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 September 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: 78,767,464

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

            Signatures                                                        13
            Certifications                                                 14-16


<PAGE>
                                                                               1


HEALTH DISCOVERY CORPORATION
(a Development Stage Company)

Balance Sheet

September 30, 2004


<TABLE>
<CAPTION>
                                     Assets
<S>                                                                         <C>
Current Assets:
  Cash                                                                      $   211,232
  Other receivable                                                                  800
                                                                            -----------
    Total current assets                                                        212,032
                                                                            -----------
Equipment, less accumulated depreciation of $1,289                                6,801
                                                                            -----------
Other assets:
  Patents, trademarks, and software, less accumulated amortization of $39     3,370,149
                                                                            -----------
    Total other assets                                                        3,370,149
                                                                            -----------
      Total Assets                                                          $ 3,588,982
                                                                            ===========

                      Liabilities and Stockholders' Equity
Current Liabilities:
  Current portion of long-term debt                                         $   871,759
  Accounts payable                                                               72,824
  Accrued payroll taxes payable                                                  17,595
  Accrued interest                                                                9,626
                                                                            -----------
    Total current liabilities                                                   971,804
Long-term debt, less current portion included above                             236,974
Convertible notes payable, no par value; convertible to
    6,634,221 shares authorized, issued and outstanding                       1,127,818
                                                                            -----------
Total liabilities                                                             2,336,596
                                                                            -----------
Stockholders' Equity:
  Common stock, no par value; 200,000,000 shares authorized
    78,742,464 shares issued and outstanding                                  3,385,934
  Additional paid-in-capital                                                    216,719
  Deficit accumulated during the development stage                           (2,350,267)
                                                                            -----------
    Total stockholders' equity                                              $ 1,252,386
Total Liabilities and Stockholders' Equity                                    3,588,982
                                                                            ===========
</TABLE>
                      See accountant's compilation report.

<PAGE>

HEALTH DISCOVERY CORPORATION
(A Development Stage Company)

Statements of Operations

For the Quarter Ended and the Nine Months Ended September 30, 2004, and the
Period from April 6, 2001 (Inception) to September 30, 2004


                                                                               2


<TABLE>
<CAPTION>
                                                               For the            For the             April 6, 2001
                                                         Quarter Ended       Nine Months Ended        (Inception) to
                                                    September 30, 2004       September 30, 2004     September 30, 2004
                                                    ------------------       ------------------     ------------------

Operating expenses:
<S>                                                 <C>                     <C>                    <C>
  Administrative fees                               $                 --    $              2,896   $             53,615
  Advertising                                                      8,375                  25,819                 33,387
  Amortization                                                         8                      25                     39
  Auto expense                                                        --                     136                    408
  Bad debt expense                                                    --                      --                  6,379
  Bank charges                                                        32                     250                    639
  Computer expense                                                   215                     403                    403
  Conference and meeting                                          13,837                  17,145                 17,145
  Consulting                                                      65,911                  88,061                 88,061
  Continuing education                                                --                      --                    200
  Contract labor                                                  13,480                  24,040                 24,040
  Depreciation                                                       856                   1,289                  1,289
  Dues and subscriptions                                             596                     596                  2,000
  Equipment lease                                                    372                     878                  1,122
  Insurance                                                        9,640                  18,520                 18,796
  Interest                                                        14,339                  26,316                 26,434
  Internet expense                                                   309                     670                    670
  Investor relations                                                 191                   8,963                  8,963
  Legal and accounting                                           167,128                 306,020                306,020
  License fee                                                         --                      30                240,830
  Meals and entertainment                                         16,670                  22,299                 23,850
  Office expense                                                   4,940                   8,375                 16,741
  Other expense                                                    1,667                   1,667                  2,054
  Outside services                                                    --                      --                 80,841
  Postage and delivery                                               553                   1,435                  4,328
  Professional and consulting fees                                    --                      --                641,597
  Public relations                                                    --                   1,850                  1,850
  Rent expense                                                     3,351                  11,390                 13,130
  Repairs and maintenance                                             --                      --                    239
  Salaries - officer                                             160,000                 506,666                506,666
  Salaries and wages                                              15,000                  27,500                 54,167
  Stock transaction fees                                          (3,555)                  2,999                 13,480
  Supplies                                                            --                      --                  7,021
  Taxes - payroll                                                  8,800                  32,672                 34,752
  Tax penalties                                                       --                       7                      7
  Telephone                                                        5,063                  12,943                 18,504
  Travel                                                          31,892                  89,485                100,576
  Utilities                                                           --                     459                    459
                                                    --------------------    --------------------   --------------------
    Total expenses                                               539,670               1,241,804              2,350,702
                                                    --------------------    --------------------   --------------------
Other income (expense):
  Loss on sale of assets                                              --                      --                    (20)
  Dividend income                                                     --                      --                     64
  Other income                                                         1                      15                    391
                                                    --------------------    --------------------   --------------------

