UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-KSB

--------------------------------------------------------------------------------


[ X ]   Annual Report under Section 13 or 15(d) of the Securities Exchange Act
        of 1934

For fiscal year ended October 31, 2004,  the fiscal year ended October 31, 2003,
and the fiscal year October 31, 2002.

[   ]   Transition Report Pursuant to Section 13 or 15(d) of the Securities
        Exchange Act of 1934


                         Commission file number: 0-21169


                     Imperial Petroleum Recovery Corporation
           (Name of small business issuer as specified in its charter)


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


                           1970 South Starpoint Drive
                              Houston, Texas 77032
               (Address of principal executive offices) (Zip Code)
         (281) 821-1110 (Issuer's telephone number, including area code)

         Securities Registered under Section 12 (b) of the Exchange Act:

                                      None

         Securities Registered under Section 12 (g) of the Exchange Act:

                    Common Stock, par value $0.001 per share
                                (Title of Class)

Check if 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
as the issuer was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes No |X|

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this report and no such disclosure will be
contained, to the best of the issuer's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. |_|

The issuer's revenues for the fiscal year ended October 31, 2003, were
approximately $607,933 and the fiscal year ended October 31, 2004, were
approximately $30,200.

Based on the last sale price of $0.29 on October 25, 2005, the aggregate market
value of shares of Common Stock held by non-affiliates was approximately
$4,023,678.

As of November 22, 2005, 40,085,029 shares of the Company's common stock were
outstanding.

Transitional small business disclosure format: |_| Yes |X| No

<PAGE>

                                EXPLANATORY NOTE


     This Annual  Report on Form 10-KSB is being filed with the  Securities  and
Exchange  Commission to cover our reporting  requirements  under the  Securities
Exchange  Act of 1934 (the  "1934  Act") for our  combined  fiscal  years  ended
October 31, 2003 and October 31, 2004.  We ceased  filing our  required  reports
under the 1934 Act  following the fiscal year ended October 31, 2002 because our
auditors at the time  refused to complete  our 2002 audit  because  they had not
been paid their fees incurred in the preparation of the audit. Unfortunately, at
that  time  we  were  unable  to  financially  proceed  with  another  audit,  a
prerequisite  to the filing of our annual  reports and hence,  we felt we had no
choice but to cease our  reporting  status.  We are now working with our current
auditors and legal counsel to file those documents with the SEC as are necessary
to  bring  our  company  back  into   reporting   compliance,   including   this
comprehensive report on Form 10-KSB that includes our un-audited  financials for
fiscal year ended October 31, 2002 and audited financials for fiscal years ended
October 31, 2003 and October 31, 2004.


                                      INDEX


PART I                                                                      PAGE

Item 1          Description of Business                                        1

Item 2          Description of Property                                        6

Item 3          Legal Proceedings                                              6

Item 4          Submission of Matters to a Vote of Security Holders            6


PART II

Item 5          Market for Common Equity and Related
                Stockholder Matters                                            7


Item 6          Management's Discussion and Analysis of Financial
                Condition and Results of Operations                           11


Item 7          Financial Statements                                          19

Item 8          Changes in and Disagreements with Accountants on              41
                Accounting and Financial Disclosure

Item 8A         Controls and Procedures                                       41

Item 8B         Other Information                                             42


PART III

Item 9          Directors, Executive Officers, Promoters and Control
                Persons; Compliance with Section 16(a) of the Exchange
                Act                                                           44

Item 10         Executive Compensation                                        45


Item 11         Security Ownership of Certain Beneficial Owners and
                Management                                                    48

Item 12         Certain Relationships and Related Transactions                49

Item 13         Exhibits and Reports on Form 8-K                              51

Item 14         Principal Accountant Fees and Services                        53

                Signatures                                                    54

<PAGE>

     This annual report contains  forward-looking  statements within the meaning
of the federal  securities laws,  including  statements  concerning  anticipated
revenues,  future marketing plans for the Company's  microwave  technology,  and
similar  statements  concerning  anticipated future events and expectations that
are not  historical  facts.  The  statements  are subject to numerous  risks and
uncertainties, including the effects of economic conditions; the availability of
capital;  the  dependence  on key  customers;  competitive  conditions;  and the
various risks associated with developing and marketing a new  process/technology
which could cause actual results to differ materially from those expressed in or
implied by the statements herein.  Due to such uncertainties and risks,  readers
are cautioned not to place undue  reliance on such  forward-looking  statements,
which speak only as of the date hereof.

     In some cases, you can identify  forward-looking  statements by terminology
such as "may," "will," "should," "expects," "plans," "anticipates,"  "believes,"
"estimates,"  "predicts,"  "potential,"  or the negative of these terms or other
comparable terminology. These statements are only predictions.  Actual events or
results may differ materially.

                                     PART I

ITEM 1  DESCRIPTION OF BUSINESS

General


     Imperial Petroleum Recovery Corporation (the "Company" or "IPRC"), with its
wholly owned subsidiary Petrowave Corporation, is a Houston based public company
that has patented  microwave  technology  for use in petroleum  and  alternative
energy applications, called Microwave Separation Technology ("MST"). IPRC's goal
is to become a leader in developing and marketing  innovative  commercial  radio
frequency ("RF") energy  applications  that can be used within the petroleum and
other industries to treat emulsions  containing oil, water, and solids or in the
production  process to enhance process efficiency and improve our customers' end
product.

     IPRC  was  founded  in 1990 as a Nevada  corporation,  and  since  1995 its
primary  business has been the  development,  marketing and distribution of MST.
The Company's offices are located at 1970 South Starpoint Drive, Houston, Texas,
and our phone  number is (281)  821-1110.  Our  common  stock  currently  trades
Over-The-Counter (OTC) as a Pink Sheet stock under the symbol "IREC".

Products and Potential Products

     The  Company  currently  offers  MST  to  the  oil  field  industry  and is
developing  the  use of MST in the  marine  industry  and in the  production  of
biodiesel.  MST technology uses commercial  radio  frequencies to separate water
and oil emulsions. Emulsions are homogenous mixtures of oil and water components
(or other normally immiscible components).

     Oil and Gas Industry

     We  have  created  four  (4)  MST  systems  to be  used  in the oil and gas
industry,  MST-1000,  MST-2000,  MST-4000 and MST-150, our self-contained mobile
system.  Produced oil contains water that is costly to transport and damaging to
infrastructure.  MST separates the water and oil emulsions, allowing the removal
of the water and  production of the oil. The MST system applies RF energy to the
oil emulsion.  The RF energy breaks the emulsion by  preferentially  heating the
water inside the oil matrix. This facilitates separation by creating differences
in surface  tension and  viscosity.  After  energy is applied,  the  material is
pumped into a separation tank. If immediate separation is required, a centrifuge
can be utilized.

                                        1

<PAGE>


     The  separated  oil is then  pumped  into  holding  tanks for  shipment  to
customers.  The separated  water and sediments can be handled in accordance with
the customer's environmental regulations.

     Each MST system is computer-controlled and contains all the elements needed
to reclaim oil from oil emulsion and "rag layer"  water  located in  refineries,
tank storage and waste pits. In its initial refinery application, the MST system
has been used to improve the efficiency of desalter operations.  MST systems are
modular and can be conjoined to handle larger capacity  requirements as required
by the customer.  The MST 150 is a self-contained  mobile unit that can be moved
to a client's site to demonstrate the effectiveness of the large scale, MST 1000
series in resolving various emulsion or process applications.

     Each MST system includes the following components:

     o    A patented microwave applicator;
     o    A microwave transmitter;
     o    Waveguides and auto tuner;
     o    Instrumentation and computer automation;
     o    Pumps and drives;
     o    If required, a separation unit; and
     o    Safety monitors and failsafe interlocking system.

     The Company  offers its products for sale or lease  directly to  end-users.
The  products  may be offered to existing  oil  emulsion  and sludge  processors
through geographically specific marketing partnerships.

     Marine Industry

     We  currently  have a patent  pending for the use of MST in marine on board
systems.  The Marine Industry MST is under development to improve the efficiency
of bilge water handling aboard large ships. Testing has been conducted employing
the existing  laboratory  MST to treat bilge samples  taken from several  cruise
ships ported in Galveston,  Texas.  Initial tests have been extremely successful
in  demonstrating  the  application  of the MST to  enhance  the  separation  of
existing on-board bilge water processing  systems.  While the Company intends to
develop and/or refine marketing plans to penetrate the marine industry,  MST use
in the marine  industry is in its early  stages of  development  and there is no
guarantee that it will be successful.

     Production of Bio-Diesel


     We currently  have a patent pending for the use of MST in the production of
biodiesel.  Effective  August  1,  2005,  we  licensed  the  use  of  MST in the
production  of  biodiesel  to  Agribiofuels,  LLC,  a company in which we own an
interest.  Agribiofuels  plans to build  and  operate  a  high-efficiency,  cost
effective 36 million gallon/year biodiesel production facility.  IPRC has agreed
to provide  certain  general  business,  financial  consultation  and advice and
management  services to  Agribiofuels  in  connection  with the operation of its
business  and  to  provide  technology  and  training  in  operating   Microwave
Separation  Technology  (MST)  in the  manufacture  of  biodiesel  products.  In
connection with these services,  commencing August 1, 2005,  Agribiofuels  shall
pay IPRC a management  fee equal to $75,000 per month through Dec. 31, 2005, and
$120,000 thereafter during the development and construction period. In addition,
once  the  biodiesel  facility  is  operational,  Agribiofuels  will  pay IPRC a
technology and licensing fee based upon throughput.



                                       2
<PAGE>

     Pure  biodiesel  contains no petroleum,  is derived from many kinds of seed
and vegetable oils produced in the U.S., and can be directly blended with fossil
fuel diesel. When blended with petroleum diesel, the fuel can be readily used in
diesel  powered  vehicles with no  mechanical  alterations  to the engines.  The
exhaust  from a vehicle  that is  switched to a  biodiesel  mixture  immediately
produces cleaner,  healthier emissions, and biodiesel is the only alternative to
fuel  certified  by  the  Environmental  Protection  Agency  that  fulfills  the
requirements of Section 211 (B) of the Clean Air Act.

     The  2005  Energy  Policy  Act  has  created  a  domestic  renewable  fuels
utilization  requirement  of  8  billion  gallons  per  year  by  2012  with  an
intermediate  goal of 4 billion gallons per year by 2008. The 2005 Energy Policy
Act  identifies  specific  groups of consumers  who must comply with the Federal
guidelines  or face  economic  penalties  in the  form of  lost or  reduced  tax
credits, diverted budget appropriations, and possible fines, including:

     o    All state, federal and local government agencies,
     o    Large trucking companies,
     o    School districts with bus fleets,
     o    Mass transit companies and contractors doing business with the Federal
          Government.

     In addition to the potential  penalties for  non-compliance,  there will be
incentives to producers, blenders and consumers who use alternative fuels.

     The U.S.  consumes over 170 billion gallons of petroleum fuel annually.  Of
this amount, petroleum diesel accounts for about 40%, or 65 billion gallons. The
Energy Act of 2005 mandates that each of these potential  diesel  customers must
use a B20 blend (BXX - where the XX represents the % of biodiesel in the blended
product  formulation;  the difference being the amount of petroleum diesel found
in the blend). The most common biodiesel blend used today is referred to as B20,
indicating a formulation of 20 percent biodiesel and 80 percent diesel.  The B20
blend is the minimum blend  percentage  required to comply with all  legislative
mandates currently in effect.

     In response to the Federal Directives  outlined in the US Energy Policy Act
of 2005 and related  legislation in the United States and the European Union, in
fiscal year end 2005,  the Company  entered into  laboratory and field trials to
determine the value of employing its  technology to enhance the  throughput  and
settling times for existing bio-diesel production processes.


     The Company believes its MST can be added to existing bio-diesel production
processes which can enable plants to increase its throughput rates by being able
to turn a batch or  semi-batch  process  into a  continuous  process.  While the
Company  intends to develop  and/or  refine  marketing  plans to  penetrate  the
biodiesel  field,  MST use in the production of biodiesel is in its early stages
of development and there is no guarantee that it will be successful.


Research and Development


     In fiscal  years 2000,  2001,  2002,  2003 and 2004,  the Company  incurred
minimal  research  and  development  costs.  IPRC  restarted  its  research  and
development  efforts as of  January  2005 to  identify  other  applications  for
microwave  treatment of  emulsions.  It is currently  broadening  its  petroleum
industry  focus  to  include  recovered  oil  processors,   bio-diesel   process
enhancements   and  maritime   applications   involving  both  the  private  and
governmental sectors.

                                        3

<PAGE>

Marketing and Customers

     The Company has currently only leased one MST. However, there are more than
700 oil  refineries  worldwide  with 149 of these located in the United  States.
Each is a potential customer of the Company. The Company's marketing strategy is
to:

     o    Strategically partner with a world-class  engineering,  manufacturing,
          marketing and distribution organization (e.g. Shaw Stone & Webster).
     o    Focus on commercialization of microwave technology
     o    Concentrate initially on the 45 refineries in Texas and Louisiana
     o    Execute existing pipeline of contacts and leads
     o    Participate  in  the  Federal  Government's  leadership  in  promoting
          through  legislation,  grant money and tax credits the  development of
          alternative fuels, specifically bio-diesel.

     Between May 2002 and December  2004,  IPRC licensed its MST  technology for
distribution thorough Indonesia and Singapore to Tradewinds Oil and Gas Inc.

     In August 2005, the Company granted Stone & Webster Management Consultants,
Inc., a  wholly-owned  subsidiary of The Shaw Group,  the right to fabricate and
integrate all MST systems to be delivered to customers in and outside the United
States in exchange for marketing and sales  contributions in the fields of crude
oil  production,   refining  and  transport,  biodiesel  and  alternative  fuels
production, bilge water treatment and environmental clean up projects.

     In August 2005, the Company granted Agribiofuels,  LLC a license to use the
MST  technology in the  production  of  biodiesel.  The Company has an ownership
interest  in  Agribiofuels,  which is in the  business  of  providing  biodiesel
products to the energy industry.  Agribiofuels,  with the help of IRPC, plans to
build and operate a high efficiency, low cost biodiesel production facility.


     While the  Company  intends to develop  and/or  refine  marketing  plans to
penetrate  these  areas,  it can  provide  no  assurances  that the MST or other
products will be accepted in the production processes defined for these sectors.

Competition

     The Company's  competitors are firms that employ heat,  pressure,  chemical
and centrifuge  processes to dispose of solid and oily  non-hazardous  oil field
wastes.   We  believe  that  our  products  will  compete  with  these  products
principally  on the basis of improved  and extended  efficacy  and  reduction in
environmental  risks. The efficacy of applying microwaves to sludge problems has
been well  documented  in a series of reports  prepared for the  Electric  Power
Research  Institute/Center  for  Materials  Production  between 1992 and 1994 by
Carnegie  Mellon  Research  Institute,   (Reports  CR-103872,   CR-105736,   and
CR-109994, all focusing on Application of Microwave to Oil Water Sludge).

     We believe that our most  significant  competitors are fully integrated oil
and  gas  processing  companies.  Smaller  companies  may  also  be  significant
competitors,  particularly through  collaborative  arrangements with oil and gas
industry companies. The Company's competitors are national,  regional and local,
including  recognizable  companies such as BJ Services,  Baker Hughes and Nalco.
The  Company  anticipates  that it will  face  additional  competition  from new
entrants  that  provide  significant  performance,   price,  creative  or  other
advantages  over those offered by the Company.  Many of these  competitors  have
greater name recognition and resources than the Company.



                                        4

<PAGE>

     Competition  related to the development of alternative fuels,  specifically
hydrogen and biodiesel, is difficult to determine due to the nature of the areas
of hydrogen and  biodiesel  fuel  generation.  According to Biodiesel  Magazine,
currently there are 42 biodiesel  production  facilities with stated capacity of
317 million  gallons  per year in the U.S. of which 8 are in Texas.  The Company
believes the  requirements  of the 2005 Energy  Policy Act will cause a spike in
demand that will far outpace supply for the next ten years and beyond.  Already,
biodiesel is the fastest growing  renewable fuel in the U.S. Its growth rate has
exceeded  100%  during  the last five  years and the  Company  believes  it will
accelerate  while  the full  implications  of the  2005  Energy  Policy  Act are
implemented.

     The  Company   believes   that  some  of  its  current   competitors   have
significantly  greater  resources,   experience  and  research  and  development
capabilities.


Protection of Intellectual Property

     The technology used in the MST process is proprietary. The Company has been
issued  three  United  States  patents  to  protect  its  design,  has 2  patent
applications  pending  for  the  use of MST in the  marine  industry  and in the
production of biodiesel and may seek additional patents in the future. There can
be no assurance that any future patent applications will result in patents being
issued.  Likewise,  there can be no assurance  that the  Company's  patents will
afford  protection  against  competitors with similar  technology.  In addition,
there can be no guarantee that the patents will not be infringed upon,  designed
around  by  others,  or  challenged  and held to be  invalid  or  unenforceable.
Proprietary  rights relating to the Company's  products and processes  generally
will be protected from unauthorized use by third parties only to the extent that
they  are  covered  by  valid  and  enforceable  patents  or are  maintained  in
confidence as trade secrets.  In the absence of patent  protection,  competitors
who  independently  develop  substantially  equivalent  technology may adversely
affect the Company's business.

