UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, DC 20549



                                   FORM 10-QSB


     (X)  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
          THE SECURITIES  EXCHANGE ACT OF 1934

          For the Quarterly Period Ended July 31, 2001

                          Commission file number: 0-21169

                      Imperial Petroleum Recovery Corporation
                (Exact name of registrant as specified in its charter)


                 Nevada                           76-0529110
    (State or other jurisdiction of           (I.R.S. Employer
    incorporation or organization)            Identification No.)


                           1970 South Starpoint Drive
                               Houston, TX 77032
                     (Address of principal executive offices)

                                 (281) 821-1110
                (Registrant's telephone number, including area code)


Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days


                                  YES X   NO __


There were 17,167,419 shares of the Registrant's $0.001 par value common stock
outstanding as of September 14, 2001.














                              TABLE OF CONTENTS

                        PART I. FINANCIAL INFORMATION

Item 1.  Consolidated Financial Statements (Unaudited)

         Consolidated Balance Sheets as of July 31, 2001 and
         October 31, 2000                                            3-4

         Consolidated Statements of Operations for the Three
         and Nine Months Ended July 31, 2001 and 2000 and
         Cumulative Amounts Since Inception                          5

         Consolidated Statements of Cash Flows for the Nine
         Months Ended July 31, 2001 and 2000 and Cumulative
         Amounts Since Inception                                     6-8

         Notes to Consolidated Financial Statements                  9-14

Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations                        15-18

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings                                          20

Item 2.  Changes in Securities and Use of Proceeds                  20

Item 3.  Defaults Upon Senior Securities                            20

Item 4.  Submission of Matters to a Vote of Security Holders        20

Item 5.  Other Information                                          20

Item 6.  Exhibits and Reports on Form 8-K                           21

         Signatures                                                 22

         Exhibit Index



















                                        2


                        PART I.  FINANCIAL INFORMATION

ITEM I. CONSOLIDATED FINANCIAL STATEMENTS

IMPERIAL PETROLEUM RECOVERY CORPORATION and SUBSIDIARY
(a development stage company)

CONSOLIDATED BALANCE SHEETS




                                          July 31, 2001    October 31, 2000
                                           (Unaudited)        (Audited)

ASSETS

CURRENT ASSETS
  Cash and cash equivalents                $    7,592         $  171,822
  Trade accounts receivable                    10,484             11,000
  Other receivables, related party              4,332              5,082
  Inventory - net of reserve of $260,000
    at July 31, 2001 and October 31, 2000        -                  -
  Prepaid expenses                             15,248             24,891
                                           ----------         ----------
     Total Current Assets                      37,656            212,795

PROPERTY AND EQUIPMENT, net of
  accumulated depreciation of $357,031
   at July 31, 2001 and $231,416 at
   October 31, 2000 respectively              878,228            921,147

OTHER ASSETS, net of accumulated
  amortization of $6,900 at July 31, 2001
   and $4,214 at October 31, 2000
   respectively                               165,682             74,244
                                           ----------         ----------

                                           $1,081,566         $1,208,186
                                           ==========         ==========















                                 (Continued)

                                      3



IMPERIAL PETROLEUM RECOVERY CORPORATION and SUBSIDIARY
(a development stage company)

CONSOLIDATED BALANCE SHEETS (Continued)



                                         July 31, 2001      October 31, 2000
                                          (Unaudited)          (Audited)

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
  Trade accounts payable                   $  625,897         $  427,211
  Payables to related parties                  29,428             17,796
  Accrued liabilities                         191,622            114,952
  Deferred revenue                             53,625             53,872
  Notes payable to related parties            829,200               -
  Current maturities of long term
   obligations                                378,538            153,117
  Current maturities of capital lease
   obligation                                   1,704              1,552
                                           ----------         ----------
     Total Current Liabilities              2,110,014            768,500

LONG TERM OBLIGATIONS
  Notes payable, less current maturities    1,195,797          1,137,224
  Capital lease obligation, less current
   maturities                                   6,911              8,319
                                           ----------         ----------
     Total Liabilities                      3,312,722          1,914,043

COMMITMENTS AND CONTINGENCIES                    -                  -

STOCKHOLDERS' DEFICIT
  Redeemable common stock (200,000 shares,
   par value $.001, relating to Guaranteed
   Investment Contract - Note D)              102,493               -
  Common stock, par value $0.001;
   authorized 100,000,000 shares; issued
   and outstanding 16,967,419 at July 31,
   2001 and 16,700,943 at October 31, 2000,
   respectively                                16,968            16,701
  Additional paid in capital               11,416,231        11,241,837
  Deficit accumulated during the
   development stage                      (13,766,848)      (11,964,395)
                                          -----------       -----------
     Total Stockholders' Deficit           (2,231,156)         (705,857)
                                          -----------       -----------
                                          $ 1,081,566       $ 1,208,186
                                          ===========       ===========



The accompanying notes are an integral part of these financial statements.

                                         4



IMPERIAL PETROLEUM RECOVERY CORPORATION and SUBSIDIARY
( a development stage company)

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
<TABLE>
<CAPTION>

                                 Cumulative
                                  Amounts          For the three             For the nine
                                   Since       months ended July 31,    months ended July 31,
                                 Inception       2001        2000         2001          2000
                                ------------   --------   ---------   -----------    ---------
<S>                             <C>            <C>        <C>         <C>            <C>
Revenues                        $    779,788   $ 82,089   $  78,858   $   324,904    $ 225,714

Cost of goods sold                 1,622,966    129,633      99,028       694,213      213,941
                                ------------   --------   ---------   -----------    ---------
     Gross profit (loss)            (843,178)   (47,544)    (20,170)     (369,309)      11,773

