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

                                  FORM 10-KSB/A
                         AMENDMENT NO. 2 TO FORM 10-KSB

[x]     Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
        Act of 1934.

        FOR THE FISCAL YEAR ENDED NOVEMBER 30, 2000.

[ ]     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)

Securities registered pursuant to Section 12(b) of the Act:
         Title of each class           Name of each exchange on which registered

----------------------------------     -----------------------------------------

Securities registered pursuant to section 12(g) of the Act:

         COMMON STOCK, $.01 PAR VALUE
--------------------------------------------------------------------------------
                   (Title of class)

         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 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 ___

         Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

         Issuer's revenues for its most recent fiscal year.  $9,294,000.
                                                            ------------

         As of February 16, 2001, 4,859,087 shares of Common Stock were
outstanding, and the aggregate market value of the shares of Common Stock (based
on the closing sales price of these shares on the Amex) held by non-affiliates
was approximately $6,692,000.

                       DOCUMENTS INCORPORATED BY REFERENCE


                                        1
<PAGE>


         A copy of the Company's definitive proxy statement for its annual
meeting of shareholders, which was filed with the Securities and Exchange
Commission within 120 days of November 30, 2000, is incorporated into Part III
of this Form 10-KSB.

         Transitional Small Business Disclosure Format: Yes ___  No _X_

         THE REGISTRANT'S ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED
NOVEMBER 30, 2000 IS HEREBY AMENDED TO READ AS FOLLOWS:


                                       2
<PAGE>


                                    IPI, INC.
                            FORM 10-KSB ANNUAL REPORT
                   FOR THE FISCAL YEAR ENDED NOVEMBER 30, 2000

                                Table of Contents



PART I                                                                      PAGE
                                                                            ----
  Item 1.    Description of Business.                                         4
  Item 2.    Description of Properties.                                       8
  Item 3.    Legal Proceedings.                                               8
  Item 4.    Submission of Matters to a Vote of Security Holders.             8

PART II

  Item 5.    Market For Common Equity and Related Stockholder Matters.        9
  Item 6.    Management's Discussion and Analysis of Financial Condition
                and Results of Operations.                                    9
  Item 7.    Financial Statements.                                           15
  Item 8.    Changes In and Disagreements With Accountants on Accounting
                and Financial Disclosure                                     31

PART III

  Item 9.    Directors, Executive Officers, Promoters and Control Persons,
                Compliance With Section 16(a) of the Exchange Act.           31
  Item 10.   Executive Compensation.                                         31
  Item 11.   Security Ownership of Certain Beneficial Owners and
                Management.                                                  32
  Item 12.   Certain Relationships and Related Transactions.                 32
  Item 13.   Exhibits and Reports on Form 8-K.                               32

SIGNATURES                                                                   34


                                       3
<PAGE>


                           IPI, INC. AND SUBSIDIARIES
                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS.

GENERAL
     IPI, Inc. (the Company), a Minnesota corporation, was incorporated in 1983
to acquire 100% of the stock of Insty-Prints, Inc. (Insty-Prints). Insty-Prints
is a wholly owned subsidiary of the Company. The Company, through 221 franchised
and corporate-owned locations with the "Insty-Prints" trade name, offers
full-service business printing, focusing on the fast-turnaround market. The
Company's franchise owners provide a wide variety of services primarily to
business customers, ranging from the printing of simple business cards to full
color brochures. The Company's growth strategy has included acquisitions. In
March 1994, the Company acquired all the outstanding stock of The Printhouse
Express, Inc. (Printhouse) from a franchisor of full service business printing
centers, primarily in the Washington D.C. area. Printhouse had 19 locations when
acquired, all of which subsequently converted to Insty-Prints stores. Effective
November 30, 1994, Printhouse was merged into Insty-Prints. In June 1995, the
Company acquired the franchise contracts and certain notes receivable of Copy
Boy Corporation (Copy Boy), a franchisor of 21 fast-turnaround business printing
locations in the Phoenix and Tucson markets. All 21 Copy Boy stores subsequently
converted to new Insty-Prints 20-year franchise contracts. In April 1999, the
Company initiated a strategy to acquire and directly operate company-owned
Insty-Prints locations through the purchase of Regency Printing in Dallas,
Texas. See note 2 to the financial statements in this Form 10K. As of November
30, 2000, the Company had two company-owned Insty-Prints locations in Dallas,
Texas and Charlotte, North Carolina. However, the operation of the Dallas
location has not met management expectations and it will be closed in early
2001. A charge of $840,000 was recorded as of November 30, 2000 to recognize the
associated costs.

     In January 2000, the Company acquired substantially all the assets of
Dreamcatcher Franchise Corporation and Dreamcatcher Learning Centers, Inc. See
note 2 to the financial statements in this Form 10K. Dreamcatcher Franchise
Corporation ("DFC") 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, algebra, study skills, G.E.D. preparation and college
preparation. The acquisition included 10 operating franchise locations; 14
contracted, but unopened franchise locations; and three operating learning
centers. In January 2001, DFC changed its name to Change of Mind Learning
Systems, Inc. ("Change of Mind Learning") to better reflect the image and
identity of the Company's learning center business. The Company's intent is to
build and develop a national franchise network of learning centers under the
Change of Mind Learning marks. The existing franchises are operating under the
Dreamcatcher marks.

QUICK PRINT INDUSTRY
     Information from Quick Print Magazine estimates that the quick printing
industry consists of approximately 30,000 business locations nationwide. Of all
quick printing locations, only approximately 4,700 are franchised, according to
International Franchise Association information. Aggregate demand for fast
turnaround business printing has increased in recent years due to significant
advances in printing and copying technology, expanded services offered and the
reduction of in-house printing operations. Desktop publishing, the Internet and
digital pre-press technology have allowed quick printers to quickly and easily
obtain customers' electronic originals and produce smaller copying and printing
runs economically, shifting demand from commercial printers to fast turn-around
business printers. As a result, small businesses, which previously could not
afford or attract the services of a large commercial printer, can now utilize
the services of quick printers on a cost-effective basis. These advances in
technology have also resulted in an expanded array of services offered by quick
printing locations, attracting new customers and increasing sales to existing
customers. In addition, corporate downsizing in the 1990's has eliminated many
internal printing functions, thereby increasing the demand for external printing
operations.


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<PAGE>


BUSINESS PRINTING SERVICES
     An Insty-Prints franchise location provides a wide array of services,
including graphic design, typesetting, desktop publishing, color printing, high
volume and color copying, and bindery. Insty-Prints franchise owners' target
customers are small to medium sized businesses, departments of larger
businesses, and in-house printing operations. Insty-Prints franchise owners
provide their customers with fast turn-around, high quality service on short run
printing and copying (normally between 2,000 and 5,000 copies) and smaller
format printing and copying (which includes documents up to 11 inches by 17
inches in size). Services provided may include the production of business cards,
business stationery, envelopes, business forms, brochures, pamphlets, manuals
and overhead color transparencies. In addition, Insty-Prints utilizes digital
transfer technology, which allows customers to deliver completed documents by
means of diskette or modem for printing or reproduction at a franchise location.
Typically, approximately 70% of revenues in any given location are derived from
printing and copying services and the remaining revenues are derived from
graphic design, binding and other services.

     The typical Insty-Prints location is owner-operated and generally has five
to eight employees, including an experienced graphic designer and an experienced
press operator. Insty-Prints recommends that franchise owners seek locations
with approximately 2,000 to 2,500 square feet in areas of high business
concentration. The cost to a prospective franchise owner to open an Insty-Prints
location typically ranges from $322,000 to $380,000 and includes, among other
things, the franchise or initial fee, the training and development fee, cost of
equipment and signage, and working capital.

     As of December 31, 2000, the Company had two corporate stores and 186
separate Insty-Prints franchise owners that operated 219 print center locations.
The average revenues per location for those reporting for the full calendar year
ended December 31, 2000 were approximately $573,000. No single location, and no
single franchise owner, accounted for more than 5% of all system revenues for
the calendar year ended December 31, 2000.

     In late 1996, the Company sold and executed a Master Franchise Agreement
(MFA) with a business covering the entire country of Poland. A new MFA was
executed on March 8, 2000, which provided for a development schedule of store
openings. The first Insty-Prints location under the Poland MFA opened in
February 1997 and the second location opened in November 2000.

FRANCHISING -- INSTY-PRINTS
     The Company is a franchisor of business printing centers, which use the
"Insty-Prints" name and business systems. The franchise owners all sign
agreements with the Company, typically 20 years in length, which detail the
terms of the relationship. Terms include the definition of exclusive
territories; reporting requirements to the Company; fees such as royalties,
franchise fees and training and development fees; terminations; a covenant not
to compete; and other matters. Ongoing royalty fees range from 2-4 1/2% of
franchise sales.

