THESE
SECURITIES MAY NOT BE TRANSFERRED FOR A PERIOD OF ONE (1) YEAR EXCEPT IN A
TRANSACTION WHICH IS EXEMPT UNDER THE MISSISSIPPI SECURITIES ACT OR IN A
TRANSACTION IN COMPLIANCE WITH THE MISSISSIPPI SECURITIES ACT.
9
<PAGE>
NOTICE TO MISSOURI RESIDENTS
THESE SECURITIES ARE SOLD TO, AND BEING ACQUIRED BY, THE HOLDER IN A
TRANSACTION EXEMPTED UNDER SECTION 10, SUBSECTION 409.402(B), MISSOURI UNIFORM
SECURITIES ACT (RMSO 1969).
THE SHARES HAVE NOT BEEN REGISTERED UNDER SAID ACT IN THE STATE OF
MISSOURI. UNLESS THE SHARES ARE REGISTERED, THEY MAY NOT BE REOFFERED OR RESOLD
IN THE STATE OF MISSOURI, EXCEPT AS A SECURITY, OR IN A TRANSACTION EXEMPT UNDER
SAID ACT.
ANYTHING TO THE CONTRARY NOTWITHSTANDING, AN INVESTOR MUST HAVE A MINIMUM
ANNUAL INCOME OF THIRTY THOUSAND ($30,000) DOLLARS AND A NET WORTH OF AT LEAST
THIRTY THOUSAND ($30,000) DOLLARS (EXCLUSIVE OF HOME, FURNISHINGS AND
AUTOMOBILES) OR A NET WORTH OF SEVENTY FIVE THOUSAND ($75,000) DOLLARS EXCLUSIVE
OF HOME, FURNISHINGS AND AUTOMOBILES.
AN INVESTMENT BY A NON-ACCREDITED INVESTOR SHALL NOT EXCEED TWENTY (20%)
PERCENT OF THE INVESTOR'S NET WORTH.
NOTICE TO MONTANA RESIDENTS
EACH MONTANA RESIDENT WHO SUBSCRIBES FOR THE SECURITIES BEING OFFERED
HEREBY AGREES NOT TO SELL THESE SECURITIES FOR A PERIOD OF TWELVE (12) MONTHS
AFTER DATE OF PURCHASE.
ANYTHING TO THE CONTRARY NOTWITHSTANDING, THE INVESTMENT BY A
NON-ACCREDITED INVESTOR MAY NOT EXCEED TWENTY (20%) PERCENT OF THE INVESTORS NET
WORTH.
NOTICE TO NEBRASKA RESIDENTS
THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE NEBRASKA SECURITIES ACT AND
MAY NOT BE SOLD WITHOUT REGISTRATION UNDER THAT ACT OR EXEMPTION THEREFROM.
NOTICE TO NEW HAMPSHIRE RESIDENTS
EACH NEW HAMPSHIRE INVESTOR PURCHASING SHARES MUST WARRANT THAT HE HAS
EITHER (i) A NET WORTH (EXCLUSIVE OF HOME, FURNISHINGS AND AUTOMOBILES) OF TWO
HUNDRED FIFTY THOUSAND ($250,000) DOLLARS OR (ii) A NET WORTH (EXCLUSIVE OF
HOME, FURNISHING AND AUTOMOBILES) OF ONE HUNDRED TWENTY FIVE THOUSAND ($125,000)
DOLLARS AND FIFTY THOUSAND ($50,000) DOLLARS ANNUAL INCOME.
NOTICE TO NEW JERSEY RESIDENTS
THE ATTORNEY GENERAL OF THE STATE HAS NOT PASSED OR ENDORSED THE MERITS OF
THIS OFFERING. THE FILING OF THE WITHIN OFFERING DOES NOT CONSTITUTE APPROVAL OF
THE ISSUE OR THE SALE THEREOF BY THE BUREAU OF SECURITIES OR THE DEPARTMENT OF
LAW AND PUBLIC SAFETY OF THE STATE OF NEW JERSEY. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
NOTICE TO NORTH DAKOTA RESIDENTS
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
COMMISSIONER OF THE STATE OF NORTH DAKOTA NOR HAS THE COMMISSIONER PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS UNLAWFUL.
10
<PAGE>
NOTICE TO NEW YORK RESIDENTS
THIS OFFERING MEMORANDUM HAS NOT YET BEEN REVIEWED BY THE ATTORNEY GENERAL
PRIOR TO ISSUANCE AND USE. THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT
PASSED OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
THIS OFFERING MEMORANDUM DOES NOT CONTAIN AN UNTRUE STATEMENT OF A MATERIAL
FACT OR OMIT TO STATE A MATERIAL FACT NECESSARY TO MAKE THE STATEMENTS MADE IN
LIGHT OF THE CIRCUMSTANCES UNDER WHICH THAT WERE MADE, NOT MISLEADING. IT
CONTAINS A FAIR SUMMARY OF THE MATERIAL TERMS AND DOCUMENTS PURPORTED TO BE
SUMMARIZED HEREIN.
NOTICE TO NORTH CAROLINA RESIDENTS
THESE SECURITIES ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION UNDER THE
NORTH CAROLINA SECURITIES ACT. THE NORTH CAROLINA SECURITIES ADMINISTRATION
NEITHER RECOMMENDS NOR ENDORSES THE PURCHASE OF ANY SECURITY, NOR HAS THE
ADMINISTRATOR PASSED ON THE ACCURACY OR ADEQUACY OF THE INFORMATION PROVIDED
HEREIN. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NOTICE TO OKLAHOMA RESIDENTS
THE SECURITIES RENDERED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR THE OKLAHOMA SECURITIES ACT. THE SECURITIES HAVE
BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR TRANSFERRED FOR VALUE IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION OF THEM UNDER THE SECURITIES ACT OF 1933
AND/OR THE OKLAHOMA SECURITIES ACT OF AN OPINION OF COUNSEL TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR ACTS.
ANYTHING TO THE CONTRARY NOTWITHSTANDING, AN INVESTMENT BY A NON-ACCREDITED
INVESTOR SHALL NOT EXCEED TEN (10%) PERCENT OF THE INVESTORS NET WORTH.
NOTICE TO OREGON RESIDENTS
THE SECURITIES OFFERED HAVE NOT BEEN REGISTERED WITH THE DIRECTOR OF THE
STATE OF OREGON UNDER THE PROVISIONS OF OAR 441-65-240. THE INVESTOR IS ADVISED
THAT THE DIRECTOR HAS MADE ONLY A CURSORY REVIEW OF THE REGISTRATION STATEMENT
AND HAS NOT REVIEWED THIS DOCUMENT SINCE THIS DOCUMENT IS NOT REQUIRED TO BE
FILED WITH THE DIRECTOR.
THE INVESTOR MUST RELY ON THE INVESTOR'S OWN EXAMINATION OF THE COMPANY
CREATING THE SECURITIES, AND THE TERMS OF THE OFFERING INCLUDING THE MERITS AND
RISKS INVOLVED IN MAKING AN INVESTMENT DECISION ON THESE SECURITIES.
NOTICE TO PENNSYLVANIA RESIDENTS
11
<PAGE>
ANY PERSON WHO ACCEPTS AN OFFER TO PURCHASE THE SECURITIES IN COMMONWEALTH
OF PENNSYLVANIA IS ADVISED, THAT PURSUANT TO SECTION 207(m) OF THE PENNSYLVANIA
SECURITIES ACT, HE SHALL HAVE THE RIGHT TO WITHDRAW HIS ACCEPTANCE, AND RECEIVE
A FULL REFUND OF ANY CONSIDERATION PAID, WITHOUT INCURRING ANY LIABILITY, WITHIN
TWO (2) BUSINESS DAYS FROM THE TIME THAT HE RECEIVES NOTICE OF THIS WITHDRAWAL
RIGHT AND RECEIVES THE PLACEMENT OFFERING MEMORANDUM. ANY PERSON WHO WISHES TO
EXERCISE SUCH RIGHT OF WITHDRAWAL IS ADVISED TO GIVE NOTICE BY LETTER OR
TELEGRAM SENT AND POSTMARKED BEFORE THE END OF THE SECOND BUSINESS DAY AFTER
EXECUTION. IF THE REQUEST FOR WITHDRAWAL IS TRANSMITTED ORALLY, WRITTEN
CONFIRMATION MUST BE GIVEN. ANY PERSON WHO PURCHASES UNITS WHO IS A PENNSYLVANIA
RESIDENT WILL NOT SELL SUCH Units FOR A PERIOD OF TWELVE (12) MONTHS BEGINNING
WITH THE CLOSING DATE. PENNSYLVANIA RESIDENTS MUST HAVE EITHER (i) A MINIMUM NET
WORTH OF THIRTY THOUSAND ($30,000) DOLLARS [EXCLUDING HOME, HOME FURNISHINGS AND
AUTOMOBILES] AND A MINIMUM ANNUAL GROSS INCOME OF THIRTY THOUSAND ($30,000)
DOLLARS, OR (ii) A NET WORTH OF AT LEAST SEVENTY-FIVE THOUSAND ($75,000) DOLLARS
[AS COMPUTED ABOVE], AND MAY NOT INVEST MORE THAN TEN (10%) PERCENT OF THEIR NET
WORTH [EXCLUSIVE OF THE SUBSCRIBER'S HOME, HOME FURNISHINGS AND AUTOMOBILES].
NOTICE TO SOUTH CAROLINA RESIDENTS
THESE SECURITIES ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION UNDER THE
SOUTH CAROLINA UNIFORM SECURITIES ACT. A REGISTRATION STATEMENT RELATING TO
THESE SECURITIES HAS NOT BEEN FILED WITH THE SOUTH CAROLINA SECURITIES
COMMISSIONER. THE COMMISSIONER DOES NOT RECOMMEND OR ENDORSE THE PURCHASE OF ANY
SECURITIES, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF THIS OFFERING
MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NOTICE TO SOUTH DAKOTA RESIDENTS
THE SHARES HAVE NOT BEEN REGISTERED UNDER CHAPTER 47-31 OF THE SOUTH DAKOTA
SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DEPOSED OF FOR
VALUE EXCEPT PURSUANT TO REGISTRATION, EXEMPTION THEREFROM OR OPERATION OF LAW.
SOUTH DAKOTA RESIDENTS MUST HAVE EITHER (i) A MINIMUM NET WORTH OF AT LEAST
SIXTY THOUSAND ($60,000) DOLLARS [EXCLUDING HOME, HOME FURNISHINGS AND
AUTOMOBILES] AND A MINIMUM GROSS INCOME OF SIXTY THOUSAND ($60,000) DOLLARS, OR
(ii) A NET WORTH OF AT LEAST TWO HUNDRED TWENTY-FIVE THOUSAND ($225,000) DOLLARS
[AS COMPUTED ABOVE].
NOTICE TO TENNESSEE RESIDENTS
ANYTHING TO THE CONTRARY NOTWITHSTANDING, AN INVESTMENT BY ANY INVESTOR
SHALL NOT EXCEED TEN (10%) PERCENT OF THE INVESTOR'S NET WORTH.
NOTICE TO TEXAS RESIDENTS
THIS OFFERING MEMORANDUM IS FOR THE INVESTOR'S CONFIDENTIAL USE AND MAY NOT
BE REPRODUCED. ANY ACTION CONTRARY TO THESE RESTRICTIONS MAY PLACE SUCH INVESTOR
AND THE ISSUER IN VIOLATION OF THE TEXAS SECURITIES ACT.
12
<PAGE>
ANYTHING TO THE CONTRARY NOTWITHSTANDING, AN INVESTMENT BY ANY INVESTOR
SHALL NOT EXCEED TEN (10%) PERCENT OF THE INVESTOR'S NET WORTH.
NOTICE TO UTAH RESIDENTS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THAT ACT OR EXEMPTION
THEREFROM.
NOTICE TO WASHINGTON RESIDENTS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE WASHINGTON SECURITIES
ACT AND THE ADMINISTRATOR OF SECURITIES OF THE STATE OF WASHINGTON HAS NOT BEEN
REVIEWED THE OFFERING OR OFFERING MEMORANDUM. THESE SECURITIES MAY NOT BE SOLD
WITHOUT REGISTRATION UNDER THE ACT OR EXEMPTION THEREFROM.
IT IS THE RESPONSIBILITY OF ANY INVESTOR PURCHASING SHARES TO SATISFY
ITSELF AS TO FULLY OBSERVANCE OF THE LAWS OF ANY RELEVANT TERRITORY OUTSIDE THE
UNITED STATES IN CONNECTION WITH ANY SUCH PURCHASE, INCLUDING OBTAINING ANY
REQUIRED GOVERNMENTAL OR OTHER CONSENTS OR OBSERVING ANY OTHER APPLICABLE
REQUIREMENTS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OF ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS, ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THE SECURITIES ARE OFFERED BY THE COMPANY SUBJECT TO PRIOR SALE, ACCEPTANCE
OR AN OFFER TO PURCHASE, WITHDRAWAL, CANCELLATION OR MODIFICATION OF THE OFFER,
WITHOUT NOTICE. THE COMPANY RESERVES THE RIGHT TO REJECT ANY ORDER, IN WHOLE OR
IN PART, FOR THE PURCHASE OF ANY OF THE SECURITIES OFFERED HEREBY.
