U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                  FORM 10-QSB/A
                         AMENDMENT NO. 1 TO FORM 10-QSB



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

         FOR THE QUARTERLY PERIOD ENDED AUGUST 31, 2001.


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

         For the transition period from _______________ to _______________



Commission file number              001-15563
                       ---------------------------------------------------------


                                    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)

         8091 WALLACE ROAD
         EDEN PRAIRIE, MN 55344
--------------------------------------------------------------------------------
         (Address of Principal Executive Offices)


                                 (952) 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 9, 2001, there were 4,579,687 Common Shares outstanding.

         THE REGISTRANT'S QUARTERLY REPORT ON FORM 10-QSB FOR THE QUARTER ENDED
AUGUST 31, 2001 IS HEREBY AMENDED TO READ AS FOLLOWS:

<PAGE>


                                    IPI, INC.
                                Table of Contents


                                                                            Page
                                                                            ----

PART I.  FINANCIAL INFORMATION

        Item 1.  Financial Statements (Unaudited)

                 Condensed Consolidated Balance Sheets as of August 31,
                 2001 and November 30, 2000.                               3

                 Condensed Consolidated Statements of Operations and
                 Comprehensive Income for the Three and Nine Months
                 Ended August 31, 2001 and August 31, 2000.                4

                 Condensed Consolidated Statements of Cash Flows for the
                 Nine Months Ended August 31, 2001 and August 31, 2000.    6

                 Notes to Condensed Consolidated Financial Statements.     7-9

        Item 2.  Management's Discussion and Analysis of Financial
                 Condition and Results of Operations.                      10-12



PART II. OTHER INFORMATION

        Item 1.  Legal Proceedings                                         13

        Item 2.  Changes in Securities                                     13

        Item 3.  Defaults Upon Senior Securities                           13

        Item 4.  Submission of Matters to Vote of Security Holders         13

        Item 5.  Other Information                                         13

        Item 6.  Exhibits and Reports of Form 8-K                          13

        Signatures                                                         13


                                       2
<PAGE>


PART I. FINANCIAL INFORMATION
ITEM 1.

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

<TABLE>
<CAPTION>
                                                                       August 31,      November 30,
                                                                          2001             2000
                                                                      ------------     ------------
<S>                                                                   <C>              <C>
                                     ASSETS
                                     ------
CURRENT ASSETS:
     Cash and cash equivalents                                        $  8,370,000     $    643,000
     Short-term investments                                              6,680,000           81,000
     Marketable equity securities                                       11,179,000       15,638,000
     Trade accounts receivable, net                                      1,089,000        1,370,000
     Current maturities of notes receivables, net of allowance of
         $157,000 and $182,000                                             637,000          707,000
     Inventories                                                           187,000          242,000
     Prepaid expenses and other                                            114,000          142,000
     Deferred income taxes                                               1,449,000        1,173,000
                                                                      ------------     ------------
         Total current assets                                           29,705,000       19,996,000
                                                                      ------------     ------------

PROPERTY AND EQUIPMENT:
     Property and equipment                                              1,862,000        1,924,000
     Less Accumulated depreciation                                      (1,202,000)      (1,148,000)
                                                                      ------------     ------------
         Property and equipment, net                                       660,000          776,000

NOTES RECEIVABLE, net of current maturities and allowance of
     $539,000 and $523,000                                                 605,000          753,000

GOODWILL AND OTHER INTANGIBLES, net                                      2,624,000        3,393,000
                                                                      ------------     ------------

                                                                      $ 33,594,000     $ 24,918,000
                                                                      ============     ============

                      LIABILITIES AND SHAREHOLDERS' EQUITY
                      ------------------------------------
CURRENT LIABILITIES:
     Accounts payable                                                 $    281,000     $    676,000
     Margin loans                                                               --        4,438,000
     Accrued compensation                                                  127,000          189,000
     Accrued financing liabilities                                          50,000          145,000
     Deferred revenues                                                     108,000          200,000
     Income taxes payable                                                4,721,000               --
     Other accrued liabilities                                             576,000          689,000
                                                                      ------------     ------------
         Total current liabilities                                       5,863,000        6,337,000
                                                                      ------------     ------------

