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 AUGUST 31, 1996.


[ ]    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 10, 1996, there were 4,734,087 Common Shares outstanding.



                                    IPI, INC.
                                Table of Contents


                                                                          Page

PART I.  FINANCIAL INFORMATION

     Item 1.    Financial Statements (Unaudited)

                Condensed Consolidated Statements of Operations for the
                Three Months and Nine Months Ended August 31, 1996 and
                1995.                                                        3

                Condensed Consolidated Balance Sheets as of August 31,
                1996 and November 30, 1995.                                  4

                Condensed Consolidated Statements of Cash Flows for the
                Nine Months ended August 31, 1996 and 1995.                  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



PART I.  FINANCIAL INFORMATION
ITEM 1.

<TABLE>
<CAPTION>
                           IPI, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

                                                           Three Months Ended                 Nine Months Ended
                                                               August 31,                         August 31,
                                                      ----------------------------      ----------------------------
                                                          1996             1995             1996             1995
                                                      -----------      -----------      -----------      -----------
<S>                                                  <C>              <C>              <C>              <C>
REVENUES:
     Royalty fees                                     $ 1,046,000      $   952,000      $ 3,051,000      $ 2,763,000
     Printing equipment, supplies and services          1,498,000        1,654,000        4,047,000        4,232,000
     Finance and other income                             242,000          226,000          766,000          647,000
                                                      -----------      -----------      -----------      -----------

     Total Revenues                                     2,786,000        2,832,000        7,864,000        7,642,000
                                                      -----------      -----------      -----------      -----------

COSTS AND EXPENSES:
     Cost of sales                                      1,270,000        1,441,000        3,385,000        3,592,000
     Selling, general and administrative expenses         793,000          707,000        2,495,000        2,212,000
     Amortization of goodwill                              58,000           68,000          173,000          126,000
                                                      -----------      -----------      -----------      -----------

     Total costs and expenses                           2,121,000        2,216,000        6,053,000        5,930,000
                                                      -----------      -----------      -----------      -----------

     Income before provision for income taxes             665,000          616,000        1,811,000        1,712,000

PROVISION FOR INCOME TAXES                               (246,000)        (243,000)        (670,000)        (676,000)
                                                      -----------      -----------      -----------      -----------

NET INCOME                                            $   419,000      $   373,000      $ 1,141,000      $ 1,036,000
                                                      ===========      ===========      ===========      ===========

NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE
                                                      $      0.09      $      0.08      $      0.24      $      0.22
                                                      ===========      ===========      ===========      ===========
WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON
     EQUIVALENT SHARES OUTSTANDING                      4,734,000        4,734,000        4,734,000        4,667,000
                                                      ===========      ===========      ===========      ===========

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

</TABLE>


<TABLE>
<CAPTION>
                                                IPI, INC. AND SUBSIDIARIES
                                           CONDENSED CONSOLIDATED BALANCE SHEETS


                                                                      August 31,1996     November 30,
                                                                       (Unaudited)           1995
                                                                      --------------     ------------
<S>                                                                   <C>               <C>
                                      ASSETS
CURRENT ASSETS:
     Cash and cash equivalents                                         $    998,000      $    575,000
     Short-term investments                                               2,748,000         2,648,000
     Trade accounts receivable                                            1,649,000         1,485,000
     Current maturities of notes receivables, net of allowance for
         doubtful accounts of $120,000                                      238,000           238,000
     Inventories                                                            395,000           266,000
     Prepaid expenses and other                                             172,000           343,000
     Deferred income taxes                                                  531,000           531,000
                                                                       ------------      ------------

         Total current assets                                             6,731,000         6,086,000
                                                                       ------------      ------------

PROPERTY AND EQUIPMENT:
     Property and equipment                                                 929,000           779,000
     Less - Accumulated depreciation                                       (542,000)         (544,000)
                                                                       ------------      ------------

         Property and equipment, net                                        387,000           235,000

NOTES RECEIVABLE, net of current maturities and allowance for
     doubtful accounts of $594,000 and $535,000                           3,083,000         2,751,000
GOODWILL AND OTHER INTANGIBLES, net of accumulated
     amortization of $876,000 and $702,000                                3,676,000         3,850,000
                                                                       ------------      ------------

                                                                       $ 13,877,000      $ 12,922,000
                                                                       ============      ============


