<PAGE>   1
                       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 June 30, 2001

[ ]    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
--------------------------------------------------------------------------------
                    (Address of principal executive offices)

                                 (208) 736-1799
--------------------------------------------------------------------------------
                (Issuer's telephone number, including area code)

                                       N/A
--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                          if changed since last report)

Check whether the issuer: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.

Yes  X     No
    ---       ---

                      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 June 30, 2001, there
were 32,768,917 shares of the issuer's Common Stock outstanding.

Transitional Small Business Disclosure Format (check one): Yes       No  X
                                                               ---      ---

<PAGE>   2

                                     PART I
                              FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

The following financial statements are filed with this report:

         Condensed Consolidated Balance Sheet as of June 30, 2001, (unaudited)
         and December 31, 2000

         Condensed Consolidated Statements of Operations for the three-month
         periods ended June 30, 2001 (unaudited) and June 30, 2000 (unaudited)
         and cumulative amounts since inception through June 30, 2001
         (unaudited)

         Condensed Consolidated Statements of Cash Flows for the three-month
         periods ended June 30, 2001 (unaudited) and June 30, 2000 (unaudited)
         and cumulative amounts since inception through June 30, 2001
         (unaudited)

         Notes to Unaudited Financial Statements



                                       2
<PAGE>   3

                        MEDICAL DISCOVERIES, INC.
                       (A DEVEOPMENT STAGE COMPANY)
                   CONDENSED CONSOLIDATED BALANCE SHEET
          As of June 30, 2001 (Unaudited) and December 31, 2000



<TABLE>
<CAPTION>
                                                       June 30, 2001     December 31, 2000
                                                       -------------     -----------------
<S>                                                     <C>                 <C>
Current assets
  Cash                                                  $     14,582        $     19,781
                                                        ------------        ------------
    Total current assets                                      14,582              19,781

Equipment, at cost, net of accumulated depreciation            1,956               4,614
                                                        ------------        ------------
    Total assets                                        $     16,538        $     24,395
                                                        ============        ============

Current liabilities
  Accounts payable                                      $  1,530,230        $  1,509,679
  Accrued interest                                           282,640             192,716
  Current portion of notes payable                         1,051,717             520,807
  Convertible notes payable                                  193,200             193,200
                                                        ------------        ------------

    Total current liabilities                              3,057,787           2,416,402

Stockholders' deficit
  Escrow receivable                                         (252,300)           (384,600)
  Common stock, no par value, authorized
   100,000,000 shares; 32,768,917 and 32,075,421
   shares issued and outstanding at June 30, 2001
   and December 31, 2000, respectively                    10,497,047          10,413,837
  Accumulated deficit                                    (13,285,996)        (12,421,244)
                                                        ------------        ------------

    Total stockholders' deficit                           (3,041,249)         (2,392,007)
                                                        ------------        ------------
                                                        $     16,538        $     24,395
                                                        ============        ============
</TABLE>


                                       3
<PAGE>   4

                           MEDICAL DISCOVERIES, INC.
                         (A DEVELOPMENT STAGE COMPANY)
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
         As of June 30, 2001 (Unaudited) and June 30, 2000 (Unaudited),
                       and Cumulative Amounts (Unaudited)



<TABLE>
<CAPTION>
                                                      For the Three Months               For the Six Months                Since
                                                       Ended June 30,                       Ended June 30,              November 20,
                                               ------------------------------      ------------------------------      1991 (Date of
                                                   2001              2000             2001              2000             Inception)
                                               ------------      ------------      ------------      ------------      ------------
<S>                                            <C>               <C>               <C>               <C>               <C>
Revenues                                       $         --      $         --      $         --      $      7,620      $    134,104
Cost of goods sold                                       --                --                --             2,511            10,526
                                               ------------      ------------      ------------      ------------      ------------
    Gross profit                                         --                --                --             5,109           123,578

Research and development expenses                   132,300                --           132,300                --         2,521,741
Inventory writedown                                      --                --                --                --            96,859
Impairment loss                                          --                --                --                --             9,709
License                                                  --                --                --                --         1,001,500
General and administrative expenses                 557,163            43,132           642,528            92,691         8,757,881
                                               ------------      ------------      ------------      ------------      ------------
    Operating loss                                 (689,463)          (43,132)         (774,828)          (87,582)      (12,264,112)

Other income (expense)
  Interest income                                        --                --                --                --            23,406
  Other income                                           --                --                --                --           268,926
  Interest expense                                  (45,739)          (15,265)          (89,924)          (29,897)         (361,679)
                                               ------------      ------------      ------------      ------------      ------------
                                                    (45,739)          (15,265)          (89,924)          (29,897)          (69,347)

    Loss before income taxes and
     extraordinary item                            (735,202)          (58,397)         (864,752)         (117,479)      (12,333,459)

