-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OfeKgl0QsrbjeUM3/2yLBVKRNXr+JnGxbZMnVmDA/E0WONxbTK0TIQpdbgwHZBxZ ou1fKD/zoYPy8XcinLV+4Q== 0001092306-03-000464.txt : 20031007 0001092306-03-000464.hdr.sgml : 20031007 20031007172236 ACCESSION NUMBER: 0001092306-03-000464 CONFORMED SUBMISSION TYPE: 10KSB/A PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20021231 FILED AS OF DATE: 20031007 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DISCOVERY INVESTMENTS INC CENTRAL INDEX KEY: 0001083459 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 880409151 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-26175 FILM NUMBER: 03932030 BUSINESS ADDRESS: STREET 1: 6767 W. TROPICANA AVENUE STREET 2: SUITE 207 CITY: LAS VEGAS STATE: NV ZIP: 89103 BUSINESS PHONE: 866-351-5099 MAIL ADDRESS: STREET 1: 12405 SO. VENICE BLVD. STREET 2: UNIT 223 CITY: LOS ANGELES STATE: CA ZIP: 90066 10KSB/A 1 form10ksba1.txt FORM 10-KSB AMENDMENT #1 - 12/31/02 Commission File No. 000-26175 U.S. SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 10-KSB/AMENDMENT NUMBER 1 /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended: December 31, 2002 / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period From __ to __ DISCOVERY INVESTMENTS, INC. ______________________________________________________ (Exact name of registrant as specified in its charter) Nevada 88-0409151 ________________________________________________________________________________ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 6767 W. Tropicana Avenue, Suite 207 Las Vegas, Nevada 89103 ________________________________________ __________ (Address of principal executive offices) (Zip Code) Issuer's telephone number: (702) 248-1047 Securities to be registered pursuant to Section 12(b) of the Act: none Securities to be registered pursuant to Section 12(g) of the Act: $.001 Common Stock __________________ (Title of Class) Check 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 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 / / Check if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part II of this Form 10-K or any amendments to this Form 10-K. /X/ As of December 31, 2002, there were 38,499,583 shares of the registrant's Common Stock, $.001 par value, outstanding. The aggregate market value of shares of Common Stock held by non-affiliates of the registrant, as of the last business day of registrant's most recent quarter is $675,220,(there were 24,499,583 shares of the registrant's Common Stock, $.001 par value, outstanding). State the registrant's revenues for the December 31, 2002 fiscal year: $0 EXPLANATORY NOTE: THIS FORM 10-KSB/AMENDMENT NO. 1 IS BEING FILED IN ORDER TO PROVIDE CORRECTED FINANCIAL STATEMENTS FOR THOSE PREVIOUSLY SUBMITTED IN ITEM 7 AND FILE AND SUPPLY THE AUDITOR'S CONSENT FOR THE RESTATED FINANCIAL STATEMENTS CONTAINED IN SAID ITEM 7. THERE HAS BEEN NO CHANGE IN THE TOTAL ASSETS AND IN THE TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY AS AT DECEMBER 31, 2002. THE RESTATED FINANCIAL STATEMENTS REFLECT THE COMPANY'S CORRECTION TO REFLECT THE ADDITIONAL PAID IN CAPITAL AND THE CORRESPONDING CORRECTION IN THE ACCUMULATED DEFICIT DURING THE DEVELOPMENT STAGE. THE ACCOMPANYING OPINION OF THE INDEPENDENT AUDITOR IS ONLY FOR THESE RESTATED FINANCIAL STATEMENTS AND THE CONSENT IS APPLICABLE ONLY TO THESE RESTATED FINANCIAL STATEMENTS AS AT DECEMBER 31, 2002. 2 TABLE OF CONTENTS PAGE Item 7. Financial Statements 4 Item 13. Exhibits and Reports on Form 8-K 5 Signatures 6 3 ITEM 7. FINANCIAL STATEMENTS. DISCOVERY INVESTMENTS, INC. (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2002 AND 2001 DISCOVERY INVESTMENTS, INC. (A DEVELOPMENT STAGE COMPANY) CONTENTS REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT F-1 Balance Sheets F-2 Statements of Income F-3-4 Statements of Stockholders' Equity F-5 Statements of Cash Flows F-6-7 Notes to Financial Statements F-8-17 ________________________________________________________________________________ REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT To the Shareholders and Board of Directors Discovery Investments, Inc. I have audited the accompanying consolidated balance sheets of Discovery Investments, Inc. (a Development Stage Company) as of December 31, 2002 and 2001, and the related consolidated statements of income, stockholders' equity and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these consolidated financial statements based on our audits. I did not audit the financial statements of Cavio Corporation (a Development Stage Company). a wholly-owned subsidiary, which statements reflect total assets of $467,621 and $0 as of December 31, 2002 and 2001, respectively, and total revenues of $1,097 and $0 for the years ended December 31, 2002 and 2001. Those statements were audited by other auditors whose report has been furnished to me, and my opinion, insofar as it relates to the amounts included for Cavio Corporation (a Development Stage Company) is based solely on the report of the other auditors. I conducted my audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. I believe that my audits provide a reasonable basis for my opinion. In my opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Discovery Investments, Inc, (a Development Stage Company) as of December 31, 2002 and 2001, and of the results of its operations and cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 2 to the financial statements, effective September 24, 2001, the Company completed its reorganization after seeking protection under Chapter 11 of the U.S. Bankruptcy Code pursuant to a Reorganization Plan which was confirmed by the Bankruptcy Court on September 24, 2001. As discussed in Note 4 to the financial statements, the Company has limited operations and has no established source of revenue. This raises substantial doubt about its ability to continue as a going concern. Management's plan in regard to these matters is also described in Note 4. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Kyle L. Tingle, CPA, LLC June 13, 2003 Henderson, NV F-1 DISCOVERY INVESTMENTS, INC. (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED BALANCE SHEETS (RESTATED) December 31, December 31, 2002 2001 ____________ ____________ ASSETS CURRENT ASSETS Cash $ 0 $ 0 Assets of discontinued operations 467,621 0 ____________ ________ Total current assets $ 467,621 $ 0 ____________ ________ Total assets $ 467,621 $ 0 ============ ======== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Bank overdraft $ 62 $ 0 Accounts payable 4,847 2,136 Officers' advances 63,693 50,000 Liabilities of discontinued operations 2,319,298 0 ____________ ________ Total current liabilities $ 2,387,900 $ 52,136 ____________ ________ LONG TERM DEBT $ 0 $ 0 ____________ ________ Total liabilities $ 2,387,900 $ 52,136 ____________ ________ STOCKHOLDERS' EQUITY Common stock: $0.001 par value; authorized 100,000,000 shares; issued and outstanding: 7,699,583 shares at December 31, 2001 7,700 38,499,583 shares at December 31, 2002 38,500 Additional paid in capital 15,441,200 0 Accumulated deficit during development stage (17,399,979) (59,836) ____________ ________ Total stockholders' equity $ (1,920,279) $(52,136) ____________ ________ Total liabilities and stockholders' equity $ 467,621 $ 0 ============ ======== See Accompanying Notes to Consolidated Financial Statements. F-2
DISCOVERY INVESTMENTS, INC. (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED STATEMENTS OF INCOME (RESTATED) Sept 10, 1996 Year Ended Year Ended (inception) to December 31, December 31, December 31, 2002 2001 2002 ____________ ____________ ______________ Revenues $ 0 $ 0 $ 0 Cost of revenue 0 0 0 ____________ __________ ____________ Gross profit $ 0 $ 0 $ 0 General, selling and administrative expenses Operating expenses 16,283 11,579 1,740,255 Write-off of goodwill 5,520,183 0 5,520,183 ____________ __________ ____________ Operating loss $ (5,536,466) $ (11,579) $ (7,260,438) Nonoperating income (expense) Interest expense 0 (98,753) (284,753) ____________ __________ ____________ Loss before reorganization items and extraordinary item $ (5,536,466) $ (110,332) $ (7,545,191) Reorganization items 0 (30,858) (30,858) ____________ __________ ____________ (Loss) before extraordinary item $ (5,536,466) $ (141,190) $ (7,576,049) Extraordinary gain on prepetition debt discharge $ 0 $1,985,347 $ 1,985,347 ____________ __________ ____________ Net income (loss) from continuing operations $ (5,536,466) $1,844,157 $ (5,590,702) Loss from discontinued operations (11,791,677) 0 (11,791,677) ____________ __________ ____________ Net income (loss) $(17,328,143) $1,844,157 $(17,382,379) ============ ========== ============ Earnings (loss) per share, basic and diluted Income (loss) from continuing operations $ (0.74) $ 0.25 $ (1.76) ============ ========== ============ Loss from discontinued operations $ (0.74) $ 0.25 $ (1.76) ============ ========== ============ Net income (loss) $ (0.74) $ 0.25 $ (1.76) ============ ========== ============ Average number of shares of common stock outstanding 23,540,679 7,380,733 9,883,849 ============ ========== ============ See Accompanying Notes to Consolidated Financial Statements.
F-3
DISCOVERY INVESTMENTS, INC. (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (RESTATED) Accumulated Additional (deficit) During Common Stock Paid-In Development _______________________ Capital Stage Total Shares Amount __________ ________________ ____________ Sale of 7,350,000 shares, Sept. 10, 1996 7,350,000 $ 7,350 $ 0 $ (5,350) $ 2,100 Net (loss), December 31, 1996 (2,100) (2,100) __________ ________ ___________ ____________ ____________ Balance, December 31, 1996 7,350,000 $ 7,350 $ 0 $ (7,350) $ 0 Net (loss), December 31, 1997 0 0 __________ ________ ___________ ____________ ____________ Balance, December 31, 1997 7,350,000 $ 7,350 $ 0 $ (7,350) 0 Net (loss), December 31, 1998 0 0 __________ ________ ___________ ____________ ____________ Balance, December 31, 1998 7,350,000 $ 7,350 $ 0 $ (7,350) $ 0 March 15, 1999, changed from no par value to $0.001 (7,277) 7,277 March 15, 1999, forward stock 100:1 7,277 (7,277) Net (loss), December 31, 1999 (1,540,654) (1,540,654) __________ ________ ___________ ____________ ____________ Balance, December 31, 1999 7,350,000 $ 7,350 $ 0 $ (1,548,004) $ (1,540,654) Net (loss), December 31, 2000 (355,639) (355,639) __________ ________ ___________ ____________ ____________ Balance, December 31, 2000 7,350,000 $ 7,350 $ 0 $ (1,903,643) $ (1,896,293) Issuance of common stock, pursuant to bankruptcy order, issued November 29, 2001 349,583 350 (250) 100 Net income, December 31, 2001 1,844,157 1,844,157 __________ ________ ___________ ____________ ____________ Balance, December 31, 2001 7,699,583 $ 7,700 $ 0 $ (59,836) $ (52,136) Issuance of common stock on acquisition of Bycom Media Inc. May 5, 2002 16,800,000 16,800 5,515,200 (12,000) 5,520,000 Stock dividend, 2.5:1, May 5, 2002 Issuance of common stock on acquisition of Cavio Corporation September 4, 2002 14,000,000 14,000 9,926,000 9,940,000 Net (loss), December 31, 2002 (17,328,143) (17,328,143) __________ ________ ___________ ____________ ____________ Balance, December 31, 2002 38,499,583 $ 38,500 $15,441,200 $(17,399,979) $ (1,920,279) ========== ======== =========== ============ ============ See Accompanying Notes to Consolidated Financial Statements.