     Third-party  patents relating to technology utilized by the Company may now
exist or may be issued in the future.  The Company may need to acquire  licenses
or to  contest  the  validity  of any such  patents.  Significant  funds  may be
required to defend against third party claims of patent  infringement.  Any such
claim  could  adversely   affect  the  Company  until  the  claim  is  resolved.
Furthermore,  any  such  dispute  could  result  in a  rejection  of any  patent
applications or the  invalidation of any patents the Company owns.  There can be
no assurance that any license  required under any such patent would be available
to the Company or, if  available,  available on acceptable  terms.  In addition,
there is no guarantee that the Company would prevail in any litigation involving
such patent.  Any of the foregoing  could have a material  adverse effect on the
Company and its results of operations.

     The Company seeks to protect the technology used in the MST process in part
by  confidentiality  agreements  with  its  advisors,  employees,   consultants,
suppliers  and vendors.  The Company also  protects its  technology  by building
interlocking  security  measures into its  products.  There can be no assurance,
however,  that these  agreements  and security  measures will not be breached or
that  competitors  will not discover the Company's  trade secrets.  In addition,
there can be no assurance that persons or institutions providing research to the
Company  will not assert  rights to  intellectual  property  arising out of such
research.

                                        5

<PAGE>

Suppliers

     The Company  primarily uses standard parts and components from a variety of
suppliers to produce the  hardware  for its  products.  Certain  components  are
currently  available only from a few limited  sources.  To date, the Company has
not had difficulty  obtaining  parts and components in sufficient  quantity in a
timely manner. Several Houston-based  fabrication companies have been identified
to  manufacture  MST  systems as  required.  These  firms  meet the  fabrication
standards required by petroleum companies worldwide. The Company does not expect
to have  difficulty  fabricating,  testing and  delivering  machines if and when
sales of MST systems accelerate.

Government Regulation

     The  Company's  products  are  subject  to  government  regulation  various
federal,  local,  state  and  international  laws and  regulations  relating  to
occupational  health and safety and the environment  including  regulations from
the  U.S.  Environmental   Protection  Agency.  Failure  to  comply  with  these
occupational  health  and  safety  and  environmental  laws and  regulations  or
associated  permits may result in the  assessment of fines and penalties and the
imposition of investigatory and remedial obligations.  The Company believes that
its products meet or exceed all applicable safety and environmental regulations.
All units will be  manufactured  to meet United  States,  Canadian  and European
standards for construction and safety.

Employees

     As of November 1, 2005, the Company had five full-time  employees and three
part-time consultants.

ITEM 2          DESCRIPTION OF PROPERTY

     The Company  leases a 10,000 square foot facility that houses the Company's
corporate offices, test facility and manufacturing  divisions in Houston,  Texas
under a lease that  originally  expired in March of 2005.  The lease payment for
this space was approximately $6,300 per month. The Company renewed the lease for
one year.  The  renewed  lease  expires in March 2006 and has a reduced  monthly
lease fee of $5,950.


ITEM 3          LEGAL PROCEEDINGS

     The  Company  is not a  party  to any  pending  legal  proceeding  and,  to
management's  knowledge;  no  federal,  state or local  governmental  agency  is
presently contemplating any proceeding against the Company.

ITEM 4          SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matters  were  submitted  to a vote of the  Company's  security  holders
during the fiscal years ended October 31, 2002,  October 31, 2003 or October 31,
2004.

                                        6

<PAGE>

                                     PART II

ITEM 5          MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     The Company's  common stock is traded on the OTC Bulletin  Board Pink Sheet
market under the symbol "IREC." The following table sets forth the range of high
and low bid quotations  for the Company's  Common Stock for each of the quarters
within the last three fiscal years:

     Fiscal Year 2004                           Low             High
     ----------------                           ---             ----

     First Quarter (11/1/03-1/31/04)          $ 0.06           $ 0.12
     Second Quarter (2/1/04-4/30/04)          $ 0.04           $ 0.13
     Third Quarter (5/1/04-7/31/04)           $ 0.10           $ 0.15
     Fourth Quarter (8/1/04-10/31/04)         $ 0.09           $ 0.12

     Fiscal Year 2003                           Low             High
     ----------------                           ---             ----

     First Quarter (11/1/02-1/31/03)          $ 0.13           $ 0.35
     Second Quarter (2/1/03-4/30/03)          $ 0.18           $ 0.20
     Third Quarter (5/1/03-7/31/03)           $ 0.05           $ 0.20
     Fourth Quarter (8/1/03-10/31/03)         $ 0.05           $ 0.11

     Fiscal Year 2002                           Low             High
     ----------------                           ---             ----

     First Quarter (11/1/01-1/31/02)          $ 0.18           $ 0.30
     Second Quarter (2/1/02-4/30/02)          $ 0.15           $ 0.76
     Third Quarter (5/1/02-7/31/02)           $ 0.22           $ 0.69
     Fourth Quarter (8/1/02-10/31/02)         $ 0.18           $ 0.40

     Fiscal Year 2001                           Low             High
     ----------------                           ---             ----

     First Quarter (11/1/00-1/31/01)          $ 0.75           $ 2.00
     Second Quarter (2/1/01-4/30/01)          $ 0.80           $ 1.48
     Third Quarter (5/1/01-7/31/01)           $ 0.40           $ 0.89
     Fourth Quarter (8/1/01-10/31/01)         $ 0.15           $ 0.48

     The  quotations in the table above  reflect  inter-dealer  prices,  without
retail  mark-up,  mark-down  or  commissions,   and  may  not  represent  actual
transactions.  The market for  Company  common  stock is limited,  sporadic  and
highly volatile.

Holders

     As  of  November,   15,  2005,  there  were  approximately  700  registered
shareholders of the Company's common stock.

Dividends

     The Company has not paid cash dividends to date, and does not expect to pay
any cash dividends in the foreseeable  future. The Company intends to retain any
earnings to finance its future growth.

                                        7

<PAGE>

Equity Compensation Plan Information

     In 1999,  the Company  granted  210,000 stock options to employees  with an
exercise price of $0.43 per share. The options vested immediately and expired in
2004. During fiscal 2002, 6,977 of these shares were exercised and the remaining
options expired in January 2004.

     In 2002, the board authorized the Company's 2002 Stock Option and Incentive
Plan ("2002  Option  Plan") under which up to 6,250,000  shares of the Company's
common  stock  may  be  issued.  Under  the  2002  Option  Plan,  incentive  and
nonqualified  stock  options  could  be  granted  to  employees,  directors  and
consultants  of the  Company.  Awards  under  the  2002  Plan  were  granted  as
determined by the Company's Board of Directors.  The options granted pursuant to
the 2002  Option  Plan may be either  incentive  stock  options  qualifying  for
beneficial tax treatment for the recipient or  nonqualified  stock options.  The
terms of the  options  granted  under the 2002  Option Plan will be fixed by the
Company,  provided  the  maximum  option  term may not exceed ten years from the
grant date.  Stock options may be granted at an exercise price determined by the
Company's  Board of  Directors.  Vesting  rights will be fixed by the  Company's
Board of Directors.

     Pursuant to the 2002  Option  Plan,  the  Company  was  required to receive
stockholder approval of the plan by November 1, 2003. If the stockholders failed
to approve the 2002 Option Plan by November 1, 2003, any awards issued under the
plan would be null and void. Due to the Company's  financial condition in fiscal
2003, a  stockholder's  meeting was never held and the plan was never  approved,
and  therefore,  all options  granted under the 2002 Option Plan became null and
void on November 1, 2003.  Pursuant to the 2002 Option  Plan,  the board  issued
options to purchase  3,335,000 shares of the Company's common stock at $0.20 per
share, of which  1,650,000  vested  immediately.  In June of 2003, the Company's
employees were terminated and the unvested  options to issue 1,685,000 shares of
the Company's  common stock were  cancelled.  As of November 1, 2003, all of the
awards  under the 2002  Option  Plan  became  null and void  because the Company
failed to receive stockholder approval.

     In April 2004, the board of directors authorized a Restricted Stock Program
to provide up to 7,754,120 shares of the Company's common stock to the Company's
employees and officers. Awards under the Restricted Stock Program are granted as
determined  by the  Company's  board of  directors.  In April 2004,  the Company
agreed  to issue  2,000,000  shares of the  Company's  common  stock to  certain
employees  and  officers  upon the closing of a  $1,500,000  fundraising.  As of
October 31, 2004, the closing of the fundraising was not complete and therefore,
none of the 2,000,000 shares were vested.

     The  following  tables  set for the  Company's  common  stock  issuable  to
employees  pursuant  to the above plans for the fiscal  years ended  October 31,
2002, October 31, 2003 and October 31, 2004.


                                        8

<PAGE>

As of October 31, 2002:
<TABLE>
<CAPTION>
<S>                                    <C>                       <C>                            <C>
                                                                                      Number of Securities
                                                                                    Remaining Available for
                             Number of Securities                                    Future Issuance Under
                               To be Issued Upon            Weighted Average          Equity Compensation
                            Exercise of Outstanding        Exercise Price of            Plans (Excluding
                             Options, Warrants and        Outstanding Options,             Securities
                                    Rights                Warrants and Rights        Reflected in Column A)
  Plan Category                      (A)                         (B)                         (C)
  -------------                      ---                         ---                         ---

Equity Compensation
Plans Approved by

Security Holders                        -                           -                           -


Equity Compensation
Plans Not Approved by
Security Holders                  203,023                       $0.43                           -
                          ------------------------------------------------------------------------------------
Total                             203,023                       $0.43                           -
                          ====================================================================================



As of October 31, 2003:

                                                                                      Number of Securities
                                                                                    Remaining Available for
                             Number of Securities                                    Future Issuance Under
                               To be Issued Upon            Weighted Average          Equity Compensation
                            Exercise of Outstanding        Exercise Price of            Plans (Excluding
                             Options, Warrants and        Outstanding Options,             Securities
                                    Rights                Warrants and Rights        Reflected in Column A)

 Plan Category                        (A)                         (B)                         (C)
 -------------                        ---                         ---                         ---

Equity Compensation
Plans Approved by
Security Holders                        -                           -                           -


Equity Compensation
Plans Not Approved by
Security Holders                3,553,023                       $0.22                   4,600,000
                          ------------------------------------------------------------------------------------
Total                           3,553,023                       $0.22                   4,600,000
                          ====================================================================================

As of October 31, 2004:

                                                                                      Number of Securities
                                                                                    Remaining Available for
                             Number of Securities                                    Future Issuance Under
                               To be Issued Upon            Weighted Average          Equity Compensation
                            Exercise of Outstanding        Exercise Price of            Plans (Excluding
                             Options, Warrants and        Outstanding Options,             Securities
                                    Rights                Warrants and Rights        Reflected in Column A)

Plan Category                         (A)                         (B)                         (C)
-------------                         ---                         ---                         ---

Equity Compensation
Plans Approved by
Security Holders                        -                           -                           -


Equity Compensation
Plans Not Approved by
Security Holders                2,000,000                       $0.00                   5,754,120
                          ------------------------------------------------------------------------------------
    Total                       2,000,000                       $0.00                   5,754,120
                          ====================================================================================
</TABLE>


                                        9

<PAGE>

Recent Sales of Unregistered Securities

     In  October  1999,  the  Company  issued a warrant  to a trust to  purchase
1,116,071 shares of its common stock. The initial exercise price of this warrant
was $3 per share and expires in October  2003.  These  warrants all specify that
the rights of the warrant  holders are entitled to "full ratchet"  anti-dilution
adjustments in the event the Company issues shares of common stock or securities
convertible into or exchangeable for common stock at a price per share less than
the warrant exercise price. The Company found that this anti-dilution adjustment
was  triggered and the Company  adjusted the warrant from  1,116,071 at $3.00 to
16,741,065  at $.20.  During 2003 the trust  settled and cancelled the agreement
with the Company by accepting 1,700,000 shares of the Company's common stock.

     In May 2001,  the company  issued a warrant to purchase  108,850  shares of
common  stock to two vendors  for value  received as  consulting  services.  The
warrants had an exercise price of $3.00 per share and expired in May 2004.

     During  fiscal  years  2002 and 2003,  the  Company  issued to an  investor
secured  convertible  promissory  notes  with an  aggregate  principal  value of
$1,725,417.  The  notes  bear  interest  at a rate of 12  percent  per annum and
matured on December  16, 2002.  The note  agreement  governing  the terms of the
notes was  amended  to extend  the  maturity  date to  December  31,  2004.  The
principal and interest on the notes may be converted at the option of the holder
into shares of common  stock at a conversion  price of $0.20 per share.  Upon an
event of  default,  the notes  begin to  accrue  interest  at a maximum  rate of
eighteen  percent  (18%) per annum.  Effective  January 1, 2005,  the notes were
converted into 11,101,900 shares of stock.

     On November 1, 2003,  pursuant to the 2002 Option Plan,  the Company issued
options to purchase  3,350,000 shares of the Company's common stock at $0.20 per
share to seven (7) employees.  Options to purchase 1,650,000 vested immediately,
the  remaining  vested  equally on November 1, 2004 and November 1, 2005.  As of
November  1, 2003,  all the options  were null and void  because the 2002 Option
Plan never received shareholder approval.

     In September,  2004,  the Company issued 250,000 shares of stock and agreed
to pay  $15,000 in cash over six months in  settlement  of an  accounts  payable
balance of $91,236.

     In October 2004,  the Company issued a 3 year 7.5% note payable for $96,315
and issued  330,879 shares of stock in settlement of $193,095  accounts  payable
balance with a vendor.

                                       10

<PAGE>

     Also in October 2004 the Company  issued  1,397,389  shares of common stock
and paid $50,000 in settlement of a note payable to a related party in which the
Company retired $239,500 of debt and accrued interest of $254,574.

     During fiscal year 2004 the Company issued to investors secured convertible
note  subscription  agreements  with  generated  cash flows of  $1,125,000.  The
subscription  agreements  bear  interest  at a rate of 12 percent  per annum and
after the  agreements  were executed into  promissory  notes in fiscal 2005 they
mature on various dates in fiscal 2007.  The notes are  convertible at $0.15 per
share.  Maturity  dates are May 26, June 1, and July 26, 2007. The purchasers of
the convertible  notes will be issued warrants for the purchase of the Company's
stock.  The warrants  vest  immediately  upon grant and have a  weighted-average
remaining  contractual  life of 3 years.  The exercise  price of the warrants is
$.15 and they expire  during  fiscal  year 2008.  In  accordance  with the terms
sheet,  the warrants  will be issued when the  definitive  loan  agreements  are
signed.  The loan agreements were not signed until 2005,  therefore the warrants
were not issued until 2005.

     During Fiscal year 2004 the Company agreed to issue 2,000,000 of restricted
stock to  participating  officers  and  employees  with a weighted  average fair
market value of $.10 per share, but have not issued any shares as of October 31,
2004.

     Each issuance was exempt from  registration  pursuant to Section 4(2) under
the  Securities  Act of 1933,  as  amended,  as a  transaction  by an issuer not
involving any public offering.

ITEM 6          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                AND RESULTS OF OPERATIONS

     The following discussions of our results of operations and financial
position should be read in conjunction with the financial statements and notes
pertaining to them that appear elsewhere in this Form 10-KSB.

Critical Accounting Policies

     Our  consolidated  financial  statements  are  based on the  selection  and
application of accounting  principles generally accepted in the United States of
America,  which require us to make estimates and assumptions about future events
that  affect  the  amounts   reported  in  our  financial   statements  and  the
accompanying  notes.  Future events and their effects cannot be determined  with
absolute  certainty.  Therefore,  the  determination  of estimates  requires the
exercise of judgment.  Actual results could differ from those estimates, and any
such  differences may be material to the financial  statements.  We believe that
the following policies may involve a higher degree of judgment and complexity in
their  application  and represent the critical  accounting  policies used in the
preparation of our financial statements.  If different assumptions or conditions
were to prevail,  the results  could be materially  different  from our reported
results.

     In December 2003, the SEC issued Staff Accounting  Bulleting (SAB) No. 104,
Revenue  Recognition,  which codifies,  revises and rescinds certain sections of
SAB No. 101, Revenue  Recognition,  in order to make this interpretive  guidance
consistent with current  authoritative  accounting and auditing guidance and SEC
rules and regulations.  The changes noted in SAB No. 104 did not have a material
effect  on  our  consolidated  results  of  operations,  consolidated  financial
position or consolidated cash flows.

                                       11

<PAGE>

Overview

     The  Company  currently  offers  MST  to  the  oil  field  industry  and is
developing  the  use of MST in the  marine  industry  and in the  production  of
bio-diesel.  MST technology uses commercial radio  frequencies to separate water
and oil emulsions.  In 2002 and 2003, the Company  focused  primarily on various
fund raising  efforts.  During 2002 and 2003, the Company's only operations were
the  shipment and set up of a MST-1000 to Kellogg  Brown & Root/Exxon  Mobil for
use in the Esso's oil field  gathering  facility  located in Africa and  leasing
certain  equipment  to third  parties.  . The unit shipped for use in Esso's oil
field was IPRC's second  commercial  system and reflects the slow  acceptance of
the use of microwave  technology in separating emulsion within the petroleum and
gas  industry.  Due to the  Company's  financial  condition,  in June 2003,  the
Company  terminated  all of 7 its  employees.  Since June 2003,  the Company has
re-hired 4 employees.

     In  January  2004,   the  Company's   internal   management   team  changed
significantly.  Henry  Kartchner  resigned  as  Chairman  and CEO  and C.  Brent
Kartchner resigned as President.  The Board of Directors appointed Alan Springer
as Chairman and CEO and Edward Gaiennie as the Chief Financial Officer.  The new
management  of the  Company  created  and began  implementing  a business  model
consisting of five (5) critical areas:

     1.   Raising Additional Capital
     2.   Settle Prior Obligations
     3.   Bring SEC Filings Up-To-Date
     4.   Establish Strategic Relationships
     5.   Develop New MST Applications

     Raising  Additional  Capital.  Finding and securing working capital was the
first step in the  business  model.  The  Company  was able to raise  $1,125,000
during the fiscal year ended October 31, 2004 and by April 1, 2005, $1.5 million
had been raised. These dollars were utilized to keep the company operational.

