SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT

                PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

       Date of Report (Date of earliest event reported) December 21, 2000.

                               PLANET ZANETT, INC.
--------------------------------------------------------------------------------
               (Exact name of registrant as specified in charter)

           Delaware                       0-27068                 56-4389547
--------------------------------------------------------------------------------
(State or other jurisdiction     (Commission File Number)       (IRS Employer
       of incorporation)                                     Identification No.)

              135 East 57th Street, 15th Floor, New York, NY 10022
              ----------------------------------------------------
               (Address of principle executive offices) (Zip Code)

                                 (212) 759-5700
                                 --------------
                         (Registrant's telephone number)

                     ------------------------------------

                    Exhibit Index appears on Page 5 hereof

<PAGE>

Item 2. Acquisition or Disposition of Assets.

      On December 21, 2000, Planet Zanett, Inc. (the "Company"), through its
affiliate Planet Zanett Angel Fund, L.P., acquired an interest in Applied
Discovery, Inc., a Washington corporation ("ADI"), pursuant to the terms of a
Series A Preferred Stock Purchase Agreement dated as of January 28, 2000, as
amended on September 29, 2000 (the "ADI Purchase Agreement"). The Company
purchased its shares of ADI's Series A Preferred Stock in the Additional
Closing, as defined in the ADI Purchase Agreement. ADI delivers web-based
services designed specifically for legal, business and government professionals
involved in electronic document discovery. ADI provides clients with a unique,
end-to-end solution for the volume of e-mail and other electronic documents
produced by businesses during the discovery phase of litigation and the due
diligence phase of mergers and acquisitions.

      Pursuant to the ADI Purchase Agreement, the Company acquired from ADI
500,000 shares of ADI's Series A Preferred Stock. The aggregate purchase price
of $500,000, which was established through arm's-length negotiation, was funded
from the Company's existing cash.

      Each share of ADI's Series A Preferred Stock will convert into one share
of ADI's Common Stock upon the Company's election, or earlier upon completion of
a public offering of ADI's Common Stock meeting certain criteria (a "Qualified
Public Offering") or the written consent of holders of at least 51% of the
issued and outstanding shares of ADI's Series A Preferred Stock. Each share of
ADI's Series A Preferred Stock is entitled to one vote and the Series A
Preferred Stock has special voting rights that require approval of the holders
of at least 51% of the issued and outstanding shares of Series A Preferred Stock
for certain material corporate actions and transactions. The shares of Series A
Preferred Stock contain a 10% cumulative dividend

      So long as at least 50% of the shares of ADI's Series A Preferred Stock
issued by ADI in this offering remain issued and outstanding, the holders of at
least 51% of ADI's issued and outstanding Series A Preferred Stock shall have
the option to require ADI to redeem their issued and outstanding shares of
Series A Preferred Stock at any time on or after January 28, 2004 upon 60 days'
written notice to ADI. Any such redemption shall be at a price per share equal
to the original purchase price of the Series A Preferred Stock, plus all accrued
and unpaid dividends on the shares. At the election of ADI, the amount of any
such redemption may be paid in three equal annual installments.

      In connection with the consummation of the ADI Purchase Agreement, the
Company also entered into a Stockholders' Agreement dated as of January 28, 2000
with ADI and its stockholders and an Investors' Rights Agreement with ADI dated
as of January 28, 2000. These agreements, taken in the aggregate, provide for,
among other things, restrictions on the transferability of securities, co-sale,
preemptive, information and registration rights. These agreements terminate upon
a Qualified Public Offering.


                                      -2-
<PAGE>

      The Company currently has beneficial ownership (calculated on an issued
and outstanding basis assuming conversion of each issued and outstanding share
of Preferred Stock) of approximately 3% of the ADI Common Stock.

Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.

      (c)   Exhibits (referenced in item 601 of Regulation S-K)

            10.9    First Amendment to Series A Preferred Stock Purchase
                    Agreement by and between Applied Discovery, Inc. and certain
                    investors dated as of September 29, 2000.

            10.10   Series A Preferred Stock Purchase Agreement by and between
                    Applied Discovery, Inc. and certain investors dated as of
                    January 28, 2000.

            10.11   Shareholders' Agreement dated as of January 28, 2000, by and
                    among Applied Discovery, Inc. and certain stockholders of
                    Applied Discovery, Inc.

            10.12   Investor Rights Agreement dated January 28, 2000, by and
                    among Applied Discovery, Inc. and certain of its Investors.


                                      -3-
<PAGE>

                                   SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                    PLANET ZANETT, INC.


Date: February 7, 2001              By: /s/ David M. McCarthy
                                        ----------------------------------------
                                        Name: David M. McCarthy
                                        Title:Chief Executive Officer


                                      -4-
<PAGE>

                                  EXHIBIT INDEX

Exhibit No.       Description
-----------       -----------

10.9              First Amendment to Series A Preferred Stock Purchase Agreement
                  by and between Applied Discovery, Inc. and certain investors
                  dated as of September 29, 2000.

10.10             Series A Preferred Stock Purchase Agreement by and between
                  Applied Discovery, Inc. and certain investors dated as of
                  January 28, 2000.

10.11             Shareholders' Agreement dated as of January 28, 2000, by and
                  among Applied Discovery, Inc. and certain stockholders of
                  Applied Discovery, Inc.

10.12             Investor Rights Agreement dated January 28, 2000, by and among
                  Applied Discovery, Inc. and certain of its Investors.