LONG-TERM CAPITAL LEASE OBLIGATIONS                                         49,000          105,000

SHAREHOLDERS' EQUITY:
     Common Stock, $.01 par value, 15,000,000 shares authorized:
         4,859,000 and 4,859,000 shares issued and outstanding              49,000           49,000
     Additional paid-in capital                                         15,769,000       15,769,000
     Retained earnings                                                  12,650,000        3,032,000
     Unrealized gain (loss) on marketable securities available for
         sale, Net of income tax effects                                  (786,000)        (374,000)
                                                                      ------------     ------------
         Total shareholders' equity                                     27,682,000       18,476,000
                                                                      ------------     ------------
                                                                      $ 33,594,000     $ 24,918,000
                                                                      ============     ============
</TABLE>


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

                                       3
<PAGE>


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

<TABLE>
<CAPTION>
                                                         Three Months Ended               Nine Months Ended
                                                             August 31,                       August 31,
                                                   -----------------------------    -----------------------------
                                                        2001             2000            2001            2000
                                                   -----------------------------    -----------------------------
<S>                                                <C>              <C>             <C>              <C>
REVENUES:
     Insty-Prints royalty and franchise fees       $  1,073,000     $  1,121,000    $  3,153,000     $  3,350,000
     Printing supplies and services                     459,000          620,000       1,495,000        1,979,000
     Company-owned print locations                      204,000          408,000         821,000        1,291,000
     Change of Mind Learning royalty fees and
       other income                                      38,000           37,000          68,000           92,000
     Other income                                       158,000          195,000         314,000          364,000
                                                   ------------     ------------    ------------     ------------
     Total Revenues                                   1,932,000        2,381,000       5,851,000        7,076,000
                                                   ------------     ------------    ------------     ------------

COSTS AND EXPENSES:
     Insty-Prints franchise and printing
         operations:
       Cost of sales--supplies and services             356,000          488,000       1,119,000        1,497,000
       Cost of sales--print locations                    57,000          128,000         230,000          387,000
       Selling, general and administrative            1,024,000        1,304,000       3,271,000        3,883,000
       Provision for bad debts                          235,000               --         235,000               --
       Amortization of goodwill                          48,000           52,000         144,000          177,000
                                                   ------------     ------------    ------------     ------------
        Total Costs and Expenses                      1,720,000        1,972,000       4,999,000        5,944,000
                                                   ------------     ------------    ------------     ------------

     Change of Mind Learning franchise
         operations:
       Selling, general and administrative              249,000          223,000       1,036,000          483,000
       Amortization of goodwill                               0           11,000          23,000           30,000
       Impairment of goodwill                           602,000               --         602,000               --
       Total Costs and Expenses                         851,000          234,000       1,661,000          513,000
                                                   ------------     ------------    ------------     ------------

OPERATING INCOME (LOSS)                                (639,000)         175,000        (809,000)         619,000

OTHER INCOME (EXPENSE)
     Interest and dividends on investments               78,000           72,000         163,000          360,000
     Interest expense on margin loans                   (17,000)              --         (74,000)              --
     Net gain on disposal of securities & other
       assets                                         9,510,000            4,000      16,750,000          474,000
                                                   ------------     ------------    ------------     ------------
                                                      9,571,000           76,000      16,839,000          834,000

INCOME BEFORE INCOME TAX                              8,932,000          251,000      16,030,000        1,453,000
INCOME TAX EXPENSE                                    3,573,000          100,000       6,412,000          581,000
                                                   ------------     ------------    ------------     ------------

NET INCOME                                         $  5,359,000     $    151,000    $  9,618,000     $    872,000
                                                   ============     ============    ============     ============

BASIC AND DILUTED EARNINGS PER
COMMON SHARE                                       $       1.10     $       0.03    $       1.98     $       0.18
                                                   ============     ============    ============     ============

WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON SHARE EQUIVALENTS OUTSTANDING
     - BASIC                                          4,859,000        4,859,000       4,859,000        4,843,000
                                                   ============     ============    ============     ============
     - DILUTED                                        4,859,000        4,859,000       4,859,000        4,843,000
                                                   ============     ============    ============     ============
</TABLE>


                                       4
<PAGE>


<TABLE>
<S>                                                    <C>              <C>             <C>              <C>
OTHER COMPREHENSIVE INCOME, NET OF TAX (NOTE 1):
     Net Income                                        $  5,359,000     $    151,000    $  9,618,000     $    872,000
     Change in unrealized gain (loss) on
         marketable securities available for
         sale, net of income tax effects                   (786,000)       1,819,000        (786,000)       1,811,000
     Reclassification adjustment from prior
         period upon sale in current period at a
         gain                                            (8,704,000)              --         374,000          369,000
                                                       ------------     ------------    ------------     ------------
     Total Comprehensive Income                        $ (4,131,000)    $  1,970,000    $  9,206,000     $  3,052,000
                                                       ============     ============    ============     ============
</TABLE>


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

                                       5
<PAGE>


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

<TABLE>
<CAPTION>
                                                                                 Nine Months Ended
                                                                                     August 31,
                                                                          -----------------------------
                                                                               2001            2000
                                                                          -----------------------------
<S>                                                                       <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income                                                           $  9,618,000     $    872,000
     Adjustments to reconcile net income to net cash provided by (used
         in) operating activities-
         Depreciation and amortization                                         328,000          399,000
         Impairment of goodwill                                                602,000               --
         Provision for bad debts                                               235,000               --
         Purchase of short-term investments                                 (8,355,000)              --
         Sale of short-term investments                                      1,756,000        1,138,000
         Realized gain on sale of marketable securities                    (16,738,000)              --
         Net change in other operating items:
              Trade accounts receivable                                        315,000           92,000
              Inventories                                                       55,000           72,000
              Prepaid expenses and other                                        28,000          (51,000)
              Accounts payable, deferred revenues and other accrued
                 liabilities                                                 3,965,000          (92,000)
                                                                          ------------     ------------

              Net cash provided by (used in) operating activities           (8,191,000)       2,430,000
                                                                          ------------     ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchase of property and equipment, net                                  (101,000)        (125,000)
     Purchase of marketable equity securities                              (20,719,000)      (6,939,000)
     Sale of marketable equity securities                                   41,228,000               --
     Change in notes receivable, net                                           (52,000)         178,000
     Purchase of Dreamcatcher                                                       --         (560,000)
                                                                          ------------     ------------

              Net cash provided by (used in) investing activities           20,356,000       (7,446,000)
                                                                          ------------     ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Increase (decrease) in margin loans                                    (4,438,000)       4,181,000

              Increase (decrease) in cash and cash equivalents               7,727,000         (835,000)

CASH AND CASH EQUIVALENTS, beginning of the period                             643,000        2,022,000
                                                                          ------------     ------------

CASH AND CASH EQUIVALENTS, end of period                                  $  8,370,000     $  1,187,000
                                                                          ============     ============

SUPPLEMENTAL CASH FLOW INFORMATION:

     Income taxes paid                                                    $  1,686,000     $    545,000
                                                                          ============     ============
</TABLE>


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

                                       6
<PAGE>


                           IPI, INC. AND SUBSIDIARIES
              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 subsidiaries,
     Insty-Prints, Inc. ("Insty-Prints") and Change of Mind Learning Systems,
     Inc. (Change of Mind Learning) 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
     inter-company transactions have been eliminated in consolidation. The
     significant accounting policies, certain financial information and footnote
     disclosures that are normally included in financial statements prepared in
     accordance with accounting principles generally accepted in the United
     States, 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, 2000 and 1999 and the
     notes thereto included in the Company's Form 10-KSB.

     In 1999, 2000 and 2001, 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 income tax effects.

