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                     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 June 30, 2003

                                    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  68,933,819  shares  of Common  Stock,  par  value  $.01 per  share,
outstanding at August 11, 2003.

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

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<PAGE>

                         NATIONAL SCIENTIFIC CORPORATION

                                   FORM 10-QSB

                                TABLE OF CONTENTS

                                                                            PAGE

Part I - Financial Information

Item 1 - Financial Statements (unaudited).....................................3

         Unaudited Condensed Balance Sheets - June 30, 2003 and
           September 30, 2002.................................................3

         Unaudited Condensed Statements of Operations - Three and Nine
           Months ended June 30, 2003, 2002 and Cumulative from
           October 1, 1997 (Inception) through June 30, 2003..................4

         Unaudited Condensed Statements of Cash Flows - Nine Months
           ended June 30, 2003, 2002 and Cumulative from October 1,
           1997 (Inception) through June 30, 2003.............................5

         Unaudited Condensed Statement of Changes in Shareholders' Equity
           (Deficit) - Nine Months Ended June 30, 2003........................7

         Notes to Financial Statements........................................8

Item 2 - Management's Discussion and Analysis of Financial Condition
           and Results of Operations.........................................11

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

Exhibit 31.1 - Certification Pursuant to Section 302 of the
               Sarbanes-Oxley Act

Exhibit 32.1   Certification Pursuant to Section 906 of the
               Sarbanes-Oxley Act


                                       2
<PAGE>

PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

                         NATIONAL SCIENTIFIC CORPORATION
                          (A Development Stage Company)
                        Unaudited Condensed Balance Sheet
                      June 30, 2003 and September 30, 2002
<TABLE>
<CAPTION>
                                                                    June 30,      September 30,
                                                                      2003             2002
                                                                  ------------    -------------
                                     ASSETS
<S>                                                               <C>             <C>
Current Assets:
   Cash and cash equivalents                                      $     19,169    $       1,405
   Inventory                                                            10,273           14,916
   Other assets                                                         81,224            7,462
                                                                  ------------    -------------
        Total current assets                                           110,666           23,783

Property and equipment, net                                             35,313           45,007
                                                                  ------------    -------------
                                                                  $    145,979    $      68,790
                                                                  ============    =============

                 LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

Current Liabilities:
   Accounts payable and accrued expenses                          $    486,741    $     765,457
   Private placement deposits                                           10,000               --
   Notes payable                                                        55,750           75,079
                                                                  ------------    -------------
        Total current liabilities                                      552,491          840,536
                                                                  ------------    -------------

Shareholders' equity (deficit):
     Common stock, par value $.01; 120,000,000
       shares authorized, and shares issued
       68,933,819 and 51,587,062 outstanding at
       June 30, 2003 and September 30, 2002,
       respectively                                                    689,338          515,871
     Additional paid-in capital                                     20,341,200       19,517,719
     Accumulated deficit                                           (21,437,050)     (20,805,336)
                                                                  ------------    -------------
        Total shareholders' equity                                    (406,512)        (771,746)
                                                                  ------------    -------------
                                                                  $    145,979    $      68,790
                                                                  ============    =============
</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 Three and Nine Months Ended June 30, 2003, 2002, and Development Stage
<TABLE>
<CAPTION>
                                       Three Months    Three Months     Nine Months     Nine Months     Cumulative
                                           Ended           Ended           Ended           Ended        Development
                                       June 30, 2003   June 30, 2002   June 30, 2003   June 30, 2002       Stage
                                       -------------   -------------   -------------   -------------   -------------
<S>                                    <C>             <C>             <C>             <C>             <C>
Revenues                               $      16,047   $       1,550   $      34,595   $       1,550   $     920,224
Cost of Sales                                  9,118             591          13,908             591         885,547
                                       -------------   -------------   -------------   -------------   -------------
Gross profit                                   6,929             959          20,687             959          34,677

Costs and expenses
     Salaries and benefits                   118,661         182,225         298,037         525,209       2,036,589
     Research and development                 34,918          24,688          56,695         143,522       3,685,529
     Consulting fees, related party            2,650              --          17,650              --       8,175,973
     Other                                   124,772         108,535         278,924         716,032       5,326,018
                                       -------------   -------------   -------------   -------------   -------------

