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, 2001
                                  --------------

[ ] 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  (IRS Employer Identification
                organization)                                 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: 6,785,799 as of June 14,
2001.





<PAGE>



INNOVATIVE MEDICAL SERVICES
INDEX

PART 1.  FINANCIAL INFORMATION
         Item 1.   Financial Statements
                   Balance Sheets as of July 31, 2000 and April 30, 2001
                   Statements of Operations for the three months and nine
                     months ended April 30, 2000 and 2001 Statements of Cash
                   Flows for the nine months ended April 30, 2000 and 2001
         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>
CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                         (Unaudited)
                                                           April 30         July 31
ASSETS                                                       2001            2000
                                                       ------------    ------------
Current Assets
<S>                                                    <C>             <C>
  Cash and cash equivalents                            $    520,086    $  1,121,316
  Restricted cash                                                --         204,887
  Accounts receivable, net of allowance for doubtful
    accounts of $ 225,000                                   408,361         411,322
  Notes receivable                                          292,913         226,729
  Inventories                                               823,609         796,136
  Prepaid expenses                                           39,805          33,975
                                                          ---------      ----------
    Total current assets                                  2,084,774       2,794,365
                                                          ---------      ----------
Property, Plant and Equipment
  Property, plant and equipment                             934,132       1,056,252
                                                          ---------      ----------
    Total property, plant and equipment                     934,132       1,056,252
                                                          ---------      ----------
Noncurrent Assets
  Deposits                                                    8,127          13,083
  Patents and license                                     1,167,992         498,181
  Goodwill                                                  244,989         250,889
  Other intangible assets                                   337,500         344,250
  Deferred acquisition costs                                     --         202,542
                                                          ---------      ----------
    Total noncurrent assets                               1,758,609       1,308,946
                                                          ---------      ----------
  Total assets                                         $  4,777,514    $  5,159,563
                                                       ============    ============
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities
  Accounts payable                                     $    480,112    $    308,812
  Accrued liabilities                                        57,762          36,880
  Notes payable                                             200,000         210,592
                                                          ---------      ----------
    Total current liabilities                               737,874         556,284
                                                          ---------      ----------
Minority interest payable                                        --          61,697
                                                          ---------      ----------
Stockholders' Equity
  Class A common stock, no par value: authorized
     20,000,000 shares, issued and outstanding
     6,630,091 at April 30, 2001 and
     5,942,903 at July 31, 2000                          11,001,345      10,018,873
  Class A warrants: issued and outstanding 3,686,000
     warrants                                               108,750         108,750
  Accumulated deficit                                    (7,070,455)     (5,586,041)
                                                        ------------    ------------
     Total stockholders' equity                           4,039,640       4,541,582
                                                        ------------    ------------
  Total liabilities and stockholders' equity           $  4,777,514    $  5,159,563
                                                        ============    ============
</TABLE>



<PAGE>

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                        For the Nine Months Ended   For the Three Months Ended
                                                                 April 31                   April 31
                                                           2001            2000         2001         2000
                                                       -----------    -----------    ---------    ---------
<S>                                                    <C>            <C>            <C>          <C>
Net sales                                              $ 1,462,586    $ 1,574,840    $ 701,146    $ 357,845
Cost of sales                                              894,457        809,301      469,940      234,249
                                                       -----------    -----------    ---------    ---------
Gross profit                                               568,129        765,539      231,206      123,596
                                                       -----------    -----------    ---------    ---------
Selling expenses                                           483,605        406,377      206,439      147,947
General and administrative expenses                      1,340,438      1,219,429      391,300      612,652
Research and development                                   268,203         84,496      185,400       40,380
                                                       -----------    -----------    ---------    ---------
Total operating costs                                    2,092,246      1,710,302      783,139      800,979
                                                       -----------    -----------    ---------    ---------
Operating income (loss)                                 (1,524,117)      (944,763)    (551,933)    (677,383)
                                                       -----------    -----------    ---------    ---------
Other income and (expense):
Interest income                                             25,930          4,218        2,768        1,714
                                                       -----------    -----------    ---------    ---------
Total other income (expense)                                25,930          4,218        2,768        1,714
                                                       -----------    -----------    ---------    ---------
Income (loss) before income taxes, minority
  Interest in subsidiary operations and
  change in accounting principle                        (1,498,187)      (940,545)    (549,165)    (675,669)

