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

                                   FORM 10-Q

(MARK ONE)

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

                 For the quarterly period ended August 31, 2012

[ ]     TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
        SECURITIES EXCHANGE ACT OF 1934

                 For the transition period from            to

                        COMMISSION FILE NUMBER 000-53520
                                               ---------

                             DISCOVERY ENERGY CORP.
                         F/K/A "Santos Rresource Corp."
             (Exact Name of Registrant as Specified in Its Charter)

                        Nevada                        98-0507846
   (State or other jurisdiction of incorporation    (I.R.S.Employer
                   or organization)                Identification No.)

              One Riverway Drive, Suite 1700, Houston, TEXAS 77056
                    (Address of principal executive offices)

                                  713-840-6495
                         (Registrant's telephone number


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding  12  months  (or  for such shorter period that the registrant was
required  to  file  such  reports),  and  (2)  has  been  subject to such filing
requirements  for  the  past  90  days.  Yes [X]    No  [ ]

Indicate  by  check mark whether the registrant has submitted electronically and
posted  on  its corporate Web site, if any, every Interactive Data File required
to  be  submitted and posted pursuant to Rule 405 of Regulation S-T ( 232.405 of
this  chapter)  during  the preceding 12 months (or for such shorter period that
the  registrant  was  required  to  submit  and  post  such  files).  Yes  [X]
No  [ ]

Indicate  by  check mark whether the registrant is a large accelerated filer, an
accelerated  filer, a non-accelerated filer, or a smaller reporting company. See
the  definitions  of "large accelerated filer," "accelerated filer" and "smaller
reporting  company"  in  Rule  12b-2  of  the  Exchange  Act.
<PAGE>
Large accelerated filer       [ ]        Accelerated filer         [ ]

Non-accelerated filer         [ ]      Smaller reporting company   [X]
(Do  not  check  if  smaller  reporting  company)

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).  Yes [ ]  No  [X]

Indicate  the  number  of  shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 62,595,500 common shares as of
October  12,  2012


<PAGE>

 DISCOVERY  ENERGY  CORP.
(an  Exploration  stage  company)
Balance  Sheets
(Unaudited)


                                            August 31,          February 29,
                                               2012                  2012
                                            ----------           ------------
Assets
Current Assets
   Cash                                 $     162,809        $     504,742
   Other receivables                            1,007                3,828
   Deposit for acquisition of oil
      and gas license                         980,000              730,000
   Prepaid expenses                             4,842                    -
                                         ------------         ------------
Total Current Assets                        1,148,658            1,238,570
                                         ------------         ------------
Total Assets                            $   1,148,658        $   1,238,570
                                        =============         ============

Liabilities and  Stockholders' Equity
Current Liabilities
   Accounts payable and accrued
      liabilities                       $     131,928        $     34,215
   Accounts payable- related party                  -              50,000
                                        -------------         ------------
Total Current Liabilities                     131,928              84,215

Stockholders' Equity
   Preferred Stock- 10,000,000 shares
      authorized, zero issued and
      outstanding                                   -                    -
   Common Stock - 500,000,000 shares
      authorized, $0.001 par value -
      62,448,500 and 60,858,500 shares
      issued and outstanding, respectively     62,449               60,859
   Additional paid in capital               1,634,565            1,437,405
   Deficit accumulated during the
      exploration stage                      (680,284)            (343,909)
                                        --------------         ------------
Total Stockholders'Equity                   1,016,730            1,154,355
                                        -------------          ------------
Total Liabilities and Stockholders'
   Equity                               $   1,148,658        $   1,238,570
                                        ==================================




The accompanying notes are an integral part of these unaudited interim financial
                                  statements.
<PAGE>

Discovery  Energy  Corp..
(an  Exploration  stage  company)
Statements  of  Expenses
(Unaudited)

                                                                     Cumulative
                        Three       Three       Six       Six     From Inception
                        Months     Months      Months    Months  (May 24, 2006)
                        Ended      Ended       Ended     Ended        to
                      August 31, August 31,  August 31, August 31, August 31,
                        2012       2011        2012       2011       2012
                      ---------  --------   ----------  ---------  ---------
Expenses
General and
   administrative     $   10,232  $     28   $  32,470  $     74  $   34,641
Mineral property costs   123,080         -     170,592    29,740     270,021
Professional fees         69,931     1,482     133,723     6,327     393,068
Rent                       1,104         -       3,170         -       3,371
Travel                       980         -       4,143         -       4,274
                      ----------   -------   ---------   -------   ---------
Total expenses          (205,327)   (1,510)   (344,098)  (36,141)   (705,375)

Other Income
Gain on debt for
   settlement of
   accounts payable            -         -           -         -      17,980
Miscellaneous income       6,730         -       7,973         -       7,973
Foreign exchange
   (loss) gain              (250)        -        (250)     (615)       (862)
                       ---------  --------   ----------   -------  ---------
Other income (expenses)    6,480         -       7,723      (615)     25,091
                       ---------  --------   ---------    -------  ---------
Net loss              $ (198,847) $ (1,510)  $(336,375)  $(36,756) $(680,284)
                      ==========  ========   =========   ========  =========

Net loss per share -
   basic and diluted  $    (0.00) $  (0.00)  $   (0.01)  $  (0.00)
Weighted average number
   of shares outstanding -
   basic and diluted  62,448,500  32,076,500 62,228,283 32,076,500
                      ==========  ========== ========== ==========

      The accompanying notes are an integral part of these unaudited interim
financial statements.
<PAGE>
Discovery  Energy  Corp.
(an  Exploration  stage  company)
Statements  of  Cash  Flows
(Unaudited)

                                                                 Cumulative from
                                                                    Inception
                             Six Months Ended  Six Months Ended  May 24, 2006 to
                                 August 31,      August 31,        August 31,
                                   2012            2011               2012
                             ---------------   ---------------   --------------
Cash Flows Used in Operating
Activities
   Net loss                  $   (336,375)     $   (36,756)      $  (680,284)
   Adjustments to reconcile
      net loss to net cash
      used in operating
      activities
        Shares issued for
         property acquisition           -                -            11,250
        Gain on debt for shares
         issued for settlement
         of accounts payable            -                -           (17,980)
       Unrealized foreign exchang
         loss (gain)                  250              615             2,746
       Services provided by founders
         in exchange for shares         -                -            15,520
       Changes in assets and
        liabilities:
          Prepaid expenses         (4,842)                            (4,842)
          Other receivable          2,821             (360)           (1,007)
          Accounts payable and
            accrued liabilities    97,713           (2,957)          150,609
                               ----------       ----------       -----------
Net cash used in operating
  activities                     (240,433)         (39,458)         (523,988)
                               ----------       ----------       -----------

Cash flows from investing
  activities
    Acquisition of oil and gas
      property                   (250,000)               -          (800,000)
                               -----------      ----------        ----------
Net cash flows used in investing
  activities                     (250,000)               -          (800,000)

Cash flows from financing activities
  Common Stock issued             198,750                -         1,408,496
  Private placement fees                -                -            (4,713)
  Repayments on shareholder
    advances                      (50,000)                           (50,000)
  Advances from shareholders           -            37,716           134,061
                               ---------        ----------        ----------
Net cash flows from financing
   activities                     148,750           37,716         1,487,844
                               ----------       ----------        ----------

Foreigh exchange effect on cash      (250)             306            (1,047)

Change in cash during the
  period                         (341,933)          (1,436)          162,809

Cash beginning of the period      504,742            1,909                 -
                               ----------       ----------        ----------
Cash end of the period         $  162,809       $      473        $  162,809
                               ==========       ==========        ==========

Supplemental disclosures:
  Interest Paid in the period  $        -       $        -        $        -
                               ----------       ----------        ----------
Income Taxes Paid in the period         -                -                 -
                               ----------       ----------        ----------

Noncash investing and financing activities:
  Shares issued for conversion
    of debt                   $        -       $         -            85,066
                              ----------       -----------        ----------
  Shares issued for O&G
    property                 $         -       $         -           180,000
                             -----------       -----------        ----------

The accompanying notes are an integral part of these unaudited interim financial
                                  statements.
<PAGE>

                             Discovery Energy Corp.

