U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                   FORM 10-QSB

[x]      Quarterly report under Section 13 or 15(d) of the Securities Exchange 
         Act of 1934.

         FOR THE QUARTERLY PERIOD ENDED MAY 31, 1997.

[  ]     Transition report under Section 13 or 15(d) of the Exchange Act.

         For the transition period from _______________ to _______________

         Commission file number 0-23902

                                    IPI, INC.
         (Exact Name of Small Business Issuer as Specified in its Charter)

         MINNESOTA                                                         
         (State or Other Jurisdiction of Incorporation or Organization)    

         41-1449312                           
         (I.R.S. Employer Identification No.) 

         15155 TECHNOLOGY DRIVE
         EDEN PRAIRIE, MN  55344
         (Address of Principal Executive Offices)

                                 (612) 975-6200
         (Issuer's Telephone Number, Including Area Code)

                                 NOT APPLICABLE

         (Former Name, Former Address and Former Fiscal Year, If Changed Since 
         Last Report)

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

Yes __X__     No _____

         As of July 11, 1997, there were 4,734,087 Common Shares outstanding.


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<CAPTION>
                                    IPI, INC.

                                Table of Contents

                                                                                                Page

PART I.  FINANCIAL INFORMATION
<S>                                                                                             <C>

         Item 1.         Financial Statements (Unaudited)

                         Condensed Consolidated Balance Sheets as of May 31,
                         1997 and November 30, 1996.                                              3

                         Condensed Consolidated Statements of Operations for the
                         Three and Six Months Ended May 31, 1997 and May 31,
                         1996.                                                                    4

                         Condensed Consolidated Statements of Cash Flows for the
                         Six Months Ended May 31, 1997 and May 31, 1996.                          5

                         Notes to Condensed Consolidated Financial Statements.                    6

         Item 2.         Management's Discussion and Analysis of Financial Condition
                         and Results of Operations.                                              7-8

PART II.  OTHER INFORMATION

         Item 1.         Legal Proceedings                                                        9

         Item 2.         Changes in Securities                                                    9

         Item 3.         Defaults Upon Senior Securities                                          9

         Item 4.         Submission of Matters to Vote of Security Holders                        9

         Item 5.         Other Information                                                        9

         Item 6.         Exhibits and Reports of Form 8-K                                         9

         Signatures                                                                              10

</TABLE>


PART I.  FINANCIAL INFORMATION

ITEM 1.

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<CAPTION>
                            IPI, INC. AND SUBSIDIARY

                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                                                            May 31, 1997           November 30,
                                                                             (Unaudited)               1996
                                                                        ------------------     ------------------
                                     ASSETS

CURRENT ASSETS:
<S>                                                                          <C>                    <C>          
     Cash and cash equivalents                                               $   2,370,000          $   1,257,000
     Short-term investments                                                      3,260,000              3,180,000
     Trade accounts receivable                                                   1,392,000              1,298,000
     Current maturities of notes receivables, net of allowance for
         doubtful accounts of $187,000 and $187,000                                917,000                917,000
     Inventories                                                                   318,000                398,000
     Prepaid expenses and other                                                    176,000                167,000
     Deferred income taxes                                                         585,000                585,000
                                                                        ------------------     ------------------

         Total current assets                                                    9,018,000              7,802,000
                                                                        ------------------     ------------------

PROPERTY AND EQUIPMENT:

     Property and equipment                                                      1,123,000                914,000
     Less - Accumulated depreciation                                              (658,000)              (582,000)
                                                                        ------------------     ------------------

         Property and equipment, net                                               465,000                332,000

NOTES RECEIVABLE, net of current maturities and allowance for doubtful
     accounts of $686,000 and $607,000                                           2,091,000              2,452,000
GOODWILL AND OTHER INTANGIBLES, net of accumulated amortization of
     $1,048,000 and $933,000                                                     3,503,000              3,619,000
                                                                        ------------------     ------------------

                                                                             $  15,077,000          $  14,205,000
                                                                        ==================     ==================


                      LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

     Accounts payable                                                        $     585,000          $     429,000
     Accrued compensation                                                          179,000                296,000
     Accrued financing liabilities                                                 200,000                200,000
     Deferred revenues                                                             102,000                 91,000
     Other accrued liabilities                                                     462,000                409,000
                                                                        ------------------     ------------------

         Total current liabilities                                               1,528,000              1,425,000
                                                                        ------------------     ------------------

SHAREHOLDERS' EQUITY:

     Common Stock, $.01 par value, 15,000,000 shares authorized:
         4,734,087 shares issued and outstanding                                    47,000                 47,000
     Additional paid-in capital                                                 15,584,000             15,584,000
     Accumulated deficit                                                        (2,082,000)            (2,851,000)
                                                                        ------------------     ------------------

         Total shareholders' equity                                             13,549,000             12,780,000
                                                                        ------------------     ------------------

                                                                             $  15,077,000          $  14,205,000
                                                                        ==================     ==================



The accompanying notes are an integral part of these consolidated balance sheets.


