|UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549


Form 10-QSB


(Mark One)
|-------------------------------------------------------------------------------------------------

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

| | For
the quarterly period ended:  March 31, 2004
| | -----------------------------------------------

||_| |  | TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE            EXCHANGE ACT
|--- |  | --------------------------------------------------------------------------

| | For
the transition period from _____________________ to __________________
| | --------------------------------------------------------------------------

|Commission file number
0-30721


IPEC HOLDINGS INC.
(Exact name of small business issuer as specified in its charter)
|---------------------------------------------------------------------------------------------------------------------

|Nevada
      
      (State or other jurisdiction of
      incorporation or organization) | 87-0621339
      
      (IRS Employer 
      Identification No.)
|---------------------------------------------------------------------------------------- | ----------------------------------------------------------------

|Northgate Industrial
Park, 185 Northgate Circle, P.O. Box 5311New Castle, Pennsylvania 16105
(Address of principal executive offices)


(800) 377-4732
(Issuers telephone number)


(Former name, former
address and former fiscal year, if changed since last report)


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 |_|


State the number of
shares outstanding of each of the issuers classes of common equity, as of thelatest
practicable date:


9,972,912 shares of
Common Stock, $0.001 par value, as ofMay 3, 2004


Transitional Small
Business Disclosure Format (check one):   Yes |_|       No   |X|
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|TABLE OF CONTENTS
|-----------------

|PART
      1 - FINANCIAL INFORMATION                                                                                                            | 3 
|----------------------------------------------------------------------------------------------------------------------------------------------- | --
|                                                                                                                                                |   
|ITEM
      1. FINANCIAL STATEMENTS                                                                                                              | 3 
|                                                                                                                                                |   
|Unaudited
      Condensed Consolidated Balance Sheets                                                                                           | 3 
|Unaudited
      Condensed Consolidated Statements Of Operations                                                                                 | 5 
|Unaudited
      Condensed Consolidated Statements Of Cash Flows                                                                                 | 6 
|Notes
      To Condensed Consolidated Financial Statements                                                                                      | 7 
|                                                                                                                                                |   
|ITEM
      2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
                                       CONDITION AND RESULTS
      OF OPERATION | 12
|                                                                                                                                                |   
|ITEM
      3. CONTROLS AND PROCEDURES                                                                                                           | 15
|                                                                                                                                                |   
|PART
      II - OTHER INFORMATION                                                                                                               | 16
|                                                                                                                                                |   
|ITEM
      1. LEGAL PROCEEDINGS                                                                                                                 | 16
|ITEM
      2. CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES 
                                       
      EQUITY SECURITIES      | 16
|ITEM
      3. DEFAULTS UPON SENIOR SECURITIES                                                                                                   | 16
|ITEM
      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                                               | 16
|ITEM
      5. OTHER INFORMATION                                                                                                                 | 16
|ITEM
      6. EXHIBITS AND REPORTS ON FORM 8-K                                                                                                  | 16
|                                                                                                                                                |   
|SIGNATURES                                                                                                                                      | 17

|2
|-

|PART I  FINANCIAL
INFORMATION




ITEM 1.
FINANCIAL STATEMENTS




IPEC
Holdings Inc.Condensed
Consolidated Balance Sheets
|---------------------------------------------------------------------------------------------------------------------------

|                                                       |  | March
      31, 2004
      (Unaudited) |            | December
      31,
      2003 |  
|------------------------------------------------------ |  | -------------------------------------- | ---------- | ----------------------------- | -
|                                                       |  |                                        |            |                               |  
|                                                       |  |                                        |            |                               |  
|Assets                                                 |  |                                        |            |                               |  
|Cash                                                   |  | $                                      | 88,587     |                               | $
|Accounts
      Receivable, less allowance for doubtful |  |                                        | 1,689,766  |                               |  
|accounts
      of $205,000 and $220,000, respectively  |  |                                        |            |                               |  
|Other
      Trade Related Receivables                  |  |                                        | 366,795    |                               |  
|Inventories                                            |  |                                        | 3,125,589  |                               |  
|Deferred
      Tax Asset                               |  |                                        | 111,909    |                               |  
|Prepaid
      Expenses                                 |  |                                        | 124,886    |                               |  
|                                                       |  |                                        |            |                               |  
|Current
      Assets                                   |  |                                        | 5,507,532  |                               |  
|                                                       |  |                                        |            |                               |  
|                                                       |  |                                        |            |                               |  
|Land                                                   |  |                                        | 129,297    |                               |  
|Buildings
      and Equipment                          |  |                                        | 18,713,943 |                               |  
|Construction
      In Progress                         |  |                                        | 797,896    |                               |  
|Accumulated
      Depreciation                         |  |                                        | (7,858,352 | )                             |  
|                                                       |  |                                        |            |                               |  
|Property,
      Plant & Equipment, Net                 |  |                                        | 11,782,784 |                               |  
|                                                       |  |                                        |            |                               |  
|                                                       |  |                                        |            |                               |  
|Patents,
      less accumulated amortization of        |  |                                        | 281,373    |                               |  
|$110,514
      and $104,115, respectively              |  |                                        |            |                               |  
|Other
      Assets                                     |  |                                        | 230,572    |                               |  
|                                                       |  |                                        |            |                               |  
|Other
      Assets                                     |  |                                        | 511,945    |                               |  
|                                                       |  |                                        |            |                               |  
|Total
      Assets                                     |  | $                                      | 17,802,261 |                               | $
|                                                       |  |                                        |            |                               |  

