================================================================================

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                 --------------
                                   FORM 10-QSB
                                 --------------

             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                  For the Quarterly Period Ended March 31, 2002

                                    000-28745
                              (Commission File No.)

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

                         NATIONAL SCIENTIFIC CORPORATION
                 (Name of Small Business Issuer in its Charter)

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

               TEXAS                                           86-0837077
   (State or Other Jurisdiction of                          (I.R.S. Employer
   Incorporation or Organization)                          Identification No.)

   14455 N. HAYDEN, SUITE 202
          SCOTTSDALE, AZ                                         85260
(Address of Principal Executive Offices)                       (Zip Code)

                                 (480) 948-8324
                 (Issuers Telephone Number, Including Area Code)


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

There  were  50,337,025  shares  of Common  Stock,  par  value  $.01 per  share,
outstanding at May 14, 2002.

Transitional Small Business Disclosure Format (Check One):  Yes [ ] No [X]

================================================================================
<PAGE>

                         NATIONAL SCIENTIFIC CORPORATION

                                   FORM 10-QSB

                                      INDEX
<TABLE>
<CAPTION>
                                                                                       PAGE
<S>                                                                                    <C>
Part I - Financial Information

Item 1 - Financial Statements (unaudited)                                                3

Balance Sheets - March 31, 2002, and September 30, 2001                                  3

         Statements of Operations - Three and Six Months Ended March 31, 2002, 2001
         and Cumulative from October 1, 1997 (Inception) through March 31, 2002          4

         Statements of Cash Flows - Six Months ended March 31, 2002, 2001
         and Cumulative from October 1, 1997 (Inception) through March 31, 2002          5

         Statement of Changes in Shareholders' Equity (Deficit) - Six Months Ended
         March 31, 2002                                                                  7

         Notes to Financial Statements                                                   8

Item 2 - Management's Discussion and Analysis or Plan of Operation                      12

Part II - Other Information

         Item 1 - Legal Proceedings                                                     15

         Item 2 - Changes in Securities and Use of Proceeds                             15

         Item 3 - Defaults upon Senior Securities                                       16

         Item 4 - Submission of Matters to a Vote of Security Holders                   16

         Item 5 - Other Information                                                     16

         Item 6 - Exhibits and Reports on Form 8-K                                      16

Signatures                                                                              17
</TABLE>


                                       2
<PAGE>

                         PART I - FINANCIAL INFORMATION

                         NATIONAL SCIENTIFIC CORPORATION
                          (A Development Stage Company)
                            Condensed Balance Sheets
<TABLE>
<CAPTION>
                                 ASSETS                                   March 31,     September 30,
                                                                            2002            2001
                                                                        (unaudited)
                                                                        ------------    ------------
<S>                                                                     <C>             <C>
Current assets:
     Cash and cash equivalents                                          $     41,390    $    604,761
     Inventory                                                                    --          20,000
     Loan to officer                                                              --         100,000
     Other assets                                                             15,481          21,358
                                                                        ------------    ------------
        Total current assets                                                  56,871         746,119
                                                                        ------------    ------------

Property and equipment, net                                                  120,033         135,836
Deferred offering costs                                                           --         193,015
                                                                        ------------    ------------
                                                                        $    176,904    $  1,074,970
                                                                        ============    ============

                 LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

Current liabilities:
     Accounts payable and accrued expenses                              $    460,533    $    326,367
     Line of credit                                                               --         430,000
                                                                        ------------    ------------
        Total current liabilities                                            460,533         756,367
                                                                        ------------    ------------
Shareholders' equity (deficit):
     Common  stock,  par value $.01;  120,000,0shares  authorized,
        50,011,525 and 47,367,498 shares issued and outstanding
        at March 31, 2002 and September 30, 2001, respectively               500,115         473,675
     Additional paid-in-capital                                           18,295,318      17,966,208
     Common stock warrants and options exercisable                           821,842         800,567
     Accumulated deficit                                                 (19,900,904)    (18,921,847)
                                                                        ------------    ------------
                                                                            (283,629)        318,603
                                                                        ------------    ------------
                                                                        $    176,904    $  1,074,970
                                                                        ============    ============
</TABLE>


   The accompanying notes are an integral part of these financial statements.


