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 FEBRUARY 28, 1999.

[ ]  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                           41-1449312
--------------------------------------------------------------------------------
     (State or Other Jurisdiction of     (I.R.S. Employer Identification No.)
     Incorporation or Organization)


     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 April 6, 1999, there were 4,734,087 Common Shares outstanding.


                                  Page 1 of 13
<PAGE>


                                    IPI, INC.
                                Table of Contents


                                                                            Page
                                                                            ----
PART I. FINANCIAL INFORMATION

      Item 1.  Financial Statements (Unaudited)

               Condensed Consolidated Balance Sheets as of
               February 28, 1999 and November 30, 1998.                      3

               Condensed Consolidated Statements of Operations
               and Comprehensive Income for the Three Months
               Ended February 28, 1999 and February 28, 1998.                4

               Condensed Consolidated Statements of Cash Flows
               for the Three Months Ended February 28, 1999
               and February 28, 1998.                                        5

               Notes to Condensed Consolidated Financial Statements.         6


      Item 2.  Management's Discussion and Analysis of Financial
               Condition and Results of Operations.                          7-9



PART II. OTHER INFORMATION

      Item 1.  Legal Proceedings                                             10

      Item 2.  Changes in Securities                                         10

      Item 3.  Defaults Upon Senior Securities                               10

      Item 4.  Submission of Matters to Vote of Security Holders             10

      Item 5.  Other Information                                             10

      Item 6.  Exhibits and Reports of Form 8-K                              10

      Signatures                                                             11


                                       2
<PAGE>


PART I. FINANCIAL INFORMATION
ITEM 1.

                            IPI, INC. AND SUBSIDIARY
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                          February 28,     November 30,
                                                                               1999            1998
                                                                          ------------     ------------
<S>                                                                       <C>              <C>         
                                     ASSETS
CURRENT ASSETS:
      Cash and cash equivalents                                           $  1,597,000     $  3,828,000
      Short-term investments                                                 2,690,000        1,340,000
      Marketable equity securities                                           5,502,000        4,631,000
      Trade accounts receivable                                              1,204,000        1,225,000
      Current maturities of notes receivables, net of allowance for
            doubtful accounts of $174,000 and $205,000                         777,000          746,000
      Inventories                                                              314,000          393,000
      Prepaid expenses and other                                               145,000           92,000
      Deferred income taxes                                                    998,000          789,000
                                                                          ------------     ------------
            Total current assets                                            13,227,000       13,044,000
                                                                          ------------     ------------

PROPERTY AND EQUIPMENT:
      Property and equipment                                                 1,543,000        1,522,000
      Less - Accumulated depreciation                                       (1,030,000)        (961,000)
                                                                          ------------     ------------
            Property and equipment, net                                        513,000          561,000

NOTES RECEIVABLE, net of current maturities and allowance for
      doubtful accounts of $648,000 and $648,000                             1,014,000        1,139,000

GOODWILL AND OTHER INTANGIBLES, net of accumulated
      amortization of $1,453,000 and $1,395,000                              3,099,000        3,157,000
                                                                          ------------     ------------

                                                                          $ 17,853,000     $ 17,901,000
                                                                          ============     ============


                      LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
      Accounts payable                                                    $    611,000     $    534,000
      Accrued compensation                                                      57,000          296,000
      Accrued financing liabilities                                            200,000          200,000
      Deferred revenues                                                         10,000           14,000
      Other accrued liabilities                                                607,000          564,000
                                                                          ------------     ------------
            Total current liabilities                                        1,485,000        1,608,000
                                                                          ------------     ------------

LONG-TERM CAPITAL LEASE OBLIGATIONS                                             33,000           51,000

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
      Retained earnings                                                      1,274,000          900,000
      Unrealized loss on marketable securities available for sale, net
            of related income tax effects                                     (570,000)        (289,000)
                                                                          ------------     ------------
            Total shareholders' equity                                      16,335,000       16,242,000
                                                                          ------------     ------------

                                                                          $ 17,853,000     $ 17,901,000
                                                                          ============     ============
</TABLE>


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

                                       3
<PAGE>


                            IPI, INC. AND SUBSIDIARY
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                            AND COMPREHENSIVE INCOME
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                      Three Months Ended
                                                                                         February 28,
                                                                                 ---------------------------
                                                                                     1999            1998
                                                                                 -----------     -----------
<S>                                                                              <C>             <C>        
REVENUES:
      Royalty fees                                                               $   954,000     $   987,000
      Printing equipment, supplies and services                                      877,000       1,062,000
      Finance and other income                                                       262,000         245,000
                                                                                 -----------     -----------

