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

FORM 10-QSB

(Mark One)

|    |  |                                                                                                                                           
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------
|[X] |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001.

OR

|      |  |                                                                                                                                               
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------
|[   ] |  | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION FROM                 TO
               .

COMMISSION FILE NUMBER 000-26175

DISCOVERY INVESTMENTS, INC.

---

(Exact name of registrant as specified in its charter)


|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Nevada                                                         |  | 88-0409151                          
|                                                               |  |                                     
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification No.)

|                                                      |  |  |            | 
|----------------------------------------------------- |  |  | ---------- | 
|6767 W. Tropicana Avenue, Suite 207
Las Vegas, Nevada |  |  | 89103      | 
|                                                      |  |  |            | 
|(Address of principal executive offices)              |  |  | (Zip Code) | 

Issuers telephone number: (702) 248-1047

N/A

---

(Former name, former address and former fiscal
year, if changed since last report.)


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 [   ]

State the number of shares outstanding of each of the issuers classes of
common equity, as of the latest practicable date:

|                                        |  |                    |             | 
|--------------------------------------- |  | ------------------ | ----------- | 
|                                        |  | Outstanding at    
|Class                                   |  | September 30, 2001
|                                        |  |                   
|Common Stock, par value
$.001 per share |  |                    | 2,100,0001/ | 

|1/ |  | 2,199,882 shares will be issued and outstanding giving effect to the
stock issuance referenced in Part I, Item
II below.
|-- |  | ------------------------------------------------------------------------------------------------------------------------

Transitional Small Business Disclosure Format: Yes [   ] No [X]

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TABLE OF CONTENTS



|                             |                                                                       |                                    |  |  |  |  |  | 
|---------------------------- | --------------------------------------------------------------------- | ---------------------------------- |  |  |  |  |  | 
|PART I FINANCIAL INFORMATION
|                             | Item I. Financial Statements                                         
|                             |                                                                       | BALANCE SHEETS                    
|                             |                                                                       | STATEMENTS OF INCOME              
|                             |                                                                       | STATEMENTS OF STOCKHOLDERS EQUITY
|                             |                                                                       | STATEMENTS OF CASH FLOWS          
|                             |                                                                       | NOTES TO FINANCIAL STATEMENTS     
|                             | Item II. Managements Discussion and Analysis or Plan of Operation   
|                             | Item III. Qualitative and Quantitative Disclosures About Market Risk.
|PART II OTHER INFORMATION   
|                             | Item 1  Legal Proceedings                                           
|                             | Item 2  Changes in the Rights of the Companys Security Holders     
|                             | Item 3  Defaults by the Company on its Senior Securities            
|                             | Item 4  Submission of Matter to Vote of Security Holders            
|                             | Item 5  Other Information                                           
|                             | Item 6  Exhibits and Reports on Form 8-K                            
|SIGNATURE                   



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PART I

FINANCIAL INFORMATION




Item I. Financial Statements

DISCOVERY INVESTMENTS, INC.
(A Development Stage Company)

FINANCIAL REPORTS

SEPTEMBER 30, 2001
DECEMBER 31, 2000

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DISCOVERY INVESTMENTS, INC.
(A Development Stage Company)

CONTENTS

|                                                         |                                    |  |   |       | 
|-------------------------------------------------------- | ---------------------------------- |  | - | ----- | 
|INDEPENDENT AUDITORS REPORT ON THE FINANCIAL STATEMENTS |                                    |  | 4 |      
|FINANCIAL STATEMENTS
Balance Sheets                      |                                    |  | 5 |      
|                                                         | Statements of Income               |  |   | 6-7   | 
|                                                         | Statements of Stockholders Equity |  |   | 8     | 
|                                                         | Statements of Cash Flows           |  |   | 9-10  | 
|                                                         | Notes to Financial Statements      |  |   | 11-15 | 

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Independent Auditors Report

To the Board of Directors
Discovery Investments, Inc.
Las Vegas, Nevada

I have audited the accompanying balance sheet of Discovery
Investments, Inc. (A Development Stage Company) as of September 30,
2001 and December 31, 2000 and the related statements of income,
stockholders equity, and cash flows for the three months ended
September 30, 2001, the nine months ended September 30, 2001 and the
year ended December 31, 2000 and the period September 10, 1996 (date
of inception) through September 30, 2001. These financial
statements are the responsibility of the Companys management. My
responsibility is to express an opinion on these financial
statements based on my audit.

I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I 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.
I believe that my audit provides a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Discovery Investments, Inc. (A
Development Stage Company) as of September 30, 2001 and December 31, 2000 and
the results of its operations and cash flows for the three months ended
September 30, 2001, the nine months ended September 30, 2001, the year ended
December 31, 2000 and the period September 10, 1996 (date of inception) through
September 30, 2001, in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As more fully described in Note 2 to
the financial statements, effective September 24, 2001, the Company completed
its reorganization after seeking protection under Chapter 11 of the U.S.
Bankruptcy Code pursuant to a Reorganization Plan which was confirmed by the
Bankruptcy Court on September 24, 2001. As discussed in Note 4 to the financial
statements, the Company has no operations and has no established source of
revenue. This raises substantial doubt about its ability to continue as a going
concern. Managements plan in regard to these matters is also described in Note
4. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.

Kyle L. Tingle, CPA, LLC
November 12, 2001
Henderson, Nevada

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##### Table of Contents



DISCOVERY INVESTMENTS, INC.
(A Development Stage Company)




BALANCE SHEETS


(Restated)


