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

Business Wire, June 17, 2002

CONSOLIDATED BALANCE SHEETS
----------------------------------------------------------------------
                                               (Unaudited)
                                                April 30,    July 31,
                                                  2002         2001
                                                  ----         ----
ASSETS
Current Assets
 Cash and cash equivalents                   $   209,774  $   207,092
 Accounts receivable, net of allowance
 for doubtful accounts of $125,000 at
 April 30, 2002, and $115,000 at
  July 31, 2001                                  597,102      570,734
 Due from officers and employees                 245,284      240,001
 Inventories                                     588,261      711,018
 Prepaid expenses                                186,518      182,556
                                              ----------    ---------

  Total current assets                         1,826,939    1,911,400
                                              ----------    ---------

Property, Plant and Equipment
 Property, plant and equipment                   717,789      903,072
                                              ----------    ---------

  Total property, plant and equipment            717,789      903,072
                                              ----------    ---------

Noncurrent Assets
 Deposits                                          8,953        8,127
 Patents and license                           2,654,507    1,014,282
 Deferred acquisition costs                      243,000      230,000
                                              ----------    ---------

  Total noncurrent assets                      2,906,460    1,252,409
                                              ----------    ---------

 Total assets                                $ 5,451,187  $ 4,066,881
                                             ===========  ===========

LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities
 Accounts payable                            $   722,406  $   543,992
 Accrued liabilities                             154,993       62,900
 Notes payable                                   519,338            -
                                              ----------    ---------

  Total current liabilities                    1,396,737      606,892
                                              ----------    ---------

Stockholders' Equity
 Class A common stock, no par value:
 authorized 50,000,000 shares,
 issued and outstanding 7,939,899 at
 April 30, 2002, and 6,954,699 at
  July 31, 2001                               13,607,991   11,619,665
 Accumulated deficit                          (9,553,542)  (8,159,676)
                                              ----------    ---------

  Total stockholders' equity                   4,054,450    3,459,989
                                              ----------    ---------

 Total liabilities and stockholders' equity  $ 5,451,187  $ 4,066,881
                                             ===========  ===========



CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
----------------------------------------------------------------------
                               For the Nine          For the Three
                               Months Ended           Months Ended
                                 April 30,              April 30,
                              2002       2001        2002      2001
                              ----       ----        ----      ----

Net sales                  $2,575,624  $1,462,586  $877,441  $701,146
Cost of sales               1,304,151     894,457   498,332   469,940
                           ----------  ----------  --------  --------

Gross profit                1,271,473     568,129   379,109   231,206
                           ----------  ----------  --------  --------

Selling expenses              576,641     483,605   222,115   206,439
General and administrative
 expenses                   1,487,307   1,329,341   480,514   389,846
Research and development      571,201     268,203   254,989   185,400
                           ----------  ----------  --------  --------

Total operating costs       2,635,149   2,081,149   957,618   781,685
                           ----------  ----------  --------  --------

Operating income (loss)    (1,363,676) (1,513,020) (578,509) (550,479)
                           ----------  ----------  --------  --------

Other income and (expense):
 Interest income                  467      25,932       124     2,770
 Interest Expense             (28,857)    (11,100)  (17,667)   (1,455)
                           ----------  ----------  --------  --------

Total other income
 (expense)                    (28,390)     14,832   (17,543)    1,315
                           ----------  ----------  --------  --------

Income (loss) before income
taxes, minority interest in
 subsidiary operations     (1,392,066) (1,498,188) (596,052) (549,164)

Federal and state
 income taxes                   1,800       1,200       600       800
                           ----------  ----------  --------  --------

Income (loss) before
minority interest in
 subsidiary operations     (1,393,866) (1,499,388) (596,652) (549,964)

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

Net income (loss)         $(1,393,866)$(1,484,416)$(596,652)$(549,964)
                          =========== =========== ========= =========

Net income (loss) per
 common share (basic)         $ (0.19)    $ (0.24)  $ (0.08)  $ (0.09)
                          =========== =========== ========= =========

Net income (loss) per
 common share (diluted)       $ (0.19)    $ (0.24)  $ (0.08)  $ (0.09)
                          =========== =========== ========= =========



                                           Nine Months
                                             Ended         Year Ended
CONSOLIDATED STATEMENTS OF                  April 30,        July 31,
ACCUMULATED DEFICITS                          2002            2001
 ---------------------------------------------------------------------

Balance, beginning of period             $ (8,159,676)   $ (6,377,451)

Net income (loss)                          (1,393,866)     (1,782,224)
                                         -------------   -------------

Balance, end of period                   $ (9,553,542)   $ (8,159,676)
                                         =============   =============