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

                                  FORM 10-QSB/A
                         AMENDMENT NO. 2 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.                     10-14



PART II. OTHER INFORMATION

       Item 1.    Legal Proceedings                                        14

       Item 2.    Changes in Securities                                    14

       Item 3.    Defaults Upon Senior Securities                          14

       Item 4.    Submission of Matters to Vote of Security Holders        14

       Item 5.    Other Information                                        14

       Item 6.    Exhibits and Reports of Form 8-K                         14

       Signatures                                                          15


                                       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             (786,000)       1,819,000        (786,000)       1,811,000
         income tax effects
     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).


                                       7
<PAGE>


    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.

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.


                                       8
<PAGE>


    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.

    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.


                                       9
<PAGE>


    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.

    SUBSEQUENT EVENT

    As of the date of this Amendment No. 2 to the Company's Form 10-QSB, Clarent
    Corporation stock has still not yet begun active trading on the Nasdaq stock
    market. While the Company has no information which would provide guidance as
    to the amount of any possible impairment in value on its investment in
    Clarent Corporation common stock, it intends to carefully review the
    possibility of such impairment prior to release of its annual report on Form
    10-KSB for the year ended November 30, 2001 based on all facts and
    circumstances available through the filing date. Because of the size of the
    Company's investment in Clarent, which approximates $12.5 million, it is
    possible that an impairment adjustment will be required in an amount that
    could be material to the Company's financial statements for the period ended
    November 30, 2001.

    As more fully disclosed in the preliminary proxy statement filed with the
    SEC, certain majority shareholders have guaranteed to all other IPI
    shareholders a value in liquidation for the Clarent investment of a prorata
    share of no less than $6 per share of Clarent Stock, an amount equal to the
    Company's initial per share investment in Clarent.

    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.

                     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:


                                       10
<PAGE>

<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>


                                       11
<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.


                                       12
<PAGE>


    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.

    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.


                                       13
<PAGE>


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.

    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          16

         (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


                                       14
<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 14, 2002        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)


                                       15