|                                              |                                                                                       |   |                                        |                                            |   |               |           |              |   |              |           |            |   |            |   | 
|--------------------------------------------- | ------------------------------------------------------------------------------------- | - | -------------------------------------- | ------------------------------------------ | - | ------------- | --------- | ------------ | - | ------------ | --------- | ---------- | - | ---------- | - | 
|                                              |                                                                                       |   |                                        |                                            |   | September 30, |           | December 31, |   | December 31,
|                                              |                                                                                       |   |                                        |                                            |   | 2001          |           | 2000         |   | 1999        
|                                              |                                                                                       |   |                                        |                                            |   |               |           |              |   |             
|ASSETS                                       
|CURRENT ASSETS                                |                                                                                       | $ | 0                                      |                                            |   | $             | 0         |              |   | $            | 0         |           
|                                              |                                                                                       |   |                                        |                                            |   |               |           |              |   |              |           |           
|                                              |                                                                                       |   | Total current assets                   |                                            | $ | 0             |           |              | $ | 0            |           |            | $ | 0          |  
|                                              |                                                                                       |   |                                        |                                            |   |               |           |              |   |              |           |           
|                                              |                                                                                       |   |                                        | Total assets                               |   | $             | 0         |              |   | $            | 0         |            |   | $          | 0 | 
|                                              |                                                                                       |   |                                        |                                            |   |               |           |              |   |              |           |           
|LIABILITIES AND STOCKHOLDERS EQUITY         
|CURRENT LIABILITIES                           |                                                                                       |   |                                        |                                            |   |               |           |              |   |              |           |           
|                                              | Short term notes payable                                                              |   | $                                      | 0                                          |   |               | $         | 0            |   |              | $         | 0          |  
|                                              | Accounts payable                                                                      |   |                                        | 50,000                                     |   |               |           | 0            |   |              |           | 0          |  
|                                              | Interest payable                                                                      |   |                                        | 0                                          |   |               |           | 0            |   |              |           | 0          |  
|                                              | Officers advances                                                                     |   |                                        | 0                                          |   |               |           | 0            |   |              |           | 0          |  
|                                              |                                                                                       |   |                                        |                                            |   |               |           |              |   |              |           |           
|                                              |                                                                                       |   | Total current liabilities              |                                            | $ | 50,000        |           |              | $ | 0            |           |            | $ | 0          |  
|                                              |                                                                                       |   |                                        |                                            |   |               |           |              |   |              |           |           
|LONG TERM DEBT                                |                                                                                       | $ | 0                                      |                                            |   | $             | 0         |              |   | $            | 0         |           
|                                              |                                                                                       |   |                                        |                                            |   |               |           |              |   |              |           |           
|Liabilities Subject to Compromise             |                                                                                       | $ | 0                                      |                                            |   | $             | 1,896,293 |              |   | $            | 1,540,654 |           
|                                              |                                                                                       |   | Total liabilities                      |                                            | $ | 50,000        |           |              | $ | 1,896,293    |           |            | $ | 1,540,654  |  
|                                              |                                                                                       |   |                                        |                                            |   |               |           |              |   |              |           |           
|STOCKHOLDERS EQUITY (DEFICIT) (Note 2 and 4) |                                                                                       |   |                                        |                                            |   |               |           |              |   |              |           |           
|                                              | Common stock: $0.001 par value;
authorized 25,000,000 shares;
issued and outstanding: |   |                                        |                                            |   |               |           |              |   |              |           |            |  
|                                              |                                                                                       |   | 2,100,000 shares at December 31, 1999; |                                            |   |               |           |              |   |              |           |            |   | 2,100      |  
|                                              |                                                                                       |   | 2,100,000 shares at December 31, 2000; |                                            |   |               |           |              |   | 2,100        |           |            |   |            |  
|                                              |                                                                                       |   | 2,100,000 shares at September 30, 2001 |                                            |   | 2,100         |           |              |   |              |           |            |   |            |  
|                                              | Additional Paid In Capital                                                            |   |                                        | 0                                          |   |               |           | 0            |   |              |           | 0          |  
|                                              | Accumulated deficit during development stage                                          |   |                                        | (52,100                                    | ) |               |           | (1,898,393   | ) |              |           | (1,542,754 | )
|                                              |                                                                                       |   |                                        |                                            |   |               |           |              |   |              |           |           
|                                              |                                                                                       |   | Total stockholders equity (deficit)   |                                            | $ | (50,000       | )         |              | $ | (1,896,293   | )         |            | $ | (1,540,654 | )
|                                              |                                                                                       |   |                                        |                                            |   |               |           |              |   |              |           |           
|                                              |                                                                                       |   |                                        | Total liabilities and
stockholders equity |   | $             | 0         |              |   | $            | 0         |            |   | $          | 0 | 
|                                              |                                                                                       |   |                                        |                                            |   |               |           |              |   |              |           |           

See Accompanying Notes to Financial Statements.

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DISCOVERY INVESTMENTS, INC.
(A Development Stage Company)




STATEMENTS OF INCOME


(Restated)


|                                                          |                  |                                                           |                                                      |         |           |                    |   |                   |         |               |           |               |           |           |         |             |          |           |   | 
|--------------------------------------------------------- | ---------------- | --------------------------------------------------------- | ---------------------------------------------------- | ------- | --------- | ------------------ | - | ----------------- | ------- | ------------- | --------- | ------------- | --------- | --------- | ------- | ----------- | -------- | --------- | - | 
|                                                          |                  |                                                           |                                                      |         |           | Three Months Ended |   | Nine Months Ended
|                                                          |                  |                                                           |                                                      |         |           |                    |   |                  
|                                                          |                  |                                                           |                                                      |         |           | September 30,      |   | September 30,     |         | September 30, |           | September 30,
|                                                          |                  |                                                           |                                                      |         |           | 2001               |   | 2000              |         | 2001          |           | 2000         
|                                                          |                  |                                                           |                                                      |         |           |                    |   |                   |         |               |           |              
|                                                          |                  |                                                           |                                                      |         |           |                    |   |                   |         | (unaudited)   |           |               |           |           |         | (unaudited)
|Revenues                                                  |                  | $                                                         | 0                                                    |         |           | $                  | 0 |                   |         | $             | 0         |               |           | $         | 0       |            
|Cost of revenue                                           |                  |                                                           | 0                                                    |         |           |                    | 0 |                   |         |               | 0         |               |           |           | 0       |            
|                                                          |                  |                                                           |                                                      |         |           |                    |   |                   |         |               |           |               |           |           |         |            
|                                                          |                  | Gross profit                                              |                                                      | $       | 0         |                    |   | $                 | 0       |               |           | $             | 0         |           |         | $           | 0        |          
|General, selling and
administrative expenses              |                  |                                                           | 3,500                                                |         |           |                    | 0 |                   |         |               | 9,443     |               |           |           | 100,000 |            
|                                                          |                  |                                                           |                                                      |         |           |                    |   |                   |         |               |           |               |           |           |         |            
|                                                          |                  | Operating (loss)                                          |                                                      | $       | (3,500    | )                  |   | $                 | 0       |               |           | $             | (9,443    | )         |         | $           | (100,000 | )        
|Nonoperating
income (expense)                            
|                                                          | Interest expense |                                                           | $                                                    | (17,753 | )         |                    | $ | (40,500           | )       |               | $         | (98,753       | )         |           | $       | (120,500    | )       
|                                                          |                  |                                                           |                                                      |         |           |                    |   |                   |         |               |           |               |           |           |         |            
|                                                          |                  | (Loss) before reorganization items
and extraordinary item |                                                      | $       | (21,253   | )                  |   | $                 | (40,500 | )             |           | $             | (108,196  | )         |         | $           | (220,500 | )        
|Reorganization items (Note 2)                             |                  |                                                           | (30,000                                              | )       |           |                    | 0 |                   |         |               | (30,000   | )             |           |           | 0       |            
|                                                          |                  |                                                           |                                                      |         |           |                    |   |                   |         |               |           |               |           |           |         |            
|                                                          |                  | (Loss) before extraordinary item                          |                                                      | $       | (51,253   | )                  |   | $                 | (40,500 | )             |           | $             | (138,196  | )         |         | $           | (220,500 | )        
|Extraordinary gain on prepetition debt
discharge (Note 2) |                  | $                                                         | 1,984,489                                            |         |           | $                  | 0 |                   |         | $             | 1,984,489 |               |           | $         | 0       |            
|                                                          |                  |                                                           |                                                      |         |           |                    |   |                   |         |               |           |               |           |           |         |            
|                                                          |                  | Net income (loss)                                         |                                                      | $       | 1,933,236 |                    |   | $                 | (40,500 | )             |           | $             | 1,846,293 |           |         | $           | (220,500 | )        
|                                                          |                  |                                                           |                                                      |         |           |                    |   |                   |         |               |           |               |           |           |         |            
|                                                          |                  |                                                           | Net (loss) per share, Basic
and diluted (Note 2)     |         | $         | 0.92               |   |                   | $       | (0.02         | )         |               | $         | 0.88      |         |             | $        | (0.11     | )
|                                                          |                  |                                                           |                                                      |         |           |                    |   |                   |         |               |           |               |           |           |         |            
|                                                          |                  |                                                           | Average number of shares
of common stock outstanding |         |           | 2,100,000          |   |                   |         | 2,100,000     |           |               |           | 2,100,000 |         |             |          | 2,100,000 |  
|                                                          |                  |                                                           |                                                      |         |           |                    |   |                   |         |               |           |               |           |           |         |            