                                       3

<PAGE>

                         NATIONAL SCIENTIFIC CORPORATION
                          (A Development Stage Company)
                  Unaudited Condensed Statements of Operations
     For the Period Three and Six Months Ended March 31, 2002 and 2001, and
      For the Period from October 1, 1997 (Inception of Development Stage)
                             Through March 31, 2002
<TABLE>
<CAPTION>
                              Three Months      Three Months      Six Months        Six Months        Cumulative
                                  Ended            Ended             Ended             Ended          Development
                             March 31, 2002    March 31, 2001    March 31, 2002    March 31, 2001       Stage
                             --------------    --------------    --------------    --------------    ------------
<S>                          <C>               <C>               <C>               <C>               <C>
Revenues                     $           --    $      317,780    $           --    $      317,780    $    882,715

Cost of sales                            --           312,000                --           312,000         869,750
                             --------------    --------------    --------------    --------------    ------------
Gross profit                             --             5,780                --             5,780          12,965


Operating expenses

Salaries and benefits               176,822           181,802           384,231           385,033       1,457,467
 Consulting fees,
   related  party                        --                --                --           422,008       8,158,323
Research and  development            44,298           327,824           118,834           514,259       3,593,120
Stock compensation                    8,854           571,682           174,751         5,664,842       2,503,619
Other                               235,362           344,292           391,498           578,901       2,023,553
                             --------------    --------------    --------------    --------------    ------------
                                    465,336         1,425,600         1,069,314         7,565,043      17,736,082
                             --------------    --------------    --------------    --------------    ------------
Net loss from operations           (465,336)       (1,419,820)       (1,069,314)       (7,559,263)    (17,723,117)
                             --------------    --------------    --------------    --------------    ------------

Other income (expense)

Interest and other income            30,391            29,163            90,898            71,907         269,286
Interest expense                         --                --              (641)               --         (23,838)
Loss on disposal of assets               --                --                --                --         (28,555)
                             --------------    --------------    --------------    --------------    ------------
                                     30,391            29,163            90,257            71,907         216,893
                             --------------    --------------    --------------    --------------    ------------

Net loss before income tax         (434,945)       (1,390,657)         (979,057)       (7,487,356)    (17,506,224)
Provision for income taxes               --                --                --                --              --
                             --------------    --------------    --------------    --------------    ------------
Net loss                     $     (434,945)   $   (1,390,657)   $     (979,057)   $   (7,487,356)   $(17,506,224)
                             ==============    ==============    ==============    ==============    ============
Net loss per common
  share, basic and diluted   $         (.01)   $         (.03)   $        (0.02)   $        (0.16)
                             ==============    ==============    ==============    ==============
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                       4
<PAGE>

                         NATIONAL SCIENTIFIC CORPORATION
                          (A Development Stage Company)
                  Unaudited Condensed Statements of Cash Flows
                For the Six Months Ended March 31, 2002 and 2001,
    and For the Period From October 1, 1997 (Inception of Development Stage)
                             Through March 31, 2002
<TABLE>
<CAPTION>
                                                         Six Months       Six Months       Cumulative
                                                            Ended            Ended         Development
                                                       March 31, 2002    March 31,2001        Stage
                                                       --------------    -------------     ------------
<S>                                                    <C>               <C>               <C>
Cash flows from operating activities:
    Net loss                                           $     (979,057)   $  (7,487,356)    $(17,506,224)
Adjustments to reconcile net loss to net
    Cash used in operating activities:
    Depreciation                                               15,803            7,433           45,227
    Loss on disposal of assets                                     --               --            8,555
    Stock and options issued for services                     193,277        2,695,862       11,130,186
    Deferred stock compensation                                    --        3,062,500               --
    Decrease (increase) in inventory                           20,000               --               --
    Decrease (increase) in receivables                             --               --          130,000
    Decrease (increase) in other assets                         5,877           36,379           (4,910)
    Increase (decrease) in accounts payable and
        accrued expenses                                      134,166           16,969          437,953
                                                       ------------------------------------------------
        Net cash used in operating activities                (609,934)      (1,668,213)      (5,739,213)
                                                       ------------------------------------------------
Cash flows from investing activities:
    Repayment of loans                                             --           50,000          200,000
    Acquisition of property and equipment                          --         (123,600)        (153,692)
    Proceeds from the sale of furniture and
        equipment                                                  --               --            4,660
    Loans issued                                                   --         (200,000)        (400,000)
                                                       ------------------------------------------------
        Net cash used in investing activities                      --         (273,600)        (349,032)