Operating expenses
 General and administrative        8,796,933    295,338     268,149     1,191,160      646,610
 Research and development-
   prototype                       3,446,469     22,257        -           67,793         -
 Acquired research and
   development-prototype             349,500       -           -             -            -
 Loss on abandonment of
   leased facility                   161,918       -           -             -            -
                                ------------   --------   ---------   -----------    ---------
                                  12,754,820    317,595     268,149     1,258,953      646,610
                                ------------   --------   ---------   -----------    ---------
     Loss from operations        (13,597,998)  (365,139)   (288,319)   (1,628,262)    (634,837)

Other
 Interest expense                   (358,882)   (70,061)     (8,713)     (157,125)     (25,537)
 Interest expense on beneficial
   conversion feature (Note D)       (13,250)   (13,250)       -          (13,250)        -
 Other income (expense), net        (152,476)      -            311        (1,323)      (1,442)
                                ------------   --------   ---------   -----------    ---------
                                    (524,608)   (83,311)     (8,402)     (171,698)     (26,979)

Loss before extraordinary
 item                            (14,122,606)  (448,450)   (296,721)   (1,799,960)    (661,816)

Extraordinary item - gain on
 extinguishment of debt              358,251       -           -             -          26,134
                                ------------   --------   ---------   -----------    ---------
     Net loss                   $(13,764,355) $(448,450)  $(296,721)  $(1,799,960)   $(635,682)
                                ============  =========   =========   ===========    =========

Net loss per common share -
 basic and diluted
  Loss before extraordinary
   item                         $     (1.22)  $    (.03)  $    (.02)  $      (.11)   $    (.04)
  Extraordinary item                    .03         -           -             -            -
                                ------------  ---------   ---------   -----------    ---------
     Net loss                   $     (1.19)  $    (.03)  $    (.02)  $      (.11)   $    (.04)
                                ============  =========   =========   ===========    =========

The accompanying notes are an integral part of these financial statements.
</TABLE>




                                        5


IMPERIAL PETROLEUM RECOVERY CORPORATION and SUBSIDIARY
( a development stage company)

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
<TABLE>
<CAPTION>
                                               Cumulative
                                                amounts
                                                 since         Nine months ended July 31
                                                inception          2001           2000
<S>                                            <C>            <C>           <C>
Increase (decrease) in cash and cash
 equivalents
  Cash flows from operating activities
   Net loss                                    $(13,751,105)  $(1,799,960)  $  (635,682)
   Adjustments to reconcile net loss to net
   cash used in operating activities
    Contributed capital for services rendered
     and liabilities paid                           114,059        35,170        45,000
    Gain on extinguishment of debt                 (358,251)         -          (26,134)
    Depreciation and amortization                   364,641       128,681        95,983
    Non-cash charge associated with acquisition     349,500          -             -
    Loss on abandonment of leased facility          161,918          -             -
    Charges associated with stock issuances
     to employees, vendors, related parties       1,064,951        12,031          -
    Non-cash expenses incurred by affiliate         661,677          -             -
    Non-cash interest expense on beneficial
     conversion of note payable to related party     13,250        13,250          -
    Loss on disposal of property and equipment       14,500         1,323          -
    Changes in assets and liabilities
     Accounts receivable                            (10,485)          515          -
       Other receivables, related party              (4,332)          750          -
     Prepaid expenses                               (15,247)        9,644       (12,574)
     Other assets                                  (178,525)      (94,102)     (217,318)
     Trade accounts payable                       1,541,915       198,686        76,940
     Payables to related parties                     29,428        11,632        (5,829)
     Accrued liabilities                            329,074        86,347       (32,902)
     Deferred revenue                                53,625          (247)       38,991
                                               ------------   -----------   -----------
         Total adjustments                        4,118,448       403,680       (37,843)

         Net cash used in operating
          activities                             (9,632,657)   (1,396,280)     (673,525)

Cash flows from investing activities

         Cash paid for acquisition                  (94,000)         -             -
         Purchases of property and equipment     (1,241,419)      (84,421)     (337,106)
                                               ------------   -----------   -----------
         Net cash used in investing activities   (1,335,419)      (84,421)     (337,106)
                                               ------------   -----------   -----------
                                         (Continued)

                                              6
</TABLE>





IMPERIAL PETROLEUM RECOVERY CORPORATION and SUBSIDIARY
( a development stage company)

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - Continued

<TABLE>
<CAPTION>
                                               Cumulative
                                                amounts
                                                 since         Nine months ended July 31
                                                inception          2001           2000
<S>                                            <C>            <C>           <C>
Cash flows from financing activities
  Proceeds from issuance of common stock
   and warrants                                   6,767,983       157,500       970,500
  Proceeds from issuance of long term
   obligations                                    4,107,627       467,250        80,000
  Proceeds from notes payable to related parties    826,200       826,200          -
  Principal payments on long term obligations      (724,141)     (133,222)         (444)
  Principal payments on capital lease obligations    (2,001)       (1,257)         -
                                               ------------   -----------   -----------
        Net cash provided by financing
         activities                              10,975,668     1,316,471     1,050,056
                                               ------------   -----------   -----------
        Net increase (decrease) in cash and
         cash equivalents                             7,592      (164,230)       39,425

Cash and cash equivalents at beginning of period       -          171,822        17,774
                                               ------------   -----------   -----------

Cash and cash equivalents at end of period     $      7,592   $     7,592   $    57,199
                                               ============   ===========   ===========
Supplemental disclosure of cash flow
  information

Cash paid during the period for:
          Interest                             $    158,307   $    54,168   $    10,000
                                               ============   ===========   ===========
          Income taxes                         $       -      $     -       $      -
                                               ============   ===========   ===========

Noncash investing and financing activities

The following noncash activities occurred during the nine month period ended July 31,

2001

In December, 2000, the Company issued 16,040 shares of its Common Stock to various
employees as bonuses for the fiscal year 2000.  The stock issued as bonuses was valued at
$12,030.

