U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                   Form 10-QSB

(Mark One)

[X]  QUARTERLY  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT
     OF 1934 For the period ended April 30, 2000
                                  --------------

[    ] TRANSITION  REPORT UNDER SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT  OF  1934  [No  Fee  Required]  For  the  transition   period
     from        to
          ------   ------


                         Commission File number 0-21019


                           INNOVATIVE MEDICAL SERVICES
                           ---------------------------
                 (Name of small business issuer in its charter)


                California                            33-0530289
          -------------------------------------------------------------------
          (State or other jurisdiction
         of incorporation or organization)  (IRS Employer Identification No.)



                    1725 Gillespie Way, El Cajon, California 92020
                -------------------------------------------------------
                    (Address of principal executive offices)


                                  619 596 8600
                            -------------------------
                            Issuer's telephone number

         Check  whether  the issuer (1) filed all reports to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. Yes X No

         State the number of shares  outstanding of each of the issuer's classes
of common  equity as of the latest  practicable  date:  6,443,814  as of June 8,
2000.





<PAGE>



INNOVATIVE MEDICAL SERVICES
INDEX

PART 1. FINANCIAL INFORMATION

  Item 1. Financial  Statements  Balance Sheets as of July 31, 1999 and April
          30, 2000 Statements of Operations for the three months ended April 30,
          1999 and 2000  Statements  of Cash  Flows for the three  months  ended
          April 30, 1999 and 2000

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

PART 2.  OTHER INFORMATION
         Item 1.       Legal Proceedings
         Item 2.       Changes in Securities
         Item 3.       Defaults Upon Senior Securities: None
         Item 4.       Submission of Matters to a Vote of Security Holders: None
         Item 5.       Other information
         Item 6.       Exhibits and Reports on Form 8-K
         Signatures


The interim financial statements include all adjustments which in the opinion of
management  are  necessary  in  order  to  make  the  financial  statements  not
misleading.


<PAGE>
ITEM 1


<TABLE>
<CAPTION>

CONSOLIDATED BALANCE SHEETS
-------------------------------------------------------------------------------------------------
                                                                (Unaudited)
                                                                 April 30            July 31
ASSETS                                                             2000               1999
                                                               ---------------   ----------------
Current Assets
<S>                                                               <C>                   <C>
      Cash and cash equivalents                                   $ 1,413,219           $ 22,056
      Restricted cash                                                 200,962            205,574
      Accounts receivable, net of allowance for doubtful
          accounts of $ 50,000                                      1,144,105            790,166
      Notes receivable                                                216,647            339,524
      Inventories                                                     712,214            719,972
      Prepaid expenses                                                 59,153             37,078
                                                                      -------             ------

          Total current assets                                      3,746,299          2,114,370
                                                                   ----------          ---------

Property, Plant and Equipment
      Property, plant and equipment                                 1,237,287            805,523
                                                                   ----------            -------

          Total property, plant and equipment                       1,237,287            805,523
                                                                   ----------            -------

Noncurrent Assets
      Deposits                                                         13,083              6,575
      Patents and license                                             576,016            425,550
      Goodwill                                                        252,522            256,422
      Other intangible assets                                         346,500            353,250
      Deferred acquisition costs                                      103,376             53,851
                                                                     --------             ------

          Total noncurrent assets                                   1,291,498          1,095,648
                                                                   ----------          ---------

      Total assets                                                $ 6,275,083        $ 4,015,541
                                                                 ============        ===========

LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities
      Accounts payable                                              $ 321,962          $ 594,948
      Accrued liabilities                                              55,709             43,068
      Notes payable                                                   260,411            446,067
                                                                     --------            -------

          Total current liabilities                                   638,082          1,084,083
                                                                     --------          ---------

Minority interest payable                                              71,877                  -
                                                                      -------          ---------

Stockholders' Equity
      Class A common stock, no par value: authorized
          20,000,000 shares, issued and outstanding
           6,416,939 at April 30, 2000 and
           4,392,242 at July 31, 1999                               9,771,973          6,663,318
      Class A warrants: issued and outstanding 3,687,500
          warrants                                                    108,750            108,750
      Accumulated deficit                                          (4,315,598)        (3,840,610)
                                                                   -----------        -----------

          Total stockholders' equity                                5,565,125          2,931,458
                                                                   ----------          ---------

