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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 March 31, 2003                                          
|  |  |                                                                                        
|o |  | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT                        
|  |  | For the transition period from      to                                                 

Commission file number 0-12627

MEDICAL DISCOVERIES, INC.




(Exact name of Small Business Issuer as specified in its charter)


|                                |  |                    
|------------------------------- |  | -------------------
|Utah                            |  | 87-0407858         
|                                |  |                    
|(State or other jurisdiction of |  | (I.R.S. Employer   
|incorporation or organization)  |  | Identification No.)

738 Aspenwood Lane, Twin Falls, Idaho 83301

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(Address of principal executive offices)


(208) 736-1799

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(Issuers telephone number, including area code)


N/A

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


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: As of May 12, 2003, there
were 55,698,858 shares of the issuers Common Stock outstanding.

Transitional Small Business Disclosure Format (check one): Yes o No x





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TABLE OF CONTENTS



|                             |                                                                                                |  |  |  |  |  |  | 
|---------------------------- | ---------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I FINANCIAL INFORMATION
|                             | ITEM 1. FINANCIAL STATEMENTS                                                                  
|                             | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|                             | ITEM 3. CONTROLS AND PROCEDURES                                                               
|PART II OTHER INFORMATION   
|                             | ITEM 2. CHANGES IN SECURITIES                                                                 
|                             | ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K                                                     
|SIGNATURES                  
|CERTIFICATION               
|INDEX TO EXHIBITS           
|EXHIBIT 99                  



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PART I
FINANCIAL INFORMATION




ITEM 1.  FINANCIAL STATEMENTS

The following financial statements are filed with this report:

Condensed Consolidated Balance Sheet as of March 31, 2003, (unaudited) and
December 31, 2002

Condensed Consolidated Statements of Operations for the three-month periods
ended March 31, 2003 (unaudited) and March 31, 2002 (unaudited) and cumulative
amounts since inception through March 31, 2003 (unaudited)

Condensed Consolidated Statements of Cash Flows for the three-month periods
ended March 31, 2003 (unaudited) and March 31, 2002 (unaudited) and cumulative
amounts since inception through March 31, 2003 (unaudited)

Notes to Unaudited Financial Statements

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MEDICAL DISCOVERIES, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED BALANCE SHEET
As of March 31, 2003 (Unaudited) and December 31, 2002

|                                       |                                                                                                                                             |                             |                           |                      |            |                |         |                   |            |           |         | 
|-------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------- | ------------------------- | -------------------- | ---------- | -------------- | ------- | ----------------- | ---------- | --------- | ------- | 
|                                       |                                                                                                                                             |                             |                           |                      |            | March 31, 2003 |         | December 31, 2002
|                                       |                                                                                                                                             |                             |                           |                      |            |                |         |                  
|Current assets                         |                                                                                                                                             |                             |                           |                      |            |                |         |                  
|                                       | Cash                                                                                                                                        |                             | $                         | 101,668              |            |                | $       | 14,555            |           
|                                       | Prepaid expenses                                                                                                                            |                             |                           | 62,706               |            |                |         | 36,261            |           
|                                       | Current portion of deferred charges                                                                                                         |                             |                           | 48,305               |            |                |         | 48,305            |           
|                                       |                                                                                                                                             |                             |                           |                      |            |                |         |                  
|                                       |                                                                                                                                             |                             |                           | Total current assets |            |                | 212,679 |                   |            |           | 99,121  | 
|Deferred charges, less current portion |                                                                                                                                             |                             |                          |                      |            |                | 12,076  |                  
|                                       |                                                                                                                                             |                             |                           |                      |            |                |         |                  
|                                       |                                                                                                                                             |                             |                           | Total assets         |            | $              | 212,679 |                   |            | $         | 111,197 | 
|                                       |                                                                                                                                             |                             |                           |                      |            |                |         |                  
|Current liabilities                    |                                                                                                                                             |                             |                           |                      |            |                |         |                  
|                                       | Accounts payable                                                                                                                            |                             | $                         | 2,342,672            |            |                | $       | 2,278,038         |           
|                                       | Accrued interest                                                                                                                            |                             |                           | 390,290              |            |                |         | 348,208           |           
|                                       | Current portion of notes payable                                                                                                            |                             |                           | 794,217              |            |                |         | 594,217           |           
|                                       | Convertible notes payable                                                                                                                   |                             |                           | 498,202              |            |                |         | 498,202           |           
|                                       |                                                                                                                                             |                             |                           |                      |            |                |         |                  
|                                       |                                                                                                                                             |                             | Total current liabilities |                      |            | 4,025,381      |         |                   |            | 3,718,665 |        
|Stockholders deficit                  |                                                                                                                                             |                             |                           |                      |            |                |         |                  
|                                       | Escrow receivable                                                                                                                           |                             |                           | (227,300             | )          |                |         | (227,300          | )         
|                                       | Additional paid in capital                                                                                                                  |                             |                           | 284,363              |            |                |         | 284,363           |           
|                                       | Common stock, no par value, authorized
100,000,000 shares; 55,598,856 shares
issued and outstanding at March 31, 2003
and December 31, 2002 |                             |                           | 11,713,262           |            |                |         | 11,713,262        |           
|                                       | Accumulated deficit                                                                                                                         |                             |                           | (15,583,027          | )          |                |         | (15,377,793       | )         
|                                       |                                                                                                                                             |                             |                           |                      |            |                |         |                  
|                                       |                                                                                                                                             | Total stockholders deficit |                           |                      | (3,812,702 | )              |         |                   | (3,607,468 | )        
|                                       |                                                                                                                                             |                             |                           |                      |            |                |         |                  
|                                       |                                                                                                                                             | $                           | 212,679                   |                      |            | $              | 111,197 |                  
|                                       |                                                                                                                                             |                             |                           |                      |            |                |         |                  