See Accompanying Notes to Financial Statements.

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##### Table of Contents



DISCOVERY INVESTMENTS, INC.
(A Development Stage Company)
STATEMENTS OF INCOME
(Restated)

|                                                          |                                  |                                                      |          |              |           |              |            |                |            |   |            |               |            |  
|--------------------------------------------------------- | -------------------------------- | ---------------------------------------------------- | -------- | ------------ | --------- | ------------ | ---------- | -------------- | ---------- | - | ---------- | ------------- | ---------- | -
|                                                          |                                  |                                                      |          |              |           |              |            |                |            |   |            | Sept 10, 1996
|                                                          |                                  |                                                      |          | Year Ended   |           | Year Ended   |            | (inception) to
|                                                          |                                  |                                                      |          | December 31, |           | December 31, |            | September 30, 
|                                                          |                                  |                                                      |          | 2000         |           | 1999         |            | 2001          
|                                                          |                                  |                                                      |          |              |           |              |            |               
|Revenues                                                  |                                  | $                                                    | 0        |              |           | $            | 0          |                |            | $ | 0          |              
|Cost of revenue                                           |                                  |                                                      | 0        |              |           |              | 0          |                |            |   | 0          |              
|                                                          |                                  |                                                      |          |              |           |              |            |                |            |   |            |              
|                                                          |                                  | Gross profit                                         |          | $            | 0         |              |            | $              | 0          |   |            | $             | 0          |  
|General, selling and
administrative expenses              |                                  |                                                      | 194,639  |              |           |              | 1,515,654  |                |            |   | 1,721,836  |              
|                                                          |                                  |                                                      |          |              |           |              |            |                |            |   |            |              
|                                                          |                                  | Operating (loss)                                     |          | $            | (194,639  | )            |            | $              | (1,515,654 | ) |            | $             | (1,721,836 | )
|Nonoperating
income (expense)                            
|                                                          |                                  | Interest expense                                     |          |              | (161,000  | )            |            |                | (25,000    | ) |            |               | (284,753   | )
|                                                          |                                  |                                                      |          |              |           |              |            |                |            |   |            |              
|(Loss) before reorganization items
and extraordinary item |                                  | $                                                    | (355,639 | )            |           | $            | (1,540,654 | )              |            | $ | (2,006,589 | )            
|Reorganization items (Note 2)                             |                                  |                                                      | 0        |              |           |              | 0          |                |            |   | (30,000    | )            
|                                                          |                                  |                                                      |          |              |           |              |            |                |            |   |            |              
|                                                          | (Loss) before extraordinary item |                                                      | $        | (355,639     | )         |              | $          | (1,540,654     | )          |   | $          | (2,036,589    | )         
|Extraordinary gain on prepetition debt
discharge (Note 2) |                                  | $                                                    | 0        |              |           | $            | 0          |                |            | $ | 1,984,489  |              
|                                                          |                                  |                                                      |          |              |           |              |            |                |            |   |            |              
|                                                          |                                  | Net (loss)                                           |          | $            | (355,639  | )            |            | $              | (1,540,654 | ) |            | $             | (52,100    | )
|                                                          |                                  |                                                      |          |              |           |              |            |                |            |   |            |              
|                                                          |                                  | Net (loss) per share, Basic
and diluted (Note 2)     |          | $            | (0.17     | )            |            | $              | (0.73      | ) |            | $             | (0.02      | )
|                                                          |                                  |                                                      |          |              |           |              |            |                |            |   |            |              
|                                                          |                                  | Average number of shares
of common stock outstanding |          |              | 2,100,000 |              |            |                | 2,100,000  |   |            |               | 2,100,000  |  
|                                                          |                                  |                                                      |          |              |           |              |            |                |            |   |            |              

See Accompanying Notes to Financial Statements.

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DISCOVERY INVESTMENTS, INC.
(A Development Stage Company)




STATEMENTS OF STOCKHOLDERS EQUITY


(Restated)