13
<PAGE>
SUMMARY OF OFFERING
The Offering
The Company is offering 800,000 Shares of its Common Stock at $2.50 per
share to qualified investors pursuant to an exemption from registration under
the Securities Act of 1933. Each purchaser will be required to buy a minimum of
twenty thousand (20,000) Shares, for a minimum consideration of fifty thousand
dollars ($50,000). However, the Company reserves the right, in its sole
discretion, to sell less than the minimum subscription.
This Offering is being conducted pursuant to Section 4(2) of the Securities
Act of 1933, as amended (Athe Act@), and Rule 506 of Regulation D promulgated
thereunder ("Rule 506") or other applicable provisions. The shares shall be Rule
144 Restricted shares. In addition, at any time that the Company proposes to
file a Company registration statement on Form S-1 under the Act, each share
investor will have piggyback registration rights if approved by the Underwriter.
The Offering
Type of security
offered.............................................................Common Stock
Offering price per Share
...........................................................................$2.50
Minimum Purchase (20,000 shares).........................................$50,000
Maximum Number of Shares Offered.........................................800,000
Common Stock Outstanding
Prior to the Offering........................................11,341,900
After the Maximum Offering..................................12,141,900*
*Prior to the exercise of any Warrant offered
The Company
The Officers and Directors of the Company are specifically set forth in the
Business Plan of the Company attached hereto dated December 20, 1999.
The executive office of Diversified Product Inspections, Inc. is as
follows:
3 Main Street
Oakridge, TN 37830
Phone: (865) 482-8480
Fax: (865) 482-8477
Selected Financial Information
The financial data, if any, is specifically set forth in the Business Plan
of the Company attached hereto dated December 20, 1999.
14
<PAGE>
RISK FACTORS
The purchase of Units offered hereby involves a high degree of risk. These
securities should only be purchased by persons who can afford the risk of loss
of their entire investment. Prior to the purchasing of shares, prospective
investors should carefully consider the following risk factors:
1. The securities market is extremely risky and there are an unlimited
number of opportunities. There can be no assurance that the Company will be able
to identify or invest in a group of profitable securities or develop suitable
investment opportunities. If the Company does identify such opportunities, the
Company may not have sufficient capital to effectively invest in or otherwise
manage such opportunities.
2. To date the Company has minimal revenues from operations and only
nominal assets. See "Financial Statements." The Company faces all the risks
inherent in a new business and there can be no assurance that any of the
Company's planned future activities will be successful. Since the Company was
recently organized, it cannot provide historical information and financial data
upon which a prospective investor can make an informed judgment as to the future
prospects of the Company. The purchase of the securities offered hereby must
therefore be regarded as the placing of funds at a high risk in a new or "start-
up" venture with all the unforeseen costs, expenses, problems and difficulties
to which such ventures are subject. See "Use of Proceeds" and "Business."
3. Without the proceeds of this Offering the Company will have only minimal
capital and will be limited in its operations. If the Offering does not raise a
substantial amount of funds, the Company's capital may prove to be insufficient
to permit substantial operations to commence, other than to a very limited
extent. The Company may receive from this offering maximum net proceeds of
$1,800,000, which management believes will be sufficient to continue the
Company's plan of operation. Less than the maximum amount may be obtained. If
less than the maximum financing offering is not available to the Company, its
activities may be materially and adversely affected.
4. Management may be required to hire additional personnel or obtain
independent outside professionals to evaluate certain aspects of its business
operations. No arrangements have been made in this regard. It is difficult to
forecast the amount of time that the Manager will devote to Company business
subsequent to commencing active operations.
<PAGE>
5. None of the outstanding Units of the Company currently outstanding have
been registered under the Securities Act of 1933, as amended (the "Act"). The
Units are offered herein pursuant to Regulation D, and as such are "restricted"
under the Securities Act of 1933. Local jurisdictions will also require the
placement of transfer restrictions on such Units.
6. The Company has broad discretion to invest the funds of the company.
DILUTION
If all of the Units offered hereby are sold, the Share holders will own
14.5% of the Common stock of the Company, for which they will have paid a
minimum of $2,000,000.00 or $2.50 per Share. Based on existing issued and
outstanding shares, existing shareholders (prior to exercise of warrants) and
after sale of Units will own 84.5% of the issued and outstanding stock of the
Company. (See "Use of Proceeds").
CAPITALIZATION
USE OF PROCEEDS
The net proceeds to be realized from this offering will approximate
$1,800,000 if the maximum offering is sold; however, it is likely that less than
the full amount of this offering will be obtained. Management anticipates the
net proceeds less initial expenses payable will be applied to the business of
the Company, providing capital for marketing and expansion and working capital.
No escrow is required and no minimum sale of Units is required before the
Company may commence use of the funds of investors.
BUSINESS
The Officers and Directors of the Company are specifically set forth in the
Business Plan of the Company attached hereto dated August 1, 2000 B Exhibit A.
The executive office of Diversified Product Inspections, Inc. is as
follows:
3 Main Street
Oakridge, TN 37830
Phone: (865) 482-8480
Fax: (865) 482-8477
<PAGE>
Exhibit A
Diversified Product
Inspections, Inc.
[GRAPHIC OMITTED]
An Independent Product Testing Service
Specializing in Product Failures, Air Contamination and Fire
Investigations
Investor Relations Contact: Corporate Contact:
Global Development Advisors Diversified Products Inspectors
Noreen Wilson/Joseph Griffin John VanZyll
4718 Lillian Ave President & CEO
Palm Beach Gardens, FL 33418 3 Main Street
Phone: 561-694-9425 Oak Ridge, TN 37830
Fax: 561-624-1171 Phone: (865) 482-8480
E-mail: [email protected] Fax: (865) 482-8477
Website: www.gdadvisors.com E-mail: [email protected]
Website: www.dpi-inc.com
Revision Date: August 15, 2000
i
<PAGE>
Confidential CORPORATE PROFILE
DISCLOSURE STATEMENT: This CORPORATE PROFILE is being submitted by
Diversified Product Inspections, Inc. ("DPI" or the "Company") on a confidential
basis for use solely by prospective investors. Its use for any other purpose is
not authorized. It may not be reproduced or redistributed, in whole or in part,
nor may its contents be disclosed to any other person. The CORPORATE PROFILE
should be read in conjunction with the appendices which constitute a part
hereof. Except as expressly provided herein. No person is authorized to make any
representations or give any information not contained in this CORPORATE PROFILE
or the appendices hereto and no such representations or information may be
relied upon by prospective investors.
Each recipient of this CORPORATE PROFILE agrees to hold the contents of the
CORPORATE PROFILE and all related documents in the strictest confidence and that
they will not utilize such information for any competitive purpose or in any
manner detrimental to the interests of the Company. Furthermore, the recipient
agrees to return the CORPORATE PROFILE and all other documents received if such
recipient does not participate in any contemplated transactions with DPI or at
DPI's request.
This CORPORATE PROFILE does not constitute an offer or solicitation in any
state or other jurisdiction in which such offer or solicitation is not
authorized. Prospective investors are not to construe the contents of this
CORPORATE PROFILE as legal, business or tax advice. Each prospective investor
should consult his/her own attorney, business advisor and tax advisor as to
legal, business, tax and related matters concerning any contemplated transaction
with the Company.
Any estimates or forecasts as to events that may occur in the future
(including forecasts of revenue, expenses, net income or other operating
measures) are based upon the best judgment of the Company's management as of the
date of this CORPORATE PROFILE. The Company or its accountants have not compiled
or examined the forecasts or audited the financial statements included herein.
Whether or not such estimates or forecasts may be achieved will depend upon the
Company achieving its overall business objectives and the availability of funds.
There is no guarantee that any of these forecasts will be attained. Actual
results may vary from the forecasts and such variations may be material.
Neither the delivery of the CORPORATE PROFILE at any time nor any
transaction made pursuant hereto shall imply that information contained herein
is correct as of any time subsequent to the date set forth on the cover hereof.
All of the information contained herein, including, without limitation,
statements, estimates, and projections as to future operations, revenue and net
income of the Company and adjustments to historical financial data, has been
based on material furnished by the Company. Each investor should make HIS/HER
own independent evaluation of the information contained in this CORPORATE
PROFILE which has been included herein in reliance on the Company as to the
accuracy or completeness of any information contained herein. Furthermore, this
CORPORATE PROFILE contains summaries, believed by the Company to be accurate, or
certain terms of certain documents, but reference is made to the actual
documents, copies of which may accompany this CORPORATE PROFILE. All such
summaries are qualified in their entirety by this reference. The Company
reserves the right to supplement or amend this CORPORATE PROFILE, in whole or in
part, without notice, for any reason whatsoever.
This CORPORATE PROFILE does not purport to be all-inclusive or contain all
the information, which a prospective investor may desire. By acceptance of this
CORPORATE PROFILE, prospective investors recognize the need to conduct their own
thorough investigation and due diligence before considering an investment in the
Company. The Company will make available to any qualified prospective investor,
the opportunity to ask questions of and to receive answers from the Company
concerning the terms and conditions of any contemplated transaction, the Company
or any other relevant matters, and to obtain any additional information to the
extent the Company possesses such information or can obtain it without
unreasonable effort or expense.
SAFE HARBOR ACT NOTICE: The statements in this CORPORATE PROFILE regarding
future results of operations are forward- looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Although the Company
believes the expectations reflected in such forward-looking statements are based
on reliable assumptions, it can give no assurance that its expectations will be
obtained. Factors that could cause actual results to differ materially from the
Company's expectations include industry conditions, acceptance and demand for
the Company's products and success of the Company's marketing efforts. These
forward-looking statements speak only as of the date hereof. The Company
disclaims any intent or obligation to update these forward-looking statements.
DISCLAIMER: This CORPORATE PROFILE was compiled by Global Development
Advisors, Inc. All of the information, data, and forward looking statements
contained herein are compiled from and based upon information and data provided
by Diversified Product Inspections, Inc. to Global Development Advisors. This
document has been reviewed and approved by the management Diversified Product
Inspections, Inc. Global Development cannot and does not make any claims,
assertions or guarantees as to the accuracy of the representations of the
Company contained herein.
Compiled by Global Development Advisors 1999-2000 Page i
<PAGE>
Table of Contents
Executive Summary..............................................................2
Products and Services..........................................................5
Overview.......................................................................5
Products and Services for the Insurance Industry...............................5
Investigations and Inspections.................................................6
On-Site Investigations......................................................6
Mail-In Program.............................................................6
Indoor Air Quality Testing..................................................7
Secure Storage and "Chain of Custody".......................................8
Expert Testimony............................................................8
Outsource Program..............................................................9
Structure Evaluations and Consumer Product Evaluation..........................9
Additional Services............................................................9
Website and E-commerce........................................................10
Manufacturer Defective Product Notifications..................................10
Business Plan.................................................................11
Marketing Plan................................................................11
Competitive Advantage.........................................................11
Client List...................................................................13
Expansion Plan................................................................14
New Headquarters and Laboratory...............................................14
Outsource Program.............................................................14
Compiled by Global Development Advisors 1999-2000 Page i
<PAGE>
Table of Contents
Projected Revenues............................................................14
Success Stories...............................................................15
Board of Directors and Officers...............................................17
Professional Organizations and Associations...................................18
Recent News...................................................................19
Compiled by Global Development Advisors 1999-2000 Page ii
<PAGE>
Diversified Product Inspections, Inc.
Executive Summary
This Executive Summary is provided to illustrate Diversified Product
Inspection, Inc.'s viability as an attractive public company investment to
prospective institutional and individual stock market investors.
Diversified Products Inspection, Inc. (DPI) was incorporated in the State
of Florida on September 30, 1991. Diversified Product Inspections, Inc. has
merged into a fully reporting company. The Company plans to file an application
with NASD and hopes to begin trading in the next 60 days under the symbol DPIX .
DPI is located at 3 Main Street, Oak Ridge, Tennessee 37830. Telephone: (865)
482-8480. Fax: (865) 482-8477. The Company maintains a web page at:
http://www.dpi-inc.com. Diversified Product Inspection, Inc. specializes in
conducting investigations and laboratory analysis of a wide variety of products
to determine the "cause and origin" of failures. The Company's primary customers
are insurance companies that are interested in subrogating claims to recover
losses.
The insurance industry is one of the largest business enterprises in the
United States. Insurance claims paid by the industry in 1998 were approximately
$150 billion and estimated to be $180 billion in 1999. In 1998, depending upon
the insurance company, only 1% to 5% of claims were subrogated. It is estimated
that the subrogation potential could be $10-15 billion annually, based on the
industry internal goals of 7-10%. DPI's clients have been able to subrogate as
high as 68% of submitted claims.
Diversified Product Inspections, Inc. is the inspiration of entrepreneur
John VanZyll. After many years of experience in home construction, and
employment as a Customer Service Manager for several large developers and
homebuilders, Mr. VanZyll recognized the opportunity and need for a service that
would help protect consumers and assist them in making informed decisions
regarding home or appliance purchases.
During the course of home investigations, the Company noted a large number
of defective products not necessarily related to home construction. Because the
home inspection industry is saturated and highly competitive, DPI sought to
differentiate itself from its competitors by adding product failure
investigations, as an additional service. The Company quickly realized that
there was tremendous demand for this type of service by the insurance industry
and has since been able to establish itself as a specialist in this rapidly
growing field. DPI has developed a sustainable competitive advantage in this
lucrative niche market through the creation of a proprietary database.
