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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-K

<Table>
<C>        <S>
   /X/     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934
</Table>

                    FOR THE FISCAL YEAR ENDED JUNE 30, 2001

                        COMMISSION FILE NUMBER: 0-37159

                                  IOMED, INC.
             (Exact name of registrant as specified in its charter)

<Table>
<S>                                            <C>
                 UTAH                                       87-0441272
    (State or other jurisdiction of                      (I.R.S. Employer
    incorporation or organization)                     Identification No.)
</Table>

                2441 SOUTH 3850 WEST, SALT LAKE CITY, UTAH 84120
              (Address of principal executive offices) (Zip Code)

                                 (801) 975-1191
              (Registrant's telephone number, including area code)

      Securities registered pursuant to Section 12(b) of the Exchange Act:
                           COMMON STOCK, NO PAR VALUE

    Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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 / /

 .

    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /

    The aggregate market value of the Registrant's voting stock held by
non-affiliates based upon the closing price of the common stock as quoted on the
American Stock Exchange on August 31, 2001, was approximately $13,450,100.

    The number of shares of Registrant's common stock outstanding on August 31,
2001, was 6,544,670.

                      DOCUMENTS INCORPORATED BY REFERENCE

    Certain information is incorporated into Part III of this Report on
Form 10-K by reference to the Registrant's Proxy Statement for its 2001 Annual
Meeting of Shareholders.

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                               TABLE OF CONTENTS

<Table>
<Caption>
                                                                                      PAGE
PART I                                                                              --------
<S>        <C>        <C>                                                           <C>
  Item 1   --         Business....................................................       3
  Item 2   --         Properties..................................................      14
  Item 3   --         Legal Proceedings...........................................      14
  Item 4   --         Submission of Matters to a Vote of Security Holders.........      14

PART II
  Item 5   --         Market for Registrant's Common Equity and Related
                      Stockholder Matters.........................................      15
  Item 6   --         Selected Consolidated Financial Data........................      16
  Item 7   --         Management's Discussion and Analysis of Financial Condition
                      and Results of Operations...................................      17
  Item 7a  --         Quantitative and Qualitative Information about Market
                      Risk........................................................      27
  Item 8   --         Financial Statements and Supplementary Data.................      27
           --         Audited Financial Statements................................   28-43
  Item 9   --         Changes and Disagreements with Accountants on Accounting and
                      Financial Disclosure........................................      27

PART III
  Item 10  --         Directors and Executive Officers of the Company.............      44
  Item 11  --         Executive Compensation......................................      44
  Item 12  --         Security Ownership of Certain Beneficial Owners and
                      Management..................................................      44
  Item 13  --         Certain Relationships and Related Transactions..............      44

PART IV
  Item 14  --         Exhibits, Financial Statement Schedules, and Reports on Form
                      8-K.........................................................      44

Signatures........................................................................      47
</Table>
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                                     PART I

ITEM 1. BUSINESS

FORWARD-LOOKING STATEMENTS

    Certain statements contained in this report on Form 10-K (the "Report") are
"forward-looking statements" within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended. Such forward-looking statements may be
identified by the use of terminology such as "may," "will," "expect,"
"anticipate," "intend," "designed," "estimate," "should," or "continue" or the
negatives thereof or other variations thereon or comparable terminology. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements of
IOMED, Inc. and its subsidiary Dermion, Inc. (collectively the "Company"), or
industry results, to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. These risks, uncertainties and other factors include, among other
things, the following: the Company's sporadic history of profitability and the
continuing uncertainty of its profitability; the Company's ability to develop
and introduce new products; the uncertainty of market acceptance of the
Company's new and existing products and their market penetration; the
uncertainties related to the Company's product development programs; the
Company's reliance on collaborative partners and licenses; the Company's limited
sales, marketing and distribution experience and current dependence on
distributors; the risks associated with obtaining governmental approval of the
Company's products; the highly competitive industry in which the Company
operates and the rapid pace of technological change within that industry; the
uncertainty of patented and proprietary technology protection and the Company's
reliance on such patented and proprietary technology (including reliance on
technology licensed from third parties); changes in or failure to comply with
governmental regulation; the uncertainty of third party reimbursement for the
Company's products; the Company's dependence on key employees; general economic
and business conditions and other factors discussed in this Report and the
Company's other Securities Exchange Commission ("SEC") filings. The Company
undertakes no obligation to update publicly any forward-looking statements for
any reason, even if new information becomes available or other events or
circumstances occur in the future.

INTRODUCTION

    The Company was incorporated in Utah in 1974 as Motion Control, Inc. In
1987, the Company merged with JMW Acquisition Corporation, and the name of the
merged entity was changed to IOMED, Inc. The Company is a specialty
pharmaceutical company focused on satisfying substantial unmet medical needs in
large pharmaceutical markets. Presently, the Company is concentrating the
majority of its research and development efforts in ophthalmics, where it seeks
to pioneer the non-invasive treatment of age-related macular degeneration
("AMD") and posterior uveitis through the development of proprietary ophthalmic
pharmaceutical systems to deliver therapeutics to the back of the eye.

    The Company is funded, in part, by its established business engaged in the
manufacture and sale of iontophoretic pharmaceutical systems primarily used to
treat acute local inflammation in the sports and occupational medicine and
physical therapy markets. The Company's active drug transport systems employ
iontophoresis as a non-invasive method of enhancing and controlling the
transport of water-soluble ionic drugs into and through the skin and other body
tissues using a low-level electrical current. The Company currently markets two
products, an iontophoretic system used to deliver a potent corticosteroid in the
treatment of acute local inflammatory conditions and an iontophoretic system
used to deliver Iontocaine-Registered Trademark-, the Company's brand of
lidocaine HCl 2% and epinephrine 1:100,000, for the administration of local
dermal anesthesia. More than 14 million treatments have been clinically

                                       3
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administered using the Company's products to treat patients, including top
professional and semi-professional athletes and sports teams.

COMMERCIAL BUSINESS

    The Company is currently developing, manufacturing and commercializing
proprietary products used in the non-invasive delivery of drugs to treat acute
local inflammation and to administer local dermal anesthetics. The Company's
proprietary, patented system (the "Phoresor-Registered Trademark- System") is
designed for clinical use and is comprised of a reusable dose controller and
single use, disposable active transdermal patch kits. The dose controller
incorporates an advanced microprocessor to precisely control drug dosage through
the Company's proprietary patch kits, which include IOGEL-TM-,
TransQ-Registered Trademark- and Anestrode-Registered Trademark- patches.

    Using the Company's Phoresor System, medical professionals are able to
deliver dexamethasone, a potent and effective corticosteroid, to treat local
inflammatory conditions. Because of the negative side effects often associated
with the oral or injectable administration of dexamethasone, it is used only as
a second- or third-line therapy. Using the Company's technology, the
administration of these drugs without the occurrence of negative side effects is
possible. The Company's solutions have been used for site-specific
corticosteroid therapy in clinics nationwide to treat a variety of conditions,
including those suffered by top professional and semi-professional athletes in
football, baseball, basketball, hockey, golf and skiing.

    The Company also markets a specialty pharmaceutical product, Numby
Stuff-Registered Trademark-, for the delivery of Iontocaine. Numby Stuff offers
non-invasive, needle-free local dermal anesthesia in as little as 10 minutes,
and can be used prior to needle sticks, IV starts, lumbar punctures, PICC
insertions, and fine needle and skin biopsies. The product is primarily used in
the pediatrics market.

MARKET OPPORTUNITIES

    The Company is leveraging its knowledge and experience in the development
and manufacture of active drug transport systems to expand its presence into
other markets. The Company's goal is to market its systems under Food and Drug
Administration ("FDA") approved New Drug Applications ("NDA"). These systems
would include a unit dose of drug together with an iontophoretic patch kit,
which the Company believes would make the products reimbursable as a
prescription pharmaceutical product.

    The Company has refined its business development strategy to focus a
majority of its internal product development resources on specific market
opportunities in ophthalmics. The Company believes specialty pharmaceuticals
combined with its unique active drug transport systems may be effectively
applied in site-specific therapeutic applications in this area. Current methods
for delivering therapeutic levels of drug into the eye using oral or infusion
therapies are very difficult. Local intraocular injections or implants are often
used, but they are not practical for either patients or physicians. In addition,
these methods are inherently risky due to the potential for bleeding, infection
or retinal detachment. The Company believes its drug transport systems are
capable of delivering potent drugs safely and site specifically. The ability to
accomplish this without needles or systemic side effects could give the Company
a significant competitive advantage. The Company has chosen to focus on
ophthalmics because it believes that its specialty pharmaceutical products offer
a solution or a significant improvement to currently unmet medical needs in this
area. The Company is pursuing the development of new ophthalmic pharmaceutical
products both internally and through strategic collaborations and partnerships.

    Following the inconclusive findings of its confirmatory Phase III clinical
study for the delivery of dexamethasone, and due to financial and other resource
constraints, the Company has currently suspended further development efforts
under its acute local inflammation program. The Company may

                                       4
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seek corporate development partners or other strategic funding sources prior to
any continuation of this development program. The Company continues to
manufacture and sell the Phoresor system into the sports and physical therapy
markets for use in the treatment of acute local inflammation.

PRODUCTS AND PRODUCTS UNDER DEVELOPMENT

    The Company currently has potential products in pre-clinical development for
the treatment of ophthalmic diseases and acute local inflammation. The following
table lists the therapeutic applications of the principal products developed or
currently under development by the Company. This table is qualified in its
entirety by reference to the more detailed descriptions set forth elsewhere in
this Report. There can be no assurance that any product under development will
be developed successfully or approved in a timely manner, if at all, or even if
developed or approved, be successfully manufactured or marketed. In addition,
the status of development indicated below does not necessarily indicate the
order in which the products shown may be submitted to or approved by the FDA.

<Table>
<Caption>
APPLICATION                    THERAPEUTIC AGENT              PRODUCT STATUS
-----------                    -----------------              --------------
<S>                            <C>                            <C>
Ophthalmic diseases            Undisclosed compound           Preclinical
Acute local inflammation       None specified                 Currently marketed (1)
Acute local inflammation       Dexamethasone                  Under evaluation (2)
Local dermal anesthesia        Iontocaine                     Currently marketed
</Table>

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

(1) Currently marketed under a 510(k) clearance for use with "ions of soluble
    salts or other drugs."

(2) In April 2001, a confirmatory Phase III clinical study failed to reach its
    primary endpoints. Further development has been suspended as of June 30,
    2001.

OPHTHALMIC DISEASES

    The Company believes that significant opportunity exists in the ophthalmic
pharmaceutical marketplace due to large patient populations with sight
threatening medical needs that are unmet. AMD and diabetic retinopathy ("DR")
are the major causes of visual impairment in the United States and Europe. Both
AMD and DR are conditions caused by angiogenesis (unwanted blood vessel growth)
resulting in neovascularization that damages the retina and ultimately causes
blindness. Posterior uveitis and retinitis secondary to glaucoma also contribute
considerably to loss of sight worldwide. A common characteristic among all of
these conditions is their location at the back of the eye, where drug treatment
is difficult to administer. The Company estimates that the worldwide market
potential for therapeutics to treat these conditions is in excess of
$9 billion.

    Laser photocoagulation therapy ("LPC") using a thermal laser has been used
to treat the later stages of neovascular AMD for more than 20 years. Laser
therapy has been shown to delay severe visual loss in some patients. However, it
is potentially useful for only 15% of all cases and approximately half of
patients treated with LPC suffer a recurrence.

    In 2000, Visudyne-Registered Trademark-, a pharmaceutical product developed
by QLT Inc. and marketed by Novartis Ophthalmics, became the first drug approved
for the treatment of AMD. Photodynamic therapy ("PDT") combines intravenous drug
administration with non-thermal laser treatment of the eye and is indicated for
the treatment of advanced AMD.

    Both LPC and PDT destroy tissue in the retina and provide benefits only at a
relatively late stage of the disease, after the abnormal neo-vascular tissue is
visible and has already damaged the retina. Furthermore, lasers are surgical
modalities, which do not address the root cause of the disease, and therefore
recurrence of the disease is frequent. Thus, a key potential advantage of drug
therapy is that it may be undertaken at an early stage of the disease, and may
prevent the evolution of the disease before the retina has been severely
damaged. In addition, drugs may be better suited for chronic

                                       5
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maintenance therapy, because drugs may be administered repeatedly, and the dose
may be adjusted according to disease activity.

    Numerous generic (off-patent) and proprietary (on-patent) drugs have the
inherent pharmacological properties to treat common site-threatening diseases in
the back of the eye, including AMD, DR, posterior uveitis and other conditions.
However, current drug delivery methods which include intravenous, oral, topical
(eye drops), intraocular injections and surgical implants all have limitations
that potentially affect their technical as well as their commercial viability in
the treatment of these diseases.

    Even the best drug will not be an effective treatment for AMD, DR, or
posterior uveitis unless it can be delivered in adequate quantities to the
retina. Given the limitations inherent in the drug delivery methods noted above,
it seems likely that non-invasive, site-specific ocular delivery is the optimum
way to minimize side effects while ensuring adequate drug levels in the retina.

    Furthermore, the complex physiology of the human eye presents unique
problems for drug delivery, which are not optimally addressed by current ocular
drug delivery methods. These problems include the relative lack of blood vessels
in the internal regions of the eye and the resulting blood-ocular barrier, the
extremely rapid blood flow within the capillaries behind the retina and the
continuous circulation of tears and other aqueous fluid both inside and on the
surface of the eye.

    PRODUCTS UNDER DEVELOPMENT.  Using its proprietary iontophoretic technology,
the Company has developed an ophthalmic drug delivery system that seeks to
address the safe and effective administration of therapeutics to the back of the
eye. The delivery system trademarked OcuPhor-TM- has been designed as a platform
technology to deliver drug compounds non-invasively and site-specifically to
posterior segments of the eye. It is an active topical method of delivery that
employs the Company's core iontophoretic drug delivery technology to deliver
drugs through the sclera (white of eye) and to the retinal tissue without
invading the integrity of the eye. OcuPhor allows for site-specific
administration of a pharmacologic agent without the collateral tissue damage
associated with surgery, lasers, needle injections or implants. The Company has
demonstrated that the OcuPhor system is capable of delivering antiangiogenics,
anti-inflammatories, antibiotics, antivirals, and neuroprotectants. The Company
believes that OcuPhor's transport capabilities are within the theoretical
therapeutic range of a variety of drugs, including small molecules as well as
some macromolecules such as oligonucleotides and small proteins.

    The Company is pursuing a three-pronged ophthalmic strategy to develop the
OcuPhor System:

    - Using the OcuPhor System, the Company is working with a specific
      undisclosed compound to develop a non-invasive, site-specific solution for
      effectively treating AMD and posterior uveitis;

    - The Company is screening additional compounds for administration using the
      OcuPhor System to treat eye diseases; and

    - The Company is working under collaborative agreements to co-develop novel
      prescription products for the non-invasive, site-specific treatment of
      diseases of the back of the eye.

    The Company and EyeTech Pharmaceuticals, Inc. have entered into an agreement
whereby the Company may develop a version of its OcuPhor system for the delivery
of EYE001, EyeTech's proprietary compound for the treatment of AMD. EyeTech will
pay for all of the development.

