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

                                 Form 10-QSB


    [X]  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
         THE SECURITIES EXCHANGE ACT OF 1934

               For the quarterly period ended January 31, 2005

    [ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
         THE EXCHANGE ACT

         For the transition period from _______________ to _______________


                      Commission File Number: 000-30794


                     INTEGRATED PERFORMANCE SYSTEMS, INC.
      -----------------------------------------------------------------
      (Exact name of small business issuer as specified in its charter)


             New York                               11-3042779
    ------------------------            ---------------------------------
    (State of incorporation)            (IRS Employer Identification No.)

       901 Hensley Lane Wylie, Texas                      75098
 ----------------------------------------               ----------
 (Address of principal executive offices)               (Zip Code)

                                (972) 771-1930
                         ---------------------------
                         (Issuer's telephone number)


      Check whether the issuer (1) filed all reports required to be filed by
 Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
 such shorter period that the registrant was required to file such reports),
 and (2) has been subject to such filing requirements for the past 90 days.
 Yes [X]  No [  ]

      At March 31, 2005 there were 58,603,230 shares of the issuer's common
 shares outstanding.

 Transitional Small Business Disclosure Format (Check one):  Yes [ ] No [X]

<PAGE>

                                GENERAL INDEX

                                                                    Page
                                                                   Number
----------------------------------------------------------------------------


                                 PART I -
                           FINANCIAL INFORMATION


 ITEM 1.   FINANCIAL STATEMENTS..................................     3

 ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR
           PLAN OF OPERATION.....................................    16

 ITEM 3.   CONTROLS AND PROCEDURES...............................    18


                    PART II - OTHER INFORMATION

 ITEM 1.   LEGAL PROCEEDINGS.....................................    19

 ITEM 2.   UNREGISTERED SALES OF EQUITY SECURITIES AND
           USE OF PROCEEDS ......................................    20

 ITEM 3.   DEFAULTS UPON SENIOR SECURITIES.......................    21

 ITEM 5.   OTHER INFORMATION.....................................    21

 ITEM 6.   EXHIBITS..............................................    21

 SIGNATURES......................................................    21

 EXHIBIT INDEX...................................................    22

<PAGE>

                     PART 1 - FINANCIAL INFORMATION


 ITEM 1.  FINANCIAL STATEMENTS

                     INTEGRATED PERFORMANCE SYSTEMS, INC.

                          Consolidated Balance Sheet
                                 (Unaudited)

 ============================================================================

                                                    January 31,
                                                        2005
                                                    ------------
 ASSETS
 Current assets:
   Cash                                            $     743,865
   Trade accounts receivable, net                      4,250,771
   Other receivables                                      19,190
   Inventory                                           1,680,078
   Deferred income tax asset                             205,948
   Income tax receivable                                 299,090
                                                    ------------
         Total current assets                          7,198,942
                                                    ------------

 Property and equipment, net                           2,026,142
                                                    ------------
 Other assets:
   Goodwill                                            8,764,536
   Customer Base, net of accumulated
     amortization of $90,341                           4,246,050
   Other                                                 100,686
                                                    ------------
                                                      13,111,272
                                                    ------------
     Total assets                                  $  22,336,356
                                                    ============

 LIABILITIES AND STOCKHOLDERS' EQUITY
 Current liabilities:
   Accounts payable                                $   2,491,421
   Accrued expenses                                    1,437,719
   Line of credit                                      1,860,000
   Notes payable, current portion                        706,517
   Notes payable to related party                      3,200,000
                                                    ------------
     Total current liabilities                         9,695,657
                                                    ------------
 Noncurrent liabilities:
   Notes payable, net of current maturities               19,050
   Note payable to related party                       1,000,000
   Deferred income tax liability                       1,749,214
                                                    ------------
     Total long-term liabilities                       2,768,264
                                                    ------------
 Contingencies (note 8, note 9, note 12)

 Stockholders' equity:
 Preferred stock; par value $0.01; 10,000,000
   shares authorized
   Series F Convertible; $1,000 per share
     redemption, 300,000 shares authorized,
     193,829 shares issued and outstanding                 1,938
 Common stock; par value $0.01; 100,000,000 shares
   authorized, 66,537,230 shares issued,
   57,903,230 outstanding                                665,372
 Treasury Stock; 8,634,000 shares                       (949,740)
 Additional paid-in capital                            6,593,099
 Retained Earnings                                     3,561,766
                                                    ------------
     Total stockholders' equity                        9,872,435
                                                    ------------
     Total liabilities and stockholders' equity    $  22,336,356
                                                    ============

                 The accompanying notes are an integral part
                  of this consolidated financial statement.

<PAGE>

                     INTEGRATED PERFORMANCE SYSTEMS, INC.

                    Consolidated Statements of Operations
                                (Unaudited)

 =============================================================================

                               Three        Three         Six          Six
                           Months Ended Months Ended Months Ended Months Ended
                            January 31,  January 31,  January 31,  January 31,
                               2005         2004         2005          2004
                            -----------  -----------  -----------  -----------

 Net sales                  $ 7,604,706  $ 5,016,863  $14,356,993  $ 9,632,245

 Cost of sales                6,335,748    4,215,670   11,987,158    8,093,975
                             ----------   ----------   ----------   ----------
 Gross profit                 1,268,958      801,193    2,369,835    1,538,270
                             ----------   ----------   ----------   ----------

 General and
   administrative expenses    1,146,399      611,046    2,001,116    1,388,803
 Amortization of customer
   base                          90,341            -       90,341            -
                             ----------   ----------   ----------   ----------
                              1,236,740      611,046    2,091,457    1,388,803
                             ----------   ----------   ----------   ----------
 Income from operations          32,218      190,147      278,378      149,467
                             ----------   ----------   ----------   ----------
 Other income (expense):
   Interest expense            (116,136)      (6,253)    (133,367)     (29,745)
   Interest income                   74           58          156          112
   Other income                     739      115,074       14,985      130,381
                             ----------   ----------   ----------   ----------
                               (115,323)     108,879     (118,226)     100,748
                             ----------   ----------   ----------   ----------
 Income (loss) before
 provision for income taxes     (83,105)     299,026      160,152      250,215

 Provision for income taxes     (21,363)     104,806       71,273      100,194
                             ----------   ----------   ----------   ----------
 Net income (loss)          $   (61,742) $   194,220  $    88,879  $   150,021
                             ==========   ==========   ==========   ==========

 Net income (loss) per share
   Basic                    $      0.00  $      0.01  $      0.00  $      0.01
                             ==========   ==========   ==========   ==========
   Diluted                  $      0.00  $      0.01  $      0.00  $      0.01
                             ==========   ==========   ==========   ==========
 Weighted average common
 shares outstanding
   Basic                     50,802,749   15,737,492   36,610,619   15,245,166
                             ==========   ==========  ===========   ==========
   Diluted                   50,802,749   15,737,492  119,503,945   15,245,166
                             ==========   ==========  ===========   ==========


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

<PAGE>

                     INTEGRATED PERFORMANCE SYSTEMS, INC.

                    Consolidated Statements of Cash Flows
                                (Unaudited)

 ============================================================================

                                                 Six Months Ended January 31,
                                                 ----------------------------
                                                      2005           2004
                                                  ------------   ------------
 Cash flows from operating activities:
 Net income                                      $      88,879  $     150,021
   Adjustments to reconcile net income to net
   cash used in operating activities:
     Depreciation and amortization                     484,070        402,324
     Deferred tax expense                               71,273        100,194
     Changes in operating assets and liabilities:
       Trade accounts receivable                      (474,160)      (555,551)
       Other receivables                               (19,190)             -
       Inventory                                       162,125       (492,506)
       Income tax receivable                                 -         57,505
       Other assets                                    (13,910)         9,945
       Bank overdraft                                        -        127,898
       Accounts payable                                219,642         80,435
       Accrued expenses                                104,118       (147,764)
                                                  ------------   ------------
     Net cash provided by (used in)
       operating activities                            622,847       (267,499)
                                                  ------------   ------------
 Cash flows from investing activities:
   Cash acquired through merger                         78,762              -
   Merger costs                                       (209,805)             -
   Acquisition of property and equipment               (46,386)      (159,557)
                                                  ------------   ------------
     Net cash used in investing activities            (177,429)      (159,557)
                                                  ------------   ------------
 Cash flows from financing activities:
   Payments on notes payable                          (907,525)      (204,030)
   Net advances from related parties                    37,972        200,000
   Net borrowing on line of credit                     950,000        298,194
                                                  ------------   ------------
     Net cash provided by financing activities          80,447        294,164
                                                  ------------   ------------
 Increase (decrease) in cash                           525,865       (132,892)

 Cash, beginning of period                             218,000        195,319
                                                  ------------   ------------
 Cash, end of period                             $     743,865  $      62,427
                                                  ============   ============


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


<PAGE>

                     Integrated Performance Systems, Inc.
              Notes to Interim Consolidated Financial Statements
                               January 31, 2005
                                 (Unaudited)

 NOTE 1 - BASIS OF PRESENTATION

 UNAUDITED FINANCIAL INFORMATION

 The unaudited condensed consolidated financial statements have been prepared
 by Integrated Performance Systems, Inc. and its subsidiaries (the  "Company"
 or  "IPS"),  pursuant to  the rules and regulations  of the  Securities  and
 Exchange  Commission  and  reflect  all  adjustments  consisting  of  normal
 recurring entries, which, in  the opinion of the  Company, are necessary  to
 present fairly the results for  the interim periods.  Results of  operations
 for  the  six-month  period  ended  January 31, 2005,  are  not  necessarily
 indicative of the results that may be expected for the year ending July  31,
 2005.