DPI began to accumulate a database of known defective products, and in 1994
began concentrating, almost exclusively, on defective product investigations for
the insurance subrogation field. DPI now has a computerized database with key
identifiers of over 300,000 products, a library of over 100,000 photos and
documentation, plus hundreds of videos. To the Company's knowledge, there is no
other company in the US that possesses such an extensive database, or is capable
of providing the cost-effective range of services and experience that DPI can
offer its clients.
Compiled by Global Development Advisors 1999 Page 1
<PAGE>
Diversified Product Inspections, Inc.
DPI has enjoyed steady growth in customer base over its nine-year history.
The Company currently provides investigative services for over 1,900 insurance
adjusters in more than 40 states. The Company employs eight state-licensed
Private Investigators who are trained and certified as "Cause and Origin"
investigators, and six lab technicians. DPI also offers pre-failure evaluations
of structures, building materials and appliances.
Since its formation, DPI has also experienced steady growth in revenues and
profits. Since 1996, the Company has increased gross sales from $188,780 to
$329,547 in 1998 and $677,078 in 1999. Gross revenues from services for 2000 are
$478,594 for the first six-month period January thru June and are projected at $
$960,340 for the year. This growth has been realized with minimal outside
funding and only a limited marketing campaign.
The Company primarily provides services to the Insurance Industry through a
rapidly growing Mail-in Inspection Program, an On-Site Investigation Program,
Indoor Air Quality Analysis and Secure Storage. In addition, the Company has
launched an Outsource Investigative Program (DPI Partners Program), which will
extend DPI's services throughout the country.
Until December 1999, the Company was expanding using its own resources. In
June 1999, the Company established a satellite office in Salisbury, North
Carolina and has since outsourced this service to an independent licensed
inspector in Raleigh, North Carolina. In August 1999, the Company signed a lease
for land and building for a new headquarters and laboratory to be located in Oak
Ridge, TN.
DPI's client list includes most of the major insurance companies including
Allstate Insurance Co., Hartford Insurance Co., Prudential Insurance Co., C.N.A.
Insurance Co., and Safeco Insurance Co., State Farm Insurance Co., Bankers
Insurance Co., and First Floridian Insurance Co., (Travelers Insurance Co. in
Florida). The Company's success rate and reputation has lead to increased demand
for the DPI's services, such that the Company must expand to meet current and
future client needs.
DPI's plans an expansion in three phases:
Phase I expansion calls for $2,000,000 for a ne headquarters and
Laboratory/Storage facility, located in Oak Ridge, TN, capable of handling
a broad range of product investigations, as well as expanded space for
secure evidence storage. An aggressive marketing campaign will include
expansion of the seminar/training programs currently being offered to the
insurance industry.
Phase II expansion calls for $5,000,000 for the opening of
Laboratory/Storage facilities located in Stockton, CA and San Bernadino, CA
to service the West Coast, expansion of the DPI Partners Outsource Program
and expansion of the On-Site Investigation Program.
Compiled by Global Development Advisors 1999 Page 2
<PAGE>
Diversified Product Inspections, Inc.
Phase III expansion calls for $5,000,000 for th opening of
Laboratory/Storage facilities located in Binghamton, NY and Austin, TX.,
and further expansion the DPI Partners Outsource Program and expansion of
the On-Site Investigation Program.
All phases include the expansion of outsource offices through the
recruiting and training of DPI certified inspectors. DPI will utilize the
existing established home inspection. The Company also has a training program to
certify "outsourced" personal to properly handle and ship evidence to the
various Laboratory/Storage Facilities. The Company will gradually phase out the
operation of its Deltona, FL and Salisbury, NC office laboratories as the
company outsources the functions to trained existing home-inspection businesses.
The goal of the multi-phase expansion is to expand DPI's service area to include
the entire continental United States within the next three years.
Based on the expansion program, revenues for Year 2001 are projected at
$5.7 million. Operating profit is projected at $4.5 million and net profit
before taxes at approximately $2.65 million.
In December 1999, the company raised $483,800 through a Reg. 504 private
placement of 241,600 shares of the company's Common Stock subject to Rule 144.
The proceeds from this sale were used to finance the relocation of the
headquarters, purchase additional lab equipment and hire additional employees.
Diversified Product Inspections, Inc. is seeking $15,000,000 to finance the
expansion to meet their growing business needs.
Compiled by Global Development Advisors 1999 Page 3
<PAGE>
Diversified Product Inspections, Inc.
Products and Services
Overview
Insurance claims in the United States are hundreds of millions of dollars
every year. A vast majority of these claims are the result of product failures
caused by defective products. Until DPI entered this market, depending upon the
insurance company, only 1% to 5% of claims were successfully subrogated. Through
the use of DPI's proprietary database, the Company is able to investigate the
"cause and origin" of losses and provide their clients with information enabling
them to cost-effectively subrogate almost 70% of their claims.
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.
Until recently, Insurance companies have not aggressively pursued
subrogation. There are many reasons for this lack of effort in this area.
Liability can be difficult to prove. Product failure investigations can be
expensive, especially if conducted by an engineering lab. Proximate cause must
be demonstrated through a preponderance of the evidence. The product and its
manufacturer must be positively identified. Because of the high cost and other
factors, many insurance companies only pursue subrogation claims over a certain
amount.
Competitive Advantage: DPI provides the Insurance Industry with the
industry's first cost- effective investigative service. DPI has a staff of
professional investigators and laboratory analysts, who are supported by an
extensive proprietary product database. DPI's database is unique to the industry
and enables DPI to quickly identify the manufacturer of a defective product and
offer its investigative services at cost-effective levels. DPI enjoys a clear
and sustainable competitive advantage as a result of this proprietary database.
Proprietary Database: The Company's Proprietary Database contains an
extensive listing of product identifiers, and known defects and failures. This
computerized database contains key identifiers of over 300,000 products. In
addition, DPI possesses a library of over 100,000 photos and documentation, plus
hundreds of videos. This database is the result of 9 years of research and is
frequently updated. Any competitor entering the field would have to create its
own database from scratch, an undertaking of great time and cost.
Compiled by Global Development Advisors 1999 Page 4
<PAGE>
Diversified Product Inspections, Inc.
Products and Services for the Insurance Industry
The primary business of DPI is the determination of the "Cause and Origin"
of property damages and the identification of the defective product that caused
the loss. DPI finds itself in a unique position of being a pioneer in what is a
growing and increasingly important field - Subrogation Recovery. Demand for
these services should grow as the percentage of successfully subrogated claims
increases. Currently, the insurance industry's internal goals are to
successfully subrogate 7% of claims1. Product identification after a failure
(especially fire) has been one of the main reasons for the lack of successful
subrogation. DPI's laboratory has a 97% success rate in product identification.
Product identification and establishing the "origin and cause" are the key
elements to successful claim subrogation. This is an improvement of 66% over the
industry average and at a fraction of the cost of conventional engineering
firms. After the deduction of DPI's reasonable fees, these subrogation
recoveries are pure profit to the insurance company.
Investigations and Inspections
On-Site Investigations
DPI performs professional forensic investigations to identify the products
and materials involved in a claim loss and determine the cause of the failure.
DPI employs state-licensed Private Investigators who have been certified in
"Cause and Origin" analysis. It is the determination of "Cause and Origin" that
is the basis for successful subrogation of a claim. DPI investigators are also
trained to conduct fire and arson investigations.
On-Site investigations are conducted for a flat fee plus log hours within a
100-mile radius of the following areas: Oak Ridge, Tennessee; Raleigh, North
Carolina; and Maitland, Florida. Areas outside these perimeters are charged a
mileage fee of .40 cents per mile. Where warranted for large losses, DPI will
fly an investigator to any of the 48 continental states. The company is in the
process of recruiting DPI Outsource Partners to conduct On-Site Investigations.
This program is designed to fill the demand for losses where the items are too
large for the Mail-In Program and the loss to small to fly in a DPI
investigator. (See Outsource Program)
Mail-In Program
Many items are small enough to ship directly to the lab. This is a DPI
innovation that has greatly reduced the cost to the insurance companies. DPI
supplies the insurance adjuster with evidence collection kits. Items are placed
in the pre-addressed, pre-paid UPS and Fed- Ex box or envelope and submitted to
DPI for identification and analysis. DPI performs this task at their lab and
submits a report to the insurance adjuster. The item is retained in secure
storage as evidence until the claim is closed. The insurance adjuster receives a
report which:
(1) Allstate Insurance Company
Compiled by Global Development Advisors 1999 Page 5
<PAGE>
Diversified Product Inspections, Inc.
Identifies the item (99% success rate with identification)
Determines whether the item was the "origin and cause" of the loss
Determines whether the item was defective
Determines whether subrogation is an option
(67%)
The "Mail-In Program" is a benchmark result of the great success that DPI
has been able to achieve in the state of California. In just one Allstate
Insurance Company claims offices near Bakersfield, the client was able to
successfully recover over $4 million in subrogated claims. As a result of this
overwhelming success, Allstate Insurance Company has instructed all its
adjusters in Northern California to submit all of their defective products to
DPI.
In November 1999, State Farm invited DPI to attend the National Association
of Subrogation Professionals (NASP) convention in Las Vegas. DPI was introduced
as an investigative specialist in the field. State Farm Insurance has
recommended DPI be used by its insurance adjusters.
The following table is a partial listing of items that can be mailed in
using the Item Mail-in Program:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Check Valves Copper Pipe CPVC Pipe Freeze Proof Toilet Tanks Faucets
Hose Bibs
------------------- ------------------ ------------------ ------------------ ------------------ -------------------
Garbage Polybutelene Pressure Release Sump Pumps Toilet Valves Surge Protectors
Disposals Valves
------------------- ------------------ ------------------ ------------------ ------------------ -------------------
Under Counter Washer Hoses Water Control Water Filters Water Level Water Softeners
Water Heaters Solenoids Switches
------------------- ------------------ ------------------ ------------------ ------------------ -------------------
Water Supply Hair Dryers Toasters Curling Irons Clock Radios
Lines
------------------- ------------------ ------------------ ------------------ ------------------ -------------------
</TABLE>
The minimum fee for these services is $255.00. Fire damaged items
(accounting for 30-40% of the items submitted) incur a minimum additional charge
of 1 log hour @ $75.00 per hour. Currently, DPI is receiving approximately 90
items per week at an average of $300 for each item submitted.
Compiled by Global Development Advisors 1999 Page 6
<PAGE>
Diversified Product Inspections, Inc.
Indoor Air Quality Testing
DPI provides in-depth indoor air quality analysis and is a pioneer in
identifying airborne contamination and determining the causes of "sick"
buildings. DPI has designed proprietary measuring instruments capable of
detecting airborne chemical contaminants in structures. DPI also utilizes state
laboratories to supplement their own lab.
These contaminations are not controlled by state boundaries or by any
particular types of construction. The contaminations can result from chemicals
used in construction materials, chemicals used in everyday cleaning products, or
could be the result of appliances leaking chemicals such as Freon. DPI is one of
a handful of companies in the country that is capable of identifying the
contaminants involved and the cause and origin within the structure.
The most dangerous and most common cause of indoor air contamination comes
from leaking refrigerants contacting a heat source that can convert the freon
into deadly phosgene gas (mustard gas). Carbon sooting frequently evidences the
presence of this reaction. Almost all air conditioners and many refrigerators
leak freon. There are many sources of heat in the home (heat strips, pilot
lights, electric range and oven, toasters, etc.), which are capable of
converting the freon into phosgene gas.
DPI has conducted a nationwide study on the prevalence of contamination in
the home. Due to the high frequency and potentially deadly effects of phosgene,
DPI has developed a device that neutralizes the freon before it can be converted
to phosgene. This device can be installed as an inexpensive retrofit to existing
systems and is seeking an appropriate licensing agreement
There are two types of Air Tests that DPI offers:
Air Scan - a on-site test performed indoors to determine the presence of
contaminants in the building or structure by comparing indoor air to
outdoor air. This test does not identify the contaminants. The current
price of this test is $1,100.
Total Air Analysis - this is a 24 hour test of indoor air with samples
taken for in- depth laboratory analysis. This test identifies the type of
contaminants that are present in the indoor air. The current price of the
Total Air Analysis is $5,000.
DPI has investigated in excess of 10,000 of these types of contaminations
in a large number of states. Extending from New York to California and from
Florida to Michigan. Depending on the conditions within the home, these
contaminations can damage the contents and can also impact the health of the
residents living within this home. DPI has a large database of information in
regards to these types of contaminations and potential damages caused by them.
Compiled by Global Development Advisors 1999 Page 7
<PAGE>
Diversified Product Inspections, Inc.
At a recent training seminar, DPI was advised of a growing concern in the
Insurance industry in regards to mold and air contamination. DPI is developing a
booklet to provide direction and guidance in dealing with these types of
contaminations. This would include an appropriate course of action to protect
the health of the adjuster who is conducting an investigation into this type of
claim.
Secure Storage and "Chain of Custody"
Crucial to the legal process of subrogation is maintenance of the "chain of
custody." DPI maintains secure facilities and has personnel who are trained in
the procedures for properly handling, storing and cataloging of evidence. The
statute of limitations for filing litigation is 3 years. Due to the crowded
court dockets, the average item remains in storage for 2 years.