See notes to consolidated financial statements

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MEDICAL DISCOVERIES, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Periods Ended March 31, 2003 and March 31, 2002, and Cumulative Amounts (Unaudited)

|                                    |                                            |                                    |                                                 |                    |          |                      |            |               |          |            |            |           |             |             |             |  
|----------------------------------- | ------------------------------------------ | ---------------------------------- | ----------------------------------------------- | ------------------ | -------- | -------------------- | ---------- | ------------- | -------- | ---------- | ---------- | --------- | ----------- | ----------- | ----------- | -
|                                    |                                            |                                    |                                                 |                    |          |                      |            |               |          |            |            |           |             | Cumulative 
|                                    |                                            |                                    |                                                 |                    |          |                      |            |               |          |            |            |           |             | Amounts    
|                                    |                                            |                                    |                                                 |                    |          | For the Three Months |            | Since        
|                                    |                                            |                                    |                                                 |                    |          | Ended March 31,      |            | November 20, 
|                                    |                                            |                                    |                                                 |                    |          |                      |            | 1991 (Date of
|                                    |                                            |                                    |                                                 |                    |          | 2003                 |            | 2002          |          | Inception)
|                                    |                                            |                                    |                                                 |                    |          |                      |            |               |          |           
|Revenues                            |                                            | $                                  |                                                |                    |          | $                    |           |               |          | $          | 137,212    |          
|Cost of goods sold                  |                                            |                                    |                                                |                    |          |                      |           |               |          |            | 10,526     |          
|                                    |                                            |                                    |                                                 |                    |          |                      |            |               |          |            |            |          
|                                    |                                            |                                    |                                                 | Gross profit       |          |                      |           |               |          |            |           |           |             |             | 126,686     |  
|Research and development expenses   |                                            |                                    |                                                |                    |          |                      |           |               |          |            | 2,521,741  |          
|Inventory writedown                 |                                            |                                    |                                                |                    |          |                      |           |               |          |            | 96,859     |          
|Impairment loss                     |                                            |                                    |                                                |                    |          |                      |           |               |          |            | 9,709      |          
|License                             |                                            |                                    |                                                |                    |          |                      |           |               |          |            | 1,001,500  |          
|General and administrative expenses |                                            |                                    | 147,201                                         |                    |          |                      | 294,362    |               |          |            | 10,727,490 |          
|                                    |                                            |                                    |                                                 |                    |          |                      |            |               |          |            |            |          
|                                    |                                            |                                    |                                                 | Operating loss     |          |                      | (147,201   | )             |          |            | (294,362   | )         |             |             | (14,230,613 | )
|Other income (expense)              |                                            |                                    |                                                 |                    |          |                      |            |               |          |            |            |          
|                                    | Interest income                            |                                    |                                                 |                   |          |                      |            |              |          |            |            | 23,406    |            
|                                    | Other income                               |                                    |                                                 |                   |          |                      |            |              |          |            |            | 268,926   |            
|                                    | Interest expense                           |                                    |                                                 | (58,033            | )        |                      |            | (22,105       | )        |            |            | (692,209  | )          
|                                    |                                            |                                    |                                                 |                    |          |                      |            |               |          |            |            |          
|                                    |                                            |                                    | (58,033                                         | )                  |          |                      | (22,105    | )             |          |            | (399,877   | )        
|                                    |                                            |                                    | Loss before income taxes and
extraordinary item |                    |          | (205,234             | )          |               |          | (316,467   | )          |           |             | (14,630,490 | )          
|                                    |                                            |                                    |                                                 | Income taxes       |          |                      |           |               |          |            |           |           |             |             |            |  
|                                    | Forgiveness of debt net of $0 income taxes |                                    |                                                 |                   |          |                      |            |              |          |            |            | 1,235,536 |            
|                                    |                                            |                                    |                                                 |                    |          |                      |            |               |          |            |            |          
|                                    |                                            | Net loss available to shareholders |                                                 | $                  | (205,234 | )                    |            | $             | (316,467 | )          |            | $         | (13,394,954 | )          
|                                    |                                            |                                    |                                                 |                    |          |                      |            |               |          |            |            |          
|Net loss per share                  |                                            |                                    |                                                 |                    |          |                      |            |               |          |            |            |          
|                                    | Continuing operations                      |                                    | $                                               | (0.00              | )        |                      | $          | (0.01         | )        |            | $          | (0.62     | )          
|                                    | Extraordinary item                         |                                    |                                                 |                   |          |                      |            |              |          |            |            | 0.05      |            
|                                    |                                            |                                    |                                                 |                    |          |                      |            |               |          |            |            |          
|                                    |                                            |                                    |                                                 | Net loss per share |          | $                    | (0.00      | )             |          | $          | (0.01      | )         |             | $           | (0.57       | )
|                                    |                                            |                                    |                                                 |                    |          |                      |            |               |          |            |            |          
|Weighted average shares outstanding |                                            |                                    | 55,598,856                                      |                    |          |                      | 34,706,917 |               |          |            | 23,553,260 |          