     Although not required under the terms of the franchise agreement, the
Company currently emphasizes franchise support in many ways to assist the owners
to conduct successful printing operations. The areas of support include:


                                       5
<PAGE>


         Business-to-Business Advertising and Marketing. Insty-Prints encourages
franchise owners to conduct local market advertising through a cooperative
advertising program known as the Advertising Fund. Under this program, each
franchise owner is reimbursed for 50% of qualified advertising expenditures up
to a maximum of 70% of such owner's annual contribution to the Advertising Fund.
The Advertising Fund is funded by each franchise owner contributing 2% of its
monthly gross revenues up to a maximum of $15,240 per calendar year.
Insty-Prints develops and creates, on behalf of the Advertising Fund, a variety
of in-store promotional materials and identity signage, radio spots, newspaper
advertisements and telemarketing programs that individual franchise owners can
use.

         Direct Mail. The Company creates and administers a direct mail program,
which is available to its franchise owners for a fee. As part of this program,
the Company creates advertising pieces that describe special services provided
by franchise owners, generates a list of potential customers in the territory of
the subscribing franchise owner and is responsible for directly mailing all
materials to the customers on behalf of the franchise owner.

         Training. The Company strives to provide franchise owners with
up-to-date educational materials and training support. Upon opening a new store,
each franchise owner attends a comprehensive training program provided by
Insty-Prints. Included in this initial training, representatives from the
Company assist each new owner in developing a one-year business plan and provide
on-site support during the first week in business. To assist all franchise
owners in keeping up-to-date on all current industry and technology changes,
Insty-Prints sends out newsletters, technical bulletins, educational materials,
conducts ongoing training sessions at its corporate headquarters and at six
annual regional meetings and provides seminars and workshops as part of a
three-day national convention.

         Support Services. Insty-Prints provides ongoing support to its
franchise owners through periodic contact by field representatives, by
telephone, e-mail and in-store visits. Representatives are available to consult
with franchise owners on specific technical questions regarding financing,
advertising, marketing support, credit and collection issues, direct mail,
hardware and software, equipment, insurance and store systems.

         Purchasing Services. The Company provides its franchise owners with
purchasing advantages for equipment and supplies in two ways. First, the Company
utilizes its substantial purchasing power to negotiate certain volume discounts
that are available to franchise owners for direct purchases from a variety of
vendors. Second, the Company is able to negotiate contracts with certain
suppliers to purchase equipment and supplies for resale to its franchise owners
at competitive prices.

         Equipment Financing. The Company and Insty-Prints have guaranteed
certain loans made by U.S. Bank Business Finance Corporation to individual
franchise owners for the purchase or lease of certain capital equipment that
aggregated $1,046,000 and $1,665,000 at November 30, 2000 and 1999,
respectively. Effective in April 2000, this financing relationship was
terminated as it relates to future financing.

COMPETITION -- INSTY-PRINTS
     Insty-Prints franchise owners experience competition within their market
area with respect to price, service, location and quality. In the Company's
view, the principal competitors are copy shops, quick printers (both independent
and franchised), commercial printers, in-house printing operations within large
companies and, occasionally, equipment vendors. Printing sales are typically
based on an ongoing relationship between the customer and a provider the
customer trusts to meet its expectations. Therefore, the Company believes that
customer service, sales abilities, production capabilities and sensitivity to
customer deadlines are critical elements to success.


                                       6
<PAGE>


     In addition, the Company may experience high levels of competition for the
acquisition of other franchise systems and will compete with other systems in
its efforts to convert independent business printers. The Company will compete
for acquisition candidates with other fast turn-around business printers having
national and regional franchised and company-owned operations, some of which may
have substantially greater financial, marketing, personnel and other resources
than the Company.

TRADEMARKS, SERVICE MARKS AND COPYRIGHTS -- INSTY-PRINTS
     The Company has 13 trademark and service mark registrations on its product
names from the United States Patent and Trademark Office. In addition,
Insty-Prints holds three copyrights on various advertising and instructional
materials. With the exception of the registration of the trademark
"Insty-Prints" with the state of Minnesota, none of the above marks are
registered with any state. There are no agreements currently in effect which
significantly limit the rights of the Company to use or license the use of such
trademarks, service marks, trade names, logotypes or other commercial symbols
(Marks) in any manner material to a franchise owner.

SUPPLEMENTAL PRIVATE EDUCATION SERVICES
     The market for supplemental private educational services has seen dramatic
growth over recent years. The Company expects this growth to continue as state
testing results continue to point out a significant need for supplemental
learning and the federal government continues to expand its focus on education.
The segment that Change of Mind Learning serves is made up of two national
organizations (Sylvan Learning Systems, Inc. and Huntington Learning Centers)
and many smaller multi or single location businesses.

     A franchised Change of Mind Learning center provides private education
services to learners of all ages using personalized assessments with direct
instruction in reading, writing, spelling, math and study skills. The business
targets students in kindergarten through twelfth grade, home school learners and
adults.

     A typical location is owner-operated and has two full time staff as well as
part-time instructors. Change of Mind Learning recommends that the business
locate in high visibility, retail locations, such as strip malls, with location
size of 1,500-1,800 square feet. The cost to a prospective owner to open a
Change of Mind Learning center ranges from $98,000 to $165,000. Ongoing
royalties paid by franchisees range from 5-8%.

FRANCHISING -- CHANGE OF MIND LEARNING
     Change of Mind Learning is a franchisor and operator of private
supplemental learning services, which use its name and business systems. The
franchise owners all sign agreements with Change of Mind Learning, typically for
ten-year terms, which detail the terms of the relationship. Terms include the
definition of exclusive territories; reporting requirements; fees such as
royalties, franchise fees and training and development fees; terminations; a
covenant not to compete; and other matters.

         Support Services. Change of Mind Learning assists in the selection of
sites for the franchised business and provides extensive training to prepare the
franchisee to open and operate the learning center. A comprehensive operations
manual is provided supporting all facets of operating the business as well as
providing proprietary software to manage and account for business activities.
Additionally, ongoing support is provided by field representatives through
periodic contact by telephone, email and on-site visits. Representatives are
available to consult with the franchise owners on specific technical educational
matters, marketing, store systems and most other business issues.


                                       7
<PAGE>


COMPETITION -- CHANGE OF MIND LEARNING
     Franchise owners face competition within their market areas from nationally
known learning center businesses as well as local independent providers of such
services. Competitive factors include location, product offerings, quality of
services and pricing. The services provided by Change of Mind Learning are
comparable to those offered by the national providers of supplemental private
learning services.

GOVERNMENT REGULATION
     Fifteen states and the Federal Trade Commission impose a pre-sale franchise
registration and/or disclosure requirement on the Company. In addition, a number
of states and the District of Columbia have statutes which regulate substantive
aspects of the company/franchise owner relationship such as termination,
non-renewal, transfer, discrimination among franchise owners and competition
with franchise owners.

EMPLOYEES
     As of November 30, 2000, the Company had 30 full-time corporate employees
and 26 employees in the company-owned print and learning centers. This includes
10 employees in the Dallas print business being closed in the first part of
2001. The Company believes that its relations with its employees are
satisfactory.

ITEM 2. DESCRIPTION OF PROPERTIES.

     The Company moved its headquarters in August 2000 to an 18,404 square foot
office/warehouse facility in Eden Prairie, Minnesota, which it leases. The lease
term expires July 31, 2005 with current annual base rent payments of $221,112.

     As of November 30, 2000, the Company leases facilities for two
company-owned print centers and a learning center in Colorado, as follows:

       Location            Size of Store   Lease Expiration   Base Lease Payment
       --------            -------------   ----------------   ------------------
       Dallas, TX           14,136 sq ft       10/31/02         $80,148 annually
       Charlotte, NC         7,885 sq ft       08/01/04         $87,000 annually
       Fort Collins, CO        875 sq ft       05/31/02          $8,531 annually

     In the opinion of management, the properties are adequately covered by
insurance.

ITEM 3. LEGAL PROCEEDINGS.

     The Company is a party to certain claims arising in the ordinary course of
business. Certain complaints are unclear as to the amount of damages being
sought by the plaintiffs. The Company has filed counteractions in certain cases,
and discovery proceedings are in process. The ultimate outcome of the litigation
cannot presently be determined; however, in the opinion of management, the
outcome of such claims are not expected to be material to the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     None.


                                       8
<PAGE>


                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     The Company's Common Stock was traded on the Nasdaq Small-Cap Stock Market
under the symbol "INST" until January 10, 2000, when the stock listing
transferred to the American Stock Exchange and now trades under the symbol
"IDH." The following table sets forth the high and low bid prices for each
quarter as reported by Nasdaq for the periods indicated. Such quotations reflect
closing day sales.