</TABLE>



                                           (Continued)

                                                 7


<PAGE>
IMPERIAL PETROLEUM RECOVERY CORPORATION and SUBSIDIARY
(a development stage company)

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - Continued

Noncash investing and financing activities

2001 - Continued

In December, 2000, the Company issued 182,936 shares of Common Stock to a
related party and stockholder in satisfaction of a note payable in the amount
of $50,033 plus accrued interest of $6,677. The note, dated August 15, 1997,
carried an interest rate 10% per annum and entitled the holder to convert any
unpaid balance into shares of the Company's Common Stock at $0.31 per share.

During the nine months ended July 31, 2001, the Company recorded $3,150 in
rental expense from a truck lease agreement with a related party.  The
agreement is considered an in-kind capital contribution.  Accordingly,
additional paid-in capital has been increased by $3,150.

During the nine months ended July 31, 2001, a related party made payments
totaling $30,750 and $1,270 to a consultant and a part-time receptionist,
respectively, on behalf of the Company. Accordingly, the Company recorded
these transactions as additional paid-in capital.

As discussed in Note D, the Company recognized charges related to the
beneficial conversion feature on a note payable to a related party issued
during the three month period ended July 31, 2001.  The beneficial conversion
feature is determined by the difference between the market value of common
stock and the conversion rate of the debt, limited to the amount of debt.  The
beneficial conversion feature is recognized as interest expense over the
period corresponding to the time restrictions on conversion of the debt into
stock.  For the three month period ended July 31, 2001, and cumulative from
inception, the beneficial conversion resulted in a noncash charge recorded as
additional interest expense of $13,250.

2000

In February, 2000, an extraordinary gain was recognized on the forgiveness of
an obligation to a vendor in the amount of $26,134.

On March 2, 2000, the Company issued 10,000 shares of Common Stock valued at
$23,000 to a vendor as a deposit for future services to be rendered.

On May 30, 2000, a capital lease obligation of $10,615 was incurred when the
Company entered into a lease for
new equipment.








The accompanying notes are an integral part of these financial statements.

                                        8



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTNG POLICIES

1.  Basis of Presentation

The consolidated financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America for
interim financial information and pursuant to the regulations of the
Securities and Exchange Commission; accordingly they do not include all of the
information and notes required by accounting principles generally accepted in
the United States of America for complete financial statements.  In the
opinion of management, all adjustments considered necessary for a fair
presentation (consisting of normal recurring accruals) have been included.
The results of operations for the nine month period ended July 31, 2001, are
not necessarily indicative of the results for the fiscal year ending October
31, 2001.  The accompanying unaudited consolidated financial statements should
be read in conjunction with the consolidated financial statements and notes
thereto included in the Company's Annual Report on Form 10-KSB for the fiscal
year ended October 31, 2000.

2.  Organization and business activity

Imperial Petroleum Recovery Corporation and Subsidiary (a development stage
company incorporated in Nevada) (the "Company" or "IPRC") has been in the
development stage since commencement of operations in fiscal year 1995 and is
committed to developing and marketing a proprietary oil sludge remediation
process and equipment (MST units) that uses high energy microwaves to separate
water, oil and solids. Company operations take place in Texas.

3.   Principles of consolidation and financial statement presentation

The consolidated financial statements include the accounts and operations of
the Company and its wholly owned subsidiary, Petrowave Corporation.
Significant intercompany transactions and balances have been eliminated in the
consolidation.

4.   Inventories

Inventory is valued at lower of cost or market.  Cost is determined using the
first-in, first-out method.

Inventory consists of the following:

                                   July 31, 2001     October 31, 2000

      Raw materials                 $  260,000          $  260,000
      Less reserve for net
       realizable value               (260,000)           (260,000)
                                    ----------          ----------

       Total                        $        -          $        -
                                    ==========          ==========

                                        9






NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTNG POLICIES (Continued)

4.  Inventories  (Continued)

The recoverability of inventory is dependent upon the Company entering into
agreements to lease the completed MST units.

5.  Certain reclassifications

Certain reclassifications have been made to the 2000 financial statements to
conform to the 2001 presentation.

NOTE B - GOING CONCERN

The accompanying consolidated financial statements have been prepared in
conformity with accounting principles generally accepted in the United States
of America for interim financial information, which contemplates continuation
of the Company as a going concern.  However, the Company is a development
stage company, has generated limited revenue through July 31, 2001, and has
sustained substantial losses from operations since inception.  In addition, as
of July 31, 2001, its current liabilities exceeded its current assets by
$2,072,358.  In addition, the Company has used cash in, rather than provided
cash from, its operations.

In view of the matters described in the preceding paragraph, recoverability of
a major portion of the recorded asset amounts shown in the accompanying
consolidated balance sheets is dependent upon continued operations of the
Company which in turn is dependent upon the Company's ability to meet its
financing requirements on a continuing basis, to maintain present financing
and to succeed in its future operations.  The consolidated financial
statements do not include any adjustments relating to the recoverability and
classification of recorded asset amounts or amounts and classification of
liabilities that might be necessary should the Company be unable to continue
in existence.

The Company has taken the following steps to revise its operating and
financial requirements, which it believes are sufficient to provide the
Company with the ability to continue in existence:

*  The Company entered into a 24-month Worldwide Marketing Agreement with a
subsidiary of ExxonMobil Corporation to provide the Company with marketing and
sales assistance.  The two companies have agreed to share certain of the
revenue related to this agreement.  The Company and ExxonMobil have been
negotiating an extension of the agreement, which expires on October 6, 2001.

*  During the third quarter of fiscal year 2001, the holder of a $100,000
promissory note that matured on June 20, 2001 extended the due date to October
8, 2001.

*  On July 27,2001, the Company received a short-term loan of $221,200 from a
shareholder.

*  On July 27, 2001, a shareholder offered to aid the formation of an
investment group to attempt to raise $5 million.