See notes to consolidated financial statements

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MEDICAL DISCOVERIES, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Periods Ended March 31, 2003 (Unaudited) & March 31, 2002 (Unaudited), and Cumulative Amounts

|                                     |                                                                            |                                                              |                                           |                                       |   |                      |          |                   |        |                     |          |             |            |           |            |  
|------------------------------------ | -------------------------------------------------------------------------- | ------------------------------------------------------------ | ----------------------------------------- | ------------------------------------- | - | -------------------- | -------- | ----------------- | ------ | ------------------- | -------- | ----------- | ---------- | --------- | ---------- | -
|                                     |                                                                            |                                                              |                                           |                                       |   | For the Three Months |          | Cumulative       
|                                     |                                                                            |                                                              |                                           |                                       |   | Ended March 31,      |          | Amounts Since    
|                                     |                                                                            |                                                              |                                           |                                       |   |                      |          | November 20, 1991
|                                     |                                                                            |                                                              |                                           |                                       |   | 2003                 |          | 2002              |        | (Date of Inception)
|                                     |                                                                            |                                                              |                                           |                                       |   |                      |          |                   |        |                    
|Cash flows from operating activities |                                                                            |                                                              |                                           |                                       |   |                      |          |                   |        |                     |          |            
|                                     | Net loss                                                                   |                                                              | $                                         | (205,234                              | ) |                      | $        | (316,467          | )      |                     | $        | (14,183,450 | )         
|                                     | Adjustments to reconcile net loss to net
cash used by operating activities |                                                              |                                           |                                       |   |                      |          |                   |        |                     |          |             |           
|                                     |                                                                            | Common stock options issued for services                     |                                           |                                       |  |                      |          |                   | 84,962 |                     |          |             | 2,841,253  |          
|                                     |                                                                            | Common stock issued for services, expenses,
and litigation   |                                           |                                       |  |                      |          |                   |       |                     |          |             | 4,157,821  |          
|                                     |                                                                            | Reduction of escrow receivable from
research and development |                                           |                                       |  |                      |          |                   |       |                     |          |             | 272,700    |          
|                                     |                                                                            | Reduction of legal costs                                     |                                           |                                       |  |                      |          |                   |       |                     |          |             | (130,000   | )        
|                                     |                                                                            | Notes payable issued for litigation                          |                                           |                                       |  |                      |          |                   |       |                     |          |             | 385,000    |          
|                                     |                                                                            | Depreciation                                                 |                                           |                                       |  |                      |          |                   | 393    |                     |          |             | 100,271    |          
|                                     |                                                                            | Write-off of subscription receivables                        |                                           |                                       |  |                      |          |                   |       |                     |          |             | 112,500    |          
|                                     |                                                                            | Impairment loss on assets                                    |                                           |                                       |  |                      |          |                   |       |                     |          |             | 9,709      |          
|                                     |                                                                            | Loss on disposal of equipment                                |                                           |                                       |  |                      |          |                   |       |                     |          |             | 30,364     |          
|                                     |                                                                            | Gain on debt restructuring                                   |                                           |                                       |  |                      |          |                   |       |                     |          |             | (1,235,536 | )        
|                                     |                                                                            | Write-off of receivables                                     |                                           |                                       |  |                      |          |                   |       |                     |          |             | 193,965    |          
|                                     |                                                                            | Changes in assets and liabilities                            |                                           |                                       |   |                      |          |                   |        |                     |          |             |            |          
|                                     |                                                                            |                                                              | Prepaid expenses                          |                                       |   | (26,445              | )        |                   |        |                    |          |             |            | (62,706   | )         
|                                     |                                                                            |                                                              | Deferred charges                          |                                       |   | 12,076               |          |                   |        | 12,076              |          |             |            | (48,305   | )         
|                                     |                                                                            |                                                              | Accounts receivable                       |                                       |   |                     |          |                   |        |                    |          |             |            | (7,529    | )         
|                                     |                                                                            |                                                              | Inventory                                 |                                       |   |                     |          |                   |        |                    |          |             |            |          |           
|                                     |                                                                            |                                                              | Other assets                              |                                       |   |                     |          |                   |        |                    |          |             |            |          |           