                               Fiscal 2000                Fiscal 1999
                              Common Stock                Common Stock
                              ------------                ------------
        Quarter           High Bid      Low Bid      High Bid      Low Bid
        -------           --------      -------      --------      -------
        First               $3.00        $2.25         $3.69        $3.25
        Second              $3.25        $2.00         $3.69        $2.63
        Third               $3.50        $2.25         $3.38        $2.06
        Fourth              $2.88        $2.06         $2.75        $2.31

     No dividends have been paid on the Common Stock since the Company's June
1994 public offering. The Company currently intends to retain earnings for use
in operation and expansion of its business and therefore does not anticipate
paying any cash dividends in the foreseeable future.

     The last reported sales price as of February 16, 2001 of the Company's
Common Stock was $4.00. As of February 16, 2001, there were approximately 300
holders of record of Common Stock.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
          OF OPERATIONS.

OVERVIEW
     As of December 31, 2000, the Company's wholly owned subsidiary,
Insty-Prints, had 219 franchises and two Company-owned stores and the Company's
wholly owned subsidiary, Change of Mind Learning Systems, Inc. (formerly
Dreamcatcher Franchise Corporation), had nine franchised locations and one
company-owned location.

RESULTS OF OPERATIONS
     The following table sets forth certain consolidated statement of operations
data as a percentage of sales for the periods indicated:

<TABLE>
<CAPTION>
                                                                      Fiscal Year Ended November 30,
                                                                     ---------------------------------
                                                                      2000          1999         1998
                                                                     ------        ------       ------
<S>                                                                   <C>           <C>          <C>
       REVENUES
         Insty-Prints royalties and franchise fees                     48.0%         45.0%        41.8%
         Printing equipment, supplies and services                     27.9          31.8         36.6
         Company-owned print locations                                 18.1          17.7         15.5
         Change of Mind Learning royalties and other income             1.2           0.0          0.0
         Note interest and other income                                 4.8           5.5          6.1
                                                                     ------        ------       ------
            Total Revenues                                            100.0         100.0        100.0
                                                                     ------        ------       ------

       COSTS AND EXPENSES
         Insty-Prints franchise operations:
            Cost of sales                                              20.8          23.9         28.8
            Selling, general and administrative expenses               34.9          32.4         30.4
</TABLE>


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<PAGE>


<TABLE>
<S>                                                                   <C>           <C>          <C>
            Amortization of goodwill and other intangibles              2.3           2.3          2.1
                                                                     ------        ------       ------
                                                                       58.0          58.6         61.3
         Company-owned print locations:
            Cost of sales                                               5.4           5.5          5.1
            Selling, general and administrative expenses               19.9          14.8          9.6
            Charge for store closing                                    9.0           0.0          0.0
            Amortization of goodwill and other intangibles              0.2           0.1          0.0
                                                                     ------        ------       ------
                                                                       34.5          20.4         14.7
         Change of Mind Learning franchise operations:
            Cost of sales                                               0.3           0.0          0.0
            Selling, general and administrative expenses                8.9           0.0          0.0
            Amortization of goodwill and other intangibles              0.5           0.0          0.0
                                                                     ------        ------       ------
                                                                        9.7           0.0          0.0

       OPERATING INCOME (LOSS)                                         (2.2)         21.0         24.0
         Other income (expense):
            Interest and dividends on investments                       4.6           7.6          5.6
            Interest expense on margin loans                           (1.3)          0.0          0.0
            Net gain on disposal of securities and other assets         5.2           0.3          0.0
                                                                     ------        ------       ------
                                                                        8.5           7.9          5.6
                                                                     ------        ------       ------

       INCOME BEFORE INCOME TAX                                         6.3          28.9         29.6

       INCOME TAX EXPENSE                                               2.5          11.6         11.0
                                                                     ------        ------       ------

       NET INCOME                                                       3.8%         17.3%        18.6%
                                                                     ======        ======       ======
</TABLE>

FISCAL YEARS ENDED NOVEMBER 30, 2000, 1999 AND 1998
REVENUES
     Total revenues, consisting of royalty and franchise fees, sales of printing
equipment supplies and services, company-owned print and learning center
locations, and note interest and other income were $9,294,000 in 2000, compared
to $10,278,000 in 1999 and $10,886,000 in 1998. Revenues have been decreasing
each year primarily as a result of reduced sales of printing equipment, supplies
and services, which is more fully discussed below.

     Insty-Prints royalty and franchise fee revenue decreased 3.5% to $4,463,000
in 2000 from $4,626,000 in 1999. Royalties for 1998 were $4,545,000, resulting
in an annual increase of 1.8% in 1999 compared to 1998. Royalty decreases in
2000 over 1999 were primarily attributable to an unexpected collection of
approximately $90,000 of royalties in 1999 on a franchisee's previously
unreported sales and from reduced number of franchised locations, offset by
increased year over year sales by continuing franchisees. The unreported sales
on which $90,000 of royalties were paid in 1999 were discovered in an audit of a
franchisee's records and related to approximately a 3 year period. Calendar year
average annualized sales per location open and reporting for the complete
12-month period were $573,000 for 2000, $551,000 for 1999 and $521,000 for 1998.
As of December 31, 2000, there were 221 franchise and company-owned locations
compared to 236 as of December 31, 1999 and 253 as of December 31, 1998. The
reduced number of franchise locations in 2000 compared to 1999 and 1998 resulted
mostly from the closing of under-performing stores. With the continued
consolidation in the printing industry, it is expected that royalty revenues
will decrease approximately 5% in the year 2001 compared to 2000. Franchise fee
revenues were not significant in 2000, 1999 or 1998 due to the Company's
emphasis on growth through acquisitions and increasing existing franchise
location sales rather than seeking to add new locations by sales of new
franchises. All franchise fee revenue in 2000, 1999 and 1998 were related to
re-sales of existing locations. No new location openings are currently expected
in future periods.


                                       10
<PAGE>


     Sales of printing equipment, supplies and services were $2,590,000 in 2000
compared to $3,269,000 in 1999, a decrease of 20.8%, and were $3,982,000 in
1998, a decrease of 17.9% between 1999 and 1998. For 2000 and 1999, the decrease
in sales resulted primarily from decreased sales of printing equipment,
decreased sales of direct mail services and reduced sales of copier supplies.
Printing equipment sales decreased primarily as a result of increased
competition, direct mail services sales were down due to the decrease in the
number of franchise locations; copier supplies were less due to increased
competition, particularly from equipment manufacturers packaging supplies with
leases on equipment. Sales revenues for 2001 are expected to decrease about 8%
from 2000, as a result of competitive factors and an expected decrease in the
number of franchise locations.

     The four largest sale items in printing equipment, supplies and services
over the past three years as a percent of total sales were as follows:

                                          2000        1999         1998
                                          ----        ----         ----
             Direct Mail                  34.1%       33.4%        30.6%
             Copier Supplies              28.5        29.3         27.6
             Packaging                    16.4        12.4         10.9
             Pressroom Supplies            8.8         8.1          6.8
             Other                        12.2        16.8         24.1
                                         -----       -----        -----
                                         100.0%      100.0%       100.0%
                                         =====       =====        -----

     Company-owned print location sales were $1,680,000 in 2000, which was 7.8%
less than the $1,822,000 sales for 1999. Sales in 1998 were $1,694,000,
resulting in a 7.6% increase in 1999. Sales in 2000 were less than 1999 due to
decreased sales at one location as a result of losing business from a large
customer and other factors. Sales were higher in 1999 over 1998 due to the
acquisition of a print business in April 1999, which was offset somewhat by the
sale of a smaller print business in March 1999.

     Change of Mind Learning royalty fees and other income of $116,000 were
recorded only in fiscal 2000 as the business started operations in January 2000.

     Note interest and other income was $445,000 in 2000 compared to $561,000 in
1999, a decrease of 20.7% in 2000 and was $665,000 in 1998. Note interest and
other income decreased in 2000 and in 1999 over 1998 due to a decreasing
portfolio of loans to Insty-Prints franchisees. In 1998, the Company ceased
making equipment loans and thus the outstanding loans have continued to drop.
Net notes receivable from franchisees was $1,460,000 and $1,824,000 on November
30, 2000 and 1999, respectively.

INSTY-PRINTS FRANCHISE OPERATIONS--COST OF SALES
     Cost of sales were $1,935,000 in 2000 compared to $2,458,000 in 1999, a
decrease of 21.3%, and were $3,134,000 for 1998, resulting in a 21.6% decrease
in 1999. The decrease in the comparative fiscal years was directly related to
the reduced level of the sales of printing equipment, copier supplies and direct
mail services. Margins on the sales of products and services were 25.3% in 2000,
24.8% in 1999 and 21.3% in 1998. The increased margins in 2000 and 1999 were due
to a higher percentage of sales on high margin products and services and reduced
sales of low margin products.