    Income taxes                                         --                --                --                --                --

    Forgiveness of debt net of $0 income
     taxes                                               --                --                --                --         1,235,536
                                               ------------      ------------      ------------      ------------      ------------
    Net loss available to shareholders         $   (735,202)     $    (58,397)     $   (864,752)     $   (117,479)     $(11,097,923)
                                               ============      ============      ============      ============      ============

Net loss per share
  Continuing operations                        $       0.02      $      (0.00)     $       0.03      $      (0.00)     $      (0.57)
  Extraordinary item                                     --                --                --                --              0.06
                                               ------------      ------------      ------------      ------------      ------------
    Net loss per share                         $       0.02      $      (0.00)     $       0.03      $      (0.00)     $      (0.52)
                                               ============      ============      ============      ============      ============

Weighted average shares outstanding              32,570,684        26,657,000        32,325,804        26,657,000        21,486,875
</TABLE>

                                       4
<PAGE>   5


                            MEDICAL DISCOVERIES, INC.
                          (A DEVEOPMENT STAGE COMPANY)
                   CONDENSED CONSOLIDATED CASH FLOW STATEMENT
         As of June 30, 2001 (Unaudited) and June 30, 2000 (Unaudited),
                       and Cumulative Amounts (Unaudited)


<TABLE>
<CAPTION>
                                                                                                Cumulative
                                                                                                  Amounts
                                                                 For the Six Months                Since
                                                                    Ended June 30,              November 20,
                                                            ------------------------------     1991 (Date of
                                                                2001              2000           Inception)
                                                            ------------      ------------      ------------
<S>                                                         <C>               <C>               <C>
Cash flows from operating activities
      Net loss                                              $   (864,752)     $    (58,397)     $(11,886,419)
      Adjustments to reconcile net loss to net
      cash used by operating activities
          Common stock issued for research costs                      --                --           115,400
          Common stock options issued for services                    --                --         2,556,890
          Common stock issued for services, expenses,
              and litigation                                      64,120                --         3,624,106
          Reduction of stock subscriptions receivable
              from research and development                      132,300                --           132,300
          Reduction of legal costs                                    --                --          (130,000)
          Notes payable issued for mediation                     385,000                --           385,000
          Depreciation                                             2,658             2,771            98,315
          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
              Accounts receivable                                     --                --            (7,529)
              Inventory                                               --             2,511                --
              Other assets                                            --               900                --
              Accounts payable                                    20,551             8,811         1,374,321
              Accrued expenses                                    89,924            14,500           304,121
                                                            ------------      ------------      ------------

              Net cash used by operating activities             (170,199)          (28,904)       (4,322,493)

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                                        --                --         3,255,359
      Payments on notes payable                                  (35,000)               --          (132,287)
      Proceeds from notes payable                                200,000            20,000           866,613
      Payments on convertible notes payable                           --                --           (98,500)
      Proceeds from convertible notes payable                         --                --           316,700
                                                            ------------      ------------      ------------

              Net cash provided by financing activities          165,000            20,000         4,339,259
                                                            ------------      ------------      ------------

              Net increase (decrease) in cash                     (5,199)           (8,904)           14,582

Cash, beginning of period                                         19,781            10,152                --
                                                            ------------      ------------      ------------
Cash, end of period                                         $     14,582      $      1,248      $     14,582
                                                            ============      ============      ============

Supplemental disclosures of cash flow information
      Noncash investing and financiang activities
          Conversion of notes payable to common stock       $     19,090
</TABLE>


                                       5

<PAGE>   6


                   MEDICAL DISCOVERIES, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                     NOTES TO UNAUDITED FINANCIAL STATEMENTS
                                  JUNE 30, 2001

NOTE 1. 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 2000 Annual
Report on Form 10-KSB for the year ended December 31, 2000, 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.

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. CONTINGENCIES REGARDING HARVEST JV AGREEMENT.

As of June 28, 2000, the Company, an outside investment group (Harvest Group,
L.L.C. ("Harvest")), and Hydromedics, Inc. ("Hydromedics"), a corporation formed
by Harvest and two other investors, entered into a so-called JV Agreement (the
"JV Agreement"). The JV Agreement contemplated that the Company would (1) assign
to Hydromedics its rights to certain skin care products, (2) issue 13,000,000
shares to Harvest, and (3) seek to appoint two Harvest representatives to the
Company's Board of directors. In return, Hydromedics would (1) issue 2,000,000
of its shares to the Company, (2) assume certain obligations of the Company
associated with the skin care products to be transferred, and (3) market the
skin care products. As for Harvest's obligations, the JV Agreement contemplated
that Harvest would (1) assign to the Company 20,000,000 of its previously-owned
Hydromedics shares and (2) make available to the Company a $150,000 line of
credit. Finally, the JV Agreement contemplated certain post-closing obligations
including (1) Harvest making an additional investment in Hydromedics in exchange
for 30,000,000 shares of Hydromedics stock, (2) Harvest assigning 20,000,000 of
such shares to the Company, and (3) the Company issuing an additional 12,000,000
shares of its stock to Harvest. In total, the transactions contemplated by the
JV Agreement would result in the Company owning approximately 40% of Hydromedics
and Harvest owning 25,000,000 new shares of the Company's stock (which, if
issued, would equal approximately 44% of the Company's total outstanding stock).