|                                     |                                                                            |                                                              | Accounts payable                          |                                       |   | 64,634               |          |                   |        | 83,460              |          |             |            | 2,186,763 |           
|                                     |                                                                            |                                                              | Accrued expenses                          |                                       |   | 42,082               |          |                   |        | 22,101              |          |             |            | 411,771   |           
|                                     |                                                                            |                                                              |                                           |                                       |   |                      |          |                   |        |                     |          |            
|                                     |                                                                            |                                                              |                                           | Net cash used by operating activities |   |                      | (112,887 | )                 |        |                     | (113,475 | )           |            |           | (4,965,409 | )
|Cash flows from investing activities |                                                                            |                                                              |                                           |                                       |   |                      |          |                   |        |                     |          |            
|                                     | Purchase of equipment                                                      |                                                              |                                           |                                      |   |                      |          |                  |        |                     |          | (132,184    | )         
|                                     | Payments received on note receivable                                       |                                                              |                                           |                                      |   |                      |          |                  |        |                     |          | 130,000     |           
|                                     |                                                                            |                                                              |                                           |                                       |   |                      |          |                   |        |                     |          |            
|                                     |                                                                            |                                                              |                                           | Net cash used by investing activities |   |                      |         |                   |        |                     |         |             |            |           | (2,184     | )
|Cash flows from financing activities |                                                                            |                                                              |                                           |                                       |   |                      |          |                   |        |                     |          |            
|                                     | Contributed equity                                                         |                                                              |                                           |                                      |   |                      |          |                  |        |                     |          | 131,374     |           
|                                     | Issuance of common stock                                                   |                                                              |                                           |                                      |   |                      |          |                  |        |                     |          | 3,354,359   |           
|                                     | Payments on notes payable                                                  |                                                              |                                           | (25,000                               | ) |                      |          |                  |        |                     |          | (231,287    | )         
|                                     | Proceeds from notes payable                                                |                                                              |                                           | 225,000                               |   |                      |          |                  |        |                     |          | 1,341,613   |           
|                                     | Payments on convertible notes payable                                      |                                                              |                                           |                                      |   |                      |          |                  |        |                     |          | (98,500     | )         
|                                     | Proceeds from convertible notes payable                                    |                                                              |                                           |                                      |   |                      |          | 105,001           |        |                     |          | 571,702     |           
|                                     |                                                                            |                                                              |                                           |                                       |   |                      |          |                   |        |                     |          |            
|                                     |                                                                            |                                                              | Net cash provided by financing activities |                                       |   | 200,000              |          |                   |        | 105,001             |          |             |            | 5,069,261 |           
|                                     |                                                                            |                                                              |                                           |                                       |   |                      |          |                   |        |                     |          |            
|                                     |                                                                            |                                                              |                                           | Net increase (decrease) in cash       |   |                      | 87,113   |                   |        |                     | (8,474   | )           |            |           | 101,668    |  
|Cash, beginning of period            |                                                                            |                                                              | 14,555                                    |                                       |   |                      | 2,481    |                   |        |                     |         |            
|                                     |                                                                            |                                                              |                                           |                                       |   |                      |          |                   |        |                     |          |            
|                                     |                                                                            |                                                              |                                           | Cash, end of period                   |   | $                    | 101,668  |                   |        | $                   | (5,993   | )           |            | $         | 101,668    |  
|                                     |                                                                            |                                                              |                                           |                                       |   |                      |          |                   |        |                     |          |            

See notes to consolidated financial statements

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MEDICAL DISCOVERIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2003

Note 1. Basis of Presentation.

Unaudited Interim Financial Statements

The accompanying unaudited financial statements have been prepared by the
Company pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. In the opinion of management, all adjustments and disclosures
necessary to a fair presentation of these financial statements have been
included. These financial statements should be read in conjunction with the
financial statements and notes thereto included in the Companys
2002 Annual
Report on Form 10-KSB for the year ended December 31, 2002, as filed with the
Securities and Exchange Commission. Certain reclassifications and other
corrections for rounding have been made in prior period financial statements to
conform to the current period presentation. The consolidated financial
statements include the accounts of the Company and its wholly owned
subsidiaries. All significant inter-company transactions and balances have been
eliminated in consolidation.