Cash flows from financing activities:
    Repayment on the line of credit                          (430,000)              --               --
    Proceeds from equity line of credit, net of
        deferred offering costs                               159,198               --          159,198
    Deferred offering costs                                   193,015               --               --
    Repayment of notes payable                                     --               --         (110,000)
    Loan to officer                                                --               --          (10,000)
    Proceeds from the exercise of options                      31,890               --           31,890
    Repayment of capital lease obligations                         --               --           (1,819)
    Proceeds from the issuance of common stock                     --        1,291,730        5,481,788
    Proceeds from the issuance of preferred stock                  --               --          482,500
    Exercise of warrants                                       92,460               --           92,460
                                                       ------------------------------------------------
        Net cash provided by financing activities              46,563        1,291,730        6,126,017
                                                       ------------------------------------------------
Net increase (decrease) in cash and cash equivalents         (563,371)        (650,083)          37,772
Cash and cash equivalents, beginning of period                604,761        2,584,900            3,618
                                                       ------------------------------------------------
Cash and cash equivalents, end of the period           $       41,390    $   1,934,817     $     41,390
                                                       ================================================
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                       5
<PAGE>

                         NATIONAL SCIENTIFIC CORPORATION
                         (A Developmental Stage Company)
                  Unaudited Condensed Statements of Cash Flows
              For the Six Months Ended March 31, 2002 and 2001 and
      For the Period From October 1, 1997 (Inception of Development Stage)
                             Through March 31, 2002
<TABLE>
<CAPTION>

SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION
                                                                                               Cumulative
                                                       Six Months Ended    Six Months Ended    Development
                                                        March 31, 2002      March 31, 2001        Stage
                                                       ----------------    ----------------    -----------
<S>                                                    <C>                  <C>                <C>
Cash paid during the period for interest               $             --     $             --   $    13,719
                                                       ================     ================   ===========
Cash paid during the period for income taxes           $             --     $             --   $       100
                                                       ================     ================   ===========


NON-CASH INVESTING AND FINANCING ACTIVITIES
                                                                                               Cumulative
                                                       Six Months Ended    Six Months Ended    Development
                                                        March 31, 2002      March 31, 2001        Stage
                                                       ----------------    ----------------    -----------
250,000 common shares returned by the Company's
    Chairman of the Board in collection of a
    note receivable                                    $        100,000    $             --    $   100,000
                                                       ================     ================   ===========
</TABLE>



   The accompanying notes are an integral part of these financial statements.


                                       6
<PAGE>

                         NATIONAL SCIENTIFIC CORPORATION
                          (A Development Stage Company)
   Unaudited Condensed Statement of Changes in Shareholders' Equity (Deficit)
                     for the Six Months Ended March 31, 2002
<TABLE>
<CAPTION>
                                    COMMON STOCK
                              --------------------------                                          COMMON STOCK
                                NUMBER OF                     ADDITIONAL        ACCUMULATED       WARRANTS AND
                                 SHARES         AMOUNT     PAID-IN CAPITAL       DEFICIT       OPTIONS EXERCISABLE     TOTAL
                              -------------------------------------------------------------------------------------------------

<S>                            <C>           <C>           <C>                <C>                <C>                 <C>
Balance September 30, 2001     47,367,498    $  473,675    $    17,966,208    $ (18,921,847)     $   800,567         $  318,603

Exercise of options               181,800         1,818             52,674               --          (22,602)            31,890
Issuance of shares for
    services                      100,000         1,000             29,600               --               --             30,600
Issuance of shares for the
    equity line of credit,
    net                         1,841,727        18,417            140,781               --               --            159,198
Issuance of non-qualified
    options                            --            --                 --               --           13,451             13,451
Options granted below
    market value                       --            --                 --               --           30,426             30,426
Warrants granted below
    market value                       --            --            118,800               --               --            118,800
Warrants exercised at the
    option price of $0.12         770,500         7,705             84,755               --               --             92,460
Loan repayment                   (250,000)       (2,500)           (97,500)              --               --           (100,000)
Net loss                               --            --                 --         (979,057)              --           (979,057)
                              -------------------------------------------------------------------------------------------------

Balance, March 31, 2002        50,011,525    $  500,115    $    18,295,318    $ (19,900,904)     $   821,842         $ (283,629)
                              =================================================================================================
</TABLE>


   The accompanying notes are an integral part of these financial statements.