|                                                    |  |              |           |            |  |             |        |       |  |   |        |   |  |             |            |  
|--------------------------------------------------- |  | ------------ | --------- | ---------- |  | ----------- | ------ | ----- |  | - | ------ | - |  | ----------- | ---------- | -
|                                                    |  |              |           |            |  |             |        |       |  |   |        |   |  | Accumulated
|                                                    |  |              |           |            |  |             |        |       |  |   |        |   |  | (Deficit)  
|                                                    |  | Common Stock |           | Additional |  | During     
|                                                    |  |              |           | Paid-In    |  | Development
|                                                    |  | Shares       |           | Amount     |  | Capital     |        | Stage
|                                                    |  |              |           |            |  |             |        |      
|Sale of 2,100,000 shares, Sept. 10, 1996            |  |              | 2,100,000 |            |  | $           | 2,100  |       |  | $ | 0      |   |  | $           | 0          |  
|Net (loss), December 31, 1996                       |  |              |           |            |  |             |        |       |  |   |        |   |  |             | (2,100     | )
|                                                    |  |              |           |            |  |             |        |       |  |   |        |   |  |             |            |  
|Balance, December 31, 1996                          |  |              | 2,100,000 |            |  | $           | 2,100  |       |  | $ | 0      |   |  | $           | (2,100     | )
|Net (loss), December 31, 1997                       |  |              |           |            |  |             |        |       |  |   |        |   |  |             | 0          |  
|                                                    |  |              |           |            |  |             |        |       |  |   |        |   |  |             |            |  
|Balance, December 31, 1997                          |  |              | 2,100,000 |            |  | $           | 2,100  |       |  | $ | 0      |   |  | $           | (2,100     | )
|Net (loss), December 31, 1998                       |  |              |           |            |  |             |        |       |  |   |        |   |  |             | 0          |  
|                                                    |  |              |           |            |  |             |        |       |  |   |        |   |  |             |            |  
|Balance, December 31, 1998                          |  |              | 2,100,000 |            |  | $           | 2,100  |       |  | $ | 0      |   |  | $           | (2,100     | )
|March 15, 1999, changed from no
par value to $0.001 |  |              |           |            |  |             | (2,079 | )     |  |   | 2,079  |   |  |             |            |  
|March 15, 1999, forward stock
100:1                 |  |              |           |            |  |             | 2,079  |       |  |   | (2,079 | ) |  |             |            |  
|Net (loss), December 31, 1999                       |  |              |           |            |  |             |        |       |  |   |        |   |  |             | (1,540,654 | )
|                                                    |  |              |           |            |  |             |        |       |  |   |        |   |  |             |            |  
|Balance, December 31, 1999                          |  |              | 2,100,000 |            |  | $           | 2,100  |       |  | $ | 0      |   |  | $           | (1,542,754 | )
|Net (loss), December 31, 2000                       |  |              |           |            |  |             |        |       |  |   |        |   |  |             | (355,639   | )
|                                                    |  |              |           |            |  |             |        |       |  |   |        |   |  |             |            |  
|Balance, December 31, 2000                          |  |              | 2,100,000 |            |  | $           | 2,100  |       |  | $ | 0      |   |  | $           | (1,898,393 | )
|Net (loss), September 30, 2001                      |  |              |           |            |  |             |        |       |  |   |        |   |  |             | 1,846,293  |  
|Balance, September 30, 2001                         |  |              | 2,100,000 |            |  | $           | 2,100  |       |  | $ | 0      |   |  | $           | (52,100    | )
|                                                    |  |              |           |            |  |             |        |       |  |   |        |   |  |             |            |  

See Accompanying Notes to Financial Statements.

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DISCOVERY INVESTMENTS, INC.
(A Development Stage Company)




STATEMENTS OF CASH FLOWS


(Restated)


|                                               |                                                                             |                                                      |   |                    |        |                   |   |               |   |               |   |            |        |             |   |          |          |  
|---------------------------------------------- | --------------------------------------------------------------------------- | ---------------------------------------------------- | - | ------------------ | ------ | ----------------- | - | ------------- | - | ------------- | - | ---------- | ------ | ----------- | - | -------- | -------- | -
|                                               |                                                                             |                                                      |   | Three Months Ended |        | Nine Months Ended
|                                               |                                                                             |                                                      |   |                    |        |                  
|                                               |                                                                             |                                                      |   | September 30,      |        | September 30,     |   | September 30, |   | September 30,
|                                               |                                                                             |                                                      |   | 2001               |        | 2000              |   | 2001          |   | 2000         
|                                               |                                                                             |                                                      |   |                    |        |                   |   |               |   |              
|                                               |                                                                             |                                                      |   |                    |        |                   |   | (unaudited)   |   |               |   |            |        | (unaudited)
|Cash
Flows From Operating Activities           |                                                                             |                                                      |   |                    |        |                   |   |               |   |               |   |            |        |             |   |         
|                                               | Net income (loss)                                                           |                                                      | $ | 1,933,236          |        |                   | $ | (40,500       | ) |               | $ | 1,846,293  |        |             | $ | (220,500 | )       
|                                               | Adjustments to reconcile net (loss) to cash
(used in) operating activities: |                                                      |   |                    |        |                   |   |               |   |               |   |            |        |             |   |          |         
|                                               | Extraordinary gain on prepetition debt discharge                            |                                                      |   | (1,984,489         | )      |                   |   | 0             |   |               |   | (1,984,489 | )      |             |   | 0        |         
|                                               | Reorganization items                                                        |                                                      |   |                    |        |                   |   |               |   |               |   |            |        |             |   |          |         
|                                               |                                                                             | Professional fees                                    |   |                    | 30,000 |                   |   |               | 0 |               |   |            | 30,000 |             |   |          | 0        |  
|                                               | Changes in assets and liabilities                                           |                                                      |   |                    |        |                   |   |               |   |               |   |            |        |             |   |          |         
|                                               | Increase
in accounts payable and accrued expenses                           |                                                      |   | 21,253             |        |                   |   | 40,500        |   |               |   | 107,121    |        |             |   | 120,500  |         
|                                               | Officer advances                                                            |                                                      |   | 0                  |        |                   |   | 0             |   |               |   | 1,075      |        |             |   | 0        |         
|                                               |                                                                             |                                                      |   |                    |        |                   |   |               |   |               |   |            |        |             |   |         
|                                               |                                                                             | Net cash (used in) operating
activities              |   | $                  | 0      |                   |   | $             | 0 |               |   | $          | 0      |             |   | $        | (100,000 | )
|                                               |                                                                             |                                                      |   |                    |        |                   |   |               |   |               |   |            |        |             |   |         
|Cash Flows From Investing Activities           |                                                                             | $                                                    | 0 |                    |        | $                 | 0 |               |   | $             | 0 |            |        | $           | 0 |         
|                                               |                                                                             |                                                      |   |                    |        |                   |   |               |   |               |   |            |        |             |   |         
|Cash Flows From Financing Activities           |                                                                             |                                                      |   |                    |        |                   |   |               |   |               |   |            |        |             |   |         
|                                               |                                                                             | Issuance of common stock                             |   | $                  | 0      |                   |   | $             | 0 |               |   | $          | 0      |             |   | $        | 0        |  
|                                               |                                                                             | Proceeds from notes payable                          |   |                    | 0      |                   |   |               | 0 |               |   |            | 0      |             |   |          | 100,000  |  
|                                               |                                                                             |                                                      |   |                    |        |                   |   |               |   |               |   |            |        |             |   |         
|                                               |                                                                             | Net cash provided by financing
activities            |   | $                  | 0      |                   |   | $             | 0 |               |   | $          | 0      |             |   | $        | 100,000  |  
|                                               |                                                                             |                                                      |   |                    |        |                   |   |               |   |               |   |            |        |             |   |         
|                                               |                                                                             | Net increase (decrease) in cash
and cash equivalents |   | $                  | 0      |                   |   | $             | 0 |               |   | $          | 0      |             |   | $        | 0        |  
|Cash and cash equivalents,
beginning of period |                                                                             |                                                      | 0 |                    |        | $                 | 0 |               |   |               | 0 |            |        |             | 0 |         
|                                               |                                                                             |                                                      |   |                    |        |                   |   |               |   |               |   |            |        |             |   |         
|Cash and cash equivalents, end of period       |                                                                             | $                                                    | 0 |                    |        | $                 | 0 |               |   | $             | 0 |            |        | $           | 0 |         
|                                               |                                                                             |                                                      |   |                    |        |                   |   |               |   |               |   |            |        |             |   |         
|Supplemental Schedule of Non-Cash              |                                                                             |                                                      |   |                    |        |                   |   |               |   |               |   |            |        |             |   |         
|Investing and Financing Activities             |                                                                             |                                                      |   |                    |        |                   |   |               |   |               |   |            |        |             |   |         
|                                               | Discharge of short term notes payable                                       |                                                      | $ | 100,000            |        |                   | $ | 0             |   |               | $ | 0          |        |             | $ | 0        |         
|                                               | Discharge of long term notes payable                                        |                                                      |   | 1,500,000          |        |                   |   | 0             |   |               |   | 0          |        |             |   | 0        |         