                         (an Exploration stage company)
                  Notes to the Unaudited Financial Statements

1.     Nature of Operations and Basis of Presentation

Discovery  Energy  Corp.  (the  "Company") was incorporated in Nevada on May 24,
2006  under the name "Santos Resource Corp." The Company is an Exploration Stage
Company.  The  Company's  principal  business  is  the  proposed  acquisition,
exploration  and development of the Petroleum Exploration License (PEL) 512 (the
"Prospect")  in  the  State  of  South  Australia. The Company has not presently
determined  whether the Prospect contains any crude oil and natural gas reserves
that  are economically recoverable.  While the Company's present focus is on the
Prospect,  the  Company may consider the acquisition of other attractive oil and
gas  properties  under  the  right  circumstances.  On  May 7, 2012, the Company
changed  its  name  to  Discovery  Energy  Corp.

In  May  2012,  the  Company  incorporated a wholly-owned Australian subsidiary,
Discovery  Energy  SA  Ltd.  for  purposes  of  acquiring  the  Prospect.

The accompanying unaudited interim financial statements of the Company have been
prepared  in  accordance  with  accounting  principles generally accepted in the
United  States  of  America  and  the  rules  of  the  Securities  and  Exchange
Commission,  and  should  be  read  in  conjunction  with  the audited financial
statements and notes thereto contained in the Company's February 29, 2012 Annual
Report  filed  with  the  SEC  on  Form  10-K. In the opinion of management, all
adjustments,  consisting  of  normal recurring adjustments, necessary for a fair
presentation of financial position and the results of operations for the interim
periods  presented  have  been  reflected  herein. The results of operations for
interim periods are not necessarily indicative of the results to be expected for
the  full  year.  Notes  to  the financial statements, which would substantially
duplicate  the  disclosure contained in the audited financial statements for the
most  recent  fiscal  year end February 29, 2012, as reported on Form 10-K, have
been  omitted.

2.     Going  Concern

The  accompanying  financial  statements  have  been prepared on a going concern
basis,  which  implies  the  Company  will  continue  to  realize its assets and
discharge  its liabilities in the normal course of business. The Company has not
generated  revenues since inception and has never paid dividends and is unlikely
to  pay  dividends  or generate earnings in the immediate or foreseeable future.
The continuation of the Company as a going concern is dependent upon the ability
of  the  Company  to  obtain  necessary  equity  or  debt  financing to continue
operations,  the  acquisition of the Prospect or one or more alternative oil and
gas  properties,  and the attainment of profitable operations.  As of August 31,
2012,  the Company has not generated any revenues and has an accumulated loss of
$680,284  since  inception.  These factors raise substantial doubt regarding the
Company's  ability to continue as a going concern. These financial statements do
not include any adjustments to the recoverability and classification of recorded
asset  amounts  and classification of liabilities that might be necessary should
the  Company  be  unable  to  continue  as  a  going  concern.

3.     Related Party Transactions

a)     During  the  first  quarter of fiscal 2013, $50,000 was paid to a related
party  pursuant  to  the  Liberty  Agreement,  as  defined  herein.

b)     At  various  times  during the period April 2006 through December 2011, a
shareholder  loaned  the Company a total of $85,066. In January 2012, the amount
was repaid through the issuance of 147,000 common shares. The shares were valued
at  $0.009  per  share.

c)     A  related  party transaction involving our current Chairman of the Board
is  discussed  in  footnote  4  immediately  below.
<PAGE>
4.     Oil and Gas Properties

On  September  12,  2011,  Keith  D.  Spickelmier entered into an agreement (the
"Liberty  Agreement") with Liberty Petroleum Corporation ("Liberty") granting to
Mr.  Spickelmier  an  exclusive  right  to  negotiate  an  option to acquire the
Petroleum  Exploration License (PEL) 512 (the "License") regarding the Prospect,
which  is located in the State of South Australia. The Prospect involves 584,651
gross  acres  overlaying  portions of the Cooper and Eromanga basins. On January
13,  2012, the Company bought Mr. Spickelmier's rights in the Liberty Agreement.
On  January  31, 2012, the Company bought an option (the "Option") directly from
Liberty.  Under  ASC 932, costs incurred to purchase, lease or otherwise acquire
a  property  (whether unproved or proved) are capitalized when incurred. Per the
terms  of  the Liberty Agreement, Mr. Spickelmier, a related party, paid $50,000
to  Liberty  for  the  exclusive right. In anticipation of the assignment of the
Liberty  Agreement  to  the  Company,  the  Company  agreed to pay an additional
$100,000  to  extend  the exclusive right provided for by the Liberty Agreement,
and  an  additional  $200,000  deposit  to modify certain terms.  Eventually the
Option  was  replaced  by a Novation Deed.  To the extent possible, the original
terms  of the Option Agreement were preserved in the Novation Deed. In the event
that  the  License  is  not  approved or issued, the total consideration will be
refunded  to  the  Company.

As  of  August  31,  2012, the Company capitalized $980,000 as a deposit for the
acquisition  of  the  License.

The  purchase  price  of  Spickelmier's  rights  in the Liberty Agreement was as
follows:
      a)     $100,000  payable  upon  notice  from  the  South  Australian
             Minister of Regional  Development  (the "Minister") that the
             Minister has granted and issued the  License  in  the  name  of
             the  Company;

      b)     $50,000 payable as of February 29, 2012 for reimbursement, which
             was paid during the first quarter of fiscal 2013;

      c)     20  million  common shares issued at $0.009, total fair value of
             $180,000 which  is  capitalized  as  a  deposit  for  the
             acquisition  of  the  License;

      d)     55 million common shares of the Company issuable upon delivery of
             the License.

The purchase price for the Option is as follows:

      a)     $550,000  paid  to Liberty as of February 29, 2012 for the
             acquisition of the  License.  An  additional  $250,000  was  paid
             to Liberty on June 28, 2012.

      b)     Two promissory notes issuable upon delivery of the License with an
             aggregate principal amount of $650,000:

             (i)     $500,000 due 6 months after the delivery of the License
             (ii)     $150,000 due 9 months after the delivery of the License

      c)     12  million  common  shares  issuable  upon  delivery  of  the
             License

The  License  requires  a  five-year  work  commitment involving expenditures of
AU$200,000  in  the  first  year after the acquisition, $1,273,900 in the second
year,  and even greater amounts in the subsequent years. The Company's inability
to  honor  this  work commitment may result in the assignment of the Prospect to
Liberty  pursuant to the terms of the Novation Deed or its reversion back to the
South  Australian  Government.

5.     Common stock

During the six months ended August 31, 2012, the Company sold an aggregate 1.59
million common shares from a private placement offering at a price of $0.125 per
share for total proceeds of $198,750.

In May 2012, the Company amended its articles of incorporation to increase the
number of authorized common shares to 500 million and to authorize 10 million
preferred shares.

