**Table      of Contents**

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**U.S.      SECURITIES AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      10-QSB**

**December      31, 2007**

**000-28745**

**NATIONAL      SCIENTIFIC CORPORATION**

| **Texas**                                                     |   | **86-0837077**                                      |
|---------------------------------------------------------------|--------|-----------------------------------------------------|
| (State                of Incorporation)                       |   | (I.R.S.                Employer Identification No.) |
|                                                          |   |                                                |
|  **8361                E. Evans Road, Suite 106**        |   |                                                |
| **Scottsdale,                AZ**                             |   | **85260-3617**                                 |
|  (Address                of Principal Executive Offices) |   | (Zip                Code)                      |

**(480)      948-8324**

**Preferred      Stock, $0.10 par value**

**Common      Stock, $0.01 par value**

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**Table          of Contents**

**NATIONAL      SCIENTIFIC CORPORATION**

**FORM      10-QSB**

**TABLE      OF CONTENTS**

|                                                                                                       |                                                                                                                                                                    |   |  **Page** |
|------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|
|                                                                                                       |                                                                                                                                                                    |   |           |
| Part                I                                                                                      | Financial                Information                                                                                                                                    |   | 3              |
|                                                                                                       |                                                                                                                                                                    |   |           |
| Item                1.                                                                                     | Financial                Statements (unaudited)                                                                                                                         |   | 3              |
|                                                                                                       |                                                                                                                                                                    |   |           |
|                                                                                                       | Condensed                Balance Sheets - As of December 31, 2007                (Unaudited) and September 30, 2007                                                     |   | 3              |
|                                                                                                       | Condensed                Statements of Operations (Unaudited) - Three                months ended December 31, 2007 and 2006                                       |   | 4              |
|                                                                                                       | Condensed                Statements of Cash Flows (Unaudited) - Three                months ended December 31, 2007 and 2006                                            |   | 5              |
|                                                                                                       | Condensed                Statement of Changes in Shareholders’ Deficit                (Unaudited) - Three months ended December 31,                2007 |   | 6              |
|                                                                                                       | Notes                to Condensed Financial Statements                                                                                                                  |   | 7              |
|                                                                                                       |                                                                                                                                                                    |   |           |
| Item                2.                                                                                     | Management’s                Discussion and Analysis of Financial Condition                and Results of Operations                                               |   | 17             |
| Item                3.                                                                                     | Controls                and Procedures                                                                                                                                  |   | 20             |
|                                                                                                       |                                                                                                                                                                    |   |           |
| Part                II                                                                                     | Other                Information                                                                                                                                        |   | 21             |
|                                                                                                       |                                                                                                                                                                    |   |           |
| Item                1.                                                                                     | Legal                Proceedings                                                                                                                                        |   | 21             |
| Item                2.                                                                                     | Changes                in Securities and Use of                Proceeds                                                                                                 |   | 21             |
| Item                3.                                                                                     | Defaults                Upon Senior Securities                                                                                                                          |   | 21             |
| Item                4.                                                                                     | Submission                of Matters to a Vote of Security                Holders                                                                                       |   | 21             |
| Item                5.                                                                                     | Other                Information                                                                                                                                        |   | 21             |
| Item                6.                                                                                     | Exhibits                                                                                                                                                                |   | 22             |
|                                                                                                       |                                                                                                                                                                    |   |           |
| Signatures                                                                                                 |                                                                                                                                                                    | 23     |
|                                                                                                       |                                                                                                                                                                    |   |
| Exhibit                31 - Certification Pursuant to Section 302 of the Sarbanes-Oxley                Act |                                                                                                                                                                    |   |
| Exhibit                32 - Certification Pursuant to Section 906 of the Sarbanes-Oxley                Act |                                                                                                                                                                    |   |

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**Table          of Contents**

**PART      1 - FINANCIAL INFORMATION**

| **Item              1.** |  **Financial                Statements** |
|--------------------------|-----------------------------------------------|

