UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-QSB

[X]   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT
      OF 1934

                  For the quarterly period ended June 30, 2004
                                                 -------------

[_]   TRANSITION  REPORT  UNDER  SECTION 13 OR 15(d) OF THE EXCHANGE ACT

      For the transition period from _________________ to _________________

                        Commission file number 333-62216
                                               ---------

                          HEALTH DISCOVERY CORPORATION
        (Exact name of small business issuer as specified in its charter)

          TEXAS                                           74-3002154
(State or other jurisdiction of               (IRS Employer Identification No.)
 incorporation or organization)

                   1116 S. OLD TEMPLE ROAD LORENA, TEXAS 76655
                    (Address of principal executive offices)


                                 (512) 583-4500
                           (Issuer's telephone number)


                                (Former address)


                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the  registrant  filed all  documents  and reports  required to be
filed by Section l2, 13 or 15(d) of the Exchange Act after the  distribution  of
securities under a plan confirmed by a court. Yes [_] No [_]

                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 77,526,128

Transitional Small Business Disclosure Format (Check one): Yes [_] No [X]


<PAGE>


                                TABLE OF CONTENTS

PART I     Financial Information

Item 1.    Financial Statements                                           Page

           Balance Sheet                                                      1

           Statements of Operations                                           2

           Statements of Cash Flows                                       3 - 4

           Notes to Financial                                             5 - 7
           Statements

Item 2.    Management's Discussion and Analysis of Financial
                Condition and Results of Operations                        8-10

PART II    OTHER INFORMATION                                                 11

Item 1.    Recent Developments in Legal Proceedings                          11

Item 2.    Changes in Securities                                             11

Item 3.    Defaults upon Senior Securities                                   11

Item 4.    Submission of Matters to a Vote of Security Holders               11

Item 5.    Other Matters                                                     11

Item 6.    Exhibits and Reports in Form 8-K                               12-13

           Signatures                                                        14

           Certifications                                                 15-17


<PAGE>

HEALTH DISCOVERY CORPORATION                                              Page 1
(A Development Stage Company)

Balance Sheet

June 30, 2004

                                     Assets

Current Assets:
    Cash                                                          $     378,237
                                                                ----------------
      Total current assets                                              378,237
                                                                ----------------
Equipment, less accumulated depreciation of $433                          4,763
                                                                ----------------
Other assets:
    Patent costs, less accumulated amortization of $31                      479
    Investment in Barnhill Group, LLC                                   596,511
    Investment in Fractal Genomics, LLC                                 767,750
                                                                ----------------
      Total other assets                                              1,364,740
                                                                ----------------
        Total Assets                                              $   1,747,740
                                                                ================

                      Liabilities and Stockholders' Equity

Current Liabilities:
    Accounts payable                                              $      36,373
    Accrued interest payable                                              5,594
    Accrued payroll taxes payable                                        17,629
    Current portion of long-term debt                                   250,000
                                                                ----------------
      Total current liabilities                                         309,596

Long-term debt, less current portion included above                     125,000
                                                                ----------------
        Total liabilities                                               434,596
                                                                ----------------
Stockholders' Equity:
    Common stock, no par value; 200,000,000 shares authorized
      77,526,128 shares issued and outstanding                        2,907,023
    Additional paid-in-capital                                          216,719
    Deficit accumulated during the development stage                 (1,810,598)
                                                                ----------------
      Total stockholders' equity                                      1,313,144
                                                                ----------------
        Total Liabilities and Stockholders' Equity                $   1,747,740
                                                                ================

<PAGE>

HEALTH DISCOVERY CORPORATION                                              Page 2
(A DEVELOPMENT STAGE COMPANY)

Statements of Operations

For the Quarter Ended and the Six Months Ended June 30, 2004, and the Period
From April 6, 2001 (Inception) to June 30, 2004