INSTY-PRINTS FRANCHISE OPERATIONS--SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
     Selling, general and administrative expenses were $3,244,000 in 2000
compared to $3,330,000 in 1999, a decrease of 2.6%, and were $3,308,000 in 1998,
an increase of 0.7% in 1999. The decrease in expenses in 2000 compared to 1999
resulted from the reduction in staff, along with the allocation of approximately
$88,000 of expenses to Change of Mind Learning, which was offset by general
inflationary increases. The increases in 1999 expenses resulted from normal
compensation and general inflationary increases for other operating costs, which
was offset by the consolidation of two staff positions.


                                       11
<PAGE>


COMPANY-OWNED PRINT LOCATIONS--COST OF GOODS SOLD
     Cost of sales were $504,000 in 2000 compared to $568,000 in 1999, a
decrease of 11.3% and were $550,000 in 1998, resulting in a 3.3% increase in
1999. The decrease in cost of goods sold in 2000 was attributable to the reduced
level of sales. The increase in cost of goods sold in 1999 was directly related
to increased sales of printing and related services. Gross margins were 70% in
2000, 68.9% in 1999 and 67.5% in 1998. The continued increase in margins
resulted primarily from improvements in production management and increased
pricing of certain products and services.

COMPANY-OWNED PRINT LOCATIONS--SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
     Selling, general and administrative expenses were $1,848,000 in 2000
compared to $1,523,000 in 1999, an increase of 21.3% and were $1,048,000 in
1998, reflecting an increase of 45.3% in 1999. Expenses increased in 2000 due
primarily to the investment in new equipment, facilities and staff to position
the businesses for future growth.

COMPANY-OWNED PRINT LOCATIONS--CHARGE FOR STORE CLOSING
     Due to continued operating losses, which in the year 2000 totaled over
$500,000, and management's judgment that a turnaround of this business was
highly unlikely within a reasonable period of time the Company made a decision
to close its Dallas Insty-Prints business that was established in April of 1999
through the acquisition of Regency Printing. A charge of $840,000 for estimated
expenses to close the store was recorded as of November 30, 2000. The expenses
related to the losses expected in the sale of equipment and furniture, the
write-off of goodwill, cost to settle lease obligations and employee
terminations. The following table details the restructuring costs as of November
30, 2000:

       RESTRUCTURING COSTS:
            Equipment lease exit fees           $293,000
            Building lease exit fees              86,000
            Severance and other costs             84,000
                                                --------

       TOTAL:                                   $463,000
                                                ========

In addition to the $463,000 of restructuring costs, unamortized goodwill of
$209,000 and $168,000 of book value of fixed assets were written off to arrive
at the total charge for store closing of $840,000. No payments have been made on
these restructuring costs as of November 30, 2000.

It is expected the restructuring costs will be fully realized by November 30,
2001. Additionally, based on operating losses of the Dallas location in fiscal
2000, it is anticipated that beginning in March 2001 future monthly operating
income should improve by approximately $40,000.

The plan above for severance includes the termination of all ten employees of
this printing center the severance amounts in the plan were $15,000. The center
was closed in early February 2001 and all ten employees were terminated and
actual severance costs were $10,000.


                                       12
<PAGE>


CHANGE OF MIND LEARNING FRANCHISE OPERATIONS
     Cost of goods sold and selling, general and administrative expenses for
Change of Mind Learning are reflected only for the fiscal period 2000 as the
business was started in January 2000. The significant level of selling, general
and administrative expenses compared to revenues reflects the start-up and
development costs related to initiating a new business.

OTHER INCOME (EXPENSE)
     Interest and dividends on investments were $424,000 in 2000, a decrease of
46% compared to 1999 and were $611,000 in 1998, resulting in an increase of 28%
for 1999. Interest and dividends decreased in 2000 due to the sale in January of
high yielding dividend stock and the reinvestment of essentially all liquid
funds in a non-dividend paying common stock. In 1999, interest income increased
compared to 1998 due to a higher level of investment funds and the investment of
funds in higher yielding securities that carried a higher risk.

     In fiscal year 2000, interest expense on margin accounts resulted from
borrowed funds used to purchase common stock on margin.

     Net gain on disposed securities and other assets of $480,000 compared to
$26,000 in 1999 resulted from the gain of $461,000 recognized on the sale of
common stock held for resale in January 2000.

INCOME TAX EXPENSE
     The Company's effective combined federal and state income tax rate was 40%
in 2000 and 1999 and 37% in 1998. The Company paid federal and state income
taxes totaling $592,000 in 2000, $1,430,000 in 1999 and $1,141,000 in 1998.

LIQUIDITY AND CAPITAL RESOURCES
     During fiscal year 2000, the Company generated $3,270,000 of cash from
operating activities, compared to $964,000 in fiscal 1999 and $1,819,000 in
fiscal 1998. The increased cash generated from operating activities in 2000
compared to 1999 resulted primarily from the sale of short-term securities
offset by reduced net income. For fiscal year 2000, cash was used to purchase
marketable equity securities, additionally, short-term borrowings were incurred
to purchase marketable equity securities. The Company also used $560,000 in 2000
to acquire the business assets of a learning center business. For fiscal year
1999, cash was principally used to fund the purchase of marketable equity
securities and the Company acquired a print business resulting in a cash outlay
of $431,000.

     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. The Company's total holdings in Conseco, Inc. constitute
less than 1% of the approximately 325,264,000 outstanding shares of common stock
of Conseco, Inc. 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 January 2001, subsequent to the fiscal year end 2000, the Company sold
814,800 shares of its holdings in Conseco, Inc. common stock and realized
proceeds of $13,319,000 for a pre-tax gain of approximately $7,229,000. The
after-tax gain will be approximately $4,337,000 or $0.89 per share. About
$4,500,000 of the proceeds from the sale will be used to pay off all margin
loans incurred when these shares were purchased. After this sale, the Company
holds a total of 1,360,700 shares of Conseco, Inc. common stock at a cost of
approximately $10,171,000.


                                       13
<PAGE>


     Management believes the current cash, short-term and marketable equity
investment balances as well as future cash flow from operations should be
sufficient to fund future growth and other ongoing operational needs.

     The Company has no bank debt or credit facility; however, it has incurred
margin debt of approximately $4,438,000 to fund the purchase of marketable
equity securities. Interest rates on margin loans are variable and ranged from
7.125% to 8.5% to during fiscal year 2000. 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.
However, future use of this financing program was terminated 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 $145,000 is recorded on the balance sheet at
November 30, 2000, representing estimated losses on this guarantee. The
aggregate balance outstanding under this facility as of November 30, 2000 was
$1,046,000.

YEAR 2000 COMPLIANCE
     The Company developed and implemented a plan to achieve Year 2000
compliance. To date, all computer and related electronic systems and services
have functioned appropriately with no interruptions to normal business functions
and no apparent issues have arisen from vendors providing products and services.
Total costs associated with the Year 2000 compliance project were approximately
$20,000 in 1999 and $16,000 in 1998.

     The Company provided its franchisees an assessment guide in October 1998,
which served as a step-by-step planning document for their use addressing Year
2000 compliance. Most of the primary equipment used by franchisees is not date
sensitive nor does it contain embedded chips. To date, no Year 2000 issues have
been brought to our attention by franchisees.

     The Company believes its efforts adequately addressed its Year 2000
concerns and, as of February 16, 2001, has no reason to believe any internal
problems will arise nor does it expect any material Year 2000 problems from its
outside vendors or franchise operations. Although the Company believes that no
significant Year 2000 matters will arise and have a material impact on its
business, financial conditions and results of operations, it cannot assure that
all potential Year 2000 issues that may affect the Company have been resolved.

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.


                                       14
<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.

ITEM 7. FINANCIAL STATEMENTS.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                                                                            PAGE
     Report of Independent Public Accountants                                 13
     Consolidated Balance Sheets as of November 30, 2000 and 1999             14
     Consolidated Statements of Operations for Each of the Three Years in
         the Period Ended November 30, 2000                                   16
     Consolidated Statements of Shareholders' Equity for Each of the Three
         Years in the Period Ended November 30, 2000                          18
     Consolidated Statements of Cash Flows for Each of the Three Years in
         the Period Ended November 30, 2000                                   19
     Notes to Consolidated Financial Statements                               20


                                       15
<PAGE>


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS




To IPI, Inc.:

We have audited the accompanying consolidated balance sheets of IPI, Inc. (a
Minnesota corporation) and Subsidiaries as of November 30, 2000 and 1999, and
the related consolidated statements of operations, shareholders' equity and cash
flows for each of the three years in the period ended November 30, 2000. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of IPI, Inc. and Subsidiaries as
of November 30, 2000 and 1999, and the results of their operations and their
cash flows for each of the three years in the period ended November 30, 2000, in
conformity with accounting principles generally accepted in the United States.




