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


                                   FORM 10-QSB/A


(Mark One)

[X]  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF 1934 For the period ended October 31, 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       (IRS Employer Identification No.)
        incorporation or organization)




                 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: 6,257,739 as of December 12,
2000.





<PAGE>

EXPLANATORY NOTE ON AMENDMENT

The Registrant has filed this Amendment in response to comments received from
the staff of the U.S. Securities and Exchange Commission. The Amendment has
revised the following sections:

  Financial Statements
  Notes to Financial Statements
  Management's Discussion and Analysis of Financial Condition and Results
    of Operations
  Exhibits
  Signatures

<PAGE>
INNOVATIVE MEDICAL SERVICES
INDEX

PART 1. FINANCIAL INFORMATION
        Item 1.   Financial Statements
                  Balance Sheets as of July 31, 2000 and October 31, 2000
                  Statements of Operations for the three months ended
                    October 31, 1999 and 2000
                  Statements of Cash Flows for the three months ended
                    October 31, 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.  Financial Statements


CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                         (Unaudited)
                                                          October 31     July 31
                                                             2000          2000
                                                          Restated       Restated
ASSETS                                                    (Note 5)       (Note 5)
                                                        -------------  -----------
Current Assets
<S>                                                       <C>          <C>
     Cash and cash equivalents                            $  614,440   $1,121,316
     Restricted cash                                         207,923      204,887
     Accounts receivable, net of allowance for doubtful
          accounts of $ 225,000 at January 2000
          and $225,000 at July 31, 2000                      305,657      411,322
     Notes receivable                                        233,321      226,729
     Inventories                                             888,779      796,136
     Prepaid expenses                                        101,789       33,975
                                                          ----------   ----------

          Total current assets                             2,351,909    2,794,365
                                                          ----------   ----------

Property, Plant and Equipment
     Property, plant and equipment                         1,009,462    1,056,252
                                                          ----------   ----------

          Total property, plant and equipment              1,009,462    1,056,252
                                                          ----------   ----------

Noncurrent Assets
     Deposits                                                  8,127       14,083
     Patents and license                                     334,910      300,910
     Deferred acquisition costs                              403,694      202,542
                                                          ----------   ----------

          Total noncurrent assets                            746,731      517,535
                                                          ----------   ----------

     Total assets                                         $4,108,103   $4,368,152
                                                          ==========   ==========

LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities
     Accounts payable                                   $    413,829   $  308,812
     Accrued liabilities                                      55,994       36,880
     Notes payable                                           196,009      210,592
                                                        ------------ ------------

          Total current liabilities                          665,831      556,284
                                                        ------------ ------------

Minority interest payable                                     46,726       61,697
                                                        ------------ ------------

Stockholders' Equity
   Class A common stock, no par value: authorized
      20,000,000 shares, issued and outstanding
      6,077,068 at October 31, 2000 and
      5,942,903 at July 31, 2000                          10,103,805   10,018,873
   Class A warrants: issued and outstanding 3,686,000
      warrants                                               108,750      108,750
   Accumulated deficit                                    (6,817,008)  (6,377,452)
                                                        ------------ ------------

      Total stockholders' equity                           3,395,547    3,750,171
                                                        ------------ ------------

     Total liabilities and stockholders' equity         $  4,108,103  $ 4,368,152
                                                        ============ ============
</TABLE>





<PAGE>



CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                     For the Three Months Ended
                                                              October 31
                                                          2000          1999
                                                     -----------   ----------
<S>                                                    <C>          <C>
Net sales                                              $ 366,126    $ 904,888
Cost of sales                                            164,077      410,213
                                                       ---------    ---------
Gross profit                                             202,049      494,675
                                                       ---------    ---------

Selling expenses                                         174,518      112,704
General and administrative expenses                      440,011      247,022
Research and development                                  50,985       38,603
                                                       ---------    ---------

Total operating costs                                    665,514      398,329
                                                       ---------    ---------

Operating income (loss)                                 (463,465)      96,346
                                                       ---------    ---------

