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


                     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, 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  51,539,285  shares  of Common  Stock,  par  value  $.01 per  share,
outstanding at August 13, 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 - June 30, 2002, and September 30, 2001                                          3

         Statements of Operations - Three and Nine Months Ended June 30, 2002, and 2001
         and Cumulative from October 1, 1997 (Inception) through June 30, 2002                  4

         Statements of Cash Flows - Nine Months ended June 30, 2002, and 2001
         and Cumulative from October 1, 1997 (Inception) through June 30, 2002                  5

         Statement of Changes in Shareholders' Equity (Deficit) - Nine Months Ended
         June 30, 2002                                                                          7

         Notes to Financial Statements                                                          8

Item 2 - Management's Discussion and Analysis or Plan of Operation                             13

Part II - Other Information

         Item 1 - Legal Proceedings                                                            17

         Item 2 - Changes in Securities and Use of Proceeds                                    17

         Item 3 - Defaults upon Senior Securities                                              18

         Item 4 - Submission of Matters to a Vote of Security Holders                          18

         Item 5 - Other Information                                                            18

         Item 6 - Exhibits and Reports on Form 8-K                                             19

Signatures                                                                                     19
</TABLE>

                                       2

<PAGE>

                         PART I - FINANCIAL INFORMATION


                          NATIONAL SCIENTIFIC CORPORATION
                           (A Development Stage Company)
                         Unaudited Condensed Balance Sheet
                      At June 30, 2002 and September 30, 2001
<TABLE>
<CAPTION>
                                               ASSETS
                                                                              June 30,      September 30,
                                                                                2002            2001
                                                                            ----------------------------
<S>                                                                         <C>             <C>
Current assets:
     Cash and cash equivalents                                              $         --    $    604,761
     Inventory                                                                        --          20,000
     Loan to officer                                                                  --         100,000
     Other assets                                                                  9,421          21,358
                                                                            ----------------------------
         Total current assets                                                      9,421         746,119

Property and equipment, net                                                      112,465         135,836
Deferred Offering Costs                                                               --         193,015
                                                                            ----------------------------
                                                                            $    121,886    $  1,074,970
                                                                            ============================

                           LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
     Bank overdraft                                                         $      2,517    $         --
     Accounts payable and accrued expenses                                       528,869         326,367
     Line of Credit                                                                   --         430,000
     Notes Payable                                                                41,125              --
                                                                            ----------------------------
         Total current liabilities                                               572,511         756,367
                                                                            ----------------------------

Shareholders' equity (deficit):
     Preferred stock $.10 par value; 4,000,000 shares authorized
         No shares issued and outstanding                                             --              --
     Common stock, par value $.01; 120,000,000 shares authorized,
         50,774,371 and 47,367,498 shares issued and outstanding                 507,744         473,675
     Additional paid-in-capital                                               18,421,988      17,966,208
     Stock options exercisable                                                   835,657         800,567
     Accumulated deficit                                                     (20,216,014)    (18,921,847)
                                                                            ----------------------------
                                                                                (450,625)        318,603
                                                                            ----------------------------
                                                                            $    121,886    $  1,074,970
                                                                            ============================
</TABLE>
          The 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 Quarters Ended and Nine Months Ended June 30, 2002 and 2001, and
      For the Period from October 1, 1997 (Inception of Development Stage)
                              Through June 30, 2002
<TABLE>
<CAPTION>
                                               Three Months     Three Months      Nine Months      Nine Months      Cumulative
                                                   Ended            Ended            Ended            Ended         Development
                                               June 30, 2002    June 30, 2001    June 30, 2002    June 30, 2001       Stage
                                               -------------    -------------    -------------    -------------    ------------
<S>                                            <C>              <C>              <C>              <C>              <C>
Revenues                                       $       1,550    $     299,000    $       1,550    $     616,780    $    884,265
Cost of sales                                            591          293,250              591          605,250         870,341
                                               -------------    -------------    -------------    -------------    ------------
     Gross profit                                        959            5,750              959           11,530          13,924