     Total costs and expenses                281,001         315,448         651,306       1,384,763      19,224,109
                                       -------------   -------------   -------------   -------------   -------------
Net loss from operations                    (274,072)       (314,489)       (630,619)     (1,383,804)    (19,189,432)
                                       -------------   -------------   -------------   -------------   -------------
Other income (expense)
     Interest and other income                    --              19              --          90,917         173,228
     Interest expense                          1,073            (639)         (1,050)         (1,280)        (26,121)
                                       -------------   -------------   -------------   -------------   -------------
                                               1,073            (620)         (1,050)         89,637         147,107
                                       -------------   -------------   -------------   -------------   -------------

Net loss before income taxes benefit        (272,999)       (315,109)       (631,669)     (1,294,167)    (19,042,325)
Provision for income taxes (benefit)             (45)             --             (45)             --            (45)
                                       -------------   -------------   -------------   -------------   -------------
Net loss                               $    (273,044)  $    (315,109)  $    (631,714)  $  (1,294,167)   $(19,042,370)
                                       =============   =============   =============   =============   =============
Net loss per common share,
basic and diluted                      $       (0.00)  $       (0.01)  $       (0.01)  $      (0.03)
                                       =============   =============   =============   =============
</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 Nine Months Ended June 30, 2003, 2002, and Development Stage
<TABLE>
<CAPTION>
                                                                                          DEVELOPMENT
                                                              2003            2002           STAGE
                                                          ------------    ------------    ------------
<S>                                                       <C>             <C>             <C>
Cash flows from operating activities:
  Net loss                                                $   (631,714)   $ (1,294,167)   $(19,042,370)
  Adjustments to reconcile net loss to net cash used in
  operating activities:
  Noncash transactions:
    Depreciation                                                 9,694          23,371          61,964
    Loss on disposal of assets                                      --              --          30,960
    Impairment loss on equipment                                    --              --          64,187
    Stock and options issued for services, net                 273,775         250,916      11,512,179
    Decrease (increase) in inventory                             4,643          20,000         (10,273)
    Deferred offering costs                                         --              --         (85,171)
    Decrease (increase) in receivables                              --              --         130,000
    Decrease (increase) in other assets                        (73,762)         11,937         (70,653)
    Increase in accounts payable and accrued expenses          (54,601)        202,502         688,276
                                                          ------------    ------------    ------------
         Net cash used in operating activities                (471,965)       (785,441)     (6,720,901)
                                                          ------------    ------------    ------------
Cash flows from investing activities:
    Acquisition of property and equipment                           --              --        (153,692)
    Repayment of loans                                              --              --         200,000
    Proceeds from the sale of furniture and equipment               --              --           6,050
    Loans issued                                                    --              --        (400,000)
                                                          ------------    ------------    ------------
         Net cash used in investing activities                      --              --        (347,642)
                                                          ------------    ------------    ------------
Cash flows from financing activities:
    Increase in notes payable                                   20,710              --          20,710
    Draws on the line of credit                                     --        (430,000)        430,000
    Loan from (to) officer                                          --          41,125          65,079
    Repayment and forgiveness of notes payable                 (40,039)             --        (150,039)
    Repayment of line of credit                                     --              --        (430,000)
    Repayment of capital lease obligations                          --              --          (1,819)
    Deferred offering costs                                         --         193,015              --
    Proceeds from the exercise of options                       29,058         119,690         198,590
    Proceeds from the exercise of warrants                          --          92,460          92,460
    Proceeds from equity line of credit                             --         164,390         414,824
    Proceeds from the issuance of preferred stock                   --              --         482,500
    Deposits for private placement                              10,000              --          10,000
    Proceeds from private placement                            470,000              --         470,000
    Proceeds from issuance of common stock                          --              --       5,481,788
                                                          ------------    ------------    ------------
         Net cash provided by financing activities             489,729         180,680       7,084,094
                                                          ------------    ------------    ------------
</TABLE>
                                                                     (Continued)