<TABLE>
<CAPTION>
                                            For the          For the         April 6, 2001
                                         Quarter Ended   Six Months Ended   (Inception) to
                                         June 30, 2004    June 30, 2004      June 30, 2004
                                         -------------   ----------------   --------------
<S>                                      <C>               <C>               <C>
Operating expenses:
     Administrative fees                 $      2,896      $      2,896      $     53,615
     Advertising                                1,198            17,444            25,012
     Amortization                                   8                17                31
     Auto expense                                  --               136               408
     Bad debt expense                              --                --             6,379
     Bank charges                                 126               218               607
     Computer expense                             188               188               188
     Conference and meeting                     3,308             3,308             3,308
     Consulting                                22,000            22,150            22,150
     Continuing education                          --                --               200
     Contract labor                            10,560            10,560            10,560
     Depreciation                                 433               433               433
     Dues and subscriptions                        --                --             1,404
     Equipment lease                              280               506               750
     Insurance                                  8,880             8,880             9,156
     Interest                                   5,594            11,977            12,095
     Internet expense                             361               361               361
     Investor relations                         8,772             8,772             8,772
     Legal and accounting                     105,230           138,892           138,892
     License fee                                   --                30           240,830
     Meals and entertainment                    3,769             5,629             7,180
     Office expense                             3,040             3,435            11,801
     Other expense                                 --                --               387
     Outside services                              --                --            80,841
     Postage and delivery                         556               882             3,775
     Professional and consulting fees              --                --           641,597
     Public relations                              --             1,850             1,850
     Rent expense                               2,585             8,039             9,779
     Repairs and maintenance                       --                --               239
     Salaries - officer                       180,333           346,666           346,666
     Salaries and wages                        12,500            12,500            39,167
     Stock transaction fees                     5,891             6,554            17,035
     Supplies                                      --                --             7,021
     Taxes - payroll                           12,676            23,872            25,952
     Tax penalties                                 --                 7                 7
     Telephone                                  5,201             7,880            13,441
     Travel                                    35,997            57,593            68,684
     Utilities                                    459               459               459
                                         ------------      -------------     ------------

        Total expenses                        432,841           702,134         1,811,032
                                         ------------      -------------     ------------
Other income (expense):
     Loss on sale of assets                        --                --               (20)
     Dividend income                               --                --                64
     Other income                                  14                14               390
                                         ------------      -------------     ------------

        Total other income (expense)               14                14               434
                                         ------------      -------------     ------------

Net loss                                 $    432,827      $    702,120      $   1,810,598
                                         ------------      -------------     ------------

Average outstanding shares                 72,392,795        69,484,461        27,451,472
                                         ============      ============      ============

Loss per share                           $       0.01      $       0.01      $        0.07
                                         ============      ============      ============
</TABLE>

<PAGE>

HEALTH DISCOVERY CORPORATION                                              Page 3
(A Development Stage Company)

Statement of Cash Flows

For Six Months Ended June 30, 2004, and the Period From
April 6, 2001 (Inception) to June 30, 2004

<TABLE>
<CAPTION>
                                                             For the          April 6, 2001
                                                        Six Months Ended     (Inception) to
                                                          June 30, 2004       June 30, 2004
                                                          -------------       -------------
<S>                                                       <C>                 <C>
Cash flows from operating activities:
    Net loss                                                $ (702,120)         (1,810,598)

Adjustments to reconcile net loss to net cash
 used in operating activities:
      Depreciation and amortization                                450                 464
      Services contributed                                           -              50,719
      Services provided for stock                                    -             589,746
      Patent costs                                                   -                (510)
      Increase in accounts payable                              30,786              36,373
      Increase in accrued liabilities                           17,728              23,223
                                                          -------------       -------------

      Net cash used in operating activities                   (653,156)         (1,110,583)
                                                          -------------       -------------

Cash flows from investing activities:
    Purchase of equipment                                       (5,196)             (5,196)
    Purchase of other intangibles                                    -            (500,000)
                                                          -------------       -------------

      Net cash used in investing activities                     (5,196)           (505,196)
                                                          -------------       -------------

Cash flows from financing activities:
    Net (repayments) proceeds from notes payable              (125,000)            375,000
    Proceeds from sale of common stock                       1,085,000           1,619,016
                                                          -------------       -------------

      Net cash provided by financing activities                960,000           1,994,016
                                                          -------------       -------------

