Innovative Medical Services Announces Third-Quarter Operating Results; Sales of Bioscience Products Rise 773% from Prior-Year Quarter

Business Wire, June 17, 2002

Business Editors

SAN DIEGO--(BUSINESS WIRE)--June 17, 2002

Innovative Medical Services (Nasdaq: PURE), a biosciences company that develops and markets technology-based products involving water purification/treatment, pest control, and anti-microbial applications, today announced its operating results for the third quarter and first nine months of FY2002.

For the three months ended April 30, 2002, net sales increased 25% to $877,441, compared with $701,146 in the third quarter of FY2001. The Company posted a net loss of ($596,652), or ($0.08) per share, in the most recent quarter, versus a net loss of ($550,479), or ($0.09) per share, in the year-earlier period.

Net sales increased 76% in the nine-month period ended April 30, 2002, to a record $2,575,624, compared with $1,462,586 in the corresponding period of the previous fiscal year. The net loss for the nine months was reduced to ($1,393,866), or ($0.19) per share, versus a net loss of ($1,484,416), or ($0.24) per share, in the first nine months of FY2001.

"We are very pleased to report that third-quarter sales at our Bioscience Division increased almost nine-fold from prior-year levels, as sales of our silver ionization and pest control products continued to grow," commented Michael Krall, Chief Executive Officer of Innovative Medical Services. "While Water Treatment Division sales were down slightly for the quarter, they increased approximately 13% during the first nine months of fiscal 2002, when compared with the year-earlier period."

New Products Join RoachX Success

During the most recent quarter, Innovative Medical Services received EPA approval for its second pesticide product, AntX 75(TM), and added TrapX(TM) and FlyX(TM) to its pest control product line. These products were developed primarily for pest control professionals.

"AntX 75 combines the Company's patent-pending Triglycylboride(TM) glycerol boric acid technology with a carbohydrate-based attractant to create a non-drying, time-released bait," continued Krall. "The non-drying formula allows ants to feed until the bait is gone while completely masking the borate in the bait. It also produces a time-released effect to extend the kill duration, allowing the ants to carry the pesticide back to their nests before dying."

AntX 75 joins the Company's RoachX(TM), a bait technology based on the same patent-pending, non-drying, time-released formula. This product is gaining popularity among pest management professionals and is currently being used by some of America's largest school systems, resorts, entertainment complexes and institutional food operations. RoachX is currently available nationwide through all major commercial pesticide distributors.

"Also during the quarter, we launched our new TrapX and FlyX pest control products," noted Krall. "TrapX is an EPA-exempt rodent lure that is available in fruit formula for roof rats and protein formula for Norway rats and squirrels. Both formulas are also effective in controlling field and house mice and may be used in any type of trap. The conveniently packaged non-drying formula requires no mixing, remains effective for over 30 days, and eliminates the cross-contamination issues that are of growing importance to pest management professionals. FlyX, also an EPA-exempt product, is effective for a variety of indoor and outdoor applications and will be available through commercial distributors later this summer."

Axenohl(TM)

In January 2002, the Company formally launched CleanKill(TM), an Axen-based hard surface disinfectant for the pest control industry. Axen is the use dilution of the Company's Axenohl product.

"In another important development during the quarter, we announced the results of a battery of independent laboratory tests using an increased formula strength of 30 parts per million (ppm) Axen(TM) that included a remarkable 30-second, 99.9999% kill rate and 24-hour, 99.99% residual kill activity," reported Krall. "The current EPA approval of Axen is based on prior tests involving 12-ppm strength. We have begun the submission process of this new data to the EPA for expanded efficacy claims on Axen as a hard surface disinfectant, thus targeting a multi-billion dollar market in the United States. The testing also serves as a basis for our entry into other markets that may benefit from formulations of Axenohl as an active ingredient."

About Innovative Medical Services

Innovative Medical Services (IMS) is a biosciences company that develops and markets technology-based products involving water purification/treatment, pest control and anti-microbial applications. The Company is currently America's leader in pharmaceutical water purification products and services using reverse osmosis technology. IMS has expanded beyond its niche pharmacy market by developing and marketing its Innovex line of EPA-approved pest control products utilizing Triglycylboride(TM) technology and its Axenohl(R) anti-microbial disinfectant based upon its patented ionic silver technology.

Innovative Medical Services is headquartered in El Cajon, California (San Diego metropolitan area), and its common stock is listed on The Nasdaq Stock Market under the symbol PURE.