Stock Options

The Company has two incentive stock option plans wherein 6,000,000 shares of
the Companys common stock can be issued. The Company did not issue any stock
options during the quarter ended March 31, 2003. As of March 31, 2003,
1,417,000 shares of stock were available for future option grants. The Company
accounts for its stock options under Accounting Principles Board (APB) Opinion
No. 25 using the intrinsic value method. In accordance with Financial
Accounting Standards (SFAS) No. 148, Accounting for Stock-Based Compensation -
Transition and Disclosure, footnote disclosures of the pro forma effects if the
fair value method had been adopted are required to be presented on a quarterly
basis. During 2003 and 2002, there were no employee stock options granted and
all previously granted employee stock options were fully vested. Therefore
there were no differences in net income between the fair value and intrinsic
value methods of accounting for stock options.

Note 2. Going Concern Considerations.

The Companys recurring losses from the Companys development-stage activities
in current and prior years raise substantial doubt about the Companys ability
to continue as a going concern. The financial statements do not include any
adjustments to reflect the possible effects on the recoverability and
classification of assets or amounts and classifications of liabilities that may
result from the possible inability of the Company to continue as a going
concern. The Company is attempting to raise additional capital to sustain
operations. However, there can be no assurance that these plans will be
successful.

Note 3. Commitment Regarding Peregrine Stock.

Peregrine Properties, LLC, a Utah limited liability company (Peregrine), has
entered into an agreement to provide $500,000 to the Company to fund testing
and research steps necessary to continue development of MDI-P. The studies are
funded through an escrow agent. As of December 31, 2000, the Company had
deposited in escrow a single certificate for 5.5 million shares of common stock
for these purposes. Through March 31, 2003, Peregrine had funded $275,800 to
the escrow, of which $272,700 had been disbursed and recorded as research and
development expense on the financial statements of the Company. The remaining
$227,300 to be expended under the agreement has been recorded on the balance
sheet in equity under the caption escrow receivable. As expenditures are made
from the escrow for research and development, the expenses are recorded on the
books of the Company with a corresponding reduction in the escrow receivable.
Under the original agreement, upon completion of the studies, the escrow agent
was to disburse the 5.5 million shares to Peregrine and to disburse the
research results to the Company. On March 22, 2002, the parties entered into
an agreement the result of which was to partially close the escrow agreement to
the extent of Peregrines funding to date. On that date, 3,143,800 shares

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were distributed to Peregrine and all research conducted to date was disbursed
to the Company. Communications with Peregrine regarding the remaining funding
commitment and related research are ongoing.




ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The purpose of this section is to discuss and analyze our consolidated
financial condition, liquidity and capital resources, and results of
operations. This analysis should be read in conjunction with the financial
statements and notes thereto at pages 2 through 7 and Managements Discussion
and Analysis of Financial Condition and Results of Operations contained in our
Annual Report on Form 10-KSB for the year ended December 31, 2002 (the 2002
10-KSB).

This section contains certain forward-looking statements that involve risks and
uncertainties, including statements regarding our plans, objectives, goals,
strategies and financial performance. Our actual results could differ
materially from the results anticipated in these forward-looking statements as
a result of factors set forth under Cautionary Statement for Forward-Looking
Information and Factors Affecting Future Results below and elsewhere in this
report.

Overview

We are a development-stage bio-pharmaceutical research company engaged in the
research, development and validation of a novel class of drugs, based upon our
patented and proprietary electrolysis technologies. We seek to develop active
anti-viral, anti-bacterial and anti-fungal agents for a variety of
applications, including treatment of HIV/AIDS.

We have developed a product, (hereafter MDI-P), which appears to have the
ability to destroy certain viruses and bacteria, including the HIV virus. MDI-P
may also have the ability to kill other infectious agents, possibly including
pathogenic fungi and parasites. MDI-P may possibly be used in
non-pharmaceutical applications such as a sterilizing agent for medical and
dental instruments. MDI-P may also potentially be used to remove or inactivate
infectious agents in human and animal blood-derived products such as plasma and
gamma globulin. We are committed to the pursuit of establishing MDI-P as an
effective anti-bacterial, anti-viral and anti-fungal pharmaceutical for
in-vitro and in-vivo applications and to developing MDI-P as an effective
liquid chemical sterilant for a variety of applications.

Our highest priority is to develop and commercialize MDI-P as a pharmaceutical
for the treatment of HIV/AIDS. Subject to additional funding, we are in the
process of completing preparatory testing and steps necessary to seek approval
of the Food and Drug Administration (FDA) for MDI-P as an HIV/AIDS treatment.
We have completed in-vitro efficacy testing and toxicity testing on animals.
We next seek to test MDI-P in a controlled, independent off-shore clinical
trial of human AIDS patients. If that clinical testing is successful, we
intend to submit an Investigatory New Drug (IND) application with the FDA, the
approval of which would allow us to begin human clinical testing of MDI-P in
the United States. Our ultimate objective for MDI-Ps pharmaceutical
applications is to co-develop MDI-P with or out-license or sell the technology
to a member of the global pharmaceutical industry at some point following the
approval of our IND application.