     The Company closed its Dallas Insty-Prints business that was established in
     April of 1999 through the acquisition of Regency. A charge for the
     estimated expenses of $840,000 to close the store was recorded effective
     November 30, 2000. The $840,000 charge includes restructuring costs of
     $463,000 and the write-off of $209,000 unamortized goodwill and $168,000 of
     book value of fixed assets. The restructuring costs relate to the
     settlement of lease obligations, severance costs and other closing costs,
     as detailed in the following table:

                                  AS OF                              AS OF
                            NOVEMBER 30, 2001   CASH PAYMENTS    AUGUST 31, 2001

     Restructuring Costs
          Equipment leases     $ 293,000         $ (76,000)        $ 217,000
          Building leases         86,000           (43,000)           43,000
          Severance & other
           costs                  84,000          (113,000)          (29,000)
                               ---------         ---------

     TOTAL                     $ 463,000         $(232,000)        $ 231,000
                               =========         =========         =========

     The Company is engaged in two business segments -- the franchising and
     operating of business printing centers under the trade name of
     Insty-Prints(R) and franchising and operating supplemental private learning
     centers under the trade name Change of Mind Learning Systems(R) (formerly
     Dreamcatcher Franchise Corporation).

     Statement of Financial Accounting Standards (SFAS) No. 133 -- "Accounting
     for Derivative Instruments and Hedging Activities" was issued during June
     1998 and, as amended, establishes accounting and reporting standards for
     derivative instruments, including certain derivative instruments embedded
     in other contracts, and for hedging activities. It requires the recognition
     of all derivatives as either assets or liabilities in the statement of
     financial position and the measurement of those instruments at fair value.
     SFAS No. 133 was effective for the Company beginning December 1, 2000. The
     adoption of SFAS No. 133 did not have a material impact on the Company's
     consolidated results of operations, financial position or cash flows.

     In July 2001, the FASB issued SFAS No. 141, "Business Combinations", and
     Statement No. 142, "Goodwill and Other Intangible Assets." Statement No.
     141 requires that the purchase method of accounting be used for all
     business combinations subsequent to June 30, 2001 and specifies criteria
     for recognizing intangible assets acquired in a business combination.
     Statement No. 142 requires that goodwill and intangible assets with
     indefinate useful lives no longer be amortized but instead be tested for
     impairment at least annually. Intangible assets with definate useful lives
     will continue to be amortized over their respective estimated useful lives.
     Statement No. 142 is effective for the Company beginning in fiscal year
     2003. The Company does not expect the implementation of these statements to
     have a material impact on its consolidated financial position or results of
     operations.

     In July 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
     Obligations, which addresses financial accounting and reporting for
     obligations associated with the retirement of tangible long-lived assets
     and the associated asset retirement costs. SFAS No. 143 requires an entity
     to recognize the fair value of a liability for an asset retirement
     obligation in the period in which it is incurred. Upon initial recognition
     of a liability for an asset retirement obligation, an entity shall
     capitalize an asset retirement cost by increasing the carrying amount of
     the related long-lived asset by the same amount as the liability. SFAS No.
     143 is effective for financial statements issued for fiscal years beginning
     after June 15, 2002. The Company does not expect the impact or adoption to
     be significant.

     In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
     or Disposal of Long-Lived Assets. This statement addresses financial
     accounting and reporting for the impairment or disposal of long-lived
     assets. SFAS No. 144 retains and expands upon the fundamental provisions of
     existing guidance related to the recognition and measurement of the
     impairment of long-lived assets to be held and used and the measurement of
     long-lived assets to be disposed of by sale. Generally, the provisions of
     SFAS No. 144 are effective for financial statements issued for fiscal years
     beginning after December 15, 2001. Earlier application is encouraged. The
     Company does not expect the impact or adoption to be significant.