                                       7
<PAGE>

                         NATIONAL SCIENTIFIC CORPORATION

                          NOTES TO FINANCIAL STATEMENTS


1.   BASIS OF PRESENTATION

The accompanying financial statements have been prepared by the Company, without
audit,  and reflect  all  adjustments  that are,  in the opinion of  management,
necessary  for a fair  statement  of the results for the  interim  periods.  The
statements have been prepared in accordance with generally  accepted  accounting
principles  for  interim   financial   reporting  and  Securities  and  Exchange
Commission  regulations.  Certain information and footnote  disclosures normally
included  in  financial   statements  prepared  in  accordance  with  accounting
principles  generally  accepted  in the  United  States  of  America  have  been
condensed or omitted pursuant to such rules and  regulations.  In the opinion of
management,  the financial  statements  reflect all adjustments (of a normal and
recurring  nature) that are necessary for a fair  presentation  of the financial
position,  results of  operations  and cash flows for the interim  periods.  The
results of operations for the three and six months ended March 31, 2002 and 2001
are not  necessarily  indicative  of the results to be  expected  for the entire
fiscal year.

These  financial  statements  should be read in  conjunction  with the financial
statements  and notes thereto  included in the  Company's  annual report on Form
10-KSB for the fiscal year ended September 30, 2001.

2.   ISSUANCE OF COMMON STOCK

During the three months ended March 31, 2002, the Company  raised  approximately
$183,000 in  consideration  for the issuance of 1,066,158 shares of common stock
under its equity line of credit  established in October 2001.  These shares were
issued at an average per share price of  approximately  $.17. For the six months
ended March 31, 2002 the Company issued  1,841,727  shares under the equity line
of credit, resulting in cash proceeds of $159,000, net of approximately $221,000
of issuance costs.

In February  2002,  the Chairman of the Board Mr. Ross repaid a $100,000 loan by
returning  250,000 shares of the Company's  common stock at the market price per
share of $.40.

During the three months ended March 31, 2001,  there were no issuances of common
stock.  During the three months ended  December 31, 2000,  the Company  received
$1,291,730 and issued 1,291,730 shares of restricted  common stock in connection
with the exercise of its outstanding  $1.00 common stock warrants.  In the three
month  period  ended March 31, 2001 the Company  also issued  100,000  shares of
restricted  common stock valued at $165,600 to  consultants  and  principals  as
compensation for services  rendered.  During the three months ended December 31,
2000,  the Company  issued 20,000  shares of  restricted  common stock valued at
$44,820 to consultants as compensation for services.


                                       8
<PAGE>

3.   STOCK OPTIONS AND WARRANTS

In late December 2001,  the Board of Directors  extended the term of outstanding
common  stock  warrants to purchase an  aggregate  of 1.32  million  shares from
December 31, 2001 to January 31, 2002,  and reduced the per share exercise price
of those warrants from $1.50 to $0.12.  In January 2002,  770,500  warrants were
exercised  and the Company  collected  proceeds  of $92,460 in exchange  for the
issuance of an aggregate of 770,500 common  shares.  As of February 1, 2002, the
remaining  549,500  warrants  expired.  At March 31,  2002,  there  are  412,201
outstanding  warrants to purchase  412,201 shares of common stock at $1.67,  all
held by Coriander Enterprises Limited.

The Company  from time to time issues  stock  options for the purchase of common
stock to directors,  officers,  employees and consultants. The Company adopted a
qualified  stock option plan for its  executives and employees in December 2000.
In  February  2001,  the  stock  option  plan  was  ratified  by  the  Company's
shareholders.

During the three months  ended March 31,  2002, a total of 48,780  non-qualified
stock options were granted to a consultant  under the 2000 Stock Option Plan, at
an average  exercise price of $.18 per share.  During the six months ended March
31,  2002,  a total of  169,833  non-qualified  stock  options  were  granted to
consultants  under the 2000 Stock  Option  Plan.  During the three  months ended
March 31, 2002,  96,800 stock options were exercised at  approximately  $.09 per
share.  For the six months  ended  March 31,  2002, the number of stock  options
exercised was 181,800, with an average exercise price of approximately $0.18.

For the three  months ended March 31,  2002,  180,000  options were issued at an
average  exercise  price of  approximately  $0.09 per share.  These options were
issued to two  employees  of the  company in exchange  for a reduction  in their
salary  previously paid in cash. The company is likely to continue this practice
until such time as cash flow from operations is sufficient to fund the Company's
working capital needs. No options were granted to employees for the three months
ended December 31, 2001.