Operating expenses

     Salaries and benefits                           182,225          332,464          525,209          717,497       1,639,692
     Consulting fees, related party                       --               --               --          422,008       8,158,323
     Research and development                         24,688          506,345          143,522        1,020,606       3,617,808
     Stock compensation                                   --              --           174,751        5,664,842       2,503,619
     Other                                           108,535          260,449          541,281          839,084       2,132,088
                                               -------------    -------------    -------------    -------------    ------------
                                                     315,448        1,099,258        1,384,763        8,664,037      18,051,530
                                               -------------    -------------    -------------    -------------    ------------

Net loss from operations                            (314,489)      (1,093,508)      (1,383,804)      (8,652,507)    (18,037,606)
                                               -------------    -------------    -------------    -------------    ------------
Other income (expense)
     Interest and other income                            19           19,198           90,917           91,105         269,305
     Interest expense                                   (639)            (233)          (1,280)            (233)        (24,477)
     Loss on disposal of assets                           --               --               --               --         (28,555)
                                               -------------    -------------    -------------    -------------    ------------
                                                        (620)          18,965           89,637           90,872         216,273
                                               -------------    -------------    -------------    -------------    ------------
Net loss before income tax benefit                  (315,109)      (1,074,543)      (1,294,167)      (8,561,635)    (17,821,333)
Provision for income taxes (benefit)                      --               --               --               --              --
                                               -------------    -------------    -------------    -------------    ------------
Net loss                                       $    (315,109)   $  (1,074,543)   $  (1,294,167)   $  (8,561,635)   $(17,821,333)
                                               =============    =============    =============    =============    ============

Net loss per common share, basic and diluted   $       (0.01)           (0.02)   $       (0.03)           (0.18)
                                               =============    =============    =============    =============
</TABLE>



          The 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, 2002 and 2001, and
      For the Period from October 1, 1997 (Inception of Development Stage)
                              Through June 30, 2002
<TABLE>
<CAPTION>
                                                                        Nine Months      Nine Months      Cumulative
                                                                           Ended            Ended         Development
                                                                       June 30, 2002    June 30, 2001       Stage
                                                                       -------------    -------------    ------------
<S>                                                                    <C>              <C>              <C>
Cash flows from operating activities:
     Net loss                                                          $  (1,294,167)   $  (8,561,635)   $(17,821,335)
     Adjustments to reconcile net loss to net
        cash used in operating activities:
        Depreciation                                                          23,371           13,345          52,795
        Loss on disposal of assets                                                --               --          28,555
        Stock and options issued for services                                250,916        2,163,459      11,187,825
        Bank overdraft                                                         2,517               --           2,517
        Deferred stock compensation                                               --        3,712,500              --
        Advances to affiliate                                                     --         (240,000)             --
        Decrease (Increase) in inventory                                      20,000         (264,500)             --
        Deferred offering costs                                                   --         (100,265)             --
        Decrease in receivables                                                   --               --         130,000
        (Increase) decrease in other assets                                   11,937           26,645           1,150
        Increase (decrease) in accounts payable and accrued expenses         202,502          253,827         506,290
                                                                       ----------------------------------------------
            Net cash used in operating activities                           (782,924)      (2,996,624)     (5,912,203)
                                                                       ----------------------------------------------
Cash flows from investing activities:
     Loans issued                                                                 --         (200,000)       (400,000)
     Repayment of loans                                                      100,000          100,000         200,000
     Reserve for note receivable                                            (100,000)        (144,595)             --
     Acquisition of property and equipment                                        --               --        (153,692)
     Proceeds from the sale of furniture and equipment                            --               --           4,660
                                                                       ----------------------------------------------
                                                                                  --         (244,595)       (349,032)
                                                                       ----------------------------------------------
Cash flows from financing activities:
     Loan from officer                                                        41,125               --          41,125
     Draws on the line of credit                                            (430,000)              --              --
     Payment on line of credit                                                    --          200,000              --
     Proceeds from equity lind of credit, net of transaction costs           161,873               --         161,873
     Loan to officer                                                              --               --         (10,000)
     Deferred offering costs                                                 193,015               --              --
     Proceeds from the exercise of options                                   119,690               --         119,690
     Repayment of notes payable                                                   --               --        (110,000)
     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                         178,163        1,491,730       6,257,617
                                                                       ----------------------------------------------
Net increase in cash and cash equivalents                                   (604,761)      (1,749,489)         (3,618)