 These financial statements should be read in conjunction with the  financial
 statements and notes  thereto contained in  the Company's  Form 8-K/A  dated
 November 24, 2004, filed on February 7, 2005.


 NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

 Inventory
 ---------

 Inventory consists of finished goods, work in process and raw materials  and
 is priced at lower of cost or market (determined product by product based on
 management's knowledge  of  current  market conditions  and  existing  sales
 levels).  Cost of raw materials  is determined on a weighted average  basis;
 cost of work  in process  and finished  goods is  determined using  specific
 identification.  At January 31, 2005, inventory consisted of $727,731 in raw
 materials, $849,194 in  work in process,  and  $181,116  in finished  goods,
 less a valuation allowance of $77,963.

 Revenue recognition
 -------------------

 The Company recognizes revenue as products are shipped.

 Stock based compensation
 ------------------------

 The  Company  accounts  for  employee  stock  options  in  accordance   with
 Accounting Principles Board Opinion  No. 25 (APB  25), Accounting for  Stock
 Issued to Employees, and Financial Accounting Standards Board Interpretation
 No. 44, Accounting  for Certain Transactions  Involving Stock  Compensation,
 and interpretation  of  APB  Opinion  No. 25.  Under  APB  25,  the  Company
 recognizes no compensation  expense related  to employee  or director  stock
 options when options are granted with  exercise prices at, or in excess  of,
 the estimated fair value of the stock on the date of grant, as determined by
 the Board of Directors.

 The Company  has  adopted the  disclosure-only  provisions of  Statement  of
 Financial Accounting Standards No. 123 (FAS 123), Accounting for Stock-Based
 Compensation, and Statement of Financial  Accounting Standards No. 148  (FAS
 148), Accounting for Stock-Based Compensation - Transition and Disclosure  -
 an Amendment of FASB Statement  No. 123.  Under  the provisions of FAS  123,
 compensation expense is recognized based on the fair value of options on the
 grant date.

 The following  tables illustrate  the effect  on net  income (loss)  if  the
 Company had applied the fair value recognition provision of FAS 123 to stock
 based compensation:

                                   For the Three Months  For the Six Months
                                    Ended January 31,     Ended January 31,
                                 --------------------------------------------
                                     2005       2004        2005       2004
                                 --------------------------------------------
 Net income (loss) as reported  $   (61,742)  $194,220   $  88,879   $150,021
 Less stock based compensation
 expense determined under fair
 value method                      (955,733)         -    (955,733)         -
                                 --------------------------------------------
 Net income (loss), pro forma   $(1,017,475)  $194,220   $(866,854)  $150,021
                                 ============================================

 Basic earnings per share -
   as reported                        $0.00      $0.01       $0.00      $0.01
                                 ============================================

 Basic earnings per share -
 pro forma                           $(0.02)     $0.01      $(0.02)     $0.01
                                 ============================================

 Earnings per share
 ------------------

 Basic net income per share is computed using the weighted average number  of
 common shares outstanding during the period.  Diluted  net income per  share
 is computed using the  weighted average number of  common and, if  dilutive,
 potential  common shares  outstanding during  the period.  Potential  common
 shares consist of the incremental common  shares issuable upon the  exercise
 of stock options and the conversion  of the Company's convertible  preferred
 stock and notes payable.

 The following table sets forth the  reconciliation of basic and diluted  net
 income (loss) per share:

                                   For the Three Months   For the Six Months
                                    Ended January 31,      Ended January 31,
                                 ---------------------------------------------
                                     2005       2004        2005        2004
                                 ---------------------------------------------
 Net income (loss)              $  (61,742) $  194,220  $   88,879  $  150,021
   Interest on convertible
    notes payable                        -           -      53,333           -
                                 ---------------------------------------------
 Net income (loss) diluted      $  (61,742) $  194,220  $  142,212  $  150,021
                                 =============================================

 Weighted average common
 shares outstanding - basic     50,802,749  15,737,492  36,610,619  15,245,166

   Convertible note payable              -           -     913,043           -
   Convertible notes payable
     to related party                    -           -  10,347,826           -
   Convertible preferred stock           -           -  71,632,457           -
                                ----------------------------------------------
 Weighted average common shares
 outstanding - diluted          50,802,749  15,737,492 119,503,945  15,245,166
                                ==============================================

 Basic (loss) income per share     $  0.00     $  0.01     $  0.00     $  0.01
                                 =============================================

 Diluted (loss) income per share   $  0.00     $  0.01     $  0.00     $  0.01
                                 =============================================


 The effect  of conversion  of the  convertible notes  payable and  preferred
 stock has been  excluded from diluted  loss per share  for the three  months
 ended January 31, 2005 as their effect would be anti-dilutive.

 The Company currently does not have a sufficient number of authorized shares
 of common  stock to  allow for  the  conversion of  all of  its  outstanding
 convertible securities.

 Recent Accounting Pronouncements
 --------------------------------

 In December  2004, the  FASB issued  SFAS No.  123R, "Share-Based  Payment,"
 which requires companies  to recognize in  the statement  of operations  all
 share-based payments  to  employees,  including  grants  of  employee  stock
 options based on their fair values.  Accounting for share-based compensation
 transactions  using  the   intrinsic  method  supplemented   by  pro   forma
 disclosures will  no longer  be  permissible.   The  new statement  will  be
 effective for small public entities in periods beginning after  December 15,
 2005.  The  Company has  not yet  completed its  analysis of  the impact  of
 adopting SFAS 123R.


 NOTE 3 - CONCENTRATIONS OF RISK

 At January 31, 2005, five customers  accounted for approximately 52% of  the
 total accounts receivable and for the three and six months ended January 31,
 2005, these customers accounted for approximately 50% of net sales.


 NOTE 4 - MERGER WITH BEST CIRCUIT BOARDS, INC.

 On November 24, 2004,  a wholly owned  subsidiary of Integrated  Performance
 Systems, Inc.  merged  with  Best Circuit  Boards,  Inc.,  d/b/a  Lone  Star
 Circuits ("LSC"), resulting  in LSC becoming  a wholly  owned subsidiary  of
 IPS.  The  beneficial  owner of  LSC acquired  controlling interest  in  the
 Company and the Company has therefore determined that the transaction should
 be accounted for as a reverse merger.  The transaction will be treated as if
 LSC  acquired  the  Company  and,  consequently,  the  historical  financial
 statements of LSC  have become the  historical financial  statements of  the
 Company.

 IPS is  a  printed  circuit board  and  electronics  component  manufacturer
 located in Frisco, Texas; LSC is  a fabrication services company located  in
 Wylie, Texas,  engaged  in time sensitive,  high technology prototypes,  and
 is  a  manufacturer  of complex  electronic circuit  boards.  The  Company's
 corporate headquarters have been moved to LSC's 101,000 square foot facility
 located in Wylie, Texas.  See Note 12.

 The significant terms of the merger were as follows:

   *  LSC Asset Acquisition Corp. (a wholly owned subsidiary of LSC) acquired
      all of the assets and  some, but not all,  of the liabilities of  three
      IPS subsidiaries (North Texas PC Dynamics, Inc. ("NTPCD"),  Performance
      Application Technologies,  Inc. ("PAT"),  and Performance  Interconnect
      Corp. of North Texas, Inc. ("PI").  These three subsidiaries  comprised
      substantially all of the business operations of IPS prior to merger.