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


3
|-----------------------------------------------------------------------------------------------------

|IPEC
Holdings Inc.Condensed
Consolidated Balance Sheets
|-------------------------------------------------------

|                                                      |  | March
      31, 2004
      (Unaudited) |            | December
      31,
      2003 |  
|----------------------------------------------------- |  | -------------------------------------- | ---------- | ----------------------------- | -
|                                                      |  |                                        |            |                               |  
|Liabilities
      and Shareholders Equity            |  |                                        |            |                               |  
|                                                      |  |                                        |            |                               |  
|Accounts
      Payable                                |  | $                                      | 1,731,916  |                               | $
|Accrued
      Liabilities                             |  |                                        | 489,615    |                               |  
|Accrued
      Interest                                |  |                                        | 7,654      |                               |  
|Related
      Party Payable                           |  |                                        | 578,312    |                               |  
|Current
      Portion of Long-term Debt               |  |                                        | 1,482,738  |                               |  
|Bank
      Line Of Credit                             |  |                                        | 4,380,000  |                               |  
|Current
      Portion of Capital Lease Obligation     |  |                                        | 68,002     |                               |  
|                                                      |  |                                        |            |                              
|Current
      Liabilities                             |  |                                        | 8,738,237  |                               |  
|                                                      |  |                                        |            |                              
|                                                      |  |                                        |            |                               |  
|Deferred
      Income Taxes                           |  |                                        | 678,599    |                               |  
|Capital
      Lease Obligation                        |  |                                        | 30,907     |                               |  
|Long-term
      Debt                                  |  |                                        | 3,812,563  |                               |  
|                                                      |  |                                        |            |                              
|Long-term
      Liabilities                           |  |                                        | 4,522,069  |                               |  
|                                                      |  |                                        |            |                              
|                                                      |  |                                        |            |                               |  
|Commitments
      and Contingencies                   |  |                                        |            |                               |  
|                                                      |  |                                        |            |                               |  
|Preferred
      Stock, no par value, 1,000,000 shares |  |                                        |            |                               |  
|authorized,
      no shares issued                    |  |                                        |            |                               |  
|Common
      Stock, par value $0.001 per              |  |                                        | 9,973      |                               |  
|share,
      100,000,000 shares authorized,           |  |                                        |            |                               |  
|9,972,912
      shares issued and                     |  |                                        |            |                               |  
|outstanding
      at March 31, 2004                   |  |                                        |            |                               |  
|and
      December 31, 2003                           |  |                                        |            |                               |  
|Additional
      Paid In Capital                      |  |                                        | 4,377,994  |                               |  
|Retained
      Earnings                               |  |                                        | 153,988    |                               |  
|                                                      |  |                                        |            |                              
|Shareholders
      Equity                            |  |                                        | 4,541,955  |                               |  
|                                                      |  |                                        |            |                              
|Total
      Liabilities and Shareholders Equity      |  | $                                      | 17,802,261 |                               | $
|                                                      |  |                                        |            |                              

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


4
|-----------------------------------------------------------------------------------------------------

|IPEC
Holdings Inc.Statements
of Condensed Consolidated Operations
|-----------------------------------------------------------------

|                                               | Three
      Months Ended
      March 31, 2004 
      (Unaudited) |            | Three
      Months Ended
      March 31, 2003 
      (Unaudited) |  
|---------------------------------------------- | ---------------------------------------------------------------- | ---------- | ---------------------------------------------------------------- | -
|                                               |                                                                  |            |                                                                  |  
|                                               |                                                                  |            |                                                                  |  
|Sales                                          | $                                                                | 4,406,690  |                                                                  | $
|                                               |                                                                  |            |                                                                  |  
|                                               |                                                                  |            |                                                                  |  
|Operating
      expenses                       |                                                                  |            |                                                                  |  
|Cost
      of sales                            |                                                                  | 3,327,099  |                                                                  |  
|Selling                                        |                                                                  | 232,661    |                                                                  |  
|General
      and administrative               |                                                                  | 470,256    |                                                                  |  
|                                               |                                                                  |            |                                                                  |  
|Operating
      expenses                       |                                                                  | 4,030,016  |                                                                  |  
|                                               |                                                                  |            |                                                                  |  
|Operating
      income (loss)                  |                                                                  | 376,674    |                                                                  |  
|                                               |                                                                  |            |                                                                  |  
|                                               |                                                                  |            |                                                                  |  
|Non-operating
      expense (income)           |                                                                  |            |                                                                  |  
|Interest
      expense                         |                                                                  | 125,653    |                                                                  |  
|Other
      income                             |                                                                  | (1,828     | )                                                                |  
|                                               |                                                                  |            |                                                                  |  
|Non-operating
      expenses                   |                                                                  | 123,825    |                                                                  |  
|                                               |                                                                  |            |                                                                  |  
|                                               |                                                                  |            |                                                                  |  
|Income
      before taxes                      |                                                                  | 252,849    |                                                                  |  
|Income
      taxes (benefit)                   |                                                                  | 101,000    |                                                                  |  
|                                               |                                                                  |            |                                                                  |  
|                                               |                                                                  |            |                                                                  |  
|Net income
      (loss)                        | $                                                                | 151,849    |                                                                  | $
|                                               |                                                                  |            |                                                                  |  
|                                               |                                                                  |            |                                                                  |  
|Average
      Shares of Common Stock - Basic   |                                                                  | 9,972,912  |                                                                  |  
|                                               |                                                                  |            |                                                                  |  
|                                               |                                                                  |            |                                                                  |  
|Average
      Shares of Common Stock - Diluted |                                                                  | 10,206,900 |                                                                  |  
|                                               |                                                                  |            |                                                                  |  
|                                               |                                                                  |            |                                                                  |  
|Basic Net
      Income (Loss) Per Share        | $                                                                | 0.02       |                                                                  | $
|                                               |                                                                  |            |                                                                  |  
|                                               |                                                                  |            |                                                                  |  
|Diluted
      Net Income (Loss) Per Share      | $                                                                | 0.01       |                                                                  | $
|                                               |                                                                  |            |                                                                  |  