     Settle  Prior  Obligations.  The  Company  decided to  request  some of the
Company's investors restructure their debt obligations.  As of October 31, 2003,
the Company had $873,494 in notes  payable.  During fiscal 2004, the Company was
able to settle  $498,494  of the  outstanding  notes  payable for  $250,000  and
1,397,389 shares of restricted common stock of the Company. The Company was able
to settle $284,331 of outstanding accounts payable for $15,000 in cash, a 3 year
7.5% notes payable for $96,315 and 330,879 shares of the Company's common stock.
Lastly,  in fiscal 2004,  the Company was able to pay off a $22,475 note payable
to a related party by assigning the note holder $18,000 of our notes receivable.
In  addition  in fiscal  2005,  the  Company  was able to settle  $2,300,000  of
outstanding obligations for 14,737,105 shares of restricted stock of the Company
(see subsequent events).

     Establish Strategic Relationships. In 2004, the Company began looking for a
strategic  partner  who  could be the  Company's  global  provider  of  turnkey,
value-added  engineering design,  procurement,  construction,  maintenance,  and
operations  services  supporting the petrochemical,  refining and gas processing
industries.  In fiscal 2005,  the Company  entered  into a Strategic  Marketing,
Manufacturing and Technology  Licensing Agreement with a subsidiary of a Fortune
500  organization  with over 18,000 employees  strategically  located around the
world,  to fabricate  and integrate all MST systems to be delivered to customers
in  and  outside  the  United   States  in  exchange  for  marketing  and  sales
contributions  in the fields of crude oil  production,  refining and  transport,
biodiesel  and  alternative   fuels   production,   bilge  water  treatment  and
environmental clean up projects.

                                       12

<PAGE>

     This  relationship is continuing to expand and the Company hopes to receive
significant support from the involvement of our strategic partner members on its
business development team.

     Develop  New  MST  Applications.  The  Company  has  identified  additional
technical  opportunities for its MST in applications involving biodiesel,  bilge
water,  and  environmental  hydrocarbon  clean-up.  A test  is  currently  being
conducted  to  validate  the  impact  of the  MST on  increasing  the  biodiesel
production process,  thus adding production capacity to existing operations.  In
addition to biodiesel,  the Company has continued to evaluate the  opportunities
for  introducing  the MST into  the  marine  industry's  bilge  water  treatment
process.

     In June 2004,  IPRC entered  into a security  deposit  payment  forbearance
agreement  with the  successor  in  interest  to  Mobil  Technology  Company  in
connection with the marketing  agreement entered into in October 1999 with Mobil
Technology Company ("MTC").  Pursuant to the 1999 agreement, MTC provided IPRC a
$1,000,000  security  deposit,  which  IPRC  was to repay on  August  10,  2003.
Pursuant to the  forbearance  agreement,  if the Company entered into a contract
for the sale,  or  license  of one or more MST units by October  31,  2004,  the
Company  was  obligated  to payoff the  security  deposit  in six (6)  quarterly
installments. If IPRC fails to enter into a contract for the sale, or license of
one or more MST  units by  October  31,  2005 or fails to  payoff  the  security
deposit by December  31,  2005,  then IPRC shall  accrue  interest on the unpaid
security deposit plus any accrued interest, at a rate equal to the prime rate of
Citibank  (New York) at the close of  business on the last  business  day of the
calendar year immediately preceding each respective year plus 4%. As of November
22, 2005,  the Company had not entered into a contract for the sale,  or license
of one or  more  MST  units  and the  Company  has not  made  any  installments.
Therefore,  the Company is currently in default under the forbearance agreement;
however, the successor to MST has not made any demands.

Recent Developments

     Pursuant to  management's  current  business  plan,  in January  2005,  the
Company  converted  the  principal  and  accrued  but unpaid  interest  totaling
$2,309,008  of that  certain  bridge loan  executed in May 2002 in favor of IPRC
Bridge, L.P. for 11,101,900 shares of the Company's common stock.  Additionally,
in January  2005,  the Company was able to convert the principal and accrued but
unpaid interest totaling $742,538 of that certain note executed in February 2001
in favor of Maya, LLC for 2,953,2058 shares of the Company's common stock.

     In April 2005, the Company  terminated and settled that certain  Guaranteed
Investment  Contract ("GIC"),  dated July 18, 2001,  executed by and between the
Company and an investor who is a former member of the Company's board.  Pursuant
to the GIC, the investor  provided  the Company  with an initial  investment  of
$100,000.  In return the  Company  issued  the  investor  200,000  shares of the
Company's  common stock and was promised to pay the investor  $2,000,000 on July
18, 2008. In  consideration  of the  termination  and settlement of the GIC, the
Company issued the investor an addition  682,301 shares of the Company's  common
stock,  which was the equivalent of the $100,000 initial investment and interest
accrued at 12% per annum  from July 18,  2001 until  April 2005  converted  into
shares of the Company's common stock.

     Between  May and  August of 2005,  the  Company  executed  notes and issued
warrants for the  subscription  agreements the Company had been receiving  since
April 2004.  The total  principal  amount of the notes is  $2,175,000,  of which
$1,125,000 was attributable to note  subscriptions  received in fiscal 2004. The
notes accrue  interest at 12% per annum and the total principal plus interest is
due and payable in 2007.  The notes are  secured by a majority of the  Company's
assets,  including the Company  patents and pending  patents.  The investors may
convert the outstanding balance and any accrued but unpaid interest on the notes
at an exercise price of $0.15 per share.  In addition,  the Company  granted the
investors certain piggyback registration rights for the shares issuable upon the
conversion  of the notes.  Lastly,  in  connection  with the notes,  the Company
issued warrants to purchase 7,250,000 shares of the Company's common stock at an
exercise price of $0.15 per share and expire on a staggered basis in fiscal year
2008.

                                       13

<PAGE>

     In August 2005, the Company granted Stone & Webster Management  Consultants
the  right to  fabricate  and  integrate  all MST  systems  to be  delivered  to
customers in and outside the United  States in exchange for  marketing and sales
contributions  in the fields of crude oil  production,  refining and  transport,
biodiesel  and  alternative   fuels   production,   bilge  water  treatment  and
environmental clean up projects.  In addition the Company granted  Agribiofuels,
LLC, a company  partially  owned by IPRC a license to use the MST  technology in
the production of biodiesel.



Results of Operations

Comparison of fiscal years ended October 31, 2004 and 2003

     Revenue.  Revenue  decreased  95%, or $577,733,  to $30,200 for fiscal year
2004 ending October 31, 2004,  compared to $607,933 in fiscal 2003. The decrease
in revenues is  primarily  attributable  to the revenue  recognized  during 2003
related to the  contract for the Esso project  which was  completed  and shipped
during fiscal year ended 2003.  The Company  received no revenues in fiscal year
2004 for the sale or use of a MST system.

     Cost of Goods Sold and Gross Profit  (Loss).  Cost of goods sold  decreased
100%,  or $504,849,  to $660 for the year ended  October 31,  2004,  compared to
$505,049 in fiscal 2003.  The decrease is  attributable  to the cost  recognized
during 2003 related to the contract for the Esso project which was completed and
shipped during the year ended 2003.

     Selling,  General and Administrative.  General and administrative  expenses
decreased  33%, or $278,513,  to $573,498  for the year ended  October 31, 2004,
compared to $852,011 in fiscal 2003. The decrease is primarily  attributable  to
the  Company  furloughing  employees  from June 2003 to March  2004 as well as a
decrease in the number of employees on staff  during 2004  compared to 2003.  In
addition,  the Company  entered into an office sharing  agreement with a related
party during June 2003 which continued until September 30, 2005.

     Interest Expense.  Interest expense increased 19%, or $136,430, to $854,077
for the year ended  October 31, 2004,  compared to $717,647 in fiscal 2003.  The
increase was primarily  attributable  to the effect of compounding  interest the
Company's  outstanding  notes  and an  increase  in  the  interest  rate  of the
Company's obligation under the forbearance agreement,  these increases accounted
for approximately $61,000. In addition the value of the stock underlying the GIC
decreased during the year ended October 31, 2004; therefore the interest expense
on the GIC increased  approximately  $38,000. In addition,  the accrued interest
expense on the note subscription  agreements totaling $1,125,000 for fiscal 2004
was  approximately  $37,000  based on the  terms of the  final  note  agreements
executed in fiscal 2005.

     Gain on  Settlement  of Debt.  Gain on  Settlement  increased  11,271%,  or
$672,086, to $678,049 for the year ended October 31, 2004, compared to $5,963 in
fiscal 2003.  During fiscal 2004,  the Company paid $250,000,  issued  1,978,268
shares of the Company's  common stock and exchanged  $18,000 of  receivables  in
full  settlement  of  $544,730  in  outstanding  debt and  $606,133  in  accrued
interest.  During  fiscal  2003,  the  Company  settled two  unsecured  creditor
accounts totaling $12,409 by paying $6,446.

                                       14

<PAGE>

Going Concern

     For the year ended  October 31, 2004,  the Company's  independent  auditors
stated that the Company's  financial  condition raises  substantial doubts about
its ability to continue as a going  concern.  The Company has generated  limited
revenue  through  October 31, 2004,  and has sustained  substantial  losses from
operations since inception.  In addition,  as of October 31, 2004, the Company's
current liabilities  exceeded its current assets by $5,472,043,  it had $450,442
of  debt  obligations  that  were  past  due,  and  a  deficit   accumulated  of
$18,538,812.  During  fiscal  year 2004,  the Company  used  $447,148 of cash in
operating  activities,  which was funded primarily through the issuance of debt,
rather than provided by its operations. These conditions raise substantial doubt
as to the ability of the Company to continue as a going concern. Management will
be required to, and expects to, raise additional capital through the issuance of
debt  securities  and  offerings  of  equity  securities  to fund the  Company's
operations,  and will attempt to continue  raising capital  resources until such
time as the Company generates revenues sufficient to maintain itself as a viable
entity. However, there is no assurance that such financing will be obtained.

Liquidity and Capital Resources

     The Company  currently  uses cash  generated  primarily  from its financing
activities  and  expects  to  continue  to do so  until  it is able to  generate
sufficient  capital  from its  operating  activities.  The  Company  expects  to
continue to experience  substantial working capital requirements.  As of October
31, 2004,  IPRC's  aggregate  current  liabilities  were $5,893,495  compared to
$6,295,853  at October 31, 2003.  Also as of October 31,  2004,  the Company had
negative  working capital of $5,474,639  compared to negative working capital of
$6,295,521 at October 31, 2003.  During 2004, the Company obtained  subscription
agreements for notes totaling $1,125,000.

     As of October 31, 2004, the Company had cash of $412,156.  Giving effect to
the  closing of the sale of the notes in August  2005 and the  execution  of the
management agreement with Agribiofuels,  LLC, we believe we have sufficient cash
to fund current  operations through August 2006. The Company's current burn rate
in is $70,000 per month. As the operations of the Company ramp up, our burn rate
is expected to increase to $110,000 per month.  The Company  used  approximately
$1,400,000 to fund its operations and settle existing debt for fiscal 2005. This
money was used for research and development  and for general and  administrative
expenses.  The Company  funded its 2005  fiscal  expenditures,  commitments  and
capital  requirements  primarily  through cash flows from financing  activities,
with an increasing amount of the Company's working capital requirements provided
through cash flows from operations. There can be no assurance that the Company's
operations will be able to generate sufficient capital from operations. Further,
there can be no  assurance  that the  Company  will be able to raise  sufficient
funds from financings to fund its working capital requirements, or if financings
occur,  that they would be  completed on terms  favorable  to the  Company.  The
Company  anticipates  that it will need to engage in best  efforts  sales of its
securities to raise needed working capital.  Failure to raise necessary  working
capital will cause us to curtail operations.

     Operating  Activities.  Cash used in operating  activities  during the year
ended  October 31, 2004,  amounted to  $447,148,  an increase of 10%, or $44,241
over the $402,907 of cash used in operating activities during fiscal 2003.

                                       15

<PAGE>

     Investing Activities. Cash provided by investing activities during the year
ended October 31, 2004 and 2003, amounted to $0.

     Financing Activities.  The Company has financed its operating and financing
activities primarily from the proceeds of private placements of common stock and
through debt.  During the year ended October 31, 2004, the Company did not raise
any  proceeds  from  the sale of  common  stock.  However,  the  Company  issued
1,978,268 shares of its common stock to settle notes and accounts  payable.  The
Company  did not raise any  proceeds  from the sale of common  stock in the year
ended October 31, 2003.  However in fiscal 2003,  the Company  issued  1,700,000
shares of its common  stock to settle a warrant  agreement  with a note  holder.
During the year ended  October  31,  2004,  the  Company  received  proceeds  of
$1,125,000  from debt,  an  increase of 210%,  or  $762,070,  over the  $362,930
received from proceeds of debt in the year ended October 31, 2003.

     At October  31,  2004,  the Company had debt  obligations  with  maturities
during fiscal 2005 of  $2,835,160.  Approximately  $375,000 of  short-term  debt
obligations  are from related  parties and are  currently  past due, In addition
there is $75,442  note  payable  which is past due.  The  Company  extended  the
maturity  dates of  convertible  promissory  notes with a  principal  balance of
$1,725,417 from December 31, 2003 to December 31, 2004.

     During fiscal 2004,  the Company  hired new officers who raised  $1,125,000
through the issuance of convertible note  subscription  agreements to investors.
The subscription agreements were issued, but convertible notes were not executed
until fiscal 2005 when definitive  note  agreements were signed.  The notes bear
interest at a rate of twelve  percent (12%) per annum and are  convertible  into
shares of common  stock at a  conversion  price of $0.15 per share.  These notes
will mature on a staggered basis in fiscal year 2007.

Comparison of fiscal years ended October 31, 2003 and 2002

     Revenue.  Revenue decreased 43%, or $453,580, to $607,933 in the year ended
October 31,  2003,  compared  to  $1,061,513  in fiscal  2002.  The  decrease in
revenues is primarily attributable to the Company's lease of an MST-1000 unit in
Torrance, California ending in December of 2003.

     Cost of Goods Sold and Gross Profit  (Loss).  Cost of goods sold  decreased
22%, or $143,992,  to $505,049 for the year ended October 31, 2003,  compared to
$649,041 in fiscal 2002. The decrease is primarily attributable to the Company's
lease of an MST-1000 unit in Torrance, California ending in December of 2003.

     Selling,  General and Administrative.  General and administrative  expenses
decreased  43%, or $647,473,  to $852,011  for the year ended  October 31, 2003,
compared to $1,499,484 in fiscal 2002. The decrease is primarily attributable to
3 items:  (i) the Company  furloughing  employees  from June 2003 to March 2004;
(ii) a decrease in legal and  professional  expenses due to the lack of activity
in the Company,  and (iii) the Company entering into an office sharing agreement
with a related party during June 2003 which is ongoing.

     Interest Expense.  Interest expense increased 50%, or $239,905, to $717,647
for the year ended  October 31, 2003,  compared to $477,742 in fiscal 2002.  The
increase was primarily  attributable to the issuance of promissory notes under a
private  placement  during the second half of fiscal year 2002,  (i.e. the notes
were outstanding  longer in 2003), this accounted for approximately  $161,000 of
the increase,  and , compounding of interest effect on certain notes  accounting
for approximately  $47,000 of the increase. In addition there was an increase in
interest  expense from the GIC as the value of the  underlying  stock  decreased
during  the year  ended  October  31,  2003.  The  interest  expense  on the GIC
increased $31,000 in 2003 as compared to 2002.

                                       16

<PAGE>

     Gain on  Extinguishment  of Debt. Gain on  Extinguishment of debt decreased
92%,  or $67,031 to $5,963 in the year  ended  October  31,  2003,  compared  to
$72,994 in fiscal 2002.  During  fiscal 2003 the Company  settled two  unsecured
creditor  accounts  totaling  $12,409 by paying $6,446.  During fiscal 2002, the
Company recorded $38,710 in gain on  extinguishment of debt in which the Company
paid $75,000 in full  settlement of $100,000 in outstanding  debt and $13,710 in
accrued  interest.  The Company also wrote off $34,284 of accounts payable which
were over five-years old.

Going Concern

     For the year ended  October 31, 2003,  the Company's  independent  auditors
stated that the Company's  financial  condition raises  substantial doubts about
its ability to continue as a going  concern.  The Company has generated  limited
revenue  through  October 31, 2003,  and has sustained  substantial  losses from
operations since inception.  In addition,  as of October 31, 2003, the Company's
current liabilities  exceeded its current assets by $6,295,521,  it had $948,936
of  debt  obligations  that  were  past  due,  and  a  deficit   accumulated  of
$17,681,581.  During  fiscal  year 2003,  the Company  used  $402,907 of cash in
operating  activities,  which was funded primarily through the issuance of debt,
rather than provided by its operations. These conditions raise substantial doubt
as to the ability of the Company to continue as a going concern. Management will
be required to, and expects to, raise additional capital through the issuance of
debt  securities  and  offerings  of  equity  securities  to fund the  Company's
operations,  and will attempt to continue  raising capital  resources until such
time as the Company generates revenues sufficient to maintain itself as a viable
entity. However, there is no assurance that such financing will be obtained.