Federal and state income taxes                               1,200            600          800          200
                                                       -----------    -----------    ---------    ---------
Income (loss) before minority interest in subsidiary
  operations and change in accounting principle         (1,499,387)      (941,145)    (549,965)    (675,869)

Minority interest in subsidiary operations                  14,972         26,718           --       26,718
                                                       -----------    -----------    ---------    ---------
Net income (loss) before cumulative
  change in accounting principle                        (1,484,415)      (914,427)    (549,965)    (649,151)

Cumulative effect of change
  in accounting principle                                       --         79,896           --           --
                                                       -----------    -----------    ---------    ---------
Net income (loss)                                      $(1,484,415)   $  (834,531)   $(549,965)   $(649,151)
                                                       -----------    -----------    ---------    ---------

Net income (loss) per common share before change
  in accounting principle (basic)                      $     (0.24)   $     (0.17)   $   (0.09)   $   (0.12)
Cumulative effect of change
  in accounting principle                                       --           0.02           --           --
                                                       -----------    -----------    ---------    ---------
Net income (loss) per common share (basic)             $     (0.24)   $     (0.15)   $   (0.09)   $   (0.12)
                                                       -----------    -----------    ---------    ---------
Net income (loss) per common share before change
  in accounting principal (diluted)                    $     (0.24)   $     (0.16)   $   (0.09)   $   (0.12)
Cumulative effect of change
  in accounting principle                                       --           0.01           --           --
                                                       -----------    -----------    ---------    ---------
Net income (loss) per common share (diluted)           $     (0.24)   $     (0.15)   $   (0.09)   $   (0.12)
                                                       -----------    -----------    ---------    ---------
</TABLE>


                                                  Nine Months
                                                     Ended         Year Ended
                                                   April 30         July 31
CONSOLIDATED STATEMENTS OF ACCUMULATED DEFICITS      2001             2000
--------------------------------------------------------------------------------

Balance, beginning of period                   $ (5,586,041)    $ (3,840,610)


Net income (loss)                                (1,484,415)      (1,745,431)
                                                 -----------      -----------

Balance, end of period                         $ (7,070,455)    $ (5,586,041)
                                               =============    =============



<PAGE>

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                           For the Nine Months Ended
                                                                                    April 30
                                                                              2001            2000
                                                                         -------------   -------------

Cash flows from operating activities
<S>                                                                        <C>            <C>
  Net income (loss)                                                        $(1,484,415)   $  (834,531)

  Adjustments to reconcile net income to net cash provided by operating
  activities:
     Amortization                                                               63,577             --
     Depreciation                                                              143,602        115,324
     Minority interest in subsidiary operations                                (61,697)        75,082
  Changes in assets and liabilities:
     (Increase) decrease in restricted cash                                    204,887          4,613
     (Increase) decrease in accounts receivable                                  2,961       (223,938)
     (Increase) decrease in notes receivable                                   (66,183)       122,877
     (Increase) decrease in prepaid expense                                     (5,830)         7,758
     (Increase) decrease in inventory                                          (27,473)       (22,075)
     (Increase) decrease in deposits                                             4,956         (6,508)
     (Increase) decrease in patent and licenses                               (669,811)      (150,465)
     (Increase) decrease in deferred acquisition costs                         202,542             --
     (Increase) decrease in goodwill                                             5,900          6,750
     (Increase) decrease in intangible assets                                    6,750        (49,525)
      Increase (decrease) in accounts payable                                  171,300       (272,987)
      Increase (decrease) in accrued liabilities                                20,883         12,641
                                                                            ----------     ----------
        Net cash provided (used) by operating
            activities                                                      (1,488,051)    (1,214,984)
                                                                            ----------     ----------
Cash flows from investing activities
  Purchase of property, plant and equipment                                    (85,058)      (316,852)
                                                                            ----------     ----------
        Net cash (used) in investing activities                                (85,058)      (316,852)
                                                                            ----------     ----------
Cash flows from financing activities
  Increase (decrease) in notes payable                                         (10,592)      (185,656)
  Proceeds from sale of common stock                                           982,471      3,108,655
                                                                            ----------     ----------
        Net cash provided by financing activities                              971,879      2,922,999
                                                                            ----------     ----------
        Net increase (decrease) in cash and cash
            equivalents                                                       (601,230)     1,391,163