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


5
|-----------------------------------------------------------------------------------------------------

|IPEC
Holdings Inc.Statements
of Condensed Consolidated Cash Flows
|-----------------------------------------------------------------

|                                                                     | Three
      Months Ended
      March 31, 2004 
      (Unaudited) |          | Three
      Months Ended
      March 31, 2003 
      (Unaudited) |  
|-------------------------------------------------------------------- | ---------------------------------------------------------------- | -------- | ---------------------------------------------------------------- | -
|                                                                     |                                                                  |          |                                                                  |  
|Cash
      Flows from Operating Activities:                          |                                                                  |          |                                                                  |  
|Net Income
      (Loss)                                              | $                                                                | 151,849  |                                                                  | $
|Adjustments
      to reconcile net income (loss) to net cash used by |                                                                  |          |                                                                  |  
|operating
      activities                                           |                                                                  |          |                                                                  |  
|Depreciation
      and amortization                                  |                                                                  | 447,069  |                                                                  |  
|Deferred
      taxes                                                 |                                                                  | 100,789  |                                                                  |  
|Working
      Capital Items:                                         |                                                                  |          |                                                                  |  
|Accounts
      receivable                                            |                                                                  | 183,479  |                                                                  |  
|Other
      receivables                                              |                                                                  | (82,786  | )                                                                |  
|Inventory                                                            |                                                                  | (982,017 | )                                                                |  
|Prepaid
      Expenses                                               |                                                                  | (73,846  | )                                                                |  
|Other
      Assets                                                   |                                                                  | (63,583  | )                                                                |  
|Accounts
      payable                                               |                                                                  | (57,067  | )                                                                |  
|Accrued
      liabilities                                            |                                                                  | 287,976  |                                                                  |  
|Taxes
      payable                                                  |                                                                  |         |                                                                  |  
|Accrued
      interest                                               |                                                                  | (607     | )                                                                |  
|                                                                     |                                                                  |          |                                                                  |  
|Net cash
      used by operating activities                          |                                                                  | (88,744  | )                                                                |  
|                                                                     |                                                                  |          |                                                                  |  
|                                                                     |                                                                  |          |                                                                  |  
|Cash Flows
      from Investing Activities:                          |                                                                  |          |                                                                  |  
|Purchases
      of property, plant and equipment                     |                                                                  | (667,962 | )                                                                |  
|Investment
      in and development of patents                       |                                                                  |         |                                                                  |  
|                                                                     |                                                                  |          |                                                                  |  
|Net cash
      used in investing activities                          |                                                                  | (667,962 | )                                                                |  
|                                                                     |                                                                  |          |                                                                  |  
|                                                                     |                                                                  |          |                                                                  |  
|Cash Flows
      from Financing Activities:                          |                                                                  |          |                                                                  |  
|Borrowing
      on bank line of credit                               |                                                                  |         |                                                                  |  
|Repayments
      of capital lease obligations                        |                                                                  | (20,950  | )                                                                |  
|Repayments
      on long-term debt                                   |                                                                  | (339,985 | )                                                                |  
|Amount
      borrowed from related parties                           |                                                                  | 578,312  |                                                                  |  
|                                                                     |                                                                  |          |                                                                  |  
|Net cash
      provided by financing activities                      |                                                                  | 217,377  |                                                                  |  
|                                                                     |                                                                  |          |                                                                  |  
|                                                                     |                                                                  |          |                                                                  |  
|Net decrease                                                         |                                                                  | (539,329 | )                                                                |  
|Cash -
      beginning of period                                     |                                                                  | 627,916  |                                                                  |  
|                                                                     |                                                                  |          |                                                                  |  
|Cash -
      end of period                                           | $                                                                | 88,587   |                                                                  | $
|                                                                     |                                                                  |          |                                                                  |  
|                                                                     |                                                                  |          |                                                                  |  
|Supplemental
      Cash Flow Information:                            |                                                                  |          |                                                                  |  
|Cash paid
      for interest, net of capitalized amount              |                                                                  |          |                                                                  |  
|of
      $4,000 and $10,500, respectively                            | $                                                                | 122,260  |                                                                  | $
|                                                                     |                                                                  |          |                                                                  |  
|Cash paid
      for income taxes                                     | $                                                                |         |                                                                  | $
|                                                                     |                                                                  |          |                                                                  |  
|Equipment
      acquired under capital leases                        | $                                                                | 27,750   |                                                                  | $
|                                                                     |                                                                  |          |                                                                  |  

|The accompany notes are
an integral part of these condensed consolidated financial statements.


6
|--------------------------------------------------------------------------------------------------

|IPEC HOLDINGS, INC.Notes
to Consolidated Financial StatementsMarch 31, 2004 and 2003


1. Description of
Business


IPEC Holdings Inc. (the
Company or IPEC) manufactures and sells tamper evident
plastic closures. These closures are predominantly used in the bottling of
non-carbonated beverages including bottled water, milk, fruit and sports drinks.
The Company also designs and manufactures capping equipment. IPECs
customer base primarily consists of dairy and bottled water manufacturers both
domestically and internationally. The Companys two principal manufacturing
facilities are located in the United States of America in Pennsylvania and
Alabama.


