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 October 31, 1999


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

                         Commission File number 0-21019


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


                  California                         33-0530289
                  ----------                         ----------

        (State or other jurisdiction
       of incorporation or organization)    (IRS Employer Identification No.)


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


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

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

         State the number of shares  outstanding of each of the issuer's classes
of common equity as of the latest practicable date: 4,552,242 as of December 14,
1999.





<PAGE>



INNOVATIVE MEDICAL SERVICES
INDEX

PART 1.  FINANCIAL INFORMATION
         Item 1.  Financial Statements
                  Balance Sheets as of July 31, 1999 and October 31, 1999
                  Statements  of  Operations  for the three  months  ended
                  October 31, 1998 and 1999  Statements  of Cash Flows for
                  the three months ended October 31, 1998 and 1999
         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


<PAGE>

ITEM 1


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

CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                 (Unaudited)
                                                                 October 31     July 31
ASSETS                                                              1999         1999
                                                                 ----------------------
 <S>                                                               <C>          <C>
Current Assets
     Cash and cash equivalents                                    $ 22,248     $ 22,056
     Restricted cash                                               201,462      205,574
     Accounts receivable, net of allowance for doubtful
         accounts of $ 17,850                                    1,231,289      790,166
     Notes receivable                                              339,975      339,524
     Inventories                                                   776,833      719,972
     Prepaid expenses                                               65,559       37,078
                                                                   -------       ------

         Total current assets                                    2,637,366    2,114,370
                                                                ----------    ---------

Property, Plant and Equipment
     Property, plant and equipment                                 819,487      805,523
                                                                  --------      -------

         Total property, plant and equipment                       819,487      805,523
                                                                  --------      -------

Noncurrent Assets
     Deposits                                                       13,083        6,575
     Patents and license                                           428,550      425,550
     Goodwill                                                      254,789      256,422
     Other intangible assets                                       351,000      353,250
     Deferred acquisition costs                                     53,851       53,851
                                                                   -------       ------

         Total noncurrent assets                                 1,101,274    1,095,648
                                                                ----------    ---------

     Total assets                                             $  4,558,126  $ 4,015,541
                                                              ============  ===========
</TABLE>



<TABLE>
<CAPTION>

LIABILITIES AND STOCKHOLDERS EQUITY
<S>                                                               <C>          <C>
Current Liabilities
     Accounts payable                                            $ 683,301    $ 594,948
     Accrued liabilities                                            13,088       43,068
     Notes payable                                                 567,367      446,067
                                                                  --------      -------

         Total current liabilities                               1,263,757    1,084,083
                                                                ----------    ---------

Stockholders' Equity
     Class A common stock, no par value: authorized
         20,000,000 shares, issued and outstanding
          4,552,242 at October 31, 1999 and
          4,392,242 at July 31, 1999                             6,880,068    6,663,318
     Class A warrants: issued and outstanding 3,687,500
         warrants                                                  108,750      108,750
     Accumulated deficit                                        (3,694,448)  (3,840,610)
                                                               -----------  -----------

         Total stockholders' equity                              3,294,370    2,931,458
                                                                 ---------    ---------

     Total liabilities and stockholders' equity                $ 4,558,126  $ 4,015,541
                                                              ============  ===========
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

CONSOLIDATED STATEMENTS OF INCOME (Uuaudited)

                                                             For the Three Months Ended
                                                                      October 31
                                                                1999             1998
<S>                                                          <C>             <C>
Net sales                                                     $ 904,888       $ 795,519
Cost of sales                                                   410,213         282,289
                                                               --------         -------

Gross profit                                                    494,675         513,230
                                                               --------         -------

Selling expenses                                                112,704          71,306
General and administrative expenses                             198,085         268,638
Research and development                                         38,603          38,037
                                                                -------          ------

Total operating costs                                           349,391         377,982
                                                               --------         -------

Operating income (loss)                                         145,284         135,248
                                                               --------         -------

Other income and (expense):
Interest income                                                   1,078           2,693
                                                                 ------           -----

Total other income (expense)                                      1,078           2,693
                                                                 ------           -----