6.     Subsequent Events

During  October 2012, the Company entered into a service agreement with Chrystal
Capital  Partners  LLP  ("Chrystal"),  a  corporate finance firm based in London
regulated  by  the British Financial Services Authority.  Chrystal has agreed to
assist  us  in  connections with our efforts to complete a major capital raising
transaction  of  up  to  US$15.0  million.

The  term  of  the Engagement Agreement is initially for two months, and it will
continue  on a month-to-month basis thereafter until either party terminates it.
In the event of a successful capital raise, the term of the Engagement Agreement
will  continue  on a year-to-year basis thereafter until either party terminates
it.  We hve the right to terminate the Engagement Agreement within its first two
months  by paying a termination fee that starts at $33,500 and rises to $100,000
with  the  fee  increasing  with  the passage of time.  After termination of the
Engagement  Agreement,  Chrystal  will be entitled to the success fees described
below  for any transaction completed within 18 months after termination with any
prospect  presented  by  Chrystal.

Pursuant  to  the  Engagement  Agreement, we agreed to pay the following fees to
Chrystal:

     *     Monthly  fees  in  the  amount  of GBP  7,500 (Sterling) (or
           approximately US$12,100);
     *     Cash  success fees generally in amounts equal to 7% of the gross
           amount of all  funds  raised,  but subject to certain carve outs for
           existing contacts and possibilities;  and
     *     A  stock  success fee represented by a Restricted Share Award
           Agreement of 6,472,425 shares of the Company's common stock, which is
           subject to reduction or forfeiture  in  certain  circumstances
     *     Option  success  fees  giving  to  Chrystal  the  right for three
           years to purchase  a  number  of  shares of our common stock equal to
           7% of the number of shares issued in the related capital raises at
           exercise prices equal to the sale prices  of Chrystal shares in such
           raises, but subject to certain carve outs for existing  contacts  and
           possibilities.

We  will  also  reimburse  Chrystal  for  its  expenses  in  connection with its
services.

During the first week of September 2012, we initiated a second private placement
seeking up to $2.0 million in capital through the sale of 16.0 million shares of
common  stock  at  a  price  of  $0.125  per  share.  As  of  October  12, 2012,
subscriptions  valued  at $250,000 have been received.  These subscriptions will
result  in  the issuance of 2,000,000 shares of stock .  We will continue to try
to  raise funds in this financing, but we have no assurance that we will be able
to  do  so.

In  October 2012, we entered into a convertible promissory note agreement with a
non-related  party  for  $25,000.  The note is convertible into common shares at
$0.085  per  share. The note matures February 4, 2013 and accrues interest at 6%
per  annum.

Item  2.  Management's Discussion  and  Analysis.

              CAUTIONARY STATEMENT FOR FORWARD-LOOKING STATEMENTS

This  Quarterly  Report  on Form 10-Q includes forward-looking statements within
the  meaning  of  Section  27A  of  the  Securities Act of 1933, as amended, and
Section  21E  of the Securities Exchange Act of 1934, as amended.  We have based
these  forward-looking  statements  on  our current expectations and projections
about  future events.  These forward-looking statements are subject to known and
unknown  risks, uncertainties and assumptions about us that may cause our actual
results,  levels  of  activity,  performance  or  achievements  to be materially
different  from  any  future  results,  levels  of  activity,  performance  or
achievements  expressed  or implied by such forward-looking statements.  In some
cases, you can identify forward-looking statements by terminology such as "may,"
"should,"  "could,"  "would,"  "expect,"  "plan,"  "anticipate,"  "believe,"
"estimate,"  "continue,"  or  the  negative  of  such  terms  or  other  similar
expressions.  Factors  that  might  cause  or  contribute  to such a discrepancy
include,  but  are  not  limited to, those described in our other Securities and
Exchange  Commission  filings.  The  following  discussion  should  be  read  in
conjunction  with  our  Financial  Statements and related Notes thereto included
elsewhere  in  this  report.

                                    General

     Our  company,  Discovery  Energy  Corp.  f/k/a "Santos Resource Corp.," was
incorporated  under  the  laws  of  the  state  of Nevada on May 24, 2006. Until
recently,  we  had  not  commenced  business  operations.  Our  original plan of
business  was  to explore and develop a 75% interest in and to 18 mineral claims
covering  approximately  900.75  hectares (9.01 km2) called the Lourdeau Claims.
The  Lourdeau  Claims  are  located  in the La Grande geological area of Quebec,
Canada, in the James Bay Territory about 620 miles (1,000 km) north of Montreal,
Quebec.  We  abandoned  this original plan of business, and had been looking for
another  business opportunity. Until the completion of the acquisition described
herein,  we  had  been  a  "shell  company"  as  defined  in the Rule 405 of the
Securities Act of 1933, as amended (the "Securities Act"), and Rule 12b-2 of the
Securities  Exchange  Act  of 1934 (the "Exchange Act"), as amended. For reasons
given  hereinafter,  we  have  adopted  a  significant  change  in our corporate
direction.  We  have  decided  to  focus  our  efforts  on the acquisition of an
attractive  crude  oil  and  natural  gas prospect located in Australia, and the
exploration,  development  and  production  of  oil  and  gas  on this prospect.

     We  are  now  pursuing a new business plan involving the development of the
Petroleum  Exploration  License (PEL) 512 (the "Prospect") in the State of South
Australia.  The Prospect involves 584,651 gross acres overlaying portions of the
geological  system  generally referred to as the Cooper and Eromanga basins. The
Prospect  is flanked by offset production totaling more than 4.2 million barrels
since  2001. Other nearby fields have produced more than 16.3 million barrels of
oil.  Since  the  early  1980s,  the  oil fairway on which the Prospect sits has
produced  over  23.6  million  barrels  of  oil. The Prospect features access to
markets  via existing and expanding pipeline capacity. During the late 1980s and
again during 2005-2006, various operators in the extreme southeast corner of the
Prospect  drilled  11  wells. Reports filed with the South Australian government
indicate  that some of these wells exhibited "oil shows" but none were completed
to  enable production. As discussed herein, we are currently actively working to
acquire  the  Prospect.

     In  the remainder of this Report, Australian dollar amounts are prefaced by
"AU$"  while  United  States  dollar amounts are prefaced simply by "$" or (when
used  in  close  proximity  to  Australian dollar amounts) by "US$." When United
States  dollar  amounts  are  given as equivalents of Australian dollar amounts,
such United States dollar amounts are approximations only and not exact figures.
The  dollar amounts in the official work commitment are Australian currency. The
US  dollar  amounts  contained  herein  are  approximate  and  are  based on the
September  28,  2012  closing  quoted exchange rate of AU$1.00/US$1.0464. The US
dollar  costs actually incurred in the future will be a function of the exchange
rate  that  exists between the two currencies when expenditures are made. During
the  past year, that exchange rate has varied from a low of AU$1.00/US$0.9500 to
a  high  of  AU$1.0593/US$1.00.