Cash and cash equivalents, beginning of period                               604,761        2,584,900           3,618
                                                                       ----------------------------------------------
Cash and cash equivalents, end of period                               $          --      $   835,411    $         --
                                                                       ==============================================
</TABLE>



          The notes are an integral part of these financial statements.


                                       5
<PAGE>

                         NATIONAL SCIENTIFIC CORPORATION
                          (A Development Stage Company)
                  Unaudited Condensed Statements of Cash Flows
              For the Nine Months Ended June 30, 2001 and 2000, and
      For the Period from October 1, 1997 (Inception of Development Stage)
                              Through June 30, 2002

<TABLE>
<CAPTION>
SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION
                                                                                               Cumulative
                                                    Nine Months Ended      Nine Months Ended   Development
                                                      June 30, 2002          June 30, 2001        Stage
                                                    -----------------      -----------------   -----------
<S>                                                 <C>                    <C>                 <C>
Cash paid during the year for interest                             --                    233        13,719
                                                    =================      =================   ===========

Cash paid during the year for income taxes                         --                     50           100
                                                    =================      =================   ===========

NON-CASH INVESTING AND FINANCING ACTIVITIES

                                                                                               Cumulative
                                                    Nine Months Ended      Nine Months Ended   Development
                                                      June 30, 2002          June 30, 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>

SUMMARY OF NON-CASH INVESTING AND FINANCING ACTIVITIES

During the quarter-ended  December 31, 1999, the Company issued 1,128,600 shares
     of  restricted  common stock to a Director's  family member in exchange for
     580,000 shares of unrestricted common stock.



          The notes are an integral part of these financial statements.


                                       6
<PAGE>

                         NATIONAL SCIENTIFIC CORPORATION
                          (A Development Stage Company)
        Unaudited Statements of Changes in Shareholders' Equity (Deficit)
                       For Nine Months Ended June 30, 2002
<TABLE>
<CAPTION>
                                                      Common Stock
                                                  ----------------------      Addition                       Stock
                                                   Number of                  Paid-In      Accumulated      Options
                                                    Shares       Amount       Capital        Deficit      Exercisable       Total
                                                  ----------------------------------------------------------------------------------
<S>                <C> <C>                        <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                                  924,000       9,240        176,876             --        (66,426)      119,690
Issuance of stock for services                       100,000       1,000         29,600             --             --        30,600
Issuance of stock for equity line of credit, net   1,862,373      18,624        143,249             --             --       161,873
Issuance of non-qualified option                          --          --             --             --         41,990        41,990
Options granted below market value                        --          --             --             --         59,526        59,526
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                                                  --          --             --     (1,294,167)            --    (1,294,167)
                                                  ----------------------------------------------------------------------------------
Balance, June 30, 2002                            50,774,371    $507,744    $18,421,988   $(20,216,014)   $   835,657   $  (450,625)
                                                  ==================================================================================
</TABLE>


          The 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 nine months ended June 30, 2002 and 2001
are not  necessarily  indicative  of the results to be  expected  for the entire
fiscal year.  Certain prior period amounts have been  reclassified to conform to
the current period's presentation.