The JV Agreement provided that the transactions contemplated above were to have
closed on June 28, 2000. However, no closing occurred on June 28, 2000 or since
and the Company has taken the position that the transactions contemplated by the
JV Agreement have not been consummated. Months later, Harvest and Hydromedics
attempted to tender partial performance under the JV Agreement. The Company
rejected that tender and has taken the position that the JV Agreement is no
longer enforceable by any of the parties because no party timely or completely
tendered performance.

On December 26, 2000, Harvest demanded arbitration of the dispute pursuant to
terms of the JV Agreement. In its arbitration demand, Harvest sought specific
performance of the JV Agreement or damages in excess of $1 million.

On August 10, 2001, the Company and Harvest reached a tentative, mediated
settlement. The tentative settlement, which has not yet been documented,
provides, among other terms, for the Company to deliver to Harvest a
non-interest bearing, convertible promissory note in the principal sum of
$500,000 due in approximately nine months.


                                       6
<PAGE>   7
Under the tentative agreement, the note and other terms will be in full
satisfaction of all current amounts owing on loans from Harvest and all of
Harvest's other claims against the Company. Once a definitive agreement has been
reached, more specific details will be disclosed. In the meantime, the Company
has accrued the $500,000 as a payable as of June 30, 2001 in lieu of the
$115,000 in notes payable that would otherwise have been accrued.

If for whatever reason the tentative settlement falls through and a court or
arbitrator were to force the Company and the other parties to specifically
perform the transactions contemplated by the JV Agreement, the Company's
shareholders could suffer significant dilution because the value of the
consideration the Company will receive under the JV Agreement could be
substantially less than the current market value of the stock to be issued to
Harvest. In addition, specific performance could result in significant changes
to the Company's financial statements, especially if the JV Agreement were
deemed to have been consummated during a period already reported. The financial
statements do not include any adjustments or reserves to reflect the possible
effects of such a result.

NOTE 4. 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 will be
funded through an escrow agent. As of June 30, 2001, the Company has deposited
in escrow a single certificate for 5.5 million shares of common stock for these
purposes. As of June 30, 2001, Peregrine had funded $250,800 to the escrow, of
which $247,700 had been disbursed and recorded as research and development
expense on the financial statements of the Company. Of this amount, $132,300 has
been disbursed and recorded as research and development expense in the six
months ended June 30, 2001. The remaining $252,300 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 will be recorded on the books of the Company with a
corresponding reduction in the escrow receivable. Upon completion of the
studies, the escrow agent will disburse the 5.5 million shares to Peregrine and
will disburse the research results to the Company.

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

The purpose of this section is to discuss and analyze the Company's 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 the Company's Annual
Report on Form 10-KSB for the year ended December 31, 2000 (the "2000 10-KSB").

This section contains certain forward-looking statements that involve risks and
uncertainties, including statements regarding the Company's plans, objectives,
goals, strategies and financial performance. The Company's 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" below and elsewhere in this report.

                                    OVERVIEW

Medical Discoveries, Inc. (the "Company" or "MDI") has developed a product
(hereafter "MDI-P") that appears to have the ability to destroy certain viruses,
bacteria and fungi. MDI-P may possibly be used 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.

The Company is committed to its 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.

MDI is a development stage company. To date, the Company has not generated
significant revenues from operations or realized a profit. The Company is
presently investing all of its resources in the testing, development and
commercialization of MDI-P and its other technologies. The Company is attempting
to raise additional funding to continue development of its technologies and to
submit its technologies to appropriate regulatory agencies to secure approvals
when required for the marketing and use of its products.



                                       7
<PAGE>   8

                                  RECENT EVENTS

On August 10, 2001, the Company and Harvest Group, L.L.C. ("Harvest") reached a
tentative, mediated settlement in the case initiated by Harvest last December
concerning the parties' failed joint venture. The tentative settlement, which
has not yet been documented, provides, among other terms, for the Company to
deliver to Harvest a non-interest bearing, convertible promissory note in the
principal sum of $500,000 due in approximately nine months. Under the tentative
agreement, the note and other terms will be in full satisfaction of all current
amounts owing on loans from Harvest and all of Harvest's other claims against
the Company. Once a definitive agreement has been reached, more specific details
will be disclosed. In the meantime, the Company has accrued the $500,000 as a
payable as of June 30, 2001 in lieu of the $115,000 in notes payable that would
otherwise have been accrued.