   *  Immediately subsequent to the asset sales  above, the Company sold  its
      100% ownership interest in NTPCD, PAT, and PI to Integrated Performance
      Business Services Corp.  ("IPBSC"), an entity  controlled by D.  Ronald
      Allen, former  chief  executive officer,  controlling  shareholder  and
      director of the Company.  These entities held liabilities having a book
      value of $748,653.

   *  IPS issued $4.2  million in  convertible promissory  notes and  193,829
      shares  of  IPS  Series  F  Convertible  Preferred  Stock,  subject  to
      adjustment to  represent 67.25%  of  the Company's  outstanding  common
      stock, to  the beneficial  owner of  LSC in  exchange for  100% of  the
      outstanding shares of LSC.

   *  Associates Funding Group and CMLP  Group, Ltd., entities controlled  by
      D. Ronald  Allen,  agreed to  contribute  8,634,000 shares  of  Company
      common stock to the Company.

   *  D. Ronald  Allen entered  into a  stock escrow  and security  agreement
      whereby  10,851,832  shares of IPS common stock beneficially  owned  by
      him  were placed  into escrow as security for  (1) advances made by LSC
      to IPS prior to  the closing of  the  merger, (2) the Company's and Mr.
      Allen's indemnification obligations under the merger agreement, and (3)
      the convertible promissory notes issued to the beneficial owner of LSC.
      The merger agreement  provides  that the  shares  used to satisfy those
      obligations be valued based on a future equity financing of the Company.

   *  Brad  Jacoby,  the  beneficial  owner  of  LSC,  became  the   majority
      shareholder, Chief Executive Officer, and sole director of the Company.

 Series F Convertible Preferred Stock
 ------------------------------------

 The terms of the merger agreement provide for the issuance of 193,829 shares
 of Series F Convertible Preferred Stock,  subject to adjustment as discussed
 below,  to the beneficial owner  of  LSC as part  of the  consideration  for
 100%  of the outstanding common stock of LSC.  The  terms  of the  Series  F
 Convertible Preferred Stock contain no mandatory redemption provisions.  The
 liquidation value  per share  is  equal  to the value of LSC, divided by the
 number  of  outstanding  shares  of  Series  F  Convertible Preferred Stock,
 payable prior  to  any  distribution to the holders of the Company's  common
 stock. Holders of the Series F Convertible Preferred Stock have the right to
 convert the preferred shares into common shares at the rate  of one thousand
 shares  of common stock  for each share  of Series  F  Convertible Preferred
 Stock outstanding.  Holders of the Series F Convertible Preferred Stock  are
 entitled  to  one thousand  votes  for each share  of Series  F  Convertible
 Preferred Stock  held.  The  merger agreement provides for adjustment to the
 number  of Series  F Convertible Preferred Stock issuable to  the beneficial
 owner of  LSC  based  upon  a  subsequent  determination  of the  number  of
 preferred shares necessary to provide the beneficial owner of  LSC  with the
 equivalent of  67.25%  of the Company's outstanding  common  stock, after an
 equity financing  contemplated  by the merger agreement.  As  of the date of
 filing of this report, that equity financing has not occurred.

 Convertible Promissory Notes
 ----------------------------

 Other  terms  of  the  merger  include  the  issuance  of  $4.2  million  in
 convertible promissory notes (the "Notes") to the beneficial owner of LSC as
 part of the  merger consideration.   The Notes are  convertible into  common
 stock at any time  at a conversion price  of $.15 per  share.  Notes in  the
 principal amount of $3.2 million bear 8% interest payable monthly, with  the
 principal balance originally due February 28, 2005, subsequently renewed and
 extended to July 31, 2005.  (See Note 8 below regarding subsequent renewal).
 A note in the principal amount of $1 million bears 8% interest payable semi-
 annually, with the principal balance due in November 2007.  All of the Notes
 are secured by  all assets of  the Company and  of LSC,  by the  outstanding
 stock  of  LSC  and  by  the  Company  capital stock  beneficially owned  by
 D. Ronald Allen.  The  issuance  of the  Notes  has been accounted for  as a
 distribution of capital in the amount of $4.2 million.

 Employment Agreement
 --------------------

 Prior to  consummating the  merger, the  Company entered  into a  consulting
 agreement with  Mr. Jacoby  to manage  the Company.   This  arrangement  was
 superseded by a three year employment agreement as CEO effective December 1,
 2004.

 Stock Escrow and Security Agreement
 -----------------------------------

 In connection with the merger,  D. Ronald Allen delivered 10,851,832  shares
 of common stock beneficially  owned by him into  escrow as security for  (1)
 advances made by LSC to the Company prior to the closing of the  merger, (2)
 the  Company's and  Mr. Allen's indemnification obligations under the merger
 agreement, and (3) the convertible promissory notes issued to the beneficial
 owner of LSC.  The term  of the stock  escrow and security agreement expires
 on November 24, 2006.  The former  beneficial owner of  LSC was also granted
 the right to vote these shares for the duration of the escrow agreement.

 Contribution of Common Shares
 -----------------------------

 In connection  with  the merger,  entities  controlled by  D.  Ronald  Allen
 contributed 8,634,000 shares  of common stock  into the Company's  treasury.
 The Company recorded  the treasury  shares at fair  value in  the amount  of
 $949,740.

 Merger Accounting
 -----------------

 The acquisition was accounted  for using the  purchase method of  accounting
 and LSC has been determined to  be the accounting acquirer.  Accordingly,  a
 new basis was established  for IPS's assets and  liabilities based upon  the
 fair values thereof.  The preliminary purchase  price was  determined to  be
 $10,487,993 based upon the fair value of IPS on the transaction  measurement
 date ($10,278,188) plus acquisition costs totaling $209,805. The measurement
 date  for  the transaction  was  October 22, 2004,  the date a substantially
 revised merger agreement was signed  and  announced.  The fair value of  IPS
 was determined based upon the quoted market price per share times the number
 of common shares outstanding on October 22, 2004.

 The  preliminary  purchase  price  allocation  to  the fair value of the IPS
 assets and liabilities is as follows:

 Cash                                             $     78,763
 Accounts receivable                                   705,736
 Inventory                                             425,143
 Property and equipment                                607,173
 Goodwill                                            8,764,536
 Customer base                                       4,336,391
 Other assets                                           32,911
                                                   -----------
      Total assets acquired                         14,950,653

 Accounts payable and accrued expenses               1,546,897
 Deferred income taxes                               1,597,618
 Notes payable                                       1,318,145
                                                   -----------
      Total liabilities assumed                      4,462,660
                                                   -----------
                                                  $ 10,487,993
                                                   ===========

 Customer base  was recorded  as a  result  of the  acquisition and  will  be
 amortized over a period of eight years.  The fair value of customer base was
 determined using estimated discounted future  cash flows.  Estimated  future
 amortization expense for the years ended July 31, is as follows:

                     2005           $    361,366 *
                     2006                542,049
                     2007                542,049
                     2008                542,049
                     2009                542,049
                     Thereafter        1,806,829
                                     -----------
                     Total          $  4,336,391
                                     ===========

      * Includes the $90,341 expense recorded for the six months ended
        January 31, 2005

 Pro Forma Results of Operations
 -------------------------------

 The following unaudited  pro forma consolidated  results of operations  have
 been prepared as if the Best Circuit Boards, Inc. merger discussed above had
 occurred on August 1, 2003:

                         For the Three Months         For the Six Months
                           Ended January 31,           Ended January 31,
                          2005          2004          2005          2004
                       ----------------------------------------------------
 Revenues
   As reported        $ 7,604,706   $ 5,016,683   $14,356,993   $ 9,632,245

   Pro forma          $ 8,111,149   $ 6,228,076   $16,432,911   $12,173,701

 Net Income
   As reported        $   (61,742)  $   194,220   $    88,879   $   150,021

   Pro forma          $  (687,996)  $(1,117,806)  $(1,158,322)  $(2,997,601)

 Earnings (loss)
 per share -   Basic
   As reported              $0.00         $0.01         $0.00         $0.01

   Pro forma               $(0.01)       $(0.02)       $(0.02)       $(0.06)


 NOTE 5 - INCOME TAXES

 The  income tax provision  for the three and six month periods ended January
 31, 2005 consists of the following:

                                                       Three         Six
                                                       Months       Months
                                                      --------     --------
 Deferred expense (benefit)                          $ (21,363)   $  71,273
                                                      ========     ========

 Significant  temporary  differences  used in the computation of deferred tax
 assets and liabilities at January 31, 2005 are as follows:

 Deferred tax assets, current
 Allowance for bad debts                           $    83,950
 Accrued vacation                                       88,087
 Other                                                  33,911
                                                    ----------
                                                   $   205,948
                                                    ==========

 Deferred tax assets (liabilities), non-current
 Depreciation of property and equipment            $  (252,446)
 Other                                                  67,566
 Net operating loss carry forwards                   6,551,271
 Valuation allowance                                (6,551,271)
 Customer base                                      (1,564,334)
                                                    ----------
                                                   $(1,749,214)
                                                    ==========

 At January 31, 2005, the Company  had tax net operating loss carry  forwards
 (NOLs)  of  approximately $17,782,000  that begin  to expire  in  2018.  The
 utilization of these NOLs  is limited due  to the change  in ownership of  a
 majority of the outstanding  shares of IPS.   Due to  the uncertainty as  to
 whether these NOLs  will ever be  utilized, a 100%  valuation allowance  has
 been recorded related to these assets.