      Total liabilities and stockholders' equity                  $ 6,275,083        $ 4,015,541
                                                                 ============        ===========
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
STATEMENT OF INCOME (Unaudited)
----------------------------------------------------------------------------------------------------------------------------
                                                         For the Nine Months Ended            For the Three Months Ended
                                                                 April 30                             April 30
                                                          2000              1999               2000              1999
----------------------------------------------------------------------------------------------------------------------------
<S>                                                        <C>               <C>                  <C>              <C>
Net sales                                                  1,909,590         2,733,401            357,845          1,169,903
Cost of sales                                                809,301         1,050,880            234,249            496,960
                                                            --------        ----------           --------           -------

Gross profit                                               1,100,288         1,682,521            123,596            672,943
                                                          ----------        ----------           --------           -------

Selling expenses                                             406,378           289,028            147,947            101,256
General and administrative expenses                        1,117,945           790,669            629,036            342,964
Research and development                                      84,496           119,862             40,380             34,923
                                                             -------          --------            -------            ------
                                                                   -
Total operating costs                                      1,608,818         1,199,559            817,363            479,143
                                                          ----------        ----------           --------           -------

Operating income (loss)                                     (508,530)         482,962            (693,767)          193,800
                                                            ---------         --------           ---------          -------

Other income and (expense):
Interest income                                                4,218             8,097              1,714              2,716
                                                              ------            ------             ------             -----

Total other income (expense)                                   4,218             8,097              1,714              2,716
                                                              ------            ------             ------             -----

Income (loss) before income taxes and
     Minority interest in subsidiary operations             (504,312)          491,059           (692,053)           196,516

Federal and state income taxes                                  600               600                 200                200
                                                                ----              ----               ----                ---

Income (loss) before minority interest in
     Subsidiary operations                                  (504,912)          490,459           (692,253)           196,316

Minority interest in subsidiary operations                   29,923                 -              29,923                 -
                                                             -------           -------            -------            -------

Net income (loss)                                         $ (474,989)       $ 490,459          $ (662,331)        $ 196,316
                                                          ===========       ==========         ===========        =========


Net income (loss) per common share (basic)                   $ (0.10)          $ 0.12             $ (0.12)           $ 0.05
                                                             ========          =======            ========           ======
Net income (loss) per common share (diluted)                 $ (0.06)          $ 0.07             $ (0.08)           $ 0.03
                                                             ========          =======            ========           ======

</TABLE>

<TABLE>
<CAPTION>
                                                             April 30        Ended July 31
CONSOLIDATED STATEMENTS OF ACCUMULATED DEFICITS                  2000                 1999
-------------------------------------------------------------------------------------------
<S>                                                     <C>                   <C>
Balance, beginning of period                            $ (3,840,610)         $ (4,101,330)

Net income (loss)                                           (474,989)              260,720
                                                           ---------               -------

Balance, end of period                                  $ (4,315,599)         $ (3,840,610)
                                                       =============          =============
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
------------------------------------------------------------------------------------------------
                                                                       For the Nine Months Ended
                                                                               April 30
                                                                        2000                1999
                                                                        ----                ----

Cash flows from operating activities
<S>                                                               <C>                 <C>
      Net income (loss)                                           $ (474,989)         $ 490,459

      Adjustments to reconcile net income to net cash
      provided by operating activities:
           Depreciation                                              115,324            116,189
           Minority interest in subsidiary operations                 71,877                  -

      Changes in assets and liabilities:
           (Increase) decrease in restricted cash                      4,613            101,425
           (Increase) decrease in accounts receivable               (353,939)        (1,021,065)
           (Increase) decrease in notes receivable                   122,877            (83,399)
           (Increase) decrease in prepaid expense                    (22,075)            (1,080)
           (Increase) decrease in inventory                            7,758            (62,095)
           (Increase) decrease in deposits                            (6,508)            (4,450)
           (Increase) decrease in patent and licenses               (150,465)          (367,140)
           (Increase) decrease in deferred acquisition costs         (49,525)         1,051,422
           (Increase) decrease in goodwill                             3,900           (258,055)
           (Increase) decrease in intangible assets                    6,750           (355,500)
           Increase (decrease) in accounts payable                  (272,987)           (71,054)
           Increase (decrease) in accrued liabilities                 12,641            (43,928)
                                                             ---------------------------------------

                Net cash provided (used) by operating
                    activities                                      (984,749)           (508,272)
                                                             ----------------  -------------------

Cash flows from investing activities
      Purchase of property, plant and equipment                     (547,088)           (120,817)
                                                             ----------------  -------------------