Net increase in cash                                           301,648             378,237

Cash, beginning of period                                       76,589                   -
                                                          -------------       -------------

Cash, end of period                                          $ 378,237           $ 378,237
                                                          =============       =============
</TABLE>

<PAGE>
HEALTH DISCOVERY CORPORATION                                              Page 4
(A Development Stage Company)

Statement of Cash Flows - Continued

For Six Months Ended June 30, 2004, and the Period From
April 6, 2001 (Inception) to June 30, 2004


Supplemental Schedule of Noncash Investing and Financing Activities:

For the Period From April 6, 2001 (Inception) to June 30, 2004:

    The Company had services contributed for administration for $50,719.

    The Company issued common stock for professional and consulting services for
    $589,746.


    The Company issued common stock for other intangibles for $864,261.

<PAGE>

HEALTH DISCOVERY CORPORATION                                              Page 5
(FORMERLY KNOWN AS DIRECT WIRELESS COMMUNICATIONS, INC.)
(a Development Stage Company)

Notes to Financial Statements
June 30, 2004


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS  AND  DESCRIPTION OF DEVELOPMENT  STAGE  ACTIVITIES  Health
Discovery Corporation (formerly known as Direct Wireless  Communications,  Inc.)
(the Company) has been in the development  stage since the date of incorporation
on April  6,  2001.  The  Company  was  primarily  engaged  in the  activity  of
developing  technology  for a wireless  telephone  system.  In 2003 the  Company
decided to abandon its efforts in the  telecommunications  industry and acquired
new  technologies  in the  biotechnology  industry.  During  2003,  the  Company
acquired  the assets of the  Barnhill  Group,  LLC and Fractal  Genomics  LLC in
pursuit of its biotechnology focus.

BASIS OF ACCOUNTING  The financial  statements of the Company have been prepared
on the accrual basis of accounting. As such, revenue is recognized as earned and
expenses  are  recorded  when  incurred.  This basis of  accounting  conforms to
generally  accepted  accounting  principles.  In the opinion of management,  all
adjustments,  which are  necessary  for a fair  statement of results,  have been
included.

BASIS FOR ASSIGNING AMOUNTS TO EQUITY SECURITIES ISSUED FOR OTHER THAN CASH

Shares of common stock issued to  individuals  and/or  companies  for other than
cash have been assigned  amounts equal to the fair value of the service provided
or the fair  value of the  shares  of the  Company  issued,  whichever  was most
readily determinable.

CASH FLOWS

For the purpose of the cash flow statement,  cash and cash equivalents represent
funds deposited in banks and investments maturing within three months.

USE OF ESTIMATES

Management  uses estimates and  assumptions in preparing  financial  statements.
Those  estimates  and  assumptions  affect  the  reported  amounts of assets and
liabilities,  disclosure of contingent assets and liabilities,  and the reported
revenue and expenses. Actual results could differ from those estimates.

EARNINGS PER SHARE

Loss per share figures are based on the weighted average number of common shares
outstanding  during the periods  included in the  statement of  operations.  The
presentation  of earnings per share is required on the face of the  statement of
operations  with and without the  dilutive  effects of  potential  common  stock
issues from instruments such as options and warrants. For all periods presented,
the potential effect of outstanding  warrants and options would be anti-dilutive
and therefore is not presented.


<PAGE>


HEALTH DISCOVERY CORPORATION                                              Page 6
(FORMERLY KNOWN AS DIRECT WIRELESS COMMUNICATIONS, INC.)
(a Development Stage Company)

Notes to Financial Statements
June 30, 2004


NOTE B - RELATED PARTY TRANSACTIONS

Direct Wireless Corporation provided office space and administrative services to
the Company  until  September  30, 2003.  The  estimated  value for the services
provided  totaled  $15,300 since  inception  and are recorded as  administrative
services in the accompanying financial statements.