 In assessing the  realization of deferred  tax assets, management  considers
 whether it is  more likely than  not that some  or all of  its deferred  tax
 assets will  not be  realized.   The ultimate  realization of  deferred  tax
 assets is dependent upon the existence of, or generation of, taxable  income
 in  the  periods  in  which  those  temporary  differences  are  deductible.
 Management considers  the scheduled  reversal of  deferred tax  liabilities,
 projected future taxable income and tax  planning strategies in making  this
 assessment.  Based upon historical taxable income and projections of  future
 taxable  income  over  the  periods  which  the  deferred  tax  assets   are
 deductible, management does  not believe that  further valuation  allowances
 are necessary as of January 31, 2005.


 NOTE 6 - LINE OF CREDIT

 Effective August 26,  2003, the Company  entered into a  $2 million line  of
 credit agreement ("LOC") with a bank, which was due on demand, bore interest
 at the bank's prime  rate plus 1%  (6.25% at January  31, 2005) and  matured
 October 15,  2004.   As of  March 17,  2005, the  LOC has  been renewed  and
 extended until October 31,  2006.  The LOC  is subject to certain  financial
 and other  covenants, is  collateralized by  all of  the Company's  accounts
 receivable and  inventory,  and  is guaranteed  by  the  Company's  majority
 stockholder, chief  executive officer  and sole  director.   At  January 31,
 2005, $1,860,000 was outstanding under this LOC.

 NOTE 7 - NOTES PAYABLE

   Long-term debt consists of the following at January 31, 2005:

   Note payable to bank, payable in monthly
   installments of $17,450 including interest
   at 5.75%, matures August 29, 2005, collateralized
   by equipment                                                   $ 119,833

   Note payable to financial institution payable in
   monthly installments of $657 at 0% interest, maturing
   June 30, 2008, collateralized by a vehicle                        26,932

   Note payable to individual A, accruing interest at
   24%, unsecured, in default as of June 20, 2004                   117,858

   Note payable to individual B, accruing interest at
   24%, unsecured, in default as of August 4, 2004                   50,000

   Convertible note payable to individual C, accruing interest
   at 12%, unsecured, in default as of September 27, 2004            15,000

   Note payable to individual D, accruing interest at
   24%, unsecured, in default as of April 15, 2005                   45,000

   Note payable to Company E, accruing interest at
   8%, unsecured, maturing December 31, 2005                         73,035

   Convertible note payable to Company F, accruing interest
   at 8%, unsecured, in default as of November 22, 2004
   (see below)                                                      277,909
                                                                   --------
                                                                    725,567
          Less current maturities of long-term debt                 706,517
                                                                   --------
          Total long-term debt, less current maturities           $  19,050
                                                                   ========

 The convertible note payable to Company F  is  in default as of November 22,
 2004.  The original face value  of the note  was  $250,000.  On November 22,
 2004, under provisions provided in  the agreement, the noteholders  demanded
 payment in  the amount  of  125% of  the  outstanding principal  balance  of
 $222,327, bringing  the demand  amount to  $277,909, plus  accrued  interest
 through October 31, 2004 of $15,222.

 Under the terms of  the agreement, the per  diem interest after October  31,
 2004, is $49.41 plus an additional  $5,000 monthly penalty for the first  90
 days, increasing  to $10,000  per month  thereafter.   Additionally,  10,000
 shares of common stock are  to be issued to  the noteholder per the  default
 provisions.  At January  31, 2005, the Company  has accrued unpaid  interest
 and penalties in  the amount of  $19,545 related to  this debt  and has  not
 issued the demanded shares of common stock.

 The terms of this note allow for the conversion  of the debt, up to the full
 principal amount,  into common  shares  at  the option  of the  holder.  The
 number of common shares into  which this debt may  be converted is  equal to
 the dollar amount  of the principal  being converted  multiplied by  eleven,
 minus the product of the conversion  price multiplied by six and  two-thirds
 times the dollar  amount of the  principal being converted,  and the  entire
 foregoing result divided by the conversion  price.  The conversion price  is
 equal to the  lesser of  $1.50 or eighty  percent of  the average  of the  5
 lowest volume weighted average prices during  the twenty trading days  prior
 to the holder's election to convert.

 If the holder elects to convert the debt, the Company will have the right to
 prepay the portion of the debt that the holder elected to convert, plus  any
 accrued and unpaid interest,  at 115% of  such amount.  In that  event,  the
 holder has the right to withdraw its conversion notice.

 Management expects  to settle  this note  in cash  and  a reduced number  of
 shares  of common stock.  The dilutive effects of the conversion  right have
 been  considered  in the computation  of diluted earnings per share,  above,
 based upon management's estimate of the number of common shares that will be
 issued upon final conversion.


 NOTE 8 - NOTES PAYABLE TO RELATED PARTY

 On November  24,  2004,  the Company  issued  $4.2  million  in  convertible
 promissory notes (the "Notes") to the beneficial owner of LSC as part of the
 consideration in the merger.  As a  result of the merger, Mr. Jacoby  became
 the majority shareholder, chief executive officer  and sole director of  the
 Company.  The  Notes are  convertible into  common stock  at any  time at  a
 conversion price of $.15 per share.   Notes in the principal amount of  $3.2
 million bear  interest at  8% payable  monthly, with  the principal  balance
 originally due February  28, 2005.   A note in  the principal  amount of  $1
 million bears 8% interest payable semi-annually, with the principal  balance
 due  in November 2007.  The  Notes are secured by  all assets of the Company
 and LSC, by the outstanding  stock of LSC and  by the Company capital  stock
 owned by D. Ronald Allen.  As of April 20, 2005, the $3.2 million notes have
 been extended  to  July 31, 2005.  Interest expense  related to these  notes
 totaled $53,333 for the three and six months ended January 31, 2005.

 The Company is in the process  of negotiating the extension or conversion of
 $3.2  million of the Notes.  No assurance can be given that the Company will
 be  successful  in negotiating  this extension  or  conversion or that  such
 extension or conversion would be on  terms favorable to the Company.  In the
 event  that  the  Company  is unsuccessful  in extending the $3.2 million of
 notes or converting the notes into shares of common stock,  Mr. Jacoby could
 demand  payment  of  the  notes  and  exercise  his  security  interests  in
 substantially  all of our assets.  The exercise of these  security interests
 would leave  insufficient assets  to continue our  operations.  These events
 would have  a material adverse effect  on our business,  financial condition
 and results of operations.


 NOTE 9 - RELATED PARTY TRANSACTIONS AND GUARANTEES

 The Company  leases  two  of  its  three  operating  facilities  from  JACCO
 Investments, an entity owned by the Company's majority shareholder and CEO.

 The  Company  has  guaranteed  payment  of  mortgage  notes  owed  by  JACCO
 Investments to financial institutions.  At January 31, 2005, amounts owed by
 JACCO Investments under mortgage note arrangements guaranteed by the Company
 totaled $5,606,890.  In the event that JACCO Investments defaults on any  of
 these respective loans, the Company would be required to make cash  payments
 equal  to  the  unpaid principal  portion  of the  mortgage  notes plus  all
 accrued penalties and interest.  The  guarantees do not contain any recourse
 provisions or collateral  for the Company  in the event  that the  guarantee
 payments are made.

 See Note 6 - Line of Credit above.


 NOTE 10 - STOCK BASED COMPENSATION

 The Company has  entered into verbal  and written agreements  to pay  common
 stock in lieu  of cash for  professional services.   For the  three and  six
 months ended January 31, 2005, the Company has recorded professional fees in
 the  amount  of $30,000  related to  these agreements.   On  March 22, 2005,
 700,000 shares of common stock were issued under these arrangements.