See Accompanying Notes to Financial Statements.

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DISCOVERY INVESTMENTS, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Restated)

|                                               |                                                                             |                                                      |   |              |          |              |   |                |            |   |   |                |            |  
|---------------------------------------------- | --------------------------------------------------------------------------- | ---------------------------------------------------- | - | ------------ | -------- | ------------ | - | -------------- | ---------- | - | - | -------------- | ---------- | -
|                                               |                                                                             |                                                      |   |              |          |              |   |                |            |   |   | Sept. 10, 1996
|                                               |                                                                             |                                                      |   | Year Ended   |          | Year Ended   |   | (inception) to
|                                               |                                                                             |                                                      |   | December 31, |          | December 31, |   | September 30, 
|                                               |                                                                             |                                                      |   | 2000         |          | 1999         |   | 2001          
|                                               |                                                                             |                                                      |   |              |          |              |   |               
|Cash Flows From Operating Activities           |                                                                             |                                                      |   |              |          |              |   |                |            |   |   |               
|                                               | Net (loss)                                                                  |                                                      | $ | (355,639     | )        |              | $ | (1,540,654     | )          |   | $ | (52,100        | )         
|                                               | Adjustments to reconcile net (loss) to cash
(used in) operating activities: |                                                      |   |              |          |              |   |                |            |   |   |                |           
|                                               | Extraordinary gain on prepetition debt discharge                            |                                                      |   | 0            |          |              |   | 0              |            |   |   | (1,984,489     | )         
|                                               | Reorganization
items                                                       
|                                               |                                                                             | Professional fees                                    |   |              | 0        |              |   |                | 0          |   |   |                | 30,000     |  
|                                               | Changes in assets and liabilities                                          
|                                               | Increase in accounts payable and
accrued expenses                           |                                                      |   | 254,792      |          |              |   | 25,000         |            |   |   | 386,913        |           
|                                               | Officer advances                                                            |                                                      |   | 847          |          |              |   | 15,654         |            |   |   | 17,576         |           
|                                               |                                                                             |                                                      |   |              |          |              |   |                |            |   |   |               
|                                               |                                                                             | Net cash (used in) operating
activities              |   | $            | (100,000 | )            |   | $              | (1,500,000 | ) |   | $              | (1,602,100 | )
|                                               |                                                                             |                                                      |   |              |          |              |   |                |            |   |   |               
|Cash Flows From Investing Activities           |                                                                             | $                                                    | 0 |              |          | $            | 0 |                |            | $ | 0 |               
|                                               |                                                                             |                                                      |   |              |          |              |   |                |            |   |   |               
|Cash Flows From Financing Activities          
|                                               | Issuance of common stock                                                    |                                                      | $ | 0            |          |              | $ | 0              |            |   | $ | 2,100          |           
|                                               | Proceeds from notes payable                                                 |                                                      |   | 100,000      |          |              |   | 1,500,000      |            |   |   | 1,600,000      |           
|                                               |                                                                             |                                                      |   |              |          |              |   |                |            |   |   |               
|                                               |                                                                             | Net cash provided by financing
activities            |   | $            | 100,000  |              |   | $              | 1,500,000  |   |   | $              | 1,602,100  |  
|                                               |                                                                             |                                                      |   |              |          |              |   |                |            |   |   |               
|                                               |                                                                             | Net increase (decrease) in cash
and cash equivalents |   | $            | 0        |              |   | $              | 0          |   |   | $              | 0          |  
|Cash and cash equivalents,
beginning of period |                                                                             |                                                      | 0 |              |          |              | 0 |                |            |   | 0 |               
|                                               |                                                                             |                                                      |   |              |          |              |   |                |            |   |   |               
|Cash and cash equivalents, end of period       |                                                                             | $                                                    | 0 |              |          | $            | 0 |                |            | $ | 0 |               
|                                               |                                                                             |                                                      |   |              |          |              |   |                |            |   |   |               
|Supplemental Schedule of Non-Cash             
|Investing and Financing Activities             |                                                                             |                                                      |   |              |          |              |   |                |            |   |   |               
|                                               | Discharge of short term notes payable                                       |                                                      | $ | 0            |          |              | $ | 0              |            |   | $ | 100,000        |           
|                                               | Discharge of long term notes payable                                        |                                                      |   | 0            |          |              |   | 0              |            |   |   | 1,500,000      |           

See Accompanying Notes to Financial Statements.

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DISCOVERY INVESTMENTS, INC.
(A Development Stage Company)




NOTES TO FINANCIAL STATEMENTS


September 30, 2001 and December 31, 2000


Note 1. Nature of Business and Significant Accounting Policies

Nature of business:

Discovery Investments, Inc. (Company) was organized September 10, 1996
under the laws of the State of Nevada. The Company currently has no
operations and, in accordance with Statement of Financial Accounting
Standard (SFAS) No. 7, Accounting and Reporting by Development Stage
Enterprises, is considered a development stage company.

On August 9, 2001 (Petition Date), the Company filed a voluntary
petition for Chapter 11 protection pursuant to the United States
Bankruptcy Code. As of that date, The United States Bankruptcy Court for
the District of Nevada (Bankruptcy Court) assumed jurisdiction over the
assets of the Company. On September 24, 2001, the Bankruptcy Court
confirmed the Disclosure Statement and Plan of Reorganization (the Plan)
submitted by the Debtor. On September 24, 2001, the Plan became
effective.