      Total Revenues                                                               2,093,000       2,294,000
                                                                                 -----------     -----------
COSTS AND EXPENSES:
      Cost of sales                                                                  656,000         833,000
      Selling, general and administrative expenses                                   756,000         787,000
      Amortization of goodwill                                                        58,000          58,000
                                                                                 -----------     -----------

      Total costs and expenses                                                     1,470,000       1,678,000
                                                                                 -----------     -----------

      Income before provision for income taxes                                       623,000         616,000

PROVISION FOR INCOME TAXES                                                           249,000         228,000
                                                                                 -----------     -----------

NET INCOME                                                                       $   374,000     $   388,000
                                                                                 ===========     ===========

BASIC AND DILUTED EARNINGS PER COMMON SHARE                                      $      0.08     $      0.08
                                                                                 ===========     ===========

WEIGHTED AVERAGE NUMBER OF COMMON AND
      COMMON SHARE EQUIVALENTS OUTSTANDING
      - BASIC                                                                      4,734,000       4,734,000
                                                                                 ===========     ===========
      - DILUTED                                                                    4,734,000       4,742,000
                                                                                 ===========     ===========
OTHER COMPREHENSIVE INCOME, NET OF TAX (NOTE 1):
      Net Income                                                                 $   374,000     $   388,000
      Unrealized gain (loss) on marketable securities available for sale, net
            of related income tax effects                                           (281,000)        345,000
                                                                                 -----------     -----------
      Total Comprehensive Income                                                 $    93,000     $   733,000
                                                                                 ===========     ===========
</TABLE>


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

                                        4
<PAGE>


                            IPI, INC. AND SUBSIDIARY
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                          Three Months Ended
                                                                             February 28,
                                                                     ---------------------------
                                                                         1999            1998
                                                                     -----------     -----------
<S>                                                                  <C>             <C>        
CASH FLOWS FROM OPERATING ACTIVITIES:
      Net income                                                     $   374,000     $   388,000
      Adjustments to reconcile net income to net cash provided by
            operating activities -
            Depreciation and amortization                                109,000          82,000
            Net change in other operating items:
                  Trade accounts receivable                               22,000         (51,000)
                  Inventories                                             79,000          44,000
                  Prepaid expenses and other                             (53,000)        (78,000)
                  Accounts payable, deferred revenues
                        and other accrued liabilities                   (123,000)       (217,000)
                                                                     -----------     -----------

                  Net cash provided by operating activities              408,000         168,000
                                                                     -----------     -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
      (Purchase) Sale of property and equipment, net                     (21,000)          1,000
      Purchase of short-term investments                              (1,350,000)       (670,000)
      Purchase of marketable equity securities                        (1,362,000)             --
      Change in notes receivable, net                                     94,000         455,000
                                                                     -----------     -----------

                  Net cash used in investing activities               (2,639,000)       (214,000)
                                                                     -----------     -----------

                  Decrease in cash and cash equivalents               (2,231,000)        (46,000)

CASH AND CASH EQUIVALENTS, beginning of the period                     3,828,000       1,294,000
                                                                     -----------     -----------

CASH AND CASH EQUIVALENTS, end of period                             $ 1,597,000     $ 1,248,000
                                                                     ===========     ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
      Income taxes paid                                              $   178,000     $    53,000
                                                                     ===========     ===========
</TABLE>


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

                                       5
<PAGE>


                            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, 1998 and 1997 and the notes
      thereto, included in the Company's Form 10-KSB.

      In August 1997 and February 1999, marketable equity securities were
      purchased to enhance returns on cash funds. In accordance with Statement
      of Financial Accounting Standards No. 115, Accounting for Certain
      Investments in Debt and Equity Securities, these securities are shown on
      the balance sheet at market value and unrealized gains (losses) are
      reflected as a separate component of shareholders equity, net of related
      income taxes.

      In March 1997, the Financial Accounting Standards Board issues SFAS No.
      128 "Earnings per Share," which changes the way companies calculate their
      earnings per share (EPS). SFAS No. 128 replaces primary EPS with basic EPS
      and fully diluted EPS with diluted EPS. Basic EPS is computed by dividing
      reported gain by the weighted average shares outstanding, excluding
      potentially dilutive securities while diluted EPS includes the dilutive
      securities. The Company adopted SFAS No. 128 in the first quarter of 1998
      and all prior periods EPS data has been restated.