NOTE C - OTHER INTANGIBLES

On August 26, 2003 Health  Discovery  Corporation  acquired the patents,  patent
rights, all pending intellectual property, proprietary software, and websites of
Barnhill  Group,  LLC through the issue of  29,825,564  common  stock  shares of
Health  Discovery  Corporation  (then known as Direct  Wireless  Communications,
Inc.).  The purchase of Barnhill  Group,  LLC's assets was recorded at $596,511,
which was the market value of the shares issued at the date of acquisition.  The
purchase  is  recorded  as  other  intangibles  in  the  accompanying  financial
statements.

On September 30, 2003 Health Discovery Corporation acquired the patents,  patent
rights, all pending intellectual property, proprietary software, and websites of
Fractal  Genomics,  LLC through the issue of  3,825,000  common  stock shares of
Health  Discovery  Corporation  (then known as Direct  Wireless  Communications,
Inc.).  In addition to the common stock  shares  issued for the  acquisition  of
Fractal  Genomics,  LLC's  assets,  the  Company  agreed  to  execute a note for
$500,000 paid in quarterly  installments to the seller.  The purchase of Fractal
Genomics,  LLC's assets was recorded at $767,750,  which was the market value of
the shares issued at the date of  acquisition  plus the amount of the note.  The
purchase  is  recorded  as  other  intangibles  in  the  accompanying  financial
statements.

NOTE D - LICENSE FEES EXPENSE - LICENSE AGREEMENT

Effective  April 30, 2001,  the Company  entered into a license  agreement  with
Direct Wireless Corporation. The Company had agreed to pay $10,000,000 under the
terms of the license  agreement  to be paid as the Company  gains money from the
sale or sales of sub-licenses for the United States. The Company had also agreed
to pay a  percentage  of all fees  collected  of  licensed  products  to  Direct
Wireless under the terms of the agreement.

As a result  of the  Barnhill  Group  Acquisition,  the  license  agreement  was
canceled.

The accompanying  financial statements include $240,440 of license fees expensed
that have been paid to Direct Wireless from  inception.  No amortization of such
fees have occurred during the development stage.


<PAGE>


HEALTH DISCOVERY CORPORATION                                              Page 7
(FORMERLY KNOWN AS DIRECT WIRELESS COMMUNICATIONS, INC.)
(a Development Stage Company)

Notes to Financial Statements
June 30, 2004


NOTE E - FEDERAL INCOME TAXES

At June 30, 2004,  the Company had net  operating  loss  carryforwards  totaling
$1,811,032,  which will expire in 2024. Realization of deferred assets resulting
from the NOL carryforwards have been offset by a valuation allowance.

NOTE F - NOTE PAYABLE

As part of the purchase of Fractal  Genomics,  LLC's  assets,  Health  Discovery
Corporation agreed to pay an additional  $500,000 in eight equal installments of
$62,500 plus interest at the rate of six percent (6%) per annum with the initial
payment  due and  payable  on January 2, 2004 and  thereafter  on the  following
dates:  April 1, 2004; July 1, 2004;  October 1, 2004; January 1, 2005; April 1,
2005;  July 1,  2005;  and  October 1,  2005.  In the event that any  payment of
principal  and interest is not made within  fifteen (15) days after the due date
thereof,  then all of the then unpaid  principal and relevant  accrued  interest
shall  become  immediately  due and  payable.  As of June 30,  2004,  there is a
balance of $375,000.

Following are maturities schedule of the note:

             Year Ended
            December 31,        Amount
           ----------------   ------------
                2004       $      121,279
                2005              253,721
                              ------------
                           $      375,000
                              ============

NOTE G - OUTSTANDING OPTIONS

At June 30, 2004, Health Discovery  Corporation has options outstanding to allow
for the  purchase of  1,200,000  shares of its common  stock.  The  warrants are
exercisable at a price of $0.01 per share. Additionally,  the Company has issued
options to purchase  4,300,000  shares of common stock. The options vest 800,000
as of each November 1, 2004, 2005 and 2006. The remaining  options vest based on
each option holder's success in raising equity capital.