**NATIONAL      SCIENTIFIC CORPORATION**

**Condensed      Balance Sheets**

|                                                                                                                                                                                                                                                                     |   | **December                    31,** |        |   | **September                    30,** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|-------------|--------|--------------------------------------|--------|
|                                                                                                                                                                                                                                                                     |   | **2007**                            |        |   | **2007**                             |   |
| **ASSETS**                                                                                                                                                                                                                                                               |   | **(Unaudited)**                     |        |   | **(Audited)**                        |   |
| Current                    Assets:                                                                                                                                                                                                                                       |   |                                |        |   |                                 |   |
| Cash                    and cash equivalents                                                                                                                                                                                                                             |   | $                                   | 11,279      |   |                                 | $      | 85,887 |   |
| Trade                    receivables, net                                                                                                                                                                                                                                |   |                                | 106,874     |   |                                 |   | 6,216 |   |
| Inventory,                    net                                                                                                                                                                                                                                        |   |                                | 19,268      |   |                                 |   | 22,900 |   |
| Other                    assets                                                                                                                                                                                                                                          |   |                                | 2,678       |   |                                 |   | 68 |   |
| Total                    current assets                                                                                                                                                                                                                                  |   |                                | 140,099     |   |                                 |   | 115,071 |   |
|                                                                                                                                                                                                                                                                     |   |                                |        |   |                                 |   |   |   |
| Property                    and equipment, net                                                                                                                                                                                                                           |   |                                | 518         |   |                                 |   | 622 |   |
| Deposits                                                                                                                                                                                                                                                                 |   |                                | 2,340       |   |                                 |   | 2,340 |   |
| Deferred                    financing costs, net                                                                                                                                                                                                                         |   |                                | 13,600      |   |                                 |   | 14,800 |   |
| Total                    assets                                                                                                                                                                                                                                          |   | $                                   | 156,557     |   |                                 | $      | 132,833 |   |
|                                                                                                                                                                                                                                                                     |   |                                |        |   |                                 |   |   |   |
| **LIABILITIES                    AND SHAREHOLDERS’ DEFICIT**                                                                                                                                                                                                       |   |                                |        |   |                                 |   |   |   |
| Current                    Liabilities:                                                                                                                                                                                                                                  |   |                                |        |   |                                 |   |   |   |
| Accounts                    payable - related parties                                                                                                                                                                                                                    |   | $                                   | –     |   |                                 | $      | 419 |   |
| Accounts                    payable – other                                                                                                                                                                                                                        |   |                                | 212,892     |   |                                 |   | 195,004 |   |
| Accrued                    expenses                                                                                                                                                                                                                                      |   |                                | 907,099     |   |                                 |   | 883,400 |   |
| Due                    to factors                                                                                                                                                                                                                                        |   |                                | 58,673      |   |                                 |   | 2,602 |   |
| Notes                    payable - related party                                                                                                                                                                                                                         |   |                                | 158,300     |   |                                 |   | 161,300 |   |
| Notes                    payable - other                                                                                                                                                                                                                                 |   |                                | 79,875      |   |                                 |   | 80,875 |   |
| Total                    current liabilities                                                                                                                                                                                                                             |   |                                | 1,416,839   |   |                                 |   | 1,323,600 |   |
|                                                                                                                                                                                                                                                                     |   |                                |        |   |                                 |   |   |   |
| Notes                    payable, less current portion, net of discount and beneficial                    conversion                    feature of $34,869 at December 31, 2007 and $37,945 at September                    30,                    2007                  |   |                                | 140,131     |   |                                 |   | 137,055 |   |
| Total                    liabilities                                                                                                                                                                                                                                     |   |                                | 1,556,970   |   |                                 |   | 1,460,655 |   |
|                                                                                                                                                                                                                                                                     |   |                                |        |   |                                 |   |   |   |
| Commitments                    and contingencies                                                                                                                                                                                                                         |   |                                | –     |   |                                 |   | – |   |
|                                                                                                                                                                                                                                                                     |   |                                |        |   |                                 |   |   |   |
| Shareholders’                    deficit:                                                                                                                                                                                                                          |   |                                |        |   |                                 |   |   |   |
| Preferred                    stock, par value $0.10; 4,000,000 shares authorized, none issued                    and                    outstanding                                                                                                                      |   |                                | –     |   |                                 |   | – |   |
| Common                    stock, par value $0.01; 187,000,000 shares authorized, and shares                    issued                    and outstanding of 122,280,557 at December 31, 2007 and 121,995,835                    at                    September 30, 2007 |   |                                | 1,222,806   |   |                                 |   | 1,219,959 |   |
| Additional                    paid-in capital                                                                                                                                                                                                                            |   |                                | 22,710,154  |   |                                 |   | 22,693,696 |   |
| Accumulated                    deficit                                                                                                                                                                                                                                   |   |                                | (25,333,373 | )      |                                 |   | (25,241,477 | ) |
| Total                    shareholders’ deficit                                                                                                                                                                                                                     |   |                                | (1,400,413  | )      |                                 |   | (1,327,822 | ) |
| Total                    liabilities and shareholder’s deficit                                                                                                                                                                                                     |   | $                                   | 156,557     |   |                                 | $      | 132,833 |   |

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**Table          of Contents**