On January 16,  2002,  the Company  granted  options to purchase an aggregate of
300,000 shares each of common stock to the Company's CEO,  Michael  Grollman and
CFO,  Sam Carr.  These  options  have a per share  exercise  price of $0.25.  In
addition,  on January 16, 2002, the Company  granted 200,000 options to Director
of Global Sales and Marketing, Graham Clark. These options also have a per share
exercise price of $0.25.  On December 14, 2001, the Company  granted  options to
purchase an aggregate of 750,000  shares of common stock to the  Company's  then
Chairman and CEO, Lou L. Ross, at exercise  prices  ranging from $1.00 to $10.00
per share over a 10-year period.

The Company adopted APB Opinion 25 and related interpretations in accounting for
the 2000 Stock Option Plan.  Accordingly,  compensation  expense is equal to the
difference  between the exercise price of the options granted and the fair value
of the common  stock at the date of grant.  Compensation  expense of $21,275 has
been recognized for the fiscal quarter ended March 31, 2002.  Under the terms of
the Company's stock options granted to certain  directors,  officers,  employees
and consultants,  the Board of Directors, at its sole discretion, will determine
when  certain  options  granted  shall  become  exercisable.  At March 31, 2002,
3,102,094  outstanding  stock options were vested,  and fully  exercisable,  and
123,773 were not vested.


                                       9
<PAGE>

In accordance  with APB Opinion 25, the fair value of option grants is estimated
on the date of grant using the Black-Scholes  option-pricing  model for proforma
footnote  purposes with the following  assumptions used for grants in all years;
dividend yield of 0%, risk-free interest rate of 5%, and expected option life of
10 years. Expected volatility was assumed to be 50% as of the date of issue.

                                                  Number of     Weighted Average
                                                   Shares       Exercise Price
                                               ---------------------------------
    Options Outstanding, September 30, 2001       1,534,501        $  1.81
         Granted                                  1,899,833        $  2.31
         Forfeited                                  (26,667)       $  0.82
         Exercised                                 (181,800)       $  0.18
                                               ------------------------------
    Options Outstanding, March 31, 2002           3,225,867        $  2.20
                                               ==============================

Had the Company fully  adopted SFAS 123, the second  quarter net loss would have
been $(513,067) and basic loss per share would have been $(.01). The table above
excludes approximately 1.32 million outstanding warrants. See Note 6.

4.   NET LOSS PER SHARE

Net loss per common share is based upon the weighted average shares outstanding.
Outstanding stock options and warrants are treated as common stock  equivalents,
but are  anti-dilutive,  for purposes of  computing  diluted net loss per common
share.  The  following  is a summary of the  computation  of net loss per common
share (amounts in thousands except shares and per share amounts):
<TABLE>
<CAPTION>
                                                       Three months ended               Six months ended
                                                            March 31,                       March 31,
                                                  ----------------------------    ----------------------------
                                                       2002            2001            2002            2001
                                                  ----------------------------    ----------------------------
<S>                                               <C>             <C>             <C>             <C>
     Basic net income (loss) per common share:

     Net income (loss)                            $   (434,945)   $ (1,390,657    $   (979,057)   $ (7,487,356))
                                                  ============    ============    ============    ============
     Weighted average common shares                 49,211,280      47,282,498      48,458,525      48,107,209
                                                  ============    ============    ============    ============
     Basic per share amount                       $      (0.01)   $      (0.03)   $      (0.02)   $      (0.16)
                                                  ============    ============    ============    ============
</TABLE>


                                       10
<PAGE>

5.   SUBSEQUENT EVENTS

In April 2002 Mr. Lou Ross, Chairman of the Board, sold 240,000 shares of common
stock.  The proceeds (net of sales  commissions) of $41,125,  were loaned to the
Company.  The loan, which bears 6% interest,  is to be repaid in twelve payments
of $3,649 beginning six months from the inception of the loan.

Effective  April 30, 2002 Charles E. Martin resigned from the Board of Directors
for personal  reasons.  National  Scientific  Corporation  is currently  seeking
candidates to replace Mr. Martin.