Other income and (expense):
Interest income                                           14,599        1,078
Interest Expense                                          (5,462)     (16,299)
                                                       ---------    ---------

Total other income (expense)                               9,137      (15,221)
                                                       ---------    ---------

Income (loss) before income taxes, minority
     Interest in subsidiary operations and
     change in accounting principle                     (454,328)      81,125

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

Income (loss) before minority interest in subsidiary
     operations and change in accounting principle      (454,528)      80,925

Minority interest in subsidiary operations                14,972           --
                                                       ---------    ---------

Net income (loss) before cumulative
     change in accounting principle                     (439,556)      80,925

Cumulative effect of change
     in accounting principle                                  --       79,896
                                                       ---------    ---------

Net income (loss)                                      $(439,556)   $ 160,821
                                                       =========    =========


Net income (loss) per common share before change
     in accounting principle (basic)                   $   (0.07)   $    0.02
Cumulative effect of change
     in accounting principle                                  --         0.02
                                                       ---------    ---------
Net income (loss) per common share (basic)             $   (0.07)   $    0.04
                                                       =========    =========

Net income (loss) per common share before change
     in accounting principal (diluted)                 $   (0.07)   $    0.01
Cumulative effect of change
     in accounting principle                                  --         0.01
                                                       ---------    ---------
Net income (loss) per common share (diluted)           $   (0.07)   $    0.02
                                                       =========    =========


                                                    Three Months
                                                           Ended    Year Ended
                                                      October 31       July 31
CONSOLIDATED STATEMENTS OF ACCUMULATED DEFICITS             2000          2000
-----------------------------------------------------------------------------------------------------

Balance, beginning of period                        $ (6,377,452) $ (3,840,610)

Net income (loss)                                       (439,556)   (2,536,842)
                                                       ---------   -----------

Balance, end of period                              $ (6,817,008) $ (6,377,452)
                                                    ============= =============
</TABLE>



<PAGE>


CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                             For the Three Months Ended
                                                                      October 31
                                                                  2000          1999
                                                             ------------   ------------

Cash flows from operating activities
<S>                                                          <C>            <C>
  Net income (loss)                                          $  (439,556)   $ 160,821

  Adjustments to reconcile net income to net cash
    provided by operating activities:
    Amortization                                                  21,192           --
    Depreciation                                                  47,500       42,484
    Minority interest in subsidiary operations                   (14,972)          --
  Changes in assets and liabilities:
    (Increase) decrease in restricted cash                        (3,036)       4,113
    (Increase) decrease in accounts receivable                   105,665     (311,123)
    (Increase) decrease in due from officers and employees        (6,592)        (452)
    (Increase) decrease in prepaid expense                       (67,814)     (28,481)
    (Increase) decrease in inventory                             (92,644)     (56,861)
    (Increase) decrease in deposits                                5,956       (6,508)
    (Increase) decrease in goodwill                                   --        1,633
    (Increase) decrease in intangible assets                          --        2,250
    Increase (decrease) in accounts payable                      105,017       88,353
    Increase (decrease) in accrued liabilities                    19,114      (29,980)
                                                             -----------    ---------

       Net cash provided (used) by operating
            activities                                          (320,170)    (133,751)
                                                             -----------    ---------

Cash flows from investing activities
   Purchase of patent and licenses                               (34,000)      (3,000)
   Deferred acquisition costs                                   (201,152)          --
   Purchase of property, plant and equipment                     (21,903)    (201,107)
                                                             -----------    ---------

       Net cash (used) in investing activities                  (257,055)    (204,107)
                                                             -----------    ---------

Cash flows from financing activities
  Proceeds from debt obligations                                      --      121,300
  Payments on debt obligations                                   (14,583)          --
  Proceeds from sale of common stock                              84,932      216,750
                                                             -----------    ---------

      Net cash provided by financing activities                   70,349      338,050
                                                             -----------    ---------

      Net increase (decrease) in cash and cash
          equivalents                                           (506,876)         192