    The Company and Santen Pharmaceutical Co., LTD entered into an initial
development agreement whereby Santen will pay for the screening of certain
compounds for use with the OcuPhor system. A more comprehensive Development,
Commercialization and Distribution Agreement for one or more drug candidates, is
currently under discussion between the Company and Santen.

                                       6
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    In addition, the Company has selected a drug currently used to treat cancers
as an additional product for development under its ophthalmic program. Subject
to the procurement of necessary funding, the Company proposes to develop this
compound for two indications, including the treatment of "wet" AMD and posterior
uveitis. The Company may develop this product independently or with a
development and marketing partner.

    The strategy behind the OcuPhor system is based upon a the premise that
ophthalmologists would use drugs to treat "back of the eye" diseases if they had
a convenient, safe, needle-free method to repeatedly administer antiangiogenic
agents and other drugs to the diseased retina. OcuPhor may provide them with an
opportunity to supplement, and possibly replace, the surgical and systemic drug
therapies now used to treat AMD, DR, uveitis and other "back of the eye"
diseases.

ACUTE LOCAL INFLAMMATION

    Acute local inflammatory conditions resulting from exercise, sports
injuries, trauma or repetitive motion disorders are among the leading types of
injuries occurring in the workplace and among physically active adults. The most
common of these injuries include tendonitis, bursitis, carpal tunnel syndrome
and epicondylitis (tennis elbow). The Company believes iontophoretic delivery of
dexamethasone may provide significant advantages over other current treatment
regimens for acute local inflammation. The Company estimates that present retail
sales into this market by the Company and its competitors are approximately
$40 million. While the Company's products are currently used in the active
transdermal delivery of corticosteroids, including dexamethasone, the Company
believes that validation of efficacy, an approved NDA, and a strategic marketing
collaboration could expand the market potential to in excess of $540 million.

    COMMERCIAL PRODUCTS.  The Company pioneered the commercial introduction of
its active transdermal drug delivery system in 1979. The product is used
principally by physical therapists (under a doctor's prescription) and has been
administered in over 14 million patient treatments for the delivery of
corticosteroids. More than 12 million of these treatments have occurred since
1990, when advancements in patch technology made by the Company led to the
introduction of its present family of hydrogel patches for use with its
microprocessor controlled dose controllers. The Company's products are also used
by athletic trainers and physical therapists serving a number of professional
and semi-professional athletes and teams, including golfers, tennis players,
men's and women's Olympic ski teams, as well as by football, basketball and
hockey teams. The Company believes that its active transdermal drug delivery
systems have been accepted in the rehabilitation marketplace due to their ease
of use, non-invasiveness, recognized efficacy and lack of significant side
effects.

    PRODUCTS UNDER DEVELOPMENT.  During fiscal 2001, the Company completed both
a pivotal Phase III and a confirmatory Phase III clinical study for the delivery
of dexamethasone for the treatment of acute local inflammation. In May 2001, the
Company announced that the confirmatory study failed to meet the primary
clinical endpoints in the treatment of epicondylitis. The study showed a
positive response in patients treated with drug; however, increased benefit in
the study's placebo group prevented the statistical separation between the two
patient groups necessary to achieve the desired conclusions. As a result of
these study results and due to financial and other resource constraints, the
Company has currently suspended further development efforts and may seek
corporate development partners or other strategic funding sources prior to any
continuation of this development program.

    The Company continues to believe its unique drug formulation, combined with
its proprietary active transport system, addresses a significant unmet medical
need by offering patients the superior anti-inflammatory effects of
dexamethasone while avoiding all of the gastrointestinal and other systemic side
effects of NSAIDS and Cox II inhibitors.

                                       7
<Page>
LOCAL DERMAL ANESTHESIA

    Medical care providers have long recognized the importance of the management
of pain, including pain associated with certain minimally invasive medical
procedures such as needle injections; venous access (including phlebotomies and
intravenous catheterizations); lumbar punctures; and local dermatological,
gynecological and urological procedures such as wart and mole removal, biopsies
(including fine needle, punch, excisional, shave and cervical biopsies), Mohs
procedures and vasectomies. To address this concern, local dermal anesthetics
are widely used in medical practice.

    COMMERCIAL PRODUCTS.  The Company's Iontocaine is approved by the FDA under
an NDA and is specifically labeled for use with the Company's Phoresor system
and its proprietary, single use, disposable active transdermal patch kits. The
Company has received FDA labeling to use the system for all procedures requiring
local dermal anesthesia.

    The Company sells its local dermal anesthesia product into the pediatric
market under the brand name Numby Stuff. Numby Stuff is presently being used to
induce local dermal anesthesia prior to pediatric intravenous starts, blood
draws and other invasive procedures, and the Company believes it provides a cost
effective alternative to the leading topical product.

    Due to limited distribution and unfavorable reimbursement from third party
payor networks, to date, Numby Stuff has not generated significant revenues.
However, the response by medical professionals and medical organizations has
been very positive. The Company seeks to expand its sales, marketing and
distribution capabilities for this product through additional distribution
arrangements, but does not anticipate significant revenues to be generated from
this product until such distribution capabilities have been established and the
reimbursement profile improved.

IONTOPHORETIC DRUG DELIVERY TECHNOLOGY AND ITS ADVANTAGES

    Iontophoretic drug delivery systems are designed to overcome many of the
limitations associated with other drug delivery methods. Iontophoresis is an
active method of drug delivery in which water-soluble, ionized (electrically
charged) drugs are transported through the skin or other body tissues for local
or systemic therapeutic applications by applying a low-level electrical current.
The amount of drug delivered is proportional to the total electrical charge
applied (which is a function of time and current). Therefore, it is possible to
program the system's electrical current levels to control more precisely the
desired drug dose, delivery rate and the pattern of delivery.

    Among the many drug delivery methods available today, the Company believes
the advantages of iontophoretic drug delivery are many and include the
following:

    - Non-invasive, needle-free

    - Ability to provide site-specific drug delivery to avoid systemic side
      effects

    - Rapid onset and cessation kinetics

    - Controlled, programmable and titratable drug delivery capabilities

    - Ability to provide smooth, variable or bolus plasma levels, singly or in
      combination, all in a single delivery system

    - Enhanced delivery for a broad range of compounds, including large drug
      molecules such as peptides and oligonucleotides

    - Minimal variability in the delivery profiles among patients and body sites

    - Potential for enhanced patient compliance and control

                                       8
<Page>
    Although the fundamentals of iontophoresis have been understood for decades,
the method has become commercially practicable as a means of delivering drugs
only recently as a result of advances in electronics, materials science and
electrochemistry. These advances have led to the development of more efficient
and adaptable drug patches and more reliable, compact and programmable dose
controllers. The Company has an expansive portfolio of intellectual property
with which it has developed iontophoretic pharmaceutical systems that have
unique and enhanced performance characteristics, which the Company believes are
adaptable to a number of clinical settings and therapeutic applications.

PATENTS AND PROPRIETARY RIGHTS

    The Company's proprietary technology includes patents, trademarks, trade
secrets and other proprietary know-how. These technologies are used in various
combinations in the testing, evaluation and formulation of optimal ionic drug
solutions and in the research, development, design and manufacture of
microprocessor controlled power supplies and active transdermal patches which
are specifically designed and constructed for particular therapeutic
applications.

    The Company has implemented a policy of actively patenting and maintaining
as trade secrets and proprietary information all inventions and technologies
that it believes are important to its business operations. The Company generally
seeks patent protection for its key proprietary technologies in major markets in
the United States, Canada, Europe and Japan. The Company also relies on a number
of trade secrets, know-how, continuing technological innovations and licensing
opportunities to develop and maintain its competitive position.

    In March 1997, the Company acquired exclusive world-wide rights to Elan
Corporation, plc's broad base of United States and foreign patents, in vitro
drug transport data and in vivo animal and human clinical data, in addition to
other proprietary know-how in the fields of iontophoretic drug delivery and
electro-transport.

    In June 2000, the Company acquired all of the rights to the iontophoretic
intellectual property owned by Laboratories Fournier, S.C.A., a former
collaborative development partner. The purchase included patented technology,
know-how, and a 10-year non-compete agreement.

    As of June 30, 2001, the Company held or had rights to utilize approximately
79 United States patents and 371 foreign patents and has (or has the rights to
utilize) approximately 18 pending patent applications in the United States and
105 pending patent applications in foreign countries for all such technology.
The Company also owns or has licensed rights to issued and pending United States
patents governing the design and manufacture of certain myoelectric prosthetic
devices which it has sublicensed to a third party in connection with the sale of
the Company's Motion Control division in December 1996.

BUSINESS STRATEGY

    The Company's primary business goal is to establish its proprietary
pharmaceutical systems as a preferred, cost effective means of delivering drugs.
Presently, the Company is concentrating the majority of its research and
development efforts in ophthalmics, where it seeks to pioneer the non-invasive
treatment of AMD and posterior uveitis through the development of proprietary
ophthalmic pharmaceutical systems to deliver therapeutics to the back of the
eye. To achieve its goal, the Company uses its multi-disciplinary expertise in
pharmacology and drug formulation, regulatory and product testing,
microelectronics, electrochemistry, polymer chemistry, adhesives, design and
manufacturing. The Company plans to execute its business strategy by: developing
systems for off-patent drugs; increasing market penetration of existing
products; broadening its technology platform; controlling product manufacturing
processes; and entering into collaborative relationships.

                                       9
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COLLABORATIVE RELATIONSHIPS AND LICENSES

    The Company has entered into collaborative relationships or license
arrangements with Novartis Pharmaceuticals Corporation, Elan Corporation, plc,
Alza Corporation, University of Utah Research Foundation, Boston University,
Santen Pharmaceutical Co., LTD, and EyeTech Pharmaceutical, Inc.

    If the Company elects to enter into additional collaborative relationships,
potential collaborative partners may provide proprietary drugs, technology,
financial resources, research and pharmaceutical manufacturing capabilities or
marketing infrastructure to aid in the development and commercialization of the
Company's current and future products. Depending on the availability of
financial, marketing and scientific resources and other factors, the Company may
also license or cross-license its technology or products to others and retain
profit sharing, royalty, manufacturing, co-marketing, co-promotion or similar
rights.

MANUFACTURING

    The Company's manufacturing activities primarily relate to its manufacture
of active transdermal patch kits, which are manufactured and assembled using
several proprietary materials, components, processes and production technologies
developed by the Company in conjunction with its equipment and materials
suppliers. The Company has manufactured internally all of the drug patches it
has sold, and believes its patch manufacturing capacity can be expanded to meet
its needs for the foreseeable future.

    The Company does not manufacture or repackage any drugs or compounds used in
its delivery systems. The Company outsources the manufacture and assembly of its
Phoresor dose controllers, which employs a variety of sub-assemblies and
components that are designed or specified by the Company. These components and
subassemblies are manufactured by third parties, and then shipped to a contract
manufacturer for final assembly. The Company's manufacturing activities for the
Phoresor are limited to design, labeling, inspection and packaging.

    The Company and certain of its suppliers are required to comply with FDA
regulations governing manufacturing practices, including the Quality System
Regulations, which mandate controls for product design, control and quality. The
Company believes it is in compliance with the Quality System Regulations. The
Company is also ISO 9001 and CE Mark certified and has Good Manufacturing
Practices ("GMP") audits conducted on a regular basis.

SALES AND DISTRIBUTION

    The Company's marketing strategy is to position its pharmaceutical products
in the marketplace as the preferred means of administration for a wide range of
drugs. The strategy employs the use of multiple sales and distribution channels,
including (i) a network of medical supply dealers; (ii) independent sales
representatives; and (iii) co-marketing through collaborative marketing partners
or distributors that have national or market-specific marketing capabilities.
The Company intends to use these distribution channels, both singly and, for
certain products, in combination, to maximize the Company's marketing resources.

    The Company currently sells the majority of its products into the physical
therapy, sports medicine and related markets. The Company employs a nationwide
network of distributors and independent sales representatives to sell and
distribute its products in those markets. This distribution network is supported
by regional business managers and internal customer service representatives who
are employees of the Company. In addition to the Company's sales and
distribution efforts for its local inflammation products in the United States,
it maintains marketing and sales activities in international markets. These
sales are made primarily through independent distributors operating in those
countries.

                                       10
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    The Company's regional business managers and internal customer service
representatives along with independent sales representatives facilitate the
sales of Numby Stuff in the pediatric hospital market. The Company desires to
expand its presence in this market through collaborative marketing partners or
through distributors that have market-specific distribution capability.

    One distributor accounted for approximately 18%, 16% and 15% of the
Company's product sales for the fiscal years ended June 30, 2001, 2000 and 1999.
Although a valued distribution channel, in the event of a loss of such customer,
the Company believes that it could continue to reach a substantial portion of
its end user customers through alternative distribution channels. Less than 10%
of product sales are to foreign customers.

GOVERNMENT REGULATION

    Both drugs and medical devices, including the Company's iontophoretic drug
delivery systems, are subject to extensive regulation by the FDA in the United
States and by comparable authorities in other foreign countries.

    The Company's iontophoretic drug delivery products involve a medical device
component, thereby subjecting such products to compliance with the FDA's
regulations governing medical devices. Where such medical devices are labeled
for use with a specific pharmaceutical product for a specific therapeutic
indication, they are subject to the FDA's regulations governing both medical
devices and pharmaceutical products. The Company believes that most, if not all,
of its future iontophoretic drug delivery systems will involve a pharmaceutical
component or specific labeling for use with a pharmaceutical product.

    Products regulated as medical devices may not be commercially distributed in
the United States unless they have been cleared or approved by the FDA.
Currently, there are two methods for obtaining FDA clearance or approval of
medical devices. Devices deemed to pose less risk are placed in class I (general
controls) or class II (general and special controls) and qualify for 510(k)
notification, a procedure under section 510(k) of the Federal Food, Drug, and
Cosmetic Act. A medical device that does not qualify for the 510(k) clearance is
placed in class III, which is reserved for devices deemed by the FDA to pose the
greatest risk. A preamendment class III device is one that was on the market
before May 28, 1976. This status means that the device at present can be
marketed through a 510(k) clearance, but it remains subject to a call for a PMA
application under section 515 of the Drug Act. A PMA application generally
requires a much more complex submission than a 510(k) notification. Typically,
it requires a showing that the device is safe and effective based on extensive
and costly preclinical and clinical testing, as well as information about the
device and its components regarding, among other things, manufacturing, labeling
and promotion.

    The regulatory status of iontophoretic devices is complex. The FDA has
classified them as class II devices eligible for marketing through 510(k)
premarket clearance when intended for use with a drug whose labeling bears
adequate directions for the device's use with that drug. However, if an
iontophoretic device is intended for use with a drug that is not labeled for use
with the device, the FDA considers the iontophoresis device to be a preamendment
class III device.

    The Company's Phoresor received 510(k) clearance as a preamendment
class III device labeled for use with ions of soluble salts or other drugs. In
1995, the FDA approved an NDA for Iontocaine to be used as a local anesthetic
and delivered iontophoretically by the Phoresor, which effectively moved the
Phoresor into class II for this intended use. Unlike Iontocaine, dexamethasone
does not have an NDA approval allowing it to be labeled for iontophoretic
delivery. Thus, at the present time, the Company's Phoresor is a preamendment
class III device when used with dexamethasone (or any drug other than
Iontocaine). The Company gives no assurance that it will ever obtain an approved
NDA for the iontophoretic delivery of any drug other than Iontocaine.