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 June 30, 2002,  the Company  raised  approximately
$6,798 net of fees in consideration  for the issuance of 53,095 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  $.13.  These shares
were issued in connection with the stock purchase  agreement between the Company
and Coriander  Enterprises  Limited  (Coriander)  at an 8% discount from market.
Proceeds from the sale of shares to Coriander are also net of bi-monthly  escrow
fees of $1,000 which are paid during  months of equity line of credit  activity.
For the nine  months  ended June 30, 2002 the Company  issued  1,862,373  shares
under the equity line of credit,  resulting in cash  proceeds of $161,873 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 nine months ended June 30, 2001,  the Company issued 10,000 shares of
common  stock.  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.  During the three months ended December 31, 2000, the Company received


                                       8

<PAGE>

$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.

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 June  30,  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 June 30,  2002,  a total of 62,176  non-qualified
stock options were granted to a consultant  under the 2000 Stock Option Plan, at
an average  exercise price of $.14 per share.  During the nine months ended June
30,  2002,  a total of  312,009  non-qualified  stock  options  were  granted at
exercise  prices  ranging from $.05 to $.28 per share to  consultants  under the
2000 Stock Option Plan to serve as  compensation  in lieu of cash. For the three
months ended June 30, 2002,  805,000 options were issued at an average  exercise
price of  approximately  $0.12  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 total employee compensation expense recognized utilizing stock
options for the three months  ended June 30, 2002 was  $41,000.  The Company may
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.

During  the three  months  ended  June 30,  2002,  742,200  stock  options  were
exercised at  approximately  $.12 per share.  For the nine months ended June 30,
2002,  the  number of stock  options  exercised  was  924,000,  with an  average
exercise price of approximately $0.13. The total cash realized from the exercise
of these options totaled $119,690.

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 its
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.  In July 2002, Mr. Ross elected
to defer  future cash  payments  related to his fees to serve as Chairman of the


                                       9

<PAGE>

Board as well as any amounts to be paid as an independent  contractor.  Mr. Ross
will be receiving  common stock in the equivalent  dollar amounts for his future
monthly  director  fees.  Mr.  Ross will  continue to offer  services  under his
independent contractor agreement, but will be paid only for services rendered at
the Company's request.

The  Company  adopted  Accounting   Principles  Board  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 $41,000 has been recognized for the fiscal quarter ended
June 30, 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 June 30, 2002, 3,228,227 outstanding stock options were vested,
and fully exercisable, and 180,949 were not vested.

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 pro forma
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                                     2,847,009        $1.58
        Forfeited                                     (48,334)       $0.60
        Exercised                                    (924,000)       $0.13
                                                    ---------        -----

     Options Outstanding, June 30, 2002             3,409,176        $2.09
                                                    =========        =====


Had the Company  fully  adopted  Statement  of  Financial  Accounting  Standards
("SFAS")  123, the third quarter net loss would have been  $(321,712)  and basic
loss per  share  would  have  been  $(.01).  The table  above  excludes  412,201
outstanding warrants.



                                       10
<PAGE>

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           Nine months ended
                                          June 30,                    June 30,
                                 -----------------------------------------------------
                                    2002         2001           2002          2001
                                 -----------------------------------------------------
<S>                              <C>          <C>            <C>           <C>
Basic net income (loss) per
common share:

Net income (loss)                $ (315,109)  $(1,074,543)   $(1,294,167)  $(8,561,635)
                                 ==========   ===========    ===========   ===========
Weighted average common
shares                           50,319,391    47,339,336     49,078,814     7,508,804
                                 ==========   ===========    ===========   ===========
Basic per share amount           $    (0.01)  $     (0.02)   $     (0.03)  $     (0.18)
                                 ==========   ===========    ===========   ===========
</TABLE>


5.   NOTES PAYABLE

On April 29, 2002 Mr. Lou Ross,  Chairman of the Board,  sold 240,000  shares of
common stock in the Company. The proceeds (net of sales commissions) of $41,125,
were loaned to the Company.  The loan,  which bears 6%  interest,  is payable in
twelve monthly installments of $3,649 beginning October 29, 2002.