**NATIONAL      SCIENTIFIC CORPORATION**

**Condensed      Statements of Operations**

**(Unaudited)**

|                                                             |   | **Three                    months ended** |        |
|------------------------------------------------------------------|--------|-------------------------------------------|-------------|
|                                                             |   | **December                    31,**       |        |
|                                                             |   | **2007**                                  |        |   | **2006** |   |
|                                                             |   |                                      |        |   |   |   |
| Revenues                                                         |   | $                                         | 215,539     |   |   | $ | 138,216 |   |
|                                                             |   |                                      |        |   |   |   |   |   |
| Cost                    of Sales                                 |   |                                      | 123,440     |   |   |   | 71,975 |   |
|                                                             |   |                                      |        |   |   |   |   |   |
| Gross                    profit                                  |   |                                      | 92,099      |   |   |   | 66,241 |   |
|                                                             |   |                                      |        |   |   |   |   |   |
| Costs                    and expenses                            |   |                                      |        |   |   |   |   |   |
| Salaries                    and benefits                         |   |                                      | 66,238      |   |   |   | 71,322 |   |
| Research                    and development                      |   |                                      | 43,251      |   |   |   | 43,453 |   |
| Stock                    compensation                            |   |                                      | 14,305      |   |   |   | 3,000 |   |
| Other                                                            |   |                                      | 36,153      |   |   |   | 34,943 |   |
| Total                    costs and expenses                      |   |                                      | 159,947     |   |   |   | 152,718 |   |
|                                                             |   |                                      |        |   |   |   |   |   |
| Loss                    from operations                          |   |                                      | (67,848     | ) |   |   | (86,477 | ) |
|                                                             |   |                                      |        |   |   |   |   |   |
| Other                    income (expense)                        |   |                                      |        |   |   |   |   |   |
| Other                    income                                  |   |                                      | –     |   |   |   | 740 |   |
| Interest                    expense                              |   |                                      | (22,848     | ) |   |   | (35,706 | ) |
| Amortization                    of deferred financing costs      |   |                                      | (1,200      | ) |   |   | (1,200 | ) |
|                                                             |   |                                      | (24,048     | ) |   |   | (36,166 | ) |
|                                                             |   |                                      |        |   |   |   |   |   |
| Loss                    before income taxes                      |   |                                      | (91,896     | ) |   |   | (122,643 | ) |
| Income                    tax expense                            |   |                                      | –     |   |   |   | – |   |
|                                                             |   |                                      |        |   |   |   |   |   |
| Net                    loss                                      |   | $                                         | (91,896     | ) |   | $ | (122,643 | ) |
|                                                             |   |                                      |        |   |   |   |   |   |
| Net                    loss per common share, basic and diluted  |   | $                                         | (0.00       | ) |   | $ | (0.00 |   |
|                                                             |   |                                      |        |   |   |   |   |   |
| Weighted                    average number of shares outstanding |   |                                      | 122,157,972 |   |   |   | 99,108,039 |   |

*.*

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**Table            of Contents**