    Total other income (expense)                                       1                      15                    435
                                                    --------------------    --------------------   --------------------

Net loss                                            $            539,669    $          1,241,789   $          2,350,267
                                                    --------------------    --------------------   --------------------

Average outstanding shares                                    79,522,240              72,830,388             31,170,813
                                                    ====================    ====================   ====================

Loss per share                                      $               0.01    $               0.02   $               0.08
                                                    ====================    ====================   ====================
</TABLE>

                      See accountant's compilation report.

<PAGE>

                                                                               3


HEALTH DISCOVERY CORPORATION
(A Development Stage Company)

Statement of Cash Flows

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

<TABLE>
<CAPTION>
                                                                For the            April 6, 2001
                                                           Nine Months Ended       (Inception) to
                                                          September 30, 2004     September 30, 2004
                                                          ------------------     ------------------
Cash flows from operating activities:
<S>                                                     <C>                     <C>
  Net loss                                              $         (1,241,789)   $         (2,350,267)
Adjustments to reconcile net loss to net cash
  used in operating activities:
    Depreciation and amortization                                      1,314                   1,328
    Services provided for administrative expenses                         --                  50,719
    Services provided for stock                                       42,911                 581,938
    Increase in other receivable                                        (800)                   (800)
    Increase in accounts payable                                      67,237                  72,824
    Increase in accrued liabilities                                   21,726                  27,221
                                                        --------------------    --------------------
    Net cash used in operating activities                         (1,109,401)             (1,617,037)
                                                        --------------------    --------------------
Cash flows from investing activities:
  Purchase of equipment                                               (8,090)                 (8,090)
  Patent costs                                                       (18,866)                (19,376)
                                                        --------------------    --------------------
    Net cash used in investing activities                            (26,956)                (27,466)
                                                        --------------------    --------------------
Cash flows from financing activities:
  Repayments of notes payable                                       (250,000)               (250,000)
  Proceeds from sale of common stock                               1,521,000               2,105,735
                                                        --------------------    --------------------
    Net cash provided by financing activities                      1,271,000               1,855,735
                                                        --------------------    --------------------

Net increase in cash                                                 134,643                 211,232

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

Cash, end of period                                     $            211,232    $            211,232
                                                        ====================    ====================
</TABLE>

                      See accountant's compilation report.


                                                                               4

<PAGE>


HEALTH DISCOVERY CORPORATION
(A Development Stage Company)

Statement of Cash Flows - Continued

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


Supplemental Schedule of Noncash Investing and Financing Activities:

For the Nine Months Ended September 30, 2004:

      The Company purchased patents, trademarks, and software using debt in the
amount of $1,986,551.

      The Company issued common stock for professional and consulting services
for $42,911.

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

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

      The Company issued common stock for professional and consulting services
for $581,938.

      The Company issued common stock for patents, trademarks, and software for
$864,261.