Cash at beginning of period                                                  1,121,316         22,056
                                                                            ----------     ----------
Cash at end of period                                                      $   520,086    $ 1,413,219
                                                                           ===========    ===========
Supplemental disclosures of cash flow information
  Cash paid for interest paid                                              $    11,100    $    65,286
  Cash paid for taxes paid                                                 $     1,200    $       600
  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 and Share Exchange
          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. Following the announcement of the
          dividend, however, adverse market conditions for solely internet-based
          ventures eroded Management's confidence in the viability of a public
          market for Nutripure.com common stock. Therefore, the Board amended
          its declaration of a Nutripure.com dividend to a dividend of
          Innovative Medical Services' common stock and the Company purchased
          the minority interest in Nutripure.com through an exchange of shares.
          The Company retains 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.

          On October 24, 2001, the Company issued 183,337 shares of common stock
          valued at $550,011 ($3.00 per share) in exchange of 1,100,000 shares
          of Nutripure.com stock representing the remaining minority interest
          outstanding shares of Nutripure.com. Management of Nutripure.com did
          not exchange shares. Shares held by Management were eliminated by a
          reverse split, effective March 16, 2001.

          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.

Note 3.   Acquisitions
          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
                                                             =========
 <PAGE>
          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 is
          responsible for processing, and production of Axenohl and Axen.
          ETI-H2O is also responsible for all supervision of all research,
          studies, data and quality control of the Axenohl/Axen product line.

          During the quarter, the Company completed the purchase of the entire
          right, title and interest in and to specific patent-pending boric acid
          pesticide technologies and all rights, title and interest in and to
          all patents, for approximately $160,000 plus a royalty structure based
          upon revenues. RoachX is a safe pesticide technology containing a
          familiar active ingredient, boric acid, bound to a masking agent and
          combined with an attractant fragrance and proteins in a colloidal
          suspension. The patent-pending time-released formulation protects the
          boric acid from dissolving in water and maintains the integrity of the
          pesticide to obtain maximum killing effect.

Note 4.   Common Stock
          In addition to the common stock issued, described in Notes 2 and 3,
          the Company completed the following private placements during the nine
          months ended April 30, 2001:

               1.   A $250,000 private placement in October 2000 in which the
                    Company issued 94,340 shares of common stock to six
                    investors at $2.65 per Unit.

               2.   A $250,002 private placement in January 2001 in which the
                    Company issued 83,334 shares of common stock to six
                    investors at $3.00 per Unit. Each Unit contained one share
                    of common stock and a warrant to acquire an additional share
                    of common stock for $4.00 per share up to January 28, 2003.

               3.   A $225,000 private placement in April 2001 in which the
                    Company issued 150,000 shares of common stock to four
                    investors at $1.50 per Unit. As part of this registration
                    the Company also issued $200,000 of convertible debentures
                    at 10% interest due July 31, 2001. The holders of this
                    debenture are entitled to convert all or any amount over
                    $10,000 of principal face amount and accrued interest into
                    Units each consisting of one share of Common Stock and a
                    Common Stock Purchase Warrant. The conversion price for each
                    Unit shall equal 80% of the average closing bid price for
                    the five trading days immediately preceding the receipt of
                    Notice of Conversion. The exercise price for the Warrant in
                    each unit shall equal 120% of the average closing bid price
                    for the five trading days immediately preceding the receipt
                    of Notice of Conversion.

          The Company also received approximately $151,000 from the exercise of
          options during the nine-month period ending April 30, 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.