      In fiscal year 1999, the Company adopted SFAS No. 130 "Reporting
      Comprehensive Income," which establishes new rules for the reporting and
      presentation of comprehensive income and its components in a full set of
      financial statements. The Company's comprehensive income is comprised of
      net income and unrealized gains (losses) on marketable securities held for
      resale. The adoption of SFAS No. 130 had no impact on the Company's net
      income or total shareholders' equity. Prior to the adoption of SFAS No.
      130, unrealized gains (losses) on marketable securities held for resale
      were reported separately in the statement of shareholders' equity. The
      comprehensive income amounts in the prior fiscal years' financial
      statements have been reclassified to conform to SFAS No. 130.

      The Company is principally engaged in one business segment--the
      franchising and servicing of business printing centers under the trade
      name of Insty-Prints(R).


                                       6
<PAGE>


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

OVERVIEW

      As of February 28, 1999, the Company, through its wholly-owned subsidiary
Insty-Prints, had 250 franchise locations and one Company-owned store.

RESULTS OF OPERATIONS

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

                                                           Quarter Ended
                                                            February 28,
                                                        ---------------------
                                                          1999         1998
                                                          ----         ----
Revenues:
      Royalty fees                                        45.6%        43.0%
      Printing equipment, supplies and services           41.9         46.3
      Finance and other income                            12.5         10.7
                                                         -----        -----

      Total revenues                                     100.0        100.0
                                                         -----        -----
Costs and expenses:
      Cost of sales                                       31.3         36.3
      Selling, general and administrative expenses        36.1         34.3
      Amortization of goodwill                             2.8          2.5
                                                         -----        -----

      Total costs and expenses                            70.2         73.1
                                                         -----        -----

Income before provision for income taxes                  29.8         26.9
Provision for income taxes                                11.9         10.0
                                                         -----        -----

Net income                                                17.9%        16.9%
                                                         =====        =====

FOR THE QUARTERS ENDED FEBRUARY 28, 1999 AND 1998

      Revenues. Total revenues for the three months ended February 28, 1999,
consisting of royalties, sales of printing equipment, supplies and services,
franchise fees and finance and other income, totaled $2,093,000, a decrease of
$201,000 or 8.8% compared to the three months ended February 28, 1998.

      Royalty revenue decreased to $954,000 in the first quarter of 1999 from
$987,000 in 1998, a decrease of 3.3%. Royalties decreased primarily as a result
of a reduced number of franchise locations in 1999 versus 1998, which was offset
by increased same store sales by existing franchise locations.

      Sales of printing equipment, supplies and services for the first quarter
of 1999 decreased to $877,000 from $1,062,000 in 1998, a decrease of 17.4%. The
decrease in sales for 1999 resulted primarily from reduced demand from franchise
owners for printing equipment and direct mail services.

      Finance and other income was $262,000 for the quarter ended February 28,
1999, which is an increase of $17,000 or 6.9% from the same quarter a year ago.
For the first quarter of 1999, finance and other income was greater due
primarily to the increased level of investments, which was offset by reduced
note interest. Note interest was lower due to decreased levels of outstanding
notes to franchise owners.


                                       7
<PAGE>


      Cost of Sales. Cost of sales decreased to $656,000 for the first quarter
of 1999 from $833,000 for 1998, a decrease of 21.2% for the quarter. The
decrease in the quarter is the result of a related decrease in product sales, as
mentioned previously. Margins on equipment, supplies and services increased to
25.1% in the three months ended February 28, 1999 from 21.6% for the same period
in 1998, which is primarily due to sales mix and increased margins on certain
products.

      Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased to $756,000 for the first quarter of 1999 from
$787,000 for the same period in 1998, a decrease of 3.9%. Expenses decreased due
to reduced equipment and general administrative expenses and improvements in
corporate owned store results.

      Provision for Income Taxes. The Company's effective combined federal and
state income tax rate is estimated to be 40% for 1999 compared to 37% for 1998
due primarily to increases in state income tax obligations.

LIQUIDITY AND CAPITAL RESOURCES

      During the three months ended February 28, 1999, the Company generated
$408,000 from operating activities, an increase of $240,000 from $168,000 of
funds provided from operating activities for the first quarter of 1998. The
increase in funds provided from operating activities was primarily attributable
to increased depreciation expense in the 1999 period, net decreases in prepaid
and other assets and increased accounts payable and other liabilities.