To date, we have not generated significant revenues from operations or realized
a profit. Through March 31, 2003, we had incurred a cumulative net loss since
inception of $13,394,954. We are currently attempting to secure capital
commitments to finance our pre-IND testing of MDI-P as an HIV/AIDS
pharmaceutical and to otherwise continue research and testing of our
technologies in order to secure required approvals to bring products to market.
In that we are a development stage company, we will increasingly require
additional funding to continue the development of our technology and to finance
submittal of our testing and trials to the appropriate regulatory agencies in
order to secure approvals for product development and sales.

Recent Events

Engagement of Intellectual Property Counsel.We have engaged the law firm of
Mayer, Brown, Rowe & Maw to strengthen and expand our intellectual property and
provide worldwide strategic partnering and regulatory

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compliance advice. Mayer, Brown, Rowe & Maw replaces our prior intellectual property counsel,
Thorpe, North & Western.

Issuance of Mexican Patent. We received, from Mexicos Patent and Trademark
Office, notice of entry into National Phase of our International PCT
Application No. PCT/US95/10777, Patent Application No. 971408, entitled System
For Electrolyzing Fluids For In Vivo Administration For Humans And Other Warm
Blooded Mammals.

Results of Operations

Revenues and Gross Profit. We did not book any revenue for the quarters ended
March 31, 2003 or March 31, 2002. We do not anticipate booking significant
revenues in the near future as we continue to focus on getting products to
market.

Operating Expenses and Operating Loss. We did not spend any funds on research
and development for the quarter ended March 31, 2003, nor were any such funds
expended during the same quarter of 2002. Our general and administrative
expenses were $147,201 during the first quarter of 2003, as compared to
$294,362 during the quarter ended March 31, 2002. As a result of the
foregoing, we sustained an operating loss of $147,201 for the quarter ended
March 31, 2003, as compared with an operating loss of $294,362 for the same
period of 2002.

Other Income/Expense and Net Loss. We booked no other income and incurred
interest expenses of $58,033 for the quarter ended March 31, 2003, as compared
with no other income and $22,105 in interest expenses for the same period of
2002. In sum, our net loss for the first quarter of 2003 was $205,234 or a
loss of less than $0.01 per fully diluted share. For the quarter ended March
31, 2003, we incurred a net loss of $316,467, a loss of $0.01 per fully diluted
share.

Future Expectations.We expect to operate at a loss for several more years
while we continue to study, gain regulatory approval of and commercialize our
technologies. If we are successful in raising additional capital, we will
likely spend more during the remainder of 2003 in research and development and
general and administrative expenses, and thereby sustain greater resulting
losses, than we have in recent years.

Liquidity and Capital Resources

As of March 31, 2003, we had only $101,668 in cash and had a working capital
deficit of $3,812,702. Since our inception, we have financed our operations
primarily through private sales of equity and the issuance of convertible and
non-convertible notes. We will require significant additional funding to
continue to develop, research and seek regulatory approval of our technologies.
In addition, we cannot survive, even in the near term, without immediate
additional funding for operations. We do not currently generate any cash from
operations and have no credit facilities in place or available. Currently, we
are funding operations through short-term loans from shareholders and others.

We are seeking to raise substantial additional funds in private stock offerings
in order to meet our near-term and mid-term funding requirements. While we are
optimistic that we can raise such funds, we have not always been successful in
doing so in recent years. Given that we are still in an early development stage
and do not have revenues from operations, raising equity financing is
difficult. In addition, any additional equity financing will have a substantial
dilutive effect to our current shareholders.

Pursuant to our commercialization strategy, we estimate we will need to expend
$805,000 in research and development to file an IND application with the FDA
for MDI-P as an HIV/AIDS therapy. (See Description of Business -
Commercialization Strategy in the 2002 10-KSB.) In addition, we estimate we
will need to expend an additional $900,000 to $1,100,000 in debt service and
general and administrative costs between now and when we hope to file the IND
in June 2004. Therefore, we have a need for between $1.7 and $1.9 million to
advance our highest priority target, HIV/AIDS, to the next development
milestone.

Once our IND application is submitted, and assuming it is approved, we will
need additional capital to initiate Phase I clinical trials and progress
through FDA clinical testing toward the end of a drug that is approved for
marketing and sales. We estimate the cost to complete Phase I and Phase II
clinical trials to be several million dollars and the cost to complete Phase
III testing and obtain approval of an NDA to be in the tens of millions of
dollars.

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While our ability to obtain financing may improve in the event our IND
application is approved, we cannot give assurances that we will have the access
to the significant capital required to take a drug through regulatory approvals
and to market. We think it is more likely that at some point following
approval of an IND application we will seek a partner in the global
pharmaceutical industry to help us co-develop, license, or even purchase some
or all of our technologies.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements as defined in Item 303(c) of Regulation S-B.