                                        ARTHUR ANDERSEN LLP


Minneapolis, Minnesota,
January 23, 2001


                                       16
<PAGE>


                           IPI, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                        November 30
                                                               -----------------------------
                                                                   2000             1999
                                                               ------------     ------------
<S>                                                            <C>              <C>
                                    ASSETS

CURRENT ASSETS:
   Cash and cash equivalents                                   $    643,000     $  2,022,000
   Short-term investments                                            81,000        2,590,000
   Marketable equity securities                                  15,638,000        6,504,000
   Trade accounts receivable, net                                 1,370,000        1,371,000
   Current maturities of notes receivable, net of allowance
      of $182,000 and $145,000 (Note 4)                             707,000          964,000
   Inventories                                                      242,000          271,000
   Prepaid expenses and other                                       142,000          107,000
   Deferred income taxes (Note 6)                                 1,173,000          930,000
                                                               ------------     ------------
               Total current assets                              19,996,000       14,759,000
                                                               ------------     ------------
PROPERTY AND EQUIPMENT:
   Property and equipment                                         1,924,000        2,226,000
   Less - Accumulated depreciation                               (1,148,000)        (980,000)
                                                               ------------     ------------
               Property and equipment, net                          776,000        1,246,000

NOTES RECEIVABLE, net of allowances of $523,000 and
   $656,000 (Note 4)                                                753,000          860,000

GOODWILL AND OTHER INTANGIBLES, net (Note 1)                      3,393,000        3,151,000
                                                               ------------     ------------
                                                               $ 24,918,000     $ 20,016,000
                                                               ============     ============
</TABLE>


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


                                       17
<PAGE>


                           IPI, INC. AND SUBSIDIARIES

                     CONSOLIDATED BALANCE SHEETS (CONTINUED)

<TABLE>
<CAPTION>
                                                                               November 30
                                                                       -----------------------------
                                                                           2000             1999
                                                                       ------------     ------------
<S>                                                                    <C>              <C>
                      LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
   Accounts payable                                                    $    676,000     $    485,000
   Margin loans                                                           4,438,000               --
   Accrued compensation                                                     189,000          296,000
   Accrued financing liabilities (Note 9)                                   145,000          150,000
   Deferred revenues                                                        200,000          264,000
   Income taxes payable                                                          --          126,000
   Other accrued liabilities                                                689,000          432,000
                                                                       ------------     ------------
               Total current liabilities                                  6,337,000        1,753,000
                                                                       ------------     ------------
LONG-TERM CAPITAL LEASE OBLIGATIONS                                         105,000          319,000

COMMITMENTS AND CONTINGENCIES (Notes 7 and 9)

SHAREHOLDERS' EQUITY:
   Common stock, $.01 par value, 15,000,000 shares authorized,
      4,859,000 and 4,734,000 shares issued and outstanding                  49,000           47,000
   Additional paid-in capital                                            15,769,000       15,584,000
   Retained earnings                                                      3,032,000        2,682,000
   Unrealized loss on marketable securities available for sale, net
      of income tax effects                                                (374,000)        (369,000)
                                                                       ------------     ------------
               Total shareholders' equity                                18,476,000       17,944,000
                                                                       ------------     ------------
                                                                       $ 24,918,000     $ 20,016,000
                                                                       ============     ============
</TABLE>


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


                                       18
<PAGE>


                           IPI, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                  For the Years Ended November 30
                                                            ---------------------------------------------
                                                                2000             1999            1998
                                                            ------------     ------------    ------------
<S>                                                         <C>              <C>             <C>
REVENUES:
   Insty-Prints royalty and franchise fees                  $  4,463,000     $  4,626,000    $  4,545,000
   Printing equipment, supplies and services                   2,590,000        3,269,000       3,982,000
   Company-owned print locations                               1,680,000        1,822,000       1,694,000
   Change of Mind Learning royalty fees and other income         116,000               --              --
   Note interest and other income                                445,000          561,000         665,000
                                                            ------------     ------------    ------------
               Total revenues                                  9,294,000       10,278,000      10,886,000
                                                            ------------     ------------    ------------
COSTS AND EXPENSES:
   Insty-Prints franchise operations:
     Cost of sales                                             1,935,000        2,458,000       3,134,000
     Selling, general and administrative expenses              3,244,000        3,330,000       3,308,000
     Amortization of goodwill and other intangibles              214,000          231,000         231,000
                                                            ------------     ------------    ------------
                                                               5,393,000        6,019,000       6,673,000
   Company-owned print locations:
     Cost of sales                                               504,000          568,000         550,000
     Selling, general and administrative expenses              1,848,000        1,523,000       1,048,000
     Charge for store closing                                    840,000               --              --
     Amortization of goodwill and other intangibles               16,000            9,000              --
                                                            ------------     ------------    ------------
                                                               3,208,000        2,100,000       1,598,000

   Change of Mind Learning franchise operations:
     Cost of sales                                                27,000               --              --
     Selling, general and administrative expenses                828,000               --              --
     Amortization of goodwill and other intangibles               42,000               --              --
                                                            ------------     ------------    ------------
                                                                 897,000               --              --
                                                            ------------     ------------    ------------
OPERATING INCOME (LOSS)                                         (204,000)       2,159,000       2,615,000
                                                            ------------     ------------    ------------
OTHER INCOME (EXPENSE):
     Interest and dividends on investments                       424,000          785,000         611,000
     Interest expense on margin loans                           (117,000)              --              --
     Net gain on disposal of securities & other assets           480,000           26,000              --
                                                            ------------     ------------    ------------
                                                                 787,000          811,000         611,000
                                                            ------------     ------------    ------------
INCOME BEFORE INCOME TAX                                         583,000        2,970,000       3,226,000
INCOME TAX EXPENSE                                               233,000        1,188,000       1,194,000
                                                            ------------     ------------    ------------
NET INCOME                                                  $    350,000     $  1,782,000    $  2,032,000
                                                            ============     ============    ============

BASIC & DILUTED EARNINGS PER COMMON SHARE                   $        .07     $        .38    $        .43
                                                            ============     ============    ============
</TABLE>

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


                                       19
<PAGE>


                           IPI, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)

<TABLE>
<S>                                                          <C>              <C>              <C>
WEIGHTED AVERAGE NUMBER OF COMMON AND
   COMMON EQUIVALENT SHARES OUTSTANDING
   - BASIC                                                      4,847,000        4,734,000        4,734,000
                                                             ============     ============     ============
   - DILUTED                                                    4,847,000        4,734,000        4,745,000
                                                             ============     ============     ============
OTHER COMPREHENSIVE INCOME, NET OF TAX
   (NOTE 1)
   Net income                                                $    350,000     $  1,782,000     $  2,032,000
   Unrealized loss on marketable securities available for
     sale, net of income tax effects                             (374,000)         (80,000)        (242,000)
   Reclassification adjustment for prior period loss upon
     sale in current year at a gain                               369,000               --               --
                                                             ------------     ------------     ------------
   Total comprehensive income                                $    345,000     $  1,702,000     $  1,790,000
                                                             ============     ============     ============
</TABLE>


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


                                       20
<PAGE>


                           IPI, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY


<TABLE>
<CAPTION>
                                          Common Stock            Additional       Retained        Unrealized
                                   --------------------------      Paid-In         Earnings         Loss on
                                      Shares        Amount         Capital         (Deficit)       Securities          Total
                                      ------        ------       ------------    ------------     ------------     ------------
<S>                              <C>             <C>             <C>             <C>              <C>              <C>
BALANCE, November 30, 1997          4,734,000    $     47,000    $ 15,584,000    $ (1,132,000)    $    (47,000)    $ 14,452,000
                                 ------------    ------------    ------------    ------------     ------------     ------------
Net income                                 --              --              --       2,032,000               --        2,032,000
Unrealized loss on marketable
  securities available for
  sale, net of income tax
  effects                                  --              --              --              --         (242,000)        (242,000)
                                 ------------    ------------    ------------    ------------     ------------     ------------

BALANCE, November 30, 1998          4,734,000          47,000      15,584,000         900,000         (289,000)      16,242,000
                                 ------------    ------------    ------------    ------------     ------------     ------------
Net income                                 --              --              --       1,782,000               --        1,782,000
Unrealized loss on marketable
  securities available for
  sale, net of income tax
  effects                                  --              --              --              --          (80,000)         (80,000)
                                 ------------    ------------    ------------    ------------     ------------     ------------

BALANCE, November 30, 1999          4,734,000          47,000      15,584,000       2,682,000         (369,000)      17,944,000
                                 ------------    ------------    ------------    ------------     ------------     ------------
Net income                                 --              --              --         350,000               --          350,000
Unrealized loss on marketable
  securities available for
  sale,                                    --              --              --              --         (374,000)        (374,000)
Reclassification adjustment
  for prior period loss upon
  sale in current year at a
  gain                                     --              --              --              --          369,000          369,000
Stock issued in acquisition           125,000           2,000         185,000              --               --          187,000
                                 ------------    ------------    ------------    ------------     ------------     ------------