                                       5

<PAGE>

                         NATIONAL SCIENTIFIC CORPORATION
                          (A Development Stage Company)
            Unaudited Condensed Statements of Cash Flows (Continued)
      For the Nine Months Ended June 30, 2003, 2002, and Development Stage

<TABLE>
<CAPTION>
                                                                                          DEVELOPMENT
                                                              2003            2002           STAGE
                                                          ------------    ------------    ------------
<S>                                                       <C>             <C>             <C>
Net (decrease) increase in cash and cash equivalents            17,764        (604,761)         15,551
Cash and cash equivalents, beginning of year                     1,405         604,761           3,618
                                                          ------------    ------------    ------------
Cash and cash equivalents, end of the period              $     19,169    $         --    $     19,169
                                                          ============    ============    ============

Supplementary Disclosure of Cash Flow Information:

Cash paid during the period for interest                  $     (1,050)   $         --          23,524
                                                          ============    ============    ============
Cash paid during the period for income taxes              $         50    $         --             100
                                                          ============    ============    ============
</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 Nine Months Ended June 30, 2003

<TABLE>
<CAPTION>
                                      COMMON STOCK
                                 -----------------------      ADDITIONAL
                                  NUMBER OF      PAR           PAID-IN        ACCUMULATED
                                   SHARES       VALUE          CAPITAL          DEFICIT         TOTAL
                                 ----------   ----------     ------------    ------------   ------------
<S>                              <C>          <C>            <C>             <C>            <C>
Balance, September 30, 2002      51,587,062   $    515,871   $ 19,517,719    (20,805,336)   $   (771,746)

Exercise of options                 637,153          6,372         22,686             --          29,058

Stock issued for services           946,270          9,462        152,912             --         162,374

Common stock options granted             --             --         44,320             --          44,320

Debt equity swap                    788,334          7,883         66,233             --          74,116

Private placement                11,625,000        116,250        353,750             --         470,000

Stock retainage program           3,350,000         33,500        183,580             --         217,080

Net loss                                 --             --             --       (631,714)       (631,714)
                                 ----------   ------------   ------------   ------------    ------------
Balance, June 30, 2003           68,933,819   $    689,338   $ 20,341,200   $(21,437,050)   $   (406,512)
                                 ==========   ============   ============   ============    ============
</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 National Scientific
Corporation, 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 generally
accepted  accounting  principles 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
nine months ended June 30, 2003 and 2002 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, 2002, and the Company's quarterly
reports on Form 10-QSB for the fiscal  periods ended December 31, 2002 and March
31, 2003.

2.   ISSUANCE OF COMMON STOCK

In November 2002, the Company  commenced a private offering of restricted common
stock and common stock purchase warrants.  During the nine months ended June 30,
2003, the Company  raised  approximately  $500,000 in cash and debt  forgiveness
from the private offering in consideration for the issuance of 12,125,000 shares
of common  stock and  5,000,000  warrants to purchase the  Company's  restricted
common  stock at prices  ranging  from  $0.30 to $0.50  cents  per share  before
December 31, 2004. These shares were issued at an average market price per share
of approximately $0.04.

During the three months ended June 30, 2003, 625,000 shares of common stock were
issued at an average market price per share price of $0.19 to Stanton,  Walker &
Co. for business advisory and consulting services provided to the Company during
the six months ending November 28, 2003.

Also during the quarter  ended June 30, 2003,  the Company  issued Mr. Lou Ross,
currently a Director,  288,334 restricted common stock as part of its program to
lower debt without expending cash resources,  in exchange for the forgiveness of
$46,250 of debt,  or one half of the total debt owed by the  company to Mr. Ross
of $86,500. The debt forgiven included various  disclosed notes, salary deferred
in 2002 and board fees  deferred  in 2002.  The shares were issued at an average
market  price per share of $0.15.  The  Company  also  issued Mr.  Ross,  50,000
restricted  common stock for reduced  Director's  fees for February 2003 through

                                       8
<PAGE>

the end of this fiscal year in  September  2003.  These shares were issued at an
average market price per share of $0.15.

3.   STOCK OPTIONS AND WARRANTS

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,  consultants,  and employees in
December 2000.