Cautionary Statement for Forward Looking Information

Certain information set forth in this report contains forward-looking
statements within the meaning of federal securities laws. Forward looking
statements include statements concerning our plans, objectives, goals,
strategies, future events, future revenues or performance, capital
expenditures, and financing needs and other information that is not historical
information. When used in this report, the words estimates, expects,
anticipates, forecasts, plans, intends, believes and variations of
such words or similar expressions are intended to identify forward-looking
statements. Additional forward-looking statements may be made by us from time
to time. All such subsequent forward-looking statements, whether written or
oral and whether made by us or on our behalf, are also expressly qualified by
these cautionary statements.

Our forward-looking statements are based upon our current expectations and
various assumptions. Our expectations, beliefs and projections are expressed in
good faith and are believed by us to have a reasonable basis, including without
limitation, our examination of historical operating trends, data contained in
our records and other data available from third parties, but there can be no
assurance that our expectations, beliefs and projections will result or be
achieved or accomplished. Our forward-looking statements apply only as of the
date made. We undertake no obligation to publicly update or revise
forward-looking statements which may be made to reflect events or circumstances
after the date made or to reflect the occurrence of unanticipated events.

There are a number of risks and uncertainties that could cause actual results
to differ materially from those set forth in, contemplated by or underlying the
forward-looking statements contained in this report. Those risks and
uncertainties include, but are not limited to, our lack of significant
operating revenues and lack of profit to date, our need for substantial and
immediate additional capital, the fact that we may dilute existing shareholders
through additional stock issuances, the extensive governmental regulation to
which we are subject, the fact that our technologies remain unproven, the
intense competition we face from other companies and other products, and our
reliance upon potentially inadequate intellectual property. Those risks and
certain other uncertainties are discussed in more detail in the 2002 10-KSB.
There may also be other factors, including those discussed elsewhere in this
report, that may cause our actual results to differ from the forward-looking
statements. Any forward-looking statements made by us or on our behalf should
be considered in light of these factors.




ITEM 3. CONTROLS AND PROCEDURES

(a)       Under the supervision and with the participation of our management,
including our principal executive officer and principal financial officer, we
conducted an evaluation of our disclosure controls and procedures, as such term
is defined under Rule 13a-14(c) promulgated under the Securities Exchange Act
of 1934, as amended (the Exchange Act), within 90 days of the filing date of
this report. Based on this evaluation, our principal executive officer and
principal financial officer concluded that our disclosure controls and
procedures are effective in alerting them on a timely basis to material
information relating to our Company (including its consolidated subsidiaries)
required to be included in our reports filed or submitted under the Exchange
Act.

(b)       There have been no significant changes (including corrective actions with
regard to significant deficiencies or material weaknesses) in our internal
controls or in other factors that could significantly affect these controls
subsequent to the date of the evaluation referenced in paragraph (a) above.

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PART II
OTHER INFORMATION




ITEM 2. CHANGES IN SECURITIES

(c)       We sold the following unregistered securities during the period covered by
this report. None of the sales involved an underwriter. We believe these sales
were exempt from registration pursuant to Section 4(2) of the Securities Act of
1933 because the sales did not involve a public offering.



| |  |  | $195,000 secured promissory note dated February 20, 2003,
bearing interest at the rate of 12.3%, together with 500,000 bonus
shares for an additional $5,000 cash consideration.                                                                             
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | $25,000 secured promissory note dated January 6, 2003,
bearing interest at the rate of 15%, 12% of which is payable in cash
and 3% of which is payable in common stock at a rate equal to the
15-day average market price determined at the date of maturity.




ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)       Exhibits.

The following documents are furnished as exhibits to this Form 10-KSB. Exhibits
marked with an asterisk are filed herewith. The remainder of the exhibits
previously have been filed with the Commission and are incorporated herein by
reference.