During the first nine months of fiscal 2001, Innovative Medical Services created
and launched the most comprehensive marketing program ever introduced to the
water treatment industry. The program offers existing independent water
treatment dealers a line of residential water softening and other point-of-use
water treatment equipment for sale to the public under IMS' reputable
"Pharmacist Recommended" Nutripure brand. In addition, the program provides
complementary, industry-unique financing that extends credit to consumers for
the purchase of water treatment equipment. The Company has partnered with MBNA
and Automated Payment Services ("APS") to strengthen and streamline the
financing program and administration of the Nutripure dealer program. Under the
unique Nutripure program, independent water treatment dealers may now offer
credit to all prospective customers because the Nutripure programs offers
competitive, risk-based interest rates. In addition, through APS, dealers can
obtain real-time processing and approval information online for their customers.
The dealer base for the program grows steadily, and the Company expects revenues
from the Nutripure dealer program to accelerate in the second half of the year.

In the third quarter, the Company announced that it has partnered with
USFilter(R) to provide equipment to the Nutripure dealers. The Company believes
that combining the unique Nutripure marketing and financing programs with
USFilter's excellent products positions Innovative Medical Services to become a
leader in the home water treatment industry. Also in the third quarter,
Innovative Medical Services launched its first Nutripure Master Dealer.

Innovative Medical Services launched its second Nutripure Master Dealer on June
6, 2001. The June launch, like the May launch, included a 2-day training seminar
for the sales people. The conversion to Nutripure included adopting the
Nutripure "Pharmacist Recommended" logo and style on all buildings, collateral
materials, vehicles and attire. Innovative Medical Services expects to add four
additional master dealers in the coming quarter. The Company has been receiving
purchase orders and shipping products to its master dealers since April and is
on schedule to add four additional master dealers in the coming quarter.

Innovative Medical Services has obtained worldwide manufacturing and marketing
rights for advanced silver ion technologies. Axenohl(TM)/Axen(TM) is a
revolutionary antimicrobial technology that uses the biocidal properties of
ionic silver to kill bacteria, viruses and fungi. Axenohl's broad effectiveness
works to prevent and treat infection, and, unlike traditional disinfectants,
Axenohl is non-toxic and environmentally friendly. Potential applications for
products containing Axenohl 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, this
technology may prove to be revolutionary in the healthcare market for treatment
of disease, including human and animal infections and wounds, and for
disinfecting applications in hospitals, clinics, surgical centers, dental
offices and other medical and health related facilities.
<PAGE>
The disinfection efficacy of Axenohl has been well documented by independent
testing laboratories. Axenohl eliminates the following test organism strains all
within one minute and with 99.9999% efficacy (complete kill): Pseudomonas
aeruginosa ATCC 15422, Staphylococcus aureus ATCC 6538, Salmonella cholerasuis
ATCC 10708, E. Coli ATCC 0157:H7, Listeria monocytogenes ATCC 11543, Entrococcus
facium ATCC 11543, Rhino virus (common colds), and Rotavirus (infectious
diarrhea).

In March 2001, the US Patent and Trademark Office issued US Patent Number
6,197,814 for Axenohl. Patent applications have been filed in more than 50
countries and regions, and the World Intellectual Property Organization
published the Axenohl International Patent Application on April 22, 1999 under
publication number WO 99/18790. The inventor of Axenohl is Mr. Andrew B. Arata,
President of ETIH2O Corporation, and the registered patent assignee is NVID
International, Inc. Innovative Medical Services entered into a sales, marketing,
distribution and manufacturing agreement for particular geographic areas and
particular market segments for Axenohl/Axen with NVID International on November
24, 1999. On March 26, 2000, Innovative Medical Services entered into a
superseding contract with NVID and ETI-H2O, Inc. of Florida for exclusive,
worldwide sales, marketing and distribution rights for Axenohl/Axen. The latter
contract is the subject of pending litigation with NVID. (Please see Legal
Proceedings.)

Regulatory approval is a threshold event for the Company's commercial launch of
Axenohl and related products in the United States. Innovative Medical Services
continues to contact the EPA and its Congressional liaison to the EPA on a
weekly basis and expects to receive EPA approval as early as June 2001.
Meanwhile, the Company has applied for regulatory approvals in several other
countries. Axen(TM) is approved in Costa Rica for use as a water treatment
chemical, hard surface disinfectant, and industrial disinfectant for direct food
contact. (Axen(TM) is the trade name for the use dilution Axenohl solution.)
Approval in Costa Rica for human and veterinary topical use is expected by the
end of the year.