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<CAPTION>
                            IPI, INC. AND SUBSIDIARY

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                   (Unaudited)

                                                            Three Months Ended           Six Months Ended
                                                                May 31,                       May 31,
                                                       -------------------------     -------------------------
                                                          1997           1996           1997           1996
                                                       ----------     ----------     ----------     ----------
REVENUES:
<S>                                                    <C>            <C>            <C>            <C>       
     Royalty fees                                      $1,193,000     $1,097,000     $2,166,000     $2,005,000
     Printing equipment, supplies and services          1,077,000      1,309,000      2,375,000      2,549,000
     Finance and other income                             314,000        394,000        501,000        524,000
                                                       ----------     ----------     ----------     ----------

     Total revenues                                     2,584,000      2,800,000      5,042,000      5,078,000
                                                       ----------     ----------     ----------     ----------

COSTS AND EXPENSES:

     Cost of sales                                        869,000      1,074,000      1,953,000      2,115,000
     Selling, general and administrative expenses         936,000        971,000      1,754,000      1,702,000
     Amortization of goodwill                              57,000         57,000        115,000        115,000
                                                       ----------     ----------     ----------     ----------

     Total costs and expenses                           1,862,000      2,102,000      3,822,000      3,932,000

     Income before provision for income taxes             722,000        698,000      1,220,000      1,146,000

PROVISION FOR INCOME TAXES                                267,000        258,000        451,000        424,000
                                                       ----------     ----------     ----------     ----------

NET INCOME                                             $  455,000     $  440,000     $  769,000     $  722,000
                                                       ==========     ==========     ==========     ==========

NET INCOME PER COMMON SHARE                            $     0.09     $     0.09     $     0.16     $     0.15
                                                       ==========     ==========     ==========     ==========

WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON SHARE
     EQUIVALENTS OUTSTANDING                            4,734,000      4,734,000      4,734,000      4,734,000
                                                       ==========     ==========     ==========     ==========


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


</TABLE>


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<CAPTION>
                            IPI, INC. AND SUBSIDIARY

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (Unaudited)

                                                                                     Six Months Ended
                                                                                         May 31,
                                                                               ----------------------------
                                                                                   1997            1996
                                                                               -----------      -----------
CASH FLOWS FROM OPERATING ACTIVITIES:

<S>                                                                        <C>                    <C>          
     Net Income                                                                $   769,000      $   722,000
     Adjustments to reconcile net income to net cash provided by
         operating activities -
              Depreciation and amortization                                        192,000          161,000
              Net change in other operating items:
                  Trade accounts receivable                                        (94,000)         (75,000)
                  Inventories                                                       80,000         (138,000)
                  Prepaid expenses and other                                        (9,000)          76,000
                  Accounts payable, accrued liabilities and other                  103,000         (174,000)
                                                                               -----------      -----------

                      Net cash provided by operating activities                  1,041,000          572,000
                                                                               -----------      -----------
CASH FLOWS FROM INVESTING ACTIVITIES:

     Short-term investments, net                                                   (80,000)          75,000
     Purchase of property and equipment, net                                      (209,000)        (172,000)
     Change in notes receivable, net                                               361,000         (243,000)
                                                                               -----------      -----------
                      Net cash provided by (used for) investing activities          72,000         (340,000)
                                                                               -----------      -----------

                      Increase in cash and cash equivalents                      1,113,000          232,000

CASH AND CASH EQUIVALENTS, beginning of year                                     1,257,000          575,000
                                                                               -----------      -----------

CASH AND CASH EQUIVALENTS, end of period                                       $ 2,370,000      $   807,000
                                                                               ===========      ===========

SUPPLEMENTAL CASH FLOW INFORMATION:

     Income taxes paid                                                         $   332,000      $   282,000
                                                                               ===========      ===========