Cash at beginning of period                                    1,121,316       22,056
                                                             -----------    ---------

Cash at end of period                                        $   614,440    $  22,248
                                                             ===========    =========

Supplemental disclosures of cash flow information
  Cash paid for interest paid                                $     5,462    $  16,299
  Cash paid for taxes paid                                   $       800    $     800
  Noncash investing and financing activities:
  Value of shares issued in exchange for
     Nutripure.com minority interest                         $   550,011    $      --
</TABLE>


<PAGE>


NOTES TO FINANCIAL STATEMENTS

Note 1.   Financial Statements
          The financial statements included herein have been prepared by
          Innovative Medical Services (the Company) without audit, pursuant to
          the rules and regulations of the Securities and Exchange Commission.
          Certain information and footnote disclosures normally included in the
          financial statements prepared in accordance with generally accepted
          accounting principles have been condensed or omitted as allowed by
          such rules and regulations, and Innovative Medical Services believes
          that the disclosures are adequate to make the information presented
          not misleading. It is suggested that these financial statements be
          read in conjunction with the July 31, 2000 audited financial
          statements and the accompanying notes thereto. While management
          believes the procedures followed in preparing these financial
          statements are reasonable, the accuracy of the amounts are in some
          respects dependent upon the facts that will exist and procedures that
          will be accomplished by Innovative Medical Services later in the year.
          The results of operations for the interim periods are not necessarily
          indicative of the results of operations for the full year.

Note 2.   Stock Dividend
          On October 26, 2000 Innovative Medical Services announced that the
          Board of Directors voted to declare a dividend in kind of Innovative
          Medical Services' common stock. This common stock dividend was
          declared and distributed in lieu of the previously announced dividend
          of Nutripure.com shares. The Company distributed one share of
          Innovative Medical Services' common stock for every fifty shares held
          of record on November 6, 2000, with fractional shares rounded up to
          the nearest whole share, for a total of 121,961 shares.

          In December 1999, Innovative Medical Services formed a wholly owned
          subsidiary, Nutripure.com, to capitalize on internet commerce
          opportunities focusing on health and wellness. In January 2000,
          Innovative Medical Services declared a dividend in kind of
          Nutripure.com common stock as the Company began the process to spin
          off Nutripure.com as a separate public company. The record date and
          distribution date were to be set following completion of the
          registration of Nutripure.com as a reporting issuer with the
          Securities and Exchange Commission. During the last several months,
          however, adverse market conditions for solely internet-based ventures
          have eroded Management's confidence in the viability of a public
          market for Nutripure.com common stock. Therefore, the Board has
          amended its declaration of a Nutripure.com dividend to a dividend of
          Innovative Medical Services' common stock. The Company will retain
          Nutripure.com as an operating division of Innovative Medical Services
          in order to minimize the substantial administrative expense associated
          with launching and operating a public company.

Note 3.   Subsequent Events

          In November 2000, Innovative Medical Services acquired 100% of the
          stock of ETIH2O, Inc., a Florida corporation, for 56,381 shares of IMS
          stock valued at $140,953 ($2.50 per share). The transaction was
          recorded using the purchase method of accounting. The assets acquired
          and liabilities assumed are as follows:

           Assets:
                  Notes Receivable                         $ 33,655
                  Inventories                                32,077
                  Equipment                                  16,932
                  Licensing & Distribution Rights           118,324
                   Total Assets                             200,988
           Liabilities:
                  Notes Payable - IMS                        60,035
           Equity                                         $ 140,953

          Assets and liabilities were valued at historical cost and no goodwill
          was recorded in the transaction. Results of operations of ETIH2O Inc.
          are included in the current quarter. The acquired entity was a startup
          company, if results of operations were included in prior periods and
          shown as though the companies had been combined at the beginning of
          the period, it would not have a material affect on the consolidated
          financial statements of Innovative Medical Services.