2. Basis of
Presentation


The accompanying unaudited
condensed consolidated balance sheets as of March 31, 2004 and December 31, 2003
and statements of operations and cash flows for the three month period ended
March 31, 2004 and 2003 have been prepared by IPEC Holdings Inc.
(Company) in accordance with the instructions for SEC Form 10-QSB
and, accordingly, do not include all disclosures required by accounting
principles generally accepted in the United States for complete financial
statements. The financial statements at March 31, 2004 and December 31, 2003
include the accounts of IPEC Holdings Inc. and its wholly-owned subsidiary. In
the opinion of management of the Company, all adjustments, consisting of normal
recurring accruals considered necessary for a fair presentation, have been
included. The results of operations for the three month period ended March 31,
2004 are subject to various factors including seasonality and are not
necessarily indicative of the operating results to be expected for the full
fiscal year ending on December 31, 2004.


Interim unaudited condensed
consolidated financial results should be read in conjunction with the audited
financial statements included in the Companys Annual Report on Form 10-KSB
for the fiscal year ended December 31, 2003.


3. Recent
Accounting Pronouncements


Effective April 1, 2003,
the FASB issued SFAS No. 149, Amendment of Statement 133 on Derivative
Instruments and Hedging Activities. This statement amends SFAS No. 133 for
certain decisions made by the Board as part of the Derivatives Implementation
Group (DIG) process and further clarifies the accounting and reporting standards
for derivative instruments including derivatives embedded in other contracts and
for hedging activities. The provisions of this statement are to be prospectively
applied effective for contracts entered into or modified after June 30, 2003 and
for hedging relationships designated after June 30, 2003. The adoption of this
statement did not have a material impact on our results of operations or
financial condition for the three month period ended March 31, 2004.


4. Summary of
Significant Accounting Policies


Employee Stock Option
Plans


Statement of Financial
Accounting Standards No. 148, Accounting for Stock-Based
CompensationTransition and Disclosure an Amendment of FASB Statement No.
123, amends the disclosure requirements of Statement of Financial
Accounting Standards No. 123, Accounting for Stock-Based
Compensation (SFAS 123), to require more prominent disclosures
in both annual and interim financial statements regarding the method of
accounting for stock-based employee compensation and the effect of the method
used on reported results.


The Company accounts for
stock-based awards to employees and directors using the intrinsic value method
of accounting in accordance with Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees (APB 25). Under
the intrinsic value method, because the exercise price of the Companys
employee stock options equals the market price of the underlying stock on the
date of grant, no compensation expense is recognized in the Companys
Consolidated Statements of Operations.


7
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|IPEC HOLDINGS, INC.Notes
to Consolidated Financial StatementsMarch 31, 2004 and 2003



The Company is required
under SFAS 123, to disclose pro forma information regarding option grants made
to its employees based on specified valuation techniques that produce estimated
compensation charges. The pro forma information is as follows:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                                                | Three
      Months Ended
      March 31, 2004 |         | Three
      Months Ended
      March 31, 2003 |  
| | -------------------------------------------------------------- | --------------------------------------------- | ------- | --------------------------------------------- | -
| |                                                                |                                               |         |                                               |  
| |                                                                |                                               |         |                                               |  
| | Net
      income (loss) - as reported                          | $                                             | 151,849 |                                               | $
| | Compensation
      expense options - net of tax                |                                               | (42,233 | )                                             |  
| | Compensation
      recorded in financial statement -net of tax |                                               |        |                                               |  
| |                                                                |                                               |         |                                               |  
| | Net income
      (loss) - pro forma                            | $                                             | 109,616 |                                               | $
| |                                                                |                                               |         |                                               |  
| | Basic net
      income (loss) per share - as reported          | $                                             | 0.02    |                                               | $
| |                                                                |                                               |         |                                               |  
| | Diluted
      net income (loss) per share - as reported        | $                                             | 0.01    |                                               | $
| |                                                                |                                               |         |                                               |  
| | Basic net
      income (loss) per share - pro forma            | $                                             | 0.01    |                                               | $
| |                                                                |                                               |         |                                               |  
| | Diluted
      net income (loss) per share - pro forma          | $                                             | 0.01    |                                               | $
| |                                                                |                                               |         |                                               |  

|The value of each option
grant is estimated on the date of grant using the Black-Scholes option pricing
model. The Black-Scholes option pricing model was developed for use in
estimating the value of traded options that have no vesting restrictions and are
fully transferable. In addition, option pricing models require the input of
highly subjective assumptions including the expected stock price volatility. The
Company uses projected data for expected volatility and expected life of its
stock options based upon historical and other economic data trended into future
years. Because the Companys employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the estimate, in
managements opinion, the existing valuation models do not provide a
reliable measure of the fair value of the Companys employee stock options.


Computation of Net
Income (Loss) per Share


Basic earnings per share is
computed using the weighted average number of shares outstanding during the
period, while diluted earnings per share is calculated to reflect the potential
dilution that occurs related to issuance of capital stock under stock option and
warrant grants. The difference between basic and diluted earnings per share
relates solely to the effect of capital stock options and warrants.


For purposes of determining
the number of diluted shares outstanding, weighted average shares outstanding
for basic earnings per share calculations were increased due solely to the
dilutive effect of unexercised stock options and warrants by 233,988 and 280,647
for the three months ended March 31, 2004 and 2003, respectively.