Storage is an additional revenue stream for DPI as the Company can perform
this service more securely and efficiently than the insurance companies can
themselves. Currently, DPI has over 9,000 items in secure storage at an average
rate of $35.00 per annum.
Expert Testimony
DPI investigators are recognized as experts in their field and are capable
of testifying as such in court. The standard fee for such court appearances is
$5,000 per day. DPI has testified in such hi-profile cases as the Masonite
Siding Class Action Suit and the Louisiana Pacific Class Action Suit.
Outsource Program
The Company has launched a DPI Partnership Program where DPI recruits and
trains outsource personnel to service any location where the insurance industry
needs the service and is capable of generating a minimum of 10
inspection/evidence collections per week. The Company is targeting the Home
Inspection industry for these partnerships. DPI handles the training,
administration and storage. The location partner receives 60% of the inspection
fee and log hours billed.
The Company has established one Outsource location in Orlando, Florida
which is already performing 10 inspections per week. The Business Plan calls for
3 additional locations the first year and then 6 locations per year thereafter.
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Diversified Product Inspections, Inc.
Structure Evaluations and Consumer Product Evaluations
Home Evaluations and Consumer Product are not to be confused with a home
inspection. Home inspections are typically performed as a pre-purchase
inspection that concentrates on the current functionality of items in the home.
The Consumer Product and Home Evaluation reports on the failure rates and
recalls of the products used in the home. The difference is significant.
Structure Evaluations are performed on-site by a qualified DPI
investigator. In addition to reporting on the current functionality of the
structure and appliances (roof, siding, heating and cooling system, etc), DPI
goes further and identifies the manufacturers of the various building materials
and appliances. The client is also informed of known failure rates, defects and
hazards, recalls and current or pending legal proceedings. As an example, a home
inspection would report that the siding on the home is in good condition if it
is painted and shows no obvious signs of decay. DPI's inspection would report on
the type of siding and whether or not that siding was the subject of high rates
of failure, or the subject of a recall. DPI would also report to the client
whether the siding was the subject of a class action settlement and the
procedures for making a claim. (i.e. Louisiana Pacific siding case)
Additional Services
Full Engineering Services - DPI is abl to provide clients with full
engineering services including mechanical and electrical engineering
Metallurgist Services - the DPI lab is equipped to perform a full range of
metallurgical services capable of analyzing submitted items for design load,
metal fatigue, hairline cracking, etc.
Training Seminars - DPI investigators are also trained as instructors and
are licensed in most states due to reciprocity agreements. DPI has been
approached by the state of Texas, to conduct licensing seminars for insurance
adjusters.
Website and E-commerce
Consumer Product Evaluations - A surve of common items in the home for the
purpose of identifying products that are the subject of a recall or are known to
have a history of failure. DPI's evaluation informs the consumer of current
working status of the product, the risks and failure rates of various products,
recalls, current legal proceeding and remedies.
DPI is planning to offer the Consumer Products Evaluation, on the Company
website. Consumers will be offered an opportunity to evaluate a single product
or an entire household. Package deals will be available which will include a
1-year subscription to the company newsletter, the "Investigator." The
"Investigator" keeps consumers informed of current product recalls and safety
tips for the home. The Company intends to provide this services for a nominal
fee or no-charge. The Company believes that revenue can be derived from the
database that is being accumulated under this program.
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Diversified Product Inspections, Inc.
Database Marketability - The Consumer Product Evaluation database may be
marketable to several different clients. The database will include consumer
buying habits, which is of value to manufactures and retailers. The database
will also contain the location of products that may present potential liability
for manufacturers, which is valuable to manufacturers and insurance companies.
Manufacturer Defective Product Notifications
DPI provides manufacturers with a service that assists those companies in
locating products that are subject to recall. It is inevitable that a certain
number of defective products will slip through the manufacturer's quality
control inspections and make their way into the marketplace. These defective
products, once identified, are a source of potential liability for the
manufacturer.
Manufactures are often eager to locate and replace defective products
before the product fails and causes high damages. If the average damages are
relatively high, the manufacture, in many cases, is willing to pay a reward or
bounty for information that will assist them in locating the product prior to
failure.
This is where DPI's database of consumer profiles will come into play.
(See: Consumer Product Evaluations). DPI plans to maintain a website where
consumers can receive a home evaluation online. The consumer may pay a nominal
fee to enter all household appliances, mechanical devices, lawn equipment and
materials of and around the house into the computer. The computer will then
compare the profile to the database of known defective products. DPI will then
inform the consumer and the manufacturer of the location of the product so that
a replacement can be scheduled.
Compiled by Global Development Advisors 1999 Page 10
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Diversified Product Inspections, Inc.
Business Plan
Marketing Plan
DPI is marketing its services through Company sponsored seminars delivered
to the major insurance companies. DPI is rapidly becoming a recognized leader in
the field of subrogation recovery. The Company has also presented seminars, on
request, to the Air Conditioning Contractors Association of Central Florida,
Fire Departments and Civic Clubs (American Legion, Knights of Columbus, Kiwanis,
etc.).
The training seminars have been instrumental in demonstrating DPI's
services, fees and success to the insurance industry. DPI's marketing strategy
is based on its highly successful training programs and seminars that the
Company puts on for the Insurance Industry. The Company has put on over 125
seminars to date, and has trained over 1,900 insurance adjusters, many of whom
have become steady DPI clients.
Competitive Advantage
DPI's sustainable competitive advantage is derived from the Company's
proprietary database of defective products. This database is the result of over
9 years of investigations, analysis and information gathering. The database is
an ongoing work with new data being added daily. DPI has identified and
cataloged unique characteristics of hundreds of thousands of products. This
combination of database and laboratory allows DPI to economically identify a
product make and model on relatively few clues. This is crucial to subrogating a
claim, where the plaintiff must be able to positively identify the manufacturer
and establish the Cause and Origin. To the Company's knowledge there is no other
company or agency with a database to match DPI's.
Prior to the establishment of DPI "Diversified Product Inspections" there
was no real economical way to receive an unbiased and independent assessment of
product failure by scientifically identifying the product's manufacturer. Now
there is! Because of DPI's database of products and the ability to identify
those defective products in the laboratory, its has become cost effective to
pursue all insurance claim losses. There is no need to hire expensive
engineering firms to try and perform this service. There is no longer a need to
suffer the following often received complaints:
NEVER AGAIN . . . .
Be frustrated by products that fail time and time again and cost the
insurance industry millions of dollars in claims without recourse.
Pay hundreds and even thousands of dollars for faulty / incomplete testing.
Have products disappear mysteriously after bein sent in for testing.
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Diversified Product Inspections, Inc.
Wait for weeks and even months for reports to b sent back.
Find a place to store the items of evidence, or have items misplaced in
storage.
DPI has been successful in assisting the insurance industry recover losses
that before were not cost effective or where the industry was unable to pursue
the defective product's manufacturer due to their inability to identify the
maker. DPI has a 95% success rate in identifying these products. If DPI is able
to identify product failure but cannot identify the manufacturer, there will be
no charge for the company's services, and the product will be returned to the
client.
DPI is differentiated from Consumer Reports and Underwriter's Laboratories.
Consumer Reports compares retail products for features and performance and
surveys customers for product problems. Underwriter's Laboratories is paid by
the manufacturer to test selected components of a product. (The manufacturer may
ask that only the power cord of a clock radio be tested. If the cord passes the
test, the clock radio will proudly display a UL listing.) DPI investigates
products that have failed in use. The Company reports on the cause of failure
and recommends to the manufacturer a means to prevent future failures. The
Insurance Industry benefits from the cost-recovery of the claims paid out on a
defective product. The manufacturer is encouraged to produce products with lower
failure rates. The consumer benefits from recovery of their insurance deductible
and from better-manufactured products.
Compiled by Global Development Advisors 1999 Page 12
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Diversified Product Inspections, Inc.
Client List
DPI's primary clients are insurance companies, including:
Allstate Insurance Amica Insurance
Appalachian Claim Services
Bankers Insurance
Bankers Security
Bausley & Associates
C.J.W. Associates
Claim Solutions Services, Inc.
C.N.A. Insurance
C.S.A.A
Crawford and Company
Curley & Associates
Elliot Claims Service, Inc.
Farmers Insurance
Fire & Arson Investigation Consultants, Inc.
Fire Service Restoration
Fireman's Fund Insurant
First Floridian (Travelers)
Florida Farm Bureau
Frontier Adjusters
Grotefeld & Denenberg, L.L.C.
Hartford Insurance
Langham & Associates
Kentucky National Insurance
McDonald, Tinker, Skaer
Liberty Mutual
Nationwide Insurance
Morrison, Mahoney & Miller
Northfield Associates
Nationwide Mutual
Professional Public Adjuster, Inc.
Post & Schell, P.C.
Prudential Insurance
Property JUA Services
Reliance Insurance Purofirst Midsouth Insurance
Residential Warranty
Rebublic Insurance
Safeco Insurance
Rimkus Consulting
Scottsdale Insurance
Schaeffer Engineering
Selective Insurance
SCS & Associates
Shepard, Filburn & Goodblatt, PA
Servpro, Inc.
State Farm Insurance
Southern Family Insurance
The Johnson Group
T.I.G. Insurance
Travelers Insurance
Totura & Company
USAA Insurance
United Pacific Insurance
Zurich American
Westfield Companies
Compiled by Global Development Advisors 1999 Page 13
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Diversified Product Inspections, Inc.
Expansion Plan
DPI recently relocated its headquarters to Oak Ridge, TN from Deltona,
Florida. DPI had satellite offices in Salisbury, North Carolina and Maitland,
Florida, which provided services to Alabama, Florida, Georgia, Kentucky, North
Carolina, South Carolina, and Tennessee. With the exception of Florida, the
other States are currently serviced out of the Oak Ridge facility . The
Company's "Mail-in Program" provides service throughout the US. Large items are
currently shipped at customer expense to Oak Ridge Tennessee.
New Headquarters and Laboratory
The Phase I Expansion Plan is the relocation to a larger facility in Oak
Ridge, Tennessee. This location was selected because it offers a central
location for the East and Central United States. Oak Ridge is located near a
major airport and trucking center, has a well-educated and available workforce
and economic incentives from the city and county for opening a business in the
area.
Outsource Program
DPI Partnership program yields substantial revenue with minimal overhead.
DPI will handle the recruiting, training and administration. The "Use of Funds"
will be primarily for the marketing of the program to the Home Inspection
Industry. Projections are based on a modest expansion of only 6 locations per
year.
Projected Revenues
(See Exhibit B - Financial Projections)
Compiled by Global Development Advisors 1999 Page 14
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Diversified Product Inspections, Inc.
Success Stories
The below examples are actual cases where DPI's investigations have enabled
the client to successfully subrogate the claim:
Masonite Siding Class Action lawsuit. DPI was key expert witness in this
lawsuit. DPI 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 regardin defective siding. DPI
inspected 2,000 homes in 19 states. It was the defense's contention that the
siding could not be positively identified once installed. DPI 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)
Battery charger in California caused a fire in strip mall causing heavy
damage. DPI is able to positively identify the origin, cause and manufacturer.
Reliance Insurance is able to subrogate a $1,000,000 claim.
Ply-Gen (Hoover) vs. Pulte Home. Defective siding was installed on over
13,000 homes in Florida. DPI's investigations and lab analysis resulted in a
$23.3 million settlement to the homeowners. (1997)
GE Dishwasher. A GE dishwasher caused $80,000 in flood damage in a
Heathrow, Florida home. This was an ongoing problem with this particular model
that DPI had informed the manufacturer of 3 years prior. GE sent their own
technicians to the home to determine the cause of the problem. DPI was finally
called in and showed GE the cause - an insecure float mechanism; and a remedy -
installation of a small stainless steel clip to hold the float mechanism in
place. GE has since incorporated this fix in future models. The insurance
company was able to successfully subrogate the claim.
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 DPI to inspect the brakes. DPI's 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", saving her from points on her
license and an increase in her insurance premium. In addition, she was refunded
her deductible.
Lamborghini Automobile in Orlando burns because of a failure of the rubber
fuel lines. DPI's 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
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Diversified Product Inspections, Inc.
of the fuel line manufacturer's recommendations. It was determined that the
owner was at fault.
Home is Kissimmee, Florida was being consumed b mold. The builder and
several engineering firms had been unable to determine the cause. Upon
inspecting the home, Mr. VanZyll immediately 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. DPI 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.
Chevy Silverado burns in Orlando. DPI was able to determine that the Cause
and Origin was a defect in the design 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.
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Diversified Product Inspections, Inc.
Board of Directors and Officers
The DPI Board of Directors and Key Management are made up of a broad
spectrum of professionals with extensive experience in their respective fields
of business management, marketing, finance and law. The Key Management personnel
are all members of the Board of Directors.
John VanZyll, Chairman of the Board and Chief Executive Officer.
Entrepreneur and founder of Diversified Product Inspections, Mr. VanZyll 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. VanZyll 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.
Ann M. Furlong, Secretary and Director. Ms. Furlong has over 29 years of
experience as a professional manager and the owner and founder of several
successful businesses. Ms. Furlong has provided the administrative and
organizational expertise that has greatly contributed to DPI's success since its
founding in 1991, including the compilation of the company's proprietary
database.