          The Company merged ETIH2O with a newly formed Nevada corporation of
          similar name and dissolved the Florida corporation. ETI-H2O, a
          privately held technology corporation, developed Axenohl and focuses
          on research and development of varied water treatment applications,
          including electronic RF scale control, copper/silver ionization and
          filtration technologies.

          In November of 2000 Innovative Medical Services acquired 100% of the
          stock of ETIH2O, Inc., a Florida corporation, for approximately
          $228,000. The transaction was recorded using the purchase method of
          accounting. The Company intends to place the assets of ETIH2O into a
          newly formed Nevada corporation of similar name and dissolve the
          Florida corporation. ETI-H2O, a privately held technology corporation,
          developed Axenohl and previously manufactured the product in
          cooperation with NVID. ETI-H2O is an industry leader in research and
          development of varied water treatment applications, including
          electronic RF scale control, copper/silver ionization and filtration
          technologies

Note 4.   Business Segment and Sales Concentrations

          The Company operates in a single operating segment and is engaged in
          the development, manufacturing and marketing of water purification and
          dispensing equipment and related filter sales to independent
          pharmacies and large chain drug stores. Although the Company has
          expanded from its niche pharmacy market into other, broader markets
          with new products, including residential and commercial water
          filtration systems, health and wellness-related retail merchandise,
          e-commerce products, and silver ion bioscience technologies, at the
          October 31, 2000 revenues from these future segments were not material
          to the consolidated financial statements and no disaggregated
          information was reviewed.

          Significant customers consisted primarily of domestic retail chain
          pharmacies. Sales concentrations to major chain stores were
          approximately $436,700 and $262,300, respectively, for the three
          months ended October 31, 1999 and 2000. No customer accounted for more
          than 10% of consolidated sales in 1999 or 2000. Export sales were
          $29,500in fiscal year 1999 and $16,900 in fiscal year 2000.

Note 5.   Prior Period Adjustment - Write Down of Impaired Assets
          The balance sheets have been adjusted to reflect the write-down of
          impaired assets in the fourth quarter of 2000. Ampromed was purchased
          in October of 1998 to enable the Company to take advantage of the
          lucrative markets for medical and dental supplies in Brazil and other
          South American countries and to later introduce and distribute its
          water purification products to these markets. Since the acquisition
          the economic conditions in the region have declined and implementation
          of the project has been delayed. The Company made its last sale in the
          region in October of 1999 and in May of 2000 terminated its lease in
          Rio de Janeiro and did not replenish the Ampromed inventory. The
          Company no longer has immediate plans to import medical and dental
          supplies into Brazil but believes, however, that Ampromed is a vital
          part of its plan to market and sell "Axenohl", RoachX and the
          Nutripure line of water treatment products. The Company believes there
          is considerable value in owning a Brazilian Limitada but has
          reassessed the value of the goodwill the customer list it purchased.
          Statement of Financial Accounting Standards No. 121 (Accounting for
          the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
          Disposed Of) requires an entity to review long-lived assets and
          identifiable intangible assets when, among other factors, there is a
          change in the extent or manner in which an asset is to be used or when
          there is a significant change in the business climate that could
          affect the value of an asset. The statement requires an entity
          estimate the future cash flows expected to result from the use of the
          asset and to recognize an impairment loss when the sum of the future
          cash flows is less than the carrying amount of the asset. Because of
          the unique nature of the products to be introduced, the Company does
          not believe it has enough quantifiable historical information to
          reliably predict future cash flows from this operation. For this
          reason the Company believes the Goodwill and Customer List should be
          written off, and the value of the Limitada license to do business in
          Brazil should be written down to what it would cost to acquire in
          today's market. This is estimated to be approximately $150,000 which
          will be amortized over its expected useful life of 15 years. The total
          reduction of assets from this restatement was $791,411. Because the
          effect of the write-down on the statements of operations presented was
          only a $700 they have not been restated. Instead the adjustment will
          be made in the fourth quarter of 2001.




<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) is the nation's leader in
pharmaceutical water purification. The Company has expanded from its niche
pharmacy market into other, broader markets with new products, including
residential and commercial water filtration systems, health and wellness-related
retail merchandise, e-commerce products, and silver ion bioscience technologies.