Income (loss) before income taxes                               146,361         137,941

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

Net income (loss)                                            $  146,161      $  137,741
                                                             ==========       =========


Net income (loss) per common share (basic)                      $  0.03          $ 0.04
                                                                =======          ======
Net income (loss) per common share (diluted)                    $  0.02          $ 0.02
                                                                =======          ======

                                                         Three Months
                                                             Ended            Year Ended
                                                          October 31        Ended July 31
CONSOLIDATED STATEMENTS OF ACCUMULATED DEFICITS              1999               1999
--------------------------------------------------------------------------------------------

Balance, beginning of period                             $ (3,842,457)     $ (4,101,330)

Net income (loss)                                             146,161           258,873
                                                             --------           -------

Balance, end of period                                   $ (3,696,296)      $(3,842,457)
                                                         =============     =============
</TABLE>


<PAGE>

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
<TABLE>
<CAPTION>

                                                                    For the Three Months Ended
                                                               October 31
                                                                  1999                     1998
                                                                  ----                     ----
<S>                                                         <C>                 <C>
Cash flows from operating activities
   Net income (loss)                                         $ 146,161            $ 137,741,161

   Adjustments to reconcile net income to net cash
   provided by operating activities:
        Depreciation                                            42,484                   35,786
   Changes in assets and liabilities:
        (Increase) decrease in restricted cash                   4,113                    1,507
        (Increase) decrease in accounts receivable            (441,123)                (360,418)
        (Increase) decrease in notes receivable                   (452)                 (16,510)
        (Increase) decrease in prepaid expense                 (28,481)                   1,030
        (Increase) decrease in inventory                       (56,861)                (164,775)
        (Increase) decrease in deposits                         (6,508)                  (3,000)
        (Increase) decrease in patent and licenses              (3,000)                (347,271)
        (Increase) decrease in deferred acquisition costs            -                1,051,422
        (Increase) decrease in goodwill                          1,633                 (261,322)
        (Increase) decrease in intangible assets                 2,250                 (360,000)
        Increase (decrease) in accounts payable                 88,353                  161,171
        Increase (decrease) in accrued liabilities             (29,980)                 (41,413)
                                                              --------                ---------
                                                                                                                  -
             Net cash provided (used) by operating                                                                -
                    activities                                (281,410)                (166,052)
                                                              --------                 --------

Cash flows from investing activities
      Purchase of property, plant and equipment                (56,448)                 (54,266)
                                                              --------                  -------

            Net cash (used) in investing activities            (56,448)                 (54,266)
                                                              --------                  -------

Cash flows from financing activities
      Increase (decrease) in notes payable                     121,300                  213,634
      Proceeds from sale of common stock                       216,750                        -
                                                              --------                  -------
                                                                                             -
            Net cash provided by financing activities          338,050                  213,634
                                                               -------                  -------

            Net increase (decrease) in cash and cash
                equivalents                                        192                   (6,684)

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

Cash at end of period                                         $ 22,248                 $ 41,566
                                                             =========                 ========

Interest paid                                                 $ 16,299                  $ 9,797
Taxes paid                                                    $    800                  $   800

</TABLE>

<PAGE>


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

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

OVERVIEW

Innovative   Medical   Services  (the   Company)  is  the  nation's   leader  in
pharmaceutical  water  purification.  The Company is engaged  principally in the
business of manufacturing and marketing the Fillmaster(R), a water purification,
measuring and  dispensing  apparatus  used in pharmacies  to  reconstitute  oral
antibiotic  suspensions.  Innovative  Medical  Services  has  also  entered  the
consumer market with its Nutripure(R)line of residential drinking water systems.
The Company markets,  for both product lines,  proprietary  filters that require
changing at  intervals  of nine to twelve  months or whenever  indicated  by the
systems' water quality monitors. The filter replacements represent a significant
continuing source of sales and cash flow to the Company.