Dean Madden, Chief Financial Officer, Treasurer and Director. Mr. Madden is
serving as the Company's interim CFO. Mr. Madden has over 33 years of experience
in all aspects of accounting. Mr. Madden served as CFO and Director of GMAC of
Canada from 1983 - 1988. Mr. Madden has worked in various accounting positions
throughout his career, specializing in auditing, taxes, and preparation of
financial statements.
Marvin Stacy, Director, Chief Operating Officer Mr. Stacy has over 40 years
of experience in all aspects of electrical and mechanical engineering and
design. Mr. Stacy is also gifted as an investigator and is responsible for the
operation of the laboratory. He has designed custom testing equipment and
designs solutions for manufacturers to correct design flaws and shortcomings.
David Dowell, Esquire, Director. Mr. Dowell wa awarded a B.S. degree in
Business from Indiana University in 1985 and a degree in Juris Prudence from
Indiana University School of Law in 1988. Upon graduation, Mr. Dowell was
admitted to the Indiana Bar and was retained by Coopers and Lybrand as a tax
associate. He moved to Florida in 1990 and became law clerk for the Fifth
Circuit Court in Lake County. In 1992, Mr. Dowell opened a private practice and
specializes in Corporate Law and Bankruptcy.
Compiled by Global Development Advisors 1999 Page 17
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Diversified Product Inspections, Inc.
Professional Organizations and Associations
Air Conditioning Contractors Association
Dun & Bradstreet Corporation Foundation Busines Education Services
International Association of Plumbing and Mechanical Officials
National Association of Investigative Specialists
Sources of Information Techniques
Advanced Fire Investigation Techniques
Insurance Claims Investigation
National Association of Subrogation Professionals
National Fire Protection Association
Private Protective Services Board - North Carolina
Southern Building Code Congress international
Compiled by Global Development Advisors 1999 Page 18
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Diversified Product Inspections, Inc.
Recent News
1999
Jul DPI opens satellite office in Salisbury, North Carolina
Aug DPI signs long term lease for what wil become the company's
new headquarters
Nov DPI relocates from Deltona, FL to Oak Ridge, TN.
Dec DPI raises $483,800 through a Reg 504 private placement sale
of the company's Common Stock, subject to Rule 144.
2000
Jan-Mar Small Item Mail-in Program grows from 100 items per month to
over 300 items per month.
Jan-Mar In-door Air Testing - 6 test conducted this year ranging
from $800 to $5,000 per test. Fees for deposition and court
testimony could add $900 to $5,000 per day for each full day
of testimony
Jan-Mar Seminars - 12 seminars with approximately 120 attendees.
Seminars are a major marketing tool and source of increased
utilization of the Small Item Mail-in Program.
Apr DPI files first 10QSB and 10K (Quarterly and Annual Reports)
with the SEC
Apr Negotiations where initiated by a majo insurance company for
DPI to become that company's records depository.
May Consolidated audits performed to enabl the company to list
with NASD as a free-trading OTC Bulletin Board stock.
July DPI Filed SEC Form 15c-211 with NASD t become free-trading
company
July DPI Completes promotional video
August DPI implements bar coding for all evidence and files, which
enables tracking of evidence throughout the facility and further
strengthens the chain of custody
August DPI implements a new accounting package
Aug DPI files 10Q-SB (Quarterly Report) with the SEC
Aug DPI has received a request from the Consumer Product Safety
Commission (CPSC) to assist them with providing information in
regards to failures in electric baseboard heaters.
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Diversified Product Inspections, Inc.
Other Developments
Hotel/Motel/Apartment Program - currently being developed are a number of
program services that would help recover losses for self-insured or
high-deductible damage claims. The program would work on a 35% - 40%
contingency fee.
Salvage Program - currently being developed is program for the acquisition
and sale of salvage materials
WebSite / Pass Program - information and evaluations regarding safe
environments (may be of special interest to the Military).
Compiled by Global Development Advisors 1999 Page 20
<PAGE>
Diversified Product Inspections, Inc.
Exhibit C
ISSUER INFORMATION FILE
PURSUANT TO
SECURITIES AND EXCHANGE COMMISSION
RULE 15c2-11
July 15, 2000
Diversified Product Inspections, Inc.
formerly known as Shoe Krazy, Inc.
TAX ID NUMBER: CUSIP NUMBER:
65-0877741 255322 10 9
Employees: shareholders:
July 15, 2000
- 21 - Approx. 38
ISSUER'S EQUITY SECURITIES
Common Voting Stock
AUTHORIZED: ISSUED AND OUTSTANDING: 11,116,900
50,000,000 Common
($.0001 par value)
TRANSFER AGENT:
<PAGE>
Diversified Product Inspections, Inc.
The Company currently serves as its own Transfer Agent. The address for the
Transfer Agent is 265 Sunrise Avenue, Suite 204, Palm Beach, FL 33480. Telephone
number is (561) 832-5696 and facsimile number is (561) 659-5371.
(905) 948-9600 Voice
(905) 948-8377 Fax
<PAGE>
Diversified Product Inspections, Inc.
Diversified Product Inspections, Inc.
CUSIP NO.
255322 10 9
ISSUER INFORMATION FILE
AS OF
July 15, 2000
THE INFORMATION FURNISHED HEREIN HAS BEEN PREPARED FROM THE BOOKS AND
RECORDS OF THE ISSUER BY ITS OFFICERS AND DIRECTORS IN ACCORDANCE WITH THE
SECURITIES AND EXCHANGE COMMISSION RULE 15c2-11 AS AMENDED, AND IS INTENDED ONLY
AS A SECURITIES DEALER INFORMATION FILE; AND
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION, OR TO MAKE ANY REPRESENTATIONS, NOT CONTAINED HEREIN IN CONNECTION
WITH THE ISSUER, SUCH INFORMATION OR REPRESENTATIONS, IF MADE, MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE ISSUER; AND
DELIVERY OF THIS INFORMATION FILE DOES NOT AT ANY TIME IMPLY THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
FIRST WRITTEN ABOVE.
SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS:
This Issuer Information File in accordance with SEC Rule 15c2-11, may
contain certain 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.
<PAGE>
Diversified Product Inspections, Inc.
Such statements refer to events that could occur in the future or may be
identified by the use of words such as "intend," "plan," "believe,"
"anticipate," correlative words, and other expressions indicating that future
events are contemplated. Such statements are subject to inherent risks and
uncertainties, and actual results could differ materially from those projected
in the forward-looking statements as a result of certain of the risk factors set
forth following and elsewhere in this Issuer Information File.
Diversified Product Inspections, Inc.
ISSUER INFORMATION FILE
The information contained in this Issuer Information Report has been
compiled to fulfill the disclosure requirements of Rule 15c2- 11 promulgated by
the Securities and Exchange Commission under the Securities Exchange Act of 1934
as Amended. The enumerated items and captions correspond generally to the format
set forth in the Rule.
Item 1: Exact Name of the Issuer and its Predecessors.
Issuer: Diversified Product Inspections, Inc., a Florida corporation
formerly known as Shoe Krazy, Inc.,
Subsidiary: Diversified Product Investigations, Inc.
Item 2: Address of Issuer's Principal Executive Offices.
The principal executive office of the Issuer is located at:
3 Main Street
Oakridge, Tennessee 37830
(865) 482-8480 Voice
(865) 482-8477 Fax
Item 3: Issuer's State of Incorporation.
<PAGE>
Diversified Product Inspections, Inc.
The Issuer was organized in the State of Florida on October 17, 1994.
Item 4: Exact Title and Class of Issuer's Securities.
The Issuer has only one class of equity securities issued and outstanding;
that being Common Voting Stock. Authorized common is 50,000,000 shares.
Shares of Preferred Stock are authorized but none have been issued or are
outstanding. Authorized Preferred Stock is 10,000,000 shares. The Board of
Directors is authorized to set the terms, conditions and limitations of such
Preferred Stock.
Item 5: Par or Stated Value of Issuer's Securities.
The par value of the Issuer's common stock is $0.0001 par value.
Item 6: Number of Shares or Total Amount of Issuer's Securities Outstanding as
of the End of the Issuer's Most Recent Fiscal Year.
December 31, 1999 Fiscal Year End (Issued and Outstanding)
2,100,000 shares of issued and outstanding as of December 31, 1999.
Item 7: Name and Address of the Issuer's Stock Transfer Agent.
The Company currently serves as its own Transfer Agent. The address for
stock transfer matters is 265 Sunrise Avenue, Suite 204, Palm Beach, FL 33480.
Telephone number is (561) 832-5696. Facsimile number is (561) 659-5371.
Item 8: The Nature of the Issuer's Business.
Diversified Products Inspections, Inc., originally known as Shoe Krazy,
Inc., was organized on October 17, 1994. The Company was formed to engage in
investment and business development operations related to the sale of shoes and
other foot products, primarily in Florida. Significant efforts were expended to
make the business plan and model work but those efforts failed. On March 13,
2000, the Company acquired all of the outstanding capital stock of its current
subsidiary, Diversified Product Investigations, Inc. in a stock for stock
exchange. The business plan and operation of the Company as presently
constituted is outlined below.
<PAGE>
Diversified Product Inspections, Inc.
The Company maintains a web page at: http://www.dpi-inc.com. Diversified
Product Inspection, Inc. specializes in conducting investigations and laboratory
analysis of a wide variety of products to determine the "cause and origin" of
failures. The Company's primary customers are insurance companies that are
interested in subrogating claims to recover losses.
The insurance industry is one of the largest business enterprises in the
United States. Insurance claims paid by the industry in 1998 were approximately
$150 billion and estimated to be $180 billion in 1999. In 1998, depending upon
the insurance company, only 1% to 5% of claims were subrogated. It is estimated
that the subrogation potential could be $10-15 billion annually, based on the
industry internal goals of 7-10%1. DPI's clients have been able to subrogate as
high as 68% of submitted claims.
Diversified Product Inspections, Inc. is the inspiration of entrepreneur
John VanZyll. After many years of experience in home construction, and
employment as a Customer Service Manager for several large developers and
homebuilders, Mr. VanZyll recognized the opportunity and need for a service that
would help protect consumers and assist them in making informed decisions
regarding home or appliance purchases.
During the course of home investigations, the Company noted a large number
of defective products not necessarily related to home construction. Because the
home inspection industry is saturated and highly competitive, DPI sought to
differentiate itself from its competitors by adding product failure
investigations, as an additional service. The Company quickly realized that
there was tremendous demand for this type of service by the insurance industry
and has since been able /to establish itself as a specialist in this rapidly
growing field. DPI has developed a sustainable competitive advantage in this
lucrative niche market through the creation of a proprietary database.
DPI began to accumulate a database of known defective products, and in 1994
began concentrating, almost exclusively, on defective product investigations for
the insurance subrogation field. DPI now has a computerized database with key
identifiers of over 300,000 products, a library of over 80,000 photos and
documentation, plus hundreds of videos. To the Company's knowledge, there is no
other company in the US that possesses such an extensive database, or is capable
of providing the cost-effective range of services and experience that DPI can
offer its clients.
DPI has enjoyed steady growth in customer base over its nine year history.
The Company currently provides investigative services for over 1,600 insurance
adjusters in more than 40 states. The Company employs eight state-licensed
Private Investigators who are trained and certified as "Cause and Origin"
investigators, and six lab technicians. DPI also offers pre- failure evaluations
of structures, building materials and appliances.
Since its formation, DPI has also experienced steady growth in revenues and
profits. Since 1996, the Company has increased gross sales from $188,780 to
$329,547 in 1998. Gross
--------
1 National Underwriters, Inc, "Claims", Oct 1999
<PAGE>
Diversified Product Inspections, Inc.
revenues from services for 1999 are $558,625 for the period Jan 1 through Oct
31, and are projected at $670,350 for the year. This growth has been realized
without any outside funding and only a limited marketing campaign. The Company
also operates a rapidly growing "Small Item Mail-in Programz" and "Large Item
Ship-In Program" to extend its services throughout the country.
Until December 1999, the Company was expanding using its own resources. In
June 1999, the Company established a satellite office in Salisbury, North
Carolina. In August 1999, the Company signed a lease for land and building for a
new headquarters and laboratory to be located in Oakridge, TN. Customers DPI's
primary clients are insurance companies:
Allstate Insurance Amica Insurance
Appalachian Claim Services Bankers Insurance
Bankers Security Bausley & Associates
C.J.W. Associates Claim Solutions Services, Inc.
C.N.A. Insurance C.S.A.A
Crawford and Company Curley & Associates
Elliot Claims Service, Inc. Farmers Insurance
Fire & Arson Investigation Consultants, Inc. Fire Service Restoration
Fireman's Fund Insurant First Floridian (Travelers)
Florida Farm Bureau Frontier Adjusters
Grotefeld & Denenberg, L.L.C. Hartford Insurance
<PAGE>
Diversified Product Inspections, Inc.
Inspire Insurance Solutions Kentucky National Insurance
Langham & Associates Liberty Mutual
McDonald, Tinker, Skaer Morrison, Mahoney & Miller
Nationwide Insurance Nationwide Mutual
Northfield Associates Post & Schell, P.C.
Professional Public Adjuster, Inc. Property JUA Services
Prudential Insurance Purofirst Midsouth Insurance
Reliance Insurance Republic Insurance
Residential Warranty Rimkus Consulting
Safeco Insurance Schaeffer Engineering
Scottsdale Insurance SCS & Associates
Selective Insurance Servpro, Inc.