                                       11
<Page>
    In August 2000, the FDA published a proposed rule to amend the physical
medical device regulations to remove the class III iontophoresis device
identification. Because the Company's products are all approved as class II
devices, the Company does not believe that the proposed regulation would have
any effect on the Company's ability to continue the manufacturing and selling of
its current products.

    A lengthy and complex regulatory framework also applies to the labeling and
marketing of specific drugs. Generally these pharmaceutical products require the
submission of an NDA. The NDA approval process generally entails (i) conducting
preclinical laboratory and animal testing to enable FDA authorization of an IND
application, (ii) initial IND clinical studies to define safety and dose
parameters, (iii) well controlled IND clinical trials to demonstrate product
safety and efficacy, and (iv) submission to the FDA of an NDA. Preclinical
studies involve laboratory evaluation of product characteristics and animal
studies to assess the efficacy and safety of the drug. Human clinical trials are
typically conducted in three sequential phases. Phase I trials normally consist
of testing the product in a small number of healthy volunteers for safety and
pharmacokinetic parameters using single and multiple dosing regimens. In Phase
II trials, the manufacturer evaluates safety, initial efficacy, and dose ranging
of the product for specific indications in a somewhat larger patient population.
Phase III trials typically involve expanded testing for safety and clinical
efficacy in a broad patient population at multiple clinical testing centers. The
FDA, under Good Laboratory Practice regulations, regulates the preclinical and
clinical studies. Results of the studies must be submitted to the FDA for
review. The FDA may grant marketing approval, require additional testing and/or
information, or deny the application. The process of obtaining FDA approval for
a new product through this process may take several years and typically involves
substantial risks and the expenditure of substantial resources.

    The FDA regulates the Company's quality control and manufacturing procedures
by requiring it and its contract manufacturers to comply with certain standards,
including compliance with the Quality System Regulations (for devices) and
current GMP regulations (for drugs).

    The Company may be subject to certain user fees that the FDA is authorized
to collect under the Food and Drug Modernization Act of 1997, which reauthorized
the user fees established in the Prescription Drug User Fees Act of 1992 for
certain drugs.

    Agencies similar to the FDA regulate medical devices and pharmaceutical
products in most foreign countries. The International Standards Organization
(ISO) has established regulations for medical devices in the European Union.
Currently, the Company is in compliance with these ISO 9001 regulations and its
products are CE Marked. The Company will be required to meet the regulations of
any foreign country where it markets its products. In addition, various aspects
of the Company's business and operations are also regulated by a number of other
governmental agencies including the Drug Enforcement Agency, U.S. Department of
Agriculture, the Environmental Protection Agency, the Occupational Safety and
Health Administration as well as by other federal, state and local authorities.

    Noncompliance with these various government regulatory requirements could
result in enforcement actions that could include fines, plant closure, a recall
of the Company's products or other civil or criminal sanctions. Noncompliance as
well as unanticipated changes in existing regulatory requirements or adoption of
new requirements could have a material adverse effect on the Company.

COMPETITION

    The drug delivery, pharmaceutical and biotechnology industries are highly
competitive and rapidly evolving, with significant developments expected to
continue at a rapid pace. The Company's success will depend upon maintaining a
competitive position and developing products and technologies for efficient and
cost effective drug delivery. The Company's products will compete with other
formulations of drugs and with other drug delivery systems, including other
iontophoretic delivery systems. The

                                       12
<Page>
Company believes its products will compete on the basis of quality, efficacy,
cost, convenience, safety and patient compliance.

    The Company is aware of many other competitors in the general field of drug
delivery, including competitors developing injectable or implantable drug
delivery systems, oral drug delivery technologies, passive transdermal systems,
oral transmucosal systems and intranasal and inhalation systems. The Company is
also aware of other companies that have developed or are currently developing
iontophoretic and other active transdermal drug delivery systems.

    Alza, Vitaris Corporation, and Empi, Inc. are engaged in the development
and/or marketing of iontophoretic devices. Alza, a licensee of the Company, and
Vitaris are both undertaking the development of iontophoretic drug delivery
systems, but neither currently market any iontophoretic products. Empi is the
Company's primary competitor in the treatment of acute local inflammation in the
physical therapy market and, the Company estimates, controls a majority of that
market.

    In connection with their collaboration, the Company granted Novartis a
perpetual, non-exclusive, royalty-bearing license to certain iontophoretic
technology which survived the collaboration's termination. After the termination
of the collaboration on December 31, 1998, Novartis may, pursuant to the
royalty-bearing license, independently develop products using the licensed
technology, including products which may compete directly with those currently
marketed or under development by the Company

    Currently, no other company has FDA approval to market an iontophoretic
system for the inducement of local anesthesia. The Company's iontophoretic
system for delivering Iontocaine for the inducement of local dermal anesthesia
will therefore primarily compete with traditional methods of delivering local
dermal anesthetics by needle injection or will be used in circumstances where
either no anesthesia is used, due to the pain associated with the needle
injection (including needle injections themselves), or where topical anesthetic
creams are used. The most effective and widely used topical anesthetic cream,
EMLA, is manufactured and sold by Astra Corporation, a large Swedish
pharmaceutical company. There can be no assurance that the Company can
effectively compete with these products or any other drug delivery system.

EMPLOYEES

    The Company has assembled a team of medical-products managers and scientists
with considerable experience in iontophoresis encompassing all of the key
disciplines which the Company believes are necessary to further the development
and implementation of the Company's business.

    As of June 30, 2001, the Company had 76 full-time employees, 6 of whom hold
doctorate degrees and 13 others who hold advanced business or technical degrees.
Of the Company's 76 full-time employees on that date, 19 were engaged in
research and development, 29 in manufacturing and quality control, and 28 in
marketing and general administration. The Company's future success depends in
significant part upon the continued service of its key technical and senior
management personnel and its continuing ability to attract and retain highly
qualified technical and managerial personnel. None of the Company's employees is
represented by a labor union. The Company has not experienced any employee
related work stoppages and considers its relations with its employees to be
good.

DISCONTINUED OPERATIONS

    In December 1996, the Company sold the assets of the Motion Control division
for $1.0 million and granted the purchaser an exclusive, worldwide license and
sublicense to the patents, trademarks, know-how and other intellectual property
of the Company relating to that division. Under the terms of that sublicense
agreement, the Company receives license fees and royalties on future Motion
Control product sales.

                                       13
<Page>
ITEM 2. PROPERTIES

    During 2001, the Company consolidated its administrative, manufacturing
operations, and research office space into a single facility, consisting of
approximately 34,000 square feet of useable space, located at 2441 South 3850
West in Salt Lake City, Utah. The facility is leased to the Company until
April 30, 2006.   The Company believes its facilities will be adequate and
suitable for its present needs and that additional space will be available as
needed.

ITEM 3. LEGAL PROCEEDINGS

    The Company is not involved in, nor is it aware of, any litigation or
impending litigation.

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

    No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this Report.

                                       14
<Page>
                                    PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

    The Company's common stock has traded on the American Stock Exchange (the
"AMEX") since April 24, 1998, under the symbol "IOX". The following table sets
forth, for the periods indicated, the high and low sales prices as reported by
the AMEX. These prices represent quotations between dealers and do not include
retail mark-up, markdown or commission, and do not necessarily represent actual
transactions.

<Table>
<Caption>
                                                     2001                  2000
                                              -------------------   -------------------
                                                HIGH       LOW        HIGH       LOW
                                              --------   --------   --------   --------
<S>                                           <C>        <C>        <C>        <C>
First Quarter...............................   $5.250     $3.188     $3.000     $2.000
Second Quarter..............................   $6.813     $4.500     $4.250     $2.188
Third Quarter...............................   $5.750     $4.250     $7.125     $3.500
Fourth Quarter..............................   $6.200     $2.560     $6.188     $3.750
</Table>

    As of June 30, 2001, there were 118 shareholders of record of the Company's
common stock. Included in the number of shareholders of record are shares held
in "nominee" or "street" names. Because many of such shares are held by brokers
and other institutions on behalf of individual investors, the Company is unable
to estimate the total number of shareholders represented by these record
holders.

    The Company has not paid dividends to date and does not anticipate or
contemplate paying cash dividends in the foreseeable future. It is the present
intention of management to utilize all available funds for the development and
growth of the Company's business.

                                       15
<Page>
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

    The following selected statement of operations data for the years ended
June 30, 2001, 2000 and 1999, and the balance sheet data as of June 30, 2001 and
2000 are derived from the audited consolidated financial statements included in
this report and should be read in conjunction with those consolidated financial
statements and the notes thereto. The selected statement of operations data for
the years ended June 30, 1998 and 1997, and the balance sheet data as of
June 30, 1999, 1998 and 1997 are derived from the audited consolidated financial
statements of the Company, which are not included herein and are qualified by
reference to such financial statements and the notes thereto. Certain
reclassifications have been made to prior year balances to conform to the
financial statement presentation included herein.

<Table>
<Caption>
                                                                          FISCAL YEAR ENDED JUNE 30,
                                                  ---------------------------------------------------------------------------
                                                      2001           2000              1999           1998           1997
                                                  ------------   ------------      ------------   ------------   ------------
<S>                                               <C>            <C>               <C>            <C>            <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
  Product sales.................................  $ 11,203,000   $ 10,596,000      $  9,608,000   $  8,489,000   $  7,483,000
  Contract research revenues, royalties and
    license fees................................       192,000        171,000           893,000      1,788,000      1,800,000
                                                  ------------   ------------      ------------   ------------   ------------
    Total revenues..............................    11,395,000     10,767,000        10,501,000     10,277,000      9,283,000
Operating costs and expenses:
  Cost of products sold.........................     3,807,000      3,692,000         3,961,000      3,659,000      3,147,000
  Research and development......................     7,749,000      3,210,000         1,860,000      1,790,000      1,679,000
  Selling, general and administrative...........     8,414,000      5,620,000         5,393,000      5,389,000      3,501,000
  Non-recurring charges.........................            --        360,000(1)             --             --     15,059,000(2)
                                                  ------------   ------------      ------------   ------------   ------------
    Total costs and expenses....................    19,970,000     12,882,000        11,214,000     10,838,000     23,386,000
                                                  ------------   ------------      ------------   ------------   ------------
Loss from operations............................    (8,575,000)    (2,115,000)         (713,000)      (561,000)   (14,103,000)
Interest expense................................        78,000         26,000            19,000        930,000        242,000
Interest income and other, net..................       777,000        986,000           867,000        402,000        291,000
Income (loss) from continuing operations before
  income taxes and minority interest............    (7,876,000)    (1,155,000)          135,000     (1,089,000)   (14,054,000)
Minority interest...............................            --             --                --         11,000         23,000
Income tax expense..............................            --             --                --             --          5,000
                                                  ------------   ------------      ------------   ------------   ------------
Income (loss) from continuing operations........    (7,876,000)    (1,155,000)          135,000     (1,100,000)   (14,082,000)
Income from discontinued operations (3).........            --             --                --             --         44,000
                                                  ------------   ------------      ------------   ------------   ------------
Net income (loss)...............................  $ (7,876,000)  $ (1,155,000)     $    135,000   $ (1,100,000)  $(14,038,000)
                                                  ============   ============      ============   ============   ============
Diluted Per Common Share Amounts:
Income (loss) from continuing operations........  $      (1.20)  $      (0.18)     $       0.02   $      (0.29)  $      (4.52)
Income from discontinued operations.............            --             --                --             --           0.01
                                                  ------------   ------------      ------------   ------------   ------------
Net income (loss)...............................  $      (1.20)  $      (0.18)     $       0.02   $      (0.29)  $      (4.51)
                                                  ============   ============      ============   ============   ============
Shares used in computing diluted per share
  amounts (4)...................................     6,541,000      6,513,000         7,429,000      3,821,000      3,109,000

BALANCE SHEET DATA:
Cash and cash equivalents.......................  $  6,436,000   $ 15,097,000      $ 17,263,000   $ 16,709,000   $  6,346,000
Restricted cash.................................     2,655,000             --                --             --             --
Total assets....................................    16,896,000     19,916,000        20,154,000     20,200,000      8,664,000
Long-term obligations, including current
  portion.......................................     3,700,000        521,000           186,000        237,000     15,240,000(5)
Redeemable, convertible preferred shares........            --             --                --             --        900,000
Accumulated deficit.............................   (31,534,000)   (23,658,000)      (22,503,000)   (22,638,000)   (21,538,000)
Shareholders' equity (deficit)..................     9,983,000     17,713,000        18,791,000     18,651,000     (9,491,000)
</Table>

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

(1) Reflects a lease abandonment charge for facilities relocation.

(2) Reflects the write-off of certain in-process research and development
    (including related transaction costs) purchased from Elan.

(3) Discontinued operations include the operating results of the Company's
    Motion Control division, which was sold in December 1996.

(4) See Notes to Consolidated Financial Statements for information concerning
    the computation of per share amounts.

(5) Reflects $15,240,000 (including accrued interest) in notes issued to Elan at
    June 30, 1997.

                                       16
<Page>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

    THE FOLLOWING DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF THE COMPANY SHOULD BE READ IN CONJUNCTION WITH THE CONSOLIDATED
FINANCIAL STATEMENTS AND THE RELATED NOTES THERETO INCLUDED ELSEWHERE IN THIS
REPORT. THE FOLLOWING MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS CONTAINS FORWARD-LOOKING STATEMENTS, WITHIN
THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933 AND SECTION 21E OF THE
SECURITIES EXCHANGE ACT OF 1934, THAT INVOLVE RISKS AND UNCERTAINTIES. THE
COMPANY'S ACTUAL RESULTS OF OPERATIONS COULD DIFFER SIGNIFICANTLY FROM THOSE
ANTICIPATED IN SUCH FORWARD-LOOKING STATEMENTS AS A RESULT OF NUMEROUS FACTORS
DISCUSSED UNDER ITEM 1 "BUSINESS" AND ELSEWHERE IN THIS REPORT.

OVERVIEW

    The Company is a specialty pharmaceutical company focused on satisfying
substantial unmet medical needs in large pharmaceutical markets. Presently, the
Company is concentrating the majority of its research and development efforts in
ophthalmics, where it seeks to pioneer the non-invasive treatment of AMD and
posterior uveitis through the development of proprietary ophthalmic
pharmaceutical systems to deliver therapeutics to the back of the eye. The
majority of the Company's revenue has been generated through the sale of its
Phoresor system and related active transdermal drug delivery products into the
physical therapy market for use in the treatment of acute local inflammation.
Since its inception, the Company has generally incurred operating losses and it
expects to incur additional operating losses over the next several years as a
result of anticipated costs associated with a significant increase in internally
funded research, development and clinical trial activities relating to new
applications for its iontophoretic drug delivery technologies. As of June 30,
2001, the Company's accumulated deficit was approximately $31.5 million. The
Company's ability to achieve and sustain profitability will depend on its
ability to achieve market acceptance and successfully expand sales of its
existing products; successfully complete the development of, receive regulatory
approvals for, and successfully manufacture and market its products under
development, as to which there can be no assurance.