6.   LEGAL PROCEEDINGS

In January  2002,  the  Company  initiated  legal  proceedings  against  Phoenix
Semiconductor,  Inc. (PSI) for breach of contract.  The Company had engaged PSI,
and advanced  approximately  $400,000 to PSI, to build thyristors (an electronic
component) to be sold by the Company.  At the time PSI was engaged,  the Company
obtained a security  interest in a portion of the assets of PSI.  Subsequent  to
the Company's legal actions,  both PSI and its principal  shareholder  Chongkook
John  Rhee  filed  for  bankruptcy  protection  under  Chapter  11 of  the  U.S.
Bankruptcy  Code.  Due to the  bankruptcy  proceedings,  management  cannot  yet
determine the amount, if any, or timing of any recovery.


                                       11

<PAGE>

7.   SUBSEQUENT EVENTS

In July 2002, Mr. Lou Ross, Chairman of the Board, sold 260,000 shares of common
stock in the Company.  The proceeds (net of sales  commissions and approximately
$4,000 withheld by Mr. Ross for taxes) of  approximately  $34,000 were loaned to
the  Company.  The  loan,  which  bears 6%  interest,  is to be repaid in twelve
payments of $3,022 beginning six months from the inception of the loan.

In July,  two  members of the Board of  Directors,  William J. Keilen and Sam H.
Carr  resigned  from the Board,  as the Company  was not capable of  maintaining
insurance for directors and officers'  liability.  Mr. Carr has also resigned as
an officer of the Company as of July 30,  2002.  Mr.  Carr and the Company  have
executed  an  independent   consulting  agreement  whereby  Mr.  Carr  has  been
contracted to manage the financial operations of the Company.

Effective August 1, 2002, Mr. Ross,  Chairman of the Board, has appointed Graham
Clark,  the Global  Director  of  Marketing  and Vice  President  of  Technology
Applications,  to  serve  on  the  Board  of  Directors  until  such  time  as a
non-employee director can appointed.

In early August 2002, the Company was awarded two new U.S.  patents.  These were
patent number  6,424,227,  covering a new version of our Monolithic  Balanced RF
Power Amplifier ("Power Amplifier"),  and patent number 6,423,990 covering a new
vertical  oriented  version of our  Heterojunction  Bipolar  Transistor  ("HBT")
design. The HBT design involves a new manufacturing  technology that allows this
transistor  to work  more  efficiently  and  faster.  The  patent  on the  Power
Amplifier was granted as its design  includes an integrated RF power  amplifier,
including  input and output  transformers  on the same silicon chip. This allows
the  amplifier to be smaller,  and the amplifier no longer has to rely upon some
external components  previously required for effective  operation.  Both patents
were assigned to the Company by their  inventor and long-term  consultant to the
Company, Dr. El-Badawy  El-Sharawy.  The Company continues to maintain,  enhance
where possible,  and market its intellectual  property library,  while executing
its primary business plan of developing its locator technology and products into
revenue stream to support future company activities.


                                       12
<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 NINE  MONTHS  ENDED JUNE 30,  2002  COMPARED  TO THREE AND NINE MONTHS
ENDED JUNE 30, 2001

For the past several years our business strategy had 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,  or that, if we were to
complete such a transaction it would be on terms favorable to the Company.

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. VCX has placed a detailed
description  of many of our  patents  on  their  website  for a fee.  We will be
contacted through VCX if there are parties interested in licensing or purchasing
our  patents.  Once  contacted,  we will seek to  negotiate a fair price for the
license or sale of our patents.

We executed two agreements with Followit AB, a Swedish  technology  firm: (1) an
international distribution agreement and (2) an intellectual property and patent
agreement. The international  distribution agreement, dated June 1, 2002, grants
us exclusive  distribution rights for the Followit locator product in the United
States,  Canada  and  Mexico.  The  Followit  locator  product  uses the  global
positioning system (GPS) and cellular technology,  with a sophisticated  mapping


                                       13
<PAGE>

interface  to  provide  tracking  capabilities  for a wide  variety of assets or
individuals.  Distributor prices were defined in the agreement and payment terms
are net thirty (30) days from the  receipt by the Company of a correct  invoice.
The contract  automatically  renews after one year unless either party  provides
written  notice to end the  agreement  thirty  (30) days prior to the  automatic
renewal period.