     Sale of partnership interests for note receivable                     $           -        $   124,000
                                                                               ===========      ===========


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



</TABLE>





                            IPI, INC. AND SUBSIDIARY

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                   (UNAUDITED)

1.   BASIS OF PRESENTATION

     The accompanying interim condensed consolidated financial statements of
     IPI, Inc. ("IPI" or the "Company") and its wholly owned subsidiary,
     Insty-Prints, Inc. ("Insty-Prints"), are unaudited; however, in the opinion
     of management, all adjustments necessary for a fair presentation of such
     financial statements have been reflected in the interim periods presented.
     Such adjustments consisted only of normal recurring items and all
     intercompany transactions have been eliminated in consolidation. The
     significant accounting policies, certain financial information and footnote
     disclosures which are normally included in financial statements prepared in
     accordance with generally accepted accounting principles, but which are not
     required for interim reporting purposes, have been condensed or omitted.
     The operating results for the interim periods presented are not necessarily
     indications of the operating results to be expected for the full fiscal
     year. The accompanying financial statements of the Company should be read
     in conjunction with the Company's audited financial statements for the
     years ended November 30, 1996 and 1995 and the notes thereto, included in
     the Company's Form 10-KSB.

     In February 1997, the Financial Accounting Standards Board issued the
     Statement of Financial Accounting Standards 128 (FAS 128) "Earnings Per
     Share," which is effective for fiscal years ending after December 15, 1997.
     When adopted, FAS 128 will require the restatement of prior periods
     earnings per share. The Company will adopt FAS 128 the quarter ending
     February 28, 1998 and does not anticipate that its adoption will have a
     significant affect on earnings per share.



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

OVERVIEW

     As of May 31, 1997, the Company, through its wholly-owned subsidiary
Insty-Prints, had 285 franchise locations and one Company-owned store.

RESULTS OF OPERATIONS

     The following table sets forth certain statement of operations data as a
percentage of sales for the periods indicated:

<TABLE>
<CAPTION>
                                                      Quarter Ended       Six Months Ended
                                                          May 31,              May 31,
                                                     ----------------      ----------------
                                                     1997       1996       1997       1996
                                                     -----      -----      -----      -----
Revenues:
<S>                                                   <C>        <C>        <C>        <C>  
    Royalty fees                                      46.2%      39.2%      43.0%      39.5%
    Printing equipment, supplies and services         41.7       46.7       47.1       50.2
    Finance and other income                          12.1       14.1        9.9       10.3
                                                     -----      -----      -----      -----

    Total revenues                                   100.0      100.0      100.0      100.0
                                                     -----      -----      -----      -----

Costs and expenses:

    Costs of sales                                    33.7       38.4       38.7       41.6
    Selling, general and administrative expenses      36.2       34.7       34.8       33.5
    Amortization of goodwill                           2.2        2.0        2.3        2.3
                                                     -----      -----      -----      -----

    Total costs and expenses                          72.1       75.1       75.8       77.4
                                                     -----      -----      -----      -----

Income before provision for income taxes              27.9       24.9       24.2       22.6
Provision for income taxes                            10.3        9.2        8.9        8.4
                                                     -----      -----      -----      -----

Net income                                            17.6%      15.7%      15.3%      14.2%
                                                     =====      =====      =====      =====

</TABLE>



FOR THE QUARTERS AND SIX MONTHS ENDED MAY 31, 1997 AND 1996

     Revenues. Total revenues for the three months ended May 31, 1997,
consisting of royalties, sales of printing equipment, supplies and services,
franchise fees and finance and other income, totaled $2,584,000, a decrease of
$216,000 or 7.7% below the three months ended May 31, 1996. Total revenues for
the six months ended May 31, 1997, of $5,042,000 were down 0.7% or $36,000 below
the six months ended May 31, 1996.

     Royalty revenue increased to $1,193,000 in the second quarter of 1997 from
$1,097,000 in 1996, an increase of 8.8%. For the six months ended May 31, 1997,
royalty revenue was $2,166,000, an increase of 8.0% or $161,000 over the same
period a year ago. Royalties increased primarily as a result of the increased
sales by existing franchise locations. While the number of franchised locations
decreased to 285 as of May 31, 1997 from 307 as of May 31, 1996, the reductions
were primarily in low-performing locations and thus royalty revenue was
minimally impacted.