FISCAL YEARS ENDED JUNE 30, 2001 AND 2000

    REVENUES.  Product sales increased 6% to $11.2 million in fiscal 2001 from
$10.6 million in fiscal 2000. Continued growth in the Company's IOGEL line of
iontophoretic patches and increased market acceptance of iontophoresis
contributed to the increase in product sales.

    Contract research revenues, royalties and license fees were $192,000 in
fiscal 2001 compared to $171,000 in fiscal 2000. Contract research revenue will
increase during fiscal 2002 as a result of the Company's collaborative
development agreements related to its ophthalmic development program. However,
the amount of such increase and the level of such revenue beyond 2002 will be
dependent upon the Company's ability to expand its existing relationships and
establish new collaborative research and product development programs.

    COSTS OF PRODUCTS SOLD.  Costs of products sold increased 3% to
$3.8 million in fiscal 2001 from $3.7 million in fiscal 2000. Gross margins on
product sales improved to 66% in fiscal 2001 compared to 65% in fiscal 2000.
During the second half of fiscal 2001 the Company experienced downward pressure
on its product margins due to higher fixed costs resulting from its relocation
to a new facility and from costs associated with the installation of automated
manufacturing equipment. The Company expects this downward pressure to continue
into fiscal 2002.

    RESEARCH AND DEVELOPMENT EXPENSE.  Research and development expenditures
increased 141% to $7.7 million in fiscal 2001 from $3.2 million in fiscal 2000,
reflecting the Company's investment in key internal research and product
development programs during the year. During fiscal 2001 and 2000, the

                                       17
<Page>
Company invested $4.4 million and $1.2 million, respectively, in product
development and Phase III clinical studies related to its product development
program for the delivery of dexamethasone to treat acute local inflammation. In
addition, during fiscal 2001, the Company invested further into the pre-clinical
development of its proprietary ophthalmic pharmaceutical systems for the
delivery of therapeutics to the back of the eye. Following the inconclusive
findings of its confirmatory Phase III clinical studies in acute local
inflammation, the Company suspended further development activity. During fiscal
2002, the Company intends to concentrate the majority of its research and
development efforts on its ophthalmic program, where it seeks to pioneer the
non-invasive treatment of age-related macular degeneration and posterior uveitis
through the development of its proprietary OcuPhor System to deliver
therapeutics to the back of the eye. Therefore, the Company's total investment
in research and development should decline. At present, the Company believes it
has the capacity to take the ophthalmic program through the pre-clinical stage
and into initial clinical development.

    SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.  Selling, general and
administrative expenses increased 50% to $8.4 million in fiscal 2001 compared to
$5.6 million in 2000. This increase relates primarily to pre-marketing activity
associated with the Company's acute local inflammation program, as well as
increased patent prosecution and maintenance costs. The Company expects selling,
general and administrative expenses to decrease in 2002 due to the suspension of
the local inflammation program.

    LEASE ABANDONMENT CHARGE.  The Company incurred a non-recurring lease
abandonment charge in fiscal 2000 of $360,000 associated with the planned
consolidation of its research, administrative and manufacturing operations.

    OTHER COSTS AND EXPENSES.  Interest expense increased to $78,000 in fiscal
2001 from $26,000 in fiscal 2000. This increase can be attributed to higher
interest expense resulting from the increased equipment and furniture purchased
under the Company's lease line and the term loan related to the building
consolidation and relocation. Interest income and other miscellaneous income was
$777,000 in fiscal 2001, compared to $986,000 in fiscal 2000. Amounts in both
periods reflect interest earnings on the invested cash balances.

    INCOME TAXES.  The Company has substantial net operating loss carryforwards,
which, under the current "change of ownership" rules of the Internal Revenue
Code of 1986, as amended, may be subject to substantial annual limitation. No
income tax benefit was recognized for fiscal 2001 or 2000.

    NET LOSS.  A net loss of $7,876,000 in fiscal 2001 compares to a net loss of
$1,155,000 in fiscal 2000. The majority of the net loss in fiscal 2001 and 2000
can be attributed to internally funded research and development programs,
including Phase III clinical studies associated with the local inflammation
program. Approximately $6 million of fiscal 2001 operating expenses were
attributed to the local inflammation program compared to approximately
$1.2 million in fiscal 2000. During both periods, net interest earnings on
invested cash balances offset a loss from operations, in part.

FISCAL YEARS ENDED JUNE 30, 2000 AND 1999

    REVENUES.  Product sales increased 10% to $10.6 million in fiscal 2000 from
$9.6 million in fiscal 1999. The increase can be attributed primarily to
continued growth in the IOGEL-TM- product line, expanded distribution efforts
and increased market acceptance of iontophoresis.

    Contract research revenues, royalties and license fees were $171,000 in
fiscal 2000 compared to $893,000 in fiscal 1999. This is attributable to a
decrease in research revenues from the Company's collaborative development
agreement with Novartis, which ended in December 1998.

    COSTS OF PRODUCTS SOLD.  Costs of products sold decreased 7% to
$3.7 million in fiscal 2000 from $4.0 million in fiscal 1999, reflecting higher
fiscal 1999 costs due to certain non-recurring engineering and tooling costs in
fiscal 1999. Gross product margins improved substantially to 65% during fiscal
2000

                                       18
<Page>
from 59% in fiscal 1999. Increased sales, a favorable product mix and effective
cost containment efforts in manufacturing operations accounted for this
improvement.

    RESEARCH AND DEVELOPMENT EXPENSE.  Research and development expenditures
increased 73% to $3.2 million in fiscal 2000 from $1.9 million in fiscal 1999,
reflecting the Company's investment in key internal development programs,
including Phase III clinical trials for the non-invasive, site-specific delivery
of dexamethasone for the treatment of acute local inflammation.

    SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.  Selling, general and
administrative expenses were $5.6 million in fiscal 2000 and $5.4 million in
1999. Expenses in fiscal 2000 included increased business development costs and
legal, professional and related costs incurred in connection with patent
prosecution and maintenance costs. Expenses in fiscal 1999 included
non-recurring costs associated with the restructuring of the Company's field
sales force and an increase in certain marketing and promotional expenses,
increased legal, professional and related costs incurred in connection with
investor relations and SEC compliance, increased patent prosecution and
maintenance costs, and executive recruiting costs.

    LEASE ABANDONMENT CHARGE.  The Company incurred a non-recurring lease
abandonment charge in fiscal 2000 of $360,000 associated with the planned
consolidation of its research, administrative and manufacturing operations.

    OTHER COSTS AND EXPENSES.  Interest expense increased to $26,000 in fiscal
2000 from $19,000 in fiscal 1999. This increase can be attributed to higher
interest expense resulting from the increased equipment and furniture purchased
under the Company's lease line. Interest income and other miscellaneous income
was $986,000 in fiscal 2000, compared to $867,000 in fiscal 1999. Amounts in
both periods reflect interest earnings on the invested cash balances.

    NET INCOME (LOSS). A net loss of $1,155,000 in fiscal 2000 compares to net
income of $135,000 in fiscal 1999. Interest earnings on invested cash balances
offset a loss from operations in fiscal 2000, in part. The net loss in fiscal
2000 can be attributed to internally funded research and development programs,
including the Phase III clinical studies, and the leasehold abandonment charge.
Net income in fiscal 1999 can primarily be attributed to the interest earnings
on invested cash balances.

LIQUIDITY AND CAPITAL RESOURCES

    During fiscal 1999, the Company's operating and research activities were
internally funded, primarily with the research and development revenues and
license fees the Company received from Novartis. During fiscal 2001 and 2000,
the Company's operating losses, which resulted primarily from investment in
research and development programs, were funded largely by cash flow from its
commercial operating business and its cash reserves from its initial public
offering in April 1998.

    As of June 30, 2001, the Company had cash and cash equivalents totaling
approximately $6.4 million. Additionally, the Company had approximately
$2.7 million of long-term restricted cash, invested in mutual funds and used to
secure long-term financing. Cash in excess of immediate requirements is invested
in a manner which is intended to maximize liquidity and return while minimizing
investment risk, and, whenever possible, the Company seeks to minimize the
potential effects of concentration of credit risk.

    The Company consumed $5,545,000 and $491,000 in cash from operating
activities during fiscal 2001 and 2000, respectively, and generated $789,000 in
fiscal 1999. The increased consumption of cash for operating activities in
fiscal 2001 and 2000 can be attributed to the Company's investment in research
and product development and the resulting net operating losses.

    Historically, the Company's operations have not been capital intensive.
However, during fiscal 2001 the Company invested approximately $3.3 million for
the relocation and consolidation of its research

                                       19
<Page>
and manufacturing facilities and for new equipment to automate its manufacturing
process. The Company used long-term financing agreements to fund these
investments.

    As of June 30, 2001, the Company had approximately $3.7 million outstanding
under these financing agreements, all of which was classified as long-term
obligations. The Company intends to enter into additional financing agreements
to fund the majority of its capital equipment needs during the next 12 months,
but does not anticipate a significant investment in capital equipment during
that time. The Company's expenditures for equipment and furniture in excess of
equipment acquired under the lease agreements were $289,000, $234,000 and
$189,000 in each of the fiscal years ended June 30, 2001, 2000 and 1999,
respectively.

    Other sources and uses of cash during the periods included the following:
During fiscal 2001, the Company used $217,000 for payments on long-term
obligations and received $45,000 in proceeds from exercise of stock options.
During fiscal 2000, the Company purchased all rights to the iontophoretic
intellectual property owned by Laboratories Fournier, including patented
technology, know-how and a 10-year non-compete clause, at a cost of
$1.4 million, including transaction expenses; used $84,000 for payments on
long-tem capital lease obligations; and received $43,000 in proceeds from
exercise of stock options. During fiscal 1999, the Company used $51,000 for
payments on long-term capital lease obligations.

    In an effort to meet anticipated future growth and to consolidate its
research and administrative functions and manufacturing operations, the Company
executed a lease agreement in fiscal 2000 for an approximate 34,000 square foot
facility. Accordingly, the Company recorded a non-recurring charge of $360,000
relating to the abandonment of certain facilities. The Company funded the
facilities modification and consolidation with a term loan and available credit
under its lease lines.

    The Company will continue to incur costs associated with its research and
product development activities. During fiscal 2002, these costs will be funded
internally from the Company's established commercial business; term loan and
capital lease financing agreements; and from existing cash balances. The Company
anticipates that its existing cash balances and cash generated from operations
will be sufficient to fund the operations of the Company at least through fiscal
2002. However, the Company will be required to raise additional capital in order
to sustain its present levels of investment in research and development beyond
fiscal 2002. If the Company is unable to secure these additional funds through
equity capital or collaborative development agreements it may be necessary to
significantly reduce the Company's research and development and other investment
activities from their current levels. The Company's actual capital requirements
will depend on many factors, some of which are outside the Company's control.

NEW ACCOUNTING PRONOUNCEMENTS

    In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets," which addresses financial accounting and reporting for acquired
goodwill and other intangible assets. SFAS No. 142 is required to be adopted for
all fiscal years beginning after December 15, 2001. Early adoption is permitted
for companies with fiscal years beginning after March 15, 2001, provided that
their first quarter financial statements have not been issued. The Company is
continuing to evaluate the impact of this statement on its financial statements.

ADDITIONAL RISK FACTORS

    Future results could differ materially from those currently anticipated by
the Company due to a number of factors, including those identified in this
section and elsewhere in this Form 10-K, any of which could have a material
adverse impact on the Company's business, financial condition or results of
operations.

                                       20
<Page>
    CONTINUING OPERATING LOSSES; UNCERTAINTY OF FUTURE PROFITABILITY.  Since
1991, the Company has sustained losses in each fiscal year, except fiscal years
1999 and 1996. The Company had an accumulated deficit of $31.5 million as of
June 30, 2001. The Company intends to expand its product lines, research and
development, business development and marketing efforts in the near future and,
therefore, does not anticipate being profitable in the near term. The Company's
ability to achieve and sustain profitability will depend on its ability to
achieve market acceptance, and successfully expand sales of its existing
products, as well as successfully complete the development of, receive
regulatory approvals for, and successfully manufacture and market, its products
under development. The success of the Company's current products and products
under development may also depend on the timing of new product introductions by
the Company relative to its competitors and other factors.

    UNCERTAINTIES RELATED TO PRODUCT DEVELOPMENT.  The Company will be required
to undertake time-consuming and costly product development activities, including
clinical trials, and seek regulatory approval for new applications and products.
Product revenues may not be realized from the sale of any such products for
several years, if at all. The Company can give no assurance that its product
development efforts, either alone or in collaboration with other parties, will
ever be successfully completed, that it can obtain required regulatory approvals
of its products, that products under development can be manufactured at
acceptable cost or with appropriate quality, or that its products can meet
market needs or achieve market acceptance.

    Before seeking regulatory approval for the commercial sale of its products,
the Company must demonstrate through preclinical studies and clinical trials
that those products are safe and effective for use in the target indications.
There can be no assurances the Company will be able to complete its clinical
trials in a timely manner, if at all. The results from preclinical studies and
early clinical trials may not be indicative of results the Company will obtain
in large-scale testing. There can be no assurance the Company's clinical trials
will demonstrate sufficient safety and efficacy to obtain requisite regulatory
approvals or that those clinical trials will result in additional marketable
products. The use of any product the Company develops may produce undesirable
side effects that could result in the interruption, delay or suspension of
clinical trials, or the failure to obtain FDA or other regulatory approval for
targeted indications. If the Company's products under development are not shown
to be safe and effective in clinical trials, the resulting delays in developing
other compounds and conducting related preclinical testing and clinical trials,
as well as the need for additional financing to complete such testing and
trials, could have a material adverse effect on the Company's business,
financial condition, and results of operations.

    RELIANCE ON COLLABORATIVE PARTNERS.  The Company's strategy is to target
products that it can develop internally, without depending on collaborative
research and product development partners, and where it can play a direct role
in the marketing or co-marketing of its products. The strategy will not preclude
the Company from seeking collaborative marketing partners for internal programs,
nor will it interfere with its interest or ability to enter into collaborative
research and development activities with prospective pharmaceutical or biotech
partners. However, the Company's product development and commercialization
strategy will not be as dependent upon such relationships, as it has been in the
past.

    The Company has previously entered into arrangements with corporate
partners, licensors, licensees and other parties for the development, clinical
testing, manufacture, marketing or commercialization of certain of its products
or products in development. Until the Company elects to and enters into
additional collaborative agreements, the Company will be required to internally
fund all of its research and development expenditures. Such agreements could
limit the Company's flexibility in pursuing alternatives for the development or
commercialization of its products. To the extent the Company chooses not, or is
not able, to establish such collaborations, it could experience significantly
increased business risk and capital requirements in the development, clinical
testing, manufacturing, marketing and commercialization of its products. The
Company could also encounter significant delays

                                       21
<Page>
in introducing products into markets or find that the development, manufacture
or sale of proposed products in such markets is adversely affected by the
absence of those collaborative arrangements.