A summary of the Companys significant accounting policies is as follows:

Basis of presentation

The Company implemented guidance provided by the American Institute of
Certified Public Accountants Statement of Position 90-7 Financial
Reporting By Entities in Reorganization Under the Bankruptcy Code (AICPA
SOP 90-7) as of September 30, 2001. Accordingly, the Companys financial
statements for the periods prior to September 30, 2001 are not comparable
to financial statements presented on or subsequent to September 30, 2001.

Estimates

The 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 and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.

Cash

For the Statements of Cash Flows, all highly liquid investments with
maturity of three months or less are considered to be cash equivalents.
There were no cash equivalents as of September 30, 2001 and December 31,
2000 and 1999.

Income taxes

Income taxes are provided for using the liability method of accounting in
accordance with SFAS No. 109 Accounting for Income Taxes.A deferred
tax asset or liability is recorded for all temporary differences between
financial and tax reporting. Temporary differences are the differences
between the reported amounts of assets and liabilities and their tax
basis. Deferred tax assets are reduced by a valuation allowance when, in
the

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DISCOVERY INVESTMENTS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 2001 and December 31, 2000

Note 1. Nature of Business and Significant Accounting Policies (continued)

opinion of management, it is more likely than not that some portion or all
of the deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effect of changes in tax laws and rates
on the date of enactment.

Reporting on costs for start-up activities

Statement of Position 98-5 (SOP 98-5), Reporting on the Costs of
Start-Up Activitieswhich provides guidance on the financial reporting of
start-up and organization costs, requires most costs of start-up
activities and organization costs to be expensed as incurred. With the
adoption of SOP 98-5, there has been little to no effect on the Companys
financial statements.

Year end

The Company originally selected March 31 for its fiscal year end. In
2000, the Company changed its fiscal year end to December 31.

Note 2. Restructuring Items

Pursuant to he Disclosure Statement and Plan of Reorganization becoming
effective September 24, 2001, all general unsecured claims were discharged
in exchange for cash payments that will total no more than $50,000. The
$50,000 has been pledged by an impaired interest holder-shareholder to pay
the Chapter 11 administrative claims in full. All remaining loan proceeds
will be allocated to the Class One impaired creditors as a pot
distribution; a single fund of the monies for the Class One creditors to
share pro-rata, along with a pro-rata share of unregistered common stock,
not to exceed 100,000 shares, of the Debtor.

The discharge of debt has been reflected in the accompanying September 30,
2001 financial statements. The Companys post-reorganization balance
sheet as of September 30, 2001 becomes the opening balance sheet for the
reorganized Company, as reflected in the following table:

|                                     |                          |   |                                                  |         |           |   |         |          |   |   |   |        | 
|------------------------------------ | ------------------------ | - | ------------------------------------------------ | ------- | --------- | - | ------- | -------- | - | - | - | ------ | 
|                                     |                          |   | Adjustments to Record the Plan of Reorganization
|                                     |                          |   |                                                 
|                                     |                          |   | Balance                                          |         | Debt      |   | Balance
|                                     |                          |   | Sheet                                            |         | Discharge |   | Sheet  
|                                     |                          |   |                                                  |         |           |   |        
|ASSETS                               |                          | $ | 0                                                |         |           | $ | 0       |          |   | $ | 0 |       
|                                     |                          |   |                                                  |         |           |   |         |          |   |   |   |       
|LIABILITIES AND STOCKHOLDERS EQUITY |                          |   |                                                  |         |           |   |         |          |   |   |   |       
|Current Liabilities                 
|                                     | Accounts payable         |   | $                                                | 20,000  |           |   | $       | 30,000   |   |   | $ | 50,000 | 
|                                     |                          |   |                                                  |         |           |   |         |          |   |   |   |       
|Liabilities Subject to Compromise   
|                                     | Short term notes payable |   | $                                                | 100,000 |           |   | $       | (100,000 | ) |   | $ | 0      | 

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##### Table of Contents



DISCOVERY INVESTMENTS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 2001 and December 31, 2000

Note 2. Restructuring Items (continued)

|                                           |                     |   |            |            |   |   |            |            |   |   |         |         |  
|------------------------------------------ | ------------------- | - | ---------- | ---------- | - | - | ---------- | ---------- | - | - | ------- | ------- | -
|                                           | Accounts payable    |   |            | 82,160     |   |   |            | (82,160    | ) |   |         | 0       |  
|                                           | Interest payable    |   |            | 284,753    |   |   |            | (284,753   | ) |   |         | 0       |  
|                                           | Officers advances  |   |            | 17,576     |   |   |            | (17,576    | ) |   |         | 0       |  
|                                           | Notes payable       |   |            | 1,500,000  |   |   |            | (1,500,000 | ) |   |         | 0       |  
|                                           |                     |   |            |            |   |   |            |            |   |   |         |        
|Total Liabilities Subject to Compromise    |                     | $ | 1,984,489  |            |   | $ | (1,984,489 | )          |   | $ | 0       |        
|                                           |                     |   |            |            |   |   |            |            |   |   |         |        
|Total Liabilities                          |                     | $ | 2,004,489  |            |   | $ | (1,954,489 | )          |   | $ | 50,000  |        
|                                           |                     |   |            |            |   |   |            |            |   |   |         |        
|Stockholders Equity                       |                     |   |            |            |   |   |            |            |   |   |         |        
|                                           | Common Stock        |   | $          | 2,100      |   |   | $          | 0          |   |   | $       | 2,100   |  
|                                           | Accumulated Deficit |   |            | (2,006,589 | ) |   |            | (1,954,489 | ) |   |         | (52,100 | )
|                                           |                     |   |            |            |   |   |            |            |   |   |         |        
|Total Stockholders Equity                 |                     | $ | (2,004,489 | )          |   | $ | (1,954,489 | )          |   | $ | (50,000 | )      
|                                           |                     |   |            |            |   |   |            |            |   |   |         |        
|Total Liabilities and Stockholders Equity |                     | $ | 0          |            |   | $ | 0          |            |   | $ | 0       |        
|                                           |                     |   |            |            |   |   |            |            |   |   |         |        

The following proforma statements of operations reflect the results of
operations as if the reorganization had been effective December 31, 2000.

