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


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

        FOR THE QUARTERLY PERIOD ENDED AUGUST 31, 1998.

[ ]     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 October 8, 1998, 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 August 31,
                  1998 and November 30, 1997.                                  3

                  Condensed Consolidated Statements of Operations for the
                  Three and Nine Months Ended August 31, 1998 and August
                  31, 1997.                                                    4

                  Condensed Consolidated Statements of Cash Flows for the
                  Nine Months Ended August 31, 1998 and August 31, 1997.       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


                                        2

<PAGE>


PART I.  FINANCIAL INFORMATION
ITEM 1.

                            IPI, INC. AND SUBSIDIARY
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                         August 31, 1998  November 30,
                                                                          (Unaudited)         1997
                                                                          ------------    ------------
<S>                                                                       <C>            <C>
                                     ASSETS
CURRENT ASSETS:
     Cash and cash equivalents                                            $  2,810,000    $  1,294,000
     Short-term investments                                                  1,440,000         800,000
     Marketable equity securities                                            4,685,000       5,014,000
     Trade accounts receivable, net                                          1,203,000       1,274,000
     Current maturities of notes receivables, net of allowance for
         doubtful accounts of $163,000 and $163,000                            987,000         987,000
     Inventories                                                               335,000         315,000
     Prepaid expenses and other                                                183,000         119,000
     Deferred income taxes                                                     715,000         593,000
                                                                          ------------    ------------

         Total current assets                                               12,358,000      10,396,000
                                                                          ------------    ------------

PROPERTY AND EQUIPMENT:
     Property and equipment                                                  1,487,000       1,356,000
     Less - Accumulated depreciation                                          (899,000)       (790,000)
                                                                          ------------    ------------
         Property and equipment, net                                           588,000         566,000

NOTES RECEIVABLE, net of current maturities and allowance for
     doubtful accounts of $814,000 and $522,000                                989,000       1,852,000
GOODWILL AND OTHER INTANGIBLES, net of accumulated 
     amortization of $1,337,000 and $1,164,000                               3,214,000       3,388,000
                                                                          ------------    ------------

                                                                          $ 17,149,000    $ 16,202,000
                                                                          ============    ============


                      LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
     Accounts payable                                                     $    232,000    $    417,000
     Accrued compensation                                                      267,000         411,000
     Accrued financing liabilities                                             200,000         200,000
     Deferred revenues                                                          34,000          52,000
     Other accrued liabilities                                                 607,000         563,000
                                                                          ------------    ------------
         Total current liabilities                                           1,340,000       1,643,000
                                                                          ------------    ------------

LONG-TERM CAPITAL LEASE OBLIGATIONS                                             65,000         107,000

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                                                       367,000      (1,132,000)
     Unrealized (loss) on marketable securities available for sale,
         net of related income tax effects                                    (254,000)        (47,000)
                                                                          ------------    ------------

         Total shareholders' equity                                         15,744,000      14,452,000
                                                                          ------------    ------------

                                                                          $ 17,149,000    $ 16,202,000
                                                                          ============    ============
</TABLE>

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


                                       3

<PAGE>


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

<TABLE>
<CAPTION>
                                                        Three Months Ended        Nine Months Ended
                                                            August 31,               August 31,
                                                     -----------------------   -----------------------
                                                         1998        1997         1998          1997
                                                         ----        ----         ----          ----
<S>                                                  <C>          <C>          <C>          <C>       
REVENUES:
     Royalty fees                                    $1,146,000   $1,118,000   $3,328,000   $3,284,000
     Printing equipment, supplies and services          852,000    1,281,000    2,926,000    3,656,000
     Finance and other income                           312,000      198,000      991,000      699,000
                                                     ----------   ----------   ----------   ----------
     Total revenues                                   2,310,000    2,597,000    7,245,000    7,639,000
                                                     ----------   ----------   ----------   ----------

COSTS AND EXPENSES:
     Cost of sales                                      649,000    1,054,000    2,279,000    3,007,000
     Selling, general and administrative expenses       723,000      739,000    2,413,000    2,493,000
     Amortization of goodwill                            58,000       58,000      173,000      173,000
                                                     ----------   ----------   ----------   ----------
     Total costs and expenses                         1,430,000    1,851,000    4,865,000    5,673,000
                                                     ----------   ----------   ----------   ----------
     Income before provision for income taxes           880,000      746,000    2,380,000    1,966,000

PROVISION FOR INCOME TAXES                              326,000      276,000      881,000      727,000
                                                     ----------   ----------   ----------   ----------