                                       11
<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

SAFE HARBOR STATEMENT

Statements  contained herein that are not historical fact may be forward-looking
statements  within the meaning of Section 27A of the  Securities Act of 1933, as
amended,  and Section 21E of the Securities Exchange Act of 1934, as amended. We
use words and phrases  such as "should  be," "will be,"  "believes,"  "expects,"
"anticipates,"  "plans,"  "intends,"  "may" and similar  expressions to identify
forward-looking  statements.  Forward-looking statements are made based upon our
belief as of the date  that such  statements  are  made.  These  forward-looking
statements  are based largely on our current  expectations  and are subject to a
number of risks and  uncertainties,  many of which are beyond our  control.  You
should not place undue reliance on these forward-looking statements, which apply
only  as of the  date  of  such  documents.  Our  actual  results  could  differ
materially from those anticipated in these  forward-looking  statements for many
reasons,  including the risks faced by us described  above and elsewhere in this
report.

THREE AND SIX MONTHS ENDED MARCH 31, 2002 COMPARED TO THREE AND SIX MONTHS ENDED
MARCH 31, 2001

For the past several years our business strategy has been to develop, patent and
license  technology.  While these  efforts have not yet  generated  any material
amount of revenue for our business,  we have been  successful in various aspects
of developing and obtaining patents for unique technology and, very recently, in
licensing  our  patented  resonator.   To  supplement  these  efforts,  we  have
determined  it would be in the best  interests of the Company to seek to acquire
proven existing  technologies from third parties.  We expect that we will either
seek to acquire technology through an asset acquisition transaction,  enter into
a joint venture relationship with the company owning the technology,  or acquire
the entire company.  We believe that such a transaction would be consistent with
our mission and, if successfully consummated and integrated into our operations,
will enhance shareholder value.  However, no assurance can be given that we will
be able to successfully complete such a transaction.

In March  2002,  we  announced  the  first of our  technology  acquisitions.  We
negotiated an agreement with Followit AB, a Swedish  technology firm, whereby we
will have  licensing  rights to sell their  locator  products and they will have
rights to  enhancements  to the locator  product  line we  develop.  The locator
product line uses the global positioning  system (GPS) and cellular  technology,
with a sophisticated  mapping  interface to provide tracking  capabilities for a
wide variety of assets or individuals.

On February 1, 2002,  Michael A. Grollman was appointed Chief Executive  Officer
by the Board of Directors.  Mr. Grollman will continue as President, in addition
to his new duties as Chief Executive Officer.  Mr. Lou L. Ross, the former Chief
Executive  Officer will continue his role as Chairman of the Board of Directors.
In addition, we executed an independent  consulting agreement with Mr. Ross. The
agreement has a two year term and pays a consulting  fee of $7,500  monthly.  As
Chairman of the Board, Mr. Ross is also entitled to $2,500 monthly as a fee paid
to the Chairman.  Beginning  February 1, 2002, Mr. Ross agreed to a 20% deferral
on consulting and board fees to help the Company conserve cash. In addition,  in


                                       12
<PAGE>

February  2002,  all  officers of the Company  agreed to a voluntary  20% salary
deferral to conserve Company cash.

In January  2002,  we signed an agreement  with the Virtual  Component  Exchange
(VCX) whereby the bulk of our core designs and patents for Radio  Frequency (RF)
devices will be available  for purchase or licensure.  VCX is an  Internet-based
organization  focused  on  producing  Internet  tools for  trading  Intellectual
Property. This agreement expires December 31, 2002.

Operating  expenses for the three  months ended March 31, 2002 of  approximately
$465,000  decreased from the comparable  period ended March 31, 2001, which were
approximately  $1,420,000.  This  decrease was primarily due to the reduction in
research staff and the  consolidation  of facilities into  Scottsdale,  Arizona.
Operating  expenses  for the six months  ended March 31,  2002 of  approximately
$1,069,000 decreased significantly from the corresponding six months ended March
31, 2001 of approximately $7,560,000.  The substantial decrease relates to stock
compensation  paid to the then  President,  Dr.  Hashemi  in January  2001.  Dr.
Hashemi is no longer employed by the Company.

Salary and benefits,  which represent the corporate and administrative  staff of
the Company, have remained substantially  unchanged for the three and six months
ended March 31, 2002 from the three months and six months ended March 31, 2001.