BALANCE, November 30, 2000          4,859,000    $     49,000    $ 15,769,000    $  3,032,000     $   (374,000)    $ 18,476,000
                                 ============    ============    ============    ============     ============     ============
</TABLE>


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


                                       21
<PAGE>


                           IPI, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                         For the Years Ended November 30
                                                                  ----------------------------------------------
                                                                      2000             1999             1998
                                                                  ------------     ------------     ------------
<S>                                                               <C>              <C>              <C>
OPERATING ACTIVITIES:
   Net income                                                     $    350,000     $  1,782,000     $  2,032,000
   Adjustments to reconcile net income to net cash provided
      by operating activities-
         Depreciation and amortization                                 534,000          440,000          418,000
         Charge for store closing                                      840,000               --               --
         Deferred income taxes                                        (243,000)         (65,000)         (54,000)
         Purchase of short-term investments                            (81,000)      (1,350,000)        (640,000)
         Sale of short-term investments                              2,590,000          100,000          100,000
         Realized gain on sale of marketable equity securities        (461,000)              --               --
         Net change in other operating items:
            Trade accounts receivable                                   (3,000)        (146,000)          49,000
            Inventories                                                 29,000          135,000          (78,000)
            Prepaid expenses and other                                   1,000           (6,000)          27,000
            Accounts payable, deferred revenues and other
               accrued liabilities                                    (286,000)          74,000          (35,000)
                                                                  ------------     ------------     ------------
               Net cash provided by operating activities             3,270,000          964,000        1,819,000
                                                                  ------------     ------------     ------------
INVESTING ACTIVITIES:
   Purchase of property and equipment, net                            (209,000)        (371,000)        (238,000)
   Purchase of marketable equity securities                        (16,261,000)      (2,029,000)              --
   Sale of marketable equity securities                              7,579,000               --               --
   Change in notes receivable, net                                     364,000           61,000          953,000
   Purchase of Regency Printing                                             --         (431,000)              --
   Purchase of Dreamcatcher                                           (560,000)              --               --
                                                                  ------------     ------------     ------------
           Net cash provided by (used in) investing activities      (9,087,000)      (2,770,000)         715,000
                                                                  ------------     ------------     ------------
FINANCING ACTIVITIES:
   Margin loans                                                      4,438,000               --               --
                                                                  ------------     ------------     ------------
           Increase (decrease) in cash and cash equivalents         (1,379,000)      (1,806,000)       2,534,000
                                                                  ------------     ------------     ------------
CASH AND CASH EQUIVALENTS, beginning of year                         2,022,000        3,828,000        1,294,000
                                                                  ------------     ------------     ------------
CASH AND CASH EQUIVALENTS, end of year                            $    643,000     $  2,022,000     $  3,828,000
                                                                  ============     ============     ============
SUPPLEMENTAL CASH FLOW INFORMATION:
   Income taxes paid                                              $    592,000     $  1,430,000     $  1,141,000
                                                                  ============     ============     ============
   Equipment acquired under capital leases                        $         --     $    545,000     $         --
                                                                  ============     ============     ============
   Assets acquired through issuance of common stock               $    187,000     $         --     $         --
                                                                  ============     ============     ============
</TABLE>


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


                                       22
<PAGE>


                           IPI, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           NOVEMBER 30, 2000 AND 1999

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION:

BUSINESS

IPI, Inc. (the Company), a Minnesota corporation, operates two wholly owned
subsidiaries, Insty-Prints, Inc. (Insty-Prints) and Change of Mind Learning
Systems, Inc. (Change of Mind Learning) formerly Dreamcatcher Franchise
Corporation. Insty-Prints, Inc. (Insty-Prints) is a franchisor of business
printing centers and provides ongoing support to its franchisees through
business and technical training as well as research and evaluation of new
products and services. Insty-Prints has 221 franchised and corporate-owned
locations in the United States with heavier concentrations in the Midwest and
Eastern Coast states. The Company operates two corporate-owned Insty-Prints
centers, one of which was acquired in 1999 (Note 2). In 1999, the Company
initiated an expansion strategy to grow through acquiring print businesses and
operating them directly. Continuation of this strategy will depend on the future
results. In fiscal year 2000, the Company made the decision to close the Dallas
corporate-owned print business and has recorded a charge of $840,000 for related
costs as of November 30, 2000.

Change of Mind Learning is a start-up business with nine franchised locations
and one corporate-owned location that currently operate under the Dreamcatcher
Learning Center mark. The learning centers located in Colorado and Florida
provide supplemental education services, primarily to learners in kindergarten
through the twelfth grade (Note 2).

PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements include the accounts of the
Company and its subsidiaries. All significant inter-company balances and
transactions have been eliminated in consolidation.

CASH AND CASH EQUIVALENTS

Cash equivalents consist of financial instruments that are highly liquid and
mature within 90 days.

SHORT-TERM INVESTMENTS AND MARKETABLE EQUITY SECURITIES

Management determines the appropriate classification of its investments at the
time of purchase and re-evaluates such determination at each balance sheet date.

Short-term investments consist principally of variable rate demand notes and are
stated at fair value, which approximates cost. All short-term investments are
classified as trading securities. These securities are bought and held
principally for the purpose of selling them in the near term.

As of November 30, 2000, marketable equity securities consisted of common stock
of Conseco, Inc., a publicly traded insurance and financial services company,
and as of November 30, 1999 such securities consisted of common stock of
Cornerstone Realty Income Trust, Inc. (Cornerstone) a publicly traded real
estate investment trust. These securities are classified as available for sale
and, accordingly, are stated at fair value with unrealized gains or losses
reported as a separate component of shareholders' equity, net of tax effects. In
the first quarter of fiscal 2000, the stock of Cornerstone was sold and a
pre-tax gain of $461,000 was realized.


                                       23
<PAGE>


At November 30, the cost, fair value and gross unrealized loss on marketable
equity securities was as follows:

                                             2000              1999
                                             ----              ----
             Fair value                  $15,638,000       $ 6,504,000
             Cost                         16,261,000         7,118,000
                                         -----------       -----------
             Gross unrealized loss       $   623,000       $   614,000
                                         ===========       ===========

The gross unrealized loss on marketable equity securities and the related income
tax effect have been excluded from the statement of cash flows due to their
non-cash nature. Dividend distributions received on marketable equity securities
were $223,000, $614,000 and $435,000 for the years ended November 30, 2000, 1999
and 1998, respectively.

INVENTORIES

Inventories consist of printing supplies and used equipment held for resale
which are valued using the lower of cost (first-in, first-out method) or market.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Maintenance and repairs are
expensed as incurred. Depreciation is computed using the straight-line method
over the estimated useful lives of three to eight years. Accelerated methods are
used for income tax reporting.

GOODWILL AND OTHER INTANGIBLES

Goodwill and other intangibles included the following as of November 30:

                                                                   Amortization
                                          2000         1999       Period (Years)
                                      -----------   -----------   --------------
     Goodwill                         $ 4,968,000   $ 4,536,000        15-40
     Non-competition agreement and
       other intangibles                  306,000       250,000          5
     Accumulated amortization          (1,881,000)   (1,635,000)
                                      -----------   -----------

                                      $ 3,393,000   $ 3,151,000
                                      ===========   ===========

Goodwill consists of the excess of cost over the fair market value of the
acquired net assets and is being amortized on a straight-line basis. The Company
periodically evaluates whether events or circumstances have occurred which may
indicate that the remaining estimated useful lives may warrant revision or that
the remaining intangible asset balance may not be recoverable. In the event that
factors indicate that the intangible assets in question should be evaluated for
possible impairment, a determination of the overall recoverability of such
intangible assets would be made. As of November 30, 2000, the Company wrote off
the remaining balance of goodwill related to the Regency acquisition, as the
Company has determined it will close that business.

ALLOWANCE FOR LOSSES

Management periodically evaluates the collectibility of trade accounts and notes
receivable. Allowances for losses on trade accounts receivable are established
for estimated uncollectable amounts. Allowance for losses on notes receivable
are recorded for differences between the unpaid principal balances of each note
and the present value of expected future payments to be received.