NET INCOME                                           $  554,000   $  470,000   $1,499,000   $1,239,000
                                                     ==========   ==========   ==========   ==========

BASIC EARNINGS PER COMMON SHARE                      $     0.12   $     0.10   $     0.32   $     0.26
                                                     ==========   ==========   ==========   ==========

DILUTED EARNINGS PER COMMON SHARE                    $     0.12   $     0.10   $     0.32   $     0.26
                                                     ==========   ==========   ==========   ==========

WEIGHTED AVERAGE NUMBER OF
     COMMON AND COMMON SHARE
     EQUIVALENTS OUTSTANDING

     - BASIC                                          4,734,000    4,734,000    4,734,000    4,734,000
                                                     ==========   ==========   ==========   ==========

     - DILUTED                                        4,758,000    4,734,000    4,746,000    4,734,000
                                                     ==========   ==========   ==========   ==========
</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>
                                                                           Nine Months Ended
                                                                               August 31,
                                                                     ---------------------------
                                                                         1998            1997
                                                                     -----------     -----------
<S>                                                                  <C>             <C>        
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net Income                                                      $ 1,499,000     $ 1,239,000
     Adjustments to reconcile net income to net cash provided by
         operating activities -
              Depreciation and amortization                              313,000         294,000
              Net change in other operating items:
                  Trade accounts receivable                               71,000        (387,000)
                  Inventories                                            (20,000)         54,000
                  Prepaid expenses and other                             (64,000)         14,000
                  Accounts payable, accrued liabilities and other       (303,000)        278,000
                                                                     -----------     -----------

                      Net cash provided by operating activities        1,496,000       1,492,000
                                                                     -----------     -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchase of equity securities                                            --      (1,606,000)
     Purchase of short-term investments, net                            (640,000)        (80,000)
     Purchase of property and equipment, net                            (203,000)       (212,000)
     Change in notes receivable, net                                     863,000         458,000
                                                                     -----------     -----------
                      Net cash provided by (used for) investing
                          activities                                      20,000      (1,440,000)
                                                                     -----------     -----------

                      Increase in cash and cash equivalents            1,516,000          52,000

CASH AND CASH EQUIVALENTS, beginning of period                         1,294,000       1,257,000
                                                                     -----------     -----------

CASH AND CASH EQUIVALENTS, end of period                             $ 2,810,000     $ 1,309,000
                                                                     -----------     -----------

SUPPLEMENTAL CASH FLOW INFORMATION:
     Income taxes paid                                               $   704,000     $   552,000
                                                                     ===========     ===========

     Equipment acquired under capital lease                          $        --     $   212,000
                                                                     ===========     ===========
</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, 1997 and 1996 and the notes thereto, included in
     the Company's Form 10-KSB.

     In August 1997, 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 the first quarter of fiscal 1998, the Company adopted Statement of
     Financial Accounting Standards No. 128 ("SFAS No. 128") "Earnings per
     Share," which is effective for interim periods ending after December 15,
     1997. As a result, all prior period earnings per share data has been
     restated. This adoption of SFAS No. 128 did not have any significant impact
     on previously reported earnings per share. Basic earnings per share was
     computed by dividing net income by the weighted average number of shares of
     common stock outstanding during the period. Diluted earnings per share was
     computed similar to the computation for basic earnings per share, except
     that the denominator is increased for the assumed exercise of dilutive
     options and other dilutive securities using the treasury stock method.


                                       6

<PAGE>


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

OVERVIEW

     As of August 31, 1998, the Company, through its wholly-owned subsidiary
Insty-Prints, had 255 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     Nine Months Ended
                                                              August 31,          August 31,
                                                           ---------------     ----------------
                                                            1998      1997      1998      1997
                                                            ----      ----      ----      ----
<S>                                                         <C>       <C>       <C>       <C>  
     Revenues:
         Royalty fees                                       49.6%     43.0%     45.9%     43.0%
         Printing equipment, supplies and services          36.9      49.4      40.4      47.9
         Finance and other income                           13.5       7.6      13.7       9.1
                                                           -----     -----     -----     -----

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

     Costs and expenses:
         Costs of sales                                     28.1      40.6      31.4      39.4
         Selling, general and administrative expenses       31.3      28.5      33.3      32.6
         Amortization of goodwill                            2.5       2.2       2.4       2.3
                                                           -----     -----     -----     -----