                                 Recent Events

     In  connection  with the change in our business focus, the following events
have  occurred:

     *     Change of the Control and Management.  A change of the control of our
           company occurred effective on January 13, 2012 pursuant to the terms,
           provisions and  conditions of a Common Stock Purchase Agreement dated
           as of such date (the "Stock  Agreement")  by  and  between  (a) Shih-
           Yi Chuang, Richard Bruce Pierce, Andrew  Lee Smith, David W. Smalley
           and Robert Birarda, as sellers (collectively "Sellers"),  and  (b)
           Keith  J. McKenzie. In connection with the closing of the
           transactions  provided  for  by  the  Stock  Agreement, Mr. McKenzie,
           William E. Begley  and  Michael D. Dahlke (collectively "Purchasers")
           acquired an aggregate of  25,310,000  shares  of  our  common  stock
           ("Transferred Shares"), $.001 par value,  theretofore  owned
           separately  by  Sellers  at  a  price of $0.0001 per Transferred
           Share.  This  number of Transferred Shares represented 78.9% of our
           outstanding shares  of  our common stock prior to taking into account
           the other transactions  described below, and 41.5% of our outstanding
           shares of our common stock after taking into account the issuances of
           20.0 million shares to Keith D. Spickelmier  and  10,070,000 shares
           in connection with a private placement (both issuances  of  which
           are  described  below).

           At  the  time  of the sale and purchase of the Transferred Shares,
           the number of directors constituting our Board of Directors was
           initially expanded from one to two,  and  Keith  J.  McKenzie was
           elected to our Board of Directors to fill the newly  created vacancy.
           Eventually, our Board of Directors was expanded to three persons;
           Richard Bruce Pierce resigned from his seat on such board; and Keith
           D. Spickelmier  and  William  E.  Begley were elected to fill the two
           vacant seats. Moreover,  at  the  time of the sale and purchase of
           the Transferred Shares, all our  then  serving officers resigned from
           their positions as such. The following persons  were  elected (some
           upon the preceding resignations, some later) to the one  or  more
           offices  of our company set forth opposite their respective names
           below  as  our  new  slate  of  officers:

           Keith  D.  Spickelmier  Chairman  of  the  Board
           Keith  J.  McKenzie     Chief  Executive  Officer
           Michael  D.  Dahlke     President  and  Chief  Operating  Officer
           William  E.  Begley     Chief  Financial  Officer  and  Treasurer
           Mark  S.  Thompson      Secretary

     *     Acquisition of Rights Under the Liberty Agreement.  Pursuant to the
           terms,  provisions  and  conditions  of  an  assignment (the
           "Assignment") dated effective  January  13,  2012  executed by Keith
            D. Spickelmier in our favor, we acquired  all  of  Mr. Spickelmier's
            rights in a legal document (as amended and restated,  the  "Liberty
            Agreement")  between  Liberty  Petroleum  Corporation ("Liberty")
            and  Mr.  Spickelmier  dated  September  12,  2011.  In the Liberty
            Agreement,  Liberty  granted  to Mr. Spickelmier an right to
            negotiate an option (the  "Option")  to acquire the Prospect upon
            Liberty's acquisition of rights in it.  Liberty  was  the  winning
            bidder  for  the Prospect. Per the terms of the Liberty Agreement,
            Mr. Spickelmier paid to Liberty a $50,000 initial deposit. In
            anticipation of  the  assignment  of  the  Liberty  Agreement to us,
            we paid an additional  $100,000  deposit  to extend the exclusive
            right provided for by the Liberty Agreement, and an additional
            $200,000 deposit to modify certain terms of the  Liberty  Agreement,
            including the further extension of the exclusive right. The
            preceding  amounts  will  be  applied  to  the Option's exercise
            price upon exercise,  or  (as  discussed  below)  will  be  refunded
            if  the Option is not exercised  for  various  reasons.

            The purchase price for the assignment of Mr. Spickelmier's rights in
            the Liberty Agreement  is  as  follows:

                 *     $50,000 in cash, which was paid during the quarter ended
                       May 31, 2012
                 *     $100,000  payable  upon  notice from the South Australian
                       Minister of Regional  Development  (the "Minister") that
                       the Minister has granted and issued in  our  name  a
                       petroleum exploration  license  allowing  the exploration
                       and drilling  rights  related  to  the  Prospect  (the
                       "License")
                 *     20.0  million shares of our common shares issued upon
                       delivery of the Assignment
                 *     55.0  million shares of our common shares issued upon
                       notice from the Minister  that  the  Minister  has
                       granted  and issued the License in our name.

In  the  Assignment  (as  amended), Mr. Spickelmier agreed that, if the Minister
ever definitively decides not to grant and issue the License in our name, or has
failed  to  grant  and issue the License in our name prior to November 30, 2012,
whichever  occurs first, then Mr. Spickelmier shall return immediately to us the
20.0  million  shares  issued  to  him  in  connection  with the delivery of the
Assignment.

     *     Optioning of the Prospect.  On January  31,  2012,  per  the  Liberty
           Agreement, we entered into an Option to Purchase and Sale and
           Purchase Agreement (the  "Option  Agreement")  with  Liberty. The
           Option Agreement provides for the sale  and transfer of the Prospect.
           The Option Agreement reflects the results of negotiations  between us
           and Liberty, including certain adjustments agreed to in June  2012.
           The  Option  Agreement  supersedes  the  Liberty  Agreement.

           The  Option Agreement provides that the Option's exercise price for
           the Prospect is  a  deemed  total  of  $3.95  million  payable  as
           follows:

           *     Cash in the amount of $800,000 - As of the date of this Report,
                 all of the $800,000  cash  amount  has  been  deposited with
                 Liberty; accordingly, once the License  is  issued to us, we
                 will owe Liberty no further up-front cash amounts.
           *     Two  promissory  notes with an aggregate principal amount of
                 $650,000, one in  the  amount of $500,000 becoming due six
                 months after our acquisition of the Prospect, and the other in
                 the amount of $150,000 becoming due nine months after our
                 acquisition  of the Prospect. These notes will feature
                 prepayment discounts if  we  pay the notes earlier than
                 required. At best, these prepayment discounts could save us
                 $150,000 if the notes are paid within 60 days after the License
                 is issued
           *     Twelve million shares of our common stock, of which Liberty has
                 agreed not to  sell  more  than  10%  in  any  three-month
                 period

           After  any exercise of the Option, Liberty would retain a 7.0%
           royalty interest.

           If  the  Minister  does  not  grant  the License allowing the
           exploration of and drilling  on  the  Prospect  within  a  certain
           period of time, we will have the option  to  cancel the transaction,
           and Liberty is required to refund all moneys paid  to  it.

           The  License  involves  a  five-year  work  commitment involving
           expenditures of AU$200,000 (US$209,300) in the first year after the
           acquisition, AU$1.25 million (US$1,308,000) in the second year, and
           even greater amounts in subsequent years. Our inability to honor this
           work commitment could result in the reversion of the License  to
           Liberty  pursuant  to  the  terms  of  the  Option  Agreement.

           In  addition  to  the  matters  described  above,  the Option
           Agreement features various  other  agreements,  representations,
           warranties and indemnities that we believe  are  customary  and  are
           commercially  reasonable.

           Effective  May  15,  2012, Liberty and we entered into a Novation
           Deed, which is intended  to supersede the Option Agreement. The
           Novation Deed attempts to place us  (through  our  newly  formed
           Australian subsidiary, Discovery Energy SA Ltd, referred  to
           hereinafter  as  the  "Subsidiary")  in  a  direct  contractual
           relationship  with  regard to the License and the Prospect for all
           purposes. For example,  instead  of the License's being issued to
           Liberty and then assigned to us,  Liberty  and  we  will  strive  to
           have the License issued directly in the Subsidiary's  name. The
           rationale for this action was to try to avoid regulatory delays  in
           having documents and rights subsequently assigned to us, and to avoid
           transfer  taxes  that  would result upon such assignments. The
           Novation Deed was intended  to  change  only  the form of our
           transaction with Liberty and not its substance.  Accordingly,  when
           possible,  the  original  terms  of  the  Option Agreement  were
           preserved  in  the  Novation Deed. The approach provided by the
           Novation  Deed required approval by the appropriate regulatory
           agencies. On June 4,  2012, we received notice that the substitution
           of the Subsidiary for Liberty regarding  the  License  was  approved
           by  the Executive Director of the Energy Resources  Division  of  the
           Department  form  Manufacturing, Innovation, Trade Resources  and
           Energy, which acts as a delegate of the Minister for Minerals and
           Energy  Resources.