NOTE H - STOCK OFFERING

The  Company  offered  sale of  restricted  stock units to  qualified  investors
through a Private Placement Offering.  The restricted stock units consist of one
share  of  restricted  common  stock  and a  warrant  to  acquire  one  share of
restricted  common stock for $.35.  The price of the  restricted  stock units is
$.10 per share.  The stock sale  commenced  on  February  1, 2004 and  continued
through June 30, 2004,  10,850,000  restricted  stock units have been sold.  The
rights to exercise any warrants not exercised  will expire in February 2007. The
offering closed on July 31,2004.


<PAGE>


ITEM 2. MANAGEMENT'S PLAN OF OPERATIONS.                                  Page 8

We have not realized any earned income since inception. However, we have entered
into  agreements  with MD Anderson Cancer Center,  Stanford  University  Medical
Center and The  University  of Miami to perform  analyses of clinical data using
our  computational  technologies,  which we expect  will earn  income  after the
identification,  patent protecting and licensing of newly discovered biomarkers.
We have secured both joint  ownership  rights and/or first options for worldwide
exclusive rights to our discoveries in these  contracts.  After the close of the
second  quarter of 2004,  we acquired  the rights to a portfolio of patents that
had initially been issued to Dr. Barnhill,  our Chief Executive Officer,  and to
several members of our Scientific  Advisory Board. Those patents,  together with
pending  applications  included in the  portfolio,  relate  primarily to Support
Vector  Machines,  which have  applications  in a wide variety of disciplines in
which it is  necessary  to analyze  complex  data sets.  We expect to be able to
generate  a stream of income by  licensing  the use of Support  Vector  Machines
covered  by the  patents.  We have  been  able to fund our  operations  though a
private  offering of our common stock under rules providing  exemptions for such
offerings and will continue to do so.

OUR  TECHNOLOGY.

Using our  recently  acquired  technologies,  which  include  Fractal  Genomics,
Support Vector Machines and other advanced computational techniques we intend to
become the first company  using these patent  protected  computational  tools to
perform "First-Phase"  Discovery;  the total process of identifying a particular
clinical  medical problem to be solved and performing the entire process leading
to the  identification  of the genes or proteins  (called  biomarkers),  and the
relationships among them (called pathways), that are relevant to the solution of
the medical problem.  This process will consist of an assessment of the clinical
problem,  the determination of the clinical trial set-up (the number of patients
and  what  medical   conditions  they  represent),   the  proper  selection  and
procurement of high quality specimens for analysis,  an analytical evaluation of
the  specimens  through  laboratory  tests to produce  the  clinical  data,  the
mathematical  evaluation of the data using pattern  recognition  techniques  and
fractal geometry  modeling to produce an accurate  determination of the relevant
genes and proteins and the manners in which they interact, and patent protecting
these discoveries.

We intend to provide pharmaceutical and diagnostic companies with all aspects of
"first phase" diagnostic and drug discovery

OUR MARKET

Developing and  evaluating  new drugs and medical  therapies in less time and at
lower cost is of enormous potential benefit for modern healthcare. Genuinely new
products  must pass a series of both  in-vitro  and in-vivo  testing in order to
demonstrate their safety and effectiveness for a specific clinical  application.
Historically,  the endpoints of these trials were  traditional  ones tied to the
actual  disease  being  evaluated,  such  as  a  decrease  in  mortality  or  an
objective/semi-objective  decrease  in  clinical  symptoms  associated  with the
condition.  In the last 10 to 15 years,  there has been a move by the U.S.  Food
and Drug  Administration  (FDA) to incorporate other endpoints,  including genes
that are biomarkers for the existence or absence of a particular disease,  which
are  nontraditional  findings  that are  related to the  presence  or absence of
disease.


<PAGE>

                                                                          Page 9

Examples of successful  application of biomarker data to therapeutic  evaluation
include the drugs Betaseron for use against multiple  sclerosis and Herceptin in
the treatment of breast cancer.

Our goal is to leverage the FDA's expedited  approval  process by producing more
relevant and predictable biomarkers for drug discovery. By speeding up approval,
new and better  medicines and  diagnostic  markers can be developed for patients
worldwide.