                Net cash (used) in investing activities             (547,088)           (120,817)
                                                             ----------------           ---------

Cash flows from financing activities
      Increase (decrease) in notes payable                          (185,656)             361,172
      Proceeds from sale of common stock                           3,108,655              375,238
                                                             ---------------   -------------------
                                                                          -                      -
                Net cash provided by financing activities         2,923,000                736,410
                                                             ---------------   -------------------

                Net increase (decrease) in cash and cash
                    equivalents                                   1,391,163                107,320

Cash at beginning of period                                          22,056                 48,250
                                                             ---------------------------------------

Cash at end of period                                           $ 1,413,219              $ 155,570
                                                                ============             =========

Interest paid                                                      $ 65,286               $ 39,622
Taxes paid                                                            $ 600                  $ 600
</TABLE>


<PAGE>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The following  discussion and analysis  should be read in  conjunction  with the
audited and unaudited financial statements of the Company.

OVERVIEW
Innovative  Medical  Services  (the  Company),  based in El  Cajon,  California,
markets unique water  treatment and  disinfecting  solutions to a broad range of
customers, including pharmaceutical, healthcare and consumer markets.

The Company is the nation's leader in  pharmaceutical  water  purification.  The
Company's   cornerstone   products  have  been  the  Fillmaster(R),   Fillmaster
1000e(R)and   Scanmaster(TM)water   purification,   measuring   and   dispensing
technologies used in pharmacies to reconstitute  oral antibiotic  prescriptions.
The Company markets proprietary filters for the aforementioned products, thereby
gaining another significant source of revenues and cash flow.

Innovative  Medical  Services  has also  entered  the  consumer  market with its
Nutripure(R) line of residential drinking water systems, including the Nutripure
Elite  reverse  osmosis water system  available as either a convenient,  compact
unit easily installed beneath the sink, or as an attractive countertop appliance
requiring no  installation.  Brand  recognition  for the  Nutripure  products is
driven by the Nutripure 2000 countertop water filtration system.  Nutripure 2000
competes with PUR(R),  Brita(R) and Culligan(R)  products,  delivering  superior
product quality and capacity to consumers.

The  Company  has  licensed   silver  ion  water   treatment  and   disinfecting
technologies for the healthcare market, including hospitals,  clinics,  surgical
centers,  dentists' and doctors'  offices and other  medical and health  related
facilities.  Innovative  Medical  Services has also secured rights to market the
Axenohl(TM)disinfectant  technology to the healthcare, food processing,  dental,
point-of-use and point-of-entry drinking water markets.

During the third  quarter,  the Company  launched  Nutripure.com,  an e-commerce
supersite providing consumers a wide variety of vitamins, minerals,  nutritional
supplements, homeopathic remedies and natural products. In addition to products,
the  website  offers   comprehensive  health  and  wellness  information  in  an
easy-to-access,  intuitive  reference  format.  The website  also  presents  the
Nutripure line of water filtration systems.

Nutripure.com has formed a strategic  alliance with Bergen Brunswig  Corporation
to  provide  a  seamless  online  interface  for  efficient,  direct-to-consumer
distribution  of  products  through  Bergen  Brunswig's   strategically  located
state-of-the-art  distribution  facility in Louisville,  Kentucky.  The alliance
combines the  strengths  of  Nutirpure.com's  aggressive  sales,  marketing  and
customer support programs with Bergen  Brunswig's  leadership,  buying power and
order fulfillment and delivery system.

Also  during  the  quarter,  the  Company  filed a  registration  statement  for
Nutripure.com  to register  the stock under the  Securities  and Exchange Act of
1934. After the Company receives notice of the effectiveness of the registration
statement,  the  Company  will set a record date and  distribution  date for the
Nutripure.com  dividend to shareholders of Innovative Medical Services.  Holders
of  Innovative   Medical  Services  Common  Stock  will  receive  one  share  of
Nutripure.com  Common Stock for each ten shares of Innovative  Medical  Services
Common Stock held as of a record date to be specified.  The Company  expects SEC
clearance and to set the record date in June 2000.

In March 2000, the Company announced that it began shipping its Nutripure(R)2000
countertop  water system and  replacement  filters to Wal-Mart  Stores and Super
Centers. The regional rollout included four states, and the Company has received
several reorders from Wal-Mart to restock stores in that region.  IMS expects to
expand distribution of the Nutripure 2000 system not only to additional Wal-Mart
regions, but also to additional national retailers in the coming months.