**NATIONAL      SCIENTIFIC CORPORATION**

**Condensed      Statements of Cash Flows**

**(Unaudited)**

|                                                                                                                  |   | **Three                      months ended** |     |
|-----------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------|----------|
|                                                                                                                  |   | **December                      31,**       |     |
|                                                                                                                  |   | **2007**                                    |     |   | **2006** |   |
| Cash                      flows from operating activities:                                                            |   |                                        |     |   |   |   |
| Net                      loss                                                                                         |   | $                                           | (91,896  | ) |   | $ | (122,643 | ) |
| Adjustments                      to reconcile net loss to net cash used in operating                      activities: |   |                                        |     |   |   |   |   |   |
| Depreciation                                                                                                          |   |                                        | 104      |   |   |   | 104 |   |
| Stock                      issued for services                                                                        |   |                                        | 1,000    |   |   |   | – |   |
| Stock                      options issued for services                                                                |   |                                        | 13,305   |   |   |   | 3,000 |   |
| Warrant                      expense                                                                                  |   |                                        | –  |   |   |   | 9,672 |   |
| Amortization                      of deferred financing costs                                                         |   |                                        | 1,200    |   |   |   | 1,200 |   |
| Amortization                      of debt discount                                                                    |   |                                        | 2,580    |   |   |   | 2,580 |   |
| Amortization                      of beneficial conversion feature                                                    |   |                                        | 496      |   |   |   | 497 |   |
| Changes                      in assets and liabilities:                                                               |   |                                        |     |   |   |   |   |   |
| Decrease                      in inventory, net                                                                       |   |                                        | 3,632    |   |   |   | 5,335 |   |
| Increase                      in receivables, net                                                                     |   |                                        | (100,658 | ) |   |   | (42,287 | ) |
| Decrease                      (increase) in other assets and deposits                                                 |   |                                        | (2,610   | ) |   |   | 3,205 |   |
| Increase                      in accounts payable and accrued expenses                                                |   |                                        | 46,168   |   |   |   | 66,880 |   |
| Net                      cash used in operating activities                                                            |   |                                        | (126,679 | ) |   |   | (72,457 | ) |
|                                                                                                                  |   |                                        |     |   |   |   |   |   |
| Cash                      flows from financing activities:                                                            |   |                                        |     |   |   |   |   |   |
| Increase                      in notes payable                                                                        |   |                                        | –  |   |   |   | 8,000 |   |
| Repayment                      of notes payable                                                                       |   |                                        | (4,000   | ) |   |   | (5,000 | ) |
| Net                      proceeds from factors                                                                        |   |                                        | 56,071   |   |   |   | 31,357 |   |
| Net                      cash provided by financing activities                                                        |   |                                        | 52,071   |   |   |   | 34,357 |   |
|                                                                                                                  |   |                                        |     |   |   |   |   |   |
| Net                      decrease in cash and cash equivalents                                                        |   |                                        | (74,608  | ) |   |   | (38,100 | ) |
| Cash                      and cash equivalents, beginning of period                                                   |   |                                        | 85,887   |   |   |   | 43,899 |   |
| Cash                      and cash equivalents, end of period                                                         |   | $                                           | 11,279   |   |   | $ | 5,799 |   |
|                                                                                                                  |   |                                        |     |   |   |   |   |   |
| Supplementary                      Disclosure of Cash Flow Information:                                               |   |                                        |     |   |   |   |   |   |
| Cash                      paid for interest                                                                           |   | $                                           | 7,140    |   |   | $ | 10,343 |   |
| Conversion                      of accounts payable and accrued expenses to equity                                    |   | $                                           | 5,000    |   |   | $ | – |   |

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**Table          of Contents**

**NATIONAL      SCIENTIFIC CORPORATION**

**Condensed      Statement of Changes in Shareholders’ Deficit**

**For      the Three months Ended December 31, 2007**

**(Unaudited)**

|                                                                         |   |   | **Common                        Stock**        |        |   |                                 |   |      |                                 |   |   |                       |   |
|------------------------------------------------------------------------------|--------|--------|------------------------------------------------|-------------|--------|--------------------------------------|--------|-----------|--------------------------------------|--------|--------|----------------------------|--------|
|                                                                         |   |   | **Number                        of****Shares** |        |   | **Par                        Value** |   |      | **Additional****Paid-In****Capital** |   |   | **Accumulated****Deficit** |   |   | **Total** |   |
|                                                                         |   |   |                                           |        |   |                                 |   |      |                                 |   |   |                       |   |   |   |   |
| Balance                        at September 30, 2007                         |   |   |                                           | 121,995,835 |   |                                 | $      | 1,219,959 |                                 |   | $      | 22,693,696                 |   |   | $ | (25,241,477 | ) |   | $ | (1,327,822 | ) |
|                                                                         |   |   |                                           |        |   |                                 |   |      |                                 |   |   |                       |   |   |   |   |   |   |   |   |   |
| Stock                        issued for services                             |   |   |                                           |        |   |                                 |   |      |                                 |   |   |                       |   |   |   |   |   |   |   |   |   |
| Price                        per share                                       |   |   |                                           |        |   |                                 |   |      |                                 |   |   |                       |   |   |   |   |   |   |   |   |   |
| $0.0288                                                                      |   |   |                                           | 34,722      |   |                                 |   | 347       |                                 |   |   | 653                        |   |   |   | – |   |   |   | 1,000 |   |
|                                                                    |   |   |                                           |        |   |                                 |   |      |                                 |   |   |                       |   |   |   |   |   |   |   |   |   |
| Stock                        options granted                                 |   |   |                                           | –     |   |                                 |   | –   |                                 |   |   | 13,305                     |   |   |   | – |   |   |   | 13,305 |   |
|                                                                    |   |   |                                           |        |   |                                 |   |      |                                 |   |   |                       |   |   |   |   |   |   |   |   |   |
| Stock                        issued in exchange of accrued expenses for:     |   |   |                                           |        |   |                                 |   |      |                                 |   |   |                       |   |   |   |   |   |   |   |   |   |
| $0.0200                                                                      |   |   |                                           | 250,000     |   |                                 |   | 2,500     |                                 |   |   | 2,500                      |   |   |   | – |   |   |   | 5,000 |   |
|                                                                    |   |   |                                           |        |   |                                 |   |      |                                 |   |   |                       |   |   |   |   |   |   |   |   |   |
| Net                        loss for the three months ended December 31, 2007 |   |   |                                           | –     |   |                                 |   | –   |                                 |   |   | –                    |   |   |   | (91,896 | ) |   |   | (91,896 | ) |
|                                                                    |   |   |                                           |        |   |                                 |   |      |                                 |   |   |                       |   |   |   |   |   |   |   |   |   |
| Balance                        at December 31, 2007                          |   |   |                                           | 122,280,557 |   |                                 | $      | 1,222,806 |                                 |   | $      | 22,710,154                 |   |   | $ | (25,333,373 | ) |   | $ | (1,400,413 | ) |