    INTENSE COMPETITION AND RAPID TECHNOLOGICAL CHANGE.  The drug delivery,
pharmaceutical and biotechnology industries are highly competitive and rapidly
evolving, with significant developments expected to continue at a rapid pace.
Many competitors, including public and private corporations, academic
institutions, governmental agencies and other public and private research
organizations, are involved in the development of drug delivery systems,
including competing electrotransport-related drug delivery technologies. Many of
these competitors have substantially greater financial and other resources, are
more experienced, and are larger, more established organizations than the
Company. In addition, these competitors may offer broader product lines, have
greater name recognition, and offer discounts as a competitive tactic.
Accordingly, competitors may succeed in developing competing technologies, and
obtaining FDA approval or gaining market share for products, more rapidly than
the Company. Many of these competitors currently have drug delivery products
that are approved or in development. There can be no assurance the Company's
competitors will not succeed in more rapidly developing or marketing products
that are more effective or commercially attractive than the Company's current or
future products, or that would render the Company's products obsolete or
noncompetitive. There can also be no assurance the Company will have the
financial resources, technical or management expertise, or manufacturing or
support capability to compete in the future.

    The first pharmaceutical product to reach the market in a therapeutic area
or using a certain drug delivery technology generally obtains and maintains a
significant market share relative to later entrants to the market. The Company's
success will depend on its ability to maintain a competitive position and
develop new products and technologies for efficient and cost effective drug
delivery. There can be no assurance any of the Company's products will have
advantages that will be significant enough to cause medical professionals to
prefer or even use them. New drugs or further development of alternative drug
delivery methods may provide greater therapeutic benefits for a specific drug or
indication, or may offer comparable performance at lower cost, than that offered
by the Company's products.

    RELIANCE ON THIRD PARTY DISTRIBUTION.  The Company presently markets its
drug delivery systems for the treatment of acute local inflammation primarily to
physical therapists through a nationwide network of distributors and independent
sales representatives. The Company is currently marketing its local dermal
anesthesia products in the United States hospital market through a limited
number of sales personnel who work directly for the Company and independent
manufacturers' representatives.

    In order to achieve broad distribution and market penetration of its current
and future products, the Company intends to expand its marketing presence
through direct sales and marketing or through co-marketing of its products with
collaborative marketing partners or distributors that have national or
market-specific marketing capabilities. There can be no assurance that the
Company will be able to maintain existing, or establish new, marketing
arrangements on terms favorable to the Company, if at all.

    DEPENDENCE ON PATENTS AND PROPRIETARY TECHNOLOGY.  The Company's ability to
commercialize many of the products it has under development will depend, in
part, on its or its licensors' ability, both in the United States and in other
countries, to obtain patents, enforce those patents, preserve trade secrets and
operate without infringing on the proprietary rights of third parties.

    The patent positions of drug delivery, pharmaceutical and biotechnology
companies are highly uncertain and involve complex legal and factual questions.
There can be no assurance the patents currently owned and licensed by the
Company, or any future patents, will prevent other companies from developing
similar or therapeutically equivalent products, or that other companies will not
be issued patents that may prevent the sale of Company products or require
licensing and the payment of significant fees or royalties by the Company.
Furthermore, there can be no assurance any of the

                                       22
<Page>
Company's products or methods will be patentable, will not infringe upon the
patents of third parties, or that the Company's patents or future patents will
give the Company an exclusive position in the subject matter claimed by those
patents. The Company may be unable to avoid infringement of third party patents
and may have to obtain licenses, defend infringement actions or challenge the
validity of those patents in court. There can be no assurance a license will be
available to the Company, if at all, on terms and conditions acceptable to the
Company, or that the Company will prevail in any patent litigation. There can be
no assurance the Company's pending patent applications will result in issued
patents, patent protection will be secured for any particular technology, any
patents that have been or may be issued to the Company or its licensors will be
valid or enforceable or that the Company's patents will provide meaningful
protection to the Company.

    The Company also relies on trade secrets and other unpatented proprietary
information in its product development activities. The Company seeks to protect
trade secrets and proprietary knowledge in part through confidentiality
agreements with its employees, consultants, advisors and collaborators. To the
extent the Company relies on confidential information to maintain its
competitive position, there can be no assurance other parties may not
independently develop the same or similar information. These agreements may not
effectively prevent disclosure of the Company's confidential information and may
not provide the Company with an adequate remedy in the event of unauthorized
disclosure of such information. The Company's failure to obtain or maintain
patent and trade secret protection, for any reason, could have a material
adverse effect on the Company's business, financial position and results of
operations. Also, the effect of potential legislative changes on the Company's
intellectual property is uncertain.

    NEED TO MANAGE EXPANDING OPERATIONS.  If the Company is successful in
achieving market acceptance of its products and products under development, it
will be required to expand its operations, particularly in the areas of research
and development, sales and marketing, and manufacturing. As the Company expands
its operations in these areas, those expansions will likely result in new and
increased responsibilities for management personnel and place significant strain
on the Company's management, operating and financial systems and other
resources. To accommodate any such growth and compete effectively, the Company
will be required to implement improved information systems, procedures and
controls, and to expand, train, motivate and manage its work force. The
Company's future success will depend to a significant extent on the ability of
its current and future management personnel to operate effectively both
independently and as a group. There can be no assurance the Company's personnel,
systems, procedures and controls will be adequate to support the Company's
future operations.

    FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING.  The further
development and commercialization of the Company's products and technology will
require a commitment of substantial funds to conduct research and development
activities, including preclinical and clinical studies, to expand distribution
and hire additional sales and marketing personnel and to expand and develop
manufacturing capabilities. Although the Company believes that existing cash
balances and cash generated from operations will be sufficient to fund its
operations for at least the next 12 months, it may be required or elect to raise
additional capital before that time to fund actual capital requirements. Actual
capital requirements will depend on many factors, including but not limited to,
the costs and timing of research and development activities, the number and type
of clinical tests required in seeking approval of products from governmental
agencies, the success of the development efforts, the costs and timing of sales
and marketing expansion, the extent to which existing and new products gain
market acceptance, the ability to maintain existing and enter into new
collaborative relationships, competing technological and market developments,
the progress of distributors' commercialization efforts, the costs involved in
preparing, filing, prosecuting, maintaining, enforcing and defending patent
claims and other intellectual property rights, developments related to
regulatory and third party reimbursement issues, and other factors.

                                       23
<Page>
    To satisfy its capital requirements, the Company may seek to raise funds
through public or private financings, collaborative relationships or other
arrangements. Any additional equity financing may be dilutive to shareholders
and debt financing may involve significant restrictive covenants. Collaborative
arrangements to raise additional funds may require the Company to relinquish its
rights to certain of its technologies, products or marketing territories. There
can be no assurance that any such financing, if required, will be available on
terms satisfactory to the Company, if at all. Failure to raise capital when
needed could have a material adverse effect on the Company's business, financial
condition and results of operations.

    UNCERTAINTY OF GOVERNMENT REGULATION.  The research, development,
manufacture and marketing of the Company's products are extensively regulated by
the FDA, which requires its approval of drugs and medical devices before they
can be marketed in the United States. Similar approvals are also required from
other regulatory bodies in foreign countries. The regulatory processes
established by these government agencies are lengthy, expensive and uncertain.
In addition, once approval is obtained, that approval may be withdrawn.

    The Company has received approval from the FDA on its NDA for Iontocaine,
and the FDA has allowed the Company to market its iontophoretic dose controllers
and electrode products for use with ions of soluble salts or other drugs under
the FDA's 510(k) regulations governing medical devices. However, in 1994, the
FDA publicly stated that it intends to require manufacturers of iontophoretic
devices to obtain PMAs for marketed devices currently used with drugs not
specifically labeled for iontophoretic delivery, which would include the
Company's dose controller for use with ions of soluble salts or other drugs,
such as dexamethasone. The agency to date has not published such a regulation.

    If the FDA calls for PMAs for preamendment class III iontophoretic devices,
the Company would be required to have a PMA accepted for filing by the FDA
within 90 days after the date of the final regulation calling for PMAs. There
can be no assurance that the Company would be able to complete and file a PMA
within the prescribed time period, or that the FDA would approve it. The
Company's failure to submit a PMA within the required timeframe could result in
the Company being required to cease commercial distribution of the Phoresor for
use with any drug other than Iontocaine. Any interference with the Company's
ability to distribute its Phoresor system for use with dexamethasone would have
a material adverse effect on the Company's financial condition and results of
operations.

    Even if the Company obtains regulatory approval, a marketed product, its
manufacturer and its manufacturing facilities and pertinent operations are
subject to extensive regulation and periodic inspections. Discovery of
previously unknown problems with a product, manufacturer or facility could
result in FDA sanctions, restrictions on a product or manufacturer, or an order
to withdraw and/or recall a specific product from the market. There can also be
no assurance that changes in the legal or regulatory framework or other
subsequent developments will not result in the limitation, suspension or
revocation of regulatory approvals granted to the Company. Such events, were
they to occur, could have a material adverse effect on the Company's business,
financial condition and results of operations.

    The Company and certain of its suppliers are also required to comply with US
and foreign regulations governing manufacturing practices, which mandate
procedures for extensive control and documentation of product design, control
and validation of the manufacturing process and overall product quality. If the
Company or its suppliers fail to comply with applicable regulations regarding
these manufacturing practices, the Company could be subject to sanctions.

    Under the FDA's regulations, when a manufacturer changes or modifies a
device for which it has received a 510(k) clearance, it is required to obtain an
additional 510(k) clearance for the modified device if the modification
significantly affects the safety or efficacy of the device, or if the
modification results in a major change in intended use. In such cases, the
manufacturer is expected to make the initial determination as to whether the
modification is of a kind that would require a new 510(k) clearance. The FDA's
regulations provide only limited guidance in making this determination. The FDA

                                       24
<Page>
has cleared the Company's iontophoretic dose controller and electrode kits for
marketing under a 510(k) clearance. Since obtaining its 510(k) clearances, the
Company has made modifications to its products. Based on the checklist developed
by the FDA to assist manufacturers in determining whether they are required to
obtain a 510(k) clearance for a modified device, the Company has determined that
a new 510(k) submission was not required in connection with the commercial
introduction of such products. However, there can be no assurance that the FDA
will not require the Company to obtain additional 510(k) clearances with respect
to those products. If the FDA requires the Company to submit a new 510(k) notice
for any device modification, the Company may be prohibited from marketing the
modified device until the 510(k) notice is cleared by the FDA.

    The Company may be required to comply with other proposed and new US and
foreign regulations governing its current and future products. There can be no
assurance that proposed and new regulations will not have a materially adverse
effect on the Company.

    DEPENDENCE ON SINGLE SOURCES OF SUPPLY.  A key material used in many of the
Company's current electrode products is available only from a single supplier.
In addition, the Company obtains Iontocaine from Abbott Laboratories under a
contract which may be terminated with six months notice. The Company also has
the right to obtain dexamethasone from Luitpold Pharmaceuticals, Inc./American
Regent Laboratories, Inc. under a contract expiring in January 2005. The Company
believes that, if necessary, alternative sources can be developed or alternate
materials can be substituted for each of these single-sourced materials.
Although the Company has not experienced difficulty acquiring these materials on
commercially reasonable terms and in sufficient quantities to maintain required
production levels, no assurance can be given that price increases or
interruptions in the supply of these materials will not occur in the future or
that the Company will not have to seek alternate suppliers or obtain substitute
materials, which may require additional product validations and regulatory
submissions. Any significant price increase, interruption of supply, inability
to secure an alternate source or qualify a substitute material could have a
material adverse effect on the Company's ability to manufacture its products or
to obtain or maintain regulatory approval of its products.

    The Company's current dose controllers are manufactured under a contract
with a third party electronics manufacturer. There can be no assurance that its
present supplier can manufacture sufficient quantities of dose controllers that
meet quality and performance standards on a timely basis. If the supplier cannot
meet the Company's requirements, or in the event of an interruption of its
supply, the Company would be required to identify, qualify and validate an
alternate supply source within a reasonable period of time.

    LIMITED MANUFACTURING EXPERIENCE.  The Company manufactures its
iontophoretic drug delivery electrodes in quantities sufficient to satisfy its
current level of product sales. To meet anticipated increases in sales, the
Company may need to increase its production significantly beyond its present
manufacturing capacity. Accordingly, the Company may be required to increase its
manufacturing capacities or to contract with another party to manufacture its
products. There can be no assurance the Company can successfully increase its
capacity on a profitable basis, or contract with another party on terms
acceptable to the Company, if at all.

    Significant increases in production volume will likely require changes in
the Company's product and manufacturing process in order to facilitate increased
automation of the Company's production. There can be no assurance such changes
in products or processes or efforts to automate the Company's manufacturing
process will be successful.

    The Company believes its facilities operate in accordance with the Quality
System Regulations currently prescribed by the FDA and in substantial compliance
with ISO 9001 and CE Mark standards. The Company has GMP audits conducted by a
qualified, independent organization on a regular basis and is ISO 9001 and CE
Mark certified. There can be no assurance the Company will be able to

                                       25
<Page>
maintain such compliance, particularly if the scale of the Company's
manufacturing operations increases.

    UNCERTAINTY OF HEALTH CARE REIMBURSEMENT.  The Company's ability to
commercialize its products successfully will depend in part on the extent to
which reimbursement for the costs of those products and related treatments will
be available from government health administration authorities, private health
insurers and other organizations in the United States and in foreign markets
where the Company's products will be sold and used. Third party payors can
affect the pricing or relative attractiveness of the Company's products by
regulating the reimbursement they provide on the Company's or competing products
or therapies. There can be no assurance such reimbursement will continue at
present levels, if at all. Some insurance carriers do not reimburse health care
providers for use of the Company's products in certain applications.
Furthermore, significant uncertainty exists as to the reimbursement status of
new health care products.

    Effective October 1, 1991, the Health Care Financing Administration adopted
new regulations providing for the treatment of capital related costs for medical
products. The Company is unable to predict what adverse impact on the Company,
if any, these or any additional government regulations, legislation or
initiatives or changes by other payors affecting reimbursement or other matters
that may influence decisions to obtain medical devices may have.

    RETENTION AND ATTRACTION OF KEY EMPLOYEES.  The Company is highly dependent
on its ability to continue to attract and retain qualified scientific,
managerial, manufacturing and sales and marketing personnel. There is intense
competition for qualified personnel in the Company's area of activity, and there
can be no assurance the Company will be able to continue to attract and retain
the qualified personnel necessary for the development of its business. The
Company does not carry key-man insurance with respect to any of its executives
or employees.

    RISK OF PRODUCT LIABILITY, PRODUCT RECALLS AND WARRANTY CLAIMS; AVAILABILITY
OF INSURANCE.  The testing, marketing and sale of drug delivery and related
pharmaceutical products for use in humans involves unavoidable risks. The use of
the Company's products in clinical trials and the sale of its products upon
approval may expose the Company to potential product liability resulting from
the use of such products. In addition, the existence of a product liability
claim, a product recall or excessive warranty claims (in any such case, whether
arising from defects in design or manufacture or otherwise) could have an
adverse effect on the Company's sales of that product or require a change in the
indications for which it may be used.

    Product liability insurance in the Company's industry is expensive and
difficult to obtain. Although the Company currently has product liability
insurance, there can be no assurance the existing coverage is adequate. The
Company will seek to maintain and appropriately increase its insurance coverage
as its product sales increase and the clinical development of its new product
applications progress. There can be no assurance, however, that the Company will
be able to maintain its current levels of insurance on acceptable terms, will be
able to secure increased coverage as the commercialization of its products
proceeds or that any particular level of insurance will provide adequate
protection against potential liabilities.