Shepard, Filburn & Goodblatt, PA Southern Family Insurance
State Farm Insurance T.I.G. Insurance
The Johnson Group Totura & Company
Travelers Insurance United Pacific Insurance
<PAGE>
Diversified Product Inspections, Inc.
USAA Insurance Westfield Companies
Zurich American
Item 9: The Nature of Products or Service's Offered.
Overview
Insurance claims in the United States are hundreds of millions of dollars
every year. A vast majority of these claims are the result of product failures
caused by defective products. Until DPI entered this market, depending upon the
insurance company, only 1% to 5% of claims were successfully subrogated. Through
the use of DPI's proprietary database, the Company is able to investigate the
"cause and origin" of losses and provide their clients with information enabling
them to cost-effectively subrogate almost 70% of their claims.
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.
Until recently, Insurance companies have not aggressively pursued
subrogation. There are many reasons for this lack of effort in this area.
Liability can be difficult to prove. Product failure investigations can be
expensive, especially if conducted by an engineering lab. Proximate cause must
be demonstrated through a preponderance of the evidence. The product and its
manufacturer must be positively identified. Because of the high cost and other
factors, many insurance companies only pursue subrogation claims over a certain
amount.
Competitive Advantage: DPI provides the Insurance Industry with the
industry's first cost-effective investigative service. DPI has a staff of
professional investigators and laboratory analysts, who are supported by an
extensive proprietary product database. DPI's database is unique to the industry
and enables DPI to quickly identify the manufacturer of a defective product and
offer its investigative services at cost-effective levels. DPI enjoys a clear
and sustainable competitive advantage as a result of this proprietary database.
Proprietary Database: The Company's Proprietary Database contains an
extensive listing of product identifiers, and known defects and failures. This
computerized database contains key identifiers of over 300,000 products. In
addition, DPI possesses a library of over 80,000 photos and documentation, plus
hundreds of videos. This database is the result of 8 years of research and is
frequently updated. Any competitor entering the field would have to create its
own database from scratch, an undertaking of great time and cost.
<PAGE>
Diversified Product Inspections, Inc.
Products and Services for the Insurance Industry
The primary business of DPI is the determination of the "Origin and Cause"
of property damages and the identification of the defective product that caused
the loss. DPI finds itself in a unique position of being a pioneer in what is a
growing and increasingly important field - Subrogation Recovery. Demand for
these services should grow as the percentage of successfully subrogated claims
increases. Currently, the insurance industry's internal goals are to
successfully subrogate 7% of claims2. Product identification after a failure
(especially fire) has been one of the main reasons for the lack of successful
subrogation. DPI's laboratory has a 97% success rate in product identification.
Insurance companies and adjusters using DPI's service have consistently been
able to successfully subrogate in excess of 68% of investigated claims. This is
an improvement of 66% over the industry average and at a fraction of the cost of
conventional engineering firms. After the deduction of DPI's reasonable fees,
these subrogation recoveries are pure profit to the insurance company. Defective
Product Investigations
DPI performs professional forensic investigations to identify the products
and materials involved in a claim loss and determine the cause of the failure.
DPI employs state-licensed Private Investigators who have been certified in
"Origin and Cause" analysis. It is the determination of "Origin and Cause" that
is the basis for successful subrogation of a claim. The client mails small items
to DPI, or investigations can be carried out on site, as in the case of fire and
arson investigations. DPI or insurance company personnel recover shippable items
from the site. The items are appropriately packaged and shipped to the DPI
Laboratory. Crucial to the legal process of subrogation is maintenance of the
"chain of evidence." DPI maintains secure facilities and has personnel who are
trained in the procedures for properly handling, storing and cataloging of
evidence.
Small Item Mail-In Program The "Small Item Mail-In Program" is a benchmark
result of the great success that DPI has been able to achieve in the state of
California. In just one Allstate Insurance Company claims offices near
Bakersfield, the client was able to successfully recover over $4 million in
subrogated claims. As a result of this overwhelming success, Allstate Insurance
Company has instructed all its adjusters in California to submit all of their
defective products to DPI. Items are placed in the pre-addressed, pre-paid
Fed-Ex box or envelope and submitted to DPI for identification and analysis. DPI
performs this task at their lab and submits a report to the insurance adjuster.
The item is retained in secure storage as evidence until the claim is closed.
DPI has recently reached an arrangement with State Farm Insurance Co.;
similar to one that is now in place with All State Insurance Company. In
November 1999, State Farm invited DPI to attend the National Association of
Subrogation Professionals (NASP) convention in Las Vegas. DPI was introduced as
an investigative specialist in the field. DPI recommends subrogation. The
determination to pursue that subrogation is determined by the insurance carrier.
DPI has been asked by the office in Texas if the Company can handle the influx
of up to 500 items per month, but this does not reflect a firm commitment to
submit that number.
The table below is a partial listing of items that can be mailed in using
the Small Item Mail-in Program:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Check Copper CPVC Pipe Freeze Toilet Tanks Faucets
Valves Pipe Proof Hose
Bibs
------------------- ------------------- ------------------- ------------------- ------------------- -------------------
Garbage Polybutelen Pressure Sump Toilet Surge
Disposals e Release Pumps Valves Protectors
Valves
------------------- ------------------- ------------------- ------------------- ------------------- -------------------
Under Washer Water Water Water Level Water
Counter Hoses Control Filters Switches Softeners
Water Solenoids
Heaters
------------------- ------------------- ------------------- ------------------- ------------------- -------------------
Water Hair Dryers Toasters Curling Clock
Supply Irons Radios
Lines
------------------- ------------------- ------------------- ------------------- ------------------- -------------------
</TABLE>
The minimum fee for these services is $175.00. Fire damaged items
(accounting for 30-40% of the items submitted) incur a minimum additional charge
of 1 log hour @ $75.00 per hour. Currently, DPI is receiving approximately 100
items per week at an average of $200 for each item submitted. This has grown
from 40 items per week in January. With growth of 15% per month, the Small Item
Mail-In Program is projected to produce approximately $3.3 million in revenue in
Year 2000 and gross profits of approximately $2.7 million. (These projections
include storage revenue for the 8,565 items currently in storage)
Large Item Ship-In Program
DPI also has a program to handle large items, including refrigerators, air
conditioning units, stoves, dishwashers, etc. These larger items are either
picked up by DPI, within a range of 150 miles of one of their offices, or
shipped directly by the client. Items picked up by DPI are billed for log hours
for the driving, handling and laboratory analysis. Items shipped by the client
are shipped prepaid and billed for the inspection fee and monthly storage.
Revenue streams are generated from the log hours billed and from the secure
storage of the items until the case is settled. Storage is typically $40 per
year per item. The average investigation is $255.00 plus 1 log hour @ $75.00,
not including the travel time. DPI is currently receiving 10 items per week
under this program. Growth has been averaging 5% increase per month. Revenues
for the year 2000 are projected at $217,270 with gross profits projected at
$182,400 for the 12 month period.
Satellite Office/Outsource Program
As part of DPI's future expansion plans, the Company intends to open 4
additional satellite Office/Labs in New York, Texas and North and South
California. This will give DPI 6 satellite locations and a main
headquarter/laboratory in Oakridge, TN. The company is also training outsource
personnel to service any location where the insurance industry needs the service
and is capable of generating a minimum of 10 inspection/evidence collections per
week. These individuals will be paid on a per investigation basis and be
responsible for their own offices and expenses. The Company plans to train 30
outsource personnel in the next 12 months if the necessary funds are available.
Revenues or the Satellite/Outsource Program are projected at $2.9 million
for Year 2000 and gross profits of $1.9 million. Chain of Custody - Evidence
Collecting and Storage
--------
2 Allstate Insurance Company
<PAGE>
Diversified Product Inspections, Inc.
DPI also provides for the storage of evidence and derives income from the
safe storage of materials. DPI is practiced in the maintenance of the "Chain of
Custody" of evidence, which is critical to successfully bringing a subrogation
case to court. The statute of limitations for filing litigation is 3 years. Due
to the crowded court dockets, the average item remains in storage for 2 years.
Storage is an additional revenue stream for DPI as the Company can perform
this service more securely and efficiently than the insurance companies can
themselves. Currently, DPI has over 8,600 items in secure storage at an average
rate of $35.00 per annum.
Revenue from storage is included in the financial projections for the Small
Item Mail-in Program, Satellite/Outsource Program and Large Item Ship-in
Programs. The mark-up on storage is substantial. Storage revenues are projected
at $457,600 for Year 2000 and gross profits of $451,000.
Indoor Air Quality Analysis
DPI provides in-depth indoor air quality analysis and is a pioneer in
identifying airborne contamination and determining the causes of sick buildings.
DPI has designed proprietary measuring instruments capable of detecting airborne
chemical contaminants in structures. DPI also utilizes state laboratories to
supplement their own lab.
These contaminants are potential health threats and come from a variety of
sources within modern buildings including air conditioners, heaters,
refrigerators and materials used in the construction of the building. DPI is one
of a handful of companies in the country that is capable of identifying the
contaminants involved and the origin and cause within the structure.
The most dangerous and most common cause of indoor air contamination comes
from leaking refrigerants contacting a heat source that can convert the Freon
into deadly phosgene gas (mustard gas). The presence of this reaction is
frequently evidenced by carbon sooting. Almost all air conditioners and many
refrigerators leak Freon. There are many sources of heat in the home (heat
strips, pilot lights, electric range and oven, toasters, etc.), which are
capable of converting the Freon into phosgene gas.
DPI has conducted a nationwide study on the prevalence of phosgene in the
home. The Company has identified phosgene as the cause of numerous severe health
and respiratory problems that have even resulted in death. The Geneva Convention
outlaws the production of phosgene, and its presence can only occur through the
accidental conversion of Freon. Air Tests conducted by DPI are to determine
contaminants of Freon. This Freon can be converted to Phosgene gas under the
right conditions. The determination of Phosgene poisoning can only be determined
by appropriate medical personnel. DPI has been able to identify the chemicals
and conditions that could result in Phosgene poisoning.
Due to the high frequency and potentially deadly effects of phosgene, DPI
has developed a prototype that the Company believes is capable of neutralizes
the Freon before it can be converted to phosgene. DPI is planning to market this
device as an inexpensive retrofit to existing systems and is seeking an
appropriate licensing agreement.
Structure Evaluations and Consumer Product Evaluations
Home Evaluations and Consumer Product are not to be confused with a home
inspection. Home inspections are typically performed as a pre-purchase
inspection that concentrates on the current functionality of items in the home.
The Consumer Product and Home Evaluation reports on the failure rates and
recalls of the products used in the home. The difference is significant.
Structure Evaluations are performed on-site by a qualified DPI
investigator. In addition to reporting on the current functionality of the
structure and appliances (roof, siding, heating and cooling system, etc), DPI
goes further and identifies the manufacturers of the various building materials
and appliances. The client is also informed of known failure rates, defects and
hazards, recalls and current or pending legal proceedings. As an example, a home
inspection would report that the siding on the home is in good condition if it
is painted and shows no obvious signs of decay. DPI's inspection would report on
the type of siding and whether or not that siding was the subject of high rates
of failure, or the subject of a recall. DPI would also report to the client
whether the siding was the subject of a class action settlement and the
procedures for making a claim. (i.e. Louisiana Pacific siding case)
<PAGE>
Diversified Product Inspections, Inc.
Consumer Product Evaluations are a survey of common items in the home for
the purpose of identifying products that are the subject of a recall or are
known to have a history of failure. DPI's evaluation informs the consumer of
current working status of the product, the risks and failure rates of various
products, recalls, current legal proceeding and remedies.
DPI is planning to offer the Consumer Products Evaluation, on the Company
website. Consumers will be offered an opportunity to evaluate a single product
or an entire household. Package deals will be available which will include a
1-year subscription to the company newsletter, the "Investigator." The
"Investigator" keeps consumers informed of current product recalls and safety
tips for the home. The Company intends to provide this services for a nominal
fee or no-charge. The Company believes that revenue can be derived from the
database that is being accumulated under this program.
Database Marketability - The Consumer Product Evaluation database may be
marketable to several different clients. The database will include consumer
buying habits, which is of value to manufactures and retailers. The database
will also contain the location of products that may present potential liability
for manufacturers, which is valuable to manufacturers and insurance companies.
Additional Services
Full Engineering Services - DPI is abl to provide clients with full
engineering services including mechanical and electrical engineering
Metallurgist Services - the DPI lab is equipped to perform a full
range of metallurgical services capable of analyzing submitted items
for design load, metal fatigue, hairline cracking, etc.
Training Seminars - DPI investigators are also trained as instructors
and are licensed in most states due to reciprocity agreements. DPI has
been approached by the states of California, Texas, Virginia, N.
Carolina and S. Carolina to conduct licensing seminars for insurance
adjusters. Each of these states has a requirement that adjusters
receive additional training each year.
Manufacturer Defective Product Notifications
DPI provides manufacturers with a service that assists those companies in
locating products that are subject to recall. It is inevitable that a certain
number of defective products will slip through the manufacturer's quality
control inspections and make their way into the marketplace. These defective
products, once identified, are a source of potential liability for the
manufacturer.
Manufactures are often eager to locate and replace defective products
before the product fails and causes high damages. If the average damages are
relatively high, the manufacture, in many cases, is willing to pay a reward or
bounty for information that will assist them in locating the product prior to
failure.