Using our established  relationships and signed discovery  contracts with top US
medical  and  cancer  centers  and  our  recently   acquired   fractal  genomics
computational technologies and support vector Machine technologies,  our goal is
to overcome the difficulties encountered with biomarker discovery and become the
first company,  to our knowledge,  to perform the total process of "first-phase"
discovery  by  identifying  a  particular  clinical  problem  to be  solved  and
performing  the entire  process  leading to the  identification  of the genes or
proteins (called biomarkers), and the relationships among them (called pathways)
that are  relevant to the solution of the medical  problem as  described  below.
Once we discover  these new  biomarkers  and pathways,  we intend to immediately
file patent  applications  to protect the  discoveries  such as with the patents
filed for our Leukemia, AIDS, and Downs Syndrome discoveries.

These  patent-protected  biomarkers  and pathways  represent the products of our
company.  After our  discovery  is patent  protected,  the process of selling or
licensing  the  newly  discovered   biomarkers  and  pathways  will  begin.  The
information  will  then  be  sold  or  licensed  to  diagnostic   companies  for
development into new state-of-the-art diagnostic assays and the same information
will be sold or licensed to  pharmaceutical  companies  for further  development
into the next generation of therapeutic targets.

Intellectual  property  is a key asset in  diagnostic  and drug  discovery.  Our
products will be based on intellectual  property,  which includes the discovered
biomarkers and pathways produced through our own internal research programs,  as
well as joint  discovery  efforts with  academic  institutions,  diagnostic  and
pharmaceutical companies worldwide.

OUR CORPORATE STRATEGY

Our goal is to  develop  a  product  line of  newly  discovered  biomarkers  and
pathways,  which will  include  human genes,  proteins  and genetic  proteonomic
variations,  as well as gene, protein and metabolite expression differences.  In
drug  discovery,  biomarkers  can help elicit  disease  targets and pathways and
validate mechanisms of drug action. They may also be pharmacodynamic  indicators
of drug activity, response and toxicity for use in clinical development.

We intend to provide pharmaceutical and diagnostic companies with all aspects of
"first  phase"  diagnostic  and drug  discovery  from expert  assessment  of the
clinical  dilemma  through  proper  selection  and  procurement  of high quality
specimens.  We will then apply our proprietary analytical evaluation methods and
state-of-the-art   computational  analysis  to  produce  relevant  and  accurate
clinical data, producing accurate biomarker and pathway  discoveries,  resulting
in patent protection of our biomarker discoveries for future development.

We will provide any or all levels of "First Phase" biomarker  discovery is based
on the belief that in order to discover the most clinically relevant biomarkers,
the computational  component must begin at the inception of the clinical dilemma
to be solved.  This pathway includes several critical levels of  decision-making
all of which are part of our business strategy.


<PAGE>

                                                                         Page 10

THE FIRST LEVEL OF DISCOVERY IS ASSESSMENT OF THE CLINICAL DILEMMA.

Is the desired biomarker or pathway to be identified related to early diagnosis,
metastasis,  treatment response or some other aspect of a given disease process?
Based  on the  clinical  question  to be  answered  along  with  the  incidence,
prevalence  and nature of the particular  disease,  we will establish a clinical
study with the appropriate number of necessary  specimens.  We expect that these
studies will provide  statistically  significant  results once the biomarker and
pathway discovery is completed.

THE SECOND LEVEL OF DISCOVERY IS THE PROPER  IDENTIFICATION  AND  PROCUREMENT OF
THE MOST RELEVANT AND PROFESSIONALLY COLLECTED CLINICAL SPECIMENS.

Based on the clinical dilemma to be solved, does the appropriate  clinical trial
determined by our team of exerts require blood, serum, aspirate fluid, tissue or
some other clinically  relevant specimen?  Once the correct decision is made, we
will procure the specimens  necessary for the  discovery  from highly  reputable
institutions, like MD Anderson Cancer Center in Houston, Texas, where we believe
proper  collection  and  informed  consent  are  completed  under the  strictest
scientific protocol.

THE THIRD LEVEL OF DISCOVERY IS THE ANALYTICAL COMPONENT.