Liquidity and Capital Resources

     The Company  currently  uses cash  generated  primarily  from its financing
activities  and  expects  to  continue  to do so  until  it is able to  generate
sufficient  capital  from its  operating  activities.  The  Company  expects  to
continue to experience  substantial working capital requirements.  As of October
31, 2003,  IPRC's  aggregate  current  liabilities  were $6,295,853  compared to
$5,029,690 at October 31, 2002. As of October 31, 2003, the Company had negative
working capital of $6,295,521 compared to negative working capital of $4,955,437
at October 31, 2002.

     Operating  Activities.  Cash used in operating  activities  during the year
ended  October 31, 2003,  amounted to  $402,907,  a decrease of 57%, or $539,295
over the $942,201 of cash used in operating  activities  during fiscal 2002. The
decrease in cash used in  operations  was due to the decrease in the net loss of
the Company from  $1,785,068 in 2002 to $1,595,640 in 2003,  and to the increase
in accrued liabilities of $742,202 in 2003 vs. $329,495 in 2002.

     Investing Activities. Cash provided by investing activities during the year
ended October 31, 2003, amounted to $0, a decrease of $9,365, over the $9,365 of
cash provided by investing activities in fiscal 2002.

     Financing Activities.  The Company has financed its operating and financing
activities primarily from the proceeds of private placements of common stock and
through  issuance of debt.  During the year ended October 31, 2003,  the Company
did not raise any proceeds from the sale of common stock.  However,  the Company
issued 1,700,000 shares of its common stock to settle a warrant agreement with a
note  holder.  During the year ended  October 31,  2003,  the  Company  received
proceeds of $362,930  from the issuance of debt, a decrease of 64%, or $653,231,
over the $1,016,161 received from proceeds of debt in the year ended October 31,
2002.

                                       17

<PAGE>

     The Company  extended the maturity  dates of convertible  promissory  notes
with a principal  balance of  $1,372,487  from December 31, 2002 to December 31,
2003.  In  addition,  the Company has long term debt  obligations  in the amount
$5,999 which is amortizing monthly until 2005.

     During fiscal 2001,  the Company  engaged  Odyssey  Capital,  LLC a Houston
based company to provide investment banking and financial  consulting  services.
During fiscal years 2003 and 2002,  the Company  raised  $1,725,417  through the
issuance of convertible  promissory notes to investors introduced to the Company
by Odyssey  Capital.  The notes bear interest at a rate of twelve  percent (12%)
per annum,  compounded monthly,  and are convertible into shares of common stock
at a conversion price of $0.15 per share. The maturity dates of these notes were
extended to December 31, 2003 and then extended again to December 31, 2004.



                                       18

<PAGE>

ITEM 7          FINANCIAL STATEMENTS


                              FINANCIAL STATEMENTS


                                                                            Page


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                       20

CONSOLIDATED FINANCIAL STATEMENTS

  BALANCE SHEETS AS OF OCTOBER 31, 2004, 2003 AND 2002                        21

  STATEMENTS OF OPERATIONS FOR THE YEARS ENDED
    OCTOBER 31, 2004, 2003 AND 2002                                           22

  STATEMENTS OF STOCKHOLDERS' DEFICIT FOR THE YEARS
    ENDED OCTOBER 31, 2004, 2003 AND 2002                                     23

  STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED
    OCTOBER 31, 2004, 2003 AND 2002                                           24

  NOTES TO FINANCIAL STATEMENTS                                            26-40







                                       19


<PAGE>

                              REPORT OF INDEPENDENT
                              ---------------------
                        REGISTERED PUBLIC ACCOUNTING FIRM
                        ---------------------------------



Board of Directors and Stockholders
Imperial Petroleum Recovery Corporation
Houston, Texas

We have  audited  the  accompanying  consolidated  balance  sheets  of  Imperial
Petroleum Recovery  Corporation (the "Company" or "IPRC") as of October 31, 2004
and 2003, and the related consolidated  statements of operations,  stockholders'
deficit,  and cash flows for each of the two years then ended.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  the  audits to  obtain  reasonable  assurance  about  whether  the
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial  statements.  An audit also  includes  assessing  the  accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial position of the Company as of October 31,
2004,  and the results of its  operations and its cash flows for each of the two
years then ended in conformity with accounting  principles generally accepted in
the United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note B to the
financial statements, the Company has incurred significant losses the last three
fiscal  years and has an  accumulated  deficit  at  October  31,  2004  totaling
$18,538,812. In addition, the Company had $450,442 of debt obligations that were
past due, all of which raise  substantial  doubt about the Company's  ability to
continue as a going concern.  Management's plans in regards to these matters are
also  described  in  Note  B.  The  financial  statements  do  not  include  any
adjustments  relating to the recoverability and classification of recorded asset
amounts nor to the  amounts  and  classification  of  liabilities  that might be
necessary should the Company be unable to continue as a going concern.




/s/ Malone & Bailey, PC
-----------------------
Malone & Bailey, PC
www.malone-bailey.com
Houston, Texas

October 21, 2005




                                       20

<PAGE>

<TABLE>
<CAPTION>

             Imperial Petroleum Recovery Corporation and Subsidiary

                           CONSOLIDATED BALANCE SHEETS
                        For the Periods Ended October 31,

                                     ASSETS

                                                                                --------------------------------------------
                                                                                                                  Unaudited
                                                                                     2004           2003             2002
                                                                                ------------    ------------    ------------
CURRENT ASSETS
<S>                                                                             <C>             <C>             <C>
    Cash and cash equivalents                                                   $    412,156    $        332    $     46,307
    Trade accounts receivable, net                                                       200            --            20,495
    Other receivable - related party                                                   2,500            --              --
    Prepaid expenses                                                                   4,000            --             7,451
                                                                                ------------    ------------    ------------
           Total current assets                                                      418,856             332          74,253

PROPERTY AND EQUIPMENT, net (Notes D, E, G and H)                                    251,223         387,263         537,247
OTHER ASSETS, net of accumulated amortization of $20,831, $16,049 and
       $11,267 for the years ended 2004, 2003 and 2002, respectively                  47,991          48,773          53,555
                                                                                ------------    ------------    ------------
    Total assets                                                                $    718,070    $    436,368    $    665,055
                                                                                ============    ============    ============
                      LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
    Trade accounts payable                                                      $    756,558    $  1,042,164    $    877,158
    Other payables - related parties (Note L)                                        123,115         136,677          19,385
    Accrued liabilities                                                            1,801,853       1,405,932         672,443
    Deferred revenue                                                                    --            30,000         143,625
    Notes payable - related parties (Note E)                                         375,000         873,494         863,494
    Bridge note payable (Note F)                                                   1,725,417       1,725,417       1,372,487
    Current maturities of long-term obligations (Note G)                           1,109,743       1,079,722       1,078,938
    Other                                                                              1,807           2,445           2,160
                                                                                ------------    ------------    ------------
           Total current liabilities                                               5,893,493       6,295,851       5,029,690
   Long-term obligations, less current maturities (Note G)                         1,186,403           4,192           8,806
   Other                                                                                --             1,807           4,252
   Guaranteed Investment Contract Liability, (Note J)                                394,132         248,354         140,503
                                                                                ------------    ------------    ------------
           Total liabilities                                                       7,474,028       6,550,204       5,183,251
STOCKHOLDERS' DEFICIT (Notes B, C, I, J, and K)
    Common stock, par value $0.001; authorized 100,000,000 shares; issued and
    outstanding 20,845,687, 18,867,419, and 17,167,419 shares respectively            20,846          18,868          17,168
    Additional paid-in capital                                                    11,762,008      11,548,877      11,550,577
    Accumulated deficit                                                          (18,538,812)    (17,681,581)    (16,085,941)
                                                                                ------------    ------------    ------------
           Total stockholders' deficit                                            (6,755,958)     (6,113,836)     (4,518,196)
                                                                                ------------    ------------    ------------
                                                                                $    718,070    $    436,368    $    665,055
                                                                                ============    ============    ============
</TABLE>

         The accompanying notes are an integral part of these statements.


                                       21

<PAGE>


<TABLE>
<CAPTION>
             Imperial Petroleum Recovery Corporation and Subsidiary

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                                      Years ended October 31,
                                                                           -------------------------------------------
                                                                                                            Unaudited
                                                                               2004           2003            2002
                                                                          -------------   ------------   -------------
<S>                                                                             <C>             <C>             <C>
Revenues (Notes H and O)                                                  $     30,200    $    607,933    $  1,061,513
Cost of goods sold                                                                (660)       (505,049)       (649,041)
                                                                          ------------    ------------    ------------
            Gross profit (loss)                                                 29,540         102,884         412,472

Operating expenses
       Selling, general and administrative expenses                            573,498         852,011       1,499,484
       Depreciation and amortization expense                                   140,822         149,098         152,518
       Inventory impairment                                                       --              --           153,290
                                                                          ------------    ------------    ------------
       Total operating expenses                                                714,320       1,001,109       1,805,292
                                                                          ------------    ------------    ------------
            Loss from operations                                              (684,780)       (898,225)     (1,392,820)
Other income (expense)
       Interest income                                                              10            --              --
       Gain on extinguishment of debt                                          678,049           5,963          72,994
       Gain on disposition of assets                                             3,567          14,269          12,500
       Interest expense                                                       (854,077)       (717,647)       (477,742)
                                                                          ------------    ------------    ------------
                                                                              (172,451)       (697,415)       (392,248)
Income taxes (Note N)                                                             --              --              --
                                                                          ------------    ------------    ------------
            Net loss                                                      $   (857,231)   $ (1,595,640)   $ (1,785,068)
                                                                          ============    ============    ============
Net loss per common share - basic and diluted (Note M)                    $      (0.04)   $      (0.09)   $      (0.10)
                                                                          ============    ============    ============
Weighted average common shares outstanding - basic and diluted (Note M)
                                                                            19,067,859      17,675,090      17,167,419
                                                                          ============    ============    ============
</TABLE>

         The accompanying notes are an integral part of these statements.

                                       22

<PAGE>


<TABLE>
<CAPTION>

             Imperial Petroleum Recovery Corporation and Subsidiary


                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

                    Years ended October 31, 2004, 2003 & 2002


                                                                             Additional
                                                         Common stock          paid-in
                                                       Shares    Amount        capital          Deficit
                                                     ----------  --------   ------------    -------------
<S>                                                      <C>          <C>       <C>             <C>
Balances as of October 31, 2001 (Restated- Note C)   17,167,419   $17,168   $ 11,550,577    $(14,300,873)

Net loss                                                                                      (1,785,068)
                                                     ----------   -------   ------------    ------------
Balances as of October 31, 2002 (Unaudited)          17,167,419    17,168     11,550,577     (16,085,941)
Exercise of Warrants                                  1,700,000     1,700         (1,700)
Net loss                                                   --        --             --        (1,595,640)
                                                     ----------   -------   ------------    ------------
Balances as of October 31, 2003                      18,867,419    18,868     11,548,877     (17,681,581)

Issuance of common stock in satisfaction
  of debt (Note H)                                      250,000       250         24,750            --
Issuance of common stock in satisfaction
  of debt (Note H)                                    1,397,389     1,397        152,315            --
Issuance of common stock in satisfaction
  of debt (Note H)                                      330,879       331         36,066            --
Net loss                                                   --        --             --          (857,231)
                                                     ----------   -------   ------------    ------------
   Balances as of October 31, 2004                   20,845,687   $20,846   $ 11,762,008    $(18,538,812)
                                                     ==========   =======   ============    ============
</TABLE>


         The accompanying notes are an integral part of these statements.


                                       23



<PAGE>


<TABLE>
<CAPTION>
             Imperial Petroleum Recovery Corporation and Subsidiary
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                            Years ended October 31,
                                                                    -----------------------------------------
                                                                                                   Unaudited
                                                                         2004          2003          2002
                                                                    ------------   -----------    -----------
Increase (decrease) in cash and cash equivalents
    Cash flows from operating activities:
<S>                                                                       <C>            <C>            <C>
    Net loss                                                        $  (857,231)   $(1,595,640)   $(1,785,068)

    Adjustments to reconcile net loss to net cash
     used in operating activities:
      Depreciation and amortization                                     140,822        149,098        152,518
      Share-based compensation                                          200,000           --             --
      Interest accretion on Guaranteed Investment Contract              145,778        107,858         77,189
      Gain on settlement of debt for stock                             (675,229)          --             --
      Gain on write-off of current liabilities                           (2,821)        (5,963)       (72,994)
      (Gain)/loss on disposal of property and equipment                    --          (14,268)       (12,500)

    Changes in assets and liabilities:
      Trade accounts receivable                                            (200)        20,495         98,001
      Inventory                                                            --             --          153,290
      Prepaid & other expenses                                          (28,500)         7,451          8,873
      Trade accounts payables                                           (53,954)       190,906        (37,633)
      Other payables, related party                                       8,913        117,292        (26,484)
      Accrued liabilities                                               705,274        742,202        329,495
      Deferred revenue                                                  (30,000)      (122,338)       173,112
                                                                    -----------    -----------    -----------
         Total adjustments                                              410,083      1,192,733        842,867
                                                                    -----------    -----------    -----------
         Net cash used in operating activities                         (447,148)      (402,907)      (942,201)
                                                                    -----------    -----------    -----------
    Cash flows from investing activities:
      Purchases of property and equipment                                  --             --           (3,135)
     Proceeds from disposal of property and equipment                      --             --           12,500
                                                                    -----------    -----------    -----------
         Net cash provided by investing activities                         --             --            9,365
                                                                    -----------    -----------    -----------
      Cash flows from financing activities:
        Proceeds from issuance of notes payable - related parties          --             --          310,233
        Principal payments on notes payable - related parties          (254,500)          --             --
        Proceeds from issuance of bridge loan                              --          362,930      1,016,161
        Proceeds from convertible note subscriptions                  1,125,000           --             --
        Principal payments on current portion of long-term
        obligations                                                     (11,528)        (5,342)      (347,152)
        Principal payments on long-term obligations                        --             (656)        (1,759)
                                                                    -----------    -----------    -----------
            Net cash provided by financing activities                   858,972        356,932        977,483
                                                                    -----------    -----------    -----------
        Net increase (decrease) in cash and cash equivalents            411,824        (45,975)        44,647
        Cash and cash equivalents at beginning of period                    332         46,307          1,660
                                                                    -----------    -----------    -----------
         Cash and cash equivalents at end of period                 $   412,156    $       332    $    46,307
                                                                    ===========    ===========    ===========
     Supplemental disclosure of cash flow information
        Cash paid during the period for
           Interest                                                 $    16,650    $    23,699    $    37,742
</TABLE>


         The accompanying notes are an integral part of these statements.


                                       24

<PAGE>




             Imperial Petroleum Recovery Corporation and Subsidiary

                CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

Non-cash investing and financing activities

2004

During fiscal 2004, the Company paid $200,000 in full  settlement of $258,994 in
outstanding  debt  and  $254,779  in  accrued  interest.  As a  result  of  this
settlement, the Company recorded a gain on extinguishment of debt of $313,773.

During  fiscal 2004,  the Company paid  $50,000 and issued  1,397,389  shares of
stock in full settlement of $239,500 in outstanding debt and $254,574 in accrued
interest.  As a  result  of this  settlement,  the  Company  recorded  a gain on
extinguishment of debt of $290,361.

The Company  issued a 3 year 7.5% note  payable  for $96,315 and issued  330,879
shares of stock in  settlement  of  $193,095  accounts  payable  balance  with a
vendor.  As a  result  of  this  settlement  the  Company  recorded  a  gain  on
extinguishment  of debt of $60,383.  The portion of accounts payable written off
by the vendor related to interest charges.

The  Company  issued  250,000  shares of stock and agreed to pay $15,000 in cash
over six months in settlement  of an accounts  payable  balance of $91,236.  The
Company recorded an initial gain on  extinguishment  of debt of $6,236 (Accounts
payable  balance of $46,236  written off by vendor in exchange for shares valued
at $25,000 and agreed cash  payments of $15,000).  Once all of the cash payments
are made, the vendor will write off the remaining balance of $45,000.  As of May
2005 all cash payments had been made.

The Company  exchanged  $18,000 of notes  receivable  from certain  employees in
exchange for a related party net loan balance of $22,475 made to the Company. As
a result of this settlement the Company recorded a gain of $4,475.

2003

The Company settled certain accounts payable accounts for $5,963 less than owed.
This  resulted in the  Company  recording  a gain on  extinguishment  of debt of
$5,963.

2002 (Unaudited)

For the fiscal year of 2002,  the Company  paid  $75,000 in full  settlement  of
$100,000 in  outstanding  debt and $13,710 in accrued  interest.  As a result of
this  settlement,  the  Company  recorded  a gain on  extinguishment  of debt of
$38,710.

Notes Payable-Related  Parties and accrued interest totaling $407,584 and $9,421
respectively were converted into Bridge Notes Payable as of May 17, 2002.


         The accompanying notes are an integral part of these statements.


                                       25
<PAGE>


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     1. Organization and business activity

     Imperial Petroleum Recovery Corporation, a Nevada corporation, incorporated
in 1982 (the "Company" or "IPRC")  commenced  operations in the fiscal year 1995
and  is  committed  to  developing  and  marketing  a  proprietary   oil  sludge
remediation process and microwave  separation  technology  equipment (MST units)
that use high energy microwaves to separate water, oil and solids.

     2. Principles of consolidation and financial statement presentation

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

     3. Use of estimates

     In preparing financial statements in conformity with accounting  principles
generally  accepted in the United  States of America,  management is required to
make estimates and  assumptions  that affect the reported  amounts of assets and
liabilities and the disclosure of contingent  assets and liabilities at the date
of the  financial  statements  and revenue  and  expenses  during the  reporting
period. Actual results could differ from those estimates.