F-4
DISCOVERY INVESTMENTS, INC. (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED STATEMENTS OF CASH FLOWS (RESTATED) Sept. 10, 1996 Year Ended Year Ended (inception) to December 31, December 31, December 31, 2002 2001 2002 ____________ ____________ ______________ Cash Flows From Operating Activities Net income (loss) $(17,328,143) $ 1,844,157 $(17,382,379) Less: loss from discontinued operations 11,791,677 0 11,791,677 ____________ ____________ ______________ Loss from continuing operations (5,536,466) 0 (5,590,702) Adjustments to reconcile net (loss) to cash (used in) operating activities: Impairment of intangible assets 5,520,183 0 5,520,183 Extraordinary gain on prepetition debt discharge 0 (1,985,347) (1,985,347) Reorganization items, professional fees 0 30,858 30,858 Changes in assets and liabilities Increase in accounts payable and accrued expenses (pre-petition) 0 107,121 386,913 Increase in accounts payable and accrued expenses (post-petition) 2,773 2,136 4,909 Increase in officer advances (pre-petition) 0 1,075 17,576 Increase in officer advances (post-petition) 13,693 50,000 63,693 ____________ ____________ ______________ Net cash provided by (used in) operating activities before reorganization items $ 183 $ 50,000 $ (1,551,917) ____________ ____________ ______________ (Decrease) to Cash Resulting from Reorganization Items: Pre-petition claims paid pursuant to plan $ 0 $ (19,142) $ (19,142) Professional fees paid 0 (30,858) (30,858) ____________ ____________ ______________ Net cash provided by (used in) operating activities $ 183 $ 0 $ (1,602,100) ____________ ____________ ______________ Cash Flows From Investing Activities Purchase of Bycom Media, Inc., net of cash acquired $ (183) $ 0 $ (183) ____________ ____________ ______________ Net cash used in investing activities $ (183) $ 0 $ (183) ____________ ____________ ______________ Cash Flows From Financing Activities Issuance of common stock $ 0 $ 0 $ 2,100 Proceeds from notes payable 0 0 1,600,000 ____________ ____________ ______________ Net cash provided by financing activities $ 0 $ 0 $ 1,602,100 ____________ ____________ ______________ Net increase (decrease) in cash and cash equivalents $ 0 $ 0 $ 0 Cash and cash equivalents, beginning of period 0 0 0 ____________ ____________ ______________ Cash and cash equivalents, end of period $ 0 $ 0 $ 0 ============ ============= ============= Supplemental Schedule of Non-Cash Investing and Financing Activities Discharge of short term notes payable $ 0 $ 100,000 $ 100,000 Discharge of long term notes payable 0 1,500,000 1,500,000 Stock issued in acquisition of Bycom Media, Inc. 5,520,000 0 5,520,000 Stock issued in acquisition of Cavio Corporation 9,940,000 0 9,940,000 See Accompanying Notes to Consolidated Financial Statements.
F-5 DISCOVERY INVESTMENTS, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2002 AND 2001 NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES NATURE OF BUSINESS: Discovery Investments, Inc. ("Company") was organized September 10, 1996 under the laws of the State of Nevada. The Company, through its subsidiaries was to develop software for multimedia internet tools and authentication software, primarily for use on the internet. The Company currently has limited operations and, in accordance with Statement of Financial Accounting Standard (SFAS) No. 7, "ACCOUNTING AND REPORTING BY DEVELOPMENT STAGE ENTERPRISES," is considered a development stage company. On August 9, 2001 ("Petition Date"), the Company filed a voluntary petition for Chapter 11 protection pursuant to the United States Bankruptcy Code. As of that date, The United States Bankruptcy Court for the District of Nevada ("Bankruptcy Court") assumed jurisdiction over the assets of the Company. On September 24, 2001, the Bankruptcy Court confirmed the Disclosure Statement and Plan of Reorganization (the "Plan") submitted by the Debtors. On September 24, 2001 the Plan became effective. A SUMMARY OF THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES IS AS FOLLOWS: BASIS OF PRESENTATION The Company implemented guidance provided by the American Institute of Certified Public Accountants Statement of Position 90-7 "Financial Reporting By Entities in Reorganization Under the Bankruptcy Code" ("AICPA SOP 90-7") as of September 30, 2001. Accordingly, the Company's financial statements for the periods prior to September 30, 2001 are not comparable to financial statements presented on or subsequent to September 30, 2001. These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries as at December 31, 2002 and for the period from May 5, 2002 to December 31, 2002. ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. CASH For the Consolidated Statements of Cash Flows, all highly liquid investments with maturity of three months or less are considered to be cash equivalents. There were no cash equivalents as of December 31, 2002 and 2001. INCOME TAXES Income taxes are provided for using the liability method of accounting in accordance with SFAS No. 109 "ACCOUNTING FOR INCOME TAXES." A deferred tax asset or liability is recorded for all temporary differences F-6 DISCOVERY INVESTMENTS, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2002 AND 2001 NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) between financial and tax reporting. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effect of changes in tax laws and rates on the date of enactment. REPORTING ON COSTS FOR START-UP ACTIVITIES Statement of Position 98-5 ("SOP 98-5), "REPORTING ON THE COSTS OF START-UP ACTIVITIES" which provides guidance on the financial reporting of start-up and organization costs, requires most costs of start-up activities and organization costs to be expensed as incurred. With the adoption of SOP 98-5, there has been little to no effect on the Company's consolidated financial statements. SOFTWARE DEVELOPMENT COSTS The software tools under development are primarily marketed for use by clients. The Company expenses these costs as costs of revenues in the period incurred in accordance with Statement of Financial Accounting Standard (SFAS) No. 86, "ACCOUNTING FOR THE COSTS OF COMPUTER SOFTWARE TO BE SOLD, LEASED, OR OTHERWISE MARKETED." In March 1998, the American Institute of Certified Public Accountants (AICPA) issued Statement of Position 98-1, "ACCOUNTING FOR THE COSTS OF COMPUTER SOFTWARE DEVELOPED OR OBTAINED FOR INTERNAL USE" ("SOP 98-1"). SOP 98-1 provides guidance on accounting for the costs of computer software developed or obtained for internal use. This pronouncement identifies the characteristics of internal use software and provides guidance on new cost recognition principles. GOODWILL AND LONG-LIVED ASSETS In July 2001, the FASB issued SFAS No. 141, "Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 requires business combinations initiated after June 30, 2001 to be accounted for using the purchase method of accounting, and broadens the criteria for recording intangible assets separate from goodwill. Recorded goodwill and intangibles will be evaluated against these new criteria and may result in certain intangibles being subsumed into goodwill, or alternatively, amounts initially recorded as goodwill may be separately identified and recognized apart from goodwill. SFAS No. 142 requires the use of a non-amortization approach to account for purchased goodwill and certain intangibles. Under a non-amortization approach, goodwill and certain intangibles will not be amortized into results of operations, but instead would be reviewed for impairment and written down and charged to results of operations only in the periods in which the recorded value of goodwill and certain intangibles is more than its fair value. During the fourth quarter, the Company performed its annual impairment review for goodwill. The company recorded a non-cash charge of $5,520,183 resulting from the acquisition of Bycom Media, Inc. due to the lack of development of any software as was originally expected from this acquisition. The Company also recorded a non-cash charge of $11,562,707 from the acquisition of Cavio Corporation. As described in Note 4, the Company has agreed to dispose of Cavio Corporation and it is recorded as a discontinued operation. F-7 DISCOVERY INVESTMENTS, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2002 AND 2001 NOTE 2. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) The FASB also recently issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," that is applicable to financial statements issued for fiscal years beginning after December 15, 2001. The FASB's new rules on asset impairment supersede SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," and portions of Accounting Principles Bulletin Opinion 30, "Reporting the Results of Operations." This Standard provides a single accounting model for long-lived assets to be disposed of and significantly changes the criteria that would have to be met to classify an asset as held-for-sale. Classification as held-for-sale is an important distinction since such assets are not depreciated and are stated at the lower of fair value and carrying amount. This Standard also requires expected future operating losses from discontinued operations to be displayed in the period(s) in which the losses are incurred, rather than as of the measurement date as presently required. YEAR END The Company originally selected March 31 for its fiscal year end. In 2000, the Company changed its fiscal year end to December 31. NEW ACCOUNTING PRONOUNCEMENTS In October 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which supersedes SFAS No. 121, "Accounting for the Impairment or Disposal of Long-Lived Assets and for Long-Lived Assets to be Disposed of," but retains many of its fundamental provisions. Additionally, this statement expands the scope of discontinued operations to include more disposal transactions. SFAS No. 144 was adopted by the Company for the fiscal year ended December 31, 2002. As disclosed in Note 6, the adoption of this standard had a material effect on the Company's financial statements. In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities" ("SFAS 146"). This Statement addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force ("EITF") Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." This Statement requires that a liability for costs associated with an exit or disposal activity be recognized and measured initially at fair value only when the liability is incurred. This pronouncement is effective for exit or disposal activities that are initiated after December 31, 2002. In December 2002, the FASB issued Statement of Financial Accounting Standards ("SFAS") No. 148, "Accounting for Stock-Based Compensation, Transition and Disclosure." SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. SFAS No. 148 also requires that disclosures of the pro forma effect of using the fair value method of accounting for stock-based employee compensation be displayed more prominently and in a tabular format. Additionally, SFAS No. 148 requires disclosure of the pro-forma effect in interim financial statements. The transition and annual disclosure requirements of SFAS No. 148 are effective for fiscal years ended after December 15, 2002. The interim disclosure F-8 DISCOVERY INVESTMENTS, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2002 AND 2001 NOTE 2. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) requirements are effective for interim periods beginning after December 15, 2002. The Company believes that the adoption of this standard will have no material impact on its financial statements. In November 2002, the FASB issued Interpretation No. 45 (FIN 45), Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others. The Interpretation expands on the accounting guidance of FAS 5, Accounting for Contingencies, FAS 57, Related Party Disclosures, and FAS 107, Disclosures about Fair Value of Financial Instruments, and incorporates without change the provisions of FIN 34, Disclosure of Indirect Guarantees of Indebtedness of Others, an interpretation of FASB Statement No. 5, which is being superseded. FIN 45 elaborates on the existing disclosure requirements for most guarantees, including loan guarantees, such as standby letters of credit. It also clarifies that at the time a company issues a guarantee, the company must recognize an initial liability for the fair value, or market value, of the obligations it assumes under that guarantee and must disclose that information in its interim and annual financial statements. FIN 45 will be effective to the Company on a prospective basis to guarantees issued or modified after December 31, 2002. The Company believes that the adoption of this standard will have no material impact on its financial statements. In January 2003, the Financial Accounting Standards Board issued FASB Interpretation No. 46, Consolidation of Variable Interest Entities ("FIN 46"). Under that interpretation, certain entities known as "Variable Interest Entities" ("VIE") must be consolidated by the "primary beneficiary" of the entity. The primary beneficiary is generally defined as having the majority of the risks and rewards arising from the VIE. For VIE's in which a significant (but not majority) variable interest is held, certain disclosures are required. FIN 46 requires disclosure of Variable Interest Entities in financial statements issued after January 31, 2003, if it is reasonably possible that as of the transition date: (1) the Company will be the primary beneficiary of an existing VIE that will require consolidation or, (2) the Company will hold a significant variable interest in, or have significant involvement with, an existing VIE. Any VIEs created after January 31, 2003, are immediately subject to the consolidation guidance in FIN 46. The measurement principles of this interpretation will be effective for the Company's 2003 financial statements. The Company does not have any entities that require disclosure or new consolidation as a result of adopting the provisions of FIN 46. In November 2002, the "EITF" reached a consensus on EITF 00-21, "Accounting for Revenue Arrangements with Multiple Deliverables." EITF 00-21 establishes criteria for whether revenue on a deliverable can be recognized separately from other deliverables in a multiple deliverable arrangement. The criteria consider whether the delivered item has stand-alone value to the customer, whether the fair value of the delivered item can be reliably determined and the rights of returns for the delivered item. EITF 00-21 is effective for revenue agreements entered into in fiscal years beginning after June 15, 2003 with early adoption permitted. The Company believes that the adoption of this standard will have no material impact on its financial statements F-9 DISCOVERY INVESTMENTS, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2002 AND 2001 NOTE 2. RESTRUCTURING ITEMS Pursuant to he Disclosure Statement and Plan of Reorganization becoming effective September 24, 2001, all general unsecured claims were discharged in exchange for cash payments totaling $50,000. An impaired interest holder-shareholder paid $30,858 for the Chapter 11 administrative claims. The remaining $19,142 was distributed to the Class One impaired creditors on a pro-rata basis, along with a pro-rata share of unregistered common stock, not to exceed 100,000 shares (350,000 post-split shares), of the Debtor. The discharge of debt has been reflected in the accompanying December 31, 2001 financial statements. The Company's post-reorganization balance sheet as of September 24, 2001 becomes the opening balance sheet for the reorganized Company, as reflected in the following table:
Adjustments to Record the Plan of Reorganization ________________________________________________ Balance Debt Balance Sheet Discharge Sheet ___________ ___________ _________ ASSETS $ 0 $ 0 $ 0 =========== =========== ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $ 19,182 $ 30,858 $ 50,000 ___________ ___________ _________ Liabilities Subject to Compromise Short term notes payable $ 100,000 $ (100,000) $ 0 Accounts payable 82,160 (82,160) 0 Interest payable 284,753 (284,753) 0 Officer's advances 17,576 (17,576) 0 Notes payable 1,500,000 (1,500,000) 0 ___________ ___________ _________ Total Liabilities Subject to Compromise $ 1,984,489 $(1,984,489) $ 0 ___________ ___________ _________ Total Liabilities $ 2,003,671 $(1,953,631) $ 50,000 ___________ ___________ _________ Stockholders' Equity Common Stock $ 2,100 $ 0 $ 2,100 Accumulated Deficit (2,005,771) (1,953,631) (52,100) ___________ ___________ _________ Total Stockholders' Equity $(2,003,671) $(1,953,631) $ (50,000) ___________ ___________ _________ Total Liabilities and Stockholders' Equity $ 0 $ 0 $ 0 =========== =========== =========
F-10 DISCOVERY INVESTMENTS, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2002 AND 2001 NOTE 2. RESTRUCTURING ITEMS (CONTINUED) The following proforma statements of operations reflect the results of operations as if the reorganization had been effective December 31, 2000.