PRO FORMA STATEMENTS OF INCOME

|                                                          |                  |                                                  |           |                                              |            |             |            |          |            |   |         |         |         |  
|--------------------------------------------------------- | ---------------- | ------------------------------------------------ | --------- | -------------------------------------------- | ---------- | ----------- | ---------- | -------- | ---------- | - | ------- | ------- | ------- | -
|                                                          |                  |                                                  |           | For the Nine Months Ended September 30, 2001
|                                                          |                  |                                                  |           |                                             
|                                                          |                  |                                                  |           | As Reported                                  |            | Adjustments |            | Proforma
|                                                          |                  |                                                  |           |                                              |            |             |            |         
|Revenues                                                  |                  | $                                                | 0         |                                              |            | $           | 0          |          |            | $ | 0       |        
|Cost of revenue                                           |                  |                                                  | 0         |                                              |            |             | 0          |          |            |   | 0       |        
|                                                          |                  |                                                  |           |                                              |            |             |            |          |            |   |         |        
|                                                          |                  | Gross profit                                     |           | $                                            | 0          |             |            | $        | 0          |   |         | $       | 0       |  
|General, selling and
administrative expenses              |                  |                                                  | 3,500     |                                              |            |             | 0          |          |            |   | 3,500   |        
|                                                          |                  |                                                  |           |                                              |            |             |            |          |            |   |         |        
|                                                          |                  | Operating (loss)                                 |           | $                                            | (3,500     | )           |            | $        | 0          |   |         | $       | (3,500  | )
|Nonoperating income (expense)                             |                  |                                                  |           |                                              |            |             |            |          |            |   |         |        
|                                                          | Interest expense |                                                  |           | (17,753                                      | )          |             |            | 0        |            |   |         | (17,753 | )      
|                                                          |                  |                                                  |           |                                              |            |             |            |          |            |   |         |        
|(Loss) before reorganization items
and extraordinary item |                  | $                                                | (21,253   | )                                            |            | $           | 0          |          |            | $ | (21,253 | )      
|Reorganization items (Note 2)                             |                  |                                                  | (30,000   | )                                            |            |             | 30,000     | (1)      |            |   | 0       |        
|                                                          |                  |                                                  |           |                                              |            |             |            |          |            |   |         |        
|(Loss) before extraordinary item                          |                  | $                                                | (51,253   | )                                            |            | $           | 30,000     |          |            | $ | (21,253 | )      
|Extraordinary gain on prepetition debt
discharge (Note 2) |                  | $                                                | 1,984,489 |                                              |            | $           | (1,984,489 | )(2)     |            | $ | 0       |        
|                                                          |                  |                                                  |           |                                              |            |             |            |          |            |   |         |        
|                                                          |                  | Net (loss)                                       |           | $                                            | (1,933,236 | )           |            | $        | (1,954,489 | ) |         | $       | (21,253 | )
|                                                          |                  |                                                  |           |                                              |            |             |            |          |            |   |         |        
|                                                          |                  | Net (loss) per share, Basic
and diluted (Note 2) |           | $                                            | (0.92      | )           |            | $        | (0.93      | ) |         | $       | (0.01   | )
|                                                          |                  |                                                  |           |                                              |            |             |            |          |            |   |         |        

(1)  Elimination of effect of reorganization items

(2)  Elimination of the gain on pre-petition debt discharge

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##### Table of Contents



DISCOVERY INVESTMENTS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 2001 and December 31, 2000

Note 3. Reorganization Items

Reorganization Items consisted of the following for the nine month period
ended September 30, 2001 and the year ended December 31, 2000:

|                  |  |               |        |              |  |   |   | 
|----------------- |  | ------------- | ------ | ------------ |  | - | - | 
|                  |  | September 30, |        | December 31,
|                  |  | 2001          |        | 2000        
|                  |  |               |        |             
|Professional Fees |  | $             | 30,000 |              |  | $ | 0 | 
|                  |  |               |        |              |  |   |   | 

Note 4. Stockholders Equity

Common stock

The authorized common stock of the Company consists of 25,000,000 shares
with par value of $0.001. On September 15, 1996, the Company authorized
and issued 21,000 shares of its no par value common stock in consideration
of $2,100 in cash.

On March 15, 1999, the State of Nevada approved the Companys Amended
Articles of Incorporation, which increased its capitalization from 25,000
common shares to 25,000,000 common shares. The no par value was changed
to $0.001 per share. Also, on March 15, 1999, the Companys shareholders
approved a forward split of its common stock at one hundred shares for one
share of the existing shares. The number of common stock shares
outstanding increased from 21,000 to 2,100,000. Prior period information
has been restated to reflect the stock split.

The Company has not authorized any preferred stock.

Net loss per common share

Net loss per share is calculated in accordance with SFAS No. 128,
Earnings Per Share. The weighted-average number of common shares
outstanding during each period is used to compute basic loss per share.
Diluted loss per share is computed using the weighted averaged number of shares and dilutive potential common shares outstanding. Dilutive
potential common shares are additional common shares assumed to be
exercised.

Basic net loss per common share is based on the
weighted average number of shares of common stock outstanding of 2,100,000 during 2001, 2000, 1999,
and since inception. As of September 30, 2001 and December 31, 2000 and
1999 and since inception, the Company had no dilutive potential
common shares.

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##### Table of Contents



DISCOVERY INVESTMENTS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 2001 and December 31, 2000

Note 5. Income Taxes

There is no provision for income taxes for the period ended September 30,
2001, due to the net loss and no state income tax in Nevada, the state of
the Companys domicile and operations. The Companys total deferred tax
asset as of September 30, 2001 is as follows:

|                                 |  |   |         |  
|-------------------------------- |  | - | ------- | -
|Net operating loss carry forward |  | $ | 52,100  |  
|Valuation allowance              |  | $ | (52,100 | )
|                                 |  |   |         |  
|Net deferred tax asset           |  | $ | 0       |  

The net federal operating loss carry forward will expire between 2016 and
2020. This carry forward may be limited upon the consummation of a
business combination under IRC Section 381.

For financial reporting purposes, the Company reported an extraordinary
gain in the amount of $1,984,489 resulting from the cancellation of
indebtedness that occurred from the bankruptcy discharge on the effective
date. Pursuant to Section 1087 of the Internal Revenue Code, this
extraordinary gain is excluded from income taxation and certain tax
attributes of the Company are eliminated or reduced, up to the amount of
such income excluded from taxation. As a result, the Companys net
operating loss carryforwards were reduced by the $1,984,489

Note 6. Going Concern

The Companys financial statements are prepared in accordance with
generally accepted accounting principles applicable to a going concern.
This contemplates the realization of assets and the liquidation of
liabilities in the normal course of business. Currently, the Company does
not have significant cash of other material assets, nor does it have
operations or a source of revenue sufficient to cover its operation costs
and allow it to continue as a going concern. Until the Company has
sufficient operations, the officers and directors have committed to
advancing the operating costs of the company.

Note 7. Related Party Transactions

The Company neither owns nor leases any real or personal property. The
resident agent of the corporation provides office services without charge.
Such costs are immaterial to the financial statements and accordingly,
have not been reflected therein. The officers and directors for the
Company are involved in other business activities and may, in the future,
become involved in other business opportunities. If a specific business
opportunity becomes available, such persons may face a conflict in
selecting between the Company and their other business interest. The
Company has not formulated a policy for the resolution of such conflicts.