The Fillmaster(R) pharmaceutical water purification, dispensing and measuring
products include the Pharmapure(R) water purification system, the FMD 550
dispenser, the patented Fillmaster 1000e computerized dispenser and the patented
Scanmaster(TM) bar code reader. The Company also markets proprietary NSF
certified replacement filters for the Fillmaster Systems.

The Company's "Pharmacist Recommended" Nutripure(R) line of water treatment and
filtration systems includes the Nutripure 3000S-Series whole-house water
softening systems, the Nutripure Elite reverse osmosis point-of-use systems, the
Nutripure 2000 countertop water filtration system and the Nutripure Sport
filtered sport bottle. The Company distributes its various Nutripure products in
several ways, including retail sales, catalogue placement, business-to-business
sales, internet promotion and in-home sales presentations.

The Company, through its subsidiary Nutripure.com(R), operates an e-commerce
health supersite, which provides consumers a wide variety of vitamins, minerals,
nutritional supplements, homeopathic remedies and natural products. In addition
to merchandise, the supersite offers comprehensive health and wellness
information in an easy-to-access, intuitive reference format.

Innovative Medical Services has obtained worldwide manufacturing and marketing
rights for advanced silver ion technologies. Potential applications for these
products include municipal and point-of-use/point-of-entry water treatment, food
processing, personal disinfecting retail products, and commercial and retail
hard surface disinfecting products. In addition, these technologies may prove to
be revolutionary in the healthcare market for treatment of including human and
animal infections and wounds, and for and disinfecting applications in
hospitals, clinics, surgical centers and other medical and health related
facilities.

In the first quarter of fiscal year 2001, Innovative Medical Services began
realizing revenues from the new Nutripure water treatment dealer program. The
dealer base grows steadily, and Management believes that the program will
produce notably increased revenues and earnings in the coming quarters. In
addition to the ongoing expansion of the water dealer program, retail products
currently in distribution are experiencing increased growth, and the Company
expects to see revenue from new products and new distribution channels this
year. The Company recently received notice from Wal-Mart that the rollout of
Nutripure 2000 will continue to additional stores in the coming year.

Regarding silver ion technologies, regulatory approval is a threshold event for
the Company's commercial launch of Axenohl and related products. EPA approval of
Axenohl for use as a hard surface disinfectant is believed imminent, and if
approvals are received, Management expects revenues from Axenohl to rapidly and
substantially develop.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED OCTOBER 31, 2000 VERSUS THREE
MONTHS ENDED OCTOBER 31, 1999
Total revenues of $366,100 in the first quarter ended October 31, 2000 were 60%
lower than the $904,900 in revenues reported for the same quarter ended October
31, 1999. Fillmaster Purification System sales in the 2000 quarter were $239,400
and replacement filter sales were $121,700. In the 1999 quarter, Fillmaster
Purification System sales were $609,100 and replacement filter sales were
$192,300. Management believes the decline in Fillmaster revenues is due to
multiple factors, including the fact that the market for pharmacy products is
maturing in that there is a decreasing number of pharmacy chains that do not
have water filtration products, and that the Company has sold systems to most
major chains. The focus for further Fillmaster sales will be on incremental and
upgrade sales to individual pharmacies within current chain accounts, although
the Company is still actively pursuing Fillmaster sales to remaining chains.
Management expects to close such volume sales to new chains in the coming year,
and, as in prior years, those sales will result in spikes in Fillmaster
revenues. The Company works to retain customers with its Customer Service Plan
2000, a multi-year service and warranty contract.

Gross profit in the most recent quarter was $202,000 versus $494,700 in the
year-earlier quarter. Gross profit percentage of 55% in the 2000 quarter
remained unchanged from the gross profit percentage in the 1999 quarter.