In the past three years,  Innovative  Medical  Services  has  launched  five new
products: the Fillmaster(R)1000e,  the Scanmaster(R),  and three products in the
Company's  Nutripure(R)line of residential  drinking water systems.  The Company
continued  its  marketing  campaigns to expand into new markets  while  pursuing
development of future products.

Innovative  Medical  Services'  customer  base  for  its  pharmaceutical   water
purification  systems includes  Wal-Mart,  Walgreens,  American Stores,  Eckerd,
Kroger, Fred Meyer,  Target and CVS, and IMS' expertise in pharmaceutical  water
systems provides a strong foundation for its "pharmacist  recommended" Nutripure
line of residential  water  filtration  systems.  The Company's  Nutripure Elite
reverse  osmosis  residential  water  system  usually  retails for $499,  and is
available as either a convenient,  compact,  unit easily  installed  beneath the
sink, or an attractive,  counter-top  appliance  requiring no installation.  The
Nutripure  2000  countertop  water filter  retails for $79.99 and competes  with
PUR(R), Brita(R)and Culligan(R)products.

In addition,  Innovative  Medical  Services markets the  Medifier(TM),  a unique
magnifying device for use with any size prescription  bottle label,  targeted to
the growing elderly  population.  The Medifier  represents a low-cost entry into
the  retail  pharmacy  market and will be sold  through  the  Company's  current
distribution  channels as well as through  catalogues and  promotional  products
distributors.

Innovative Medical Services also owns Export Company of America, Inc. (EXCOA), a
Nevada corporation that holds and operates the Company's Brazilian export/import
operation.  The Company distributes medical, dental and veterinary supplies into
Brazil  and  plans to use this  distribution  conduit  for the  Company's  water
filtration products.

During the first quarter of the fiscal year, the Company  continued its progress
on three major projects which,  when fully launched,  should create  significant
quantum  growth  for the  Company:  1) Retail  rollout of the  Nutripure  2000CT
countertop  water  filtration  system;  2)  expansion  of the  Company's  online
retailing  initiative  through the addition of vitamins and  supplements  to the
Company's  existing  product  line;  and 3)  Addition  of  patented  ionic water
treatment and disinfecting technologies.

The Nutripure 2000CT  residential  countertop  water filtration  system has been
very well received by the mass merchandisers and is undergoing final evaluations
in several  chains.  The online  retailing  expansion  to include  vitamins  and
supplements  should  be  completed  within 30 days.  Both  retail  programs  are
strongly  supported by IMS' internet  market  presence,  and the Company expects
these two projects to dramatically accelerate the Company's growth. As mentioned
earlier, marketing for the Company's products is supported by consumer targeted,
e-commerce advertising campaigns on AOL(R)(NYSE:  AOL),  Yahoo(R)(NASDAQ:  YHOO)
and Lycos(R)(NASDAQ:  LCOS). The Company's products can be purchased online from
IMS'  Yahoo!(R)Store  at  stores.yahoo.com/nutripure  or from  its  web  site at
www.imspure.com.

As  announced  in November and December  1999,  Innovative  Medical  Services is
entering  into  licensing   agreements  for  three  ionic  water  treatment  and
disinfecting  technologies.  Innovative  Medical  Services  expects to  generate
immediate  revenues from sales of RMS technology in the hospital  market because
the system solves a very serious problem in hospital  infrastructures.  Hospital
water  systems  can  harbor  bacteria,   including   Legionella--  the  bacteria
responsible  for  Legionnaires'  disease,  which can be deadly to patients  with
compromised immune systems. The RMS integrates with a hospital's water system to
control and eliminate bio-film buildup. Treatment of hospital water could reduce
or  eliminate  patient  infections  and death  resulting  from  Legionella,  and
national attention has focused on Legionnaires'  disease as a critical threat to
hospital patients.