During  the three  months  ended  June 30,  2003,  non-qualified  stock  options
totaling  75,000 were granted  under the 2000 Stock  Option Plan,  at an average
exercise price of $0.10 per share.

The Company  adopted  Financial  Accounting  Standards Board APB Opinion No. 25,
ACCOUNTING  FOR STOCK  ISSUED  TO  EMPLOYEES,  and  related  interpretations  in
accounting  for the  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  of  $131,025  has been
recognized  for the fiscal  quarter ended June 30, 2003.  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 be fully vested and exercisable. On June 30, 2003,
3,576,676  outstanding  stock options were vested,  and fully  exercisable,  and
10,000 were not vested.

In accordance with The Statement of Financial  Accounting  Standards  (SFAS)123,
ACCOUNTING  FOR  STOCK-BASED  COMPENSATION,  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 100% as of the date of
issue.

                                                 Number of      Weighted Average
                                                  Shares         Exercise Price
                                                 ---------      ----------------
Options Outstanding, September 30, 2002          3,582,829         $   1.97
Granted                                            651,000             0.06
Exercised                                          637,153             0.05
                                                 ---------         --------
Options Outstanding, June 30, 2003               3,586,676         $   1.97
                                                 =========         ========


                                       9
<PAGE>

Had the Company fully adopted SFAS123, the Company's net income and earnings per
share would approximate the following pro forma amounts:

<TABLE>
<CAPTION>
                                      Three Months    Three Months     Nine Months     Nine Months
                                          Ended           Ended           Ended           Ended
                                      June 30, 2003   June 30, 2002   June 30, 2003   June 30, 2002
                                      -------------   -------------   -------------   -------------
<S>                                   <C>             <C>             <C>             <C>
Net (loss) income:
   As reported                        $    (273,044)  $    (315,109)  $    (631,714)   $ (1,294,167)
   Pro forma                               (273,044)       (327,993)       (643,050)     (1,403,641)

Basic (loss) earnings per share:
   As reported                        $       (0.00)  $       (0.01)  $       (0.01)   $      (0.03)
   Pro forma                                  (0.00)          (0.01)          (0.01)          (0.03)
</TABLE>

SFAS 123 does not  apply to  awards  before  1996,  nor are the  effects  of its
application in this disclosure  indicative of the pro forma effect on net income
in future years.

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):

                                                Three months ended
                                                      June 30
                                           ----------------------------
                                               2003            2002
                                           ----------------------------
        Basic net income (loss) per
        common share:

        Net income (loss)                  $   (273,044)   $   (315,109)
                                           ============    ============
        Weighted average common shares       66,936,328      50,319,391
                                           ============    ============
        Basic per share amount             $      (0.00)   $      (0.01)
                                           ============    ============


                                       10
<PAGE>

6.   SUBSEQUENT EVENTS

In June 2003,  the Company  commenced a private  offering of  restricted  common
stock and common stock purchase warrants. As of August 12, 2003, the Company had
raised approximately $200,000 in cash from this effort. Subsequent to the end of
June 30, 2003,  the Company will issue  2,500,000  shares of  restricted  common
stock and granted 20 "J" warrants to purchase  100,000  additional  common stock
shares.  The  warrants  are  exercisable  at a price of $0.35 to $0.50 per share
until June 30, 2006. As part of this  transaction,  the $10,000  liability entry
shown on the balance sheet at June 30, 2003 for private placement  deposits will
be converted to equity.  No  underwriters  are involved in connection  with this
private placement.  The sales and issuances of the securities issued pursuant to
the  foregoing  private  placement  are  exempt  from  registration   under  the
Securities Act of 1933, as amended,  pursuant to Section 4(2) thereof,  and Rule
506 of Regulation D.


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

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 we face  described  above and  elsewhere  in this
report.