      During the three months ended February 28, 1999, the Company purchased
$1,350,000 of short-term investments and $1,362,000 of marketable equity
securities held for resale. All marketable equity securities reflected on the
balance sheet as of February 28, 1999 are common shares of stock in a Real
Estate Investment Trust, which have been purchased to improve yields on invested
funds. As reflected in the equity section of the balance sheet and in
Comprehensive Income, unrealized gains or losses for changes in the market value
of the stock are shown.

      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 U.S. Bank (formerly
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, annually. A loss reserve of
$200,000 is recorded on the balance sheet at February 28, 1999, representing
estimated losses on these guarantees, net of equipment value. The aggregate
balance outstanding under this facility as of February 28, 1999 was
approximately $2,581,000.

      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.

YEAR 2000 COMPLIANCE

      The Company has adopted a plan to achieve Year 2000 compliance and an
assessment of its internal systems has essentially been completed. Most desktop
computers are Macintosh-based and are Year 2000 compliant, as well as the
software utilized. Those desktop systems not compliant will be upgraded to new
systems that are Year 2000 compliant by the third quarter of 1999. Software
updates to the Company's mainframe systems are substantially complete and
expected to be finalized by the end of the second quarter of 1999. The vendor
supplying the Point of Sale system used by most franchisees has verified that
the system is Year 2000 compliant. The Company has completed an analysis of its
vendor relationships in which the risk of each vendor's non-compliance with Year
2000 was assessed. Survey letters were sent to major vendors in


                                       8
<PAGE>


mid-year 1998 to ascertain the status of each vendor's Year 2000 compliance. The
survey process of vendors has essentially been completed and will be monitored
on an ongoing basis. Total costs associated with the Year 2000 compliance
project are expected to be less than $50,000.

      The Company provided its franchisees an assessment guide in October 1998,
which serves as a step-by-step planning document for their use addressing Year
2000 compliance. Most of the primary equipment used by franchisees is not date
sensitive nor does it contain embedded chips.

      The Company does not have vendor or customer relationships in which
critical data is exchanged electronically. The Company would suffer if a service
provider such as a telecommunications or utility vendor was not Year 2000
compliant and their respective service was interrupted or terminated. In such a
case, the Company would be required to revert to its disaster recovery plan for
the specific issue. If a large number of vendors that provide product to our
franchisees were not compliant and unable to provide our franchisees products,
it is likely that the Company would recognize a material reduction of royalties
from the franchisees' lost sales.

      To date, the Company has not identified any suppliers who do not plan to
be Year 2000 compliant; this analysis is ongoing. If non-compliant vendors are
identified, the Company intends to develop appropriate contingency plans.

      While the Company believes its planning efforts are adequate to address
its Year 2000 concerns, the Year 2000 readiness of the Company's suppliers and
business partners may lag behind the Company's efforts. Although the Company
does not believe that the Year 2000 matters discussed above will have a material
impact on its business, financial condition and results of operations, it is
uncertain as to what extent the Company may be affected by such matters.

FORWARD LOOKING STATEMENTS

      Except for historical financial information , the information contained in
this quarterly report constitute forward-looking statements and are based on
management's goals, estimates, assumptions and projections. Important factors
could cause results to differ materially from those expected by management. Some
of these factors, such as increased competition from other business printing
centers or reduced demand for printed media could decrease sales by franchised
locations and decrease sales of products to franchisees by the Company. This
would reduce royalty revenue from franchised locations and sales of products to
such locations by the Company, thus reducing revenues and profits.

      Due to factors noted above and elsewhere in this quarterly report, the
Company's future earnings and Common Stock price may be subject to volatility.
Any shortfall in revenue or earnings from anticipated levels could have a
significant effect on the trading price of the Company's Common Stock in any
given period.


                                       9
<PAGE>


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

         On approximately April 5, 1999, proxy statements were mailed to the
         holders of record of 4,734,087 shares of common stock to solicit
         proxies in connection with the Annual Meeting of Shareholders on May
         10, 1999. Two proposals were submitted to a vote of shareholders, as
         follows:

         (a)      Election of Directors--all current directors (Robert J.
                  Sutter, Dennis M. Mathisen, Irwin L. Jacobs, Daniel T.
                  Lindsay, Dr. Kenneth J. Roering and Howard Grodnick) were up
                  for re-election to terms of one year.

         (b)      Ratification and Appointment of Independent Auditors--Arthur
                  Andersen LLP.

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     12

         (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


                                       10
<PAGE>


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: April 7, 1999                   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)


                                       11