Note 8. Warrants and Options

There are no warrants or options outstanding to acquire any additional
shares of common stock of the Company.

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##### Table of Contents






Item II. Managements Discussion and Analysis or Plan of Operation

On August 8, 2001, the Company commenced a Chapter 11 proceeding in the
United States Bankruptcy Court, District of Nevada, Case Number 01 1856RCJ, 300
Las Vegas Boulevard South, Las Vegas, Nevada. On September 24, 2001, a motion
to confirm the pre-package plan of reorganization was heard and approved. See
Item 5 of the Form 10QSB filed on August 14, 2001. See also Part II, Item 1
below.

The Company is now dependent upon its officers to meet any de minimis
costs which may occur. Kimberly Lynn Jack, an officer and director of the
Company, has agreed to provide the necessary funds, without interest, for the
Company to comply with the Securities Exchange Act of 1934, as amended;
provided that she is an officer and director of the Company when the obligation
is incurred. All advances are interest-free.

In addition, since the Company has no current operating history nor any
revenues or earnings from operations, with no significant assets or financial
resources, the Company will in all likelihood sustain operating expenses
without corresponding revenues, at least until the consummation of a business
combination. This may result in the Company incurring a net operating loss
which will increase continuously until the Company can consummate a business
combination with a profitable business opportunity and consummate such a
business combination.

This discussion may contain certain forward looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Actual
results could differ materially from those forward-looking statements. The
factors that may cause actual results to differ materially is that the Company
has no arrangement, agreement or understanding with respect to engaging in a
merger with, joint venture with or acquisition of, a private or public company
and that there can be no assurance that the Company will be successful in
identifying and evaluating suitable business opportunities or including a
business combination.




Item III. Qualitative and Quantitative Disclosures About Market Risk.

The Company has neither considered or conducted any research concerning
qualitative and quantitative market risk.

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PART II

OTHER INFORMATION




Item 1  Legal Proceedings

On August 8, 2001, the Company commenced a Chapter 11 proceeding in the
United States Bankruptcy Court, District of Nevada, Case Number 01 1856RCJ, 300
Las Vegas Boulevard South, Las Vegas, Nevada. Said bankruptcy proceeding was
required predicated upon the Companys lack of operations, assets or financial
resources to defend against those creditors claiming potential obligations or
contingent obligations from the Company, in connection with the period of time
that LLO-Gas, Inc. was a wholly-owned operating subsidiary of the Company.

Prior to the filing of a Chapter 11 proceeding, the Company prepared a
Disclosure Statement and Plan of Reorganization (Plan) which was furnished
along with a ballot, in connection with a selected solicitation by the Company
of consents and acceptances by certain creditors and interest holders, without
any solicitation by proxy, to the Plan. The majority of shareholders of the
Company and creditors approved the Plan and the Company was the proponent of
the Plan.

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On September 24, 2001, the Plan was confirmed and the Court found that the
disclosure statement was adequate and the Plan and the solicitation otherwise
complied with all statutory requirements.

The source of money and property available to pay creditors of the
Company, under the Plan, was funds derived from a $50,0000 shareholder loan and
the issuance of 100,000 shares of authorized and unissued stock. Prior to
September 24, 2000, there was the funding of the shareholder loan and the
Company has sufficient funds to pay its Chapter 11 administrative claims in
full and otherwise perform under the Plan. The remaining loan funds will be
allocated to the impaired creditors as a pot distribution, a single fund of
monies for the creditors to share pro-rata, along with a pro-rata share of
100,000 shares of common stock of the Company which has not been registered
under the Securities Act of 1933, as amended. No monies or shares will be
allocated to the shareholders. The creditors are not entitled to receive any
additional funds, and the remaining unpaid amount for each creditors claim was
deemed discharged.

As a condition of receiving shares, each creditor who receives shares must
agree that said shares are being acquired for investment purposes only and not
with a view towards resale or redistribution in violation of state and federal
securities laws, including the Securities Act of 1933, as amended. Acceptance
of the shares by the creditor, under the Plan, and the failure to return said
shares within ten (10) days after mailing by the transfer agent or a designated
disbursing agent shall be deemed acceptance of the investment intent.

It is anticipated that not to exceed 137 shares will be returned to the
Company for cancellation and the sole creditor who has indicated that he was
not going to accept the shares and who will return said shares will be
considered to have received his full entitlement under the Plan despite the
return. The creditors can expect final payment prior to November 30, 2001.

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|         |  |                                                         |  |     
|-------- |  | ------------------------------------------------------- |  | ----
|Item 2 - |  | Changes in the Rights of the Companys Security Holders |  | None
|Item 3 - |  | Defaults by the Company on its Senior Securities        |  | None
|Item 4 - |  | Submission of Matter to Vote of Security Holders        |  | None
|Item 5 - |  | Other Information                                       |  |     

Board Meeting

The board held three meetings during the current quarter.

(b)  Committees

We have not established any audit committee. In addition, we do not have
any other compensation or executive or similar committees. We will not, in all
likelihood, establish any audit committee until such time as we have achieved
minimal revenues. We recognize that an audit committee, when established, will
play a critical role in the financial reporting system by overseeing and
monitoring managements and the independent auditors participation in the
financial reporting process. At such time as we establish an audit committee,
the additional disclosures with our auditors and management may promote
investor confidence in the integrity of the financial reporting process.

Until such time as an audit committee has been established, the full board
of directors will undertake those tasks normally associated with an audit
committee to include, but not by way of limitation, the (i) review and
discussion of the audited financial statements with management, (ii)
discussions with the independent auditors of the matters required to be
discussed by the Statement On Auditing Standards No. 61, as may be modified or
supplemented, and (iii) information received from the auditors disclosures
regarding the auditors Independents Standards Board Standard No. 1, as may be
modified or supplemented.

Our board of directors, consistent with an intent to enhance the
reliability and credibility of our financial

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statements, has submitted the
financial statements included in this Form 10-QSB to our independent auditor
prior to the filing of this report. An audit was completed for the period then
ended.




Item 6  Exhibits and Reports on Form 8-K

A.     Form 10QSB filed on August 14, 2001.




SIGNATURE

Pursuant to the requirements 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.

|                         |  |                                          |  |                             
|------------------------ |  | ---------------------------------------- |  | ----------------------------
|Dated: November 26, 2001 |  | DISCOVERY
INVESTMENTS, INC.
(Registrant)
|                        
|                         |  | By:                                      |  | /s/ Kimberly Lynn Jack      
|                         |  |                                          |  |                             
|                         |  |                                          |  | Kimberly Lynn Jack
President

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