      The Company purchased patents, trademarks, and software using debt in the
amount of $2,486,551.


                      See accountant's compilation report.

                                                                               5
<PAGE>


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

Notes to Financial Statements
September 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>

                                                                               6


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 and Convertible Notes Payable

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 assets 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 assets in the accompanying financial statements.

On July 30, 2004, Health Discovery Corporation acquired the patents and patents
pending applications for certain machine learning tools used for diagnostic and
drug discovery. The rights in these assets were purchased from unrelated third
parties for a combination of cash consideration to be paid over time and
interest bearing notes payable that are convertible to common stock. An initial
cash payment of $175,394 will be paid by December 31, 2004. Four additional
payments of $175,394 will be made 4 months from the date of the initial payment
and every 4th month thereafter until $876, 968 has been paid. The Company has
imputed interest on the cash payments using a rate of 3.16 % resulting in a
liability that amounts to $858,733. The remainder of the consideration was paid
by issuing notes payable that bear interest at 3.16 % and are convertible into
6,634,221 shares of common stock (at $.17 per share) until maturity on July 28,
2009. The purchase was recorded as other assets in the accompanying financial
statements. The agreements place certain limitations on the selling the common
stock shares during certain periods after conversion.

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>

Note E - Federal Income Taxes

At September 30, 2004, the Company had net operating loss carryforwards totaling
$2,350,702, 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 September 30, 2004, there is a balance of
$312,500.

Following are maturities schedule of the note:

                      Year Ended
                     December  31,                Amount
                -----------------------     -----------------
                         2004           $             62,500
                         2005                        250,000
                                            -----------------
                                        $            312,500
                                            =================

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 closed on July
31, 2004. Once the Private Placement Offering was completed, the resultant sale
to qualified individual investors in the amount of $1,521,000.00 units, which is
comprised of restricted common stock and warrants to acquire restricted common
stock. Under the terms of the sale, the company issued 15,210,000 restricted
common shares which represents approximately 19% of the total shares
outstanding. In addition, each purchaser of common shares was granted a warrant
to acquire an equal number of restricted common shares at a fixed price of $0.35
per share until February 2007. This could result in the issuance of up to
15,210,000 additional restricted common shares upon exercise. Neither the shares
sold pursuant to the private placement nor the shares issuable upon the exercise
of the warrants will be registered under either federal or state securities laws
and must be held for at least one year from the time they are issued.

<PAGE>

                                                                               8


Item 2. Management's Plan of Operations.

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 Biomarker 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 Biomarker Discovery" 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.

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.

<PAGE>

                                                                               9


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 Biomarker 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 Biomarker Discovery" 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" 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.

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.

<PAGE>
                                                                              10


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 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.

<PAGE>

                                                                              11


                           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. On the 25th day of August, 2004 the Court of Appeals for the Tenth
District of the State of Texas granted Health Discovery Corporation's Appeal of
an order denying a temporary injunction against Respondents Bill G. Williams,
Shirley K. Williams, and Automated Shrimp Corporation and entered the following
order. "Because we find that the trial court abused its discretion in failing to
preserve the status quo pending a trial of the issue, we reverse the order and
remand the cause with instructions to issue a temporary injunction." 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 retuned a total of
3,466,036 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>
                                                                              12


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.

23. Certifications of Chief Financial Officer

(B) REPORTS ON FORM 8-K.

8-K Filed August 26, 2004 Item 8.01 Other Events and Regulation FD Disclosure.

<PAGE>
                                                                              13


                                   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: November 15, 2004         /s/ Stephen D. Barnhill M.D.
                                ----------------------------------------------
                                Printed Name Stephen D. Barnhill M.D.
                                Title Chief Executive Officer

Date: November 15, 2004         /s/ Robert S. Braswell IV
                                ----------------------------------------------
                                Printed Name Robert S. Braswell IV
                                Title Chief Administrative Officer / Secretary