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**Table          of Contents**

**NATIONAL      SCIENTIFIC CORPORATION**

**NOTES        TO FINANCIAL STATEMENTS**

**December        31, 2007**

**(Unaudited)**

| **1.** | **Summary                  of Significant Accounting Policies and Use of                  Estimates** |
|--------|-------------------------------------------------------------------------------------------------------|

***Nature                of Business***

***Basis                of Presentation***

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**Table                        of Contents**

***Going                Concern***

***Use                of Estimates***

***Revenue                Recognition***

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**Table                        of Contents**

***Fair                Value of Financial Instruments***

***Earnings                per Share***

***Stock-Based                Compensation***

            -  Expected                      term is determined using a weighted average of the contractual                      term and                      vesting period of the award; 
            -  Expected                        volatility is measured using the average of historical daily                        changes in the                        market price of the Company’s common stock over the period equal to their                        expected term. 
            -  Risk-free                          interest rate is equivalent to the implied yield on U.S.                          Treasury bills with a                          remaining maturity equal to the expected term of the awards;                          and 
            -  Forfeitures                            are based on the history of cancellations of similar                            awards granted by the                            Company and management’s analysis of potential                            forfeitures. 

***Recent                Accounting                Pronouncements***

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**Table                          of Contents**

  SFAS 160 establishes accounting and reporting                standards for the                noncontrolling interest in a subsidiary and for the deconsolidation                of a                subsidiary. The guidance will become effective for the fiscal year                beginning                after December 15, 2008. The management is in the process of evaluating                the                impact
 SFAS 160 will have on the Company’s financial statements                upon adoption.

| **2.** | **Issuance                    of Common Stock** |
|--------|-------------------------------------------------|

| **3.** | **Stock-Based                    Compensation** |
|--------|-------------------------------------------------|

***Stock                Options***

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**Table                      of Contents**

|                                                            |   | **2007**                                    |   | **2006**                                 |
|-----------------------------------------------------------------|--------|---------------------------------------------|--------|------------------------------------------|
|                                                            |   |                                        |   |                                     |
| Risk                          - free interest rate              |   | 3.86%                          to 4.33%     |   | 4.46%                          to 4.61%  |
| Expected                          life (years)                  |   | 5                                           |   | 10                                       |
| Expected                          volatility                    |   | 167.9%                          to 187.7%   |   | 91.4%                          to 147.6% |
| Expected                          dividends                     |   | None                                        |   | None                                     |
| Forfeitures                          assumed                    |   | None                                        |   | None                                     |
| Weighted                          average grant date fair value |   | $0.0120                          to $0.0186 |   | $0.0200                                  |

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**Table                        of Contents**

|                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |       |      |     | **Weighted** |   |   | **Weighted                            Average** |   |                                |
|------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------|----------|--------------|--------|--------|-------------------------------------------------|--------|------------------------------------------|
|                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | **Number** |      |     | **Average**  |   |   | **Remaining**                                   |   | **Aggregate**                            |
|                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | **of**     |      |     | **Exercise** |   |   | **Contractual**                                 |   | **Intrinsic**                            |
|                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | **Shares** |      |     | **Price**    |   |   | **Term                            (1)**         |   | **Value                            (2)** |
|                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |       |      |     |         |   |   |                                            |   |                                     |   |
|  Options                          Outstanding, December 31, 2007                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |       | 4,786,756 |     |         | $      | 0.74   |                                            |   |                                     | 6.16 |   |   |   |
|                                                                                                 | Granted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |       |      | 895,000  |         |   |   | 0.03                                            |   |                                     |   |   |   |   |   |
|                                                                                                 | Exercised                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |       |      | –  |         |   |   | –                                         |   |                                     |   |   |   |   |   |
|                                                                                                 | Forfeited                            or expired                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |       |      | (450,000 | )            |   |   | 1.84                                            |   |                                     |   |   |   |   |   |
|                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |       |      |     |         |   |   |                                            |   |                                     |   |   |   |   |
|  Options                          Outstanding, December 31, 2007                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |       | 5,231,756 |     |         | $      | 0.44   |                                            |   |                                     | 5.94 |   | $  | 117 |
|  Options                          Exercisable December 31, 2007                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |       | 5,231,756 |     |         | $      | 0.44   |                                            |   |                                     | 5.94 |   | $  | 117 |
| __________                |
| (1)                                                                                                  | Remaining                            contractual term is presented in years                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (2)                                                                                                  | The                            aggregate intrinsic value is                            calculated as the difference between the exercise price                            of the underlying                            awards and the closing price of our common stock as ofDecember                            31, 2007,                            for those awards that have an                            exercise price currently below the closing price as ofDecember                            31, 2007.                            Awards with an exercise price                            above the closing price of $0.025 as of December                            31, 2007                            are considered to have no                            intrinsic value. |