                                       7
<PAGE>


2.   ACQUISITIONS

     In April 1999, Texas IPI, L.P. purchased the printing related assets and
     assumed the facility and printing equipment leases of Regency Plaza
     Printing and Office Supplies, Inc. (Regency), located in Dallas, Texas. The
     consideration paid of $431,000 exceeded the fair value of assets received
     by $234,000 of goodwill that was being amortized on a straight-line basis
     over fifteen (15) years. The assets purchased include furniture, computers,
     leasehold improvements, customer list and various printing equipment items.
     Leases assumed were primarily for presses, copiers and related printing
     equipment and the business facility. The operations of Texas IPI, L.P. are
     included in the IPI Statement of Operations from the date of acquisition.
     As noted in Note 1, this business was closed and a charge of $840,000 has
     been recognized as of November 30, 2000 for related expenses.

     In January 2000, the Company acquired substantially all the assets of
     Dreamcatcher Franchise Corporation and Dreamcatcher Learning Centers, Inc.
     (together, Dreamcatcher). The acquisition costs included the assumption of
     $395,000 in obligations, legal and other related costs of $40,000, a cash
     payment of $125,000, the issuance of 125,000 shares of the Company's stock
     with a valuation of $187,000 and a future maximum earn-out provision of
     $375,000, based on the achievement of certain levels of operational
     franchised learning centers. Through the period ended August 31, 2001, no
     earn-out provisions were earned or paid. The acquisition price and costs
     exceeded the fair value of assets received by $666,000, which has been
     recorded as goodwill that is being amortized on a straight-line basis over
     15 years. The assets purchased include furniture, computers, leasehold
     improvements and receivables. The remaining goodwill was written off in the
     third quarter of 2001 because it was determined that the carrying value
     would not be recovered from future net operating cash flows.

     Subsequently, the name of the company was changed to Change of Mind
     Learning Systems, Inc. Change of Mind Learning franchises the
     establishment, development and operation of facilities providing
     supplemental private education services to people of all ages using
     personalized assessments with direct instruction in reading, writing,
     spelling, math, study skills, G.E.D. preparation and college preparation.
     As of August 31, 2001, there was one operating franchise location and one
     corporate-owned learning center.

3.   SIGNIFICANT INVESTMENT TRANSACTIONS

     Through a series of purchases during the period from April 24, 2000 to
     September 25, 2000, the Company acquired 2,175,500 shares of common stock
     of Conseco, Inc. (NYSE: CNC), an Indiana based insurance and financial
     services company. The Company paid approximately $16,261,000 in total
     consideration for the 2,175,500 shares; all but $4,438,000 of which was
     financed from the working capital of the Company.

     In January 2001, the Company sold 815,100 shares of its holdings in
     Conseco, Inc. common stock and realized proceeds of $13,325,000 for a
     pre-tax gain of approximately $7,232,000. The after-tax gain was
     approximately $4,339,000 or $0.89 per share. Approximately $4,438,000 of
     the proceeds from the sale was used to re-pay all margin loans incurred
     when shares were purchased. Through additional purchases in March and June,
     2001, the Company acquired 562,600 shares of common stock of Conseco, Inc.
     The Company paid approximately $8,229,000 in consideration for the 562,600
     shares, which was financed from working capital of the Company. In third
     quarter ended August the Company sold its remaining 1,923,000 shares of
     Conseco common stock realizing proceeds of $27,957,000 and a pre-tax gain
     of $9,506,000. The after tax gain was approximately $5,704,000 or $1.17 per
     share of IPI stock outstanding at the quarter end. The shares were
     purchased for investment purposes only and the Company has no relationship
     to Conseco, Inc. other than that of shareholder. All shares were purchased
     in open market transactions.


                                       8
<PAGE>


     In a series of transactions during August 2001, the Company purchased
     2,081,800 shares of common stock of Clarent Corporation (Nasdaq NM: CLRN),
     Clarent Corporation is a California-based provider of Internet protocol
     communication solutions. The Company paid approximately $12,485,030 in
     total consideration for the 2,081,800 shares, which was financed from the
     working capital of the Company. The Company's total holdings in Clarent
     Corporation constitute approximately 5.1% of the 40,685,480 outstanding
     shares of common stock of Clarent Corporation as reported in Clarent
     Corporation's Quarterly Report on form 10-Q for the quarter ended June 30,
     2001. The shares were purchased because the Company feels the shares are
     undervalued. The Company has no relationship to Clarent Corporation other
     than that of shareholder. On September 4, 2001, subsequent to the purchase
     of Clarent stock, Clarent Corporation issued a press release announcing an
     investigation on the potential overstatement of historical revenues.
     Clarent indicated it expects the 2001 first and second quarters revenues
     will be reduced and related net losses increased. Trading in Clarent
     Corporation stock was halted on September 4, 2001 pending resolution of the
     first and second quarter results of operation. The investment has been
     recorded at the market closing price as of August 31, 2001.