     4. Cash and cash equivalents

     The Company considers all highly liquid investments, with original maturity
dates of three months or less when purchased, to be cash equivalents.

     5. Inventories

     Inventory  consists  of  components  to be  assembled  into  the  Company's
products.  Inventory  is valued at lower of cost or market.  Cost is  determined
using the first-in, first-out method. As of October 31, 2004, 2003 and 2002, the
Company held no inventory.

     6. Other assets

     Included in other assets are  long-term  deposits and patents.  The cost of
patents is capitalized and amortized to operations on the  straight-line  method
over their estimated useful lives or statutory lives whichever is shorter.

     7. Property and equipment

     Depreciation  and  amortization  are provided for in amounts  sufficient to
relate the cost of depreciable  assets to operations over their estimated useful
lives.  The  straight-line  method of  depreciation  is followed  for  financial
reporting purposes.

                                       26
<PAGE>

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

     8. Impairment of long-lived assets

     The Company reviews all long-term assets for impairment  whenever events or
changes in  circumstances  indicate that the carrying  amount of such assets may
not be recoverable through undiscounted future cash flows. If an impairment loss
has occurred, such loss is recognized in income.

     9. Revenue recognition - long-term contracts

     Revenue  relating to crude oil sludge  recovery  services  contracts in the
accompanying     financial     statements     is     recognized     using    the
percentage-of-completion  method and,  therefore,  take into  account the costs,
estimated  earnings  and revenue to date on  contracts  not yet  completed.  The
revenue  recognized  is that  portion  of the  total  contract  price  that cost
incurred  to date  bears to  anticipated  final  total  cost,  based on  current
estimates of cost to complete.

     Contract costs include all direct and allocable  indirect labor,  benefits,
and  materials  unique  to or  installed  in  the  project,  subcontractor  cost
allocations,  including employee benefits and equipment  expense.  At the time a
loss on a contract  becomes known,  the entire amount of the estimated  ultimate
loss is recognized in the financial  statements.  As long-term  contracts extend
over one year, revisions in cost and earnings estimates during the course of the
work are reflected in the accounting period in which the facts which require the
revision  become known.  Costs  attributable  to contract claims or disputes are
carried in the  accompanying  balance sheets only when  realization is probable.
These costs are  recorded at the lesser of actual  costs  incurred or the amount
expected to be realized.  It is reasonably possible that estimates by management
related to  contracts  can change in the  future.  As of October 31,  2002,  the
Company only has one contract in progress.

     Revenue earned on contracts in progress in excess of billings  (billings in
excess of costs) is classified as a current  asset.  Amounts billed in excess of
revenue   earned  (cost  in  excess  of  billings)  are  classified  as  current
liabilities.  At the time a loss on a contract  becomes known, the entire amount
of the estimated ultimate loss is recognized in the financial statements.

     10. Other revenue recognition

     Revenues on contracts  from rental  equipment are  recognized  according to
contract terms.

     11. Fair value of financial instruments

     Cash and cash  equivalents,  accounts  payable and accrued  liabilities are
reflected in the financial  statements  at fair value because of the  short-term
maturity  of these  instruments.  Notes  payable to third  parties  and  related
parties as reflected in the financial statements approximate their fair value.



                                       27
<PAGE>

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

     12. Income taxes

     The Company  utilizes the liability  method of accounting for income taxes.
Under the liability  method,  deferred tax assets and liabilities are determined
based on the difference between the financial  statement and tax bases of assets
and liabilities  using enacted tax rates in effect during the years in which the
differences are expected to reverse. An allowance against deferred tax assets is
recorded  in  whole or in part  when it is more  likely  than not that  such tax
benefits will not be realized.

     13. Warrants

     In  accordance  with  Statement of Financial  Accounting  Standards No. 123
(SFAS No. 123) "Accounting for Stock-Based Compensation",  expense is recognized
in connection with the grant of warrants when issued using the fair-market-value
method.  Pro forma  adjusted  net income  calculated  by applying the fair value
requirement  for  warrants  issued for  recognition  of expense is not  included
because there is no significant impact in application of the standard.

     14. Loss per common share

     The Company  follows the  provisions  of Statement of Financial  Accounting
Standards No. 128 "Earnings per Share" (SFAS No. 128). SFAS No. 128 requires the
presentation  of basic and diluted  EPS.  Basic EPS are  calculated  by dividing
earnings (loss) available to common shareholders by the weighted-average  number
of common  shares  outstanding  during each  period.  Diluted EPS are  similarly
calculated, except that the weighted-average number of common shares outstanding
includes  common  shares  that may be issued  subject to  existing  rights  with
dilutive  potential.  Potential  common shares having an antidilutive  effect on
periods presented are not included in the computation of dilutive EPS.

     15. New Accounting Pronouncements

     In May 2002, SFAS No. 145, "Rescission of FASB Statements No. 4, 44 and 64,
Amendment of FASB Statement No. 13, and Technical  Corrections" was issued. SFAS
145,  which is effective  for  financial  statements  issued on or after May 15,
2002, rescinds the automatic treatment of gains and losses from  extinguishments
of debt as extraordinary  unless they meet the criteria for extraordinary  items
as outlined in Accounting Principles Board Opinion No. 30,"Reporting the Results
of Operations, Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions." SFAS
145 also requires sale-leaseback accounting for certain lease modifications that
have economic effects similar to a sale-leaseback  transaction and makes various
corrections  to existing  pronouncements.  The adoption of SFAS 145 required the
Company to modify the presentation of its gain on extinguishments of debt in its
statements of operations.



                                       28
<PAGE>

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

     In December  2004, the FASB issued SFAS No.  123(R),  Share-Based  Payment,
which  establishes  standards for  transactions in which an entity exchanges its
equity  instruments for goods or services.  This standard  requires an issuer to
measure the cost of  employee  services  received  in  exchange  for an award of
equity  instruments  based  on the  grant-date  fair  value of the  award.  This
eliminates  the exception to account for such awards using the intrinsic  method
previously  allowable  under APB Opinion No. 25. In March 2005, the SEC released
Staff Accounting Bulletin (SAB) 107, Share-Based Payment,  which expresses views
of the SEC Staff about the application of SFAS No. 123(R). In April 2005 the SEC
issued a rule that SFAS No.  123(R) will be effective  for the first  interim or
annual  reporting period beginning on or after December 15, 2005. The Company is
still evaluating what impact, if any, the adoption of this standard will have.


NOTE B - GOING CONCERN

     The accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America,  which
contemplate  continuation  of the  Company as a going  concern.  The Company has
generated   limited   revenue  through  October  31,  2004,  and  has  sustained
substantial losses from operations since inception.  In addition,  as of October
31, 2004,  the  Company's  current  liabilities  exceeded its current  assets by
$5,474,637,  it had  $450,442  of debt  obligations  that were  past due,  and a
deficit  accumulated of  $18,538,812.  During fiscal year 2004, the Company used
$447,148 of cash in operating activities, which was funded primarily through the
issuance of debt, rather than provided by its operations.

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

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

     During March of 2004,  the Company  hired a new  management  team which has
raised $1,125,000 of new capital through October 31, 2004.

     Beginning in January  2005,  the Company began to explore the benefits of a
strategic relationship with a major engineering,  manufacturing and construction
firm to further promote the Microwave  Separation  Technology ("MST") throughout
the US and  overseas  locations.  This firm is a world  leader in  environmental
studies and consulting;  engineering,  design and construction for refinery, gas
processing applications and petrochemical operations.


                                       29
<PAGE>

NOTE B - GOING CONCERN - CONTINUED

     During February 2005, the Company filed for a provisional patents using MST
in the  production of biodiesel.  Also  beginning in February  2005, the Company
entered into  discussions  regarding the lease of the MST for the  production of
biodiesel  fuel  to  enhance  production   throughput.   IPRC  also  intends  to
participate  in a research  initiative  with several  universities  and research
centers to examine the MST technology in this application.

     During fiscal year 2001, the Company entered into an agreement with Kellogg
Brown & Root  /ExxonMobil  to sell a  MST-1000  to Esso's  oil  field  gathering
facility  located in Africa.  The Company  shipped the unit in December of 2002.
The equipment  arrived in Chad in 2003 and was heavily damaged during  shipment.
During 2004 the Company had the  equipment  repaired.  Upon initial  attempts to
commission the unit, it was discovered that the centrifuge pumps were inadequate
for site conditions.  The centrifuge  subcontractor  began production of the new
pump skid in early 2005 and the new pump skid was shipped to Chad during  fiscal
fourth quarter of 2005. The Company is in discussion with ExxonMobil to schedule
the MST-1000 unit commissioning, so that it can be turned over to them.

NOTE C - RESTATEMENT OF ACCUMULATED DEFICIT AT OCTOBER 31, 2001

     In connection  with the audit of the Company's  financial  statements as of
October  31,  2004  and  2003,  we  determined  that  interest  expense  and the
corresponding  liability relating to certain debt instruments and the Guaranteed
Investment  Contract had not been accounted for in accordance  with the terms of
their underlying documents.  Consequently, the accumulated deficit as of October
31, 2001 has been reduced by approximately  $161,000.  The restated  accumulated
deficit as of October  31, 2001 is included  in our  Statement  of  Stockholders
Deficit.


NOTE D - PROPERTY AND EQUIPMENT

            Property and equipment and estimated useful lives consist of the
following:

<TABLE>
<CAPTION>
                                          -----------      -----------          -----------          ----------
                                                                                                      Unaudited
                                             Years             2004                 2003                 2002
                                          -----------      -----------          -----------          ----------
<S>                                           <C>               <C>                   <C>                  <C>
Furniture and fixtures                        1-5          $    25,113          $    25,113          $   25,113
Machinery and equipment                       2-7               76,352               76,352              87,044
Rental equipment                                7              528,963              528,963             528,963
Transportation Equipment                      4-7              117,441              117,441             117,441
Leasehold improvements                          5               75,836               75,836              75,836
Demonstration unit                              7              211,140              211,140             211,140
                                                           -----------          -----------          ----------
                                                             1,034,845            1,034,845           1,045,537
Less accumulated depreciation                                 (783,622)            (647,582)           (508,290)
                                                           -----------          -----------          ----------
                                                           $   251,223          $   387,263          $  537,247
                                                           ===========          ===========          ==========
</TABLE>

                                       30

<PAGE>

NOTE E - NOTES PAYABLE - RELATED PARTIES


<TABLE>
<CAPTION>
       Notes payable consist of the following:

                                                                          ------------  -----------   -------------
                                                                                                         Unaudited
                                                                              2004          2003           2002
                                                                          ------------  -----------   -------------
<S>                                                                             <C>           <C>           <C>
    20% note payable, interest compounded monthly, to Treeview            $          -  $   258,994   $     248,994
    Investments, Inc., a shareholder, matured December 31, 2001,
    collateralized by all of the shares of stock of the Company's
    wholly owned subsidiary and a lien on the Company's patents and
    trademarks. Subsequent to the maturity date, interest is being
    charged at the loan default rate of 24%, compounded monthly.
    Settled In August 2004

    12% note payable, interest compounded daily, to Maya, LLC a related party
    and stockholder, was due in full July 31, 2001, collateralized by
    demonstration unit. Subsequent to the maturity date, interest is being
    charged at the loan default rate of 18%,
    compounded daily. Past due as of October 31, 2004.                         375,000      375,000         375,000

    20% note payable interest compounded monthly, to Hensel Family LP,
    a related party and stockholder, matured October 31, 2001.
    Subsequent to the maturity date, interest is being charged at the
    loan default rate of 24%, compounded monthly.  Settled in October
    2004                                                                             -      239,500         239,500

                                                                          ------------  -----------   -------------
                                                                          $    375,000  $   873,494   $     863,494
                                                                          ============  ===========   =============
</TABLE>


NOTE F - BRIDGE NOTE PAYABLE

     In March of 2002, the Company entered into a private  placement.  In May of
2002 a financing  source on behalf of the Company  completed the minimum funding
($800,000)  requirement  under  a  $2,000,000  private  placement  with  Odyssey
Capital.  The bridge loan is a secured  promissory  note bearing  interest at 12
percent,  compounded monthly, with an initial maturity of December 16, 2002. The
note was extended  twice to December 31, 2003 and then to December 31, 2004. The
debt instruments are convertible at the option of the holder to $0.001 par value
common stock at $0.20 per share  (trading  price  during March of 2002).  In the
event of default,  the  interest  rate on the debt will  increase to the maximum
allowed by law in Texas (18  percent).  The  balance of the bridge  loan for the
years ended  October  31, 2004 and 2003 was  $1,725,417,  and  $1,372,487  as of
October  31,  2002.  During  January  2005 the note of  $1,725,417  and  accrued
interest of $561,048 were converted into 11,101,900 shares of stock.



                                       31
<PAGE>

NOTE G - LONG-TERM OBLIGATIONS

<TABLE>
<CAPTION>
       Long-term obligations consist of the following:
                                                                       ------------  -------------  ------------
                                                                                                      Unaudited
                                                                           2004           2003          2002
                                                                       ------------  -------------  ------------
<S>                                                                          <C>           <C>            <C>
    Security deposit payable to a company relating to a prior          $  1,000,000  $   1,000,000  $  1,000,000
    Marketing Agreement.  The note bears interest at prime rate plus
    4%, compounded daily.  The interest rate is adjusted annually as
    of the beginning of the year based upon the prime rate at the end
    of the previous calendar year.  The security deposit was
    initially due in full in August 2003.  The note was extended to
    November 15, 2004

    10% note payable to a corporation, due September 2003, interest
    paid in full at date incurred, and principal due in full at
    maturity, not collateralized. Note is past due                           75,442         75,442        75,442

    11% note to a financial institution, due August 2005, payments of
    principal and interest in the amount of $418 due monthly,
    collateralized by automobiles.                                            4,192          8,472        12,302

    7.5% note payable to a corporation, due November 2007, payments
    of principal and interest of $2,996 due monthly, collateralized
    by demo trailer and skid.                                                91,512              -             -

    Subscriptions purchased for convertible notes bearing an
    interest rate of 12%, compounded monthly and a conversion price
    of $.15 per share payable to various individuals, principal and
    interest due at maturity. Collateralized by liens on the
    Company's patents and trademarks. Maturity dates are May 26,
    June 1, and July 26, 2007.                                            1,125,000              -             -
                                                                       -----------------------------------------
                                                               Total      2,296,146      1,083,914     1,087,744
    Less current maturities                                               1,109,743      1,079,722     1,078,938
                                                                       ------------  -------------  ------------
    Long-term portion                                                  $  1,186,403  $       4,192  $      8,806
                                                                       ============  =============  ============
</TABLE>


       Scheduled maturities of long-term obligations as of October 31, 2004, are
as follows:

<TABLE>
<CAPTION>
<S>                                                                        <C>
           Year ending October 31,
               Past Due                                                $    75,442
               2005                                                      1,034,301
               2006                                                         32,447
               2007                                                      1,153,956
                                                                       ------------
                                                                       $ 2,296,146
                                                                       ============
</TABLE>


                                       32
<PAGE>


NOTE H - COMMITMENTS AND CONTINGENCIES

     1. Lessee leasing

     The Company  leases office space,  a  manufacturing  and lab facility,  and
office  equipment under long-term  operating and capital leases expiring through
the year 2005 with monthly payments of approximately $6,300. Under the operating
lease  agreements,  the Company is required to maintain  property  insurance and
assume the responsibility for maintaining the property. The Company signed a new
one year  lease on April 1, 2005 for the  office  space,  manufacturing  and lab
facility at a rate of $5,950 per month.

     The Company's  future  minimum lease  payments  under  operating  leases at
October 31, 2004, are as follows:

                                            Operating
      Year ending October 31,                 leases
      -----------------------             -----------
          2005                            $    73,150
          2006                                 29,750
          Thereafter                                -

                                          -----------
      Total minimum lease payments            102,900

       Total rent expense for the years ended October 31, 2004, 2003, 2002, was
approximately $75,600.

     2. Leasor leasing

     The Company  leased certain  equipment to third parties during 2002.  Total
rental  income  for the year  ended  October  31,  2002  for  these  leases  was
approximately  $325,000.  All leases expired during 2002 and the Company has not
entered into any new leases as of October 31, 2004.


NOTE I - STOCKHOLDERS' DEFICIT

       Common stock

     During fiscal 2003, the Company issued  1,700,000 shares of common stock in
settlement of cashless exercise agreement.

     During  fiscal  2004,  the  Company  issued  shares of stock of 330,879 and
250,000 in  satisfaction  of an  accounts  payable  debt of $96,780  and $46,236
respectively.

     Also during fiscal 2004 the Company issued 1,397,389 shares of common stock
and paid $50,000 in settlement of a note payable to a related party in which the
Company retired $239,500 of debt and accrued interest of $254,574.


                                       33
<PAGE>

NOTE J - GUARANTEED INVESTMENT CONTRACT

     In July 2001,  a  shareholder  and former  member of the Board of Directors
purchased  200,000  shares  of  the  Company's  common  stock  and a  Guaranteed
Investment Contract ("GIC") from the Company for $100,000.  The GIC entitles the
shareholder a 20 times the rate of return over a period of seven years ending in
2008 amounting to $2,000,000. The investment is secured by a third position lien
on certain  equipment  of the  Company.  The Company may repay this  investment,
which matures on July 18, 2008,  together with the related rate of return earned
to that date,  less the market value of the common stock at the repayment  date,
any time after July 18, 2002.  This  obligation is presented as GIC Liability on
the balance sheet. The difference between the contract redemption amount and the
purchase price is being accreted on a  straight-line  basis over seven years and
is being added to the GIC liability  less the market value of the 200,000 shares
that were issued.  In April 2005 this GIC agreement was  terminated and settled.
The Company  issued an  additional  682,301  share of common  stock.  The holder
agreed to terminate the GIC and release his lien position.