Research  and  development  costs have  decreased by  approximately  $283,000 to
$44,000 for the three months ended March 31, 2002,  compared to $327,000 for the
three months ended March 31, 2001,  primarily due to the closing of our San Jose
office and consolidation of operations into Scottsdale.  Similarly, research and
development  expenses have been reduced from approximately  $514,000 for the six
months  ended March 31, 2001 to almost  $119,000  for the six months ended March
31, 2002.

LIQUIDITY AND CAPITAL RESOURCES

At  March  31,  2002,  our  liquidity  included  cash and  cash  equivalents  of
approximately $41,000 compared to approximately  $605,000 at September 30, 2001.
We have an accumulated  deficit of $19.9 million and expect  operating losses in
the foreseeable  future as we continue our efforts to  commercially  exploit our
portfolio  of patents and  develop  commercial  products.  We expect to generate
future   revenues  by  entering   into   strategic   joint   venture   licensing
relationships,   manufacturing  agreements,  development  agreements  and  other
relationships with manufacturing firms and/or entities that will incorporate our
technologies  into their  products.  We have financed our  operations  primarily
through the sale of common stock and warrants in the public and private market.

In October 2001, we entered into an equity line of credit agreement with a third
party investor. Under the equity line, we have the option, at our discretion, to
issue during a two-year term shares of our common stock to an investor at prices
that are  discounted  from the fair market  value on the date of  issuance.  Our
ability  to draw down  amounts  under  this line of credit  has been  materially
adversely  effected by our declining stock price. If this trend  continues,  the
proceeds  from this  equity  line of credit  may not be  sufficient  to fund our
ongoing operations.


                                       13
<PAGE>

In April 2002,  Mr. Lou Ross,  Chairman  of the Board,  sold  240,000  shares of
common  stock.  Mr. Ross loaned the  proceeds of these  sales,  $41,125,  to the
Company. The loan, which bears 6% interest is to be repaid in twelve payments of
$3,649 beginning six months from the inception of the loan.

As of March 31, 2002, we believe that our current working capital, together with
funds we expect to  receive  from  future  draw downs  under our equity  line of
credit and projected funds generated from sales of our locator products, will be
sufficient to fund the Company's  operations  for the next twelve  months.  This
belief assumes that the salary and consulting  fee deferral  programs  described
elsewhere  in this  report  remain in effect and that  certain of our  employees
continue to accept a portion of their  monthly  salaries in common  stock of the
Company.  In the event we experience any one or more of the following events, we
may need to seek  additional  capital  through a debt or equity offering to fund
our  operations:  (a) a  material  decline  in  our  stock  price,  which  would
materially and adversely  affect our ability to draw down sufficient funds under
our equity line of credit,  (b) the  inability  to continue in effect our salary
deferral  program,  or (c) sales of our locator  products fail to materialize or
are  substantially  less than  projected.  The raising of additional  capital in
public markets will be primarily dependent upon prevailing market conditions and
the demand for the Company's  products and  services.  No assurance can be given
that the Company  will be able to raise  additional  capital,  when needed or at
all, or that such  capital,  if  available,  will be on  acceptable  terms.  The
Company's  independent  certified public accountants have issued a going concern
opinion on the  financial  statements  of the  Company for the fiscal year ended
September 30, 2001.

Warrants  to  acquire  an  aggregate  of 1.5  million  shares of  common  stock,
originally  scheduled to expire on December 31, 2001, were issued in conjunction
with our private  offering of August 1, 1999, at an exercise  price of $1.50 per
share.  Prior to the fiscal  quarter ended  December 31, 2000,  120,000 of these
warrants  were  exercised,  yielding  $180,000 in cash for the Company.  In late
December  2001,  the  Board  of  Directors  determined  it  would be in the best
interests  of the Company to extend the  expiration  date of the  warrants  from
December  31, 2001 to January 31, 2002,  and to decrease  the exercise  price of
these  warrants  from $1.50 to $0.12.  During the quarter  ended March 31, 2002,
770,500 warrants were exercised,  resulting in the issuance of 770,500 shares of
common  stock and the  receipt  of $92,460  in cash.  As a result,  there are no
remaining  outstanding  warrants  that  were  issued  during  the  1999  private
placement.

During the six months ended March 31, 2001,  we received  $1.29 million from the
exercise of  outstanding  warrants to purchase an  aggregate  of 1.29 million of
shares of common stock. These warrants were previously issued in connection with
our private offering in March 1998, at an exercise price of $1.00 per share. The
remaining unexercised warrants that were issued in connection with this offering
expired on December 31, 2000.