           We  need no further up-front funds to acquire the License.
           Nevertheless, we will need  to  raise  additional  funds  to  satisfy
           the deferred payments to Liberty incurred  in  connection  with  the
           acquisition of the License, our obligations under the work commitment
           with respect to the License and other amounts required to explore and
           develop the Prospect, and other working capital needs. We have no
           assurance  that we will be able to raise funds to satisfy the
           preceding amounts.

     *     Native  Title  Agreement.  On  September  3,  2012,  our  Australian
           subsidiary  (the  "Subsidiary")  completed  the execution of an
           agreement titled "Deed  (Pursuant  to  Section  31  of  the  Native
           Title Act 1993)" (referred to hereinafter  as  the  "Native  Title
           Agreement")  with  (a)  the State of South Australia,  (b)
           representatives  of the Dieri Native Title Holders (the "Native
           Title  Holders")  on  behalf  of  the  Native  Title  Holders, and
           (c) the Dieri Aboriginal  Corporation.  The  Native Title Holders
           have certain historic rights on  the lands covered by the License,
           which we are seeking to have issued to the Subsidiary.  The Native
           Title Agreement memorializes the agreement of the Native Title
           Holders  and  the  Association  to  the  issuance  of the License and
           the Subsidiary's  activities with respect to the License.  The terms,
           provisions and conditions  of  the  Native Title Agreement are
           described in a Current Report on Form  8-K  that  we filed with the
           SEC on September 7, 2012.  In connection with the entry into the
           Native Title Agreement, the Subsidiary entered into a similar
           agreement  with  other Aboriginal native titleholders and claimants
           with respect to  a  comparatively  small amount of land also covered
           by the License.  For all practical purposes, the terms of this
           additional agreement are the same as those contained  in  the  Native
           Title  Agreement.

     *     License Grant Offer.   On  September  6,  2012,  the  related South
           Australian  government  agency  formally  offered  to  grant  the
           License to the Subsidiary.  The  Native  Title  Agreement,  and  a
           similar agreement with other Aboriginal  native  titleholders  and
           claimants with respect to a comparatively small  amount  of  land
           also  covered by the License were preconditions to this offer.  This
           offer  must  be  accepted within 60 days, and a nominal annual fee
           must  accompany  the acceptance.  The Company intends to cause the
           Subsidiary to accept  the offer timely.  Once the offer is accepted
           and the License is issued, the Company will report these events in a
           subsequent Current Report on Form 8-K, giving further information
           regarding the issued License.  Although we expect the License  to  be
           issued  to  the  Subsidiary,  we  have  no  assurance  of this.

     *     Private Placement of Common Stock.  We completed a private placement
           as  of May 1, 2012 in which we sold an aggregate of 10,070,000 shares
           at a price of US$0.125 per share. The cash offering resulted in
           US$1,258,750 in proceeds to us.  The  shares  were  issued  to  a
           total  of  23 investors, all of whom were accredited.

     *     Name Change.  We  changed  our  corporate name from "Santos Resource
           Corp."  to  "Discovery  Energy  Corp."  effective  May  7,  2012.

     *     Engagement of Financial Adviser. During October 2012, we engaged the
           services of Chrystal Capital Partners LLP ("Chrystal"), a corporate
           finance firm based in London regulated by the British Financial
           Services Authority.  Chrystal has  agreed  to  assist  us  in
           connections with our efforts to complete a major capital raising
           transaction of up to US$15.0 million.  We have no assurance that
           we  will  be successful  in  completing  this  type  of  transaction.

     *     Change in Shell Status.  As a result of the acquisition of the events
           described above, we are no longer a shell corporation as that term is
           defined in Rule  405  of  the  Securities  Act  and  Rule  12b-2
           under  the  Exchange Act.

                               Plan of Operation

General

     We intend to engage primarily in the exploration and development of oil and
gas  on the Prospect in an effort to develop oil and gas reserves. Our principal
products  will  be  crude oil and natural gas.  Our development strategy will be
directed  in the multi-pay target areas of South Australia, with principal focus
on  the prolific Cooper/Eromanga Basin, towards initiating and rapidly expanding
production  rates  and  proving  up  significant  reserves  primarily  through
exploratory  drilling.  Our mission will be to generate superior returns for our
stockholders  by  working with industry partners, suppliers and the community to
build  a  focused  exploration  and  production  company with strong development
assets  in  the  oil  and  gas  sector.

     In the right circumstances, we might assume the entire risk of the drilling
and  development  of  the  Prospect.  More  likely,  we  will determine that the
drilling  and  development  of  the  Prospect can be more effectively pursued by
inviting  industry participants to share the risk and the reward of the Prospect
by  financing  some or all of the costs of drilling wells. Such arrangements are
frequently  referred  to  as "farm-outs." In such cases, we may retain a carried
working  interest  or a reversionary interest, and we may be required to finance
all  or  a  portion  of our proportional interest in the Prospect. Although this
approach  will  reduce our potential return should the drilling operations prove
successful,  it  will  also  reduce  our  risk  and  financial  commitment  to a
particular  prospect.  Prospective  participants  regarding  possible "farm-out"
arrangements  have  already  approached  us.

     There can be no assurance that we will be successful in our exploratory and
production  activities.  The  oil  and gas business involves numerous risks, the
principal  ones  of  which  are listed in our 2012 Annual Report on Form 10-K in
"Item  1A.  Risk  Factors - RISKS RELATING TO OUR INDUSTRY - PARTICIPANTS IN THE
OIL  AND GAS INDUSTRY ARE SUBJECT TO NUMEROUS RISKS." As we become more involved
in the oil and gas exploration and production business, we will give more detail
information  regarding  these  risks.

     Although  our  primary  focus  is on the acquisition and development of the
Prospect,  we have received information about, and have had discussion regarding
possible  acquisition  of  or  participation in, other oil or gas opportunities.
None  of  these discussions has led to any agreement in principle. Nevertheless,
given an attractive opportunity and our ability to consummate the same, we could
acquire  one  or more other crude oil and natural gas properties, or participant
in  one  or  more  other  crude  oil  and  natural  gas  opportunities.

Proposed Initial Activities

     Currently,  we  are  striving  to close the acquisition of the Prospect. In
this  connection,  we  have  raised sufficient funds, completed the execution of
virtually  all  documentation, and received a governmental offer of a grant of a
petroleum  exploration  license  allowing  the  exploration  and drilling rights
related  to  the  Prospect  (the "License").  To be granted the License, we need
only  accept  the offer timely and pay a nominal annual fee.  Although we intend
to  accept  the  offer  timely  and  expect  the  License  to  be  issued to the
Subsidiary,  we  have  no  assurance  of  this.