     From time to time, the Company has invested and may invest in other
     businesses or companies other than its core businesses of franchising and
     operating fast turnaround business printing operations and franchising
     learning centers. Although the Company has invested in other businesses or
     companies, the Company does not intend to become an investment company and
     intends to remain primarily an operating company.


                                       9
<PAGE>


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

OVERVIEW

     As of August 31, 2001, the Company, through its wholly owned subsidiary
Insty-Prints, had 211 franchise locations and one Company-owned store and,
through Change of Mind, had one franchise location and one Company-owned
location.

RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>
                                                                    Quarter Ended        Nine Month Ended
                                                                      August 31,            August 31,
                                                                -------------------------------------------
                                                                  2001        2000       2001        2000
                                                                -------------------------------------------
<S>                                                              <C>         <C>        <C>         <C>
     Revenues:
         Insty-Prints royalty and franchise fees                  55.5%       47.1%      53.9%       47.3%
         Printing supplies and services                           23.8        26.0       25.6        28.0
         Company-owned print locations                            10.6        17.1       14.0        18.2
         Change of Mind Learning royalty fees & other income       2.0         1.6        1.2         1.3
         Other income                                              8.1         8.2        5.3         5.2
                                                                 -----       -----      -----       -----
              Total revenues                                     100.0       100.0      100.0       100.0
                                                                 -----       -----      -----       -----
     Costs and expenses:
         Insty-Prints franchise and printing operations:
           Cost of sales--supplies and services                   18.4        20.5       19.1        21.2
           Cost of sales--print locations                          3.0         5.4        3.9         5.5
           Selling, general and administrative                    53.0        54.8       55.9        54.9
           Provision for Bad Debt                                 12.2          --        4.0          --
           Amortization of goodwill                                2.4         2.2        2.5         2.5
                                                                 -----       -----      -----       -----
                                                                  89.0        82.9       85.4        84.1
                                                                 -----       -----      -----       -----
         Change of Mind Learning franchise operations:
           Selling, general and administrative                    12.9         9.4       17.7         6.8
           Amortization of goodwill                                 --         0.4        0.4         0.4
           Impairment  of goodwill                                31.2         0.0       10.3         0.0
                                                                 -----       -----      -----       -----
           Total Costs and Expenses                               44.1         9.8       28.4         7.2
                                                                 -----       -----      -----       -----

     Operating income (loss)                                     (33.1)        7.3      (13.8)        8.7
                                                                 -----       -----      -----       -----
     Other income (expense):
         Interest and dividends on investments                     4.0         3.0        2.8         5.1
         Interest expense on margin loans                         (0.8)        0.0       (1.3)        0.0
         Net gain on disposal of securities and other assets     492.2         0.2      286.3         6.7
                                                                 -----       -----      -----       -----
                                                                 495.4         3.2      287.8        11.8
                                                                 -----       -----      -----       -----
     Income before income tax                                    462.3        10.5      274.0        20.5
                                                                 -----       -----      -----       -----

     Income tax expense                                          184.9         4.2      109.6         8.2
                                                                 -----       -----      -----       -----

     Net income                                                  277.4%        6.3%     164.4%       12.3%
                                                                 =====       =====      =====       =====
</TABLE>


                                       10
<PAGE>


     Revenues. Total revenues for the three months ended August 31, 2001,
consisting of royalties, sales of printing supplies and services, company-owned
print and learning centers, and other income, totaled $1,932,000, a decrease of
$449,000 or 18.9% compared to the three months ended August 31, 2000. Total
revenues for the nine months ended August 31, 2001, of $5,851,000 were
$1,225,000 or 17.3% below the nine months ended August 31, 2000.