<PAGE>
The Nutripure 2000  professional,  one-micron,  carbon microfilter is trusted to
reduce dirt, chorine, lead and filterable cysts,  including  cryptosporidium and
giardia, to improve the taste, quality and safety of drinking water. In this era
of water awareness,  consumers are turning away from tap water to cleaner, safer
sources  of water.  The  "pharmacist  recommended"  Nutripure(R)2000  countertop
carbon filtration system leads its category with a 2,000 gallon-capacity  filter
and a unique electronic monitor to remind users when to change the filter.

The  Company  continued  to broaden its reach in the  disinfecting  technologies
market by launching the Reservoir  Metering  System (RMS) in March 2000. The new
product  was  unveiled  at  the  4th  Decennial  Conference  on  Nosocomial  and
Healthcare-Associated   Infections   held  in  Atlanta.   Recent   outbreaks  of
Legionnaires' disease and national media attention regarding the transmission of
Legionella have created a heightened  awareness about the role that contaminated
water systems play in nosocomial infections.

The  Reservoir  Metering  System  is  a  non-halogen  disinfection  system  that
effectively treats large volumes of water with ionic silver compounds.  Designed
to be a cost effective  alternative to the use of halogens  (chlorine) for water
disinfection  in either single pass or  re-circulating  systems,  RMS technology
delivers ionic silver using proprietary assayed electrodes. The ions are metered
into the process  water by dosing pumps based upon flow rates to ensure  precise
dosage of ions.  Generation of the ion  concentrate is produced  off-line by the
RMS without utilizing the process water,  enabling the equipment to produce ions
more effectively and efficiently than conventional ionization systems.

In addition to the RMS silver ion product,  the Company  moved  forward with its
antimicrobial  product line featuring  Axenohl(TM)  (Axen(TM)).  The Company has
developed equipment to dispense Axen in measured doses to municipal,  commercial
and point-of-use water supplies to kill bacteria,  viruses and fungi originating
from  the  water  source  or the  delivery  infrastructure.  Axen may be used to
replace, or drastically reduce,  halogens (e.g.  chlorine) as the primary method
of disinfection.  International  trials of the system are progressing  well, and
the Company  expects to begin  marketing  the Axen  product for water  treatment
later in the year.

The Company has also  established a veterinary  line of products  featuring Axen
including  antimicrobial  shampoo,  hoof spray, wound salve and stall and kennel
spray. These products will be launched in June 2000.

The Company  plans to launch a consumer line of products  featuring  Axen in the
coming quarter. The first products to launch will be antimicrobial soap and hand
lotion.

Axenohl(TM)(Axen(TM)) is a patent-pending, non-toxic aqueous disinfectant. Based
upon proprietary ionization stabilization  technology,  Axenohl does not include
the use of traditional disinfectants such as quaternary ammonium salts, phenols,
glutaraldehyde, chlorine or bromine compounds. Axenohl enhances the disinfection
properties  of halogens  (chlorine) at reduced  levels and is a cost  effective,
stand  alone  alternative  to  halogens  in  many  markets  where   conventional
disinfection methodologies are employed. Innovative Medical Services will market
Axenohl to the medical,  dental and food  processing  markets in addition to the
commercial  and  consumer  drinking  water  markets  in  conjunction  with  IMS'
Nutripure line of water treatment systems.

<PAGE>
RESULTS OF  OPERATIONS  FOR THE THREE  MONTHS  ENDED APRIL 30, 2000 VERSUS THREE
MONTHS ENDED APRIL 30, 1999
Revenues of $357,800  in the third  quarter  ended April 30, 2000 were 69% lower
than the  $1,169,900  in revenues  reported for the same quarter ended April 30,
1999. Fillmaster Purification System sales in the 2000 quarter were $206,600 and
replacement  filter  sales  were  $123,000.  In  the  1999  quarter,  Fillmaster
Purification  System  sales were  $922,100  and  replacement  filter  sales were
$247,800. As anticipated, filter sales are recovering from the second quarter of
the fiscal  year.  Net loss for the quarter  ended  April 30, 2000 was  $662,300
versus net income of $196,300 for the same quarter in 1999. The decreased income
was due to  decreased  sales  and an  increase  in  General  and  Administrative
expenses as the Company  positions for anticipated rapid growth activity related
to new ventures,  including  expanded retail  distribution of the Nutripure 2000
home water system, Nutripure.com and the new silver ion technologies.