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**Table                      of Contents**

***Warrants***

|                                                            |   | **2006**                                 |
|-----------------------------------------------------------------|--------|------------------------------------------|
|                                                            |   |                                     |
| Risk                          - free interest rate              |   | 4.57%                                    |
| Expected                          life (years)                  |   | 3                          to 5          |
| Expected                          volatility                    |   | 97.1%                          to 116.1% |
| Expected                          dividends                     |   | None                                     |
| Forfeitures                          assumed                    |   | None                                     |
| Weighted                          average grant date fair value |   | $0.03                                    |

|                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |       |       |    | **Weighted** |   |   | **Weighted                          Average** |   |                                   |
|-----------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------|---------|--------------|--------|--------|-----------------------------------------------|--------|----------------------------------------|
|                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | **Number** |       |    | **Average**  |   |   | **Remaining**                                 |   | **Aggregate**                          |
|                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | **of**     |       |    | **Exercise** |   |   | **Contractual**                               |   | **Intrinsic**                          |
|                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | **Shares** |       |    | **Price**    |   |   | **Term                          (1)**         |   | **Value                          (2)** |
|                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |       |       |    |         |   |   |                                          |   |                                   |   |
| Warrants                        Outstanding, September 30, 2007 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |       | 17,714,197 |    |         | $      | 0.17   |                                          |   |                                   | 1.56 |   |   |   |
|                                                            | Granted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |       |       | – |         |   |   | –                                       |   |                                   |   | – |   |   |   |
|                                                            | Exercised                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |       |       | – |         |   |   | –                                       |   |                                   |   | – |   |   |   |
|                                                            | Cancelled                          or expired                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |       |       | – |         |   |   | –                                       |   |                                   |   | – |   |   |   |
| Warrants                        Outstanding, December 31, 2007  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |       | 17,714,197 |    |         | $      | 0.17   |                                          |   |                                   | 1.31 |   | $ | – |
| __________                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |       |       |    |         |   |   |                                          |   |                                   |   |   |   |   |
| (1)                                                             | Remaining                          contractual term is presented in years                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (2)                                                             | The                          aggregate intrinsic value is                          calculated as the difference between the exercise price                          of the underlying                          awards and the closing price of our common stock as of                          December 31, 2007,                          for those awards that have an exercise price currently                          below the closing                          price as of December 31, 2007. Awards with an exercise                          price above the                          closing price as of December 31, 2007 of $0.025 are considered                          to have no                          intrinsic value. |

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**Table                of Contents**

| **4.** | **Trade                      Receivables** |
|--------|--------------------------------------------|

|                                   |   | **December                      31, 2007****(Unaudited)** |    |   | **September                      30, 2007****(Audited)** |   |
|----------------------------------------|--------|-----------------------------------------------------------|---------|--------|----------------------------------------------------------|--------|
|                                   |   |                                                      |    |   |                                                     |   |
| Trade                      receivables |   | $                                                         | 106,874 |   |                                                     | $      | 6,216 |   |
| Less:                      reserves    |   |                                                      | – |   |                                                     |   | – |   |
|                                   |   | $                                                         | 106,874 |   |                                                     | $      | 6,216 |   |

| **5.** | **Inventory,                    net** |
|--------|---------------------------------------|

|                                                |   | **December                      31, 2007****(Unaudited)** |    |   | **September                      30, 2007****(Audited)** |   |
|-----------------------------------------------------|--------|-----------------------------------------------------------|---------|--------|----------------------------------------------------------|--------|
|                                                |   |                                                      |    |   |                                                     |   |
| Inventory,                      gross               |   | $                                                         | 19,268  |   |                                                     | $      | 22,900 |   |
| Less:                      reserve for obsolescence |   |                                                      | – |   |                                                     |   | – |   |
| Inventory,                      net                 |   | $                                                         | 19,268  |   |                                                     | $      | 22,900 |   |

| **6.** | **Accrued                      Expenses** |
|--------|-------------------------------------------|