     Sales of printing equipment, supplies and services for the second quarter
of 1997 decreased to $1,077,000 from $1,309,000 for 1996, a decrease of 17.7%.
For the six months ended May 31, 1997, sales of products were $2,375,000 or 6.8%
below the sales of $2,549,000 for the same period a year ago. The decrease in
1997 was primarily the result of decreased sales of printing related equipment
and electronic publishing equipment. The drop in printing related equipment
reflects store owner needs and the decrease in electronic publishing equipment
results from discontinuing the selling of computers and certain related
equipment.

     Finance and other income was $314,000 for the quarter ended May 31, 1997,
which is $80,000 or 20.3% less than the same quarter a year ago. For the six
months ended May 31, 1997, finance and other income was $501,000 or 4.4% less
than the $524,000 for the same period a year ago. For the three and six month
periods of 1997, the decreased revenues were primarily a result of decreased
franchise fee income. Overall, franchise fee revenues are not significant in
1997 or 1996 due to the Company's emphasis during such periods on increasing
existing franchise location sales and growth through acquisitions.

     Cost of Sales. Cost of sales decreased to $869,000 for the second quarter
of 1997 from $1,074,000 for 1996, a decrease of 19.1% for the quarter. The
decrease in the second quarter is the result of a related decrease in sales of
printing and electronic publishing equipment. Six month cost of sales amounts
totaled $1,953,000 in 1997, compared to $2,115,000 in 1996, a decrease of
$162,000 or 7.7%, relating primarily to sales decreases. Average margins in
products and services increased slightly to 17.7% for the six month period of
1997 compared to 17.0% for the six month period ended May 31, 1996.

     Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $936,000 for the second quarter 1997 compared to
$971,000 for 1996, a decrease of 3.6%. Total expenses for the six months ended
May 31, 1997 were $1,754,000 compared to $1,702,000 for 1996, representing a
3.1% increase. The increase in expenses was due primarily to increased
compensation expense for salary increases, staff additions and incentive program
accruals.

     Provision for Income Tax. The Company's effective combined federal and
state income tax rate is estimated to be 37% for 1997 due primarily to the
effect of state income taxes, non-taxable income on municipal securities and
non-deductible goodwill amortization.

LIQUIDITY AND CAPITAL RESOURCES

     During the six months ending May 31, 1997, the Company generated $1,041,000
from operating activities, an increase of $469,000 from $572,000 of funds
provided from operating activities for the six month period of 1996. The
increase in funds provided from operating activities was primarily attributable
to an increase in net income, reduced inventories and increased accounts payable
and other.

     The Company has no bank debt or credit facility. Operations are funded from
cash generated by the business.

     Franchise owners may finance their equipment purchases through a $6,000,000
equipment financing facility established with First Bank Systems by Insty-Prints
for the benefit of the franchise owners. This facility is guaranteed by IPI and
Insty-Prints, whose contingent liability under this agreement is capped at
$2,400,000. A loss reserve of $200,000 is recorded on the balance sheet at May
31, 1997, representing estimated losses on these guarantees, net of equipment
value. The aggregate balance outstanding under this facility as of May 31, 1997
was approximately $3,718,000.

     The Insty-Prints' franchise business is not highly seasonal, and franchise
owners' sales generally follow overall economic trends. The business is not
impacted materially by inflation.



PART II.  OTHER INFORMATION

Item 1.        Legal Proceedings

               The Company and its subsidiary are involved in various legal
               proceedings arising in the normal course of business, none of
               which is expected to result in any material loss to the Company
               or its subsidiary.

Item 2.        Changes in Securities
               Not applicable.

Item 3.        Defaults Upon Senior Securities
               Not applicable.

Item 4.        Submission of Matters to Vote of Security Holders
               Not applicable.

Item 5.        Other Information
               Not applicable.

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

               (a)  Exhibits.

                    *11    Statement Re: Computation of per 
                           share earnings                                  11

               (b)  Reports on Form 8-K.

                    No reports on Form 8-K were filed during the quarter for
                    which this report is filed.

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

                    *Filed herewith



SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Dated:  July 11, 1997        IPI, Inc.

                             By:    /S/ Robert J. Sutter

                                    Robert J. Sutter
                                    President and Chief Executive Officer
                                    (Principal Executive Officer)

                             By:    /S/ David M. Engel
                                    David M. Engel
                                    Chief Financial Officer
                                    (Principal Financial and Accounting Officer)