                                       24
<PAGE>


CHARGE FOR STORE CLOSING

Due to continued operating losses, which in the year 2000 totaled over $500,000,
and management's judgment that a turnaround of this business was highly unlikely
within a reasonable period of time the Company made a decision to close its
Dallas Insty-Prints business that was established in April of 1999 through the
acquisition of Regency Printing. A charge of $840,000 for estimated expenses to
close the store was recorded as of November 30, 2000. The expenses related to
the losses expected in the sale of equipment and furniture, the write-off of
goodwill, cost to settle lease obligations and employee terminations. The
following table details the restructuring costs as of November 30, 2000:

       RESTRUCTURING COSTS:
            Equipment lease exit fees           $293,000
            Building lease exit fees              86,000
            Severance and other costs             84,000
                                                --------

       TOTAL:                                   $463,000
                                                ========

In addition to the $463,000 of restructuring costs, unamortized goodwill of
$209,000 and $168,000 of book value of fixed assets were written off to arrive
at the total charge for store closing of $840,000. No payments have been made on
these restructuring costs as of November 30, 2000.


REVENUE RECOGNITION

Franchise fee revenue related to the sale of new franchises is recognized when
earned, which occurs in two parts: training fees are recognized at the
completion of new owners training and the second part of revenue recognition
occurs after the opening of new locations. As the Company expects no new
location openings in future periods, franchise fee revenue from this activity
should be insignificant in the future. Insty-Prints franchisees are required to
pay monthly royalty fees of 2% to 4.5% of gross revenues over the term of the
franchise agreement of up to 20 years. Change of Mind Learning franchisees are
required to pay royalties weekly, which range from 5-8 % of gross revenues over
the term of franchise agreements of up to 10 years. Royalty fees are recognized
as revenue on the accrual method while revenue from printing equipment, supply
sales, educational materials and print sales is recognized upon shipment.

DEFERRED REVENUE

Deferred revenue on the balance sheets as of November 30, 2000 and 1999
represent prepaid royalty fees and franchise non-compete buy-out fees paid at
the expiration of a franchise agreement. Prepaid royalties are amortized into
income as earned, based on monthly sales reported by a franchisee. Franchise
non-compete buy-out fees are paid at the expiration of a franchise in exchange
for non-enforcement of non-compete provisions of the franchise agreement and
normally are equal to approximately three years royalties and are amortized into
income over a three-year period.

INCOME TAXES

Deferred income taxes are determined based on the estimated future tax effects
of differences between the financial statement and tax basis of assets and
liabilities.


                                       25
<PAGE>


BUSINESS SEGMENT INFORMATION

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).

USE OF ESTIMATES

The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the consolidated financial statements and the reported amounts of
revenues and expenses during the reporting period. Ultimate results could differ
from those estimates.

NEW ACCOUNTING PRONOUNCEMENTS

Statement of Financial Accounting Standards (SFAS) No. 133 -- "Accounting for
Derivative Instruments and Hedging Activities" was issued during June 1998 and,
as amended by SFAS No. 137, 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 is
effective for the Company beginning December 1, 2000. The adoption of SFAS No.
133 will not have a material impact on the Company's consolidated results of
operations, financial position or cash flows.

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 was recorded as
goodwill that is 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
Company's statement of operations from the date of acquisition and were not
material to prior periods. As noted in Note 1, this business is being 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. For the year 2000, no earnout 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.


                                       26
<PAGE>


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, algebra, study skills, G.E.D. preparation and
college preparation. As of November 30, 2000, there were nine operating
franchise locations and one corporate-owned learning center.

3. SIGNIFICANT INVESTMENTS:

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. The Company's total holdings in Conseco, Inc. constitute less than 1%
of the approximately 325,264,000 outstanding shares of common stock of Conseco,
Inc. 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.

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.

4. NOTES RECEIVABLE:

Notes receivable consists primarily of notes from franchisees. Notes receivable
of $1,903,000 at November 30, 2000 are subject to security agreements with
franchisees and are collateralized by printing equipment, furniture and
fixtures. The majority of the notes receivable are also personally guaranteed by
the respective franchisees. The franchisees generally pay principal and interest
in monthly installments over a period not to exceed 120 months. The majority of
notes written are for a period of 60 to 84 months.

5. MARGIN LOANS:

As of November 30, 2000, the Company had margin loans of $4,438,000 to support
the purchase of Conseco, Inc. common stock. The margin loans are collateralized
by the underlying securities. The loans have no maturity dates, but are subject
to specific collateral requirements. Interest on the margin loans is variable
and ranged from 7.125% to 8.5% during fiscal year 2000. The rate as of November
30, 2000 was 8.3%. The loans were paid subsequent to year end (see Note 10).


                                       27
<PAGE>


6. INCOME TAXES:

The Company files a consolidated federal income tax return and a combined state
return with affiliated companies.

The provision for income taxes consists of the following:

                                      For the Years Ended November 30
                                   -------------------------------------
                                      2000         1999          1998
                                   ---------    ----------    ----------
            Current:
               Federal             $ 427,000    $1,045,000    $1,057,000
               State                  49,000       208,000       191,000
                                   ---------    ----------    ----------
                                     473,000     1,253,000     1,248,000
            Deferred                (243,000)      (65,000)      (54,000)
                                   ---------    ----------    ----------
                                   $ 233,000    $1,188,000    $1,194,000
                                   =========    ==========    ==========

The differences between income taxes computed using the federal statutory rate
and the effective tax rate were as follows:

                                                          For the Years Ended
                                                              November 30
                                                         ---------------------
                                                         2000    1999     1998
                                                         ----    ----     ----
         Federal statutory rate                           34%     34%      34%
         State income taxes, net of federal tax benefit    2       4        1
         Nondeductible amortization                        4       2        2
                                                         ----    ----     ----
                                                          40%     40%      37%
                                                         ====    ====     ====

The tax effect of significant temporary differences representing deferred tax
assets, as of November 30, are as follows:

                                                           2000         1999
                                                        ----------    --------
            Allowance for losses                          $274,000    $313,000
            Accrued financing liabilities                   57,000      59,000
            Accrued compensation                            27,000      27,000
            Accrued franchise incentives                    64,000      66,000
            Accrued expenses-store closing                 328,000          --
            Other                                          423,000     465,000
                                                        ----------    --------
                                                        $1,173,000    $930,000
                                                        ==========    ========

No valuation allowance was required as of November 30, 2000 or 1999.


                                       28
<PAGE>


7. STOCK OPTION PLANS:

The Company has long-term incentive and stock option plans that allow for the
granting of stock options and other incentive awards to key employees, officers
and directors of the Company. The employee stock option plan was amended in
April 2000 increasing the stock options available by 200,000 and both plans
together now provide for a maximum of 600,000 shares to be granted. The options
are generally granted at prices equal to the fair market value of the shares at
the date of grant and are exercisable in cumulative annual increments of 20%
each, commencing one year after the date of grant.

The following is a summary of activity of the plans for the years ended November
30, 2000, 1999 and 1998:

                                                       Number
                                                         of         Price
                                                       Options    Per Share
                                                      --------    ---------

         Outstanding, November 30, 1997                300,000       $4.00
                                                      --------    --------
              Granted                                   22,000        4.45
              Cancelled                                (55,000)       4.00
                                                      --------    --------
         Outstanding, November 30, 1998                267,000        4.04
                                                      --------    --------
              Granted                                   69,000        4.00
              Cancelled                                 (8,000)       4.25
                                                      --------    --------
         Outstanding, November 30, 1999                328,000        4.02
                                                      --------    --------
              Granted                                   87,000        4.00
              Cancelled                                (28,000)       4.07
                                                      --------    --------
         Outstanding, November 30, 2000                387,000       $4.01
                                                      ========    ========

The number of options exercisable at November 30, 2000, 1999 and 1998 are
218,800, 180,200 and 129,600, respectively, and all are at the exercise price of
$4.00 per share, except 1,600 options at November 30, 2000 that are exercisable
at $5.00 per share. As of November 30, 2000, there were options for 213,000
shares available for future grant.

The Company applies Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issues to Employees," and related interpretations in accounting for its
stock option plans. Accordingly, no compensation cost has been recognized in the
accompanying consolidated statements of operations. Had compensation cost been
recognized based on the fair values of options at the grant dates consistent
with the provisions of SFAS No. 123, "Accounting for Stock-Based Compensation,"
the Company's net income and net income per common share would have been
decreased to the following pro forma amounts:


                                       29
<PAGE>


                                         2000          1999           1998
                                       --------     ----------     ----------
     Net Income
         As reported                    $350,000    $1,782,000     $2,032,000
         Pro forma                       258,000     1,702,000      1,960,000
     Income Per Share-as reported:
         Basic and diluted                  $.07          $.38           $.43
     Income Per Share-pro forma:
         Basic and diluted                  $.05          $.36           $.41

The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted-average
assumptions used: risk-free interest rates of 5.94% to 6.92% for 2000 and 5.66%
to 5.85% for 1999 and 5.56% to 5.72% for 1998; no expected dividends; expected
lives of 10 years for 2000, 1999 and 1998; and expected volatility of 37% to
40.7% for 2000 and 38.5% to 40.5% for 1999 grants and 34.52% to 35.29% for 1998
grants. The weighted average fair values of options granted in 2000, 1999 and
1998 were $1.15, $1.67 and $2.57, respectively.