During the third quarter,  management worked to strengthen the Company by adding
key personnel in the areas of sales,  marketing,  infectious diseases management
and web design. The Company continues its marketing campaigns to expand into new
markets while pursuing development of future products.

Gross  profit in the most recent  quarter was  $123,600  versus  $672,900 in the
year-earlier  quarter.  Gross profit  percentage  of 35% in the 2000 quarter was
lower versus the 58% gross profit  percentage in the 1999 quarter.  The decrease
in gross profit  percentage was largely due to applying fixed  production  labor
costs to the unexpected lower sales volume for the quarter.

The Company is transitioning  from a niche market company that provides pharmacy
water  purification to an international  company containing several divisions to
manage new products and programs in consumer  and  commercial  water  treatment,
direct-to-consumer e-commerce and retail distribution of multiple product lines.

RESULTS OF  OPERATIONS  FOR THE NINE  MONTHS  ENDED  APRIL 30,  2000 VERSUS NINE
MONTHS ENDED APRIL 30, 1999
Revenues of  $1,909,600  in the nine months  ended April 30, 2000 were 30% lower
than the  $2,733,400  in revenues  reported  for the nine months ended April 30,
1999.  Fillmaster  Purification  System sales in the nine months ended April 30,
2000 were  $1,042,900 and replacement  filter sales were $377,500.  In the prior
period,  Fillmaster  Purification  System sales were  $2,035,500 and replacement
filter sales were $665,400.  Sales of Fillmaster  Purification  System decreased
49% and sales of filter  replacements  decreased  43% during  the recent  fiscal
period.

The decrease in Fillmaster  Purification System and replacement filter sales was
partially offset by the sale of an internally  developed  e-commerce  supersite.
During  the  period  the  Company  sold  the  website  to  its  new  subsidiary,
Nutripure.com,  for an initial  purchase  price of  $1,000,000.  Of this amount,
$665,200 was eliminated from sales in inter-company  consolidation  adjustments.
The  remaining  $334,800  represents  the cost of the  website  development  not
capitalized  in  previous  quarters.  During the period  Nutripure.com  paid the
Company $492,000 of the purchase price for the website.  The sale of the website
during the period increased total sales 18%.

Gross  profits for the nine months ended April 30, 2000 were  $1,100,300  versus
$1,682,500  in 1999.  The gross  profit of 58% in 2000 was lower  versus the 62%
gross  profit in 2000.  The  gross  profit  decrease  resulting  from  decreased
Fillmaster and  replacement  filter sales was largely offset by the website sale
described above.

Net loss for first nine months  ended April 30, 2000 was  $475,000  versus a net
income of $490,500 for the same period last year.


<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
During the nine months ended April 30, 2000,  the  Company's  current  assets to
liabilities  ratio rose from 1.95 to 5.87.  Current assets increased  $1,631,900
from  $2,114,400  to  $3,746,300.  Current  assets at April 30, 2000  include an
increase of  $1,391,200  in cash on hand and an increase of $353,900 in accounts
receivable.  Notes  receivable  decreased  $122,900 while  inventories  remained
constant  during  the  period.   Current  liabilities  decreased  $446,000  from
$1,084,100 to $638,100.  The decrease in current  liabilities  was the result of
the Company's ability to pay down accounts payable by $273,000 and notes payable
by $185,700 during the recent period. The company has no long-term debt.

Cash flows used from operations were $475,000 in the first nine months of fiscal
year 2000. Cash flows from operations were $490,500 for the same period in 1999.
For  those  periods,   cash  flows  used  in  investing   activities   included,
respectively, $547,100 and $120,800 for the purchase of fixed assets. Cash flows
used in investing activities for the recent period included $334,800 capitalized
website  cost by  Nutripure.com.  Cash flows from  financing  activities  in the
current  period  were  $3,108,700  from  the  sale  of  common  stock  including
$2,596,500  from  proceeds  received  through  private  placements  of  IMS  and
Nutripure.com.  Of the  $2,596,500,  $200,000  was  received  through  a private
placement of 160,000 common shares of Innovative  Medical  Services at $1.25 per
share in October  1999;  $500,000  received  from the private  sale of 1,000,000
shares of  Nutripure.com  common stock in Dec-Feb 2000; and $1,896,500  received
through a private  placement  of 607,411  units sold at $3.375 per unit in March
2000. Each unit contained one share of Innovative  Medical Services common stock
and  one  warrant  exercisable  at  $5.25  expiring  March  2001.  In  addition,
approximately  $500,000 was received from exercise of outstanding  stock options
which  management  believes  were  largely  exercised  in  anticipation  of  the
Nutripure.com  stock dividend.  The total increase in cash and cash  equivalents
for the 2000  nine-month  period was  $1,413,200  as  compared to an increase of
$155,600 during the same period in 1999.