This is where DPI's database of consumer profiles will come into play.
(See: Consumer Product Evaluations). DPI plans to maintain a website where
consumers can receive a home evaluation online. The consumer may pay a nominal
fee to enter all household appliances, mechanical devices, lawn equipment and
materials of and around the house into the computer. The computer will then
compare the profile to the database of known defective products. DPI will then
inform the consumer and the manufacturer of the location of the product so that
a replacement can be scheduled.
To understand the process, one need only look at the example of the number
one cause of flooding in the home - the washing machine hose. State Farm paid
over $140,000,000 in damage claims caused from water damage an example is failed
laundry hoses. Claims from water damage can vary greatly and do not have an
industry average. 3. These hoses are relatively inexpensive and easy to replace
and are designed to provide service for 3 years. If a manufacturer has a run of
faulty hoses that fail to meet design specs, the manufacture could be liable for
subrogation recovery. As subrogation rates increase, manufacturers will have an
incentive to locate and replace the defective hoses. DPI will be able to provide
manufacturers with this information, as its "Consumer Products Evaluation"
database expands.
--------
<PAGE>
Diversified Product Inspections, Inc.
Item 10: The Nature and Extent of the Issuer's Facilities.
The Issuer conducts its business in approximately 30,000 square feet of
office and warehouse space located at 3 Main Street, Oakridge, Tennessee. The
Issuer occupies said premises pursuant to a written lease which expires June
2003 for a monthly rent of $21,000.
Item 11: Names of the Chief Executive Officers and Members of the Board of
Directors of the Issuer.
Directors and Executive Officers
The following table includes the names, positions held and ages of our
executive officers and directors. All directors serve for one year and until
their successors are elected and qualify. Officers are elected by the Board and
their terms of office are, except as otherwise stated in employment contracts,
at the discretion of the Board.
NAME POSITION
John VanZyll
President, Chairman, Chief Executive Officer and
Director
Marvin Stacy
Chief Operating Officer and Director
Dean Madden
Chief Financial Officer, Treasurer and Director
Ann Furlong
Secretary and Director
David Dowell
Director
John VanZyll, President Chairman of the Board, Chief Executive Officer and
Director. Entrepreneur and founder of Diversified Product Inspections, Mr.
VanZyll 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. VanZyll is considered an expert in the field of investigation
and subrogation by the insurance industry and has conducted over 60 training
seminars and trained over 1600 insurance adjusters.
<PAGE>
Diversified Product Inspections, Inc.
Marvin Stacy, Director, Chief Operating Officer. Mr. Stacy has over 40
years of experience in all aspects of electrical and mechanical engineering and
design. Mr. Stacy is also gifted as an investigator and is responsible for the
operation of the laboratory. He has designed custom testing equipment and
designs solutions for manufacturers to correct design flaws and shortcomings.
Dean Madden, Chief Financial Officer, Treasure and Director. Mr. Madden is
serving as the Company's interim CFO. Mr. Madden has over 33 years of experience
in all aspects of accounting. Mr. Madden served as CFO and Director of GMAC of
Canada from 1983 - 1988. Mr. Madden has worked in various accounting positions
throughout his career, specializing in auditing, taxes, and preparation of
financial statements.
Ann M. Furlong, Secretary and Director. Ms. Furlong has over 29 years of
experience as a professional manager and the owner and founder of several
successful businesses. Ms. Furlong has provided the administrative and
organizational expertise that has greatly contributed to DPI's success since its
founding in 1991, including the compilation of the company's proprietary
database.
David Dowell, Esquire, Director. Mr. Dowell was awarded a B.S. degree in
Business from Indiana University in 1985 and a degree in Juris Prudence from
Indiana University School of Law in 1988. Upon graduation, Mr. Dowell was
admitted to the Indiana Bar and was retained by Coopers and Lybrand as a tax
associate. He moved to Florida in 1990 and became law clerk for the Fifth
Circuit Court in Lake County. In 1992, Mr. Dowell opened a private practice and
specializes in Corporate Law and Bankruptcy
Item 12: Remuneration of Officers and Directors.
Although there are no formal agreements between the Company and its
employees, officers and directors, the Company intends to enter into such
agreements in the near future.
Item 13: Management Option to Purchase Stock/Securities.
None.
Item 14: Interest of Management and Others in Certain Transactions.
None.
Item 15: Principal Security Holders and Security Holdings of Management.
<PAGE>
Diversified Product Inspections, Inc.
The following table sets forth information known to us relating to the
beneficial ownership of shares of common stock by each person who is known by us
to be the beneficial owner of more than five percent of the outstanding shares
of common stock; each director; each executive officer; and all executive
officers and directors as a group.
Unless otherwise indicated, the address of each beneficial owner in the
table set forth below is care of Diversified Product Inspections, Inc.
Name and Address of Amount and Nature of Percent of Class
Beneficial Owner Beneficial Ownership
John VanZyll 5,000,000 45%
Marvin Stacey 2,000,000 18%
Anne Furlong 2,000,000 18%
All Executive Officers and 9,000,000 81%
Directors as a Group
Item 16: Pending Legal Proceedings.
None.
Item 17: Nature of Trading Market.
None.
Item 18: Recent Sales/Issuance of Unregistered Securities.
1. On or about October 17, 1994, the Company issued a total of 600,000
shares of its common stock for services in an offering conducted pursuant to
Section 3(b) of the Securities Act of 1933, and Rule 504 of Regulation D
promulgated thereunder. This offering was made in the state of Florida. The
shares were subsequently transferred pursuant to 4(1) of the Securities Act of
1933 to 25 purchasers. The Company thereafter effected a forward split of such
shares at the rate of 3.125 to 1, for holders of record on March 1, 2000. Post
split shares total 1,875,000.
2. In December 1998 the Company received gross proceeds in the amount of
$50,000.00 from the sale of a total of 1,000,000 shares of restricted common
stock, $.0001 par value per share, to 25 subscribers in an offering conducted
pursuant to Section 3(b) and 4(2) of the Securities Act of 1933, and Rule 505
and 506 of Regulation D promulgated thereunder. This offering was made in the
state of Georgia and the State of Florida. These shares were canceled as a part
of and at the time of the acquisition of Diversified Products Investigations,
Inc. on or about March 13, 2000.
3. On December 1, 1998, the Company issued and sold 500,000 shares of its
common stock to Mr. Rodney Delaney Ford, the President, Secretary and Treasurer
of the Company, in consideration and exchange for services valued at $12,500.00
in connection with the organization of the Company. These shares were issued to
pursuant to Section 4(2) of the Securities Act of 1933, and Rule 506 of
Regulation D promulgated thereunder. This offering was made in the state of
Georgia. These shares were canceled as a part of and at the time of the
acquisition of Diversified Products Investigations, Inc. on or about March 13,
2000.
4. On or about March 13, 2000, the Company issued 9,241,900 shares of its
restricted common stock to thirteen (13) shareholders of Diversified Product
Investigations, Inc. pursuant to a Share Exchange Agreement of same date in sole
consideration of the exchange of all issued and outstanding shares of
Diversified Product Investigations, Inc to the Company.
<PAGE>
Diversified Product Inspections, Inc.
Item 19: Indemnification of Directors and Officers.
The Florida Business Corporation Act (the "Corporation Act") permits the
indemnification of directors, employees, officers and agents of Florida
corporations. The Company's Articles of Incorporation (the "Articles") and
Bylaws provide that the Company shall indemnify its directors and officers to
the fullest extent permitted by the Corporation Act.
The provisions of the Corporation Act that authorize indemnification do not
eliminate the duty of care of a director, and in appropriate circumstances
equitable remedies such as injunctive or other forms of non-monetary relief will
remain available under Florida law. In addition, each director will continue to
be subject to liability for (i) violations of criminal laws, unless the director
had reasonable cause to believe his conduct was lawful or had no reasonable
cause to believe his conduct was unlawful, (ii) deriving an improper personal
benefit from a transaction, (iii) voting for or assenting to an unlawful
distribution and (iv) willful misconduct or conscious disregard for the best
interests of the Company in a proceeding by or in the right of a shareholder.
The statute does not affect a director's responsibilities under any other law,
such as the Federal securities laws.
The effect of the foregoing is to require the Company to indemnify the
officers and directors of the Company for any claim arising against such persons
in their official capacities if such person acted in good faith and in a manner
that he reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling the
Company pursuant to the foregoing provisions, the Company has been informed that
in the opinion of the Securities and Exchange Commission, such indemnification
is against public policy as expressed in the act and is therefore unenforceable.
The Company has not made any provision for the indemnification of its
officers or directors. The Articles of Incorporation and By-Laws do not have any
provisions for indemnification. Neither the Company's Articles of Incorporation
nor By-Laws makes provisions for the purchase of liability insurance on behalf
of its officers or directors. Currently the Company does not maintain any such
liability insurance.
Item 20: The Issuer's Most Recent Balance Sheet and Statement
of Income and Retained Earnings.
See Form 8-KA dated May 22, 2000 attached hereto and made a part hereof.
CLIENT FORMAT
<PAGE>
Diversified Product Inspections, Inc.
independent auditors' report
Item 21: Issuer's Financial Statements for the Two Preceding Fiscal Years.
See Form 8-KA dated May 22, 2000 attached hereto and made a part hereof.
Item 22: Disclosure Whether The Broker or Dealer or any Associated Person is
Affiliated, Directly or Indirectly with the Issuer.
The Issuer has no knowledge of any Broker or Dealer or associated person
who is submitting quotations with respect to the Issuer's securities who may be
simultaneously affiliated directly or indirectly with the Issuer. There are no
members of the Board of Directors or Management with any affiliation to any
Broker/Dealer.
Item 23: Disclosure Whether the Quotation is Being Published or Submitted on
Behalf of any other Broker/Dealer.
The Issuer has no knowledge of any quotation being published or submitted
on behalf of any other Broker/Dealer.
Item 24: Disclosure Whether the Quotation is Being Published on Behalf of any
10% or more Beneficial Owner.
No Quotation is being submitted or being published directly or indirectly
on behalf of the Issuer or any Director or Officer or any person, directly or
indirectly the beneficial owner of more than 10% of the issued and outstanding
shares of any equity security of the Issuer.
Item 25: Other Information.
The Attachments and Exhibits referred to hereinabove and attached hereto
are more particularly described in the Index of Attachments and Exhibits, which
follows the signature page hereof.
<PAGE>
Diversified Product Inspections, Inc.
Item 26: Contact Representative.
The Name of the Issuer's Representative to contact regarding any matter
arising from this Report or the Information contained herein is:
DIVERSIFIED PRODUCT INSPECTIONS, INC.
John VanZyll, President
The undersigned hereby state that he has read the information set forth
hereinabove, and attests hereby that, to the best of his current knowledge and
belief, such information is true and correct.
Diversified Product Inspections, Inc.
By:------------------------
John VanZyll
<PAGE>
Diversified Product Inspections, Inc.
Exhibit E
DIVERSIFIED PRODUCT INSPECTIONS, INC.
SUBSCRIPTION DOCUMENTS
Name of Subscriber: _______________________________
Memorandum Number: _______________________________
<PAGE>
Diversified Product Inspections, Inc.
INSTRUCTIONS TO SUBSCRIBERS Persons wishing to subscribe for shares (as defined
herein) of Diversified Product Inspections, Inc., Inc., a Florida corporation,
are required to complete the pertinent documents in this package.
Please comply with the following instructions:
1. Please complete and sign the Subscription Agreement and Purchaser
Questionnaire provided to you. In those cases in which Shares will be
held in joint ownership, all parties must sign.
Your check or wire transfer in the amount of $2.50 for each Share
purchased should be made payable to "Donald Mintmire Trust Account for
the benefit of Diversified Product Inspections, Inc."
Check and this signed subscription documents to be sent to: Donald
Mintmire Trust Account Mintmire & Associates 265 Sunrise Ave #204 Palm
Beach, Florida 33480 Phone (561) 832-5696 Fax (561) 659-5371
SPECIAL SUBSCRIPTION INSTRUCTIONS AND A CERTIFICATE
FOR CORPORATION, PARTNERSHIP AND TRUST SUBSCRIBERS
If the Investor is a corporation, partnership, trust or other entity, the
following additional instructions must be followed. Information in addition to
that requested below may also be required in some cases.
1. Corporations, partnerships and trusts must have the Subscription Agreement
completed and executed by an authorized corporate officer, general partner or
trustee who is making the investment decision on behalf of the corporation,
partnership or trust.
2. Corporations, partnerships and trusts must provide the following information:
(a) Corporations must attach a copy of their currently effective Articles
of Incorporation.
(b) Partnerships must attach a copy of their currently effective
partnership agreement, including the date of formation and a list of all
the partners.
<PAGE>
Diversified Product Inspections, Inc.
(c) Trusts must attach a copy of their currently effective trust instrument
authorizing investments by a trustee.
The authorized corporate officer, general partner or trustee must complete,
date, and sign the Certificate set forth on page 9 hereof.
SUBSCRIPTION AGREEMENT
Name(s) of Subscriber(s): Total Subscription Price:
___________________________________ $ ____________
___________________________________ $ ____________
_____________________________________ $ ____________
Diversified Product Inspections, Inc.