                                      -5-
[{"type": "8-K", "sequence": "1", "filename": "0001.txt", "description": "FORM 8-K", "secsgml_size_bytes": 7309}]
{"company-data": {"conformed-name": "PLANET ZANETT INC", "cik": "0001133872", "assigned-sic": "7389", "irs-number": "564389547", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-32315", "film-number": "1527218"}, "business-address": {"street1": "135 E 57TH STREET", "street2": "15TH FLOOR", "city": "NEW YORK", "state": "NY", "zip": "10022", "phone": "2127595700"}, "mail-address": {"street1": "135 E 57TH ST 15TH FLOOR", "city": "NEW YORK", "state": "NY", "zip": "10022"}}
SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT

                PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

       Date of Report (Date of earliest event reported) December 21, 2000.

                               PLANET ZANETT, INC.
--------------------------------------------------------------------------------
               (Exact name of registrant as specified in charter)

           Delaware                       0-27068                 56-4389547
--------------------------------------------------------------------------------
(State or other jurisdiction     (Commission File Number)       (IRS Employer
       of incorporation)                                     Identification No.)

              135 East 57th Street, 15th Floor, New York, NY 10022
              ----------------------------------------------------
               (Address of principle executive offices) (Zip Code)

                                 (212) 759-5700
                                 --------------
                         (Registrant's telephone number)

                     ------------------------------------

                    Exhibit Index appears on Page 5 hereof
Item 2. Acquisition or Disposition of Assets.

      On December 21, 2000, Planet Zanett, Inc. (the "Company"), through its
affiliate Planet Zanett Angel Fund, L.P., acquired an interest in Applied
Discovery, Inc., a Washington corporation ("ADI"), pursuant to the terms of a
Series A Preferred Stock Purchase Agreement dated as of January 28, 2000, as
amended on September 29, 2000 (the "ADI Purchase Agreement"). The Company
purchased its shares of ADI's Series A Preferred Stock in the Additional
Closing, as defined in the ADI Purchase Agreement. ADI delivers web-based
services designed specifically for legal, business and government professionals
involved in electronic document discovery. ADI provides clients with a unique,
end-to-end solution for the volume of e-mail and other electronic documents
produced by businesses during the discovery phase of litigation and the due
diligence phase of mergers and acquisitions.

      Pursuant to the ADI Purchase Agreement, the Company acquired from ADI
500,000 shares of ADI's Series A Preferred Stock. The aggregate purchase price
of $500,000, which was established through arm's-length negotiation, was funded
from the Company's existing cash.

      Each share of ADI's Series A Preferred Stock will convert into one share
of ADI's Common Stock upon the Company's election, or earlier upon completion of
a public offering of ADI's Common Stock meeting certain criteria (a "Qualified
Public Offering") or the written consent of holders of at least 51% of the
issued and outstanding shares of ADI's Series A Preferred Stock. Each share of
ADI's Series A Preferred Stock is entitled to one vote and the Series A
Preferred Stock has special voting rights that require approval of the holders
of at least 51% of the issued and outstanding shares of Series A Preferred Stock
for certain material corporate actions and transactions. The shares of Series A
Preferred Stock contain a 10% cumulative dividend

      So long as at least 50% of the shares of ADI's Series A Preferred Stock
issued by ADI in this offering remain issued and outstanding, the holders of at
least 51% of ADI's issued and outstanding Series A Preferred Stock shall have
the option to require ADI to redeem their issued and outstanding shares of
Series A Preferred Stock at any time on or after January 28, 2004 upon 60 days'
written notice to ADI. Any such redemption shall be at a price per share equal
to the original purchase price of the Series A Preferred Stock, plus all accrued
and unpaid dividends on the shares. At the election of ADI, the amount of any
such redemption may be paid in three equal annual installments.

      In connection with the consummation of the ADI Purchase Agreement, the
Company also entered into a Stockholders' Agreement dated as of January 28, 2000
with ADI and its stockholders and an Investors' Rights Agreement with ADI dated
as of January 28, 2000. These agreements, taken in the aggregate, provide for,
among other things, restrictions on the transferability of securities, co-sale,
preemptive, information and registration rights. These agreements terminate upon
a Qualified Public Offering.

                                      -2-
The Company currently has beneficial ownership (calculated on an issued
and outstanding basis assuming conversion of each issued and outstanding share
of Preferred Stock) of approximately 3% of the ADI Common Stock.

Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.

      (c)   Exhibits (referenced in item 601 of Regulation S-K)

            10.9    First Amendment to Series A Preferred Stock Purchase
                    Agreement by and between Applied Discovery, Inc. and certain
                    investors dated as of September 29, 2000.

            10.10   Series A Preferred Stock Purchase Agreement by and between
                    Applied Discovery, Inc. and certain investors dated as of
                    January 28, 2000.

            10.11   Shareholders' Agreement dated as of January 28, 2000, by and
                    among Applied Discovery, Inc. and certain stockholders of
                    Applied Discovery, Inc.

            10.12   Investor Rights Agreement dated January 28, 2000, by and
                    among Applied Discovery, Inc. and certain of its Investors.

                                      -3-
SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                    PLANET ZANETT, INC.

Date: February 7, 2001              By: /s/ David M. McCarthy
                                        ----------------------------------------
                                        Name: David M. McCarthy
                                        Title:Chief Executive Officer

                                      -4-
EXHIBIT INDEX

Exhibit No.       Description
-----------       -----------

10.9              First Amendment to Series A Preferred Stock Purchase Agreement
                  by and between Applied Discovery, Inc. and certain investors
                  dated as of September 29, 2000.

10.10             Series A Preferred Stock Purchase Agreement by and between
                  Applied Discovery, Inc. and certain investors dated as of
                  January 28, 2000.

10.11             Shareholders' Agreement dated as of January 28, 2000, by and
                  among Applied Discovery, Inc. and certain stockholders of
                  Applied Discovery, Inc.

10.12             Investor Rights Agreement dated January 28, 2000, by and among
                  Applied Discovery, Inc. and certain of its Investors.

                                      -5-