PRO FORMA STATEMENTS OF INCOME For the Year Ended December 31, 2001 ______________________________________________ As Reported Adjustments Proforma ___________ ___________ ________ Revenues $ 0 $ 0 $ 0 Cost of revenue 0 0 0 __________ ___________ _________ Gross profit $ 0 $ 0 $ 0 General, selling and administrative expenses 11,579 0 11,579 __________ ___________ _________ Operating (loss) $ (11,579) $ 0 $ (11,579) Nonoperating income (expense) Interest expense (98,753) 0 (98,753) __________ ___________ _________ (Loss) before reorganization items and extraordinary item $ (110,332) $ 0 $(110,332) Reorganization items (Note 2) (30,858) 30,858(1) 0 __________ ___________ _________ (Loss) before extraordinary item $ (141,190) $ 30,858 $(110,332) Extraordinary gain on prepetition debt discharge (Note 2) $1,985,347 $(1,985,347)(2) $ 0 __________ ___________ _________ Net income (loss) $1,844,157 $(1,954,489) $(110,332) ========== ============ ========= Net (loss) per share, Basic and diluted (Note 2) $ (0.87) $ (0.93) $ (0.05) ========== =========== ========= (1) Elimination of effect of reorganization items (2) Elimination of the gain on pre-petition debt discharge
NOTE 3. REORGANIZATION ITEMS Reorganization Items consisted of the following for the period ended September 30, 2002 and year ended December 31, 2001: September 30, December 31, 2002 2001 _____________ ____________ Professional Fees $ 0 $ 30,858 ============= ============= F-11 DISCOVERY INVESTMENTS, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2002 AND 2001 NOTE 4. ACQUISITIONS AND DISPOSITIONS BYCOM MEDIA INC. On April 29, 2002, the Company entered into a Plan and Agreement of Reorganization ("the Plan") with Bycom Media, Inc., an Ontario, Canada corporation ("Bycom"). Pursuant to the Plan, the Company acquired all the outstanding shares of Bycom for 4,800,000 shares of Company stock. Bycom became a wholly owned subsidiary of the Company. The closing of the purchase of Bycom occurred on May 5, 2002. Bycom is engaged in multimedia applications for internet-based businesses. Utilizing business search tools and databases, Bycom will be able to locate and access global business information. Bycom intends to use its technology in order to enter into various business combinations with entities that offer products or services that are susceptible to internet marketing. As an alternative, Bycom will also sell, for a fee, this information and will act as an "out-source provider" of information. As an "out-source provider," the information will be cost-effective for the user. This is because the customer typically lacks the technology expertise, capital, personnel or ability to bear the time to market and operating risk to install, maintain and monitor business information. Bycom for itself and for its customers will provide personnel who are readily available to respond to technical issues and marketing issues, and who can assist in developing and implementing the effective use of the business search tools and database. The Company has recorded the excess of the purchase price over the net book value of Bycom as goodwill on consolidation. On May 5, 2002, the common stock of the Company closed on the NASDAQ bulletin board at $1.15 per share. The transaction increased shares outstanding by more than 100%, therefore, the Company valued the acquisition on the fair value of the stock issued. Pursuant to SFAS No. 141, "Business Combinations," the transaction was treated as acquisition by Discovery Investments, Inc. whereby the assets acquired and liabilities were recorded at their fair market value. The excess of cost over net identifiable assets acquired is reflected as goodwill. The allocation of the purchase price was as follows: Cash $ 7 Goodwill 5,520,183 Net assets acquired $5,520,190 __________ Officer payable $ 190 __________ Net liabilities acquired 190 __________ Share Consideration $5,520,000 ========== CAVIO CORPORATION On June 13, 2002, the Company entered into a Plan and Agreement of Reorganization with Cavio Corporation, a Washington corporation ("Cavio") whereby the Company acquired all of the outstanding shares of Cavio in exchange for 14,000,000 shares of the Company. Following closing of this transaction, which occurred on September 4, 2002, Cavio Corporation and subsidiary became a wholly owned subsidiary of the Company. F-12 DISCOVERY INVESTMENTS, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2002 AND 2001 NOTE 4. ACQUISITIONS AND DISPOSITIONS (CONTINUED) Cavio is engaged in the development of simple to use technology allowing users to biometrically authenticate themselves to secure transactions, control access, authorize payment or confirm identity across a number of industries. Cavio is in the development stage and has not realized revenues from its software development. Software development to be marketed to third parties has properly been expensed under SFAS No. 86. "ACCOUNTING FOR THE COSTS OF COMPUTER SOFTWARE TO BE SOLD, LEASED, OR OTHERWISE MARKETED." The Company has recorded the excess of the purchase price over the net book value of Cavio as goodwill on consolidation. On September 4, 2002, the common stock of the Company closed on the NASDAQ bulletin board at $0.71 per share. The Company valued the acquisition on the fair value of the stock issued. Pursuant to SFAS No. 141, "Business Combinations," the transaction was treated as acquisition by Discovery Investments, Inc. whereby the assets acquired and liabilities were recorded at their fair market value. The allocation of the purchase price was as follows: Inventory $ 1,754 Prepaid Expenses 16,645 Capital assets 128,514 Deferred financing costs 168,240 Goodwill 11,562,707 ___________ Net assets acquired $11,877,860 ___________ Accounts payable and other accrued expenses $ 720,674 Loans payable 1,217,186 ___________ Net liabilities acquired 1,937,860 ___________ Share Consideration $ 9,940,000 =========== On December 2, 2002, the Board of Directors unanimously approved the disposition of the Company's interest in Cavio Corporation. This was approved by the consent of a majority of the shareholders. The Agreement is not a rescission of the original agreement. The company will repurchase the 14,000,000 shares of its common stock in exchange for the 100% acquired outstanding shares of Cavio Corporation. The transaction is to be completed upon tender of the 14,000,000 outstanding shares. The Company closed the transaction in March 2003. The Company accounted for this divestiture as a spin-off in accordance with Accounting Principles Board Statement ("APB") No. 29, "ACCOUNTING FOR NONMONETARY TRANSACTIONS." The repurchase will be considered a distribution of the nonmonetary assets to the former shareholders of Cavio, whereby the reversal of the prior business combination is based on the historical