         Total costs and expenses                           61.9      71.3      67.1      74.3
                                                           -----     -----     -----     -----

     Income before provision for income taxes               38.1      28.7      32.9      25.7
     Provision for income taxes                             14.1      10.6      12.2       9.5
                                                           -----     -----     -----     -----

     Net income                                             24.0%     18.1%     20.7%     16.2%
                                                           =====     =====     =====     =====
</TABLE>

FOR THE QUARTERS AND NINE MONTHS ENDED AUGUST 31, 1998 AND 1997

     Revenues. Total revenues for the three months ended August 31, 1998,
consisting of royalties, sales of printing equipment, supplies and services,
franchise fees and finance and other income, totaled $2,310,000, a decrease of
$287,000 or 11.1% compared to the three months ended August 31, 1997. Total
revenues for the nine months ended August 31, 1998, of $7,245,000 were $394,000
or 5.2% below the nine months ended August 31, 1997.

     Royalty revenue increased slightly to $1,146,000 in the third quarter of
1998 from $1,118,000 in 1997. For the nine months ended August 31, 1998, royalty
revenue was $3,328,000, an increase of $44,000 or 1.3% over the same period a
year ago. Royalties were essentially flat as the increased royalties paid as a
result of increased sales by existing franchise locations was offset by reduced
royalties resulting from the number of franchised locations decreasing to 255 as
of August 31, 1998 from 277 as of August 31, 1997. Most of the store reductions
were in low-performing locations; however, there was some impact on royalty
revenue.

     Sales of printing equipment, supplies and services for the third quarter of
1998 decreased to $852,000 from $1,281,000 for 1997, a decrease of 33.5%. For
the nine months ended August 31, 1998, sales of products were $2,926,000 or 20%
below the sales of $3,656,000 for the same period a year ago. The decrease in
1998 resulted from the elimination of selling certain electronic publishing
equipment, envelopes and inks and reduced sales of printing presses and related
equipment that reflected reduced demand from franchisees.


                                       7

<PAGE>


     Finance and other income was $312,000 for the quarter ended August 31,
1998, which is $114,000 or 57.6% greater than the same quarter a year ago. For
the nine months ended August 31, 1998, finance and other income was $991,000 or
41.2% more than the $699,000 for the same period a year ago. For the three and
nine month periods of 1998, the increased revenues were primarily due to
investing in higher yielding investments and an increased level of investments.
Overall, franchise fee revenues are not significant in 1998 or 1997 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 $649,000 for the third quarter of
1998 from $1,054,000 for 1997, a decrease of 38.4% for the quarter. The decrease
in the third quarter is the result of a related decrease in sales of printing
and electronic publishing equipment. Nine month cost of sales amounts totaled
$2,279,000 in 1998, compared to $3,007,000 in 1997, a decrease of $728,000 or
24.2%, relating primarily to sales decreases. Average margins in products and
services increased to 22.1% for the nine month period of 1998 compared to 17.7%
for the nine month period ended August 31, 1997 due to the elimination of
selling and reduced sales of certain low margin products and generally improved
margins on most other product lines.

     Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $723,000 for the third quarter 1998 compared to
$739,000 for 1997, a decrease of 2.2%. Total expenses for the nine months ended
August 31, 1998 were $2,413,000 compared to $2,493,000 for 1997, representing a
3.2% decrease. The decrease in expenses was due to the elimination of one
executive position and the expiration of a long-term consulting agreement,
effective December 1, 1997, which was offset by general inflationary increases
in other operating expenses.

     Provision for Income Tax. The Company's effective combined federal and
state income tax rate is estimated to be 37% for 1998 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 nine months ending August 31, 1998, the Company generated
$1,496,000 from operating activities, a slight increase of $4,000 from
$1,492,000 of funds provided from operating activities for the nine month period
of 1997.

     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 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. Accrued financing liabilities of $200,000 are recorded on
the balance sheet at August 31, 1998, representing estimated losses on these
guarantees, net of equipment value. The aggregate balance outstanding under this
facility as of August 31, 1998 was approximately $2,839,000.

     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 mid-year 1998 to
ascertain the status of each vendor's Year 2000 compliance. The survey process
of vendors will be completed by the end of the first quarter of 1999 and will be
monitored thereafter. Total costs associated with the Year 2000 compliance
project through August 31, 1998 have been approximately $10,000 and total costs
related to Year 2000 are expected to be less than $50,000.


                                       8

<PAGE>


    The Company plans to provide 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.


                                       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
         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


                                       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: January 13, 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