8. RELATED-PARTY TRANSACTIONS:

The Company paid management fees of $75,000 in 2000, 1999 and 1998 to an
affiliated company.

9. COMMITMENTS AND CONTINGENCIES:

GUARANTEES

The Company is a guarantor of equipment financing by certain franchisees in
amounts that aggregated $1,046,000 at November 30, 2000 and $1,665,000 at
November 30, 1999. Under the terms of the guarantees, the maximum annual
liability of the Company is the lesser of the outstanding balance or $2,400,000.
The Company has recorded reserves for estimated losses on these guarantees as
accrued financing liabilities in the accompanying consolidated balance sheets.
As guarantor, the Company is subject to restrictive covenants which, among other
matters, require that the Company maintain a minimum net worth and a debt to net
worth ratio, as defined. As of November 30, 2000 and 1999, the Company was in
compliance with such covenants. In April 2000 this financing program was
terminated relative to adding any new transactions.

OPERATING LEASES

At November 30, 2000, the Company's minimum annual rental commitments for leased
equipment and facilities under operating leases with lease terms in excess of
one year, were as follows:

        For the Years Ending November 30                        Amount
        --------------------------------                        ------

                  2001                                       $  355,000
                  2002                                          357,000
                  2003                                          330,000
                  2004                                          306,000
                  2005                                          156,000
                                                             ----------
                  Total minimum payments required            $1,504,000
                                                             ==========

Rent expense was $500,000, $362,000 and $305,000 in 2000, 1999 and 1998,
respectively.


                                       30
<PAGE>


PROFIT SHARING PLAN

The Company offers a 401(k) plan (the Plan). Employees who meet certain criteria
are eligible to join the Plan. Plan participants elect a percentage of their
salary to be contributed to the Plan. The Company makes a matching contribution
of 25% on the first 6% of salary contributed. The expense for the Plan was
$28,700, $24,200 and $20,100 in 2000, 1999 and 1998, respectively. The Company's
contributions vest at the rate of 20% per year of service and after five years
of service are fully vested.

LEGAL PROCEEDINGS

The Company is a party to certain claims arising in the ordinary course of
business. The Company has filed counteractions in certain cases, and discovery
proceedings are in process. The ultimate outcome of the litigation cannot
presently be determined; however, based on discussions with legal counsel, it is
the opinion of management, the outcome of such claims are not expected to be
material to the financial positions or the results of operations of the Company.

10. SUBSEQUENT EVENT

In January 2001, the Company sold 814,800 shares of its holdings in Conseco,
Inc. common stock and realized proceeds of $13,319,000 for a pre-tax gain of
approximately $7,229,000. The after-tax gain would be approximately $4,337,000
or $0.89 per share. Approximately $4,500,000 of the proceeds from the sale were
used to re-pay all margin loans incurred when shares were purchased. The Company
continues to hold a total of 1,360,700 shares of Conseco, Inc. common stock at a
cost of approximately $10,171,000.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE.

     None.


                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS, COMPLIANCE
          WITH SECTION 16(a) OF THE EXCHANGE ACT.

     The information called for in this item is incorporated by reference to the
Sections of the Proxy Statement entitled "Information Concerning the Director
Nominees," "Executive Officers of the Company" and "Section 16(a) Beneficial
Ownership Reporting Compliance" in the Company's Proxy Statement for the Year
2001 Annual Meeting of Shareholders.

ITEM 10. EXECUTIVE COMPENSATION.

     The information required in this item is incorporated by reference to the
Section of the Proxy Statement for the Year 2001 Annual Meeting of Shareholders
entitled "Executive Compensation."


                                       31
<PAGE>


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The information called for in this item is incorporated by reference to the
Section of the Proxy Statement for the Year 2001 Annual Meeting of Shareholders
entitled "Security Ownership of Certain Beneficial Owners and Management."

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     The information called for in this item is incorporated by reference to the
Section of the Proxy Statement for the Year 2001 Annual Meeting of Shareholders
entitled "Certain Transactions."

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

(a) Exhibits

Exhibit No.            Description
----------- --------------------------------------------------------------------

  2.1       Asset Purchase Agreement by and among IPI, Inc., Insty-Prints, Inc.,
             Copy Boy Corporation and Stan P. Hilkemeyer dated effective June 1,
             1995 (5)
  3.1       Articles of Incorporation as amended and restated to date (1)
  3.2       By-laws (1)
  4         Specimen of Common Stock (2)
+10.1       Form of Insty-Prints, Inc. Franchise Agreement (6)
+10.2       1994 Long-Term Incentive Plan, as amended (1) (7) (8)
+10.3       1994 Non-Employee Directors' Stock Option Plan (1)
+10.3a      Amendment to Non-Employees Directors' Stock Option Plan dated
             October 13, 1995 (4)
 10.4       Mnagement Services Agreement between Jacobs Management Corporation
             and Insty-Prints dated effective December 1, 1993 (1)
 10.5       Management Services Agreement between Jacobs Management Corporation
             and IPI, Inc. dated effective December 1, 1993 (1)
 10.6       Amended and Restated Ultimate Net Loss Agreement between FBS
             Business Finance Corporation and Insty-Prints dated October 3, 1995
             (3)
 10.8       Lease for Corporate Headquarters of IPI, Inc. (3)
 10.9       Lease for Corporate Headquarters of IPI, Inc. (9)
 10.10      Form of Change of Mind Learning System, Inc. Franchise Agreement (9)
 10.11      Asset Purchase Agreement between IPI, Inc. and Dreamcatcher
             Franchise Corporation dated January 5, 2000 (9)
 10.12      Asset Purchase Agreement between IPI, Inc. and Dreamcatcher Learning
             Centers, Inc. dated January 5, 2000 (9)
 11         Statement Re: Computation of per share earnings (9)
 21         List of Subsidiaries of IPI, Inc. (9)
*23         Consent of Independent Public Accountants

 *    Filed herewith
 +    Material contract or compensatory plan or arrangement required to be filed
      as an exhibit to this Form 10-KSB pursuant to Item 13(a).
(1)   Incorporated by reference to the Registrant's Registration Statement on
      Form SB-2 (File No. 33-77190C).


                                       32
<PAGE>


(2)   Incorporated by reference to Amendment No.1 to the registrant's statement
      on Form SB-2 (File No. 33-77190C).
(3)   Incorporated by reference to the Registrant's Annual Report on Form 10-KSB
      for the year ended November 30, 1994.
(4)   Incorporated by reference to the Registrant's Registration Statement on
      Form S-8 (File No. 33-99770).
(5)   Incorporated by reference to the Registrant's Current Report on Form 8-K
      filed June 1, 1995.
(6)   Incorporated by reference to the Registrant's Annual Report on Form 10-KSB
      for the year ended November 30, 1996.
(7)   Incorporated by reference to the Registrant's Registration Statement on
      Form S-8 (File No. 333-28413).
(8)   Incorporated by reference to the Registrant's Registration Statement on
      Form S-8 (File No. 333-54674).
(9)   Incorporated by reference to the Registrant's Annual Report on Form 10-KSB
      for the year ended November 30, 2000.

(b) Reports on Form 8-K

      No reports on Form 8-K were filed during the three months ended November
      30, 2000.


                                       33
<PAGE>


                                   SIGNATURES


         In accordance with Sections 13 or 15 (d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
there unto duly authorized, on January 14, 2002.

         IPI, Inc.


         By:  /S/ Robert J. Sutter
             -------------------------------
                  Robert J. Sutter
              CHIEF EXECUTIVE OFFICER AND CHAIRMAN OF THE BOARD

         In accordance with the Exchange Act, this report has been signed below
on January 14, 2002 by the following persons on behalf of the registrant and in
the capacities indicated.


   Signatures               Title
   ----------               -----


/S/ Robert J. Sutter        Chief Executive Officer; Chairman of the Board
-------------------------       (Principal Executive Officer)
   Robert J. Sutter

/S/ Irwin L. Jacobs         Director
-------------------------
   Irwin L. Jacobs

/S/ Daniel T. Lindsay       Director
-------------------------
   Daniel T. Lindsay

/S/ Howard Grodnick         Director
-------------------------
   Howard Grodnick

/S/ Dennis M. Mathisen      Director
-------------------------
   Dennis M. Mathisen

/S/ David C. Oswald         Director/President and CEO of Insty-Prints, Inc.
-------------------------       and Vice President of IPI, Inc.
   David C. Oswald

/S/ David M. Engel          Vice President - Finance and Chief Financial Officer
-------------------------       (Principal Accounting Officer and Principal
   David M. Engel                Financial Officer)


                                       34