NOTE K - WARRANTS, STOCK OPTIONS & RESTRICTED STOCK PROGRAM

Warrants

     The  Company's  board  of  directors  has the  authority  to sell or  grant
warrants to certain  non-employees.  These warrants are considered  nonqualified
for income tax purposes.

     At various  dates  during  1997 and 1998,  the  Company  issued  11,375,000
warrants to a limited  liability  company (LLC) to purchase shares of its common
stock.  The initial  exercise  price of all of the LLC warrants was $1 per share
and each  warrant  expires four years after the grant date.  LLC had  10,500,000
warrants  expire during the year ended October 31, 2002.  The remaining  875,000
warrants  expired on December  10,  2002.  The LLC did not  exercise  any of its
warrants.

     In  October  1999,  the  Company  issued a warrant  to a Trust to  purchase
1,116,071 shares of its common stock. The initial exercise price of this warrant
was $3 per share and expires in October 2003.

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

                                       34

<PAGE>

NOTE K - WARRANTS, STOCK OPTIONS & RESTRICTED STOCK PROGRAM - CONTINUED

     Following the issuance of these warrants,  the Company has issued shares of
its common  stock at prices  that  triggered  or could be deemed to trigger  the
above-described  anti-dilution  provisions on a number of occasions. In addition
the Company  issued  notes  convertible  into the Company  common  stock at $.20
during  fiscal  year  2002 and 2003.  Based  upon  this it was  deemed  that the
anti-dilution adjustment was triggered and the Company adjusted the warrant from
1,116,071  at $3.00 to  16,741,065  at $.20.  During 2003 the trust  settled and
cancelled the agreement  with the Company by accepting  1,700,000  shares of the
Company stock.

     During fiscal 2004 the Company received advances totaling  $1,125,000,  for
future  issuances  of 12%  convertible  notes  with 50%  warrant  coverage.  The
purchasers of the convertible  notes will be issued warrants for the purchase of
the  Company's  stock.  The  warrants  vest  immediately  upon  grant and have a
weighted-average  remaining  contractual  life of 3 years. The exercise price of
the warrants is $.15 and they expire during fiscal year 2008. In accordance with
the terms sheet, the warrants will be issued when the definitive loan agreements
are  signed.  The loan  agreements  were not signed  until 2005,  therefore  the
warrants were not issued until 2005.

                  Changes in the Company's warrants are as follows:

<TABLE>
<CAPTION>
                                                                                    Exercise         Weighted-average
                                                                 Warrants            price            exercise price
                                                             ----------------  -----------------  ---------------------
<S>                                                                 <C>               <C>                   <C>
        Outstanding at November 1, 2001 (Unaudited)              12,958,696       $ 1.00 - 3.00            $ 1.21
             Anti-dilution adjustment                            15,624,994                0.20              0.20
             Expired                                            (10,500,000)               3.00              3.00
                                                             ----------------
        Outstanding at October 31, 2002 (Unaudited)              18,083,690         0.20 - 3.00              1.21
             Exercised                                           (1,700,000)               0.20              0.20
             Expired                                             (1,125,125)               3.00              3.00
             Cancelled                                          (15,041,065)               0.20              0.20
                                                             ----------------
        Outstanding at October 31, 2003                             217,500                3.00              3.00
             Expired                                               (217,500)               3.00
                                                             ----------------
        Outstanding at October 31, 2004                                    -
                                                             ================
        Exercisable at October 31, 2004                                    -
                                                             ================
</TABLE>


Options

     The Company also grants stock options to employees  for services  rendered.
The stock options are also  nonqualified  for income tax  purposes.  Stock-based
compensation is accounted for under Accounting  Principles Board Opinion No. 25,
under  which no  compensation  cost  has been  recognized.  If the  Company  had
recognized  compensation expense based upon fair value at the grant date for the
awards  consistent  with Financial  Accounting  Standards No. 123 (FAS 123), the
proforma adjustments would not be material to the financial statements.


                                       35
<PAGE>

NOTE K - WARRANTS, STOCK OPTIONS & RESTRICTED STOCK PROGRAM - CONTINUED

     During 1999, the Company  granted 210,000 stock options to employees with a
strike price of $0.43 per share. The options vest immediately and expire in five
years.  No   compensation   expense  was  recognized  on  the  grant  date.  The
weighted-average  remaining contractual life of the options is 3.2 years. All of
the stock options under this plan expired in January 2004.

     During 2003, the Company established a stock option plan for employees with
the initial grant of options. Approved by the Board the plan was to be put forth
in front of shareholders in order for it to be a qualified plan under IRS rules.
However due to the Company's financial condition a stockholder meeting was never
held and under the terms of the plan if the  stockholders  fail to  approve  the
plan  within a year after the  effective  date any awards  made  became null and
void.  The stock options had an exercise  price of $.20 and expired in ten years
some of the  options  vested  immediately  and others  vested over the period of
employment. Since all of the employees were terminated on or before June 6, 2003
only the initial grant of 1,650,000 shares were made. As it was the intention of
the Company to recognize  certain  employees  under the stock  option plan,  the
Company  issued  new  options  in  March of 2005 to the  employees  who were not
executive officers totaling 1,225,000 shares with an exercise price $.20.

                  Changes in the Company's stock options are as follows:


<TABLE>
<CAPTION>
                                                                                     Exercise        Weighted-average
                                                                    Options           price           exercise price
                                                                 -------------   ---------------  ---------------------
<S>                                                                   <C>               <C>                      <C>
         Outstanding at November 1, 2001 (Unaudited)                  210,000           $ 0.43                   $ 0.43
            Granted                                                         -                -                        -
            Exercised                                                 (6,977)             0.43                     0.43
                                                                 ------------
         Outstanding at October 31, 2002 (Unaudited)                  203,023             0.43                     0.43
            Granted                                                 1,650,000             0.20                     0.20
            Exercised                                                       -                -                        -
            Cancelled                                              (1,650,000)            0.20                     0.20
                                                                 ------------
         Outstanding at October 31, 2003                              203,023             0.23                     0.23
            Granted                                                         -                -                        -
            Expired                                                  (203,023)            0.43                     0.43
                                                                 ------------
         Outstanding at October 31, 2004                                    -
                                                                 ============
         Exercisable at October 31, 2004                                    -
                                                                 ============
</TABLE>


                                       36
<PAGE>

NOTE K - WARRANTS, STOCK OPTIONS & RESTRICTED STOCK PROGRAM - CONTINUED

Restricted Stock Program

     The Company  issues  shares of IPRC common stock in the form of  restricted
stock to  participating  officers and employees.  The restricted stock generally
has a  vesting  period  before  issuance  during  which  time it is  subject  to
forfeiture if the participants' employment is terminated.  Once issued the stock
sale is restricted under rule 144. Unearned compensation expense associated with
restricted stock grants  represents the market value of IPRC common stock at the
dated of grant and is recognized as a charge to income  ratably over the vesting
period.  During Fiscal year 2004 the Company  agreed to issue  2,000,000  shares
with a weighted average fair market value of $.10 per share, but have not issued
any shares as of October 31, 2004. The compensation charge and related liability
for the year ended October 31, 2004 was $200,000.


NOTE L - RELATED PARTY TRANSACTIONS

     The Company has at various  times  entered into  transactions  with related
parties,  including officers,  directors and major  shareholders,  wherein these
parties have advanced or loaned funds to the Company needed to support its daily
operations.

     In addition  to matters in Notes E, G, and J the Company had related  party
transactions relating to the following:

     1. Food Development Corporation

     Food Development  Corporation  (FDC), an entity controlled by a stockholder
and officer of the Company,  has on occasion loaned the Company funds to support
daily  operations.  During 2003,  FDC loaned $80,000 of which funds were used to
pay certain  employees and consultants.  FDC agreed to write off said amounts in
December 2003.  During 2003 and 2004 FDC made loans to the Company in support of
the daily  operation.  During  June of 2003 the Company  entered  into an office
sharing-agreement  with FDC.  The  amount of  reimbursement  accrued  and offset
against  loans made by FDC for the years  ended  October  31,  2004 and 2003 was
$44,586 and $19,673 respectively. The payable balances included in related party
payables were  $19,141,  $32,703,  and $0 as of October 31, 2004,  2003 and 2002
respectively.

     2. Management agreement

     During  November  1998,  the Company  entered  into a five year  management
agreement with a company controlled by a major stockholder.  The agreement calls
for general business and financial  consultation and certain management services
to be provided to the  Company by the  related  party in exchange  for an annual
management fee equal to five percent of the Company's gross revenues.

                                       37

<PAGE>

NOTE L - RELATED PARTY TRANSACTIONS - CONTINUED

     During 2004, 2003 and 2002, the Company recorded  approximately $0, $31,147
and $53,076,  respectively,  in  management  fees which are included in selling,
general and administrative expenses.

     The agreement  ended in November 2003. The Company has a balance payable of
$73,413,   $73,413  and  $15,590  as  of  October  31,  2004,   2003  and  2002,
respectively. The amount owed was in dispute so the Company settled for $100,000
as the  stockholder  agreed to invest the $100,000  accrued  management fees and
$100,000 cash in the Company's 12% Convertible notes issued in June 2005.

     3. Employee Benefits

     During  2004 an  entity  owned by the CEO and CFO of the  Company  provided
benefits to certain employees utilizing a professional  employment  organization
("PEO").  The Company paid $33,332 for this service.  The employees covered were
paid a portion  of their  salaries  through  the PEO  Company.  This  amount was
approximately  $4,600.  The  entity  owned  by the CEO  and CFO had an  existing
contract  with the PEO as the  Company's  credit made it  difficult  to purchase
insurance for its employees.  The $4,000 prepaid expense balance is the November
2004 benefits paid in October 2004.

     4. Other Related Party Payable

       During 2003 a former CEO made a loan to cover payroll cost and is owed a
       balance of $19,821 as of October 31, 2004 and 2003 this amount is
       included in related party payables. In addition the former President is
       owed for un-reimbursed expenses $10,740, $10,740 and $3,795 as of October
       31, 2004, 2003 and 2002, respectively.

NOTE M - LOSS PER COMMON SHARE

     The  following  data show the amounts used in computing net loss per common
share,  including the effect on net loss for the accretion of redeemable  common
stock to the redemption amount (Note H).


<TABLE>
<CAPTION>
                                                                                 Year ended October 31,
                                                                --------------------------------------------------------
                                                                                                             Unaudited
                                                                    2004                  2003                  2002
                                                                ------------          ------------          ------------
Net loss per common share - basic and diluted
<S>                                                             <C>                   <C>                   <C>
   Net loss available to common shareholders                    $   (857,231)         $ (1,595,640)         $ (1,785,068)
                                                                ------------          ------------          ------------
   Net loss available to common shareholders                    $   (857,231)         $ (1,595,640)         $ (1,785,068)
                                                                ============          ============          ============
Common shares outstanding during
   the entire period                                              18,867,419            17,167,419            17,167,419
Weighted average common shares issued during the period
                                                                     200,440               507,671                  --
                                                                ------------          ------------          ------------
Weighted average number of common
   shares used in basic EPS                                       19,067,859            17,675,090            17,167,419
Dilutive effect of stock options and warrants                           --                    --                    --
                                                                ------------          ------------          ------------
Weighted average number of common
   shares and dilutive potential common
   stock used in diluted EPS                                      19,067,859            17,675,090            17,167,419
                                                                ============          ============          ============
Net loss per share - basic and diluted                          $      (0.04)         $      (0.09)         $      (0.10)
                                                                ============          ============          ============
</TABLE>


                                       38
<PAGE>

     The  average  number of shares  relating  to all  outstanding  options  and
warrants and to potentially  convertible debt instruments have been omitted from
the  computation  of diluted loss per share because their  inclusion  would have
been antidilutive for all periods (Notes F and K).


NOTE N - INCOME TAXES

     The  Company  uses the  liability  method,  where  deferred  tax assets and
liabilities  are determined  based on the expected  future tax  consequences  of
temporary differences between the carrying amounts of assets and liabilities for
financial and income tax reporting purposes. During fiscal, the Company incurred
net losses and,  therefore,  has no tax  liability.  The net  deferred tax asset
generated by the loss carry-forward has been fully reserved.  The cumulative net
operating loss  carry-forward is approximately  $17,441,305 at October 31, 2004,
and will expire in the years 2013 through 2024.

     At  October  31  2004,  deferred  tax  asset  consisted  primarily  of  the
following:


                                                            --------------
                                                                 2004
                                                            --------------
             Deferred tax assets
                 Net operating loss carryforward            $    6,023,898
                   Valuation allowance                          (6,023,898)
                                                            --------------
                         Net deferred tax asset             $            -
                                                            ==============



NOTE O - CONCENTRATION

     Revenue for the years ended October 31, 2003 and 2002 comprised of $562,933
and $665,513 related to the construction and delivery of an MST unit to a single
customer.  In addition,  the Company recorded  $325,000 in fiscal 2002 of rental
income  from  leasing  its  crude  oil  sludge  recovery  equipment  to a single
customer.


                                       39

<PAGE>

NOTE P - SUBSEQUENT EVENTS

     The Company's obligation for the Bridge note payable (Note F) of $1,725,417
plus accrued  interest of $561,048 was converted into  11,101,900  shares of the
Company's common stock.

     The Company also settled  debt  obligation  for the note payable with Maya,
LLC (Note E)  consisting  of a principal  note balance of $375,000  plus accrued
interest of $339,429 for 2,953,205 shares of the Company's common stock.

     The Company's  obligation for the GIC agreement (Note J) was terminated and
settled in exchange for 682,301  shares of common  stock.  The holder  agreed to
terminate the GIC and release his lien position.

     The  Company   signed  a  one  year  lease  for  office  space  along  with
manufacturing and lab facilities at a rate of $5,950 per month.

     Accrued  management  fees of $73,413  (Note M #2) owed to Maya,  LLC by the
Company was converted  into a $100,000,  12%  convertible  note,  also Maya, LLC
invested an additional $100,000 cash into the Company's 12% convertible notes.

     The Company issued final agreements for the 12% convertible  notes totaling
$2,175,000.  $1,125,000  of proceeds for the notes were  received in fiscal 2004
for note  subscriptions.  Proceeds received for fiscal 2005 from the issuance of
the 12% convertible  notes were $950,000 cash and $100,000 in  extinguishment of
debt.  Warrants associated with the convertible notes were also issued in fiscal
2005.

     During fiscal 2005 the Company issued  2,040,000  shares of common stock to
employees as share based compensation.

     In August 2005 the Company signed a management agreement with Agribiofuels,
LLC  ("Agribiofuels")  a related  party to  provide  certain  general  business,
financial  consultation  and advice and management  services to  Agribiofuels in
connection  with the  operation of its business  and to provide  technology  and
training in operating Microwave  Separation  Technology (MST) in the manufacture
of biodiesel product. Commencing August 1, 2005, Agribiofuels shall pay IPRC, in
consideration  of the  services  rendered  by IPRC  equal to  $75,000  per month
through Dec.  31, 2005,  and $120,000  thereafter  during the  construction  and
development  period.  In addition,  once the biodiesel  facility is operational,
Agribiofuels will pay IPRC a technology and licensing fee based upon throughput.

                                       40

<PAGE>

ITEM 8          CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                ON ACCOUNTING AND FINANCIAL DISCLOSURE

     In September of 2003, Grant Thornton,  LLP ("GT") notified the Company that
it resigned as the Company's independent auditor effective immediately.

     GT was engaged as the  Company's  independent  auditor since April 9, 1997.
GT's report on the  financial  statements  for the fiscal year ended October 31,
2001  contained no adverse  opinion or  disclaimer  of opinion  related to audit
scope or accounting  principles however it was modified as to the uncertainty of
the company's ability to continue as a going concern. GT had completed the field
work on the October 31, 2002 audit. However, since the Company had not paid GT's
fees incurred to date, GT felt it was in their best interest not to complete the
audit and issue the report.

     During the Company's  fiscal year ended October 31, 2002 and the subsequent
interim periods preceding GT's resignation,  there were no disagreements between
the  Company  and  GT on any  matter  of  accounting  principles  or  practices,
financial  statement   disclosure,   or  auditing  scope  or  procedure,   which
disagreements,  if not  resolved to GT's  satisfaction,  would have caused GT to
make  reference to the subject  matter of the  disagreement  in connection  with
their report.

     In  February  2005  the  Company  engaged  Malone &  Bailey,  PC as our new
independent accountant to audit the years ended October 31, 2004 and 2003.

ITEM 8A         CONTROLS AND PROCEDURES

     The Company maintains  disclosure controls and procedures that are designed
to ensure that information  required to be disclosed in its Exchange Act reports
is  recorded,  processed,  summarized  and  reported  within  the  time  periods
specified in the SEC's rules and forms, and that such information is accumulated
and communicated to its management,  including its Chief Executive Officer/Chief
Financial Officer, as appropriate,  to allow timely decisions regarding required
disclosure  based  closely  on  the  definition  of  "disclosure   controls  and
procedures"  in Rule  13a-15(e).  In designing  and  evaluating  the  disclosure
controls and procedures, management recognized that any controls and procedures,
no matter how well designed and operated,  can provide only reasonable assurance
of achieving the desired  control  objectives,  and management  necessarily  was
required to apply its judgment in evaluating the  cost-benefit  relationship  of
possible controls and procedures.