 NOTE 11 - STOCK OPTIONS AND WARRANTS

 On November 30, 2004, the Company's  Chief Executive Officer, sole  director
 and controlling  shareholder  issued to  certain  employees of  the  Company
 options to purchase 40,000,000 shares of  common stock issuable to him  upon
 the conversion of shares of his Series F Preferred Stock.  The options  have
 an exercise price of $.15 per  share, vest immediately, and expire  November
 30, 2014.  The Company is  not a direct  party to the  agreement  as no  new
 shares will  be issued  upon the  exercise of  the options.   For  financial
 reporting purposes, these  options will be  accounted for  as deemed  grants
 from the Company.  Since the options had  no intrinsic value on the date  of
 grant, no compensation expense has been recorded.

 As of January 31, 2005, there were 500,000 outstanding warrants to  purchase
 common  stock  held by  certain employees.  These warrants have an  exercise
 price of $.75 per share and expire November 5, 2009.

 As of  January  31,  2005, there  were  1,708,333  outstanding  warrants  to
 purchase common stock held by debt holders.  These warrants have an exercise
 price of $1.50 per share and expire October 24, 2006 and February 8, 2011.


 NOTE 12 - CONTINGENCIES

 Sale of Subsidiaries
 --------------------

 In connection with the merger with  Best Circuit Boards, Inc. (see Note  4),
 on November 24, 2004, the Company sold its 100% ownership interest in  three
 of its subsidiaries  (North Texas PC  Dynamics, Inc. ("NTPCD"),  Performance
 Application Technologies, Inc. ("PAT"),  and Performance Interconnect  Corp.
 of North  Texas, Inc.  ("PI") to  Integrated Performance  Business  Services
 Corp., an  entity controlled  by  D. Ronald  Allen, former  chief  executive
 officer, controlling shareholder and director of  the Company.  On the  date
 of sale, these entities held liabilities having a book value of $748,653.

 On April  23,  2004,  the  Company  sold  its  100%  ownership  interest  in
 subsidiaries Cadsouth  Inc. ("CAD"),  PC  Dynamics Corporation  ("PCD"),  PC
 Dynamics of  Texas,  Inc.  ("PCDT"),  and  Integrated  Performance  Business
 Services Corp.  ("IPBSC"),  including  its wholly  owned  subsidiary,  Power
 Development, Inc.   At  the time  of the  sale these  subsidiaries owned  no
 assets and  maintained  liabilities  with an  aggregate  carrying  value  of
 approximately $1,477,000. In exchange for the sale, IPS issued to the  buyer
 678,000 shares of common stock of IPS.

 The debts of NTPCD, PAT, PI, CAD, PCD, PCDT, and IPBSC represent  contingent
 liabilities of the Company.  Future  enforcement of these debts against  the
 Company could have a material adverse impact on the cash flow and  liquidity
 of the Company.

 Lease Agreement
 ---------------

 The Company leases a 60,000 sq. ft. manufacturing facility in Frisco,  Texas
 from C-Gate  Construction  Company ("C-Gate"),  an  affiliate of  D.  Ronald
 Allen, the  former  chief  executive officer,  controlling  shareholder  and
 director of the Company.  Prior  to the merger,  Mr. Allen executed a  lease
 modification document which, according to  its terms, reduced monthly  rents
 from $35,000 to $17,000  and reduced the 20-year  lease term to a  month-to-
 month tenancy.  The  enforceability of the  lease modification is  currently
 being disputed by C-Gate's lender in litigation pending in C-Gate's  Chapter
 11 bankruptcy  proceedings in  the U.S.  Bankruptcy  Court for  the  Eastern
 District of Texas, Sherman Division.  The issues in that litigation  include
 whether (a) C-Gate received approval for the modification from its lender in
 accordance with the terms  of the mortgage on  the property, (b) C-Gate  had
 the authority to execute a lease modification without the prior approval  of
 the bankruptcy court, and  (c) an attornment  agreement that was  apparently
 previously executed by the Company in favor of the lender, would prevent the
 Company from  effecting a  modification of  the lease  without the  lender's
 specific consent.   In  the pending  litigation,  the Company  has  asserted
 certain claims against  D. Ronald Allen  and C-Gate's  principal to  recover
 damages  against  them  should  the  lease  modification  document  not   be
 enforceable.  The litigation is currently in the preliminary stages and  the
 ultimate outcome of  the claims  by and  against the  Company is  uncertain.
 Also, the Company  is currently in  arrears in its  rent payments under  the
 lease and the  lender has indicated  that it may  take action to  accelerate
 future  rent  payments  under  the  lease, subject  to  certain offsets.  An
 unfavorable decision  regarding  the  effectiveness  of  lease  modification
 document or action by  the lender to accelerate  future rent payments  would
 have a material  adverse effect on  the Company.   The Company is  currently
 working to obtain  an amicable resolution  but no assurance  of such can  be
 provided.


 NOTE 13 - SUBSEQUENT EVENT

 In March 2005, the Company entered into a $1.2 million operating lease  line
 to  provide  financing  for  the  acquisition  of  manufacturing  equipment.
 As of April 27, 2005, the Company has used $700,000 of this line.


 ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR
           PLAN OF OPERATION

                           Forward Looking Statements

      This report may  contain "Forward  Looking Statements,"  which are  our
 expectations,  plans  and   projections,  including  statements   concerning
 expected income and  expenses and  the adequacy of  our sources  of cash  to
 finance current and future operations, which may or may not materialize  and
 which are subject to various risks  and uncertainties.  Factors which  could
 cause actual results to materially differ from our expectations include  the
 following:   general  economic  conditions  and  growth  in  the  high  tech
 industry; competitive factors and pricing pressures; changes in product mix;
 the timely development and  acceptance of new products;  the effects of  the
 contingencies described herein; the availability  of capital; and the  risks
 described  from  time  to  time  in  our other filings  with the  Securities
 and  Exchange  Commission ("SEC").  When  used  in  this report,  the  words
 "may,"  "will,"  "plans,"  "believes,"  "expects,"  "projects,"   "targets,"
 "anticipates," "estimates," "continue," "intend" and similar expressions are
 intended  to  identify  forward-looking  statements.  These  forward-looking
 statements speak only as of the date of this report.  We expressly  disclaim
 any obligation or undertaking to release  publicly any updates or change  in
 our expectations or  any change in  events, conditions  or circumstances  on
 which any such statement may be  based, except as may be otherwise  required
 by the securities laws.

                                 Overview

      On  November  24,  2004,  a  wholly  owned  subsidiary  of   Integrated
 Performance Systems, Inc. merged with Best Circuit Boards, Inc., d/b/a  Lone
 Star Circuits ("LSC"), resulting in LSC  becoming a wholly owned  subsidiary
 of the Company.  The beneficial  owner of LSC acquired controlling  interest
 in the Company and the Company has therefore determined that the transaction
 should be  accounted for  as a  reverse  merger.   The transaction  will  be
 treated as if  LSC acquired the  Company and,  consequently, the  historical
 financial statements of LSC have become the historical financial  statements
 of the Company.

 The significant terms of the merger were as follows:

   *  LSC Asset Acquisition Corp. (a wholly owned subsidiary of LSC) acquired
      all of the assets and  some, but not all,  of the liabilities of  three
      IPS subsidiaries (North Texas PC Dynamics, Inc. ("NTPCD"),  Performance
      Application Technologies,  Inc. ("PAT"),  and Performance  Interconnect
      Corp. of North Texas, Inc. ("PI").  These three subsidiaries  comprised
      substantially all of the business operations of IPS prior to the merger.

   *  Immediately subsequent to the asset sales  above, the Company sold  its
      100% ownership interest in NTPCD, PAT, and PI to Integrated Performance
      Business Services Corp.  ("IPBSC"), an entity  controlled by D.  Ronald
      Allen, former  chief  executive officer,  controlling  shareholder  and
      director of the Company.  These entities held liabilities having a book
      value of $748,653.

   *  IPS issued $4.2  million in  convertible promissory  notes and  193,829
      shares  of  IPS  Series  F  Convertible  Preferred  Stock,  subject  to
      adjustment to  represent 67.25%  of  the Company's  outstanding  common
      stock, to  the beneficial  owner of  LSC in  exchange for  100% of  the
      outstanding shares of LSC.

   *  Associates Funding Group and CMLP  Group, Ltd., entities controlled  by
      D. Ronald  Allen,  agreed to  contribute  8,634,000 shares  of  Company
      common stock to the Company.