     We  have  just begun the initial phase of our plan of operation. To date we
have  not  commenced  any  drilling  or  other  exploration  activities  on  any
properties,  and  thus  we  do  not  have any estimates of oil and gas reserves.
Consequently  we  have  not  reported  any reserve estimates to any governmental
authority.  We  cannot  assure  anyone that we will find commercially producible
amounts  of  oil  and  gas. Moreover, at the present time, we cannot finance the
initial phase of our plan of operation solely through our own current resources.
Consequently,  we  plan on undertaking certain financing activities described in
"Liquidity and Capital Resources" below. The success of the initial phase of our
plan  of  operation  depends  upon  our  ability to obtain additional capital to
acquire  seismic data with respect to the Prospect, and to drill exploratory and
developmental  wells.  We cannot assure anyone that we will obtain the necessary
capital.

     The  initial phase of our plan of operation will involve the acquisition of
the  Prospect.  For  the  terms  of  this acquisition, see the section captioned
"Optioning  of  the  Prospect"  above.  If  this  acquisition  is completed, the
Prospect  will  be  subject  to  a five-year work commitment, which involves the
following:

          *     Year  1  -  AU$200,000  ((US$209,300)  must  be  expended  for
                geological  studies  and  interpretation  of  existing  seismic
          *     Year  2  - AU$1,250,000 (US$1,308,000) must be expended to shoot
                250  square  kilometers  (approximately  97  square  miles)  of
                new  2D seismic
          *     Year  3  - AU$5,000,000 (US$5,232,000) must be expended to shoot
                400  square  kilometers  (approximately  154 square miles) of
                new 3D seismic and AU$3,600,000  (US$3,767,000)  must  be
                expended  to  drill  two  wells
          *     Year  4  - AU$9,000,000 (US$9,418,000) must be expended to drill
                five wells
          *     Year  5  - AU$9,000,000 (US$9,418,000) must be expended to drill
                five wells

     The prices of the equipment and services that we must employ to fulfill the
work  commitment also vary based on both local and international demand for such
products  by  others  involved in exploration for and production of oil and gas.
Recent  high  worldwide  energy  prices  have  resulted  in  growing demand, and
frequent  higher  prices  charged  by suppliers. Therefore, we have no assurance
that  the  steps  in  the work plan (e.g. shooting 250 square kilometers) can be
accomplished  at  the cost estimates included in Liberty's original License bid,
which  has  been  accepted  by  the  South  Australian  government.

     Based  on  our  technical analysis to date, we believe that acceleration of
the  PEL  512  work plan can be justified. Hence, we have begun outlining a more
aggressive  schedule  for  the first license year. It is expected this plan will
involve an earlier 2D/3D seismic campaign ($US6.3 - 8.9 million) and exploratory
well  drilling ($US5.5 - 7.3 million). Subject to the availability of funds plus
proper  equipment  and  personnel, management feels that US$15.0 million or more
can  be  productively  invested  within  the  first  two years. Not only is this
program contingent on our procurement of sufficient funds therefore, it may also
be  subject  to  governmental  approval  to  vary the work commitment already in
place.

     We intend to seek a joint venture partner that might act as the operator of
our  wells.  If  we are unsuccessful in procuring such a partner, we will engage
the  services of a third party once we have identified a proposed drilling site.
Management  foresees  no  problem  in  procuring  the  services  of  one or more
qualified  operators  and  drillers  in connection with the initial phase of our
plan  of  operation,  although a considerable increase in drilling activities in
the  area  of  our  properties  could make difficult (and perhaps expensive) the
procurement  of operating and drilling services. In all cases, the operator will
be  responsible  for all regulatory compliance regarding the well, including any
necessary  permitting  for  the  well. In addition to regulatory compliance, the
operator  will  be responsible for hiring the drilling contractor, geologist and
petroleum engineer to make final decisions relative to the zones to be targeted,
well  design, and bore-hole drilling and logging. Should the well be successful,
the operator would thereafter be responsible for completing the well, installing
production  facilities  and  interconnecting  with  gathering  or  transmission
pipelines  if  economically  appropriate  we expect to pay third party operators
(i.e.  not  joint  venture  partner  with  us)  commercially  prevailing  rates.

     The  operator  will  be  the  caretaker  of  the  well  once production has
commenced. Additionally, the operator will formulate and deliver to all interest
owners  an  operating  agreement  establishing  each  participant's  rights  and
obligations  in  that  particular well based on the location of the well and the
ownership. The operator will also be responsible for paying bills related to the
well,  billing  working  interest  owners  for  their  proportionate expenses in
drilling  and  completing  the  well,  and selling the production from the well.
Unless  each  interest  owner sells its production separately, the operator will
collect  sale  proceeds  from oil and gas purchasers, and, once a division order
has  been  established  and  confirmed by the interest owners, the operator will
issue  the  checks  to  each  interest  owner in accordance with its appropriate
interest. The operator will not perform these functions when each interest owner
sells  its  production  separately,  in  which  case  the  interest  owners will
undertake these activities separately. After production commences on a well, the
operator also will be responsible for maintaining the well and the wellhead site
during  the entire term of the production or until such time as the operator has
been  replaced.

     The  principal  oil, natural gas and gas liquids transportation hub for the
region of South Australia surrounding the Prospect is located in the vicinity of
Moomba.  This  processing  and  transportation center is approximately 60 km (36
miles)  due  east  of  the Prospect's eastern boundary. Large diameter pipelines
deliver  oil  and  gas  liquids  from  Moomba  south to Port Bonython (Whyalla).
Natural  gas  is  also  moved  south  to  Adelaide  or  east  to  Sydney.  A gas
transmission  pipeline  also  connects  Moomba  to  Ballera,  which  is  located
northeastward  in  the  State  of  Queensland.  From Ballera gas can be moved to
Brisbane  and  Gladstone,  where  a Liquefied Natural Gas (LNG) project is under
development. The Moomba treating and transportation facilities and the southward
pipelines were developed and are operated by a producer consortium led by Santos
Limited  (no  relation  to  us).

     We cannot accurately predict the costs of transporting our production until
we  locate  our  first successful well. The cost of installing infrastructure to
deliver  our production to Moomba or elsewhere will vary depending upon distance
traversed,  negotiated  handling/treating  fees,  and  pipeline  tariffs.

                             Results of Operations

                                    General

     Financial  results for the quarter and six months ended August 31, 2012 are
not  directly  comparable  to  financial  results for the quarter and six months
ended  August 31, 2011. During January 2012, we changed our business focus. This
change  in  focus  resulted  in  an  elevated  level  of business activity and a
corresponding  increase  in  expenses.

     We did not earn any revenues for the three months ended August 31, 2012 and
2011.  We  do not anticipate earning revenues until such time as we have entered
into  commercial  production  of  oil  and natural gas.  We are presently in the
exploration  stage of our business, and we can provide no assurance that we will
discover  commercially  exploitable levels of hydrocarbons on our properties, or
if  such resources are discovered, that we will enter the commercial production.