THREE AND NINE  MONTHS  ENDED JUNE 30,  2003  COMPARED  TO THREE AND NINE MONTHS
ENDED JUNE 30, 2002

The Company's  embedded  systems  location  tools  strategy began to yield small
amounts of revenue late in the fiscal year ending September 30, 2002. This small
revenue  stream  roughly  doubled to $5,455 in the first  quarter of the current
fiscal year, then more than doubled again in the second quarter to $13,093,  and
increased by  approximately  23% to $16,047 in this most recently ended quarter.
This compares  with a revenue  total of $1,550 during the three  quarters of the
previous fiscal year,  prior to the adoption of the location  services  business
model.  The growth in revenue  over the last three  quarters  is  attributed  to
product introductions from NSC's Followit, DarkStar, and Gotcha lines, only some
of which were  available  for sale during the quarter  ending June 30, 2003,  as
well as revenues  related to design  services that quarter.  The Company expects
these product lines can  contribute  some  additional  revenue during the fiscal
quarter ending September 30, 2003.

                                       11
<PAGE>

As  of  June  30,  2003,  the  Company's  cash  and  cash  equivalents   totaled
approximately $19,169 and total current assets were approximately $110,666.

On May 29,  2003  the  Company  entered  into a  six-month  agreement  with  New
York-based Stanton, Walker & Company to perform business advisory and consulting
services.  Stanton,  Walker will assist in expanding existing strategies for NSC
business  growth as well as developing new ones,  such as merger and acquisition
planning.  In conjunction with this agreement,  NSC issued 625,000 shares of NSC
common stock to Stanton,  Walker & Company using a Form S-8 registration on June
4, 2003.

The Company  entered  into an agreement on June 11,  2003,  to  restructure  its
delinquent  outstanding  debt and back pay to Mr. Lou Ross,  a  Director  of the
Company.  The Company and Mr. Ross  aggregated  the value of all sums  currently
owed by the Company to Mr. Ross.  This included notes executed of  approximately
$75,000,  all salary deferred by Mr. Ross in 2002 of approximately  $8,300,  and
all cash board fees deferred in 2002 by Mr. Ross of approximately  $3,000, for a
total  debt  outstanding  by the  Company  to Mr.  Ross as of June  11,  2003 of
approximately  $86,500.  Mr. Ross agreed to accept  one-half of this amount,  or
$43,250,  in restricted NSC common stock issued at the then-current market price
of $0.15 cents per share, for a total share grant to Mr. Ross of 288,334 shares.
Mr.  Ross also  agreed to  convert  the  remaining  one-half  of the total  debt
outstanding  from the Company to him, or $43,250,  into a 3 year  interest  free
note,  with no  payments  required  of the  Company  until the end of the 3 year
period, and which could be paid by the Company at any time before the three year
period elapses with either cash or its common  restricted stock or a combination
of cash and  stock.  With  this  agreement,  NSC no longer  has any  outstanding
delinquent  notes to Mr. Ross,  and the overall  company  liabilities  have been
reduced by $43,250.

Mr. Ross also agreed to take a reduction in his  Director's  fees for the period
from  February  2003 to the end of the current  fiscal year ending in  September
2003,  and accept 50,000 shares of NSC  restricted  common stock in lieu of cash
for these board services, which was paid to him in stock on June 11, 2003.

As of June 30, 2003, the Company has a $10,000  liability for private  placement
deposits.  Subsequent to June 30, 2003, the liability will be converted entirely
into  equity,  in  connection  with the  issuance of shares under the April 2003
private placement (See Liquidity and Capital Resources).

We believe that our current cash position, including cash funds arising from the
exercise  of   outstanding   options,   and  secured  plant  assets  from  legal
settlements,  equity private placement,  product sales, and continued aggressive
expense  management to be sufficient to continue  operations for the next twelve
months.  We also believe that we may be able to reduce  outstanding  liabilities
through  negotiations  with our creditors,  or possibly  negotiate to extend the
payment  schedule for these debts. In the event these  approaches do not provide
us with  adequate  working  capital,  we may be required  to further  curtail or
reduce our development  activities,  seek alternative  funding sources,  or seek
protection under reorganization laws.

                                       12
<PAGE>

Operating  expenses  for the nine months  ended June 30,  2003 of  approximately
$651,306 are down from the  comparable  period  ended June 30, 2002,  which were
approximately  $1,384,763.  This decrease was primarily due to staff  reductions
and the shift away from investments in semiconductor technology development.