The second  agreement  executed  with  Followit AB was a thee-year  intellectual
property  and patent  agreement,  which was entered  into on May 24,  2002.  The
agreement  calls for both parties to enjoy the first right of results  regarding
the  licensing  rights of  technology  developed  by the  other in the  location
services  technology areas in which they cooperatively  develop products.  Under
the agreement,  neither party intends to jointly own any  intellectual  property
which may result from cooperation on the locator products. However, both parties
have agreed to a first right of refusal to any licensure of related intellectual
property it develops  during the term of the  agreement.  The  agreement  may be
terminated  by either  party with ninety (90) days  written  notice to the other
party.

In April 2002, we announced a new relationship with ESEMDE, Inc.  ("ESEMDE"),  a
wireless virtual network operator.  ESEMDE is obligated to provide Short Message
Services  ("SMS") to the  Company's  customers in North  America.  The Company's
locator  products  utilize SMS message to transfer the GPS location  data via an
internal  cellular phone to communicate the location of the locator device.  The
Company  paid a  connection  fee to ESEMDE and will be billed a nominal  monthly
access fee per device,  plus a charge for SMS services  based upon the volume of
messages  transferred by ESEMDE each month.  The agreement has a three year term
and may be terminated by either party with a ninety (90) day written notice. The
Company provides a fixed number  (typically  several hundred) messages with each
locator device sold, the cost of which is included in the product's sales price.
Additional  message services for SMS message  transfers may be purchased through
the Company  which in turn,  will be billed to the customer.  This  relationship
provides us a data transport  platform so that our location devices will be able
to roam  throughout the United States without  interruption.  It also allows our
customers  to  purchase  packets of  location  transmissions  and pay for actual
usage,  rather  than  purchasing  a  monthly  service  plan  like  some  of  our
competitors.

In  June  2002,  we  announced  our  internally   designed  StarSeries  line  of
intelligent wireless mobile communications  platforms.  These products include a
location   information   server  designed  to  connect  automotive  drivers  and
passengers  with the Internet and location  based  technologies.  The StarSeries
products  contain an open source design using the Linux operating  system.  This
will  enable us and third  parties to develop a  multitude  of mobile  computing
applications.

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  in his  role as  Chairman  of the  Board of
Directors.  In  addition,  we  entered  into a two year  independent  consulting
agreement with Mr. Ross. The agreement  requires  payment of a consulting fee of
$7,500  monthly in  consideration  for consulting  services.  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


                                       14
<PAGE>

February  2002,  all  officers of the Company  agreed to a voluntary  20% salary
deferral to conserve Company cash. In July 2002 Mr. Ross elected to defer future
cash  payments  related to his fees to serve as Chairman of the Board as well as
any amounts to be paid as a consultant. The Board of Directors has agreed to pay
Mr. Ross common stock in the  equivalent  dollar  amounts for his future monthly
director  fees, to conserve cash. Mr. Ross will continue to offer services under
his  consulting  agreement,  but will be paid only for services  rendered at the
Company's request.

Operating  losses  for the three  months  ended June 30,  2002 of  approximately
$314,000  decreased from the comparable  period ended June 30, 2001,  which were
approximately  $1,075,000.  This  decrease was primarily due to the reduction in
research staff and the  consolidation  of facilities into  Scottsdale,  Arizona.
Operating  losses  for the nine  months  ended  June 30,  2002 of  approximately
$1,294,000 decreased significantly from the corresponding nine months ended June
30, 2001 of approximately $8,562,000.  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 decreased by approximately $150,000 and $192,000 for the three
and nine months  ended June 30, 2002 from the three months and nine months ended
June 30, 2001, respectively.