Attn: John VanZyll
3 Main Street
Oakridge, Tennessee 37830
Gentlemen:
1. Subscription. The undersigned (the "Subscriber") hereby subscribes for
and agrees to purchase the number of Shares (the "Shares") of the .001 par value
per share Common Stock (the "Common Stock") of Diversified Product Inspections,
Inc., a Florida corporation (the "Corporation") in accordance with the terms of
this Subscription Agreement (the "Subscription Agreement").
2. Subscription Instruments. The Subscriber hereby tenders to the
Corporation the following materials (the "Subscription Materials"), all of which
have been duly completed and executed by the Subscriber;
a. A check or wire transfer, in the amount of $2.50 per Share being
subscribed for, made payable to "Donald Mintmire Trust Account for the benefit
of Diversified Product Inspections, Inc."
b. One signed copy of this Subscription Agreement; and
c. One signed copy of the Purchaser Questionnaire.
<PAGE>
Diversified Product Inspections, Inc.
3. Acceptances or Rejection of Subscription. The Subscriber understands and
agrees that:
a. If this subscription is accepted, the proceeds delivered herewith shall
be used to admit the subscribers whose subscriptions were accepted as
shareholders of the Corporation; and
b. If this subscription is rejected, the Subscription Materials and the
subscription funds will be promptly returned to the Subscriber. No interest will
be paid on any subscription funds.
4. Representations and Warranties. The Subscriber hereby represents and
warrants to the Corporation as follows:
a. The Subscriber has received the Confidential Private Placement
Memorandum of the Corporation dated December 1, 1999 including all Exhibits
thereto (collectively, the "Memorandum"), and, prior to the execution of this
Subscription Agreement by the Subscriber, have carefully reviewed the
Memorandum. The Subscriber has relied solely on the information contained in the
Memorandum in making his investment decision, and, in making such investment
decision, has disregarded any other written or oral statements or information,
if any, concerning the Company or an investment in Shares made by any party,
including, without limitation, the officers, directors, and employees of the
Company. All capitalized terms contained herein shall have the meanings given to
them in the Memorandum unless otherwise specifically defined herein. The
Subscriber understands the business in which the Corporation will be engaged and
has such knowledge and experience in financial and business matters that he is
capable of evaluating the merits and risks of an investment in the Corporation
and making an informed investment decision with respect thereto. He has obtained
sufficient information to evaluate the merits and risks of the investment and to
make such a decision.
b. The Subscriber has had sufficient access to all documents and records
pertaining to the Corporation and this proposed investment in the Shares.
Additionally, the subscriber has had the opportunity to ask questions and
receive answers concerning the terms and conditions of the offering and to
obtain any additional information which the Corporation possesses, or can
acquire without unreasonable effort or expense, necessary to verify the accuracy
of the information furnished in the Memorandum.
c. The Subscriber (i) has adequate means to provide for his current needs
and possible personal contingencies and those of his family, if applicable, in
the same manner as he would have been able to provide prior to making the
investment in the Shares, (ii) has no need for liquidity in this investment,
(iii) is aware of and able to bear the risks of this investment for an
indefinite period of time and (iv) is presently able to afford a complete loss
of such investment.
<PAGE>
Diversified Product Inspections, Inc.
d. The Subscriber recognizes that the Corporation is a growth stage entity,
and that the Shares as an investment involve significant risks, including,
without limitation, those set forth in the Memorandum.
e. The Subscriber understands that none of the Shares have been registered
under the Securities Act of 1933, as amended (the "Securities Act") or the
securities laws of any state in reliance upon exemptions there from for private
offerings. The Subscriber understands that the Shares must be held indefinitely
unless the sale thereof is subsequently registered under the Securities Act and
applicable state securities laws or exemptions from such registration are
available. The Subscriber further understands that the Corporation has no
obligation to repurchase any of the Shares, register any of the Shares under any
Federal or state securities laws on his behalf or to assist him in complying
with any exemption from registration and that it is not contemplated that any of
the Shares will ever be registered under the Securities Act or applicable state
securities laws.
f. The Shares are being purchased solely for the Subscriber's account for
investment and not for the account of any other person and not with a view to or
for distribution, assignment or resale in connection with any distribution
within the meaning of the Securities Act, and no other person has a direct or
indirect beneficial interest in such Shares. The Subscriber represents that he
has no agreement, understanding, commitment or other arrangement with any person
and no present intention to sell, transfer or assign any Shares.
g. The Subscriber realizes that he may not be able to sell or dispose of
any of the Shares that no market of any kind (public or private) will be
available for any of the Shares. In addition, the Subscriber understands that
his right to transfer the Shares will be subject to restrictions contained in
applicable Federal and state securities laws.
h. All information which the Subscriber has provided to the Corporation
concerning himself, his financial position and his knowledge of financial and
business matters, including all information contained in this Subscription
Agreement, is correct and complete as of the date set forth on the signature
page hereof, and if there should be any adverse change in such information prior
to his subscription being accepted, he will immediately provide the Corporation
with such information.
i. The Subscriber's principal residence (if Subscriber is an individual) or
principal business address, as applicable, is in the State of _________________
and the Subscriber has no present intention to move such residence or principal
business address, as applicable, from such State.
<PAGE>
Diversified Product Inspections, Inc.
j. The Subscriber understands that the financial projections included in
the Memorandum are for planning purposes only, and the Subscriber hereby
represents and warrants that neither the Subscriber nor any of his advisors are
relying on such financial projections in connection with determining the merits
of an investment in the Shares. The Subscriber understands and acknowledges that
no representations concerning the accuracy of information or financial
projections, if any, not included in the Memorandum are being made and he and
all of his advisors have completely disregarded such information or financial
projections, in determining whether to invest in the Shares.
k. The Subscriber understands that the Corporation may at any time, in its
sole discretion, arrange for the offer and sale of additional shares of its
capital stock, including, without limitation, additional shares of Common Stock
to current or additional shareholders, at such prices and in such amounts as it,
in its sole discretion, may determine to be in the best interests of the
Corporation.
5. Subscription. The Subscriber hereby subscribes for _________ Shares at
$2.50 per Share for an aggregate price of $ ________________ and has provided a
check or wire transfer for that amount payable to: "Mintmire Trust Account Trust
Account for the benefit of Diversified Product Inspections, Inc."
TYPE OF OWNERSHIP: Please check one:
______________ Individual (One signature required)
______________ Joint tenants with rights of survivorship (All parties must sign)
______________ Tenants by the Entirety (Both parties must sign)
______________ Tenants in common (All parties must sign)
______________ Corporation (Authorized officer must sign)
______________ Other Entity (Specify type) (Authorized party must sign)
<PAGE>
Diversified Product Inspections, Inc.
SIGNATURE PAGE FOR INDIVIDUAL INVESTORS
IN WITNESS WHEREOF, the Subscriber has executed this Subscription Agreement this
_____ day of ________________, 2000
Investor
Signature: __________________________________
Print Name.___________________________
Investor (If Joint Ownership)
Signature: ___________________________________
Print Name: _________________________________
<PAGE>
Diversified Product Inspections, Inc.
SIGNATURE PAGE FOR CORPORATE INVESTORS
IN WITNESS WHEREOF, the undersigned, intending to be legally bound, has executed
this Subscription Agreement this _____ day of _____________________, 2000 .
_______________________________________
Name of Corporation
By: ___________________________________
Signature of authorized representative
Title: ________________________________
Title of authorized representative
<PAGE>
Diversified Product Inspections, Inc.
SIGNATURE PAGE FOR PARTNERSHIP INVESTORS
IN WITNESS WHEREOF, the undersigned, intending to be legally bound, has executed
this Subscription Agreement this _____ day of _________________, 2000
________________________________________
Name of Partnership
By: _____________________________________
Signature of general partner
Title: __________________________________
Title of additional general partner if required
<PAGE>
Diversified Product Inspections, Inc.
SIGNATURE PAGE FOR TRUST INVESTORS
IN WITNESS WHEREOF, the undersigned, intending to be legally bound, has executed
this Subscription Agreement this _____ day of ___________________, 2000
______________________________________
Name of Trust
By: ___________________________________
Signature of Trustee
Title: _________________________________
Title of additional Trustee if required
<PAGE>
Diversified Product Inspections, Inc.
CERTIFICATE FOR CORPORATE, PARTNERSHIP OR TRUST SUBSCRIBER
The undersigned, an authorized officer, trustee or general partner of
_______________________________________, hereby certifies that:
(a) The Subscriber has been duly formed and is validly existing under
the laws of the State of ___________________, with full power and
authority to invest in Diversified Product Inspections Inc., a Florida
corporation; and
(b) The Subscriber's Subscription Agreement has been duly and validly
authorized, Executed and delivered on behalf of the Subscriber, and
upon the Corporations acceptance of the Subscribers subscription, the
Subscription Agreement will constitute the valid, binding and
enforceable agreement of the Subscriber.
________________________________________
Name of Subscriber
________________________________________
Signature of an authorized corporate
officer, general partner or trustee
____ Date _______________
Title
<PAGE>
Diversified Product Inspections, Inc.
ACCEPTANCE
DIVERSIFIED PRODUCT INSPECTIONS, INC. HEREBY ACCEPTS THE SUBSCRIPTION
FOR SHARES CONTAINED IN THIS SUBSCRIPTION AGREEMENT.
Diversified Product Inspections, Inc.
By: _____________________________________
John VanZyll
Its: President
Date: _________________
<PAGE>
Diversified Product Inspections, Inc.
Exhibit F
Diversified Product Inspections, Inc.
PURCHASER QUESTIONNAIRE
Instructions. This Purchaser Questionnaire must be completed by each person who
has indicated an interest in purchasing Shares. The purpose of this Purchaser
Questionnaire is to permit the Corporation to determine whether each such person
meets certain standards imposed by Federal and state securities laws.
If the answer to any question is "None" or "Not Applicable," please so state.
Please complete, sign, date and return this Purchaser Questionnaire to Mintmire
& Associates. Should there be any material change in the information contained
herein prior to acceptance by the Corporation of your subscription for Shares,
you must notify the Corporation or its authorized representative immediately.
Signed subscription documents, signed questionnaire and check to be sent to:
Mintmire & Associates
265 Sunrise Ave #204
Palm Beach, Florida 33480
Phone (561) 832-5696
Fax (561) 659-5371Mintmire & Associates
QUESTIONNAIRE (Please Print or Type)
SECTION I - GENERAL INFORMATION (ALL PURCHASERS MUST COMPLETE)
Name:
_________________________________________________________________
Home Address (if individual) or principal place of business:
__________________________________________________________________
Occupation (if individual):
_______________________________________________________
Employer (if individual):
_______________________________________________________
<PAGE>
Diversified Product Inspections, Inc.
(c) i) Please indicate your principal state of residence (if individual) or
principal place of business for the last two years:
_______________________________________________________________
ii) Do you have any present intention of changing the information
provided in Section (c) (i) above?
Yes _____ No _____
iii) If "Yes", please explain:
________________________________________________________________
________________________________________________________________
With respect to tenants in common, joint tenants, and tenants by the entirety,
complete only if information differs from that above.
i) Home Address (Principal Residence):
___________________________________________________________
___________________________________________________________
___________________________________________________________
Telephone: (_____) ______________
Social Security Number: ____________________________________
Taxpayer Identification Number: ____________________________
ii) Occupation: __________________________________
Employer:
___________________________________________________________
Business Address: ___________________________________________________
<PAGE>
Diversified Product Inspections, Inc.
________________________________________________ _______
iii)(A) Please indicate your state of principal residence for the last
two years:
_________________________________________________________
(B) Do you have any intention of changing your present state of
residence in the near future?
Yes ___ No ___
(C) If "Yes," please explain:
_____________________________________________________
_____________________________________________________
_____________________________________________________
SECTION 2- ACCREDITED INVESTOR STATUS
The Subscriber hereby acknowledges that the representations contained in this
Section 2 are made for the purpose of qualifying the Subscriber as an
"Accredited Investor" as that term is defined in Rule 501(a) of Regulation D
promulgated under the Securities Act, and applicable state securities laws. The
Subscriber hereby represents that the statement or statements initialed below
are true and correct in all respects. The Subscriber understands that a false
representation may constitute a violation of law and that any person who suffers
damage as a result of a false representation may have a claim against the
Subscriber for damages. PLEASE INITIAL THE APPROPRIATE STATEMENTS:
_____ (i) I am an Accredited Investor because I had an individual net
income (excluding any income attributable to my spouse) in excess of
$200,000 or joint net income with my spouse in excess of $300,000 in each
of the two most recent years and I reasonably expect an income of the same
level in the current year.
_____ (ii) I am an Accredited Investor because my individual net worth, or
joint net worth with my spouse is, at the present time, in excess of
$1,000,000.
<PAGE>
Diversified Product Inspections, Inc.
For this purpose, "net worth" refers to the fair market value of all of my
assets, including home and furnishings, less all of my liabilities.
______ (iii) I am an Accredited Investor because I am a director or
executive officer of the Corporation.
______ (iv) The Subscriber is an Accredited Investor because it is an
entity in which all of the equity owners are Accredited Investors.
______ (v) I am an Accredited Investor because ___________________
__________________________________________________________________
______ (vi) I am not an Accredited Investor.
I hereby certify that the information provided in this Purchaser Questionnaire
is correct.
Signature:________________________________ Date: ___________________
Print Name:_______________________________
Signature:________________________________ Date: ___________________
Print Name:_______________________________
(All Subscribers Must Sign)