                              RESULTS OF OPERATIONS

REVENUES AND GROSS PROFIT. The Company did not book any revenues for the six
months ended June 30, 2001, and booked only $7,620 in revenues for the six
months ended June 30, 2000. The Company does not anticipate booking significant
revenues in the near future as it continues to focus on getting products to
market.

OPERATING EXPENSES AND OPERATING LOSS. The Company spent $132,300 on research
and development during the six months ended June 30, 2001. By comparison, it did
not spend any funds during the six months ended June 30, 2000. The increase was
due to the toxicity studies the Company is completing. The Company's general and
administrative expenses increased in the first half of 2001 to $642,528, as
compared with $92,691 during the six months ended June 30, 2000. This increase
was due primarily to higher travel, salary, accounting and legal expenses as the
Company strengthens its management infrastructure and progresses toward
commercialization of key products and the accrual of an additional $385,000 as a
result of the tentative settlement with Harvest. As a result of the foregoing,
the Company sustained an operating loss of $774,828 for the six months ended
June 30, 2001, as compared with an operating loss of $87,582 for the same period
of 2000.

OTHER INCOME/EXPENSE AND NET LOSS. The Company incurred interest expenses of
$89,924 for the six months ended June 30, 2001, as compared with $29,897 in such
expenses for the same period of 2000. The increase in interest expense reflects
the Company's need to operate on short-term, high-interest borrowings while it
continues to seek significant equity investment. In sum, the Company's net loss
for the first half of 2001 was $864,752, or a loss of $0.03 per fully diluted
share. For the six months ended June 30, 2000, the Company sustained a net loss
of $117,479, a loss of less than $0.01 per fully diluted share.

FUTURE EXPECTATIONS. Management expects the Company will operate at a loss for
several more years while it continues to study, gain regulatory approval of and
commercialize its technologies. If the Company is successful in raising
additional capital, the Company will likely spend more during the remainder of
2001 in research and development and general and administrative expenses, and
thereby sustain greater resulting losses, than it has in recent years.

                         LIQUIDITY AND CAPITAL RESOURCES

The Company will require significant additional funding to continue to develop,
research and seek regulatory approval of its technologies. In addition, the
Company cannot survive, even in the near term, without immediate additional
funding for operations. The Company does not currently generate any cash from
operations and has no credit facilities in place or available. Currently, the
Company is funding operations through short-term loans from shareholders and
others. The Company is currently funding its research activities with funds from
Peregrine Properties, LLC.

Management is seeking to raise substantial additional funds in private stock
offerings in order to meet its near-term and long-term funding requirements.
While management is optimistic that it can raise such funds, the Company has not
always been successful in doing so in recent years. Given that the Company is
still in an early development stage and does not have revenues from operations,
raising equity financing is difficult. In addition, any additional equity
financing will have a substantial dilutive effect to the Company's current
shareholders.

              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 plans, objectives, goals, strategies,
future events, future revenues or performance, capital expenditures, and
financing needs of the Company and other information that is not historical
information. When used in this report, the words "estimates," "expects,"


                                       8
<PAGE>   9

"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 the Company
from time to time. All such subsequent forward-looking statements, whether
written or oral and whether made by or on behalf of the Company, are also
expressly qualified by these cautionary statements.

The Company's forward-looking statements are based upon the Company's current
expectations and various assumptions. The Company's expectations, beliefs and
projections are expressed in good faith and are believed by the Company to have
a reasonable basis, including without limitation, management's examination of
historical operating trends, data contained in the Company's records and other
data available from third parties, but there can be no assurance that
management's expectations, beliefs and projections will result or be achieved or
accomplished. The Company's forward-looking statements apply only as of the date
made. The Company undertakes 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
revenue 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 2000 10-KSB. There may also be other factors, including
those discussed elsewhere in this report, that may cause the Company's actual
results to differ from the forward-looking statements. Any forward-looking
statements made by or on behalf of the Company should be considered in light of
these factors.

                                     PART II

                                OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is a party to ongoing litigation with Harvest Group, L.L.C.
concerning a so-called "JV Agreement" dated as of June 28, 2000. As disclosed
under "Management's Discussion and Analysis of Financial Condition and Results
of Operations - Recent Events" above, the parties reached a tentative settlement
of this matter on August 10, 2001.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) The following exhibits are filed with this report:

None.

(b) Reports on 8-K.

None



                                       9
<PAGE>   10


                                   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
                                        Chief Executive Officer

Date: August 14, 2001



                                       10