<PAGE>

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

RESULTS OF  OPERATIONS  FOR THE THREE MONTHS ENDED OCTOBER 31, 1999 VERSUS THREE
MONTHS ENDED OCTOBER 31, 1998

Total  revenues of $904,900 in the first quarter ended October 31, 1999 were 14%
higher than the $795,500 in revenues reported for the same quarter ended October
31, 1998. Fillmaster Purification System sales in the 1999 quarter were $609,000
and  replacement  filter sales were  $192,300.  In the 1998 quarter,  Fillmaster
Purification  System  sales were  $620,100  and  replacement  filter  sales were
$157,600.  Although  system  sales  decreased  2%  during  the  current  period,
replacement filter sales rose 22% as expected due to the continually  increasing
number of Fillmaster(R)  Purification Systems in use. The decrease in Fillmaster
system revenues reflects the Company's  offering of penetration  pricing to gain
access to a new national chain customer during the quarter.  The remaining sales
during the current period came from retail and international sales that were not
available to the company during the prior quarter ending October 31, 1998.

Gross  profit in the most recent  quarter was  $494,700  versus  $513,200 in the
year-earlier  quarter.  Gross profit  percentage  of 55% in the 1999 quarter was
lower  versus the 65% gross profit  percentage  in the 1998  quarter.  The gross
profit percentage  decrease  reflects the combination of penetration  pricing as
mentioned  above  and  the  Company's   addition  of  sophisticated   technology
components in its newer products.

Income for the quarter ended October 31, 1999 was $146,200  versus  $137,700 for
the same quarter in 1998. The increased income was due to increased sales volume
during the period.

LIQUIDITY AND CAPITAL RESOURCES

During the three months ended October 31, 1999 the Company's  current  assets to
current  liabilities  ratio  rose from 1.32 to 2.09.  Current  assets  increased
$523,000  from  $2,114,400  to  $2,637,400.  Current  assets at October 31, 1999
include an increase of $441,100 of accounts  receivable  on higher sales volume.
Inventories  increased  $56,900  from  $720,000 to $776,900 on  anticipation  of
increased sales of the new electronic  dispenser.  Current liabilities increased
$179,700 from $1,084,100 to $1,263,800.  The increase in current liabilities was
the  result  of  increased  accounts  payable  associated  with a  corresponding
increase in accounts receivables and inventories.  Also, the company borrowed an
additional $121,300 on its credit facility during the period.

Cash flows used by operations  were $284,400 in the first three months of fiscal
year 1999.  Cash flows used by  operations  were $166,100 for the same period in
1998.  For those  periods,  cash flows used in  investing  activities  included,
respectively,  $56,400 and $54,300 for the purchase of machinery  and  equipment
and for leasehold  improvements.  Investing  activities  included an increase of
$121,300  in notes  payable in the  current  quarter  compared to an increase of
$213,600 in the prior quarter ending October 31, 1998. Also,  during the current
quarter,  the Company  received  $200,000 ($1.25 per share) from the issuance of
160,000  shares of common  stock to an  accredited  investor  during the current
quarter.  With respect to the sale made,  the Company  relied on Section 4(2) of
the Securities Act of 1933, as amended.  No advertising or general  solicitation
was  employed  in  offering  the  securities.  The  securities  were  offered to
accredited  investor  who was  provided  all of the current  public  information
available on the Company.

The total  increase in cash and cash  equivalents  for the quarter ended October
31,  1999 was $200 as compared  to a decrease  of cash and cash  equivalents  of
$6,700 for the same period in the prior fiscal year. u



<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 October
26, 1999, no ruling has been received on the Company's Appeal.

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

ITEM 2.
CHANGES IN SECURITIES

In  September  1999,  the Company  issued  160,000  shares of common stock to an
accredited investor for $200,000 ($1.25 per share) in a private placement of the
shares.

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


<PAGE>



ITEM 3.
DEFAULTS UPON SENIOR SECURITIES
Not applicable.

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

ITEM 5.
OTHER INFORMATION
Not applicable.

ITEM 6.
EXHIBITS AND REPORTS ON FORM 8-K
         (A)      EXHIBITS
                  EXHIBITS DESCRIPTION
                           11    Statement re: computation of per share earnings
                           27    Financial data schedule
         (B)      REPORTS ON FORM 8-K
                  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

By:

/s/ GARY BROWNELL
-----------------
Gary Brownell, Chief Financial Officer
<PAGE>