Revenue Recognition


The Company follows Staff
Accounting Bulletin 101, Revenue Recognition in Financial
Statements, in recognizing revenues within the Companys financial
statements. This bulletin requires, among other things, that revenue only be
recognized when title has transferred and risk of loss has passed to the
customer with the capability to pay, and that there are no significant remaining
obligations related to the sale on the part of the Company.


8
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|IPEC HOLDINGS, INC.Notes
to Consolidated Financial StatementsMarch 31, 2004 and 2003



Inventory Valuation


Inventories are stated at the lower
of cost or market. The Company uses the first-in first-out (FIFO) method for determining
the cost of its inventory. The Company will record an obsolescence reserve based upon its
assessment of customer demand and alternative disposals methods.


Shipping


Amounts billed to customers for
shipping related fees are recorded as revenues. Shipping costs incurred by the Company
are recorded as cost of sales in the accompanying statements of operations. For the three
months ended March 31, 2004 and 2003, the Company recorded shipping charges of $174,000
and $92,000, respectively.


Reclassifications


Certain reclassifications
have been made to prior period balances in order to conform to the current
period presentation.


5. Inventory


As of March 31, 2004 and
December 31, 2003, inventories consisted of the following:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                | March
      31
      2004 |           | December
      31,
      2003 |  
| | ------------------------------ | ------------------------- | --------- | ----------------------------- | -
| |                                |                           |           |                               |  
| | Raw
      Materials            | $                         | 820,023   |                               | $
| | Work in process                |                           | 72,985    |                               |  
| | Finished
      goods           |                           | 2,325,087 |                               |  
| | Reserve for
      obsolescence |                           | (92,506   | )                             |  
| |                                |                           |           |                               |  
| | Total Inventories              | $                         | 3,125,589 |                               | $
| |                                |                           |           |                               |  

|6. Common
Stock and Equity Awards


The following is a schedule
of option and warrant activity from December 31, 2003 to March 31, 2004:
|----------------------------------------------------------------------------------------------------------------------------------------

| |                         | Options |           | Warrants | 
| | ----------------------- | ------- | --------- | -------- | 
| |                         |         |           |          | 
| | December
      31, 2003 |         | 1,415,000 |          | 
| | Granted                 |         |          |          | 
| | Forfeitures             |         |          |          | 
| | Exercised               |         |          |          | 
| |                         |         |           |          | 
| | March 31,
      2004    |         | 1,415,000 |          | 
| |                         |         |           |          | 

|9
|-

|IPEC HOLDINGS, INC.Notes
to Consolidated Financial StatementsMarch 31, 2004 and 2003




7. Debt and
Capital Lease Obligations


In early April 2003, the
Companys line of credit was increased from $3.5 million to $5.5 million. A
portion of the increased line of credit was used to repay a shareholder loan of
$605,000. The Companys line of credit is payable upon demand by the bank
and bears interest at 4.00% as of March 31, 2004.


The following is a maturity
schedule as of March 31, 2004 for the Companys debt components excluding
its demand bank line of credit.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                          | Long-term
      Debt |           | Capital
      Lease
      Obligations |  
| | ------------------------ | -------------------- | --------- | ------------------------------------- | -
| |                          |                      |           |                                       |  
| | 2004
      (nine months) | $                    | 1,196,280 |                                       | $
| | 2005                     |                      | 1,145,831 |                                       |  
| | 2006                     |                      | 1,458,562 |                                       |  
| | 2007                     |                      | 185,372   |                                       |  
| | 2008                     |                      | 191,174   |                                       |  
| | Thereafter               |                      | 1,118,082 |                                       |  
| |                          |                      |           |                                       |  
| | Total                    |                      | 5,295,301 |                                       | $
| |                          |                      |           |                                       |  

|8. Intangible
Assets


The Companys
intangible assets consist of finite-lived patents and are amortized over the
shorter of their legal or estimated useful lives. Amortization expense for these
intangible assets was $6,000 for the three months ending March 31, 2004 and
2003, respectively. The anticipated annual amortization expense for these
intangible assets is $19,500 for 2004 (nine months) and $26,000 for each fiscal
year 2005, 2006, 2007, 2008 and 2009.


9. Commitments
and Contingencies


The Company is subject to
various legal proceedings and claims arising out of the normal course of
business. Based on the facts currently available, management believes that the
ultimate amount of liability beyond reserves provided, if any, for any pending
actions will not have a material adverse effect on the Companys financial
position. However, the ultimate outcome of any litigation is uncertain, and
either unfavorable or favorable outcomes could have a material impact on the
results of operations or liquidity of the Company in a particular period.


10. Related
Party Transactions


As of March 31, 2004, the
Company had approximately $578,000 owed to Giordano Construction Co., Inc.,
(Giordano Construction) which has entered into an $868,000 construction
agreement with the Company to provide overall management and construction
related services for a 30,000 square foot expansion of the Companys
Brewton, Alabama production facility. One of the Companys principal
shareholders is also the sole owner and founder of Giordano Construction. As of
March 31, 2004, the project was approximately 67% complete.


10
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|IPEC HOLDINGS, INC.Notes
to Consolidated Financial StatementsMarch 31, 2004 and 2003




11. Subsequent
Events


On November 13, 2003, the
Company obtained approval from its Board of Directors and signed commitment
letters to consummate two separate sale leaseback transactions. These
transactions are for the Companys two primary production facilities in
Brewton, Alabama (the Alabama Transaction) and New Castle,
Pennsylvania (the Pennsylvania Transaction). Upon closing, the
properties will be transferred to two separate single purpose entities
maintained by the Lessor. Both transactions have a projected closing date of May
2004 and are subject to the Lessors due diligence requirements and
Investment Committee approval. On March 18, 2004, both transactions received
Lender Committee approval.