In the third quarter, Dodo & Company began purchasing product in preparation for
the September launch of its new product line of acne-fighting cosmetics
containing Axen as its active ingredient. The Company expects to continue to
receive purchase orders from Dodo & Company. In May 2001, Innovative Medical
Services began realizing revenues from sales of Axenohl to additional
international customers.

During the quarter, the Company completed the acquisition of a revolutionary,
safe pesticide technology. The EPA-approved RoachX(R) was the first product to
launch from the line, and the Company has submitted for and anticipates EPA
approval for AntX. RoachX is over 96% effective in three to four days with one
application for indoor and outdoor eradication of cockroaches. The
patent-pending time-released formulation protects the boric acid from dissolving
in water and maintains the integrity of the pesticide to obtain maximum killing
effect. The product line, containing particular formulas for specific pests,
provides excellent results against cockroaches, ants, palmetto bugs, silverfish,
waterbugs, ticks, fleas, lice and garden pests. RoachX is available through
Vopak (formerly Van, Waters & Rogers) and members of the Speckoz group of nine
regional independent wholesalers.

Innovative Medical Services believes that with RoachX, and AntX it is well
positioned to capitalize on the recent federal restrictions on poisonous
pesticides and the subsequent industry trend of eliminating spray pesticides and
increasing the use of bait-style products like RoachX and AntX. RoachX is a safe
bait that is 96-100% effective, as tested by the USDA. Many states, including
California, New York and Florida, have legislated to eliminate pesticide
spraying in public schools and move to 100% IPM (integrated pest management)
practices, such as using baits. In addition to school districts, RoachX is
currently being tested and test marketed by dozens of companies in the US and
abroad and is also being tested by the US Navy aboard ships afloat as a safer
and more effective alternative to traditional sprays and other baits that
evaporate or emit fumes.

Also during the quarter, Innovative Medical Services announced the re-launch of
its corporate website - www.IMSPURE.com(TM), and the launch of two new product
websites - www.Axenohl.com(TM) and www.RoachX.com(TM). The dynamic,
user-friendly websites link to each other and provide a complete overview of the
company, its subsidiaries, products, executive management team, company news and
stock information. The new websites also provide key technical data to
Innovative Medical Services' current and prospective customers. Visitors to the
sites may also go to www.Nutripure.com(R), the Innovative Medical Services
e-commerce health products subsidiary. Nutripure.com 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.


RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED APRIL 30, 2001 VERSUS THREE
MONTHS ENDED APRIL 30, 2000
During the quarter, the Company began to realize revenues from multiple product
lines in its different divisions. In order to be more informative regarding
distribution of revenues, discussion of revenues will be in terms of the
Company's water treatment, silver ionization and pesticide divisions, rather
than in terms of individual products. Total revenues of $701,100 in the third
quarter ended April 30, 2001 were 96% higher than the $357,800 in revenues
reported for the same quarter ended April 30, 2000. Water treatment division
sales in the 2001 quarter were $667,300, which includes $140,200 in revenues
from the new Nutripure water dealer program. Revenues from the silver ionization
division in the quarter were $30,300. Revenues from the pesticide division were
$3,500.
<PAGE>
Gross profit in the most recent quarter was $231,200 versus $123,600 in the
year-earlier quarter. The gross profit of 33% in 2001 remained relatively
constant compared to the 35% gross profit in 2000.

Net loss for the quarter ended April 30, 2001 was $550,000 versus a loss of
$649,200 for the same quarter in 2000. During the period General and
Administrative expenses decreased 36% from $612,600 to $391,300. Research and
Development costs increased 359% from $40,400 to $185,400. Selling and marketing
expenses also increased over the prior period rising 40% from $148,000 to
$206,400.