Salary and benefits  have  decreased  for the nine months ended June 30, 2003 by
approximately  $227,172 from the nine months ended June 30, 2002.  This decrease
is  attributable  to the staff  reductions and the movement of some staff from a
full time to part time basis.

Research and development  costs have decreased from  approximately  $143,522 for
the nine months ended June 30, 2002 to approximately $56,695 for the nine months
ended  June 30,  2003,  primarily  due to the shift of  resources  from  capital
intensive  semiconductor-related  development  projects to more labor  intensive
location service technology-related projects.

The  Company  has  focused an  increasingly  significant  amount of its time and
energy on  development  of new sources of revenue  through  the  building of new
distributor and customer  relationships.  This has included increased attendance
at trade  shows,  increased  expenditures  on  direct  mailings  of  promotional
literature, internet advertising and promotion through website listings, on-site
customer product demonstrations, and other marketing related activities intended
to foster customer acquisition. The Company has also spent and plans to continue
to spend  resources  on the  development  of strategic  partnerships  with other
technology firms to assist it in taking its products to market. The Company will
continue  to  research  and  implement  innovative  ways to take its  technology
expertise and products to market,  across its entire  portfolio of semiconductor
and electronics-related devices.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2003, NSC's liquidity  included cash and cash equivalents of $19,169
compared  to $1,405 at  September  30,  2002.  Our total cash used in  operating
activities from developmental  stage inception in 1998 through June 30, 2003 was
$6,720,901.  We have an accumulated  deficit of $21,437,050 and expect operating
losses in the  foreseeable  future as we  continue  our  efforts to develop  and
market  commercial  products.  We expect to generate  future revenues by product
sales,   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, and to a very recent
limited  extent,  through  the sale of our  products.  We expect our  ability to
finance  operations  through  sales to improve  during the course of this fiscal
year and next.

In June 2003,  the Company  commenced a private  offering of  restricted  common
stock and common stock purchase warrants. As of August 12, 2003, the Company had
raised  approximately  $200,000 in cash from this effort.  No  underwriters  are
involved in connection with this private  placement.  The sales and issuances of
the securities  issued  pursuant to the foregoing  private  placement are exempt
from  registration  under the  Securities  Act of 1933, as amended,  pursuant to
Section 4(2) thereof, and Rule 506 of Regulation D.

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<PAGE>

We believe that our current cash position, including cash funds arising from the
exercise  of   outstanding   options,   and  secured  plant  assets  from  legal
settlements,  equity private placement,  product sales, and continued aggressive
expense  management to be sufficient to continue  operations for the next twelve
months.  We also believe that we may be able to reduce  outstanding  liabilities
through  negotiations  with our creditors,  or possibly  negotiate to extend the
payment  schedule for these debts. In the event these  approaches do not provide
us with  adequate  working  capital,  we may be required  to further  curtail or
reduce our development  activities,  seek alternative  funding sources,  or seek
protection under reorganization laws.

Cash used in  operations  was  approximately  $466,965 for the nine months ended
June 30, 2003  compared  with  approximately  $785,441 for the nine months ended
June 30,  2002.  The  decrease in cash used in  operations  resulted  from staff
reductions,  salary deferrals, and reductions in other operating expense related
areas.  Additionally,  management  has  sought  to  reduce  cash  uses  wherever
possible.  We are  continuing  efforts to lower our  consumption of cash through
expense reductions.

SUBSEQUENT EVENTS

The Company continued shipping samples in May, June, and July of its Gotcha!(TM)
product to sales representatives,  retailers, distributors, and booked its first
revenue from the sale of this product in July 2003. Although the primary channel
of distribution  for this product will be through NSC's  distribution and retail
partners,  a number of units have been  reserved by NSC for direct sale  through
its own website for a limited time. The Company  received its first order within
an hour of placing  them for sale on its web site and  continues to fill a small
number of orders directly from its own website.

The Company's IBUS(TM) technology was successfully piloted for the first time by
its business  partner Verify Systems in July 2003 at a school in  Massachusetts.
The units in use for the pilot program were part of an initial  shipment against
Verify's  $250,000  blanket  purchase order for NSC's IBUS(TM)  school bus rider
authentication system.  Additional pilots are planned for this product in August
and September at various schools around the United States.