**:**

|                                                                              |   | **December                          31,                          2007****(Unaudited)** |    |   | **September                          30,                          2007****(Audited)** |   |
|-----------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------|---------|--------|---------------------------------------------------------------------------------------|--------|
|                                                                              |   |                                                                                   |    |   |                                                                                  |   |
| Salaries                          and vacation pay - current management and staff |   | $                                                                                      | 606,150 |   |                                                                                  | $      | 575,727 |   |
| Salaries                          and vacation pay - former employee              |   |                                                                                   | 29,375  |   |                                                                                  |   | 29,375 |   |
| Payroll                          taxes for back pay                               |   |                                                                                   | 40,429  |   |                                                                                  |   | 40,781 |   |
| Interest                                                                          |   |                                                                                   | 168,903 |   |                                                                                  |   | 156,271 |   |
| Employee                          stock retainage pool                            |   |                                                                                   | 50,250  |   |                                                                                  |   | 50,250 |   |
| Other                          liabilities                                        |   |                                                                                   | 11,992  |   |                                                                                  |   | 30,996 |   |
|                                                                              |   | $                                                                                      | 907,099 |   |                                                                                  | $      | 883,400 |   |

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**Table                      of Contents**

| **7.** | **Notes                      Payable and Long-Term                      Debt** |
|--------|--------------------------------------------------------------------------------|

|                                                                                                                  |   | **December                        31, 2007****(Unaudited)** |     |   | **September                        30,                        2007****(Audited)** |   |
|-----------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------|----------|--------|-----------------------------------------------------------------------------------|--------|
|                                                                                                                  |   |                                                        |     |   |                                                                              |   |
| Non-interest                        bearing note payable, due June 2006; unsecured;                                   |   |                                                        |     |   |                                                                              |   |
| repayment                        may be made by the Company with either cash or its                                   |   |                                                        |     |   |                                                                              |   |
| restricted                        common stock or a combination of cash and stock                                     |   | $                                                           | 43,250   |   |                                                                              | $      | 43,250 |   |
| 8%                        note payable to a related party; unsecured; principal and                                   |   |                                                        |     |   |                                                                              |   |   |   |
| interest                        payable on demand                                                                     |   |                                                        | 158,300  |   |                                                                              |   | 161,300 |   |
| 12%                        note payable; secured; payable on demand                                                   |   |                                                        | 11,625   |   |                                                                              |   | 11,625 |   |
| 12%                        note payable; secured; payable on demand                                                   |   |                                                        | 20,000   |   |                                                                              |   | 20,000 |   |
| 8%                        note payable; unsecured; principal payable in full in November                        2010; |   |                                                        |     |   |                                                                              |   |   |   |
| with                        semi-annual interest payments in May and November                                         |   |                                                        | 175,000  |   |                                                                              |   | 175,000 |   |
| 6%                        note payable; unsecured; payable on demand with 30 days prior                        notice |   |                                                        | 5,000    |   |                                                                              |   | 6,000 |   |
|                                                                                                                  |   |                                                        | 413,175  |   |                                                                              |   | 417,175 |   |
| Less:                                                                                                                 |   |                                                        |     |   |                                                                              |   |   |   |
| Current                        portion of long term debt                                                              |   |                                                        | (238,175 | )      |                                                                              |   | (242,175 | ) |
| Discount                                                                                                              |   |                                                        | (29,240  | )      |                                                                              |   | (31,820 | ) |
| Beneficial                        conversion feature                                                                  |   |                                                        | (5,629   | )      |                                                                              |   | (6,125 | ) |
| Long-term                        debt, net of current portion                                                         |   | $                                                           | 140,131  |   |                                                                              | $      | 137,055 |   |

| 2008   |   | $      | 238,175 |   |
|--------|--------|--------|---------|--------|
| 2009   |   |   | – |   |
| 2010   |   |   | 175,000 |   |
|   |   | $      | 413,175 |   |

| **8.** | **Earnings                      Per Share** |
|--------|---------------------------------------------|