                                       10





*  On July, 2001, the Company entered into an agreement to sell a MST-1000 to
a refinery located in Africa.  The Company expects the customer to inspect and
accept the completed  MST on March 15, 2002.

*  At the end of July, 2001, the Company implemented cost cutting measures by
substantially reducing the size of its work force.

NOTE C - LOSS PER COMMON SHARE

The following data show the shares used in computing net loss per common share
including dilutive potential common stock:
<TABLE>
<CAPTION>
                                   Cumulative
                                    amounts
                                     since       Three months ended July 31,     Nine months ended July 31,
                                   inception       2001               2000          2001             2000
<S>                              <C>            <C>                <C>           <C>              <C>
Common shares outstanding                 -     16,947,419         16,415,675    16,700,943       15,901,597
  during the entire period
Weighted average common shares
  issued during the period       11,582,146         21,739             31,365       207,881          294,059
Weighted average number
  common shares
  used in basic EPS              11,582,146     16,969,158         16,447,040    16,908,824       16,195,656
Dilutive effect of stock
  options and warrants                 -              -                  -             -                -
                                 ----------     ----------         ----------    ----------       ----------
Weighted average number
  of common shares and
  dilutive potential common
  stock used in diluted EPS      11,582,146     16,969,158         16,447,040    16,908,824       16,195,656
                                 ==========     ==========         ==========    ==========       ==========
</TABLE>

All shares relating to warrants granted as described in Note E, together with
250,125 warrants issued in fiscal year 2000 and 140,266 shares relating to
potentially convertible debt instruments were not included in the computation
of diluted loss per share because their inclusion would have been antidilutive
for all periods.

The following data shows the amounts used in computing net loss per common
share, including the effect on net loss for a beneficial conversion feature
associated with redeemable common stock.  The following data also shows the
weighted-average number of shares and rights to acquire shares with dilutive
potential.  The net loss for the three and nine months ended July 31, 2001 and
cumulative amounts since inception include a noncash imputed dividend related
to the beneficial conversion feature.  The beneficial conversion feature is
computed as the difference between the market value of the common stock into
which the redeemable common stock can be converted and the value assigned to
the redeemable common stock.  The imputed dividend is a one-time, noncash
charge increasing the net loss.









                                       11


<TABLE>
<CAPTION>
                                   Cumulative
                                    amounts     Three months ended         Nine months ended
                                     since           July 31,                  July 31,
                                   inception     2001          2000       2001           2000
<S>                                <C>          <C>          <C>       <C>             <C>

Net loss                          (13,764,355)  $(448,450)   (296,721)  $(1,799,960)  (635,682)
Imputed dividend from
 beneficial conversion feature         14,000      14,000        -           14,000       -
                                   ----------   ---------     -------   -----------    -------
     Net loss applicable to
      common stock                (13,778,355)  $(462,450)   (296,721)  $(1,813,960)  (635,682)
                                   ==========   =========     =======   ===========    =======
</TABLE>

NOTE D - RELATED PARTY TRANSACTIONS

On December 6, 2000, an officer and member of the Board of Directors funded a
short-term advance of  $50,000 to the Company.  The advance was to be repaid
one week later, on December 13, 2000, for a one time loan fee of $3,000. On
July 31, 2001, the unpaid balance of $53,000 was converted into a promissory
note at 10% per annum with interest to accrue retroactively from January 1,
2001. The promissory note, which matures on September 15, 2001, gives the
holder the option to convert any unpaid balance into shares of the Company's
Common Stock at $0.40 per share. The market price of the stock was higher that
the conversion rate on the day of issuance.  The difference between the price
to convert and the market price of the stock is considered a beneficial
conversion feature.  The beneficial conversion feature is recorded as an
additional noncash charge to interest expense of $13,250 and is  recognized in
the period when the debt became convertible into stock.

On January 19, 2001, the Company executed a $375,000 short-term loan agreement
with a controlling stockholder.  The loan was funded on March 6, 2001.  The
loan is secured by the MST Unit located at Tar Sands Island, Fort McMurray,
Alberta, Canada; carries an interest rate of 12% per annum compounded daily
and matures on July 31, 2001. The loan remains unpaid at July 31, 2001.

As part of the original loan agreement dated January 19, 2001, the Company and
the controlling stockholder agreed to negotiate a recapitalization plan in
good faith.  The proposed plan included a provision for the Company to
repurchase a certain portion of the stockholder's shares of common stock for
$1.10 per share. In addition to the repurchase provision, the agreement would
have allowed the stockholder to exchange warrants for shares of the Company's
common stock and would have provided the Company with an option to repurchase
a specified number of shares of common stock held by certain
officers/directors.

At that time, the Company was considering alternatives to raise capital by a
private placement of securities through an investment group. The Company
planned to use a specified portion of the net proceeds of the private
placement to repurchase the stock of the controlling stockholder.

However, after careful evaluation, the Board of Directors did not approve the
recapitalization plan as proposed.  In addition, the Board decided to not go
forward with the private placement of securities as the Company and the
investment group could not reach terms that were mutually satisfactory.

                                       12



On April 27, June 6 and June 20, 2001, the Company received advances of
$150,000, $40,000, and $30,000 respectively, from another shareholder who is a
member of the Board of Directors. The advances were used to fund operations.
The Company repaid the $40,000 advance on June 12, 2001. This individual has
the option to participate as an initial investor in a planned investment group
by converting the $180,000 balance and accrued interest into shares of Common
Stock that will receive a 20X rate of return. Subsequent to July 31, 2001, the
Company received an additional advance of $4,500 from this shareholder.