     Our  results of operation for the three and six months periods ended August
31,  2012  and  2011  are  summarized  in  the  table  below:

                Three months      Three months    Six months      Six months
               Ended August 31, Ended August 31, Ended August 31, Ended August
                  2012              2011            2012           31, 2011

Revenue        $       -       $          -      $         -      $         -
Operating
   Expenses      205,327              1,510          344,098           36,141
Other (income)
  /expenses       (6,480)                 -           (7,723)            (615)
Net Loss         198,847              1,510          336,375            36,756

     Our operating expenses for the three and six months periods ended August
31, 2012 and 2011 are outlined in the table below:

            Three months         Three months      Six months     Six months
           Ended August 31,    Ended August 31,  Ended August 31, Ended August
               2012                  2011               2012         31, 2011

General and
  Admini-
  strative  $     10,232        $         28     $      32,470   $        74
Mineral
  Property
  Costs          123,080                   -           170,592        29,740
Professional
  Fees            69,931               1,482           133,723         6,327
Travel               980                   -             4,143             -
Rent               1,104                   -             3,170             -
Total        $   205,327        $      1,510     $     344,098   $    36,141
             ---------------------------------------------------------------

Results of Operations for the Three-Month Periods Ended August 31, 2012 and 2011

     Expenses.  The  expenses  for the three-month period ending August 31, 2012
were  dramatically  higher  than  for the corresponding period one year ago. The
difference of $197,337 generally reflects the change of our activities from that
of  a  shell  company to those associated with the multiple initiatives begun at
the  end  of  our  last  fiscal  year to repurpose the Company as an oil and gas
exploration  and  production enterprise. Growth in Mineral Property Costs during
the  current reporting periods accounted for over half of our increased expenses
These costs reflect the ongoing geologic evaluation and analysis of our optioned
South Australian exploration area. Elevated Professional Fees accounted for most
of  the  remaining  increase  in our expenses and were associated primarily with
legal  services  required  for  the  processes of acquiring the South Australian
exploration license, privately placing stock and regulatory reporting of company
developments.  General  and Administrative expenses during the current reporting
period reflect in part the costs associated with changing the Company's name and
establishing  its  Australian  subsidiary.

     Other  (income)/expenses.  Our other income was derived from adjustments to
prior  periods  offset  to  some extent by the cost of translating US$ to AU$ to
meet  local  expenses  in  Australia.

     Net  loss.  In  view  of  the  increase  in expenses during the three-month
period  ending  August  31,  2012,  our  net loss during the period increased to
$198,847 (or $0.00 per-share) compared to our net loss during the same period in
fiscal  2012  of  $1,510  (or  $0.00  per-share).

 Results of Operations for the Six-Month Periods Ended August 31, 2012 and 2011

     Expenses.  The  expenses  for  the  six-month period ending August 31, 2012
were  dramatically  higher  than for the corresponding periods one year ago. The
difference  of $299,169 generally reflect the change of our activities from that
of  a  shell  company to those associated with the multiple initiatives begun at
the  end  of  our  last  fiscal  year to repurpose the Company as an oil and gas
exploration  and production enterprise.  Growth in Mineral Property Costs during
the  current reporting periods accounted for over half of our increased expenses
These costs reflect the ongoing geologic evaluation and analysis of our optioned
South Australian exploration area. Elevated Professional Fees accounted for most
of  the  remaining  increase  in our expenses and were associated primarily with
legal  services  required  for  the  processes of acquiring the South Australian
exploration license, privately placing stock and regulatory reporting of company
developments.  General  and Administrative expenses during the current reporting
period reflect in part the costs associated with changing the Company's name and
establishing  its  Australian  subsidiary.

     Other  (income)/expenses.  Our  other  income  reflects  the  receipt  of a
Canadian  sales  tax  refund  associated with the company's activities in Fiscal
Year 2012, adjustments to prior periods offset by the cost of translating US$ to
AU$  to  meet  local  expenses  in  Australia

     Net  loss.  In view of the increase in expenses during the six-month period
ending August 31, 2012, our net loss during the period increased to $336,375 (or
$0.01  per-share) compared to our net loss during the same period in fiscal 2012
of  $36,756  (or  $0.00  per-share).

                         Off-Balalnce Sheet Arrangements

     The  Company  has  no  off-balance  sheet  arrangements.

                       Liquidity and Capital Requirements

     As  of  August  31, 2012, we had cash in the amount of $162,809, and we had
working capital of $1,016,730. Earlier in this fiscal year, we completed a round
of  financing  in  which we raised "seed" capital in the amount of US$1,258,750.
This  has  been  our  source  of  cash so far this fiscal year. We need to raise
additional  funds  for operating expenses.  In this connection, during the first
week  of  September  2012, we initiated a second private placement seeking up to
$2.0  million  in capital through the sale of 160 million shares of common stock
at  a price of $0.125 per share. As of October 12, 2012, subscriptions valued at
$250,000 have been received.  These subscriptions will result in the issuance of
2,000,000  shares  of  stock  .  We  will continue to try to raise funds in this
financing,  but  we  have  no  assurance  that  we  will  be  able  to  do  so.

     We  will  also  need to obtain additional financing before we can implement
the  initial phase of our current plan of operation. To acquire the Prospect, we
will  incur  a  deferred  payment  in  the  form  of two promissory notes in the
aggregate  amount  of US$650,000 payable to Liberty, one becoming due six months
after  our  acquisition  of the Prospect, and the other becoming due nine months
after  our  acquisition  of  the  Prospect.  Furthermore, the acquisition of the
Prospect  will obligate us to pay US$100,000 in cash to Keith D. Spickelmier for
his assignment to us of the ability to acquire the Prospect. Moreover, after the
acquisition,  we  will  have  a  work  commitment  with  respect to the Prospect
requiring  us  to  expend  AU$200,000  (US$209,300)  in the first year after the
acquisition and AU$1.25 million (US$1,308,000) in the second year. Some of these
amounts  will  become  due  before  we  are  able  to commence production on the
Prospect. Accordingly, some of these amounts must be raised. Moreover, we expect
to  need  a  substantial amount of funds to develop the Prospect. In addition to
the  preceding,  we  will  need working capital in amounts not now determinable.

     We  believe  at least US$3.0 million of additional capital will be required
to  satisfy  our  obligations in connection with the acquisition of the Prospect
and  for  two  years  after  the Prospect is acquired, but this amount would not
allow  us  to  develop  the Prospect in any meaningful way. About US$1.0 million
would  need  to  be  raised  within  about the next 12 months to satisfy amounts
becoming  due within such time period, while the remaining US$2.0 million amount
would  need  to  be  raised  within  about the next 24 months to satisfy amounts
becoming  due  near  the  end  of  such  time  period.

     During  October  2012, we engaged the services of Chrystal Capital Partners
LLP  ("Chrystal"),  a  corporate  finance  firm based in London regulated by the
British  Financial  Services  Authority.  Chrystal  has  agreed  to assist us in
connections  with our efforts to complete a major capital raising transaction of
up  to  US$20.0  million.  We  have  no  assurance that we will be successful in
completing  this type of transaction. If Chrystal is successful in raising funds
for  us,  we  will  owe  to  Chrystal  the  fees  described in footnote 6 to the
financial  statements  contained  in  this  Report.

     Another  source  of funding under investigation is the sale of a portion of
our  post-acquisition  interest in the Prospect to a joint venture partner for a
cash  payment and/or a work commitment. We have had very preliminary discussions
with  several  companies to become joint venture partners. To obtain the maximum
combination  of  cash  and  work  commitment  in  connection with the sale of an
interest  in  the  Prospect, we may seek to add value by completing a 3D seismic
survey over a portion of the property and/or re-processing existing seismic data
related  to  the  Prospect.

     If  required  financing  is  not available on acceptable terms, we could be
prevented  from  satisfying  our debt obligations or developing the Prospect. In
such  event,  we  would  be  forced  to seek an extension of the due date of the
amount  owed  to  Liberty, or else default on one or more of these amounts. If a
default  occurs,  Liberty could exercise the rights of an unsecured creditor and
possibly  levy  encumbrances on all or a large part of our assets. Moreover, our
failure  to  honor our work commitment could result in our loss of the Prospect.
If  any  of  the preceding events were to occur, we could be forced to cease our
new  business  plan  altogether,  which  could  result  in  a  complete  loss of
stockholders'  equity.