     As expected, Insty-Prints royalty and franchise fees of $1,073,000 in the
third quarter of 2001 were 4.3% below the 2000 third quarter of $1,121,000. For
the nine months ended August 31, 2001, royalty revenue was $3,153,000 a decrease
of $197,000 or 5.9% less than the same period a year ago. The decrease in
royalty and franchise fees was due primarily to a decline in the number of
franchised locations in 2001 compared to 2000.

     Sales of printing supplies and services for the third quarter of 2001
decreased to $459,000 from $620,000 in 2000 or 26%. For the nine months ended
August 31, 2001, sales of printing supplies and services were $1,495,000 or
24.5% below sales of $1,979,000 for the same period a year ago. The decrease in
sales for 2001 resulted primarily from reduced sales of copier supplies due to
such products now being provided for in copier leases. Additionally, direct mail
services sales decreased due to reduced demand from franchise owners.

     Sales at Company-owned Insty-Prints decreased to $204,000 for the third
quarter of 2001, compared to $408,000 for the same quarter a year ago. For the
nine months ended August 31, 2001, sales of printing supplies and services were
$821,000 or 36.4% below sales of $1,291,000 for the same period a year ago. The
Dallas print business was closed in early February 2001, which reduced sales in
2001 compared to 2000.

     Change of Mind Learning royalties and other income were $38,000 for the
third quarter of 2001, compared to $37,000 for the same period a year ago. For
the nine months ended August 31, 2001 royalties and other income was $68,000 or
26.1% below the $92,000 for the same period a year ago. This business began
operations in January 2000 and is in its early stage of development.

     Other income was $158,000 for the quarter ended August 31, 2001, which is a
decrease of $37,000 or 19.0% from the same quarter a year ago. For the nine
months ended August 31, 2001, other income was $314,000 or 13.7% below the
$364,000 for the same period a year ago. For 2001, other income was less due
primarily to decreased levels of notes receivable that are outstanding on which
interest income is earned.

     Cost of Sales--Printing Supplies and Services. Cost of sales decreased to
$356,000 for the third quarter of 2001 from $488,000 for 2000, a decrease of
27.1% for the quarter. For the nine months ended August 31, 2001, the cost of
sales of printing supplies and services were $1,119,000 or 25.3% below sales of
$1,497,000 for the same period a year ago. The decrease in the third quarter and
nine months ended August 31, 2001, is the result of a related decrease in
product sales, as mentioned previously. Margins on printing supplies and
services for the three months ended August 31, 2001 were 22.4% compared to 21.3%
for the same period in 2000 and for the nine months ended August 31, 2001 were
25.2% compared to 24.4% for the same period in 2000.

     Cost of Sales--Company-owned Print Locations. Cost of sales decreased to
$57,000 for the third quarter of 2001 compared to $128,000 for the same quarter
a year ago. For the nine months ended August 31, 2001, cost of sales were
$230,000 or 40.6% less than the $387,000 for the same period a year ago. Cost of
sales decreased due to decreased sales in 2001 as a result of closing a printing
business in early February 2001.

     Insty-Prints Selling, General and Administrative Expenses. Selling, general
and administrative expenses decreased to $1,024,000 for the third quarter of
2001 from $1,304,000 for the same period in 2000, a decrease of 21.5%. For the
nine months ended August 31, 2001, expenses were $3,271,000 or 15.8% less than
the $3,883,000 of expenses for the same period a year ago. Expenses decreased in
both periods of 2001 primarily due to reduced staffing and allocation of certain
expenses to Change of Mind Learning.


                                       11
<PAGE>


     Insty-Prints Provision for Bad Debt. A provision for bad debts expense of
$235,000 was recorded for the third quarter of 2001 compared to no provision
expense for the same period in 2000. The provision for bad debts was recorded to
recognize a deterioration in the likely collection of note and other
receivables.