The  clinical  specimens  must then be  analyzed  and  converted  into  relevant
clinical  data.  l Our team of experts make the  determine  of which  analytical
method is appropriate for the most successful  biomarker and pathway  discovery.
Our experts constantly monitor improvements in these techniques  worldwide.  The
techniques we currently expect to use include mass spectroscopy,  MALDI,  SELDI,
DNA methylation,  gene chip analysis, 2-D Gel Electrophoresis,  as well as other
proprietary  techniques  developed by companies and academic  institutions  with
which we have relationships.

THE FOURTH LEVEL OF DISCOVERY IS THE COMPUTATIONAL COMPONENT.

The data generated from the  analytical  component must then be  computationally
analyzed for the discovery of new  biomarkers,  patterns among those  biomarkers
and causality pathways. Our team of experts decides which of the current leading
computational algorithms, such as the fractal geometry modeling (FGM) techniques
or support vector machine (SVM) techniques owned by the Company, are best suited
to  solve  the  particular  clinical  dilemma  in  question.  The  data  is then
computationally analyzed, and the new biomarkers and pathways are discovered and
patent protected.

THE FIFTH LEVEL OF DISCOVERY IS PATENT PROTECT THE DISCOVERY.

Newly discovered  biomarkers and pathways will be patented for future license to
diagnostic companies for use in biomarker assays and to pharmaceutical companies
for use in developing drug targets.

THE SIXTH  LEVEL OF  DISCOVERY  DEFINE  THE  CLINICAL  VALIDITY  AND  UTILITY OF
DISCOVERED BIOMARKERS.

Biomarkers  uncovered  through the four stages of discovery will be subsequently
validated  independently in larger,  clinically relevant  populations.  Clinical
validity of a biomarker is  confirmed by its presence in the clinical  condition
in question and its ability to differentiate one disease state from another,  or
a diseased  state from a healthy state.  Markers  validated by our processes may
provide:  vastly  improved  diagnostic  capabilities;   may  identify  potential
therapeutic  targets for pharmaceutical  intervention  (e.g.  membrane signaling
proteins  and  inhibitors);   and  markers   suitable  for  monitoring   disease
progression  following  therapeutic  intervention.   Application  of  clinically
validated biomarkers in such a manner will result in improved individual patient
care and the  advancement  of the field of  personalized  medicine.  This unique
approach  to  biomarker  discovery  and its  additional  validation  in relevant
clinical  samples advances the commercial  potential of biomarkers  uncovered by
Health Discovery Corporation to diagnostic and



<PAGE>

                                                                         Page 11

therapeutic  partners.  Integration  of the six  levels of  biomarker  discovery
should result in improved  efficiencies in translation of this  information into
commercial and medically valuable products.

The goal of  Health  Discovery  Corporation  is to  produce  more  relevant  and
predictable  biomarkers for drug discovery so that new and better  medicines and
diagnostic markers can be developed for patients worldwide.


                           PART II--OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

We are the  plantiff in Health  Discovery  Corporation  vs Bill G.  Williams and
Shirley K. Williams etal. in the 74th Judicial  Disctrict Mclennan County Texas.
The Tenth Court of Appeals Mclennan County Texas has issued an injuction pending
the final  determination of the appeal.  Health Discovery  Corporation seeks the
repossession  and  cancellation  of shares  from  defendants  because  they were
illegally  obtained under Texas law. Three of the four officers  involved in the
transaction in question have agreed to return a total of 3,466,000 shares.

ITEM 2.  CHANGES IN SECURITIES.

      There have been no material changes in securities.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

      There has been no  material  default  by the  Company  in the  payment  of
principal,  interest,  a sinking or purchase fund  installment or other material
default in the Company's Senior Securities.

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

      No  matters  have been  submitted  to a vote of the  holders of the common
stock or other securities of the Company during the reporting period

ITEM 5.  OTHER MATTERS.

      There are no other matters upon which the Company is reporting.


<PAGE>

                                                                         Page 12

PART II--OTHER INFORMATION (CONTINUED)

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

      (A) EXHIBITS

3.1 Articles of Incorporation.  Registrant incorporates by reference Exhibit 3.1
to Registration Statement on Form SB-2, File No. 333-62216, filed 6/04/2001.