    POTENTIAL VOLATILITY OF SHARE PRICE.  The market price of the Company's
common shares, like that of the common shares of many other drug delivery,
pharmaceutical, biotechnology, medical device and other high technology
companies, is likely to be highly volatile. Factors such as fluctuations or
volatility in the Company's operating results, announcements of technological
innovations, results of clinical trials or new commercial products by the
Company or competitors, regulatory developments in the United Sates or foreign
countries, changes in the current structure of health care financing and payment
systems, developments in or disputes regarding patent or other proprietary
rights, general market conditions, economic and other external factors may have
a significant effect on the market price of the

                                       26
<Page>
common shares. In addition, sales of substantial amounts of common shares
(including shares issuable upon exercise of outstanding options and warrants) in
the public market could adversely affect the market price of the common shares.
Such sales could also make it more difficult for the Company to sell equity
securities or equity-related securities in the future at a time and price that
the Company deems appropriate.

    ANTI-TAKEOVER PROVISIONS OF CERTAIN OF THE COMPANY'S AGREEMENTS.  Certain
provisions of a cross-license agreement between the Company and Alza may have
the effect of deferring, delaying or preventing a change in control of the
Company, a merger involving the Company or the assignment or transfer of certain
technologies of the Company. Under the agreement, the Company and Alza, among
other things, exchanged non-exclusive, royalty free rights to certain patented
technologies which each party believed to be of significant strategic importance
to the potential technological success of many iontophoretic drug delivery
applications. Both parties are prohibited from assigning their rights under the
agreement to certain named companies or any other entity that derives more than
50 percent of its income from the development, licensing and/or sale of drug
delivery systems to other pharmaceutical companies without first receiving the
consent of the other party. Restrictions imposed on the Company's ability to
assign its rights under this agreement may have the effect of prohibiting a sale
of the Company to such named companies or entities, or may otherwise limit the
Company's ability to capitalize on the commercial and other economic potential
of these technologies through a technology license, asset sale, merger,
combination or similar transaction.

    ENVIRONMENTAL MATTERS.  The Company's research and development activities
involve the controlled use of hazardous materials, chemicals and various
radioactive compounds. These materials, and their use, disposal and handling,
are extensively regulated by federal, state and local government authorities.
Although the Company believes its safety procedures for handling and disposing
of such materials comply in all material respects with the standards prescribed
by state and federal regulations, the risk of accidental environmental
contamination or personal injury from these materials cannot be completely
eliminated. In the event of such an accident, the Company could be held liable
for any damages and any such liability could exceed the resources of the
Company. There can be no assurance the Company will not be required to incur
significant costs to comply with such environmental and health and safety laws
and regulations in the future, particularly if the Company develops additional
manufacturing or research facilities and capacity.

ITEM 7a. QUANTITATIVE AND QUALITATIVE INFORMATION ABOUT MARKET RISK

    Not applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

    The consolidated financial statements of the Company and its subsidiary are
included elsewhere in this Report.

ITEM 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
        DISCLOSURE

    None.

                                       27
<Page>
                       CONSOLIDATED FINANCIAL STATEMENTS

                                  IOMED, INC.

                                 JUNE 30, 2001

                                       28
<Page>
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                  IOMED, INC.

<Table>
<Caption>
                                                                PAGE
                                                              --------
<S>                                                           <C>
AUDITED CONSOLIDATED FINANCIAL STATEMENTS:

Report of Independent Auditors..............................      30

Consolidated Balance Sheets at June 30, 2001 and 2000.......      31

Consolidated Statements of Operations for the Years Ended
  June 30, 2001, 2000 and 1999..............................      32

Consolidated Statements of Shareholders' Equity for the
  Years Ended June 30, 2001, 2000 and 1999..................      33

Consolidated Statements of Cash Flows for the Years Ended
  June 30, 2001, 2000 and 1999..............................      34

Notes to Consolidated Financial Statements..................   35-43
</Table>

                                       29
<Page>
                         REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Shareholders
IOMED, Inc.

    We have audited the accompanying consolidated balance sheets of IOMED, Inc.
and subsidiary as of June 30, 2001 and 2000, and the related consolidated
statements of operations, shareholders' equity, and cash flows for each of the
three years in the period ended June 30, 2001. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

    In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of IOMED, Inc. and
subsidiary at June 30, 2001 and 2000, and the consolidated results of their
operations and their cash flows for each of the three years in the period ended
June 30, 2001, in conformity with accounting principles generally accepted in
the United States.

ERNST & YOUNG LLP

Salt Lake City, Utah
August 9, 2001

                                       30
<Page>
                                  IOMED, INC.

                          CONSOLIDATED BALANCE SHEETS

<Table>
<Caption>
                                                                      JUNE 30,
                                                              -------------------------
                                                                 2001          2000
                                                              -----------   -----------
<S>                                                           <C>           <C>
                           ASSETS
Current assets:
  Cash and cash equivalents.................................  $ 6,436,000   $15,097,000
  Accounts receivable, less allowance for doubtful accounts
    of $74,000 in 2001 and $78,000 in 2000..................    1,283,000     1,339,000
  Inventories...............................................    1,009,000       767,000
  Prepaid expenses..........................................       78,000       119,000
                                                              -----------   -----------
    Total current assets....................................    8,806,000    17,322,000
Equipment and furniture, net................................    3,931,000       908,000
Restricted cash.............................................    2,655,000            --
Other assets................................................    1,504,000     1,686,000
                                                              -----------   -----------
    Total assets............................................  $16,896,000   $19,916,000
                                                              ===========   ===========
            LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Trade accounts payable....................................  $   916,000   $   145,000
  Accrued liabilities.......................................    2,225,000     1,338,000
  Current portion of long-term obligations..................      575,000       134,000
                                                              -----------   -----------
    Total current liabilities...............................    3,716,000     1,617,000
Long-term obligations.......................................    3,125,000       387,000
Other long-term liabilities.................................       72,000       199,000

Commitments

Shareholders' equity:
  Common shares, no par value; 100,000,000 shares
    authorized; issued and outstanding 6,544,670 shares in
    2001 and 6,527,535 shares in 2000.......................   34,636,000    34,490,000
  Convertible preferred shares, no par value; 10,000,000
    shares authorized; issued and outstanding of all series
    893,801 shares in 2001 and 2000.........................    6,881,000     6,881,000
  Accumulated deficit.......................................  (31,534,000)  (23,658,000)
                                                              -----------   -----------
    Total shareholders' equity..............................    9,983,000    17,713,000
                                                              -----------   -----------
    Total liabilities and shareholders' equity..............  $16,896,000   $19,916,000
                                                              ===========   ===========
</Table>

                            See accompanying notes.

                                       31
<Page>
                                  IOMED, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS

<Table>
<Caption>
                                                                  YEAR ENDED JUNE 30,
                                                        ---------------------------------------
                                                           2001          2000          1999
                                                        -----------   -----------   -----------
<S>                                                     <C>           <C>           <C>
Revenues:
  Product sales.......................................  $11,203,000   $10,596,000   $ 9,608,000
  Contract research revenue, royalties and license
    fees..............................................      192,000       171,000       893,000
                                                        -----------   -----------   -----------
    Total revenues....................................   11,395,000    10,767,000    10,501,000
Operating costs and expenses:
  Cost of products sold...............................    3,807,000     3,692,000     3,961,000
  Research and development............................    7,749,000     3,210,000     1,860,000
  Selling, general and administrative.................    8,414,000     5,620,000     5,393,000
  Lease abandonment charge............................           --       360,000            --
                                                        -----------   -----------   -----------
    Total costs and expenses..........................   19,970,000    12,882,000    11,214,000
                                                        -----------   -----------   -----------
Loss from operations..................................   (8,575,000)   (2,115,000)     (713,000)
Interest expense......................................       78,000        26,000        19,000
Interest income and other, net........................      777,000       986,000       867,000
                                                        -----------   -----------   -----------
Net income (loss).....................................  $(7,876,000)  $(1,155,000)  $   135,000
                                                        ===========   ===========   ===========
Basic and diluted income (loss) per common share......  $     (1.20)  $      (.18)  $       .02
</Table>

                            See accompanying notes.

                                       32
<Page>
                                  IOMED, INC.

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<Table>
<Caption>
                                      COMMON SHARES         CONVERTIBLE
                                 ------------------------    PREFERRED    ACCUMULATED
                                   SHARES       AMOUNT        SHARES        DEFICIT         TOTAL
                                 ----------   -----------   -----------   ------------   -----------
<S>                              <C>          <C>           <C>           <C>            <C>
BALANCE AT JUNE 30, 1998.......   6,499,518   $34,408,000   $6,881,000    $(22,638,000)  $18,651,000
  Stock options exercised......       8,226         5,000           --              --         5,000
  Net income...................          --            --           --         135,000       135,000
                                 ----------   -----------   ----------    ------------   -----------
BALANCE AT JUNE 30, 1999.......   6,507,744    34,413,000    6,881,000     (22,503,000)   18,791,000
  Stock options exercised......      19,791        43,000           --              --        43,000
  Compensation related to non-
    employee stock option
    grants.....................          --        34,000           --              --        34,000
  Net loss.....................          --            --           --      (1,155,000)   (1,155,000)
                                 ----------   -----------   ----------    ------------   -----------
BALANCE AT JUNE 30, 2000.......   6,527,535    34,490,000    6,881,000     (23,658,000)   17,713,000
  Stock options exercised......      17,135        45,000           --              --        45,000
  Compensation related to non-
    employee stock option
    grants.....................          --       101,000           --              --       101,000
  Net loss.....................          --            --           --      (7,876,000)   (7,876,000)
                                 ----------   -----------   ----------    ------------   -----------
BALANCE AT JUNE 30, 2001.......   6,544,670   $34,636,000   $6,881,000    $(31,534,000)  $ 9,983,000
                                 ==========   ===========   ==========    ============   ===========
</Table>

                            See accompanying notes.

                                       33
<Page>
                                  IOMED, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<Table>
<Caption>
                                                                  YEAR ENDED JUNE 30,
                                                        ---------------------------------------
                                                           2001          2000          1999
                                                        -----------   -----------   -----------
<S>                                                     <C>           <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss).....................................  $(7,876,000)  $(1,155,000)  $   135,000
Adjustments to reconcile net income (loss) to net cash
  provided by (used in) operating activities:
  Depreciation and amortization.......................      747,000       380,000       407,000
  Provision for doubtful accounts.....................       24,000            --        24,000
  Other non-cash charges..............................      159,000        34,000        30,000
  Lease abandonment charge............................           --       360,000            --
  Changes in operating assets and liabilities:
    Accounts receivable...............................       32,000       (47,000)      225,000
    Inventories.......................................     (242,000)       15,000        94,000
    Prepaid expenses..................................       41,000      (120,000)       10,000
    Trade accounts payable............................      771,000       (92,000)     (389,000)
    Accrued expenses and other liabilities............      799,000       134,000       253,000
                                                        -----------   -----------   -----------
Net cash provided by (used in) operating activities...   (5,545,000)     (491,000)      789,000

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of equipment and furniture..................     (289,000)     (234,000)     (189,000)
Purchase of intangible assets.........................           --    (1,400,000)           --
                                                        -----------   -----------   -----------
Net cash used in investing activities.................     (289,000)   (1,634,000)     (189,000)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common shares...............       45,000        43,000         5,000
Restricted cash used to secure long-term
  obligations.........................................   (2,655,000)           --            --
Payments on long-term obligations.....................     (217,000)      (84,000)      (51,000)
                                                        -----------   -----------   -----------
Net cash used in financing activities.................   (2,827,000)      (41,000)      (46,000)
                                                        -----------   -----------   -----------
Net increase/(decrease) in cash and cash
  equivalents.........................................   (8,661,000)   (2,166,000)      554,000
Cash and cash equivalents at beginning of year........   15,097,000    17,263,000    16,709,000
                                                        -----------   -----------   -----------
Cash and cash equivalents at end of year..............  $ 6,436,000   $15,097,000   $17,263,000
                                                        ===========   ===========   ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest................................  $    78,000   $    26,000   $    19,000
Cash paid for income taxes............................  $        --   $        --   $        --

SUPPLEMENTAL SCHEDULE OF NON-CASH ACTIVITIES
Purchase of equipment under long-term obligations.....  $ 3,338,000   $   419,000   $        --
Write-off of fixed assets against lease abandonment
  accrual.............................................  $    39,000   $        --   $        --
</Table>

                            See accompanying notes.

                                       34
<Page>
                                  IOMED, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

    IOMED, Inc., a Utah corporation (the "Company"), is a specialty
pharmaceutical company focused on satisfying substantial unmet medical needs in
large pharmaceutical markets. Presently, the Company is concentrating the
majority of its research and development efforts in ophthalmics, where it seeks
to pioneer the non-invasive treatment of age-related macular degeneration and
posterior uveitis through the development of proprietary ophthalmic
pharmaceutical systems to deliver therapeutics to the back of the eye. The
Company is funded, in part, by an established business engaged in the
manufacture and sale of iontophoretic pharmaceutical systems primarily used to
treat acute local inflammation in the sports and occupational medicine and
physical therapy markets.

PRINCIPLES OF CONSOLIDATION

    The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiary, Dermion, Inc. ("Dermion"). Dermion was formed
in April 1996 to conduct advanced research and development of iontophoretic
systems on its own behalf and on behalf of third party clients. All significant
intercompany transactions and accounts have been eliminated.

ESTIMATES

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

CASH EQUIVALENTS

    The Company considers all highly liquid investments with maturities of three
months or less, when purchased, to be cash equivalents, including $350,000
restricted to secure the current portion of long-term obligations (see note 4).

CONCENTRATIONS OF CREDIT RISK

    The Company's financial instruments that are exposed to concentrations of
credit risk consist primarily of cash, cash equivalents and trade accounts
receivable. Cash and cash equivalents are held in federally insured financial
institutions or invested in high-grade short-term commercial paper issued by
major United States corporations. The Company sells its products primarily to,
and has trade accounts receivable with, independent durable medical equipment
dealers in the United States and abroad. Less than 10% of product sales are to
foreign customers. As a general policy, collateral is not required for accounts
receivable; however, the Company maintains an allowance for losses based upon
expected collections of accounts receivable. Additionally, customers' financial
condition and credit worthiness are regularly evaluated and historical losses
have not been material. Sales to one customer accounted for approximately 18%,
16% and 15% of the Company's product sales for the years ended June 30, 2001,
2000 and 1999. At June 30, 2001, 2000 and 1999, amounts due from such customer
accounted for approximately 14%, 14% and 18% of trade receivables, all of which
was current. The Company considers credit risk from concentrations of trade
accounts receivable to be low.

                                       35
<Page>
                                  IOMED, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

REVENUE RECOGNITION

    Revenues on product sales are generally recognized upon shipment against a
customer order. The Company recognizes revenue from contract research based on
qualifying expenditures. Revenues from royalty and license agreements are
recognized as earned, during the term of the agreement.

RECLASSIFICATIONS

    Certain reclassifications have been made to prior year balances to conform
to the financial statement presentation included herein.