On July 18, 2001, a shareholder and former member of the Board of Directors
purchased 200,000 shares of the Company's Common Stock and a Guaranteed
Investment Contract from the Company for $100,000.  The Guaranteed Investment
Contract entitles the shareholder a 20X rate of return over a period of 7
years ending on July 18, 2008. The investment is secured by a third position
lien on certain equipment of the Company that is leased to a customer and
located in a refinery in Torrance, California. The Company may repay this
investment, which matures on July 18, 2008, together with the related rate of
return earned to that date, any time after July 18, 2002 without penalty. The
trading price of the Common Stock on July 18, 2001 was $0.57 per share. These
200,000 shares are shown as redeemable Common Stock on the balance sheet at
July 31. 2001.

A shareholder is negotiating with the Company with respect to potential
formation of an investment group to arrange for an investment of $5 million
and is cooperating to encourage one or more investors who elect to do so to
lend the Company up to $750,000 of the $5 million on a secured basis prior to
the closing of the investment.   At the closing of the investment, the
pre-closing loans would be converted into the form assumed by the aggregate $5
million investment, but the pre-closing lenders would be entitled to receive a
higher rate of return.

On July 27, 2001, a shareholder loaned the Company $221,200 of the $750,000
under the terms and conditions of the $5 million investment discussed above.
The loan carries an interest rate of 20%, compounded monthly, and matures on
December 31, 2001.  If the $5 million loan is consummated by December 31,
2001,the lender has the option to convert the indebtedness represented by the
loan into the definitive investment and, thereby, receive a higher rate of
return.  This loan is secured by all assets currently owned by the Company as
well as any assets that the Company may own in the future, such as rights to
letters of credit, deposit accounts, intangible assets, and rights to
insurance settlement proceeds, subject to prior liens.  In addition, the
Company executed a Stock Pledge Agreement, in which IPRC pledged to the lender
all the shares of the Common Stock of Petrowave, IPRC's wholly-owned
subsidiary and any future subsidiaries the Company may have. Subsequent to
July 31, 2001, the Company received an additional advance of $4,500 from this
shareholder.

In addition, on July 27, 2001, the Company entered into an agreement with this
shareholder to amend a Warrant for the Purchase of Shares of Common Stock.  In
relevant part, the Amendment will allow the holder of the Warrant to either
pay the Warrant price in cash, or effect a cashless exercise by delivering for
payment one or more shares of outstanding common stock or surrendering part or
parts of the Warrant as payment.



                                      13


On September 1, 2000, the Company entered into a two year agreement to lease a
truck from a member of the Board of Directors and an officer of the Company
for $1 per year. The fair market value of the lease was determined to be $350
per month.  Accordingly, the Company recorded lease expense of  $3,150 for the
nine months ended July 31, 2001, and increased additional paid-in capital by
$3,150 to recognize this contribution by a related party.

During the nine months ended July 31, 2001, a related party made payments
totaling $30,750 and $1,270 to a consultant and a part-time receptionist,
respectively, on behalf of the Company. Accordingly, the Company recorded
these transactions as additional paid-in capital.

NOTE E - STOCK WARRANTS

On the dates set forth in the table below, the Company issued warrants to Maya
LLC to purchase shares of its common stock.  The number of shares subject to
each warrant and the expiration dates of the warrants are also set forth.

        Date             No. of Warrant Shares           Expiration Date

     Dec. 11, 1997              3,500,000                 Dec. 11, 2001
     Mar. 11, 1998              3,500,000                 Mar. 11, 2002
     July 11, 1998              3,500,000                 July 11, 2002
     Dec. 8, 1998                 875,000                 Dec.  8, 2002

The initial exercise price of all of the Maya warrants was $1.00 per share.

On October 6, 1999, the Company issued a warrant to the Howarth Family Trust
to purchase 1,116,071 shares of its common stock.  The initial exercise price
of the Howarth warrant was $3.00 per share. The Warrant was amended on July
27, 2001 to allow the holder to effect a cashless exercise by delivering for
payment one or more shares of outstanding common stock or surrendering part or
parts of the Warrant as payment.

The warrant expires on October 6, 2003.

Both the Maya and the Howarth warrants are transferable in accordance with
applicable securities laws.

The warrants specify that the rights of the warrant holders are entitled to
"full ratchet" anti-dilution adjustments in the event the Company issues
shares of common stock or securities convertible into or exchangeable for
common stock at a price per share less than the warrant exercise price.  Upon
any such adjustment, the holder of a warrant would be entitled to exercise the
warrant at an exercise price per share equal to the price per share at which
the shares of common stock or securities convertible into or exchangeable for
common stock were issued.  The warrants also specify that any such adjustment
would trigger an additional adjustment in the number of shares for which the
warrant is exercisable.  The warrants specify that such number would be
adjusted by multiplying the number of shares subject to the warrant
immediately before the adjustment by a fraction, the numerator of which would
be the per share exercise price immediately before the adjustment and the
denominator of which would be the per share exercise price after the
adjustment.


                                        14


Following the issuance of the Maya and Howarth warrants, the Company has
issued shares of its common stock at prices that triggered or could be deemed
to trigger the above-described anti-dilution provisions on a number of
occasions.  The lowest price at which the Company has sold stock is $.50 per
share, although the Company has issued shares of restricted common stock to
employees as bonuses valued at as low as $0.30 per share.  The Company has not
interpreted employee stock bonuses as triggering the anti-dilution provisions
because the warrants contain customary exemptions for employee equity
incentive issuances, although the text of the warrants suggests that these
particular warrants may exempt employee stock option issuances only and not
employee restricted stock bonuses.

In a "worst case" scenario, therefore, the Maya and Howarth warrants would be
exercisable for either $.50 or $.30 per share, depending on whether the
Company's interpretation of the employee equity incentive exemption is
accepted.  Also on a "worst case" basis, the anti-dilution clauses requiring
an adjustment in the number of shares for which the warrants are exercisable
simultaneously with each adjustment in the per share exercise price could be
interpreted to entitle Maya LLC to exercise warrants to purchase 37,916,667
shares of the Company's common stock (at an exercise price of $.30 per share)
and The Howarth Family Trust to purchase 11,160,710 shares of the Company's
common stock (at an exercise price of $.30 per share).  To acquire these
shares, Maya LLC and The Howarth Family Trust would need to invest $11,375,000
and $3,348,213, respectively.  Either warrant holder could also exercise a
warrant to purchase smaller numbers of shares in minimum 25,000 share
increments up to the total number of shares covered by the warrant.  The
warrants must be exercised before their respective expiration dates.  If not
exercised by their expiration dates, the warrants will expire worthless.

