INNOVATIVE MEDICAL SERVICES REPORTS 2ND QTR FY2003 NET LOSS.

Innovative Medical Services (Nasdaq:PURE), San Diego, a biosciences company that develops and markets technology-based products involving water purification/treatment, pest control and anti-microbial applications, has reported its operating results for the second quarter and first half of FY2003.

For the three months ended Jan. 31, 2003, revenues totaled $633,500, compared with revenues of $834,200 in the second quarter of FY2002. The company recorded a net loss from operations of ($1,233,300), or ($0.14) per share, in the most recent quarter, compared with a net loss from operations of ($406,200), or ($0.06) per share, in the prior-year quarter. Approximately 52 percent of the loss recorded in the second quarter of FY2003 is attributed to non-cash start-up costs associated with the acquisition of Nickel Ltd. distribution and licensing agreements.

For the six months ended Jan. 31, 2003, the company reported a net loss from operations of ($1,696,000), or ($0.20) per share, on revenues of $1,360,800. These results compared with a net loss from operations of ($785,200), or ($0.11) per share, and revenues of $1,698,000, in the first half of FY2002.

Water treatment division revenues increased 28 percent during the quarter to $601,600, versus $470,900 in the quarter ended Jan. 31, 2002. Revenues from the company's biosciences divisions declined 91 percent to $31,900, compared with $363,300 in the prior-year quarter.

The increase in water treatment division revenues reflects higher commercial and residential water treatment product sales. Increased sales in the Nutripure dealer program were primarily responsible for this increase in revenue. The company expects further growth in water treatment division revenues during the second half of FY2003 as the dealer program continues to expand and sales of the Nutripure 2000 countertop water filtration system to a national mass merchandiser increase.

Sales in the company's biosciences divisions trailed prior-year levels in the most recent quarter. A decline in pesticide product sales resulted from the restructuring of the company's sales and marketing strategy in order to focus on large end-users, including leading pest control service companies. Management expects benefits of the restructuring to be evident in higher pest control product sales during the second half of FY2003.

Silver ionization revenues declined this quarter due to a lack of sales of Axen to Dodo & Co. ("Dodo"), a Korean cosmetics manufacturer and marketer. As previously disclosed, we believe Dodo continues in the bankruptcy reorganization process. Until the matter is resolved and Dodo restabilizes, Innovative Medical Services will not ship additional product to Dodo. No Axen was shipped to Dodo during the quarter ended Jan. 31, 2003, whereas sales to Dodo comprised the majority of Axen sales in the prior-year quarter.

"While our operating results during the first half of Fiscal 2003 were disappointing, we do not believe they are indicative of the company's prospects for sales and profitability," stated Michael Krall, CEO of Innovative Medical Services.

"Our Nutripure dealer program is gaining momentum in response to changes in strategy that have been implemented by a strengthened management team in recent months, and we expect sales growth to accelerate in the water treatment division during the second half of the fiscal year. Meanwhile, steps have been taken to reverse the decline in biosciences product sales that was evident in the first and second quarters. Our previously announced licensing agreement with Nickel Ltd. has already resulted in the market launch in Europe of anti-bacterial products containing the 30 part-per-million (ppm) formulation of our Axen technology, and we will soon be introducing a number of Nickel's Clean Plus(R) janitorial and sanitation products to distributors and mass merchandisers in the United States.

"We have overhauled key sales and marketing strategies for our pesticide products in a manner that is intended to decrease expenses and increase sales by targeting major wholesalers and national pest control service companies," continued Krall. "A number of leading pest control organizations are currently evaluating the private-label potential of our least-toxic pesticides.

"We continue to believe that the 30-ppm formulation of our Axen silver ion anti-microbial disinfectant, when approved by the EPA, holds great promise for our company. Management remains optimistic that such regulatory approval will be forthcoming during the next several weeks. Once EPA approval is granted, we should be able to expand Axen's efficacy claims as a hard surface disinfectant to include a 30-second kill time on standard indicator bacteria, a 24-hour residual kill on standard indicator bacteria, and enhanced kill times for resistant strains of bacteria, fungi, and a number of viruses. These efficacy claims, combined with Axen's lowest EPA toxicity rating, will significantly exceed those stated on the labels of many leading disinfectants on the market today. We expect to see a shift toward increased Axenohl and Innovex product sales in the coming quarter.

"EPA approval for Axen-30 will also allow Innovative Medical Services to move forward with its plans to import and sell Nickel Ltd.'s new Bac'Out(R) line of wet wipes, liquids and sprays into the United States under our distribution agreement with that company. We expect to pursue additional EPA and FDA regulatory approvals for other Axen applications involving wound care, topical infection care, personal disinfecting products, food processing, food safety, and municipal water treatment. We continue to believe that our silver ion technologies will become the largest revenue generator for our company over the long term," concluded Krall.

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(TM) anti-microbial disinfectant based upon its patented ionic silver technology.

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

For more information call 619/596-8600 or visit http://mwww.imspure.com.