The net purchase price for
the Alabama Transaction is expected to be $1,750,000 which includes proceeds of
$870,000 to fund the construction of a 30,000 square foot warehouse addition to
the building. This transaction is secured by a secured letter of credit totaling
$1,750,000 and is automatically renewable on an annual basis subject to Lender
approval. As security for such letter of credit, the Company is expected to fund
approximately $400,000 to a a restricted escrow account evenly over a 60 month
period to be released to the Company after the 60th  month contingent
upon a satisfactory financial review performed by the lending institution.
Primarily as a result of the secured letter of credit, the Company anticipates
treating this as a financing transaction under the provisions of Statement of
Financial Accounting Standards No. 98, Accounting for Leases and,
subject to the actual closing date, recording an incremental debt obligation
related to this transaction of $1,650,000. Annual rental payments will be based
on a combination of a fixed market component subject to agreed upon reset
provisions and a 29.30% weighted 3-month LIBOR plus 165 basis points (the
Rental Rate). The annual rent will then be determined by multiplying
the gross purchase price of the property by the Rental Rate for the 29.5 year
term of the lease.


The net purchase price for
the Pennsylvania Transaction is expected to be $3,450,000. This Company expects
to record, subject to the actual closing date, a reduction in its existing debt
obligations of $1,900,000 related to this transaction. The Pennsylvania
Transaction is expected to be treated as an operating lease and will generate a
deferred pre-tax gain of $1,200,000. The gain will be amortized prospectively in
proportion to the gross rental charged to expense over the lease term. Annual
rental payments will be based on a combination of a fixed market component
subject to agreed upon reset provisions and a 29.30% weighted 3-month LIBOR plus
165 basis points (the Rental Rate). The annual rent will then be
determined by multiplying the gross purchase price of the property by the Rental
Rate for the 29.5 year term of the lease.


11
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|ITEM 2. MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                  AND RESULTS OF OPERATION


We acquired all of the
issued and outstanding shares of International Plastic and Equipment Corp.
(IPEC) in exchange for 9,489,796 shares of our common stock
effective January 28, 2002. Following the acquisition the former shareholders of
IPEC held a majority of our total issued and outstanding common shares; IPEC was
thereby deemed to be the acquirer through a reverse merger. IPEC has continued
as the operating entity and its historical financial statements have replaced
those of the parent company.


The following discussion of
our results of operations for the three months ended March 31, 2004 should be
read in conjunction with our condensed consolidated financial statements
(unaudited) and related notes included therein.


Overview


We, through IPEC, are
engaged in the manufacture of tamper evident plastic closures and the design and
fabrication of capping equipment.


Results of Operations
for the Three Months Ended March 31, 2004 and 2003


Three Months Ended March
31.Operating income for the three months ended March 31, 2004 increased
$412,836 from the comparable 2003 period. The increase in operating income was
primarily a function of the Companys increased customer base and the
attainment of a relatively fixed general and administrative infrastructure
permitting the margin from its new customer base to increase overall
profitability. Accordingly, sales for 2004 increased by $1,226,117 (38.6%) while
2004 operating expenses increased by $813,281 (25.3%). Non-operating expenses
decreased by $26,064 (17.4%) primarily due to lower borrowing rates and a lower
overall outstanding balance. This resulted in 2004 income before taxes being
$438,900 higher than that of the previous year.


Cost of good sold of
$3,327,099 was lower as a percentage of sales (75.5%) as compared to 2003
(77.8%) due to lower overall resin pricing procured by the Company substantially
offset by reduced pricing among certain product lines as a result of intensified
market competition and customer consolidation.


Selling expenses for 2004
decreased $90,682 (28.0%) reflecting lower costs associated with start-up
tooling for customer conversions and a decrease in commissions relating to the
Companys severance of its relationship with certain brokers.


General and administrative
expenses for 2004 increased $52,928 (12.7%) reflecting the addition of one new
Company executive and routine salary increases. The Company believes that it has
in place a general and administrative infrastructure that will be able to
sustain future sales growth and does not anticipate any significant future
personnel expansion in this area of operations.


We accrued $101,000 of
income taxes in the first quarter of 2004 using an effective rate of
approximately 40%. As a result, net income for the three months ended March 31,
2004 is $151,849 or $0.02 basic net income per share, as compared to a loss of
$(124,301) or ($0.01) basic loss per share for the three months ended March 31,
2003.


12
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Liquidity and
Financial Condition


Cash and Cash
Equivalents. At March 31, 2004, the Company had cash and cash equivalents of
$88,587. In addition, we had a working capital deficiency of $3,230,705, as
compared to a deficiency of $2,925,764 at December 31, 2003, primarily due to a
$578,000 related party payable due to the Companys Brewton, Alabama plant
expansion. As disclosed in footnote 12 to the condensed consolidated financial
statements, the Company has signed commitment letters and obtained board
approval for two separate sale leaseback transactions. These transactions are
anticipated to generate $1.6 million in cash flows upon their consummation.
Management believes that existing cash and cash equivalents together with
anticipated cash flow from operations will be adequate to fund the
Companys operations, debt service requirements and capital expenditures
throughout fiscal 2004. The Company may require additional funds to support
operations and may seek to raise additional funds through debt financing or
other sources. There can be no assurance that additional funding will be
available at all, or that if available, such financing will be obtainable on
terms favorably to the Company.