     If  we  do  not  obtain  additional  financing  through  an  equity or debt
offering,  we may be constrained to attempt to sell some portion of the Prospect
under  unfavorable circumstances and at an undesirable price. However, we cannot
assure  anyone  that we will be able to find interested buyers or that the funds
received from any such sale would be adequate to fund our activities. Our future
liquidity  will  depend  upon  numerous  factors,  including  the success of our
business  efforts  and  our  capital  raising  activities.

     We  are  currently  developing a more aggressive work plan for the Prospect
than  has  been  included  in  the  License  bid.  This plan is expected include
acceleration  in  the  shooting  of  new 2D/3D seismic (US$6.3 -8.9 million) and
early  (versus  the  bid  work  plan) exploratory drilling (US$5.5-7.3 million).
Assuming  availability  of funding, timely governmental approvals, and access to
proper  equipment  and  trained personnel, we feel that US$ 15.0 million or more
can  be  productively  invested  within  the Prospect during the first two years
following  the  issuance  of  the  License.

     If  we  are  successful  with the early wells, we will continue with a full
development  plan,  the  scope  of  which  is now uncertain but will be based on
technical  analysis of acquired seismic data collected and/or reprocessed, field
drilling  reports  and well log reports. However, all of the preceding plans are
subject  to  the  availability  of sufficient funding and the procurement of all
governmental  approvals.  We  do  not  now  have  sufficient  available funds to
undertake these tasks, and will need to procure a joint venture partner or raise
additional  funds  as  described  above.  The failure to procure a joint venture
partner  or  raise  additional funds will preclude us from pursuing our business
plan,  as  well  as  exposing  us  to  the  loss  of  the Prospect, as discussed
immediately  above.  Moreover,  if our business plan proceeds as just described,
but our first wells do not prove to hold producible reserves, we could be forced
to  cease  our  exploration  efforts  on  the  Prospect.

     Production  from our exploration and drilling efforts would provide us with
cash  flow.  The  proven  reserves associated with production would increase the
value  of  our rights in the Prospect. This, in turn, should enable us to obtain
bank  financing  (after  the wells have produced for a period of time to satisfy
the  related lender). Both of these results would enable us to continue with our
initial  drilling activities. In fact, cash flow and conventional bank financing
are as critical to our plan of operation in the long run as the procurement of a
joint  venture  partner  or completion of a significant institutional financing.
Management believes that, if our plan of operation progresses (and production is
realized)  as planned, sufficient cash flow and conventional bank financing will
be  available  for purposes of properly pursuing our plan of operation, although
we  can  make  no  assurances  in  this  regard.

     To conserve on our cash requirements, we may try to satisfy our obligations
by  issuing  shares  of  our  common stock, which will result in dilution to our
existing  stockholders.

Item 4T. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

     Under  the  supervision  and  with  the  participation  of  our management,
including  our  principal  executive officer and principal financial officer, we
have  evaluated  the effectiveness of the design and operation of its disclosure
controls  and  procedures  pursuant  to  Exchange  Act  Rule  13a-15(e) and Rule
15d-15(e) as of the end of the period covered by this quarterly report. Based on
that evaluation, the principal executive officer and principal financial officer
have identified that the lack of segregation of accounting duties as a result of
limited  personnel resources is a material weakness of its financial procedures.
Other  than  for  this  exception, the principal executive officer and principal
financial  officer  believe the disclosure controls and procedures are effective
to ensure that information required to be disclosed by us in the reports we file
or  submit  under  the  Exchange  Act  is  recorded,  processed, summarized, and
reported  within  the  time  periods  specified  in  the Securities and Exchange
Commission's  rules  and forms and that our disclosure and controls are designed
to ensure that information required to be disclosed by us in the reports that we
file  or  submit  under  the Exchange Act is accumulated and communicated to our
management,  including  our  principal executive officer and principal financial
officer, or persons performing similar functions, as appropriate to allow timely
decisions  regarding  required  disclosure. There were no significant changes in
our  internal  controls  or  in  other  factors  that could significantly affect
internal  controls  subsequent to the date of their evaluation and there were no
corrective  actions  with  regard  to  significant  deficiencies  and  material
weaknesses.

Limitations on Effectiveness of Controls and Procedures

     Our  management,  including our Chief Executive Officer and Chief Financial
Officer,  does  not  expect  that  our disclosure controls and procedures or our
internal  controls  will  prevent  all error and all fraud. A control system, no
matter  how  well  conceived  and  operated,  can  provide  only reasonable, not
absolute,  assurance that the objectives of the control system are met. Further,
the  design  of  a  control system must reflect the fact that there are resource
constraints  and  the  benefits of controls must be considered relative to their
costs. Because of the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that all control issues and instances
of  fraud,  if  any,  within  our  company  have  been  detected. These inherent
limitations  include,  but  are  not limited to, the realities that judgments in
decision-making  can  be  faulty and that breakdowns can occur because of simple
error  or  mistake. Additionally, controls can be circumvented by the individual
acts  of  some  persons,  by  collusion  of two or more people, or by management
override  of  the control. The design of any system of controls also is based in
part  upon  certain  assumptions about the likelihood of future events and there
can  be  no assurance that any design will succeed in achieving its stated goals
under  all potential future conditions; over time, control may become inadequate
because  of changes in conditions, or the degree of compliance with the policies
or  procedures  may  deteriorate.

Changes in Internal  Controls over  Financial  Reporting

     There  have  not  been  any  changes in our internal control over financial
reporting,  as  such  term is defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act, during the period of this report that have materially affected, or
are  reasonably  likely to materially affect our internal control over financial
reporting.

                           PART II  OTHER INFORMATION

ITEM 6.  Exhibits.

     (a)     The  following exhibits are filed with this Quarterly Report or are
incorporated  herein  by  reference:

Exhibit
Number      Description

31.01       Certification pursuant to Rule 13a-14(a) of the Securities Exchange
            Act of 1934.
31.02       Certification pursuant to Rule 13a-14(a) of the Securities Exchange
            Act of 1934.
32.01       Certification Pursuant to 18 U.S.C. Section 1350, as pursuant to
            Section 906 of the Sarbanes-Oxley Act of 2002.
32.02       Certification Pursuant to 18 U.S.C. Section 1350, as pursuant to
            Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*    XBRL Instance Document
101.SCH*    XBRL Taxonomy Extension Schema
101.CAL*    XBRL Taxonomy Extension Calculation Linkbase
101.DEF*    XBRL Taxonomy Extension Definition Linkbase
101.LAB*    XBRL Taxonomy Extension Labels Linkbase
101.PRE*    XBRL Taxonomy Extension Presentation Linkbase

*     XBRL  information  is  furnished and not filed or a part of a registration
statement  or prospectus for purposes of sections 11 or 12 of the Securities Act
of  1933,  as  amended,  is  deemed  not filed for purposes of section 18 of the
Securities  Exchange  Act  of  1934, as amended, and otherwise is not subject to
liability  under  these  sections.

                                   SIGNATURES

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


                                        DISCOVERY ENERGY CORP.
                                        (Registrant)

                                        By:     /s/ Keith J. McKenzie
                                                --------------------------------
                                                Keith J. McKenzie,
                                                Chief Executive Officer
                                                (Principal Executive Officer)


                                        By:     /s/ William E. Begley
                                                --------------------------------
                                                William E. Begley,
                                                Chief Financial Officer
                                                (Principal Financial Officer and
                                                Principal Accounting Officer)

October _____, 2012