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**Table                        of Contents**

|                                                                               |   | **Three                            months ended** |        |
|------------------------------------------------------------------------------------|--------|---------------------------------------------------|-------------|
|                                                                               |   | **December                            31,**       |        |
|                                                                               |   | **2007**                                          |        |   | **2006** |   |
|                                                                               |   |                                              |        |   |   |   |
| Net                            (loss)                                              |   | $                                                 | (91,896     | ) |   | $ | (122,643 | ) |
| Weighted                            average shares:                                |   |                                              |        |   |   |   |   |   |
| Average                            shares outstanding                              |   |                                              | 122,157,972 |   |   |   | 99,108,039 |   |
| Effect                            of dilutive shares                               |   |                                              | –     |   |   |   | – |   |
|                                                                               |   |                                              |        |   |   |   |   |   |
| Average                            shares outstanding adjusted for dilutive effect |   |                                              | 122,157,972 |   |   |   | 99,108,039 |   |
|                                                                               |   |                                              |        |   |   |   |   |   |
| (Loss)                            per share - basic                                |   | $                                                 | (0.00       | ) |   | $ | (0.00 | ) |
|                                                                               |   |                                              |        |   |   |   |   |   |
| (Loss)                            per share - diluted                              |   | $                                                 | (0.00       | ) |   | $ | (0.00 | ) |

|                                               |   | **December                            31,                            2007** |       |   | **December                            31, 2006** |   |
|---------------------------------------------------------|--------|-----------------------------------------------------------------------------|------------|--------|--------------------------------------------------|--------|
|                                                    |   |                                                                        |       |   |                                             |   |
| Options                                                 |   |                                                                        | 5,231,756  |   |                                             |   | 4,330,055 |   |
| Warrants                                                |   |                                                                        | 17,714,197 |   |                                             |   | 15,884,197 |   |
| Potential                            common equivalents |   |                                                                        | 22,945,953 |   |                                             |   | 20,214,252 |   |

| **9.** | **Subsequent                        Events** |
|--------|----------------------------------------------|

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**Table          of Contents**

| **Item              2.** | **Management’s                Discussion and Analysis of Financial Condition and Results of                Operations** |
|--------------------------|-------------------------------------------------------------------------------------------------------------------------------|

**SAFE              HARBOR STATEMENT**

**General**

**Overview**

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**Table                    of Contents**

**Three              Months              Ended December 31, 2007 Compared to Three Months Ended December 31,              2006**

**Revenues**

**Gross              Profit**

**Salaries              and Benefits**

**Research              and Development**

**Stock              Compensation**

----

**Table                    of Contents**

**Other              Expenses**

**Interest              Expense**

**Amortization              of Deferred Financing Costs**

**Liquidity              and Capital Resources**

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**Table                    of Contents**

**Other              Subsequent Events**

| **Item              3.** | **Controls                and Procedures** |
|--------------------------|--------------------------------------------|

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**Table            of Contents**

**PART        II - OTHER INFORMATION**

| **Item              1.** | **Legal                Proceedings** |
|--------------------------|--------------------------------------|

| **Item              2.** | **Changes                in Securities and Use of                Proceeds** |
|--------------------------|-----------------------------------------------------------------------------|

| **Item              3.** | **Defaults                Upon Senior Securities.** |
|--------------------------|-----------------------------------------------------|

| **Item              4.** | **Submission                of Matters to a Vote of Security                Holders.** |
|--------------------------|----------------------------------------------------------------------------------------|

| **Item              5.** | **Other                Information.** |
|--------------------------|---------------------------------------|

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**Table            of Contents**

| **Item              6.** | **Exhibits.** |
|--------------------------|---------------|

| **Exhibit****Number** |   |  **Description**                                                                         |
|-----------------------|--------|-----------------------------------------------------------------------------------------------|
|                  |   |                                                                                          |
| 13                    |   | Form                10-KSB Annual Report For The Fiscal Year Ended Sept. 30, 2007 (1)    |
| 31                    |   | Certification                Pursuant to Section 302 of the Sarbanes-Oxley Act                |
| 32                    |   | Certification                Pursuant to Section 906 of the Sarbanes-Oxley                Act |

| (1) | Filed                    on or around December 31, 2007, on Form                    10-KSB. |
|-----|---------------------------------------------------------------------------------------------|

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**Table          of Contents**

**SIGNATURES**

|                                         |                                                                                                                                           |                                   |
|----------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------|
|                                         | **NATIONAL                SCIENTIFIC CORPORATION**                                                                                             |
|                                         |                                                                                                                                           |                                   |
| Date:                 February 14, 2008 | By:                                                                                                                                            | /s/                Michael A. Grollman |
|                                         | Michael                A. GrollmanDirector,                Chief Executive Officer, Acting Chief Financial                Officer and Chairman |

|   |                                                                            |                               |
|--------|---------------------------------------------------------------------------------|------------------------------------|
|   |                                                                            |                               |
|   | By:                                                                             | /s/                Graham L. Clark |
|   | Graham                L. ClarkDirector,                President, and Secretary |

|   |                                 |                             |
|--------|--------------------------------------|----------------------------------|
|   |                                 |                             |
|   | By:                                  | /s/                Gregory Szabo |
|   | Gregory                SzaboDirector |

----