     At the end of the period covered by this Annual Report, the Company carried
out an  evaluation,  under the  supervision  and with the  participation  of its
management,  including its Chief Financial Officer,  of the effectiveness of the
design and operation of Company's disclosure controls and procedures. Based upon
the foregoing, the Company's Chief Executive Officer and Chief Financial Officer
concluded  that,  as of October 31, 2004,  October 31, 2003 and October 31, 2002
the  disclosure  controls and  procedures  of the Company were not  effective to
ensure that the information  required to be disclosed in the Company's  Exchange
Act reports was recorded, processed, summarized and reported on a timely basis.

     In connection  with the completion of its audit of, and the issuance of its
report on the financial statements of the Company for the year ended October 31,
2004, Malone & Bailey, PC identified deficiencies in Company's internal controls
related to the accrual of liabilities and the related expense recognition,  gain
on extinguishment of debt recognition,  and disclosure controls relating to such
transactions.  The  adjustments  to these  accounts and the footnote  disclosure
deficiencies  were  detected in the audit  process  and have been  appropriately
recorded and  disclosed in this Form 10-KSB.  We are in the process of improving
our internal controls in an effort to remediate these  deficiencies.  Additional
effort is needed to fully remedy these  deficiencies  and we are  continuing our
efforts to improve and  strengthen  our control  processes and  procedures.  Our
management  and  directors  will  continue to work with our  auditors  and other
outside  advisors to ensure that our  controls and  procedures  are adequate and
effective.

                                       41
<PAGE>

     There were no changes in internal  controls over  financial  reporting that
occurred  during the fiscal quarter ended October 31, 2004, that have materially
affected,  or are reasonably likely to materially  affect,  our internal control
over financial reporting.

ITEM 8B         OTHER INFORMATION

The Company failed to file an 8-K for the following:


o    In June 2004,  IPRC entered  into a security  deposit  payment  forbearance
     agreement  with  successor  in  interest  to MTC  in  connection  with  the
     marketing  agreement  entered into in October 1999 with MTC Pursuant to the
     1999 agreement, MTC provided IPRC a $1,000,000 security deposit, which IPRC
     was to repay on August 10, 2003. Pursuant to the forbearance agreement,  if
     the Company entered into a contract for the sale, or license of one or more
     MST units by October 31,  2004,  the Company  was  obligated  to payoff the
     security deposit in six (6) quarterly installments.  If IPRC fails to enter
     into a  contract  for the  sale,  or  license  of one or more MST  units by
     October 31, 2005 or fails to payoff the  security  deposit by December  31,
     2005, then IPRC shall accrue  interest on the unpaid security  deposit plus
     any accrued  interest,  at a rate equal to the prime rate of Citibank  (New
     York) at the close of business  on the last  business  day of the  calendar
     year immediately preceding each respective year plus 4%.

o    During  fiscal  years  2002 and 2003,  the  Company  issued to an  investor
     secured  convertible  promissory notes with an aggregate principal value of
     $1,725,417.  The notes bear  interest at a rate of 12 percent per annum and
     matured on December 16, 2002. The note agreement governing the terms of the
     notes was amended to extend the maturity  date to December  31,  2004.  The
     principal  and  interest on the notes may be converted at the option of the
     holder  into  shares of  common  stock at a  conversion  price of $0.20 per
     share.  Upon an event of default,  the notes begin to accrue  interest at a
     maximum  rate of eighteen  percent  (18%) per annum.  Effective  January 1,
     2005, the notes were converted into 11,101,900 shares of stock.

o    During fiscal 2003, the Company issued  1,700,000 shares of common stock in
     settlement of cashless exercise agreement.

o    In  September  of  2003,  Grant  Thornton,  LLP  ("GT")  notified  Imperial
     Petroleum  Recovery  Corporation  (the  "Company")  that it resigned as the
     Company's independent auditor effective immediately.  GT was engaged as the
     Company's  independent  auditor  since  April 9, 1997.  GT's  report on the
     financial  statements  for the fiscal year ended October 31, 2001 contained
     no adverse  opinion or  disclaimer  of  opinion  related to audit  scope or
     accounting  principles however it was modified as to the uncertainty of the
     company's  ability to continue as a going  concern.  GT had  completed  the
     field work on the October 31,  2002 audit.  However,  since the Company had
     not paid GT's fees  incurred to date, GT felt it was in their best interest
     not to complete the audit and issue the report. During the Company's fiscal
     year ended October 31, 2002 and the subsequent  interim  periods  preceding
     GT's resignation, there were no disagreements between the Company and GT on
     any matter of  accounting  principles  or  practices,  financial  statement
     disclosure,  or auditing scope or procedure,  which  disagreements,  if not
     resolved to GT's  satisfaction,  would have caused GT to make  reference to
     the subject matter of the disagreement in connection with their report.


                                       42
<PAGE>


o    On November 1, 2003,  pursuant to the 2002 Option Plan,  the Company issued
     options to purchase 3,350,000 shares of the Company's common stock at $0.20
     per share to seven (7)  employees.  Options to  purchase  1,650,000  vested
     immediately,  the remaining vested equally on November 1, 2004 and November
     1, 2005. As of November 1, 2003, all the options were null and void because
     the 2002 Option Plan never received shareholder approval.

o    In September,  2004,  the Company issued 250,000 shares of stock and agreed
     to pay $15,000 in cash over six months in settlement of an accounts payable
     balance of $91,236.

o    In October 2004,  the Company issued a 3 year 7.5% note payable for $96,315
     and issued  330,879  shares of stock in  settlement  of  $193,095  accounts
     payable balance with a vendor.

o    In October  2004 the Company  issued  1,397,389  shares of common stock and
     paid $50,000 in  settlement  of a note payable to a related  party in which
     the Company retired $239,500 of debt and accrued interest of $254,574.

o    During fiscal year 2004 the Company issued to investors secured convertible
     note subscription  agreements with generated cash flows of $1,125,000.  The
     subscription agreements bear interest at a rate of 12 percent per annum and
     after the  agreements  were executed into  promissory  notes in fiscal 2005
     they mature on various dates in fiscal 2007.  The notes are  convertible at
     $0.15 per share.  Maturity dates are May 26, June 1, and July 26, 2007. The
     purchasers  of the  convertible  notes  will  be  issued  warrants  for the
     purchase of the Company's  stock.  The warrants vest immediately upon grant
     and have a  weighted-average  remaining  contractual  life of 3 years.  The
     exercise  price of the warrants is $.15 and they expire  during fiscal year
     2008. In accordance with the terms sheet,  the warrants will be issued when
     the definitive  loan  agreements are signed.  The loan  agreements were not
     signed until 2005, therefore the warrants were not issued until 2005.

o    During fiscal year 2004 the Company agreed to issue 2,000,000 of restricted
     stock to participating  officers and employees with a weighted average fair
     market  value of $.10 per  share,  but have not  issued  any  shares  as of
     October 31, 2004.

o    In January 2003,  Christopher G. DeClaire was appointed the chief executive
     officer and resigned in May 2003.  Alan  Springer and Edward  Gaiennie were
     appointed  directors  in April  2003.  In  January  2004,  Henry  Kartchner
     resigned as Chairman and CEO and C. Brent Kartchner  resigned as President.
     The Board of  Directors  appointed  Alan  Springer as Chairman  and CEO and
     Edward Gaiennie as the Chief Financial Officer.

o    In  February  2005  the  Company  engaged  Malone &  Bailey,  PC as our new
     independent accountant to audit the years ended October 31, 2004 and 2003.


                                       43

<PAGE>

                                    PART III

ITEM 9          DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
                COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Directors and Executive Officers

         The following are the directors, executive officers and key employees
of the Company.



Name                   Age                            Position
----                   ---                            --------
Alan B. Springer        61      Chairman and Chief Executive Officer

Edward C. Gaiennie      41      Chief Financial Officer, Secretary-Treasurer ,
                                Principal Accounting Officer and Director

A.V. McGraw             77      Director

James Hammond           69      Director

     Alan B.  Springer.  Mr.  Springer  has served as a director  of the Company
since April  2003.  Mr.  Springer  assumed the role of Chairman of the Board and
Chief Executive Officer in January of 2004. From 1998 to 2004 Mr. Springer was a
Managing  Director of Odyssey  Capital,  LLC.  From 1994 to 1998,  Mr.  Springer
served as the Chief  Financial  Officer  for IKON  Office  Solutions  - Document
Services  Division  in  Houston,  Texas.  IKON  Office  Solutions  is an  office
technology  company  providing  total  document  solutions  for many Fortune 500
companies.  From 1968 to 1994 Mr. Springer worked within the U.S.  Department of
Defense,  serving in various  financial  management  positions as the  Financial
Officer of several  strategic  tactical NATO  organizations.  During this period
1978 - 1986 Mr.  Springer was an adjunct  professor in the European  Division of
the University of Maryland in their Business  College.  Mr.  Springer  graduated
from  the  University  of  Akron  with  a  Bachelor  of  Science  in  industrial
engineering  and from the University of Utah with an MBA.  Postgraduate  studies
include the Naval Post Graduate  School in Monterey,  California and the Air War
College in Montgomery, Alabama both during his military career.

     Edward C.  Gaiennie.  Mr.  Gaiennie has served as a director of the Company
since April 2003. He became Principal Accounting Officer,  Secretary,  Treasurer
and Chief  Financial  Officer of the Company in January 2004. From 1999 to 2004,
Mr. Gaiennie was Controller of Odyssey Capital,  LLC and its predecessor Company
ROI Group,  LLC.  Previous to 1999,  Mr.  Gaiennie  was  employed as a certified
public accountant.  Seven of those years were with Price Waterhouse Coopers LLP.
In his  eleven  years of public  accounting  Mr.  Gaiennie  served as a business
advisor  to  high  growth   companies  with  an  emphasis  in  construction  and
manufacturing.  Mr.  Gaiennie  has a Bachelor of Science  degree in business and
accounting from Louisiana State University.

     A.V.  "Buddy"  McGraw.  Mr. McGraw has served as a director  since November
2000.  Since  1977,  he has served as General  Manager and  President  of Centex
Materials,  Inc., a wholly owned subsidiary of Centex Corporation.  In 1991, Mr.
McGraw  co-founded  Phonon  Technologies,  Inc., a small microwave  research and
development company in Houston,  Texas, which later sold its assets to Microwave
Technology Acquisition  Corporation in 1996. Mr. McGraw has previously served as
Chairman of the Board of the Texas  Aggregate  and Concrete  Association  and he
continues to provide consulting services to the construction aggregate and ready
mix concrete industries. A recipient of the Austin, Texas' Distinguished Citizen
Award,  Mr. McGraw has been active in the Texas political  arena, and has proven
to be an effective  negotiator with regulatory  agencies,  energy  corporations,
government authorities,  financial institutions and the transportation industry.
Mr.  McGraw  graduated  from the  University  of Texas at Austin with a business
administration degree.

                                       44
<PAGE>

     James W. Hammond.  Mr. Hammond has served as a director since July 2001. In
1986,  Mr.  Hammond  co-founded  Administaff,  one of the  largest  professional
employer  organizations in the United States.  In 1997, Mr. Hammond retired from
Administaff as a director and as Senior Vice President, after its initial public
offering.  Prior to founding Administaff,  Mr. Hammond held several positions at
Exxon in a wide range of activities including research,  refining, new ventures,
chemicals,  production,  pipelines,  transportation,  sales and  marketing,  and
corporate  planning.  Presently,  he holds management and advisory  positions in
five private  companies  and serves on the Board of Directors of three  national
charities and a university. Mr. Hammond received a Bachelor of Science degree in
chemical  engineering from Virginia Tech and did post graduate work in economics
at the University of Houston.

Audit Committee Matters

     The  Company's  Audit  Committee is  comprised  of James  Hammond and Buddy
McGraw.  The Audit Committee is responsible for, among other things,  overseeing
the Company's  accounting  and financial  reporting  processes and audits of the
Company's  financial  statements.  There are  currently  no members of the Audit
Committee  who  qualify  as an "audit  committee  financial  expert."  There are
currently no members of the Audit Committee who are  "independent" as defined in
federal  securities  laws. The Company intends to add additional  members to the
Board of Directors,  and the Audit Committee,  that would qualify as a financial
expert and as independent. However, the Company cannot assure you as to whether,
or when, they will succeed in recruiting an acceptable director.

Section 16(a) Beneficial Ownership Reporting Compliance


     Section 16(a) of the Securities  Exchange Act of 1934 (the "Act")  requires
the  Company's  executive  officers  and  directors  and  any  persons  who  own
beneficially more than 10% of the Company's Common Stock to file initial reports
of  ownership  and  changes  in  ownership  with  the  Securities  and  Exchange
Commission  ("SEC") as well as to furnish the  Company  with a copy of each such
report.  Additionally,  SEC  regulations  require the Company to identify in its
proxy statement and Annual Report on Form 10-KSB those  individuals for whom one
or more of these  reports  required  under  Section 16 was not filed on a timely
basis during the most recent fiscal year or prior fiscal years.  To management's
knowledge,  no executive  officers,  directors and 10% stockholders have met the
requirements  of Section  16(a)  during the 2002,  2003 and 2004  fiscal  years.
Specifically,  Mr.  Springer and Mr.  Gaiennie failed to file Form 3's in fiscal
year 2004. Mr.  Springer and Mr. Gaiennie failed to file a Form 4 or Form 5 upon
the issuance of their respective restricted stock rights granted in April 2004.


Code of Ethics

     The  Company  has  adopted  a Code of  Ethics  that  applies  to all of its
directors,  officers  (including its chief  executive  officer,  chief financial
officer,  chief accounting  officer and any person performing similar functions)
and employees.

                                       45
<PAGE>

ITEM 10  EXECUTIVE COMPENSATION

Summary Compensation Table

         The following table sets forth certain information concerning the
compensation paid or accrued by IPRC to or on behalf of the Company's Chief
Executive Officer and other executive officers for services provided in the
fiscal years indicated.

<TABLE>
<CAPTION>
                           SUMMARY COMPENSATION TABLE
      Name and
      Principal Positions                Year      Annual Compensation compensation             Compensation
                                                    Salary ($)       Bonus ($)        Stock Award            Options
                                                    ----------       ---------        -----------    ---------------------
<S>                                       <C>        <C>             <C>              <C>                 <C>
      Alan B. Springer (Chairman and
      CEO) (1)                             2004     $     38,500                         $75,000(2)

      Henry H. Kartchner (Former
      Chairman and CEO) (3)                2004     $      1,000
                                           2003     $     17,500
                                           2002     $     30,000                                              450,000(4)
                                           2001                -
                                           2000     $     16,155        $120,000
      Christopher G. DeClaire (Former
      CEO) (5)                             2003     $     17,308
      C. Brent Kartchner (Former
      President) (6)                       2004     $      1,000
                                           2003     $     29,077
                                           2002     $     56,302                                              400,000(7)
                                           2001     $    112,460
                                           2000     $    130,770         $50,000
      Edward C. Gaiennie (CFO) (8)         2004     $     38,500                         $35,000(9)
      William W. Chalmers, Jr.
      (President & CEO) (10)               2001     $    100,440

                                           2000     $     12,500
</TABLE>

(1)  Mr. Springer was appointed  Chief  Executive  Officer in January 2004, this
     includes Mr.  Springer's  compensation  from January 2004 until October 31,
     2004.

(2)  Mr. Springer was granted the right to 750,000  restricted  shares as a part
     of his incentive  driven  compensation  package which included a lower than
     market salary upon the closing of a $1,500,000 financing. As of October 31,
     2004, the financing had not closed. Mr. Springer will not receive dividends
     on the restricted  shares until the financing has closed. As of October 31,
     2004, the value of the restricted  shares using the Company's closing price
     of $0.09 per share on October 29, 2004 is $67,500.

(3)  Mr. Henry Kartchner was Chief Executive Officer from April 2001 until April
     2004; this table includes all  compensation  paid to Mr.  Kartchner  during
     that period.

                                       46
<PAGE>

(4)  Mr.  Kartchner  was  issued  an option to  purchase  450,000  shares of the
     Company's  common  stock  pursuant  to the 2002  Option Plan at an exercise
     price of $0.20 per share.  As of October 31, 2003,  those options were null
     and void because the Company did not receive stockholders authorization for
     the 2002 Option Plan.

(5)  DeClaire was the Chief  Executive  Officer from January to May of 2003.

(6)  Mr. Brent Kartchner was president until April 2004; this table includes all
     compensation paid to Mr. Kartchner through April 2004.

(7)  Mr.  Kartchner  was  issued  an option to  purchase  400,000  shares of the
     Company's  common stock  pursuant to the 2002 Option Plan an exercise price
     of $0.20 per share.  As of October 31,  2003,  those  options were null and
     void because the Company did not receive stockholders authorization for the
     2002 Option Plan.

(8)  Mr. Gaiennie was appointed  Chief  Financial  Officer in January 2004, this
     includes Mr.  Gaiennie's  compensation  from January 2004 until October 31,
     2004.

(9)  Mr. Gaiennie was granted the right to 350,000  restricted  shares as a part
     of his incentive  driven  compensation  package which included a lower than
     market salary upon the closing of a $1,500,000 financing. As of October 31,
     2004, the financing had not closed. Mr. Gaiennie will not receive dividends
     on the restricted  shares until the financing has closed. As of October 31,
     2004 the value of the restricted  shares using the Company's  closing price
     of $0.09 per share on October 29, 2004 is $31,500.

(10) Mr.  Chalmers was  President and Chief  Executive  Officer from October 16,
     2000 to April 24, 2001,  this table includes all  compensation  paid during
     that time period.