In addition to the ongoing expansion of the water dealer program, distribution
of the Company's other products in the Water Treatment Division continues to
grow. Fillmaster rollouts to Shaws and Kaiser Permanente are on schedule.
Wal-Mart submits reorders on a regular basis for the Nutripure 2000 countertop
water filtration systems stocked in over 350 of its highest volume stores, and
the Company is now connected directly to Wal-Mart's ordering and inventory
system via EDI (Electronic Data Interchange). CVS continues to purchase
Fillmaster systems for its new and remodeled stores at a rate of at least 50
units per month and plans to continue the roll out through the end of the
calendar year. Fillmaster and replacement filter sales to the Company's existing
customers continues steadily. Nutripure Sport Bottle, Nutripure 2000 and
Fillmaster are being tested in Canada, with initial placement in some Pharma
Plus and Wal-Mart Canada Stores. Drug Trading, the eight largest wholesaler in
North America, is now purchasing Fillmaster, Nutripure 2000 and Nutripure Sport
Bottles for their member and associate stores, and Fillmaster, Nutripure 2000
and Nutripure Sport bottles are being sold through several other regional chains
in the US and Canada. In addition to retail sales, the Company is conducting a
successful direct mail program with Nutripure 2000 and the Nutripure Sport
Bottle.

During the quarter, the Company launched its first Nutripure Master Dealer, and,
subsequently, launched its second Master Dealer in June. Revenues from the
program began in the third quarter, and continue to ramp up, with over $61,800
in sales since April 30, 2001, the end of the third quarter, and a backlog of
orders for approximately $48,000.

In March 2001, Innovative Medical Services signed a five-year contract with Dodo
& Company, a leading Korean cosmetics manufacturer and marketer to provide
Axenohl. Dodo & Company will purchase approximately $1.2 million dollars of
product from Innovative Medical Services over five years. In addition to the
purchase price, Innovative Medical Services will receive a royalty on sales of
the Axen-containing products. The Company anticipates that, over the five years,
the revenues from Dodo & Company cosmetics royalties will exceed $5 Million. In
the third quarter, Dodo & Company began purchasing product in April 2001 in
preparation for the September launch of its new product line.
<PAGE>
In May 2001, Innovative Medical Services began realizing revenues from sales of
Axenohl to additional international customers. Revenues from Axenohl began in
the second half of the third quarter, and continue to ramp up, with over
$230,000 in sales since April 30, 2001, the end of the third quarter.

In January 2001, the Company announced its acquisition of a new, non-toxic
pesticide technology. The acquisition was completed in April 2001 for
approximately $160,000. RoachX is the first product to launch, and during the
third quarter, the Company focused on gaining distribution to more than 40,000
commercial pest control companies through national wholesalers. The commercial
industry provides larger dollar volume potential and select and controlled
distribution. During the third quarter, the Company began receiving purchase
orders and shipping RoachX to customers in the western regions of the United
States. The national kickoff will take place at the National Pest Management
Association meeting in New Orleans in October. Innovative Medical Services has
taken an aggressive approach by introducing an incentive point program for
wholesalers to accumulate points used to redeem top brand merchandise based upon
purchases.

Revenues from RoachX began in the second half of the third quarter, and continue
to ramp up, with over $23,000 in sales since the end of the third quarter. The
Company expects revenues from sales of RoachX to accelerate in the coming
quarter and have a very significant short and long-term impact on revenues and
earnings.


RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED APRIL 30, 2001 VERSUS NINE
MONTHS ENDED APRIL 30, 2000
Revenues of $1,462,600 in the nine months ended April 30, 2001 were 7% lower
than the $1,574,800 in revenues reported for the nine months ended April 30,
2000. The decrease was due to a decline in sales of Fillmaster pharmaceutical
purification systems and filter replacements in the current nine-month period.
Management believes the decline in Fillmaster revenues was 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.

Water treatment division sales in the 2001 period were $1,428,800. Revenues from
the silver ionization division in the period were $30,300. Revenues from the
pesticide division were $3,500.

Gross profits for the nine months ended April 30, 2001 were $568,100 versus
$765,500 in 2000. The gross profit of 39% in 2001 was lower versus the 49% gross
profit in 2000. The decrease in gross profit percentage was due to fixed
production and labor costs being applied to the lower sales volume for the
period and to additional costs associated with the launch of the Company's new
product lines.