cost of the nonmonetary assets distributed and no gain or loss will be recognized. The sale of the Cavio shares represents the disposal of a component of the entity as defined by paragraph 41 of SFAS 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." Accordingly, the Company's financial statements have been presented to reflect "Cavio" as a discontinued operation for all periods presented. The revenue, costs, expenses, assets, liabilities, and cash flows from the discontinued operations have been excluded from the respective captions on the Balance Sheets, Statements of Income and, Statements of Cashflows, and have been F-13 DISCOVERY INVESTMENTS, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2002 AND 2001 NOTE 4. ACQUISITIONS AND DISPOSITIONS (CONTINUED) reported though December 31, 2002 as "Net assets of discontinued operations," "net loss from discontinued operations," and "net cash provided by (used in) discontinued operations." The following is a summary of assets and liabilities from discontinued operations as of December 31, 2002. Assets of discontinued operations: Cash $ 994 Inventory 1,754 Prepaid expenses 11,839 Property and equipment, net 116,338 Deferred finance costs 336,696 ____________ Total assets of discontinued operations $ 467,621 ============ Liabilities of discontinued operations Accounts payable $ 524,596 Bonuses payable 9,508 Employee deductions payable 270,405 Loan payable 1,514,789 ____________ Total liabilities of discontinued operations $ 2,319,298 ============ The following is a summary of activities from discontinued operations for the year ended December 31, 2002. Revenues $ 1,097 Expenses (230,067) Write off of goodwill (11,562,707) ____________ Loss from discontinued operations $(11,791,677) ============ The Company has recognized goodwill in the acquisition of both Bycom Media, Inc. and Cavio Corporation for the software that was to be developed by the subsidiary. Bycom Media is no longer developing software, and therefore an impairment to the value of the goodwill has been recognized. Due to the discontinuation of business through Cavio Corporation, the company has recorded an impairment equal to the goodwill attributed to the acquisition of Cavio. F-14 DISCOVERY INVESTMENTS, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2002 AND 2001 NOTE 5. STOCKHOLDERS' EQUITY COMMON STOCK The authorized common stock of the Company consists of 25,000,000 shares with par value of $0.001. On September 15, 1996, the Company authorized and issued 21,000 shares of its no par value common stock in consideration of $2,100 in cash. On March 15, 1999, the State of Nevada approved the Company's amended Articles of Incorporation, which increased its capitalization from 25,000 common shares to 25,000,000 common shares. The no par value was changed to $0.001 per share. Also, on March 15, 1999, the Company's shareholders approved a forward split of its common stock at one hundred shares for one share of the existing shares. The number of common stock shares outstanding increased from 21,000 to 2,100,000. Prior period information has been restated to reflect the stock split. As part of the reorganization explained in Note2, the Company issued 99,881 shares of stock to the Class One impaired creditors on November 29, 2001 On April 25, 2002, the sole director of the Company adopted a resolution that resulted in a stock split in the form of a stock dividend. For stockholders of record on May 5, 2002, the Company will issue 2.5 shares for each shares owned. In lieu of issuing a fractional share certificate, the Company shall round up to a full share. This resulted in approximately 24,499,600 shares outstanding as of May 5, 2002. Prior information has been restated to reflect the stock split. On May 5, 2002, the Company issued 4,800,000 shares pursuant to a Plan of Reorganization whereby it acquired all of the outstanding shares of Bycom Media Inc. (Note 4). INCREASE IN AUTHORIZED CAPITAL On July 10, 2002, the State of Nevada approved the Company's amended Articles of Incorporation, which increased its capitalization from 25,000,000 common shares to 100,000,000 common shares. On September 4, 2002, the Company issued 14,000,000 shares pursuant to a Plan and Agreement of Reorganization whereby it acquired all the outstanding shares of Cavio Corporation. As described in Note 4., the 14,000,000 shares were returned to the Company in March 2003 in consideration for the common stock of Cavio Corporation held by the Company. The Company has not authorized any preferred stock. F-15 DISCOVERY INVESTMENTS, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2002 AND 2001 NOTE 5. STOCKHOLDERS' EQUITY (CONTINUED) NET LOSS PER COMMON SHARE Net loss per share is calculated in accordance with SFAS No. 128, "EARNINGS PER SHARE." The weighted-average number of common shares outstanding during each period is used to compute basic loss per share. Diluted loss per share is computed using the weighted averaged number of shares and dilutive potential common shares outstanding. Dilutive potential common shares are additional common shares assumed to be exercised. Basic net loss per common share is based on the weighted average number of shares of common stock outstanding for the years ended December 31, 2002 and 2001 and since inception through December 31, 2002 was 23,272,186; 7,380,733 and 9,883,849, respectively. As of December 31, 2002 and December 31, 2001, the Company had no dilutive potential common shares. NOTE 6. INCOME TAXES There is no provision for income taxes for the period ended December 31, 2002, due to the net loss and no state income tax in Nevada, the state of the Company's domicile and operations. The Company's total deferred tax asset as of December 31: 2002 2001 _________ _______ Net operating loss carryforward $ 121,737 $ 2,136 Valuation allowance (121,737) (2,136) _________ _______ Net deferred tax asset $ 0 $ 0 ========= ======= The net federal operating loss carry forward will expire between 2020 and 2022. This carry forward may be limited upon the consummation of a business combination under IRC Section 381. For financial reporting purposes, the Company reported an extraordinary gain in the amount of $1,984,489 resulting from the cancellation of indebtedness that occurred from the bankruptcy discharge on the effective date. Pursuant to Section 1087 of the Internal Revenue Code, this extraordinary gain is excluded from income taxation and certain tax attributes of the Company are eliminated or reduced, up to the amount of such income excluded from taxation. As a result, the Company's net operating loss carryforwards were reduced by the $1,984,489. NOTE 7. GOING CONCERN The Company's consolidated financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern. This contemplates the realization of assets and the