|       |  |                                                                                                                                                                                                                                                                                                                       
|------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|NUMBER |  | EXHIBIT                                                                                                                                                                                                                                                                                                               
|       |  |                                                                                                                                                                                                                                                                                                                       
|3.1    |  | Amended and Restated Articles of Incorporation of the Company (filed as
Exhibit 3.1 to the Companys Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1994, and incorporated herein by reference).                                                                                                 
|       |  |                                                                                                                                                                                                                                                                                                                       
|3.2    |  | Amended Bylaws of the Company (filed as Exhibit 3.2 to the Companys
Annual Report on Form 10-KSB for the fiscal year ended December 31, 1994,
and incorporated herein by reference).                                                                                                                                 
|       |  |                                                                                                                                                                                                                                                                                                                       
|10.1   |  | Mutual Release and Settlement Agreement dated as of November 29, 2001,
among Medical Discoveries, Inc., Harvest Group, L.L.C. and Hydromedics,
Inc. (f/k/a Advanced Sales Company, Inc.) (filed as Exhibit 10 to the
Companys Current Report on Form 8-K on December 15, 2000, and
incorporated herein by reference).
|       |  |                                                                                                                                                                                                                                                                                                                       
|10.2   |  | Advisory Agreement dated as of March 26, 2002, between Medical
Discoveries, Inc. and Euronet International, Inc. (filed as Exhibit 10.3
to the Companys Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2001, and incorporated herein by reference).                                             
|       |  |                                                                                                                                                                                                                                                                                                                       
|10.3   |  | Employment Agreement dated as of May 15, 2002 between Medical
Discoveries, Inc. and Judy M. Robinett (filed as Exhibit 10.4 to the
Companys Quarterly Report on Form 10-QSB for the quarter ended June 30,
2002, and incorporated herein by reference).                                                              
|       |  |                                                                                                                                                                                                                                                                                                                       
|10.4   |  | 2002 Stock Incentive Plan adopted by the Board of Directors as of July
11, 2002 (filed as Exhibit 10.5 to the Companys Quarterly Report on Form
10-QSB for the quarter ended June 30, 2002, and incorporated herein by
reference).                                                                                   
|       |  |                                                                                                                                                                                                                                                                                                                       
|99     |  | Certification pursuant to 18 U.S. C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.*                                                                                                                                                                                             

(b)       Reports on Form 8-K.

The Company filed a Current Report on Form 8-K on April 9, 2003.

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SIGNATURES

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

| |                                      
| | -------------------------------------
| | MEDICAL DISCOVERIES, INC.            
| |                                      
| | /S/ JUDY M. ROBINETT                 
| |                                      
| | Judy M. Robinett                     
| | President and Chief Executive Officer

Date: May 14, 2003




CERTIFICATION

I, Judy M. Robinett, certify that:

1.     I have reviewed this quarterly report on Form 10-QSB of Medical Discoveries,
Inc.;

2.     Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     I am responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and I have:

a)     designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to me by others within those entities, particularly
during the period in which this quarterly report is being prepared;

b)     evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and

c)     presented in this quarterly report my conclusions about the
effectiveness of the disclosure controls and procedures based on my evaluation
as of the Evaluation Date;

5.     I have disclosed, based on my most recent evaluation, to the registrants
auditors and the audit committee of registrants board of directors (or persons
performing the equivalent function):

a)     all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and

b)     any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and

6.     I have indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of our most
recent evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.

Date: May 14, 2003

| |                                                                   
| | ------------------------------------------------------------------
| | /S/ JUDY M. ROBINETT                                              
| |                                                                   
| | Judy M. Robinett                                                  
| | President, Chief Executive Officer and principal financial officer

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INDEX TO EXHIBITS

|       |  |                                                                                                                                                                                                                                                                                                                      
|------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|NUMBER |  | EXHIBIT                                                                                                                                                                                                                                                                                                              
|       |  |                                                                                                                                                                                                                                                                                                                      
|3.1    |  | Amended and Restated Articles of Incorporation of the Company (filed as
Exhibit 3.1 to the Companys Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1994, and incorporated herein by reference).                                                                                                
|       |  |                                                                                                                                                                                                                                                                                                                      
|3.2    |  | Amended Bylaws of the Company (filed as Exhibit 3.2 to the Companys
Annual Report on Form 10-KSB for the fiscal year ended December 31, 1994,
and incorporated herein by reference).                                                                                                                                
|       |  |                                                                                                                                                                                                                                                                                                                      
|10.1   |  | Mutual Release and Settlement Agreement dated as of November 29, 2001,
among Medical Discoveries, Inc., Harvest Group, L.L.C. and Hydromedics,
Inc. (f/k/a Advanced Sales Company, Inc.) (filed as Exhibit 10 to the
Companys Current Report on Form 8-K on December 15, 2000 and incorporated
herein by reference).
|       |  |                                                                                                                                                                                                                                                                                                                      
|10.2   |  | Advisory Agreement dated as of March 26, 2002, between Medical
Discoveries, Inc. and Euronet International, Inc. (filed as Exhibit 10.3
to the Companys Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2001, and incorporated herein by reference).                                            
|       |  |                                                                                                                                                                                                                                                                                                                      
|10.3   |  | Employment Agreement dated as of May 15, 2002 between Medical
Discoveries, Inc. and Judy M. Robinett (filed as Exhibit 10.4 to the
Companys Quarterly Report on Form 10-QSB for the quarter ended June 30,
2002, and incorporated herein by reference).                                                             
|       |  |                                                                                                                                                                                                                                                                                                                      
|10.4   |  | 2002 Stock Incentive Plan adopted by the Board of Directors as of July
11, 2002 (filed as Exhibit 10.5 to the Companys Quarterly Report on Form
10-QSB for the quarter ended June 30, 2002, and incorporated herein by
reference).                                                                                  
|       |  |                                                                                                                                                                                                                                                                                                                      
|99     |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.*                                                                                                                                                                                             



---

* Filed herewith.


12