3.1  (a)  Articles  of  Amendment  to  Articles  of  Incorporation.   Registrant
incorporates by reference Exhibit 2.2 to Form10-QSB,  File No. 333-62216,  filed
11/14/2001.

3.1(b) Articles of Amendment to Articles of  Incorporation  changing  Registrant
name from Direct Wireless Communications, Inc., to Health Discovery Corporation.
Registrant  incorporates  by  reference  Exhibit  3.1(b) to Form 10-QSB File No.
333-62216 Filed 3/30/2004.

3.2 By-Laws.  Registrant  incorporates by reference  Exhibit 3.2 to Registration
Statement on Form SB-2, File No. 333-62216, filed 6/04/2001.

4.1  Copy of  Specimen  Certificate  for  shares  of  common  stock.  Registrant
incorporates by reference  Exhibit 4.1 to  Registration  Statement on Form SB-2,
File No. 333-62216, filed 6/04/2001.

4.1 (b) Copy of  Specimen  Certificate  for shares of common  stock.  Registrant
incorporates by reference Exhibit 4.1 (b) to Form 10-K, filed 3/30/2004.

4.2 Excerpt from By-Laws.  Registrant  incorporates by reference  Exhibit 4.2 to
Registration Statement on Form SB-2, File No. 333-62216, filed 6/04/2001.

4.2(A) Corrected Article 3.02 of By-Laws.  Registrant  incorporates by reference
Exhibit 4.2(A) to Amendment No. 2 to  Registration  Statement on Form SB-2, File
No. 333-62216, filed 8/15/2001

4.3(a) Non  Qualified  stock option  agreements  dated  October 30, 2003 between
registrant and David Cooper.  Registrant  incorporates by reference  Exhibit 4.3
(a) to Form 10-K, filed 3/30/2004.

4.3(b) Non  Qualified  stock option  agreements  dated October  30,2003  between
registrant and Joe Fanelli. Registrant incorporates by reference Exhibit 4.3 (b)
to Form 10-K, filed 3/30/2004.

10.1(a)  Technology  License  Agreement  dated May 15, 2001, as amended July 17,
2001 between Direct Wireless  Corporation  and Direct  Wireless  Communications,
Inc.  Registrant  incorporates by reference Exhibit 10.1(a) to Amendment No.1 to
Registration Statement on Form SB-2, File No. 333-62216, filed 7/24/ 2001.

10.2 Asset purchase  agreement  between  registrant dated September  15,2003 and
Barnhill Group LLC.  Registrant  incorporates by reference  Exhibit 10.2 to Form
10-K, filed 3/30/2004.

10.3 Asset purchase  agreement  between  registrant  dated December  30,2003 and
Fractal Genomics LLC. Registrant  incorporates by reference Exhibit 10.3 to Form
10-K, filed 3/30/2004.

32. Certifications of Chief Financial Officer


<PAGE>


                                                                         Page 13

(B) REPORTS ON FORM 8-K.

8-K Filed June 10, 2004 Item 5. Other Events and Regulation FD Disclosure.

8-K Filed June 18, 2004 Item 5. Other Events and Regulation FD Disclosure.

8-K Filed June 21, 2004 Item 5. Other Events and Regulation FD Disclosure.

8-K Filed July 9, 2004 Item 5. Other Events and Regulation FD Disclosure.

8-K Filed June 9, 2004 Item 5. Other Events and Regulation FD Disclosure.

8-K Filed August 9, 2004 Item 2 Acquisition  or  Disposition  of Assets,  Item 4
Change in Registrant's  Certified  Accountant Item 5 Other Events and Regulation
FD Disclosure


<PAGE>


                                                                         Page 14

                                   SIGNATURES

      In accordance  with the  requirement  of the Exchange Act, the  registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                    Health Discovery Corporation
                                    Registrant

      Date: August 16, 2004         s. Stephen D. Barnhill M.D.
                                    Printed Name Stephen D. Barnhill M.D.
                                    Title Chief Executive Officer

      Date: August 16, 2004         s. Robert S. Braswell IV
                                    Printed Name Robert S. Braswell IV
                                    Title Chief Administrative Officer/Secretary