liquidation of liabilities in the normal course of business. Currently, the Company does not have significant cash of other material assets, nor does it have operations or a source of revenue sufficient to cover its operation costs and allow it to continue as a going concern. Until the Company has sufficient operations, the officers and directors have committed to advancing the operating costs of the company. F-16 DISCOVERY INVESTMENTS, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2002 AND 2001 NOTE 8. RELATED PARTY TRANSACTIONS AND INVESTMENT LOANS PAYABLE The Company, through its subsidiaries, has borrowed monies from officers and shareholders to fund ongoing operations, without interest until the Company develops viable operations. NOTE 9. WARRANTS AND OPTIONS There are no warrants or options outstanding to acquire any additional shares of common stock of the Company NOTE 10. MUTUAL RESCISSION AGREEMENT AND MUTUAL RELEASE On December 10, 1999, the Company entered into a Plan and Agreement of Reorganization with LLO-Gas, Inc. and John Castellucci. On December 20, 1999, there was a closing under the Plan and Agreement of Reorganization and LLO-Gas, Inc. became a wholly owned subsidiary of the Company and there was a change of control of the Company. Between December 20, 1999 and August 11, 2000, differences of opinion as to matters of fact and as to matters of law have arisen by and between certain of the shareholders of the Company, who were shareholders prior to the closing, and between the Company, John Castellucci and LLO-Gas, Inc. In addition, on June 7, 2000, LLO-Gas, Inc. filed a Voluntary 27. Petition under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court, Central District of California, San Fernando Valley Division, case number SV 00- 15398-AG. Said Chapter 11 Bankruptcy is currently pending and effects LLO-Gas, Inc. Predicated upon the differences of matters of fact and matter of law, the parties entered into a Mutual Rescission Agreement and Mutual Release. The Mutual Rescission Agreement and Mutual Release provides, inter alia, that the Company consents and agrees to rescind that certain Plan and Agreement of Reorganization with John Castellucci consenting and agreeing to the rescission. The parties mutually agreed, pursuant to said Mutual Rescission Agreement and Mutual Release to forgo all rights and benefits provided to each other under the Plan and Agreement of Reorganization, as consideration for the rescission, ab initio, of the closing described therein. F-17 ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K. There were no reports that are made a part hereof. The following exhibits are filed with this report. (a) EXHIBITS 23.1 Consent of Kyle L. Tingle, Certified Public Accountant. 31.1 Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes- Oxley Act of 2002. 31.2 Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes- Oxley Act of 2002. 32.1 Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002. 32.2 Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002. 5 SIGNATURES Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Company has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized. Date: October 6, 2003 DISCOVERY INVESTMENTS, INC. By: /s/ DONALD BELL ___________________ Donald Bell President 6 EX-23 3 ex23-1.txt EXHIBIT 23.1 - CONSENT OF KYLE L. TINGLE, CPA KLT Logo Appears Here Kyle L. Tingle, CPA, LLC Personal Financial Planning, Business Services & Tax Planning EXHIBIT 23.1 September 19, 2003 To Whom It May Concern: The firm of Kyle L. Tingle, CPA, LLC consents to the inclusion of his report of June 13, 2003 accompanying the audited financial statements of Discovery Investments, Inc., as at December 31, 2002, in Amendment Number 1 to the Form 10KSB. Very truly yours, /s/ KYLE L. TINGLE ________________________ Kyle L. Tingle, CPA, LLC P.O. BOX 50329 * HENDERSON, NEVADA 89016 * PHONE: (702) 450-2200 * FAX: (702) 436-4218 * E-MAIL: ktingle@kyletinglecpa.com P.O. BOX 50329 HENDERSON, NEVADA 89016 PHONE: (702) 450-2200 FAX: (702) 436-4218 E-MAIL: ktingle@kyletinglecpa.com EX-31 4 ex31-1.txt EXHIBIT 31.1 EXHIBIT 31.1 CERTIFICATIONS I, Donald Bell, certify that: 1. I have reviewed this Form 10-KSB/A of DISCOVERY INVESTMENTS INC.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15-(e)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: October 6, 2003 /s/ DONALD BELL ___________________________________ Donald Bell President EX-31 5 ex31-2.txt EXHIBIT 31.2 EXHIBIT 31.2 CERTIFICATIONS I, Donald Bell, CFO, certify that: 1. I have reviewed this Form 10-KSB/A of DISCOVERY INVESTMENTS INC.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15-(e)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: October 6, 2003 /s/ DONALD BELL ___________________________________ Donald Bell Chief Financial Officer EX-32 6 ex32-1.txt EXHIBIT 32.1 EXHIBIT 32.1 SECTION 1350 CERTIFICATIONS CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Form 10-KSB/A of DISCOVERY INVESTMENTS INC. (the "Company") on Form 10-kSB/A for the period ended December 31, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Donald Bell, President of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that based on my knowledge: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: October 6, 2003 /s/ DONALD BELL ______________________________________ Donald Bell President A SIGNED ORIGINAL OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906, OR OTHER DOCUMENT AUTHENTICATING, ACKNOWLEDGING, OR OTHERWISE ADOPTING THE SIGNATURE THAT APPEARS IN TYPED FORM WITHIN THE ELECTRONIC VERSION OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906, HAS BEEN PROVIDED TO INETEVENTS, INC. AND WILL BE RETAINED BY INETEVENTS, INC. AND FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION OR ITS STAFF UPON REQUEST. EX-32 7 ex32-2.txt EXHIBIT 32.2 EXHIBIT 32.2 SECTION 1350 CERTIFICATIONS CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Form 10-KSB/A of DISCOVERY INVESTMENTS INC. (the "Company") on Form 10-KSB/A for the period ended December 31, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Donald Bell, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that based on my knowledge: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: October 6, 2003 /s/ DONALD BELL ______________________________________ Donald Bell Chief Financial Officer A SIGNED ORIGINAL OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906, OR OTHER DOCUMENT AUTHENTICATING, ACKNOWLEDGING, OR OTHERWISE ADOPTING THE SIGNATURE THAT APPEARS IN TYPED FORM WITHIN THE ELECTRONIC VERSION OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906, HAS BEEN PROVIDED TO INETEVENTS, INC. AND WILL BE RETAINED BY INETEVENTS, INC. AND FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION OR ITS STAFF UPON REQUEST. -----END PRIVACY-ENHANCED MESSAGE-----