<PAGE>



PART 2            OTHER INFORMATION

ITEM 1
LEGAL PROCEEDINGS

The  following  is  an  update  of  developments  in  the  previously  disclosed
litigation  involving the Company filed in the Circuit Court of Pinellas County,
Florida by Zedburn  Corporation,  against  the Company for breach of contract in
October  1997.  The Company  has filed  counterclaims  based upon the  Racketeer
Influenced  and  Corrupt  Organization  (RICO) Act against  Mr.  Reitz,  Zedburn
Corporation,  Capital Development Group, Steven Durland and other defendants. It
is the  Company's  position  that Mr. Reitz and others  perpetrated  a scheme to
defraud the Company of cash fees and  securities  in connection  with  purported
services  of  arranging a public  offering of the  Company's  common  stock.  In
October  1997,  Mr.  Reitz and Zedburn  filed for  protection  under the Federal
bankruptcy laws. In August 1998, Mr. Reitz voluntarily  dismissed his bankruptcy
and as a result  thereof the Company has named Mr.  Reitz as a defendant  to its
counterclaims.

The Company believes that the defendants had perpetrated similar schemes against
other  parties.  The  Company  also  believes  it  has  substantially  completed
discovery and compiled compelling evidence to prove its claims.

Several of the Defendants filed Motions to Dismiss the Company's  counterclaims.
A hearing on the  Motions  was held on October 1, 1998.  Certain of the  Motions
were granted pending the Company's  amendment of its  Counterclaim.  The Company
amended  its  Counterclaims  in  accordance  with the judge's  rulings.  Certain
Defendants filed second Motions to Dismiss the amended Counterclaims.  A hearing
on these latest  motions was held in March 1999,  before a different  judge than
the judge who ruled on the first motions. On April 20,1999,  Orders were entered
granting the Defendants' Motions to Dismiss.  However these Orders did not state
the basis for the Orders, nor was the Company's legal counsel provided notice of
the  Orders  or a copy of the new  judge's  correspondence  offering  a  "formal
ruling" upon request.  In May 1999 the Company filed an Appeal of the Orders and
Motions  for  Reconsideration  based upon  inconsistency  of the Orders with the
previous  judge's  rulings  and the lack of notice to the  Company.  The Company
believes  that its Appeal and  Motions  have merit and will be  granted.  In any
event the Company  intends to pursue a trial as soon as possible.  As of June 8,
2000, no ruling has been received on the Company's Appeal.

The  Company  has  neither  accrued  a  liability  in its  financial  statements
regarding this litigation nor disclosed the matter in the footnotes thereof. The
Company  has not done so because it does not  believe  there is any merit to Mr.
Reitz's claims and that the likelihood that the Company will realize a loss from
these matters is believed remote. In addition,  the Company believes that in the
unlikely event that the Company settles, the amount of any such settlement would
not be material to the Company's financial statements.

ITEM 2. CHANGES IN SECURITIES
In March 2000,  the Company  issued  607,411  units,  consisting of one share of
common stock and one warrant to purchase an  additional  share of common stock @
$5.25 per share on or before March 31, 2001 for $1,896,500  ($3.375 per unit) in
a private placement of the units to 15 accredited investors.

With  respect to the sales  made,  the  Company  relied on  Section  4(2) of the
Securities Act of 1933, as amended.  No advertising or general  solicitation was
employed in offering the  securities.  The securities were offered to accredited
investors who were provided all of the current public  information  available on
the Company.


<PAGE>


ITEM 3.
DEFAULTS UPON SENIOR SECURITIES
Not applicable.

ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.

ITEM 5.
OTHER INFORMATION
Not applicable.

ITEM 6.
EXHIBITS AND REPORTS ON FORM 8-K
         (A)      EXHIBITS
                  EXHIBITS DESCRIPTION
                        11       Statement re: computation of per share earnings
                        27       Financial data schedule
         (B)      REPORTS ON FORM 8-K
                  Change in Auditor filed June 12, 2000

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


INNOVATIVE MEDICAL SERVICES
(Registrant)
By: /s  Michael L. Krall
------------------------
Michael L. Krall, President/CEO

By: /s/ Gary Brownell
---------------------
Gary Brownell, Chief Financial Officer


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