Operating
Activities. Our operations used cash of $88,744 for the three months ended
March 31, 2004, as compared to the previous year when our operations used cash
of $538,523. The decrease in cash used by operations during 2003 was due
primarily to an increase in net income and the results of improved accounts
receivable management processes substantially offset by a higher inventory build
and an overall accounts payable decrease.


Investing
Activities. During the three months ended March 31, 2004, we used $667,962
primarily for our Brewton, Alabama plant expansion and certain machinery as
compared to $631,592 during the previous year primarily for molds.


Financing
Activities. In 2004, we paid down capital lease obligations ($20,950) and
notes payable ($339,985), while borrowing $578,312 on a construction loan with a
related party, for net cash of $217,377 provided by financing activities. During
2003, $1,098,533 was provided by financing activities comprised of $910,000
borrowed on our line of credit and a shareholder loan of $605,000. We also paid
down ($370,408) on our long-term debt and reduced capital lease obligations by
($46,059). A significant portion of funds borrowed on our line of credit were
used to fund the creation of molds for new product lines with all molds active
in production as of December 31, 2003.


Related Party
Transactions


The Company incurs certain
related party transactions throughout the course of its business. In March 2003,
one of the Companys principal shareholders issued a $605,000 shareholder
note payable, which was repaid during 2003. As of March 31, 2004, the Company
had approximately $578,000 owed to Giordano Construction Co., Inc., (Giordano
Construction) which has entered into an $868,000 construction agreement with the
Company to provide overall management and construction related services for a
30,000 square foot expansion of the Companys Brewton, Alabama production
facility. One of the Companys principal shareholders is also the sole
owner and founder of Giordano Construction. Except for those items listed above,
there have been no significant additional related party transactions from those
disclosed in Note 12 to the Consolidated Financial Statements of the
Companys most recent annual report on Form 10-KSB.


13
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Plan of
Operation


IPECs primary
strategy is to increase its plastic closure sales by aggressively increasing its
market share in the non-carbonated beverage sector of the caps and closures
industry. Management has identified 4 areas of focus to support this strategy:
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (i) |  | Continuing
its commitment to research and development leading to new product innovations;
| |  | --- |  | -----------------------------------------------------------------------------------------

| |  | (ii) |  | Emphasizing
customer support and total product solutions;
| |  | ---- |  | ---------------------------------------------------------

| |  | (iii) |  | Continuing
to enhance low cost manufacturing capabilities; and
| |  | ----- |  | --------------------------------------------------------------

| |  | (iv) |  | Expanding
sales initiatives.
| |  | ---- |  | ----------------------------

|Management of the Company
believes that it has in place a significant portion of the capital and
administrative infrastructure required to support growth up to three times its
2003 production levels. The Company intends to sustain in current capacity and
increase its overall closure sales to approximately 4.0 billion closures within
the next three years. With the goal of this operating capacity, Company
management projects the following capital expenditures through 2007.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Year |  | Description                                   | Amount  |  | Totals
| | ---- |  | --------------------------------------------- | ------- |  | ------
| |      |  |                                               |         |  |       
| |      |  |                                               |         |  |       
| | 2004 |  | Machinery
      and equipment                 | 400,000 |  |       
| |      |  | Molds                                         | 200,000 |  |       
| |      |  | Alabama
      warehouse expansion             |         |  |       
| |      |  | ($578,000
      accrued as of March 31, 2004) | 870,000 |  |       
| |      |  |                                               |        
| |      |  | Total
      2004                              |         |  |       
| |      |  |                                              
| |      |  |                                               |         |  |       
| | 2005 |  | Machinery
      and equipment                 | 400,000 |  |       
| |      |  | Molds                                         | 200,000 |  |       
| |      |  |                                               |        
| |      |  | Total
      2005                              |         |  |       
| |      |  |                                              
| |      |  |                                               |         |  |       
| | 2006 |  | Machinery
      and equipment                 | 400,000 |  |       
| |      |  | Molds                                         | 200,000 |  |       
| |      |  |                                               |        
| |      |  | Total
      2006                              |         |  |       
| |      |  |                                              
| |      |  |                                               |         |  |       
| |      |  | TOTAL                                         |         |  | $     
| |      |  |                                              

|To provide the cash
necessary to support this business plan through 2006, IPEC anticipates that it
will generate cash flow of $1.2, $1.5 and 1.7 million from operations during the
next three years. As disclosed in footnote 11 to the consolidated financial
statements, IPEC anticipates consummating in May 2004 a sale-leaseback
transaction for its two primary production facilities expected to generate
approximately $1.6 million in free cash flow. These proceeds accompanied with a
conversion of a portion of its bank line of credit to a term note will enable
IPEC to execute its business plan and retire $3.2 million in debt obligations
through 2006.


Forward-Looking
Statements


Under the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995
(the PSLRA), we caution readers regarding forward looking statements
found in this report and in any other statement made by, or on our behalf,
whether or not in future filings with the Securities and Exchange Commission.
Forward-looking statements are statements not based on historical information
and which relate to future operations, strategies, financial results or other
developments. Forward looking statements are necessarily based upon estimates
and assumptions that are inherently subject to significant business, economic
and competitive uncertainties and contingencies, many of which are beyond our
control and many of which, with respect to future business decisions, are
subject to change. These uncertainties and contingencies can affect actual
results and could cause actual results to differ materially from those expressed
in any forward looking statements made by or on our behalf. We disclaim any
obligation to update forward-looking statements.