Management believes it may have legal justification for refusing to honor an
attempt to exercise the Maya and Howarth warrants based on adjustments made
pursuant to the anti-dilution provisions discussed above.  The above
information is provided merely to reflect the dilutive effects on the other
shareholders of a successful attempt to exercise the warrants at the two
hypothetical exercise prices of $.50 and $.30 per share.






















                                         15


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

This and other portions of this Form 10-QSB may contain "forward-looking
statements" within the meaning of the federal securities laws, including
statements concerning anticipated revenues, future marketing plans for the
MST-1000, and similar statements concerning anticipated future events and
expectations that are not historical facts.  The forward-looking statements in
this Form 10-QSB are subject to numerous risks and uncertainties, including
the effects of economic conditions; the availability of capital; the
dependence on key customers; competitive conditions; and the various risks
associated with developing and marketing a new process/technology which could
cause actual results to differ materially from those expressed in or implied
by such forward-looking statements, which speak only as of the date hereof.
Readers should also refer to the Company's Annual Report on Form 10-KSB for
the fiscal year ended October 31, 2000.

Overview

The third quarter of fiscal year 2001 saw a continuation of the activities
discussed in our Form 10-KSB for the fiscal year ended October 31, 2000 and
the Forms 10-QSB filed for the first two quarters of fiscal year 2001.  During
the third quarter, our resources were focused on obtaining adequate funding to
finance the operations necessary to drive the Company forward.  Several
potential capital infusions were explored , but none came to a successful
conclusion.  The Board of Directors is reviewing a new proposal from a
shareholder to raise up to $5,000,000 and is also exploring other potential
sources of capital and strategic relationships.  Raising capital is our number
one priority at this time.  Once we have confirmed amounts and sources of
finance, we will be able to expand marketing, improve the Company's
technology, and hire key personnel.

While our focus has been on obtaining investment capital, IPRC continues to
work on technology improvement, marketing, and consolidation of operations. In
addition, we are working to expand the use of the resources of ExxonMobil
Research and Engineering (EMRE), a subsidiary of our marketing partner,
ExxonMobil Corporation,  in the areas of technology improvement and marketing.
Although no MST units have been placed to date through our joint marketing
effort with EMRE, IPRC did successfully bid on a Bad Emulsion Treatment
Package offered by Kellogg Brown & Root, Inc. (KBR) for a client in Central
Africa.  In July, 2001, we were awarded a contract to sell a MST-1000 system
to an affiliate of ExxonMobil Corporation, KBR's client.

IPRC's Microwave Separation Technology (MST) has moved to Gate 4 in EMRE's
internal "Gating Process". We expected completion of this final gate by the
end of this summer, but have been delayed in obtaining final acceptance due to
problems with the mechanical separation equipment (centrifuges) used in
connection with  MST units.  IPRC has worked closely with its centrifuge
experts and vendors to resolve this final hurdle. We envision that we will
complete the gating process during the fourth quarter of this fiscal year.
This is a rigorous process that scrutinizes new technology in the areas of
design, engineering, function, reliability, and assesses the environmental and
economic benefits for the refineries within the ExxonMobil global refinery
system. It is anticipated that when this "gating" designation is concluded, it
will be easier for IPRC to place its MST units within the ExxonMobil plants
and will enhance the joint marketing efforts with other petroleum clients.

                                     16



IPRC participated in the NAFTA 2001 conference held in May in Washington, D.
C. This conference was sponsored by Mexico's Chamber of Commerce. Our
representatives at this conference made several contacts. One member of our
Board of Directors was tasked with following up with these managers and
government officials to introduce our MST technology to the appropriate oil
sector personnel. We believe that these efforts should begin to produce
results during the first half of fiscal year 2002.

IPRC marketing efforts have been expanded to include petroleum-engineering
companies such as Kellogg Brown & Root, Fluor Daniel and Jacobs Engineering.
We are emphasizing to this audience the value of the MST process for inclusion
in planned modifications and operational enhancements for their major
worldwide petroleum-engineering projects.  Most engineering companies, such as
KBR, are headquartered or have a strong presence in Houston, Texas, where our
headquarters is located, a fact that is helpful in the marketing effort. The
value of the IPRC's Houston location was demonstrated during the bidding
process with Kellogg Brown & Root for a Bad Emulsion Treatment Package.  Over
15 meetings and numerous e-mail and telephone conversations were conducted
prior to IPRC successfully receiving the contract for this project.

The successful contract award with KBR continues to validate the importance of
the MST technology. Our marketing relationship with EMRE remains strong, but
with a notable lack of success in placing units as rapidly as IPRC would like
to have them placed. We believe that we need to continue to emphasize the
refining operations as the primary target for our technology, but we have also
learned that other applications for the MST technology exist that also need to
be addressed. IPRC is working closely with its partners and potential clients
to identify and broaden the potential market for the MST.

Results of Operations

Three and Nine Months Ended July 31, 2001 Compared to Three and Nine Months
Ended July 31, 2000

Revenue

During the three month period ended July 31, 2001, the Company recognized
$82,089 revenue compared to $78,858 during the same period in 2000. The
revenue in both years was comprised of income earned from leases of the
MST-1000.

During the nine month period ended July 31, 2001, the Company recognized
$324,904 in revenue compared to $225,714 in the same period of 2000. The third
quarter 2001 revenue was comprised of lease revenue earned from leases of the
MST-1000 and fees charged to reimburse set-up costs incurred by the Company to
demonstrate the MST-1000 at various locations. During the third quarter 2000,
the revenue represented only revenue earned from leases of the MST-1000.