                        Option Grants in 2002Fiscal Year
                               (Individual Grants)

<TABLE>
<CAPTION>
                        Number of Securities   Percent of Total
                         Underlying Options   Options Granted to      Exercise or
                              Granted            Employees in          Base Price           Expiration
Name                            (#)               Fiscal Year            ($/Sh)                Date
----------------------- --------------------- -------------------- ------------------- ----------------------
<S>                           <C>                     <C>                <C>                    <C>
Henry H. Kartchner            450,000                 13%                $0.20         November 1, 2010 (1)
C. Brent Kartchner            400,000                 12%                $0.20         November 1, 2010 (1)
</TABLE>

(1)  These  options were issued  pursuant to the 2002 Option Plan. As of October
     31,  2003,  these  options  were null and void  because the Company did not
     receive stockholders authorization for the 2002 Option Plan.

Compensation of Directors

         Directors receive no compensation or fees for their services rendered
in such capacity at this time.

Employment Contracts

         The Company had not entered into employment contracts with any of its
employees.

                                       47
<PAGE>


ITEM 11           SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Security Ownership of Certain Beneficial Owners and Management

     As  of  November  22,  2005,   40,085,029   shares  of  common  stock  were
outstanding.  The following table sets forth, as of September 13, 2005,  certain
information with respect to shares beneficially owned by: (a) each person who is
known to be the beneficial  owner of more than 5% of our  outstanding  shares of
common  stock,  (b) each  director  or  nominee  for  director,  (c) each  named
executive  officers,  and (d) all current directors and executive  officers as a
group.

     Beneficial  ownership has been  determined  in  accordance  with Rule 13d-3
under the  Exchange  Act.  Under this rule,  certain  shares may be deemed to be
beneficially  owned by more than one person (if, for example,  persons share the
power to vote or the power to dispose of the shares).  In  addition,  shares are
deemed  to be  beneficially  owned by a person  if the  person  has the right to
acquire  shares (for example,  upon exercise of an option)  within sixty days of
the date as of which the  information  is provided.  In computing the percentage
ownership of any person, the amount of shares is deemed to include the amount of
shares  beneficially owned by such person by reason of such acquisition  rights.
As a result,  the percentage of outstanding shares of any person as shown in the
following table does not necessarily reflect the person's actual voting power at
any particular date.

     To the  Company's  knowledge,  except as indicated in the footnotes to this
table and pursuant to applicable  community  property laws, the persons named in
the table have sole voting and  investment  power with  respect to all shares of
common  stock shown as  beneficially  owned by them.  The address of each of the
individuals  listed is 1970 S. Starpoint  Drive,  Houston,  Texas 77032,  except
where footnoted.


<TABLE>
<CAPTION>
                                                                            SHARES BENEFICIAL OWNED
BENEFICIAL OWNER                                             SHARES OF COMMON STOCK           PERCENT OF CLASS
----------------                                             ----------------------           ----------------
<S>                                                               <C>                         <C>
Henry H. Kartchner                                                2,691,020 (1)                     4.35%
Alan B. Springer                                                  1,600,000 (2)                     2.59%
C. Brent Kartchner                                                  876,525 (3)                     1.42%
Edward C. Gaiennie                                                  950,000 (4)                     1.54%
Rex Lewis (5)                                                     8,578,205 (6)                    13.87%
Don B. Carmichael (7)                                            27,101,900 (8)                    43.83%
All current directors and executive officers as a group            2,700,000                        4.37%
(8 persons)
</TABLE>


(1)  Includes  1,087,646 shares held by Food Development  Corporation  which Mr.
     Kartchner  controls.  This  does not  include  Mr.  Kartchner's  option  to
     purchase  450,000 shares of the Company's  common stock because such option
     is null and void pursuant to the terms of the 2002 Option Plan.


                                       48
<PAGE>

(2)  Includes  750,000 shares of restricted  stock to be issued to Mr.  Springer
     for the  completion of the  $1,500,000  financing and 850,000  shares to be
     issued  to  Mr.  Springer  for  the  negotiation   and   restructuring   of
     approximately $5.1 million of the Company's debt. As of September 13, 2005,
     the financing was completed and the majority of the Company's debt has been
     restructured.


(3)  This does not include Mr.  Kartchner's option to purchase 450,000 shares of
     the Company's common stock because such option is null and void pursuant to
     the terms of the 2002 Option Plan.


(4)  Includes  350,000 shares of restricted  stock to be issued to Mr.  Gaiennie
     for the  completion of the  $1,500,000  financing and 600,000  shares to be
     issued  to  Mr.  Gaiennie  for  the  negotiation   and   restructuring   of
     approximately $5.1 million of the Company's debt. As of September 13, 2005,
     the financing was completed and the majority of the Company's debt has been
     restructured.

(5)  Mr. Lewis' principal business address is 2325 A Renaissance Dr., Las Vegas,
     Nevada 89119.  The shares  beneficially  owned by Mr. Lewis are held in the
     name of Maya, LLC and All Safe, LLC, entities controlled by Mr. Lewis.

(6)  This  includes   $200,000  in  convertible   promissory   notes  which  are
     convertible at $0.15 into 1,333,333  shares of stock in addition to holding
     warrants to purchase another 666,667 shares at $0.15.


(7)  Don B. Carmichael's  business address is 714 FM 1960W Suite 107 Houston, TX
     77090.


(8)  This includes  11,101,900  shares held in the name of IPRC Bridge,  LP. Mr.
     Carmichael is the general  partner of IPRC Bridge,  LP. Mr. Henry Kartchner
     and Mr.  Hammond are  limited  partners in IPRC Bridge LP, each owning less
     than  five  percent  (5%)  of the  outstanding  partnership  interests.  In
     addition  Mr.  Carmichael  holds  convertible   promissory  notes  totaling
     $1,400,000  as of September  15, 2005,  which are  convertible  at $.15 and
     warrants to purchase an additional 4,666,667 shares at $0.15.

ITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     In December 2000, Henry H. Kartchner  advanced $50,000 to the Company.  The
advance was to be repaid one week  later,  on December  13,  2000,  for a fee of
$3,000.  In July 2001,  the  unpaid  balance of  $53,000  was  converted  into a
promissory  note  accruing  interest at a rate of 10% per annum with interest to
accrue retroactively from January 1, 2001. The promissory note, which matured on
September  15, 2001,  gives the holder the option to convert any unpaid  balance
into shares of the Company's  Common Stock at $0.40 per share.  In May 2002, Mr.
Kartchner  agreed to exchange  this note,  which had an  outstanding  balance of
$71,433,  for a limited  partnership  interest in IPRC Bridge, LP. In connection
with this exchange, Mr. Kartchner agreed to cancel the note payable owed by IPRC
in exchange for receiving the limited partnership from the IPRC Bridge, LP.

     Through May 2002, Mr. Hammond was owed $16,747  pursuant to advances he had
made to the Company. In May 2002, Mr. Hammond agreed to exchange this debt for a
limited partnership interest in IPRC Bridge, LP, which was valued at $16,747. In
connection with this exchange, Mr. Hammond agreed to cancel the debt owed by the
Company in exchange for receiving the limited  partnership  interest in the IPRC
Bridge LP.

                                       49
<PAGE>

     On January 19, 2001, the Company borrowed $375,000 from Maya, LLC. The loan
was funded in March 2001 and is secured by the MST Demonstration  Unit currently
located at the Company's  business office in Houston,  Texas. The loan currently
accrues interest at a rate of eighteen percent (18%) per annum and is payable on
demand. During January 2005 the Company settled the note and accrued interest of
$743,538 by issuing 2,953,205 shares of the Company Common Stock.

     From April 2001 through  September 2001, the Company borrowed $219,500 from
Scott Hensel, a former member of the Board of Directors.  The loans were used to
fund  operations  and accrued  interest  at a rate of 20% per annum.  They had a
staggered  maturity  schedule.  Mr. Hensel  loaned an additional  $20,000 to the
Company in December  2001 under the  agreement  at an  interest  rate of 20% per
annum. The loan is in default  therefore the interest rate was increased to 24%.
As of October 31, 2003 and 2002,  the Company  owed  approximately  $413,353 and
$325,927 in principal and interest  respectively.  The Company settled the notes
and accrued  interest by paying  $50,000  and  issuing  1,397,389  shares of the
Company's Common Stock.

     In July 2001,  Paul Howarth loaned the Company  $222,399 and $26,595 during
September and October 2001. The loans,  which accrued  interest at a rate of 20%
per annum,  began to accrue  interest  at a default  rate of 24% per annum after
December 31, 2001.  In connection  with these loans,  the Company (a) executed a
pledge  agreement  wherein IPRC  pledged 100% of the shares of its  wholly-owned
subsidiary,  Petrowave,  Inc. and any other  subsidiaries the Company forms, and
(b) granted Mr. Howarth a lien on its patents and trademarks.

     In October  1999,  the Company  issued to Howarth  Family  Trust,  Ltd.,  a
warrant to purchase  1,116,071  shares of IPRC common stock at an exercise price
of $3.00 per share. Pursuant to "full-ratchet" anti-dilution provision contained
in the  warrant,  the exercise  price of the warrant has  decreased to $0.20 per
share and the number of shares  which may be acquired  increased  to  16,741,065
shares.  The Company  settled this  agreement in June 2003 by issuing  1,700,000
shares of the Company's  common stock and adding $10,000 to his promissory note.
During August of 2004 the Company settled the entire promissory note of $258,994
plus accrued interest of $254,779 for a cash payment of $200,000.

     On July 18, 2001,  Thomas Rossi  purchased  200,000 shares of the Company's
Common Stock and a Guaranteed Investment Contract from the Company for $100,000.
The Guaranteed  Investment  Contract entitles the shareholder a 20 times rate of
return  over a period of 7 years  ending on July 18,  2008.  The  investment  is
secured by a third  position  lien on certain  equipment  of the Company that is
leased to a customer  and located in a refinery  in  Torrance,  California.  The
Company may repay this investment, which matures on July 18, 2008, together with
the  related  rate of return  earned to that date,  any time after July 18, 2002
without penalty.  The amount  outstanding at October 31, 2004, 2003 and 2002 was
$$394,131,  $248,354 and $140,503,  respectively.  In April 2005 the Company and
the holder agreed to cancel the agreement and Mr. Rossi  received and additional
682,301 shares of stock in addition to the 200,000 initially issued.

     In November  2001,  the Company  entered into a consulting  agreement  with
Odyssey  Capital,  LLC wherein  Odyssey  Capital agreed to provide  business and
financial advisory services to the Company.  The consulting  agreement was for a
term of three  months and  provided  that  Odyssey  Capital  would  receive  the
following: (a) a monthly financial advisory fee of $20,000, in addition to other
compensation  if a private  placement of  securities  was made to refinance  the
Bridge  Note.  This  private  placement  never  was  undertaken   therefore  the
contingent fees were not recorded.  The agreement  continued on a month-to-month
basis until the  agreement  was  amended in December  2002.  The  December  2002
amendment  provided  that (a) the  financial  advisory  fee would be  reduced to
$10,000 per month;  (b) the agreement  would  terminate  December 31, 2003.  The
agreement was  terminated by both parties in May of 2003 and any amounts owed or
due under the agreement were cancelled by and agreed to by both parties.

                                       50
<PAGE>

     Food Development  Corporation  (FDC), an entity controlled by a stockholder
and former officer of the Company,  has on occasion  loaned the Company funds to
support daily  operations.  During 2003,  FDC loaned $80,000 of which funds were
used to pay  certain  employees  and  consultants.  FDC agreed to write off said
amounts in 2003.  During  2003 and 2004 FDC made loans to the Company in support
of the daily operation.  During June of 2003 the Company entered into an office-
sharing-agreement  with FDC.  The  amount of  reimbursement  accrued  and offset
against  loans made by FDC for the years  ended  October  31,  2004 and 2003 was
$44,586 and $19,673 respectively.

     The Company  issues  shares of IPRC common stock in the form of  restricted
stock to  participating  officers and employees.  The restricted stock generally
has a  vesting  period  before  issuance  during  which  time it is  subject  to
forfeiture if the participants' employment is terminated.  Once issued the stock
sale is restricted under rule 144. Unearned compensation expense associated with
restricted stock grants  represents the market value of IPRC common stock at the
date of grant and is recognized  as a charge to income  ratably over the vesting
period. During fiscal year 2004 the Company issued 2,000,000 shares.

ITEM 13           EXHIBITS AND REPORTS ON FORM 8-K

         (a) The following exhibits are to be filed as part of the annual
report:

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

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

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

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

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

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

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

                                       51
<PAGE>

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

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

10.8     Warrant  for the  Purchase of Shares of Common  Stock dated  October 6,
         1999 issued by the Company to the Howarth Family Trust (incorporated by
         reference to Exhibit 4 to the Schedule 13D of the Howarth  Family Trust
         dated 10/1/87 filed with the Commission on June 13, 2001).

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

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

10.11    License Agreement between IPRC and Tradewinds Oil and Gas Inc.

10.12    Security Deposit  Forbearance  Agreement,  dated June 8, 2004,  between
         IPRC and successor in interest to Mobil.

10.13    Management  Agreement,  effective  August  1,  2005,  between  IPRC and
         Agribiofuels, LLC.

10.14    2002 Stock Option Plan

10.15    Form of Note Agreement, executed in 2005, between IPRC and investors.

10.16    Form of Registration  Right Agreement,  executed in 2005,  between IPRC
         and investors

10.17    Form  of  Warrant  Agreement,   executed  in  2005,  between  IPRC  and
         investors.

10.18    Strategic Marketing Manufacturing and Technology Licensing Agreement.

21.1     Subsidiaries of Registrant

31.1     Certification of Alan Springer.

31.2     Certification of Edward Gaiennie.

32.1     Certification for Sarbanes-Oxley Act of Alan Springer.

32.2     Certification for Sarbanes-Oxley Act of Edward Gaiennie.

                                       52
<PAGE>



ITEM 14  PRINCIPAL ACCOUNTANT FEES AND SERVICES

         Malone & Bailey, PC, are the Company's  independent auditors engaged to
examine the  financial  statements  of the  Company  for the fiscal  years ended
October 31,  2004 and 2003.  Malone & Bailey,  PC has  performed  the  following
services and has been paid the following fees for these fiscal years:

Audit Fees

         Malone & Bailey,  PC was paid aggregate fees of  approximately  $55,000
for the fiscal years ended October 31, 2004 and 2003 for  professional  services
rendered  for  the  audits  of  the  Company's  annual  consolidated   financial
statements.

Audit Related Fees

         Malone & Bailey,  PC was not paid any  additional  fees for the  fiscal
years  ended  October  31,  2004 and 2003 for  assurance  and  related  services
reasonably related to the performance of the audit of the Company's consolidated
financial statements.

Tax Fees

         Malone &  Bailey,  PC was not paid any  aggregate  fees for the  fiscal
years ended October 31, 2004 and 2003 for professional services rendered for tax
compliance, tax advice and tax planning.

Other Fees

         Malone & Bailey,  PC was paid no other fees for  professional  services
during the fiscal years ended October 31, 2004 and 2003.


                                       53
<PAGE>



                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                         IMPERIAL PETROLEUM RECOVERY CORPORATION


                         By: /s/  Alan Springer
                            --------------------------------------------------
                               Alan Springer, Chairman and Chief
                               Executive Officer

                         Date:    November __, 2005

         In accordance with Section 13 or 15(d) of the Exchange Act, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
         Signature                                   Title                           Date
<S>                                   <C>                                       <C>

/s/ Alan Springer
-------------------------------      Chairman of the Board                       November __, 2005
Alan Springer                        and Chief Executive Officer


/s/ Edward C. Gaiennie               Vice President, Chief Financial Officer,    November __, 2005
-------------------------------      Principal Accounting Officer
Edward C. Gaiennie                   and Director


/s/ James Hammond
-------------------------------      Director                                    November __, 2005
James Hammond


/s/ A.V. McGraw
-------------------------------      Director                                    November __, 2005
A.V. McGraw
</TABLE>


                                       54


<PAGE>

                     IMPERIAL PETROLEUM RECOVERY CORPORATION

                          Exhibit Index to Form 10-KSB


Exhibit No.                         Identification of Exhibit


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

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

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

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

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

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

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

                                       55
<PAGE>

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

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

10.8     Warrant  for the  Purchase of Shares of Common  Stock dated  October 6,
         1999 issued by the Company to the Howarth Family Trust (incorporated by
         reference to Exhibit 4 to the Schedule 13D of the Howarth  Family Trust
         dated 10/1/87 filed with the Commission on June 13, 2001).

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

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

10.11    License Agreement between IPRC and Tradewinds Oil and Gas Inc.

10.12    Security Deposit  Forbearance  Agreement,  dated June 8, 2004,  between
         IPRC and successor in interest to Mobil.

10.13    Management  Agreement,  effective  August  1,  2005,  between  IPRC and
         Agribiofuels, LLC.

10.14    2002 Stock Option Plan

10.15    Form of Note Agreement, executed in 2005, between IPRC and investors.

10.16    Form of Registration  Right Agreement,  executed in 2005,  between IPRC
         and investors

10.17    Form  of  Warrant  Agreement,   executed  in  2005,  between  IPRC  and
         investors.

10.18    Strategic Marketing Manufacturing and Technology Licensing Agreement.

21.1     Subsidiaries of Registrant

31.1     Certification of Alan Springer.

31.2     Certification of Edward Gaiennie.

32.1     Certification for Sarbanes-Oxley Act of Alan Springer.

32.2     Certification for Sarbanes-Oxley Act of Edward Gaiennie.

                                       56