Net loss for first nine months ended April 30, 2001 was $1,484,400 versus
$834,500 for the same period last year. The decreased income was due to
decreased sales and to an increase in Research and Development costs and General
and Administrative expenses as the Company positions for anticipated rapid
growth activity related to new ventures, including expanded distribution of the
Nutripure line of water treatment systems, RoachX, and the new silver ion
technologies. Research and Development costs increased $183,700 (217%) from
$84,500 in the prior period to $268,200 in the current period. Selling and
marketing expenses rose $77,200 (19%) from $406,400 to $483,600. General and
Administrative expenses increased $121,000 (9%) from $1,219,400 in fiscal 2000
to $1,340,400 in fiscal 2001. $178,200 of these expenses were related to
Nutripure.com, a wholly owned subsidiary. The Company believes it has created
and maintains a robust website at a fraction of the cost of other stand alone
e-commerce engines. Although sales to date from Nutripure.com are non-material,
the Company has minimized costs related to the operation and promotion of
Nutripure.com and has plans for strategic partnership and future promotion. The
Company does not anticipate significant revenues from Nutripure.com until the
coming fiscal year.

In November 2000, Innovative Medical Services acquired 100% of the stock of
ETIH2O, Inc., a Florida corporation, for approximately 56,400 shares of IMS
stock valued at approximately $141,000. The transaction was recorded using the
purchase method of accounting. 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
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.
<PAGE>
During the second quarter, the Company partnered with Automated Payment Services
("APS"), and MBNA to strengthen and streamline the financing program and
administration of the Nutripure dealer program. Under the unique Nutripure
program, independent water treatment dealers may now offer credit to all
prospective customers because the Nutripure programs offers competitive,
risk-based interest rates. In addition, through APS, dealers can obtain
real-time processing and approval information online for their customers.
Revenues from the Nutripure water treatment dealer program continue to ramp up.
The dealer base grows steadily, and Management believes that the program will
accelerate through the second half of the year.

Throughout the nine-month period, 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 nine months ended April 30, 2001, the Company's current assets to
liabilities ratio decreased from 5.02 to 2.83. Current assets decreased $709,300
from $2,794,400 to $2,084,800. The change in current assets during the nine
months ended April 30, 2001 include a decrease of $601,200 in cash on hand and a
decrease of $204,900 in restricted cash which was pledged against a line of
credit that was paid off during the period. Accounts and notes receivable,
inventories and prepaid expenses increased slightly during the recent nine
months. Current liabilities rose $181,600 which was mainly a result of an
increase in accounts payable. Notes payable decreased $210,600 as the Company
paid off it's line of credit but increased $200,000 by the sale of convertible
debentures described below.

Cash flows used from operations were $1,488,100 in the first nine months of
fiscal year 2001. Cash flows used from operations were $1,213,000 for the same
period in 2000. For those periods, cash flows used in investing activities
included, respectively, $85,100 and $316,900 for the purchase of fixed assets.
Cash flows from financing activities were $971,800 during the current period
which included the following common stock transactions:

     1.   A $250,000 private placement in October 2000 in which the Company
          issued 94,340 shares of common stock to six investors at $2.65 per
          Unit.
     2.   A $250,002 private placement in January 2001 in which the Company
          issued 83,334 shares of common stock to six investors at $3.00 per
          Unit. Each Unit contained one share of common stock and a warrant to
          acquire an additional share of common stock for $4.00 per share up to
          January 28, 2003.
     3.   A $225,000 private placement in April 2001 in which the Company issued
          150,000 shares of common stock to four investors at $1.50 per Unit. As
          part of this registration the Company also issued $200,000 of
          convertible debentures at 10% interest due July 31, 2001. The holders
          of this debenture are entitled to convert all or any amount over
          $10,000 of principal face amount and accrued interest into Units each
          consisting of one share of Common Stock and a Common Stock Purchase
          Warrant. The conversion price for each Unit shall equal 80% of the
          average closing bid price for the five trading days immediately
          preceding the receipt of Notice of Conversion.
     4.   In November 2000, Innovative Medical Services acquired 100% of the
          stock of ETIH2O, Inc., a Florida corporation, for approximately 56,400
          shares of IMS stock valued at approximately $141,000. The transaction
          was recorded using the purchase method of accounting.
     5.   In addition, approximately $151,000 was received from exercise of
          outstanding stock options.