                            LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
     Accounts payable                                                  $    468,000      $    448,000
     Accrued compensation                                                   243,000           411,000
     Accrued financing liabilities                                          175,000           175,000
     Deferred revenues                                                      144,000           157,000
     Other accrued liabilities                                              459,000           484,000
                                                                       ------------      ------------

     Total current liabilities                                            1,489,000         1,675,000
                                                                       ------------      ------------

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                                                 (3,243,000)       (4,384,000)
                                                                       ------------      ------------

     Total shareholders' equity                                          12,388,000        11,247,000
                                                                       ------------      ------------

                                                                       $ 13,877,000      $ 12,922,000
                                                                       ============      ============

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

</TABLE>


<TABLE>
<CAPTION>
                           IPI, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)


                                                                                 Nine Months Ended
                                                                                     August 31,
                                                                           ----------------------------
                                                                                1996            1995
                                                                                ----            ----
<S>                                                                        <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net Income                                                            $ 1,141,000      $ 1,036,000
     Adjustments to reconcile net income to net cash provided by
         operating activities -
              Depreciation and amortization                                    242,000          189,000
              Net change in other operating items:
                  Trade accounts receivable                                   (164,000)        (630,000)
                  Inventories                                                 (129,000)        (122,000)
                  Prepaid expenses and other                                    47,000           51,000
                  Accounts payable, accrued liabilities and other             (186,000)         428,000
                                                                           -----------      -----------

                      Net cash provided by operating activities                951,000          952,000
                                                                           -----------      -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Short-term investments, net                                              (100,000)       1,008,000
     Purchase of property and equipment, net                                  (221,000)         (74,000)
     Cash investment in Copy Boy                                                  --         (1,200,000)
     Investments in partnerships                                                  --               --
     Change in notes receivable, net                                          (207,000)        (998,000)
                                                                           -----------      -----------
                      Net cash used by investing activities                   (528,000)      (1,264,000)
                                                                           -----------      -----------

                      Increase (decrease) in cash and cash equivalents         423,000         (312,000)

CASH AND CASH EQUIVALENTS, beginning of year                                   575,000          482,000
                                                                           -----------      -----------

CASH AND CASH EQUIVALENTS, end of period                                   $   998,000      $   170,000
                                                                           ===========      ===========

SUPPLEMENTAL CASH FLOW INFORMATION:
     Income taxes paid                                                     $   606,000      $   277,000
                                                                           ===========      ===========

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

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

</TABLE>



                           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 Digital Output Center ("DOCs"), 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, 1995 and 1994
     and the notes thereto, included in the Company's Form 10-KSB.

2.   ACQUISITION OF COPY BOY

     In June 1995, Insty-Prints acquired the franchise contracts and IPI
     acquired certain notes receivable of Copy Boy Corporation ("Copy Boy"), a
     franchisor of 21 fast turnaround business printing locations in the Phoenix
     and Tucson markets, pursuant to an Asset Purchase Agreement. All 21 Copy
     Boy stores were converted to new 20 year Insty-Prints, Inc. franchise
     agreements.


Item 2.

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

OVERVIEW

     As of August 31, 1996, the Company, through its wholly-owned subsidiary
Insty-Prints, had 307 franchise locations and one Company-owned store. Included
in the franchise locations are 19 former Printhouse Express, Inc. (Printhouse)
stores which were acquired in March 1994, and 21 former Copy Boy stores acquired
in June 1995, all of which were subsequently converted to Insty-Prints stores.

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,
                                                        ---------------     -----------------
                                                        1996       1995       1996      1995
                                                        ----       ----       ----      ----
<S>                                                     <C>        <C>        <C>        <C>
Revenues:
    Royalty fees                                        37.5%      33.6%      38.8%      36.1%
    Printing equipment, supplies and services           53.8       58.4       51.5       55.4
    Finance and other income                             8.7        8.0        9.7        8.5
                                                       -----      -----      -----      -----

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

Costs and expenses:
    Costs of sales                                      45.6       50.9       43.0       47.0
    Selling, general and administrative expenses        28.4       25.0       31.7       29.0
    Amortization of goodwill                             2.1        2.4        2.2        1.6
                                                       -----      -----      -----      -----

    Total costs and expenses                            76.1       78.3       76.9       77.6
                                                       -----      -----      -----      -----

Income before provision for income taxes                23.9       21.7       23.0       22.4
Provision for income taxes                               8.8        8.6        8.5        8.9
                                                       -----      -----      -----      -----

Net income                                              15.1%      13.1%      14.5%      13.5%
                                                       =====      =====      =====      =====
</TABLE>


FOR THE QUARTERS AND NINE MONTHS ENDED AUGUST 31, 1996 AND 1995

     Revenues. Total revenues for the three months ended August 31, 1996,
consisting of royalties, sales of printing equipment, supplies and services,
franchise fees and finance and other income, totaled $2,786,000, a decrease of
$46,000 or 1.6% as compared to the three months ended August 31, 1995. Total
revenues for the nine months ended August 31, 1996, of $7,864,000 were up 2.9%
or $222,000 as compared to the nine months ended August 31, 1995.