Cash used in  operations  was  approximately  $742,000  for the six months ended
March 31, 2002  compared  with  approximately  $1.67  million for the six months
ended  March  31,  2001.  The  decrease  in  cash  used in  operations  resulted
significantly  from  closing of the San Jose  facility,  reductions  in research
staff  and  consolidation  of  offices  in  Scottsdale,  Arizona.  Additionally,
management has sought to reduce cash uses wherever possible.


                                       14
<PAGE>

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         The Company is involved in legal actions in the ordinary  course of its
business.  Although the outcomes of any such legal actions  cannot be predicted,
in the opinion of management,  there is no legal proceeding  pending or asserted
against  or  involving  the  Company  the  outcome  of which is likely to have a
material adverse effect upon the financial  position or results of operations of
the Company.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

During the six months ended March 31, 2002,  100,000  restricted  common  shares
were issued for  consulting  services at a total value of $30,600.  In addition,
181,800  options were issued and 96,800 were  exercised in  connection  with the
exercise of options granted under the 2000 Stock Option Plan.  These options had
an exercise price of approximately $0.18 per share, resulting in $31,890 of cash
proceeds  from the  exercise to the  Company.  Also during the six months  ended
March 31, 2002, 1,841,727 common shares were issued in connection with the draws
under the equity  line of credit.  These  draws  yielded  net cash  proceeds  of
$159,198.

In late  December  2001,  the  Board of  Directors  approved  an  extension  and
re-pricing  of warrants  that were to expire on December 31,  2001.  Warrants to
purchase  approximately  1.32 million shares of common stock at a price of $1.50
were re-priced to be  exercisable at $0.12 per share,  and the exercise date was
extended  through  January 31, 2002.  Because the re-priced  warrants were below
market  price,  an expense of $118,800 was  recognized  during the quarter ended
December 31, 2001,  which takes into account all  outstanding  options and their
potential exercise.  Through March 31, 2002, 770,500 warrants were exercised and
the Company  collected $92,460 in exchange for the issuance of restricted common
shares.

During the six months ended March 31, 2001,  approximately  1.3 million warrants
were exercised at $1.00 each. These were a part of the 9,650,000 warrants issued
in  conjunction  with our Private  Offering of March 15, 1998. The remaining and
unexercised warrants issued during this Private Offering expired on December 31,
2000.  The shares  sold under the  various  private  placements  were done so in
reliance on the exemption  provided by Sections 4(2) and 4(6) of the  Securities
Act of 1933 and Rule 506 of Regulation D. All warrants issued in connection with
the 1998 private offering have either been exercised or have expired.

In  addition,  during the six months ended March 31,  2001,  100,000  restricted
shares of common stock were issued to the Chief Operating Officer, in accordance
with his  employment  agreement,  and 15,000 shares were granted to a consultant
for services rendered

On December 1, 2000,  the Board of  Directors  adopted a Stock Option Plan (2000
Plan).  Under the terms of the 2000 Plan,  7,000,000 Common Shares are available
for issuance to qualified  individuals  under the 2000 Plan to encourage them to
remain in the service of NSC and to promote its business and growth strategy.


                                       15
<PAGE>

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

         Not applicable.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         Not applicable.

ITEM 5. OTHER INFORMATION.

         Not applicable.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

(a)      Exhibits.
                                                                      METHOD OF
EXHIBIT NO.     DESCRIPTION                                            FILING

   10.1         Consulting Agreement between National Scientific         (1)
                Corporation and Mr. Lou L. Ross, dated February 1,
                2002
-----------

(1)      Filed herewith.



(b)      Reports on Form 8-K.

         No  reports on  Form 8-K were filed  during  the fiscal  quarter  ended
         March 31, 2002.


                                       16
<PAGE>

                                   SIGNATURES

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

                                             NATIONAL SCIENTIFIC CORPORATION



May 15, 2002                                 /s/ MICHAEL A. GROLLMAN
                                             -----------------------------------
                                             Michael A. Grollman
                                             President & Chief Executive Officer



                                             /s/ SAM H. CARR
                                             -----------------------------------
                                             Sam H. Carr
                                             Chief Financial Officer


                                       17
<PAGE>

                                INDEX TO EXHIBITS


Exhibit 10.1    Consulting  Agreement between  National  Scientific  Corporation
                and Mr. Lou L. Ross, dated February 1, 2002




                                       18