Net loss for the quarter ended October 31, 2000 was $439,600 versus a net income
of $160,800 for the same quarter in 1999. The decreased income was due to
decreased sales and to 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. General and Administrative
expenses increased $193,000 from $247,000 in fiscal 1999 to $440,000 in fiscal
2000, $75,100 of these expenses were related to Nutripure.com, a wholly owned
subsidiary incorporated in the state of Nevada in December 1999. Nutripure.com
is an e-commerce web 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.


Throughout the quarter, Innovative Medical Services focused its resources on
expanding the current and future scope of business and related growth potential.
The Company's increased selling expenses and general and administrative expenses
reflect the Company's transition from a niche market company that provides water
purification equipment to pharmacies 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.

LIQUIDITY AND CAPITAL RESOURCES
During the three months ended October 31, 2000 the Company's current assets to
liabilities ratio decreased from 5.02 to 3.53. Current assets decreased $442,500
from $2,794,400 to $2,351,900. Current liabilities increased $109,600 from
$556,300 to $665,800.

Cash flows used by operations were $320,200 in the first three months of fiscal
year 2000. Cash flows used by operations were $133,800 for the same period in
1999. For those periods, cash flows used in investing activities included,
respectively, $21,900 and $201,100 for the purchase of machinery and equipment
and for leasehold improvements. Investing activities also included the purchase
of $34,000 of Patents and Licenses and $201,200 of deferred acquisition costs
for the three months ended January 31, 2000. Financing activities included a
decrease of $14,600 in notes payable in the current quarter compared to an
increase of $121,300 in the prior quarter ending October 31, 1999. The Company
also received $84,900 from the sale of common stock resulting from the
exercising of employees options.

The total decrease in cash and cash equivalents for the quarter ended October
31, 2000 was $506,900 as compared to an increase of cash and cash equivalents of
$200 for the same period in the prior fiscal year.

<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 complied 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 December
12, 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.

The Company has filed an action against John Woodard, former Vice President of
Sales, in Superior Court in the State of California in April 2000. The Company
has alleged Mr. Woodard violated his non-competition/non-disclosure agreement
and provided proprietary information, including information regarding the
Company's Fillmaster line of products and Fillmaster customer base, to Fresh
Water Systems, Inc. The Company is seeking monetary damages and injunctive
relief.

The Company has also filed an action against Fresh Water Systems, Inc., Steven
Norvell, Brian Folk and Eric Norvell in Superior Court in the State of
California. The action was filed in August 2000 and amended in October 2000. The
Company alleges Fresh Water Systems and it's officers and directors
misappropriated trade secrets of the Company obtained from former employees of
the Company, engaged in unfair competition in violation of the California Unfair
Practices Act, tortious interference with contractual relations, tortious
interference with prospective business advantage, fraud, trade libel and
conspiracy with regard to the Fillmaster line of products and Fillmaster
customer base. The Company is seeking monetary damages and injunctive relief.

The Company filed an action against Eckerd Corporation in Superior Court in the
State of California in August 2000. The Company alleges Eckerd Corporation has
not paid for Fillmaster products ordered by and shipped to Eckerd pharmacies.
The Company seeks monetary damages not less than $170,000 plus interest and
attorney's fees.



<PAGE>

ITEM 2.
CHANGES IN SECURITIES

In November 2000, the Company issued 94,340 shares of common stock at $2.625 per
share for $247,642 in a private placement to five investors.

In November 2000, the Company issued 31,240 shares of common stock to eight
investors in exchange for their shares in ETI H2O, Inc. An additional 3,143
shares were issued to a single investor in satisfaction of debt of ETI H2O, Inc.

Also in November 2000, the Company issued 121,961 shares in a dividend payment
to holders of Innovative Medical Services common stock. The Company distributed
one share of Innovative Medical Services common stock for every fifty shares
held of record on November 6, 2000

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 solely to
accredited or sophisticated investors who were provided all of the current
public information available on the Company.

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

         (B)  REPORTS ON FORM 8-K
              None

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
                               August 13, 2001


                     By:       /s/ Gary Brownell
                               --------------------------------------
                               Gary Brownell, Chief Financial Officer
                               August 13, 2001