     Royalty revenue increased to $1,046,000 in the third quarter of 1996 from
$952,000 in 1995, an increase of 9.9%. For the nine months ended August 31,
1996, royalty revenue was $3,051,000, an increase of 10.4% or $288,000 as
compared to the same period a year ago. Royalties increased primarily as a
result of the increased number of franchise locations open during the respective
periods and increased same store sales in 1996 over 1995.

     Sales of printing equipment, supplies and services for the third quarter of
1996 decreased $156,000 or 9.4% to $1,498,000 from $1,654,000 for 1995. For the
nine months ended August 31, 1996, sales of products were $4,047,000 or 4.4%
below the sales of $4,232,000 for the same period a year ago. The slight
decrease in 1996 was primarily the result of decreased sales of printing related
equipment, which was partially offset by an increase in the sale of electronic
publishing equipment, both reflecting store owner needs.

     Finance and other income was $242,000 for the quarter ended August 31,
1996, which is a $16,000 or 7.1% increase from the same quarter a year ago. For
the nine months ended August 31, 1996, finance and other income was $766,000 or
18.4% greater than the $647,000 for the same period a year ago. For the nine
month period of 1996, the increased revenues were primarily as a result of
increased franchise fee income, which was $88,000 higher than in the 1995
period. Overall, franchise fee revenues are not significant in 1996 or 1995 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 $1,270,000 for the third quarter
of 1996 from $1,441,000 for 1995, a decrease of 11.9% for the quarter. Average
margins in products and services were slightly higher for the nine months of
1996 at 16.4% compared to 15.1% for the 1995 period. The decrease in the third
quarter is the result of a related decrease in sales of printing equipment,
supplies and services. Nine month cost of sales amounts totaled $3,385,000 in
1996, compared to $3,592,000 in 1995, a decrease of $207,000 or 5.8%.

     Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $793,000 for the third quarter 1996 compared to
$707,000 for 1995, an increase of 12.2%. Total expenses for the nine months
ended August 31, 1996 were $2,495,000 compared to $2,212,000 for 1995,
representing a 12.8% increase. The increase in expenses was due primarily to
increased compensation expense for salary increases, staff additions, incentive
program accruals and the start-up of the DOCs subsidiary in March 1996.

     Amortization of Goodwill. Increases in the amortization of goodwill for the
nine month period in 1996 results from the June 1995 Copy Boy acquisition.

     Income Tax Expense. The Company's effective combined federal and state
income tax rate is estimated to be 37% for 1996 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, 1996, the Company generated
$951,000 from operating activities, compared to $952,000 of funds provided from
operating activities for the nine month period of 1995. While net cash provided
by operations was essentially the same for the two periods, there were
offsetting factors as shown on the Statements of Cash Flow.

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

     Franchise owners may finance their equipment purchases through a $6,000,000
equipment financing facility established with First Bank Systems by Insty-Prints
for the benefit of the franchise owners. This facility is guaranteed by IPI and
Insty-Prints, whose contingent liability under this agreement is capped at
$2,400,000. A loss reserve of $175,000 is recorded on the balance sheet at
August 31, 1996, representing estimated losses on these guarantees, net of
equipment value. The aggregate balance outstanding under this facility as of
August 31, 1996 was approximately $3,859,000.

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



PART II.  OTHER INFORMATION


Item 1.        Legal Proceedings

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

Item 2.        Changes in Securities
               Not applicable.

Item 3.        Defaults Upon Senior Securities
               Not applicable.

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

Item 5.        Other Information
               Not applicable.

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

               (a)  Exhibits.

                    *11  Statement Re: Computation of per share earnings    11

               (b)  Reports on Form 8-K.

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

                    ----------------------
                    *Filed herewith




SIGNATURES

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


Dated:  October 10, 1996        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)