Cost of Goods Sold and Gross Profit (Loss)

During the three month periods ended July 31, 2001 and 2000, the Company
identified $129,633 and $99,028, respectively, in costs that were specifically
identified to contract revenue. During the three month period ended July 31,
2001,  the costs were primarily comprised of approximately $47,400 in
personnel costs, $58,155 for costs incurred to set-up and support equipment
leases, and $5,525 in costs to demonstrate the MST at various locations.
During the same period in the prior year, the Company incurred $53,260 in

                                       17


payroll and related charges and $21,913 in costs to set up new leases.
Additionally, during the three month periods ended July 31, 2001 and 2000, the
Company recorded charges of $18,553 and $23,855, respectively against income
for depreciation of the leased equipment.

During the nine month period ended July 31, 2001, the Company identified
$694,213 in costs that were specifically identified to contract revenue
compared to $213,941 for the same period in the prior year, an increase of
$480,272.

Of this increase, $99,072 was attributed to an increase in personnel costs.
This was a result of the Company utilizing additional, more highly trained
personnel at higher pay scales to support the existing MST leases and to
perform demonstrations at potential customers' facilities. During the first
three quarters of fiscal year 2001, the Company had five highly paid employees
who spent more than 70% of their time working on supporting lease contracts
and performing demonstrations of the MST, compared to only two employees
during the third quarter 2000.

In addition to the increase in personnel costs, the Company had an increase of
$221,620 in repairs and maintenance costs to set-up and support equipment
leases and an increase of $156,780 in demonstration costs during the nine
months ended July 31, 2001. This is a result of the Company actively
maintaining and demonstrating its technology in the marketplace.
Additionally, the Company recorded a charge of $55,400 against income for
depreciation of the leased equipment during the nine months ended July 31,
2001, compared to $52,600 for the same period in the prior year.

General and Administrative

General and administrative expenses for the three month period ended July 31,
2001, totaled $295,338 compared to $268,149 for same period in 2000. The net
increase of $27,189 in general and administrative costs was primarily
comprised of increases of $98,700 and $8,240 in legal fees and insurance
costs, respectively, and a net decrease of $85,466 of all other general and
administrative costs.  Additionally, during the three month period ended July
31, 2001, the Company recorded a charge against income of $23,539 for
depreciation compared to $17,824 for the same period in the prior year, an
increase of $5,715.

General and administrative expenses for the nine month period ended July 31,
2001 totaled $1,191,160 compared to $646,610 for same period in 2000 for a net
increase of $544,550. Of this increase, an increase of $208,815 in net
personnel costs was recorded as a result of the Company recruiting additional,
more highly trained employees at higher pay scales to support the laboratory
facility and marketing efforts.  Additionally, travel costs increased by
$59,095 as the Company stepped up its efforts to present the MST process to
the marketplace.  The Company also recorded an increase of $237,892 in legal
and professional fees that were incurred as a result of the Company seeking
advice on alternative methods of obtaining long-term financing and capital.
Also included in the net increase was $15,065 in insurance expense and a net
decrease of $5,575 in all other general expenses.  Additionally, during the
nine month periods ended July 31, 2001 and 2000, the Company recorded a charge
of $70,617 and $41,359, respectively, against income for depreciation of
equipment, an increase of $29,258.


                                      18



Research and Development Expenses

The Company incurred research and development costs of $22,257 for the three
month period ended July 31, 2001, compared to no costs for the same period in
2000.  This increase was comprised of $28,257 in personnel costs and a decease
of $6,000 in consulting costs.

For the nine month period ended July 31, 2001, the Company incurred research
and development costs of $67,793 compared to no costs for the same period in
fiscal year 2000. This increase was comprised of $52,955 in personnel costs
and $14,838 in consulting costs. This was due to the Company exploring
expanded fields of use in down hole technology and waste minimization

Interest Expense

During the three month periods ended July 31, 2001 and 2000, the Company
recorded interest expense of $70,061 and $8,713, respectively, an increase of
$61,348.  During the nine months ended July 31, 2001 and 2000, the Company
incurred interest expense of  $157,125 and $25,537, respectively, an increase
of  $131,588. The increase during fiscal year 2001 is a result of the Company
primarily funding operations through the issuance of debt rather than the sale
of its equity securities.

Liquidity and Capital Resources

As of July 31, 2001, IPRC's aggregate current liabilities were $2,110,014
compared to $768,500 at October 31, 2000. At the third quarter ended July 31,
2001, the Company had negative working capital of $2,072,358 compared to
negative working capital of $555,705 at October 31, 2000.

Although the Company continues to use cash in, rather than supply cash from
its operations, management is hopeful that it can identify sufficient sources
to fund operations in the near term. A shareholder is negotiating with the
Company with respect to potential formation of an investment group to arrange
for an investment of $5 million, which management estimates should be
sufficient to support the Company's operations for one year.  There can be no
assurance, however, that sufficient funds can be raised to continue
operations. The Company also expects to generate revenue from fees charged to
demonstrate the MST-1000 to potential customers and from payments from
existing equipment leases. Additionally, the Company has the ability to raise
capital through the sale of shares of its common stock and issuance of debt to
others.  In addition, the Company may also consider seeking shareholder
consent to issue shares of preferred stock.  However, there can be no
assurance that any sales of common or preferred stock will occur, or if they
occur, that they would be completed on terms most favorable to the Company.
Unless registered for sale under the Securities Act of 1933, as amended, any
securities sold by the Company would be offered or sold in the United States
in private transactions.

The presence of "full ratchet" anti-dilution provisions in certain warrants
issued by the Company in 1997, 1998, 1999, which are discussed in Footnote E
to the financial statements included in this report, has proven to be a burden
on the Company in seeking equity financing.  The Company has been negotiating
with the warrant holders to either waive or modify their anti-dilution
protections or to exercise their warrants, so far without success.