In the prior nine month period cash flows from financing activities were
$2,923,000 which included $2,596,500 received through private placements of IMS
and Nutripure.com. The total decrease in cash and cash equivalents for the 2001
nine-month period was $220,100 as compared to an increase of $1,413,200 during
the same period in 2000.
<PAGE>
PART 2   OTHER INFORMATION

ITEM 1
LEGAL PROCEEDINGS

There have been no developments in the case involving the Company and Zedburn
Corporation et al in Circuit Court of Pinellas County, Florida as previously
discussed. Rulings on motions are on appeal, and as of June 14, 2001, no rulings
have been received.

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.
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. The Company alleges Fresh Water
Systems and its 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. 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. In September 2000, the action was removed to the Federal Court
for the Southern District of California. On March 5, 2001 Defendant's motion to
"Dismiss for Lack of Personal Jurisdiction" was granted.. The Company filed an
appeal on April 5, 2001. This matter is now before the United States Court of
Appeals for the Ninth Circuit.

On April 12, 2001, NVID, International, Inc. filed a declaratory judgment action
in the Circuit Court of Pinellas County, Florida against the Company and
ETI-H2O, Inc. The lawsuit seeks a judicial declaration that the Manufacturing,
Licensing and Distribution Agreement, dated March 26, 2000 between the Company,
NVID, International, Inc. and ETI-H2O does not constitute a binding contract and
seeks unspecified damages. The lawsuit does not challenge the binding effect of
the Standard Manufacturing Agreements dated November 30, 1998 and September 17,
1999 between NVID, International, Inc. and ETI-H2O and the November 24, 1999
License Agreement between the Company and NVID, International, Inc.

On May 17, 2001, the Company and ETI-H2O removed NVID'S declaratory judgment
action from Pinellas County Circuit Court to the United States District Court
for the Middle District of Florida. The Company and ETI-H2O has filed a Motion
To Dismiss, which is currently pending.

On May 7, 2001, the Company and EIT-H2O filed a separate action, a Petition to
Compel Arbitration, in the United States District Court for the Southern
District of California based on arbitration clauses contained in the March 26,
2000 and November 24, 1999 agreements. Contemporaneously with filing the
Petition, the Company and ETI-H2O filed a demand for arbitration against NVID,
International, Inc. with the American Arbitration Association ("AAA") in San
Diego, California. NVID, International, Inc. has notified AAA that it objects to
the arbitration demand. The Company's Petition to compel Arbitration is
scheduled to be heard in July 2001.

<PAGE>
ITEM 2.
CHANGES IN SECURITIES
In February 2001, the Company issued 20,000 shares of common stock to a single
investor in settlement of a debt of ETI H2O, Inc.

With respect to these shares, the Company relied on Section 3(a)(10) of the
Securities Act of 1933, as amended as the shares were a security issued in
exchange for a bona fide outstanding claim where the terms and conditions of
such issuance and exchange have been approved, after a hearing by a court of the
United States.

In April 2001, the Company issued 150,000 shares of common stock in a private
placement to four investors at $1.50 per Unit. In April, the Company also issued
$200,000 of convertible debentures at 10% interest due July 31, 2001. The
holders of this debenture are entitled to convert all or any amount over $10,000
of principal face amount and accrued interest into Units each consisting of one
share of Common Stock and a Common Stock Purchase Warrant. The conversion price
for each Unit shall equal 80% of the average closing bid price for the five
trading days immediately preceding the receipt of Notice of Conversion. The
exercise price of the Warrants shall equal 120% of the average closing bid price
for the five trading days immediately preceding the receipt of Notice of
Conversion.

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
                  The Company filed a Report on Form 8-K on May 24, 2001
                  regarding the current IMS/ETI-H2O Manufacturing, Licensing and
                  Distribution Agreement with NVID. The entire contract was
                  filed as an exhibit.

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/ Garu Brownell
                          -----------------------
                          Gary Brownell, Chief Financial Officer