   *  D. Ronald  Allen entered  into a  stock escrow  and security  agreement
      whereby  10,851,832  shares of IPS common stock beneficially  owned  by
      him  were  placed into escrow as security for  (1) advances made by LSC
      to IPS prior to  the closing of  the  merger, (2) the Company's and Mr.
      Allen's  indemnification obligations under the  merger  agreement,  and
      (3) the convertible promissory  notes issued to the beneficial owner of
      LSC.  The merger agreement  provides  that the shares  used  to satisfy
      those obligations  be valued based  on a future equity financing of the
      Company.

   *  Brad  Jacoby,  the  beneficial  owner  of  LSC,  became  the   majority
      shareholder, Chief Executive Officer, and sole director of the Company.

      Integrated Performance  Systems, Inc.  (the  "Company") is  a  contract
 manufacturer of high  quality, high  performance circuit  boards located  in
 Wylie, Texas,  just east  of Dallas.   The  Company's products  are used  in
 computers,  communication   equipment,  the   aerospace  industry,   defense
 electronics and  other  applications requiring  reliable,  high  performance
 electrical capability.

      The  following  discussion  provides  information  to  assist  in   the
 understanding of our financial condition and  results of operations for  the
 three and six months periods ended January 31, 2005 and 2004.  It should  be
 read in  conjunction with  the financial  information for  the twelve  month
 period ended July 31, 2004, appearing  in the Form 8-K/A dated November  24,
 2004, filed on February 7, 2005.

                            Results of Operations

      Revenues.  Net revenues  increased to $7,605,000  for the three  months
 ended January 31, 2005 from  $5,017,000 for the same  period in 2004, a  net
 increase  of $2,588,000  or  52%.  Net revenues increased to $14,357,000 for
 the six months ended January 31, 2005 from $9,632,000 for the same period in
 2004, a net increase of 4,725,000 or 49%.  The increases are attributable to
 a continued strengthening of demand for our products driven by our  existing
 original equipment manufacturer ("OEM") customers, several new customers and
 the addition  of  approximately  $500,000  from  the  acquired  business  in
 December and January.

      Gross Profit.  Gross profit for the three months ended January 31, 2005
 was$1,269,000, versus a gross profit of $801,000 in the same period in 2004.
 Gross profit for  the six months  ended January 31,  2005 was  approximately
 $2,370,000, versus a gross profit of $1,538,000 for the same period in 2004.
 The increases are attributable to the  increase in sales resulting in  fixed
 costs being spread over a larger  number of units being produced and  higher
 demand for premium services, predominately  quick turn orders, resulting  in
 higher gross margins  of 17% and  16%, respectively, for  the three and  six
 months ended January 31, 2005.

      Selling, general  and administrative  expenses.   Selling, general  and
 administrative  expenses  consist  primarily  of  the  direct  charges   for
 advertising, sales  promotion,  and  marketing,  as  well  as  the  cost  of
 executive, administrative and  accounting personnel  and professional  fees.
 Selling, general and administrative expense increased to $1,146,000 for  the
 three months ended January 31, 2005 from $611,000 in 2004, a net increase of
 $626,000 or 102%.  Selling, general and administrative expense increased  to
 $2,001,000 for the  six months  ended January 31, 2005  from  $1,389,000  in
 2004, a  net increase  of $702,000  or  51%.  The  increases were  primarily
 attributable to increased employee benefits and additional accounting, legal
 and other  professional fees  relating to  the  ongoing integration  of  the
 merged entities.

                       Liquidity and Capital Resources

      We  have  generally  financed  our  business  from  cash  generated  by
 operations, borrowings  and in  some periods  our majority  shareholder  has
 loaned the Company operating capital at prevailing market rates of  interest
 or has guaranteed our indebtedness.

      Cash flows from operations.  Net cash provided by operations during the
 six months ended January  31, 2005 was  approximately $623,000, compared  to
 $267,000 being used  in operations  during the same  period in  2004.   This
 change in our cash flows from operations relates to the profitability of the
 Company for the period combined with an increase in accounts payable.

      Cash used for investing activities.  Cash used for investing activities
 during the six  months ended January  31, 2005  was approximately  $177,000,
 consisting of cash acquired from the merger of $79,000, merger related costs
 of $210,000 and investments in property and equipment of $46,000.  Cash used
 for investing activities during the same period ending January 31, 2004  was
 approximately $160,000.  The  increase is attributable to  cash used in  the
 merger, offset  by  cash acquired  in  the merger  and  a reduction  in  the
 purchase of property and equipment.

      Cash flows from financing activities.   Net cash provided by  financing
 activities during  the  six  months ended  January  31,  2005  was  $80,000,
 consisting primarily of  proceeds of $950,000  from our line  of credit  and
 payments of  $908,000 on  notes payable.   Net  cash provided  by  financing
 activities during  the  six months  ended  January 31,  2004  was  $294,000,
 consisting primarily  of  proceeds of  $298,000  from our  line  of  credit,
 advances of $200,000 from related parties, and payments of $204,000 on  long
 term debt.

      Indebtedness and  guarantees.   We have  a $2  million line  of  credit
 described in Note 6 of our financial statements set forth in Part I, Item  1
 above.  We have other long-term indebtedness in the amount of  approximately
 $725,000, some of which was originally incurred by the acquired company,  as
 described in Note 7 to our financial statements.  Approximately $706,000  is
 accounted for  as  current  maturities of  long-term  debt,  which  includes
 certain  amounts  in  default.  We  are currently  attempting  to  negotiate
 resolution of the indebtedness that is in default, however, no assurance can
 be given that  any such  resolution can  be  reached.  We  have issued  $4.2
 million in convertible promissory notes to a related party, as described  in
 Note 8 to our financial  statements.  The maturity  of these notes has  been
 extended to  July 31,  2005.   We have  guaranteed certain  indebtedness  of
 related parties, as described in Note 9 to our financial statements.

      Contingent Liabilities.    We  are subject  to  significant  contingent
 liabilities, as described in Note 12  to our financial statements set  forth
 in Part I, Item 1 above.

      We are subject to  current liabilities substantially  in excess of  our
 current assets  and  are subject to  significant contingent liabilities.  We
 are  in  the  process  of negotiating  the extension  or  conversion of $3.2
 million of current notes payable  to our majority shareholder and are in the
 process  of restructuring  our notes payable  with other lenders.  We are in
 discussions with our bank to use our manufacturing  equipment  as collateral
 for a midterm loan, the proceeds of which would be used to pay down our line
 of credit  and  to provide  working  capital.  We  can  provide no assurance
 that  we  will  be  successful in restructuring, converting or extending our
 indebtedness,  or that any  such transaction would be on terms favorable  to
 the Company.  In the event  that we are unsuccessful  in extending  the $3.2
 million notes  payable to  our majority shareholder or converting  the notes
 into shares of common stock,  such  shareholder could demand  payment of the
 notes  and  exercise  his  security interests  in substantially  all  of our
 assets.  The exercise of  these security  interests would leave insufficient
 assets  to  continue  our operations.  These  events  would  have a material
 adverse   effect  on  our  business,  financial  condition  and  results  of
 operations.


 ITEM 3.   CONTROLS AND PROCEDURES

      Evaluation of Disclosure Controls and Procedures.  Our management, with
 the participation  of  our  Chief  Executive  Officer  and  Chief  Financial
 Officer, has  reviewed and  evaluated the  effectiveness of  the design  and
 operation of our disclosure controls and procedures (as defined in Rule 13a-
 15(e) under the Securities Exchange Act of 1934) as of the end of the period
 covered  by this report.  Based on  that evaluation, and  based on the  fact
 that this report will be filed past our extension date, our Chief  Executive
 Officer and  Chief  Financial Officer  have  concluded that  our  disclosure
 controls and  procedures  are  not  effective  to  ensure  that  information
 required to be disclosed by us in the  reports that we file or submit  under
 the Securities Exchange Act of 1934  is recorded, processed, summarized  and
 reported within the  time periods specified  in the rules  and forms of  the
 Securities and Exchange Commission.  Our  management expects to address  and
 improve upon the weaknesses in our disclosure controls and procedures in the
 near future.

      Annual report on internal control over financial reporting.  Based upon
 the most recent  pronouncements of the  Securities and Exchange  Commission,
 our first annual report on internal control over financial reporting is  due
 for inclusion  in our  annual report  on Form  10-KSB for  the twelve  month
 period ending July 31,  2006.  We expect  to begin the  process in the  near
 future of identifying a  framework to use to  evaluate the effectiveness  of
 our internal control over financial reporting as required by  Rule 13a-15(c)
 under the Securities Exchange Act of 1934.   Although we have not yet  begun
 the formal evaluation process, we have informally identified certain  areas,
 such as project job cost accounting,  in which we expect to see  improvement
 in our internal controls as a result of the process.