                                         19


                       PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

None.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

The following are the changes in equity securities between October 31, 2000
and July 31,2001:

In December, 2000, the Company issued 16,040 shares of its Common Stock to
various employees as bonuses for the fiscal year 2000.  The stock issued as
bonuses was valued at $12,030.

In December, 2000, the Company issued 182,936 shares of Common Stock to a
related party and stockholder in satisfaction of a note payable in the amount
of $50,033 plus accrued interest of $6,677. The note, dated August 15, 1997,
carried an interest rate 10% per annum and entitled the holder to convert any
unpaid balance into shares of the Company's Common Stock at $0.31 per share.

On February 28, 2001, the Company issued 47,500 shares of Common Stock to two
investors for $47,500 in cash.

On May 5, 2001, the Company issued 20,000 shares of Common Stock to an
investor for $10,000 in cash.

On July 18, 2001, the Company issued 200,000 shares of Common Stock and a
Guaranteed Investment Contract to an investor for $100,000 in cash.

The Company relied upon the exemption provided in Section 4(2) of the
Securities Act and/or Rule 506 thereunder, which cover "transactions by an
issuer not involving any public offering," in connection with sales of the
securities discussed above without registration under the Securities Act of
1933.  The Company made a determination in each case that the person to whom
the securities were sold did not need the protections that registration would
afford.  The certificates representing the securities sold were marked with a
legend indicating that transfer of the securities was restricted because they
had not been sold in a registered offering.  The Company believes that the
investors to whom securities were sold had such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of the prospective investment.  The Company also believes that the
investors had access to the same type of information as would be contained in
a registration statement.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5.  OTHER INFORMATION

None.

                                         20




ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

The exhibits to this report are listed in the Exhibit Index, which appears
immediately after the signature page.

(b)  Reports on Form 8-K

The Company did not file any reports on Form 8-K during the quarter ended July
31, 2001.













































                                       21



                                  SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized, on
September 14, 2001.

                                    IMPERIAL PETROLEUM RECOVERY CORPORATION


                                    By: /s/ Scott Jensen
Date: September 14, 2001                Scott Jensen
                                        Chief Accounting Officer
                                       (Duly Authorized Officer)

                                    By: /s/ C. Brent Kartchner
Date: September 14, 2001                C. Brent Kartchner
                                        President and Director
                                        (Duly Authorized Officer)



































                                      22



                    Imperial Petroleum Recovery Corporation

                            Exhibit Index to Form 10-QSB

Exhibit No.     Identification of Exhibit

    3.1         Articles of Incorporation of the Company (incorporated by
                reference to Exhibits 2 and 2.1 to the Company's Registration
                Statement on Form 10- KSB filed with the Commission with a
                filing date of August 8, 1996, Commission file No. 0-21169).

    3.2         Bylaws of the Company (incorporated by reference to Exhibit
                3.2 to the Company's Annual Report on Form 10-KSB for the
                fiscal year end October 31, 1996 filed with the Commission
                with a filing date of November 26, 1997, Commission File No.
                0-21169).

    9.1         Marketing Agreement dated October 6, 1999 with Mobil
                Technology Company and the Company (incorporated by reference
                to Exhibit 10.1 to the Company's current report on Form 8-K
                filed with the Commission on February 26, 2001).

    9.2         Loan Agreement dated January 19, 2001 between Maya, LLC and
                the Company (incorporated by reference to Exhibit 10.2 to the
                Company's quarterly report on Form 10-QSB filed with the
                Commission on March 20, 2001).

    9.3         Warrant for the Purchase of Shares of Common Stock dated
                December 11, 1997 issued to Maya LLC (incorporated by
                reference to Exhibit 1 to the Schedule 13D of Maya LLC (filed
                with the Commission on September 25, 1997).

    9.4         Warrant for the Purchase of Shares of Common Stock dated
                December 11, 1997 issued to Maya LLC (incorporated by
                reference to Exhibit 1 to the Schedule 13D/A of Maya LLC
                filed with the Commission on December 22, 1997).

    9.5         Warrant for the Purchase of Shares of Common Stock dated March
                11, 1998 issued by the Company to Maya LLC (incorporated by
                reference to Exhibit 1 to the Schedule 13D/A of Maya LLC filed
                with the Commission on March 23, 1998.

    9.6         Warrant for the Purchase of Shares of Common Stock exercisable
                as of July 11, 1998 issued by the Company to May LLC
                (incorporated by reference to Exhibit 1 to the Schedule 13D/A
                of Maya LLC field with the Commission of June 22, 1998).

    9.7         Warrant of the Purchase of Shares of Common Stock dated
                December 8, 1998 issued by the Company to Maya LLC
                (incorporated by reference to Exhibit 1 to the Schedule 13D/A
                of Maya LLC filed with the Commission on December 18, 1998).

    9.8         Warrant of the Purchase of Shares of Common Stock dated
                December 11, 1997 issued by the Company to the Howarth Family
                Trust (incorporated by reference to Exhibit 4 to the Schedule
                13D of the Howarth Family Trust dated 10/1/87 filed with the
                Commission on June 13, 2001).

    9.9         Loan Agreement between the Company and Treeview Investments
                Inc. dated as of July 27, 2001 (incorporated by reference to
                Exhibit 5 to the Schedule 13D/A of Paul Howarth filed with the
                Commission on August 13, 2001).

    9.10        Amendment No. 1 dated July 27, 2001 to the Warrant for the
                Purchase of Shares of Common Stock dated December 11, 1997
                issued by the Company to the Howarth Family Trust
                (incorporated by reference to Exhibit 6 to the Schedule 13D/A
                of the Howarth Family Trust dated 10/1/87 filed with the
                Commission on August 13, 2001).