PATENT DEVELOPMENT COSTS

    In connection with its research and development efforts, costs of which are
expensed as incurred, the Company incurs certain costs in the preparation,
application, filing, maintenance and defense of patents and trademarks. Where
such costs primarily relate to patents and trademarks covering technologies or
products which are under development or in the early stages of
commercialization, the Company expenses such costs as incurred.

INVENTORIES

    Inventories are stated at the lower of cost or market. Cost is determined
using the first-in, first-out method. Inventories consist of the following:

<Table>
<Caption>
                                                              JUNE 30,
                                                        ---------------------
                                                           2001        2000
                                                        ----------   --------
<S>                                                     <C>          <C>
Raw materials.........................................  $  688,000   $441,000
Work-in-progress......................................      40,000     24,000
Finished goods........................................     281,000    302,000
                                                        ----------   --------
                                                        $1,009,000   $767,000
                                                        ==========   ========
</Table>

EQUIPMENT AND FURNITURE

    Equipment and furniture are stated at cost. Depreciation and amortization is
computed using the straight-line method over estimated useful lives of three to
five years. Leasehold improvements are amortized over the term of the lease or
the useful life of the improvements, whichever is shorter. Equipment and
furniture consist of the following:

<Table>
<Caption>
                                                             JUNE 30,
                                                     -------------------------
                                                        2001          2000
                                                     -----------   -----------
<S>                                                  <C>           <C>
Manufacturing equipment............................  $ 1,673,000   $ 1,199,000
Office and research and development equipment......    1,889,000     1,868,000
Leasehold improvements.............................    2,736,000       736,000
                                                     -----------   -----------
                                                       6,298,000     3,803,000
Less accumulated depreciation and amortization.....   (2,367,000)   (2,895,000)
                                                     -----------   -----------
                                                     $ 3,931,000   $   908,000
                                                     ===========   ===========
</Table>

                                       36
<Page>
                                  IOMED, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

LONG LIVED ASSETS

    The estimated useful lives and recorded values of all long lived assets are
periodically reviewed by management and adjusted to reflect any change in
anticipated lives or impairment in value, in accordance with Statement of
Financial Accounting Standards No. 121.

INTANGIBLE ASSETS

    At June 30, 2001, intangible assets totaling $1,362,000, net of accumulated
depreciation totaling $252,000, are included in other assets and consist of
rights to certain patents, trademarks, non-compete agreements, and other
intellectual property. Such assets are being amortized on a straight-line basis
over the estimated useful lives of the individual assets, ranging from five to
seventeen years.

STOCK OPTIONS

    The Company has elected to follow Accounting Principles Board Opinion
No. 25--ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES (APB 25) and related
interpretations in accounting for its employee stock options rather than
adopting the alternative fair value accounting provided for under FASB Statement
No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION (SFAS 123). Under APB 25,
because the exercise price of the Company's employee stock options equals the
market price of the underlying shares on the date of grant, the Company does not
recognize any compensation expense.

    Stock compensation expense for options granted to non-employees has been
determined in accordance with SFAS 123 and the Emerging Issues Task Force
consensus in Issue No. 96-18, ACCOUNTING FOR EQUITY INSTRUMENTS THAT ARE ISSUED
TO OTHER THAN EMPLOYEES FOR ACQUIRING, OR IN CONJUNCTION WITH SELLING GOODS OR
SERVICES (EITF 96-18). The fair value of options granted to non-employees is
periodically re-measured as the underlying options vest.

EARNINGS (LOSS) PER SHARE

    The Company's net income (loss) per share has been calculated in accordance
with SFAS No. 128--EARNINGS PER SHARE and, accordingly, includes a computation
of both basic and diluted earnings per share. Net income (loss) as presented in
the statements of operations represents the numerator used in computing earnings
per share and the following table sets forth the computation of the weighted
average shares used in determining basic and diluted earnings per share:

<Table>
<Caption>
                                                           2001       2000       1999
                                                         --------   --------   --------
                                                                 (IN THOUSANDS)
<S>                                                      <C>        <C>        <C>
Denominator for basic earnings per share -- weighted
  average shares.......................................   6,541      6,513      6,503
Dilutive securities: preferred stock, convertible debt,
  warrants and stock options...........................      --         --        926
                                                          -----      -----      -----
Denominator for diluted earnings per share -- adjusted
  weighted average shares and assumed conversions......   6,541      6,513      7,429
                                                          =====      =====      =====
</Table>

    At June 30, 2001, the following securities were outstanding but were not
included in the computation of diluted earnings per share due to their
anti-dilutive effect: options to purchase 1,411,463 common shares at a weighted
average exercise price of $3.74 per share; warrants to purchase 339,792 common
shares at a weighted average price of $13.70 per share; and 893,801 Series D
Convertible Preferred Shares convertible on a share-for-share basis into common
stock.

                                       37
<Page>
                                  IOMED, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

INCOME TAXES

    The Company accounts for income taxes using the asset and liability method.
Under the asset and liability method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases, and operating loss and tax credit carryforwards.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.

NEW ACCOUNTING PRONOUNCEMENTS

    In July 2001, the FASB issued SFAS No. 142, "GOODWILL AND OTHER INTANGIBLE
ASSETS" which addresses financial accounting and reporting for acquired goodwill
and other intangible assets. SFAS No. 142 is required to be adopted for all
fiscal years beginning after December 15, 2001. Early adoption is permitted for
companies with fiscal years beginning after March 15, 2001, provided that their
first quarter financial statements have not been issued. The Company is
evaluating the impact of this statement on its financial statements.

2.  RESTRICTED CASH

    The Company maintains an interest bearing money market account with a
lending bank, $2,655,000 of which is being held as a compensating balance under
a long-term obligation (see note 4) and is restricted as to withdrawal. The
restricted cash balance requirement decreases over the life of the obligation as
payments are made.

3.  ACCRUED LIABILITIES

    Accrued liabilities consist of the following:

<Table>
<Caption>
                                                              JUNE 30,
                                                       -----------------------
                                                          2001         2000
                                                       ----------   ----------
<S>                                                    <C>          <C>
Payroll and related benefits.........................  $  416,000   $  585,000
Professional fees....................................      98,000      219,000
Lease and other obligations on abandoned
  facilities.........................................     201,000      264,000
Product development obligations......................   1,159,000           --
Prepaid contract revenue.............................     175,000           --
Other................................................     176,000      270,000
                                                       ----------   ----------
                                                       $2,225,000   $1,338,000
                                                       ==========   ==========
</Table>

    Product development obligations are expenses incurred prior to June 30,
2001, relating to clinical research, product development, and pre-marketing
activities associated with the Company's product development program for the
treatment of acute local inflammation. Included in this amount is approximately
$300,000 of employee severance costs relating to the termination of 5
individuals pursuant to the Company's decisions to suspend further development
activities in the acute local inflammation program.

                                       38
<Page>
                                  IOMED, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4.  COMMITMENTS

OPERATING LEASES

    The Company leases space and certain equipment under noncancellable
operating lease agreements that expire at various dates through April 2006.
Rental expense for such leases was $405,000, $227,000 and $248,000 for the years
ended June 30, 2001, 2000 and 1999, respectively. It is generally expected that,
in the normal course of business, operating leases that expire will be renewed
or replaced by other leases with similar terms. Future minimum lease payments
under noncancellable operating leases at June 30, 2001, were $1,747,000. These
obligations mature as follows: fiscal 2002--$426,000; fiscal 2003--$376,000;
fiscal 2004--$332,000; fiscal 2005--$333,000; and fiscal 2006--$280,000.

    In order to consolidate its research, administrative and manufacturing
operations, the Company entered into a lease agreement for a new facility in
fiscal 2000 and recorded a net non-recurring lease abandonment charge of
$360,000 and accrued the associated non-cancelable abandoned lease and other
obligations. At June 30, 2001 and 2000, the Company recorded $72,000 and
$199,000 of lease obligations on the abandoned facility with terms in excess of
one year as other long-term liabilities. All other obligations associated with
the abandonment are considered current and are recorded as accrued liabilities.

LONG-TERM OBLIGATIONS

    The Company has acquired various equipment and furniture under capital lease
agreements. The capitalized cost of such equipment was $1,379,000 and $713,000
and accumulated amortization was $298,000 and $152,000 at June 30, 2001 and
2000, respectively. Under these capital lease agreements, the Company is
required to meet certain financial covenants.

    The Company refinanced $2.7 million of capital lease obligations into a term
loan, collateralized by the underlying assets, restricted cash and cash, with a
fixed rate of 6.82%, payable in 84 monthly installments of $40,519 maturing
April 2008. At June 30, 2001, the outstanding balance was $2,650,000. Payments
of approximately $486,000 are due within one year, of which $315,000 is
principal reduction.

    The carrying values of the long-term obligations approximate fair values as
the interest rates on these long-term obligations approximate market rates of
interest. Future minimum payments under long-term obligations consisted of the
following at June 30, 2001:

<Table>
<S>                                                           <C>
2002........................................................  $  833,000
2003........................................................     769,000
2004........................................................     766,000
2005........................................................     723,000
2006........................................................     610,000
Thereafter..................................................     892,000
                                                              ----------
Total minimum payments......................................   4,593,000
Amounts representing interest...............................    (893,000)
                                                              ----------
Present value of net minimum payments.......................   3,700,000
Less current portion of long-term obligations...............    (575,000)
                                                              ----------
Non-current portion of long-term obligations................  $3,125,000
                                                              ==========
</Table>

                                       39
<Page>
                                  IOMED, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

ROYALTY AGREEMENTS

    The Company is the licensee under royalty agreements, which provide for the
payment of royalties to the licensor based upon net sales of the products under
royalty. Royalty expense in each of the three years in the period ended
June 30, 2001 was not material.

5.  SHAREHOLDERS' EQUITY

WARRANTS

    The Company has issued five warrants, which entitle the holders thereof to
acquire common shares of the Company. In April 1998, the Company issued a
warrant to Everen Securities to acquire up to 170,000 shares for an initial
exercise price of $9.38 per share. In November 1997, the Company issued a
warrant to Novartis Pharmaceuticals Corporation ("Novartis") to acquire up to
18,750 shares for an exercise price of $21.60 per share. In March 1997, the
Company issued a warrant to Elan to acquire up to 104,167 shares for an exercise
price of $21.60 per share. In December 1996, the Company issued a warrant to the
Alliance of Children's Hospitals, Inc. to acquire up to 44,792 shares for an
exercise price of $8.88 per share. In June 1995, the Company issued a warrant to
the Silicon Valley Bank to acquire up to 2,083 shares for an exercise price of
$4.80 per share. The warrants expire in April 2003, November 2002, April 2002,
December 2003, and June 2002, respectively. At June 30, 2000, the Company had
339,792 shares of its authorized, unissued common shares reserved for issuance
pursuant to these warrant obligations.

STOCK OPTIONS

    The Company has adopted and approved two incentive compensation plans. The
Company's 1988 Stock Option Plan was approved by the shareholders in
November 1988 and the Company's 1997 Share Incentive Plan was approved by the
shareholders in November 1997. The 1988 Stock Option Plan expired in
August 1998 and no further grants were made under the Plan following the
adoption of the 1997 Share Incentive Plan. In general, options granted vest over
zero to five years. A summary of the activity under the Plans during each of the
three years ended June 30, 2001, is as follows:

<Table>
<Caption>
                                                            OUTSTANDING STOCK OPTIONS
                                                 SHARES     -------------------------     WEIGHTED-
                                                AVAILABLE   NUMBER OF     PRICE PER        AVERAGE
                                                FOR GRANT     SHARES        SHARE       EXERCISE PRICE
                                                ---------   ----------   ------------   --------------
<S>                                             <C>         <C>          <C>            <C>
Balance at June 30, 1998......................  1,308,400     331,337    $.72-$9.00          $4.96
  Options granted.............................   (540,000)    540,000    $2.25-$2.63         $2.28
  Options exercised...........................         --      (8,226)      $.72             $ .72
  Options canceled............................      1,000     (20,734)   $.72-$9.00          $6.41
                                                ---------   ---------    -----------         -----
Balance at June 30, 1999......................    769,400     842,377    $.72-$9.00          $3.25
  Options granted.............................   (418,500)    418,500    $2.25-$3.88         $3.50
  Options exercised...........................         --     (19,791)      $2.16            $2.16
  Options canceled............................      5,500     (20,666)   $.72-$8.88          $4.52
                                                ---------   ---------    -----------         -----
Balance at June 30, 2000......................    356,400   1,220,420    $.72-$9.00          $3.33
  Additional authorization....................  1,500,000
  Options granted.............................   (362,500)    362,500    $3.75-$6.50         $5.14
  Options exercised...........................         --     (17,135)   $.72-$3.60          $2.63
  Options canceled............................    115,227    (154,322)   $2.16-$8.88         $3.90
                                                ---------   ---------    -----------         -----
Balance at June 30, 2001......................  1,609,127   1,411,463    $2.16-$9.00         $3.74
                                                =========   =========    ===========         =====
</Table>

                                       40
<Page>
                                  IOMED, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The weighted average fair value of options granted in the years ended June 30,
2001, 2000 and 1999, was $3.44, $2.26 and $2.06, respectively. Additional
information regarding the options outstanding at June 30, 2001 follows:

<Table>
<Caption>
                    OPTIONS OUTSTANDING                         OPTIONS EXERCISABLE
------------------------------------------------------------   ----------------------
                                       WEIGHTED
                                        AVERAGE     WEIGHTED                 WEIGHTED
      RANGE OF                         REMAINING    AVERAGE                  AVERAGE
      EXERCISE            NUMBER      CONTRACTUAL   EXERCISE     NUMBER      EXERCISE
       PRICES           OUTSTANDING      LIFE        PRICE     EXERCISABLE    PRICE
---------------------   -----------   -----------   --------   -----------   --------
<S>                     <C>           <C>           <C>        <C>           <C>
     $2.16-$2.63           628,825        7.55       $2.30       355,808      $2.30
     $3.60-$4.80           567,878        6.86       $4.23       284,636      $4.36
     $6.50-$9.00           214,760        7.64       $6.69       138,654      $6.74
     -----------         ---------       -----       -----       -------      -----
     $2.16-$9.00         1,411,463        7.29       $3.74       779,098      $3.84
     ===========         =========       =====       =====       =======      =====
</Table>

    Pro forma information regarding net income and earnings per share is
required by SFAS 123, and has been determined as if the Company had accounted
for its employee stock options under the fair value method of that Statement.
Had compensation cost for the Company's employee stock options been determined
consistent with the methodology prescribed under SFAS 123, the Company's net
loss and loss per share would have been increased by approximately $680,000 and
$378,000, or $.10 and $.06 per common share in fiscal 2001 and 2000,
respectively. The effect on the Company's pro forma results for fiscal year 1999
was not material (less than $.01 per share). The fair value of these options was
estimated at the date of grant using a Black-Scholes option pricing model with
the following weighted average assumptions for 2001, 2000 and 1999,
respectively: risk-free interest rates of 5.5%, 6.5% and 5.6%; dividend yield of
0%; volatility factors of the expected market price of the Company's common
stock of 0.74, 0.63 and 1.42; and a weighted-average expected life of the option
of 6 years.