The Company also shipped in late June of 2003 its first bench-testing model of a
power sports tracking design for its project with Positus Corporation,  formerly
known as Bike & Cycle Trak USA,  Inc.,  project.  The  Company  expects the next
phase to move forward in the fall of 2003.

Initial  shipments of the Company's  WiFi tag developer  kits are expected to be
shipped  to  interested  parties in August of 2003.  The  Company  continues  to
receive purchase orders for the developer kits for this product.

In August of 2003 the Company  promoted David Mandala to its Technical  Advisory
Board for the fiscal year 2004.  During late August Mr.  Mandala is scheduled to
pass on his  developmental  technical  project  duties as NSC's CTO of  Embedded
Systems to NSC's new Lead  Engineer  for Embedded  Systems,  who is scheduled to
begin working on these projects at that time.  After August 2003, Mr.  Mandala's
only duties with NSC will be those related to the NSC Technical Advisory Board.

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<PAGE>

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     The  Company is  involved in legal  actions in the  ordinary  course of its
business, including those outlined in the Company's annual report on Form 10-KSB
for the fiscal year ended September 30, 2002.  Although the outcomes of any such
legal actions cannot be predicted,  in the opinion of  management,  there are no
legal  proceedings  pending or asserted against or involving the Company the net
outcome of which are likely to have a material adverse effect upon the financial
position or results of operations of the Company.

     In May of 2003 the  Company had a setback in its  litigation  with Bowne of
Phoenix,  when a judgment was entered against it for approximately  $26,000. NSC
has  already  paid Bowne  over  $20,000  for  printing  work in 2001,  and still
maintains that Bowne has overcharged NSC for its services.  As a result, NSC has
filed a motion for a new trial,  and is  considering an appeal in this matter as
well.  NSC has  taken a  reserve  for this  judgment  in its  current  financial
statement.

     The Company was awarded a judgment of approximately $179,000 in May of 2003
against  E4World  Corporation.  However,  there is no assurance that any of this
amount will be collected by NSC. Since collectability of this judgment by NSC is
uncertain,  this positive  judgment is not reflected in NSC's current  financial
statements.  The Company  continues to press its claim to secure  assets held by
PSI in a separate  legal matter,  although there is no assurance that this claim
will be collected by NSC, and thus this claim is not shown in the NSC  financial
statements.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

     During the nine  months  ended June 30,  2003,  946,270  restricted  common
shares were issued for  consulting  services  at a total value of  $162,374.  In
addition,  637,153 common shares were issued in connection  with the exercise of
options granted under the 2000 Stock Option Plan.  These options had an exercise
price of $0.05 per share, resulting in $29,058 of cash proceeds to the Company.

     As of July 31, 2003, there are 412,201 outstanding warrants to purchase the
Company common stock at $1.67 per share held by Coriander  Enterprises  Limited,
4,700,000 warrants outstanding to purchase the Company common stock at $0.30 per
share,  expiring December 30, 2004, and 200,000 warrants outstanding to purchase
the Company  common stock at $0.50 per share,  expiring  also December 30, 2004.
Coriander  Enterprises  Limited  has  recently  assigned  all  warrants  held by
Coriander Enterprises Limited to Omega Financial International, Inc.

                                       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. THER INFORMATION.

     Not applicable.

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

     (a)  Exhibits.

Exhibit
Number           Description
-------          -----------

31.1             Certification pursuant to Section 302 of the Sarbanes-Oxley Act
                 of 2002

32.1             Certification pursuant to Section 906 of the Sarbanes-Oxley Act
                 of 2002

     (b)  Reports on Form 8-K.

          None.


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<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



August 14, 2003                    /s/ Michael A. Grollman
                                   --------------------------------------------
                                   Michael A. Grollman
                                   President, Chief Executive Officer, Interim
                                   Chief Financial Officer, Chairman


                                   /s/ Graham Clark
                                   --------------------------------------------
                                   Graham L. Clark
                                   Secretary


                                   /s/ Lou L. Ross
                                   --------------------------------------------
                                   Lou L. Ross
                                   Director and Chairman-Emeritus


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