      Changes in internal control over financial reporting.  Our  management,
 with the participation of  our Chief Executive  Officer and Chief  Financial
 Officer, has  evaluated whether  any change  in  our internal  control  over
 financial reporting occurred during the last  fiscal quarter. Based on  that
 evaluation, our Chief  Executive Officer  and Chief  Financial Officer  have
 concluded that  there  have  been  changes  in  our  internal  control  over
 financial reporting during the period that  have materially affected or  are
 reasonably likely to materially affect  our internal control over  financial
 reporting.  As a result of the merger with LSC, the internal controls of LSC
 have  become  the  internal  controls  of  the  Company,  including  without
 limitation  the  personnel,   policies,  systems   and  administrative   and
 accounting functions  of LSC.   Management  has not  had an  opportunity  to
 conduct a detailed comparison of these changes.


                         PART II - OTHER INFORMATION

 ITEM 1.   LEGAL PROCEEDINGS

      The Company leases  a 60,000 sq.ft.  manufacturing facility in  Frisco,
 Texas  from  C-Gate  Construction  Company ("C-Gate"),  an affiliate  of  D.
 Ronald Allen, the  former chief executive  officer, controlling  shareholder
 and director of  the Company.   Prior to the  merger, Mr.  Allen executed  a
 lease modification document which, according  to its terms, reduced  monthly
 rents from $35,000 to $17,000 and reduced the 20-year lease term to a month-
 to-month tenancy.  The enforceability of the lease modification is currently
 being disputed  by C-Gate's  lender, Legacy  Bank  of Texas,  in  litigation
 pending in C-Gate's Chapter 11 bankruptcy proceedings in the U.S. Bankruptcy
 Court for  the Eastern  District of  Texas,  Sherman Division  initiated  by
 Legacy Bank  of Texas  on March  4, 2005.   The  issues in  that  litigation
 include whether (a) C-Gate received approval  for the modification from  its
 lender, enforceability of the lease modification is currently being disputed
 by C-Gate's lender, Legacy  Bank of Texas, in  accordance with the terms  of
 the mortgage on  the property,  (b) C-Gate had  the authority  to execute  a
 lease modification without the prior approval  of the bankruptcy court,  and
 (c) an attornment agreement that was  apparently previously executed by  the
 Company in favor of  the lender would prevent  the Company from effecting  a
 modification of the  lease without the  lender's specific consent.   In  the
 pending litigation,  the  Company has  asserted  certain claims  against  D.
 Ronald Allen and C-Gate's principal to  recover damages against them  should
 the lease  modification document  not be  enforceable.   The  litigation  is
 currently in the preliminary stages and  the ultimate outcome of the  claims
 by and against the Company is uncertain.  Also, the Company is currently  in
 arrears in its rent payments  under the lease and  Legacy Bank of Texas  has
 indicated that it may take action  to accelerate future rent payments  under
 the lease, subject to  certain offsets.   An unfavorable decision  regarding
 the effectiveness of lease modification document or action by Legacy Bank of
 Texas to  accelerate future  rent payments  would  have a  material  adverse
 impact on  the Company.   The  Company  is currently  working to  obtain  an
 amicable resolution but no assurance of such can be provided.


 ITEM 2.   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

      Issuances of equity securities during the period covered by this report
 that were not registered under the  Securities Act of 1933 consisted of  the
 following:

      In November 2004 we issued to  offshore investors 65,500 shares of  our
 par value $.01 common stock ("Common Stock"), pursuant to Regulation S under
 the Securities Act of 1933, for  gross proceeds of approximately $29,750  of
 which we received approximately $10,710 and brokers in the United States and
 overseas received approximately $19,040 as commissions  on the sales.  These
 issuances were made in connection with a Stock Escrow Agreement dated as  of
 October 23, 2003 between the Company,  Morgan Watts & Associates, Ltd.,  and
 Scott Mayer, concerning  private placements  of the  Company's Common  Stock
 pursuant to Regulation S.

      In November 2004  we issued  to related  and unrelated  parties, at  an
 average of approximately $.30 per share, an aggregate of 1,617,000 shares of
 Common Stock in  consideration of forgiveness  of aggregate  debt and  other
 financial obligations of the Company of approximately $484,000, as  follows:
 we issued 68,000  shares to  an unrelated  trust entity  in satisfaction  of
 $15,000 principal and accrued  interest due on  a convertible debenture;  we
 issued 334,000 shares to an unrelated  legal advisor in partial payment  for
 services rendered  to the  Company valued  at  $100,000; we  issued  367,000
 shares in satisfaction of $100,000 principal  and accrued interest due on  a
 debt obligation to a  limited partnership related party  in which D.  Ronald
 Allen, the  former  chief  executive officer,  controlling  shareholder  and
 director of the Company,  served as President of  the General Partner and  a
 25% limited  partner; and  we  issued 848,000  shares  to the  same  limited
 partnership in  return for  the assumption  by the  limited partnership  and
 promise to pay on  behalf of the Company  an outstanding debt obligation  of
 $200,000 in principal and accrued interest to a unrelated individual.  These
 issuances were made pursuant to the exemption from registration provided  by
 Section 4(2) of the Securities Act of 1933,  in that they did not involve  a
 public offering.

      In November  2004 we  issued to  an unrelated  investor 225  shares  of
 Common Stock to correct a discrepancy in the number of shares issued to this
 investor in connection with a reverse  merger transaction of the Company  in
 1999.  This issuance  was made pursuant to  the exemption from  registration
 provided by Section 4(2) of the Securities Act  of 1933, in that it did  not
 involve a public offering.

      In November 2004, as a result of conversions of preferred stock of  the
 Company by the  holders of  the preferred stock,  we issued  to related  and
 unrelated parties  an aggregate  of 27,164,000  shares of  Common Stock,  as
 follows:  we issued to unrelated individuals and various unrelated  entities
 an aggregate of 8,164,000 shares of Common Stock; and we issued an aggregate
 of 19,000,000 shares to various related  entities of which D. Ronald  Allen,
 the former chief executive officer, controlling shareholder and director  of
 the Company, is an officer and beneficial owner.  These issuances were  made
 pursuant to the exemptions from registration  provided by Sections 4(2)  and
 3(a)(9) of the Securities Act of 1933, in that they did not involve a public
 offering and the securities were exchanged by the Company with its  existing
 security holders exclusively  and no  commission or  other remuneration  was
 paid or given directly or indirectly for soliciting the exchange.

      In November 2004, as a result of conversions of preferred stock of  the
 Company by the  holders of the  preferred stock, we  issued an aggregate  of
 1,180,000  shares  of  Common  Stock  to  unrelated  parties  consisting  of
 individuals and various  entities, and we  issued 162,000  shares of  Common
 Stock to a related party company in which D. Ronald Allen, the former  chief
 executive officer, controlling shareholder and director of the Company,  was
 an officer and a 5% beneficial owner.  These issuances were made pursuant to
 the exemptions from registration  provided by Sections  4(2) and 3(a)(9)  of
 the Securities Act of 1933, in that  they did not involve a public  offering
 and the securities were exchanged by  the issuer with its existing  security
 holders exclusively  and no  commission or  other remuneration  was paid  or
 given directly or indirectly for soliciting the exchange.

      In November 2004 we issued to 41 employees of the Company an  aggregate
 of 118,546 shares of Common Stock to  fulfill a promise made by the  Company
 to issue these shares to the employees if they would remain with the Company
 through the merger  with LSC.   These issuances  were made  pursuant to  the
 exemption from registration provided by Section  4(2) of the Securities  Act
 of 1933, in that they did not involve a public offering.

      In November 2004 we issued to  a consultant 5,000,000 shares of  Common
 Stock as a  finder's fee and  for services rendered  in connection with  the
 merger transaction  with  LSC.   This  issuance  was made  pursuant  to  the
 exemption from registration provided by Section  4(2) of the Securities  Act
 of 1933, in that it did not involve a public offering.

      In November 2004  we issued  to an  employee of  the Company  1,000,000
 shares of  Common  Stock in  connection  with  a  severance  package.   This
 issuance was made pursuant  to the exemption  from registration provided  by
 Section 4(2) of the  Securities Act of 1933,  in that it  did not involve  a
 public offering.