     Insty-Prints Amortization of Goodwill. Amortization of goodwill decreased
to $48,000 in the third quarter of 2001 compared to $52,000 in the same quarter
a year ago. For the nine months ended August 31, 2001, amortization was $144,000
or 18.6% below the $177,000 for the same period a year ago. The decrease in 2001
resulted from the closing of a printing business, effective November 30, 2000,
and goodwill related to an intangible asset was fully amortized in May 2000.

     Change of Mind Learning Franchise Operations. Selling, general and
administrative expenses were $249,000 for the third quarter of 2001, reflecting
an increase of $26,000 from the third quarter of 2000. For the nine months ended
August 31, 2001, expenses were $1,036,000 or 114.5% greater than the $483,000 of
expenses for the same period a year ago. Expenses increased due to increased
developmental efforts in both periods of 2001.

     Change of Mind Learning Franchise Impairment of Goodwill. The remaining
goodwill of $602,000 was written off in the third quarter of 2001. Based on the
current state of progress and the more immediate future prospects for the
business, it was determined the write-off of goodwill was appropriate.

     Provision for Income Taxes. The Company's effective combined federal and
state income tax rate is estimated to be 40% for 2001 and was 40% for 2000.

LIQUIDITY AND CAPITAL RESOURCES

     During the nine months ended August 31, 2001, the Company used funds of
$8,191,000 from operating activities; a decrease of $10,621,000 from $2,430,000
of funds provided from operating activities for the nine months ended August 31,
2000. In the 2001 period, the Company's use of funds compared to the prior
period a year ago primarily related to purchases of short-term investments of
$8,355,000 and a $16,738,000 realized gain on marketable securities, which was
offset by net income of $9,618,000.

     During the nine months ended August 31, 2001, investment activities of the
Company included the purchase of $6,599,000 of short-term investments, the sale
of $41,228,000 of marketable equity securities held for sale and purchase of
$20,719,000 of marketable equities held for sale. Financing activities for the
nine months ended August 31, 2001 included the retirement of margin loans of
$4,438,000.

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

     Certain franchise owners have financed their equipment purchases through a
$6,000,000 equipment financing facility established with U.S. Bank Business
Finance Corporation by Insty-Prints for the benefit of the franchise owners. New
financings under this program ceased in April 2000. This facility is guaranteed
by the Company and Insty-Prints, whose contingent liability under this agreement
is the lesser of the outstanding balance or $2,400,000. A loss reserve of
$50,000 is recorded on the balance sheet at August 31, 2001, representing
estimated losses on this guarantee. The approximate aggregate balance
outstanding under this facility as of August 31, 2001 was $512,000.

FORWARD-LOOKING STATEMENTS
     This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. With the exception of historical matters, the matters
discussed herein are forward-looking statements that involve risks and
uncertainties. These forward-looking statements are based on management's goals,
estimates, assumptions and projections. Actual results and events could differ
materially from those projected, anticipated or implicit in the forward-looking
statements as a result of certain risk factors. These factors include, but are
not limited to, increased competition from other business printing centers,
reduced demand for printed media, lack of experience in the supplemental private
education market, increased competition from other providers of educational
services, greater start-up costs than expected and other factors of which the
Company is unaware at this time. If any of these risks were to materialize,
royalty revenue from franchised locations and sales of products to such
locations by the Company would be reduced, thus reducing revenue and profits.


                                       12
<PAGE>


     The preceding discussion of financial condition and results of operations
should be read in conjunction with the financial statements and the related
notes thereto appearing elsewhere herein.

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      14

            (b)   Reports on Form 8-K.
                  The Company filed a Form 8-K report on August 15, 2001 related
                  to the sale of Conseco common stock, which is classified as
                  marketable equity securities held for sale.

                  The Company filed a Form 8-K report on September 5, 2001,
                  related to the purchase of Clarent common stock in August
                  2001, which is classified as marketable equity securities held
                  for sale.

                  ----------------------------
                  *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: December 31, 2001       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)


                                       13