14
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|ITEM 3.
CONTROLS AND PROCEDURES


We carried out an
evaluation required by the 1934 Act, under the supervision and with the
participation of our principal executive officer and principal financial
officer, of the effectiveness of the design and operation of our disclosure
controls and procedures as of the end of the period covered by this report.
Based on this evaluation, our principal executive officer and principal
financial officer concluded that our disclosure controls and procedures are
effective in timely alerting them to material information required to be
included in our periodic SEC reports. It should be noted that any system of
controls is based in part upon certain assumptions designed to obtain reasonable
(and not absolute) assurance as to its effectiveness, and there can be no
assurance that any design will succeed in achieving its stated goals.


During the most recent
fiscal quarter, there has not occurred any change in our internal control over
financial reporting that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.


15
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|PART II
  OTHER INFORMATION




Item 1. Legal
Proceedings
|---------------------------------------------------------

| | We
are not a party to any pending legal proceedings, other than routine litigation deemed
incidental to our business.
| | ---------------------------------------------------------------------------------------------------------------------

|Item 2.         Changes
in Securities, Use of Proceeds and Issuer Purchases of Equity Securities
|------------------------------------------------------------------------------------------------

| | None
| | ----

|Item 3.
Defaults Upon Senior Securities
|---------------------------------------

| | None.
| | -----

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

| | None.
| | -----

|Item 5. Other
Information
|-------------------------

| | None.
| | -----

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

| |  | (a) |  | Exhibits:
| |  | --- |  | ---------

| | Regulation
      S-B Number |  | Exhibit                                                                                                                                 
| | --------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------
| |                             |  |                                                                                                                                         
| | 2.1                         |  | Share
      Exchange Agreement between Golden Hole, Inc. and International Plastics
      and Equipment Corp. dated January 14, 2002 (1)
| |                             |  |                                                                                                                                         
| | 3.1                         |  | Restated
      Articles of Incorporation (2)                                                                                            
| |                             |  |                                                                                                                                         
| | 3.2                         |  | Bylaws
      (2)                                                                                                                        
| |                             |  |                                                                                                                                         
| | 4.1                         |  | Description
      of Series A Convertible Preferred Stock (3)                                                                           
| |                             |  |                                                                                                                                         
| | 10.1                        |  | December
      23, 1998 Loan Documents with First Western Bank (3)                                                                      
| |                             |  |                                                                                                                                         
| | 10.2                        |  | January
      13, 2000 Loan Documents with First Western Bank (3)                                                                       
| |                             |  |                                                                                                                                         
| | 10.3                        |  | January
      11, 2001 Loan Documents with Sky Bank (3)                                                                                 
| |                             |  |                                                                                                                                         
| | 10.4                        |  | February
      25, 2002 Loan Documents with Sky Bank (3)                                                                                
| |                             |  |                                                                                                                                         
| | 10.5                        |  | Series
      A Convertible Preferred Stock Purchase Agreement dated January 1, 2000 (3)                                                 
| |                             |  |                                                                                                                                         
| | 10.6                        |  | Consulting
      Agreement dated January 1, 2000 with Sherwood LLC (3)                                                                  
| |                             |  |                                                                                                                                         
| | 10.7                        |  | Payment
      and Severance Agreement and Guarantee dated January 2, 2001 (3)                                                           
| |                             |  |                                                                                                                                         
| | 10.8                        |  | Consulting
      Agreement dated January 1, 2001 with Sherwood LLC (3)                                                                  
| |                             |  |                                                                                                                                         
| | 10.9                        |  | 2002 Stock
      Option Plan (2)                                                                                                        
| |                             |  |                                                                                                                                         
| | 16.1                        |  | Letter
      from Baier & Williams dated July 24, 2003 (4)                                                                              

|16
|--

| | Regulation
      S-B Number |  | Exhibit                                                                                                                          
| | --------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------
| |                             |  |                                                                                                                                  
| | 21.1                        |  | Subsidiaries
      of the registrant (3)                                                                                         
| |                             |  |                                                                                                                                  
| | 31.1                        |  | Rule 13a-14(a)
      Certification of Chief Executive Officer                                                                    
| |                             |  |                                                                                                                                  
| | 31.2                        |  | Rule 13a-14(a)
      Certification of Chief Financial Officer                                                                    
| |                             |  |                                                                                                                                  
| | 32.1                        |  | Certification
      Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002
| |                             |  |                                                                                                                                  
| | 32.2                        |  | Certification
      Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002

| | 
| | 

| |  | (1) |  | Incorporated
by reference to the exhibits to the registrants current report on Form 8-K dated
January 28, 2002, file number 0-30721.
| |  | --- |  | -------------------------------------------------------------------------------------------------------------------------------------

| |  | (2) |  | Incorporated
by reference to the exhibits to the registrants current report on Form 8-K dated
April 15, 2002, file number 0-30721.
| |  | --- |  | -----------------------------------------------------------------------------------------------------------------------------------

| |  | (3) |  | Incorporated
by reference to the exhibits to the registrants annual report on Form 10-KSB for
the fiscal year ended December 31, 2001, file number 0-30721.
| |  | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (4) |  | Incororated
by reference to the exhibits to the registrants quarterly report on Form 10-QSB for
the quarter ended June 30, 2003, file number 0-30721.
| |  | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (b) |  | Reports
on Form 8-K:
| |  | --- |  | --------------------

| | None
| | ----

|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.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Date: May 7, 2004 |  | IPEC HOLDINGS
      INC.
      By:    /s/ Shawn C. Fabry
             
                Shawn C. Fabry
                Chief Financial
      Officer
|----------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

|17
|--