    The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options, which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input of
highly subjective assumptions, including the expected stock price volatility. In
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options because the
Company's employee stock options have characteristics different from those of
traded options and because changes in the subjective input assumptions can
materially affect the fair value estimate.

    For purposes of pro forma disclosures, the estimated fair value of the
options is amortized over the options' vesting period. Because the effect of
SFAS 123 is prospective, the initial impact on pro forma net income (loss) may
not be representative of compensation expense in future years.

    In accordance with EITF 96-18, the Company accounts for stock options issued
to non-employees at fair value. The value of the stock options is amortized to
expense over the vesting period. The Company has issued stock options to certain
non-employees and recognized related compensation expense of $101,000 and
$34,000 during the fiscal years ended June 30, 2001 and 2000.

SERIES D CONVERTIBLE PREFERRED SHARES

    The Series D preferred shares are convertible at the option of the holder,
Elan Corporation, plc, into common shares, on a share-for-share basis, subject
to adjustment for certain corporate transactions. Further, the Series D
preferred shares are non-redeemable, non-voting and have no

                                       41
<Page>
                                  IOMED, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

dividend, liquidation or similar preferences over common shares but are entitled
to a pro rata share of any such distribution as if the Series D preferred shares
had been converted into common shares.

6.  EMPLOYEE BENEFIT PLAN

    The Company has established a 401(k) savings plan for its full-time
employees and makes a matching contribution based on a percentage of the
contributions of participating employees. The Company contributed approximately
$91,000, $63,000 and $20,000 for the years ended June 30, 2001, 2000 and 1999.

7.  RESEARCH & DEVELOPMENT

    In July 1995, the Company entered into a research and development agreement
with Novartis, a Swiss pharmaceutical company, to evaluate the feasibility of
delivering certain Novartis compounds using the Company's iontophoretic drug
delivery technologies. The term of the research and development agreement ended
on December 31, 1998, and Novartis did not renew the agreement beyond that date.
Research funding payments and license fees paid pursuant to the agreement with
Novartis totaled $716,000 in the fiscal year ended June 30, 1999.

8.  INCOME TAXES

    Deferred taxes result from differences in the carrying value of various
assets and liabilities between income tax reporting and financial reporting
purposes. These differences arise from differing depreciation methods, and other
reserves that are deductible in different periods for tax and financial
reporting purposes.

    The approximate tax effect of temporary differences, net operating loss
carryforwards and tax credit carryforwards as of June 30, 2001 and 2000, is as
follows:

<Table>
<Caption>
                                                        2001          2000
                                                    ------------   -----------
<S>                                                 <C>            <C>
Deferred tax assets:
  Net operating loss carryforwards................  $  6,565,000   $ 3,115,000
  Book in excess of tax depreciation..............       321,000       235,000
  Book in excess of tax amortization..............     4,073,000     4,401,000
  Tax credit carryforwards........................       903,000       516,000
  Reserves........................................       403,000       473,000
                                                    ------------   -----------
Total deferred tax assets.........................    12,265,000     8,740,000
Valuation allowance...............................   (12,265,000)   (8,740,000)
                                                    ------------   -----------
Net deferred tax assets...........................  $         --   $        --
                                                    ============   ===========
</Table>

    There were no significant deferred tax liabilities in 2001 or 2000. The
valuation allowance increased by $3,525,000 during the fiscal year.

    There were no net deferred income tax provisions in any of the years
presented. The Company recorded no current federal or state income tax provision
for fiscal 2001, 2000 and 1999.

                                       42
<Page>
                                  IOMED, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

    The reconciliation of income taxes at the statutory United States federal
income tax rate and the Company's effective income expense attributable to
continuing operations is as follows:

<Table>
<Caption>
                                                                2001        2000        1999
                                                              --------    --------    --------
<S>                                                           <C>         <C>         <C>
Tax at U.S. statutory rates.................................   (34.0)%     (34.0)%      34.0 %
State tax, net of federal tax benefit.......................    (3.3)       (3.3)        3.3
Credits.....................................................    (4.9)        0.0         0.0
Non-deductible interest and other expenses..................     0.8         1.5        22.7
Effect of deferred tax valuation adjustments................    41.4        35.8       (60.0)
                                                               -----       -----       -----
Effective income tax rate (percentage)......................      --%         --%         --%
                                                               =====       =====       =====
</Table>

    As of June 30, 2001, the Company had approximately $16,479,000 and
$12,670,000 in federal and state net operating loss carryforwards, respectively,
and $903,000 in federal tax credit carryforwards, that expire from 2003 through
2021. Utilization of the Company's net operating loss and credit carryforwards
is limited to the future taxable income of the Company. Under the "change of
ownership" provisions of the Internal Revenue Code, utilization of these net
operating loss and credit carryforwards may be subject to an annual limitation.

9.  QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

<Table>
<Caption>
                                   FIRST        SECOND         THIRD        FOURTH
                                  QUARTER       QUARTER       QUARTER       QUARTER        TOTAL
                                 ----------   -----------   -----------   -----------   -----------
<S>                              <C>          <C>           <C>           <C>           <C>
FISCAL 2001
  Product sales................  $2,763,000   $ 2,778,000   $ 2,760,000   $ 2,902,000   $11,203,000
  Gross profit.................   1,846,000     1,834,000     1,768,000     1,948,000     7,396,000
  Loss from operations.........    (671,000)   (1,638,000)   (2,437,000)   (3,829,000)   (8,575,000)
  Net loss.....................    (439,000)   (1,410,000)   (2,263,000)   (3,764,000)   (7,876,000)

  Loss per share...............  $    (0.07)  $     (0.22)  $     (0.35)  $     (0.57)  $     (1.20)

FISCAL 2000
  Product sales................  $2,532,000   $ 2,643,000   $ 2,561,000   $ 2,860,000   $10,596,000
  Gross profit.................   1,608,000     1,738,000     1,670,000     1,888,000     6,904,000
  Loss from operations.........    (312,000)     (424,000)     (452,000)     (927,000)   (2,115,000)
  Net loss.....................     (91,000)     (174,000)     (214,000)     (676,000)   (1,155,000)

  Loss per share...............  $    (0.01)  $     (0.03)  $     (0.03)  $     (0.11)  $     (0.18)
</Table>

10.  CONTINGENCIES

    The Company is subject to various claims and legal proceedings covering
matters that arise in the ordinary course of its business activities. Management
believes any liability that may ultimately result from the resolution of these
matters will not have a material adverse effect on the Company's consolidated
financial position, operating results, or cash flows.

                                       43
<Page>
                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

    The information required by this item is included under "Election of
Directors," "The Board of Directors and Committees," and "Executive Officers" in
the Company's Proxy Statement to be filed in connection with its Annual Meeting
of Shareholders, to be held on November 13, 2001, and is incorporated herein by
reference.

ITEM 11. EXECUTIVE COMPENSATION

    The information required by this item is included under "Compensation of
Directors and Executive Officers" in the Company's Proxy Statement to be filed
in connection with its Annual Meeting of Shareholders, to be held on
November 13, 2001, and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    The information required by this item is included under "Security Ownership
of Certain Beneficial Owners and Management" in the Company's Proxy Statement to
be filed in connection with its Annual Meeting of Shareholders, to be held on
November 13, 2001, and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    The information required by this item is included under "Certain
Relationships and Related Transactions" in the Company's Proxy Statement to be
filed in connection with its Annual Meeting of Shareholders, to be held on
November 13, 2001, and is incorporated herein by reference.

                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

FINANCIAL STATEMENTS

    The consolidated financial statements of the Company and its subsidiary are
included elsewhere in this Report.

FINANCIAL STATEMENT SCHEDULES

    No schedules are required in connection with the filing of this Report as
amounts are either immaterial or are otherwise disclosed in the financial
statements.

EXHIBITS

<Table>
<Caption>
NUMBER                                          DESCRIPTION
------                                          -----------
<C>                     <S>
       3.1**            Amended and Restated Articles of Incorporation of the
                        Company

       3.2*             Amended and Restated Bylaws of the Company

       4.1*             Reference is made to Exhibit 3.1

       4.2*             Specimen of Common Share Certificate

       4.3***           1988 Stock Option Plan of the Company

       4.4***           1997 Share Incentive Plan of the Company

      10.1*             Lease between the Company and Hayter Properties, Inc., dated
                        September 1, 1997
</Table>

                                       44
<Page>

<Table>
<Caption>
NUMBER                                          DESCRIPTION
------                                          -----------
<C>                     <S>
      10.2*             License Agreement between the Company and Elan International
                        Services, Ltd., dated April 14, 1997

      10.3*             License Agreement between the Company and Drug Delivery
                        Systems, Inc., dated April 14, 1997

      10.4*             Promissory Note issued by the Company to Elan International
                        Management, Ltd., in the principal amount of $10,000,000,
                        dated April 14, 1997

      10.5*             Promissory Note issued by the Company to Elan International
                        Management, Ltd., in the principal amount of $5,000,000,
                        dated April 14, 1997

      10.6*             Note Purchase and Warrant Agreement among the Company, Elan
                        International Services, Ltd. And Elan International
                        Management, Ltd. dated April 14, 1997

      10.7*             Warrant issued to Elan International Services, Ltd., dated
                        April 14, 1997

      10.8*             Registration Rights Agreement between the Company and Elan
                        International Services, Ltd., dated April 14, 1997

      10.9*             Asset Acquisition Agreement between the Company and
                        Fillauer, Inc., dated December 27, 1996

      10.10*            License Agreement between the Company and Fillauer, Inc.,
                        dated December 26, 1996

      10.11*            Warrant issued to Alliance of Children's Hospitals, Inc.,
                        dated December 1, 1996

      10.12*            Stock Purchase Agreement between the Company and Child
                        Health Investment Corporation, dated November 29, 1996

      10.13*            Manufacturing Agreement between the Company and KWM
                        Electronics Corporation, dated November 1, 1996

      10.14*            Contribution Agreement between the Company and Dermion,
                        Inc., dated March 29, 1996

      10.15*            Patent License Agreement between the Company and Dermion,
                        Inc., dated March 29, 1996

      10.16*            Research and Development Agreement among the Company,
                        Dermion, Inc. and Ciba-Geigy Corporation, dated March 29,
                        1996

      10.17*            Stock Purchase Agreement among the Company, Dermion, Inc.
                        and Ciba-Geigy Corporation, dated March 29, 1996

      10.18*            Stockholders' Agreement among the Company, Dermion, Inc. and
                        Ciba-Geigy Corporation, dated March 29, 1996

      10.19*            Agreement between the Company and Laboratoires Fournier
                        S.C.A., dated February 20, 1996

      10.20*            Agreement between the Company and ALZA Corporation, dated
                        July 28, 1993

      10.21*            Supply Agreement between the Company and Abbot Laboratories,
                        Inc., dated April 27, 1993

      10.22*            Stock Purchase Agreement between the Company and The CIT
                        Group/Venture Capital, Inc., dated March 8, 1993

      10.23*            Stock Purchase Agreement between the Company and certain
                        investors, dated February 19, 1993
</Table>

                                       45
<Page>

<Table>
<Caption>
NUMBER                                          DESCRIPTION
------                                          -----------
<C>                     <S>
      10.24*            License Agreement between the Company and the University of
                        Utah Research Foundation, dated October 1, 1992

      10.25*            Warrant issued to Silicon Valley Bank, dated June 25, 1992

      10.26*            Company 1997 Share Incentive Plan

      10.27*            Preferred Stock Purchase Agreement between the Company,
                        Newtek Ventures, MBW Venture Partners, Michigan Investment
                        Fund, Utah Ventures, Cordis Corporation, Ian R.N. Bund,
                        James R. Weersing and Robert J. Harrington, dated August 4,
                        1987

      10.28*            Exchange Agreement among the Company, Novartis
                        Pharmaceuticals Corporation and Dermion, Inc., dated
                        November 1, 1997

      10.29*            Warrant to Purchase Shares of Common Stock in favor of
                        Novartis Pharmaceuticals Corporation, dated November 1, 1997

      10.30*            First Amendment of Research & Development Agreement among
                        the Company, Novartis Pharmaceuticals Corporation and
                        Dermion, Inc. dated November 1, 1997

      10.31*            Supply Agreement between the Company and Luitpold
                        Pharmaceuticals, Inc./American Regent Laboratories, Inc.
                        dated December 4, 1994

      10.32****         Lease between the Company and NP#2, dated May 22, 2000

      11.1*****         Statement re computation of earnings per share

      21.1*             Schedule of Subsidiaries

      23.1#             Consent of Ernst & Young LLP, Independent Auditors
</Table>

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

*   Filed by the Company as an exhibit to the Form S-1 Registration Statement on
    April 23, 1998.

**  Filed by the Company as an exhibit to the Annual Report on Form 10-K on
    September 28, 1998.

*** Filed by the Company as an exhibit to the Form S-8 Registration Statement on
    February 9, 2000

****Filed by the Company as an exhibit to the Annual Report on Form 10-K on
    September 28, 2000.

*****Information included in consolidated financial statements.

#  Filed herewith.

REPORTS ON FORM 8-K

<Table>
<Caption>
DATE            ITEM REPORTED
----            -------------
<S>             <C>
May 1, 2001     The Registrant's May 1, 2001 press release announcing that
                based on preliminary analysis, the confirmatory phase III
                clinical study for its G-II product, formerly called
                ProDex-TM-, did not meet the primary endpoints in the
                treatment of epicondylitis.
</Table>

                                       46
<Page>
                                   SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) 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.

<Table>
<S>                                                    <C>  <C>
                                                       IOMED, INC.

Date: September 25, 2001                               By:  /s/ JAMES R. WEERSING
                                                            -----------------------------------------
                                                            James R. Weersing
                                                            President and Chief Executive Officer

Date: September 25, 2001                               By:  /s/ ROBERT J. LOLLINI
                                                            -----------------------------------------
                                                            Robert J. Lollini
                                                            Vice President, Finance and
                                                            Chief Financial Officer
</Table>

                                   SIGNATURES

    In accordance with the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Company and in the
capacities and on the dates indicated.

<Table>
<Caption>
                      SIGNATURE                                 CAPACITY                   DATE
                      ---------                                 --------                   ----
<C>                                                    <S>                          <C>
                 /s/ PETER J. WARDLE
     -------------------------------------------       Chairman                     September 25, 2001
                   Peter J. Wardle

                /s/ JAMES R. WEERSING
     -------------------------------------------       Director                     September 25, 2001
                  James R. Weersing

               /s/ JOHN W. FARA, PH.D.
     -------------------------------------------       Director                     September 25, 2001
                 John W. Fara, Ph.D.

                /s/ MICHAEL T. SEMBER
     -------------------------------------------       Director                     September 25, 2001
                   Michael Sember

                /s/ STEVEN P. SIDWELL
     -------------------------------------------       Director                     September 25, 2001
                  Steven P. Sidwell

                   /s/ WARREN WOOD
     -------------------------------------------       Director                     September 25, 2001
                     Warren Wood
</Table>

                                       47
<Page>
                                 EXHIBIT INDEX

<Table>
<Caption>
       NUMBER           DESCRIPTION                                                     PAGE
---------------------   -----------                                                   --------
<C>                     <S>                                                           <C>
        23.1            Consent of Ernst & Young LLP, Independent Auditors               49
</Table>

                                       48