      In March 2005 we issued to  consultants 700,000 shares of Common  Stock
 in connection with services rendered.  These issuances were made pursuant to
 the exemption from registration provided by  Section 4(2) of the  Securities
 Act of 1933, in that they did not involve a public offering.

      In connection  with the  merger with  LSC, in  November 2004,  entities
 controlled  by  D.  Ronald  Allen,  our  former  chief  executive   officer,
 controlling shareholder and director, contributed 8,634,000 shares of common
 stock back into the Company's treasury.   The Company recorded the  treasury
 shares at fair value in the amount of $949,740.


 ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

      For information concerning defaults on our indebtedness, see Note 7  to
 our financial statements set forth in Part I, Item 1 above and  Management's
 Discussion and Analysis or Plan of Operation in Part I, Item 2 above,  which
 are incorporated herein by reference.


 ITEM 5.   OTHER INFORMATION

      We are currently in  arrears in rent payments  under the lease for  our
 Frisco,  Texas manufacturing facility.  The landlord  has indicated that  it
 may take action to accelerate future rent payments under the lease,  subject
 to  certain offsets.  See  Note 12 - Contingencies - Lease Agreement to  our
 financial  statements  set  forth  in  Part  I,  Item  1  above,  which   is
 incorporated herein by reference.

      Our common  stock is  listed on  the over  the counter  bulletin  board
 ("OTCBB").  On April 21, 2005, the  OTCBB notified us that our common  stock
 will no longer be eligible for listing on the OTCBB if we fail to file  this
 Quarterly Report on Form 10-QSB for  the quarterly period ended  January 31,
 2005 on or before April 27,  2005.  We anticipate  that this report will  be
 filed on or before that date.

      During the  period covered  by this  report, we  issued certain  equity
 securities that were not registered under  the Securities Act of 1933.   See
 Part II, Item 2 above, which is incorporated herein by reference.


 ITEM 6.   EXHIBITS

      Reference is made to the Exhibit Index  of this Form 10-QSB for a  list
 of all exhibits filed with and incorporated by reference in this report.

                                  SIGNATURES

      In accordance with the requirements of the Exchange Act, the registrant
 caused this report to be signed on its behalf by the undersigned,  thereunto
 duly authorized.

                          INTEGRATED PERFORMANCE SYSTEMS, INC.
                          (Registrant)

 Date: April 27, 2005     By:  /s/  BRAD J. PETERS
                          -------------------------------------------
                          Brad J. Peters
                          Vice President and Chief Financial Officer
                          (On behalf of the registrant and as
                          principal financial and accounting officer)

<PAGE>

                                EXHIBIT INDEX

 Exhibit
 Number               Description of Exhibit
 ------               ----------------------
 2.1       Agreement and Plan of Merger between the Company and Best Circuit
           Boards, Inc. dated October 22, 2004 (filed as Exhibit "2.1" to the
           Company's Current Report on Form 8-K filed on October 28, 2004 and
           incorporated herein by reference.)

 2.2       First Addendum to the Agreement and Plan of Merger between the
           Company and Best Circuit Boards, Inc. dated November 24, 2004
           (filed as Exhibit "2.2" to the Company's Current Report on Form
           8-K filed on December 1, 2004 and incorporated herein by
           reference.)

 2.3 **    Closing Document between the Company and Best Circuit Boards, Inc.
           dated November 24, 2004.

 2.4 **    Asset Purchase Agreement between Performance Interconnect Corp. of
           North Texas, Inc. and LSC Asset Acquisition Corp. dated October
           22, 2004.

 2.5 **    Asset Purchase Agreement between Performance Application
           Technologies Inc. and LSC Asset Acquisition Corp. dated October
           22, 2004.

 2.6 **    Asset Purchase Agreement between North Texas PC Dynamics Inc.
           and LSC Asset Acquisition Corp. dated October 22, 2004.

 2.7 **    Stock Purchase Agreement between the Company and Integrated
           Performance Business Services Corp. dated November 24, 2004.

 4.1       Series F Preferred Stock terms and conditions (filed as Exhibit
           "4.1" to the Company's Current Report on Form 8-K/A filed on
           February 7, 2005 and incorporated herein by reference.)

 4.2 **    Secured Convertible Promissory Note One for $1 million dated
           November 24, 2004 between the Company, LSC Merger Corp. and
           Brad Jacoby.

 4.3 **    Secured Convertible Promissory Note Two for $200,000 dated
           November 24, 2004 between the Company, LSC Merger Corp. and
           Brad Jacoby.

 4.4 **    First Addendum to Secured Convertible Promissory Note Two for
           $200,000 dated April 20, 2005 between the Company and Brad Jacoby.

 4.5 **    Secured Convertible Promissory Note Three for $3 million dated
           November 24, 2004 between the Company, LSC Merger Corp. and Brad
           Jacoby.

 4.6 **    First Addendum to Secured Convertible Promissory Note Three for $3
           million dated April 20, 2005 between the Company and Brad Jacoby.

 10.1      Agreement for Management Consulting Services between the Company
           and Brad Jacoby dated July 23, 2004 (filed as Exhibit "10.1" to
           the Company's Quarterly Report on Form 10-QSB filed on October 20,
           2004 and incorporated herein by reference.)

 10.2      Stock Escrow and Security Agreement between Ron Allen, the Company
           and Brad Jacoby dated September 16, 2004 (filed as Exhibit "10.2"
           to the Company's Quarterly Report on Form 10-QSB filed on October
           20, 2004 and incorporated herein by reference.)

 10.3 **   Addendum to Stock Escrow and Security Agreement between Ron Allen,
           the Company and Brad Jacoby dated November 24, 2004.

 10.4 **   "Giveback" Agreement between Associates Funding Group, CMLP Group
           Ltd. and Best Circuit Boards, Inc. dated November 24, 2004.

 10.5 **   Employment Contract with Mr. Brad Jacoby dated November 30, 2004.

 10.6 **   Employment Contract with Mr. Brad Peters dated November 30, 2004.

 10.7 **   Employment Contract with Mr. Brent Nolan dated November 30, 2004.

 10.8 **   Employment Contract with Mr. James B. Nolan dated November 30,
           2004.

 10.9 **   Form of Stock Option Agreement between Mr. Jacoby and third
           parties relating to options to purchase shares of Common Stock
           held by Mr. Jacoby.

 10.10 **  Employment Contract with Mr. Brett Whitman dated November 30,
           2004.

 10.11 **  Security Agreement #1 dated November 24, 2004 by the Company,
           as debtor, in favor of Brad Jacoby, as secured party, in
           connection with that certain Secured Convertible Promissory
           Note One in the amount of $1 million.

 10.12 **  Security Agreement #2 dated November 24, 2004 by LSC Merger
           Corp., as debtor, in favor of Brad Jacoby, as secured party,
           in connection with that certain Secured Convertible Promissory
           Note One in the amount of $1 million.

 10.13 **  Security Agreement #1 dated November 24, 2004 by the Company,
           as debtor, in favor of Brad Jacoby, as secured party, in
           connection with that certain Secured Convertible Promissory
           Note Two in the amount of $200,000.

 10.14 **  Security Agreement #2 dated November 24, 2004 by LSC Merger
           Corp., as debtor, in favor of Brad Jacoby, as secured party,
           in connection with that certain Secured Convertible Promissory
           Note Two in the amount of $200,000.

 10.15 **  Security Agreement #1 dated November 24, 2004 by the Company,
           as debtor, in favor of Brad Jacoby, as secured party, in
           connection with that certain Secured Convertible Promissory
           Note Three in the amount of $3 million.

 10.16 **  Security Agreement #2 dated November 24, 2004 by LSC Merger
           Corp., as debtor, in favor of Brad Jacoby, as secured party,
           in connection with that certain Secured Convertible Promissory
           Note Three in the amount of $3 million.

 10.17 **  Compass Bank Letter Loan Agreement dated March 21, 2005

 31.1 **   Certification of Brad Jacoby, President and Chief Executive
           Officer, pursuant to Rule 13a-14(a) of the Securities and Exchange
           Act of 1934.

 31.2 **   Certification of Brad J. Peters, Vice President and Chief
           Financial Officer, pursuant to Rule 13a-14(a) of the Securities
           and Exchange Act of 1934.

 32.1 **   Certifications of Brad Jacoby,  President and Principal  Executive
           Officer, and Brad  J. Peters, Vice  President and Chief  Financial
           Officer, pursuant to 18 U.S.C. Section 1350.
 _______________________
 **        Filed herewith.