Research  and  development  costs have  decreased by  approximately  $482,000 to
approximately  $25,000 for the three  months  ended June 30,  2002,  compared to
$506,000 for the three months  ended June 30, 2001.  This  decrease is 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  $1,021,000  for the nine  months  ended  June 30,  2001 to almost
$144,000 for the nine months ended June 30, 2002.

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

RECENT DEVELOPMENTS

In early August 2002, the Company was awarded two new U.S.  patents.  These were
patent number  6,424,227,  covering a new version of our Monolithic  Balanced RF
Power Amplifier ("Power Amplifier"),  and patent number 6,423,990 covering a new
vertical  oriented  version of our  Heterojunction  Bipolar  Transistor  ("HBT")
design. The HBT design involves a new manufacturing  technology that allows this
transistor  to work  more  efficiently  and  faster.  The  patent  on the  Power
Amplifier was granted as its design  includes an integrated RF power  amplifier,
including  input and output  transformers  on the same silicon chip. This allows
the  amplifier to be smaller,  and the amplifier no longer has to rely upon some
external components  previously required for effective  operation.  Both patents
were assigned to the Company by their  inventor and long-term  consultant to the
Company, Dr. El-Badawy  El-Sharawy.  The Company continues to maintain,  enhance
where possible,  and market its intellectual  property library,  while executing
its primary business plan of developing its locator technology and products into
revenue stream to support future company activities.


                                       15
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

At  June  30,  2002,  our  liquidity  included  cash  and  cash  equivalents  of
approximately ($0) compared to approximately  $605,000 at September 30, 2001. We
have an accumulated  deficit of $20.2 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  affected due to the declining per share price of our common stock. If
this trend  continues,  the proceeds  from this equity line of credit may not be
sufficient to fund our ongoing operations.

On April 29, 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, payable in twelve payments of $3,649
beginning October 29, 2002.

At June 30, 2002, we believed that our current  working  capital,  together with
funds we  expected  to receive  from  future draw downs under our equity line of
credit and projected funds generated from sales of our locator  products,  would
be sufficient to fund the Company's  operations for the next twelve months. This
belief assumed that the continuing availability of our equity line of credit and
that the salary and consulting fee deferral programs described elsewhere in this
report  remained in effect and that certain of our employees  would  continue to
accept a portion  of their  monthly  salaries  in shares of common  stock of the
Company. Recently, we determined that we may no longer be able to use our equity
line of credit at all, or that there may be an extended delay before we are able
to once again draw down funds under that facility.  Accordingly,  as of the date
of the filing of this Form 10-QSB we believe that our cash flow from  operations
and  available  capital  may not be  sufficient  to meet our  current  operating
expenses and debt services  requirements.  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. Failure to
raise capital or generate  sufficient  sales to meet our  creditor's  demands as
well as working  capital for ongoing  operations,  could result in the Company's
failure to continue as a going concern.  In order for the Company to continue as
a going  concern  management  may be  required to  eliminate  new  research  and
development,  and slow the pace of  development  of its existing  business plan.
Further,  the Company may be required to attempt  renegotiation  of its debts or
use  applicable  reorganization  laws to  restructure  its debts.  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.


                                       16
<PAGE>

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  $852,000 for the nine months ended
June 30, 2002 compared with approximately $3.0 million for the nine months ended
June 30, 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.

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

In January  2002,  the  Company  initiated  legal  proceedings  against  Phoenix
Semiconductor,  Inc. (PSI) for breach of contract.  The Company had engaged PSI,
and advanced  approximately  $400,000 to PSI, to build  thyristors to be sold by
National  Scientific.  At the time  PSI was  engaged,  the  Company  obtained  a
security interest in a portion of the assets of PSI. Subsequent to the Company's
legal actions,  both PSI and its principal shareholder Chongkook John Rhee filed
for bankruptcy  protection under Chapter 11. Due to the bankruptcy  proceedings,
management cannot yet determine the amount, if any, or timing of any recovery.

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.



                                       17
<PAGE>

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

During the nine months ended June 30, 2002,  100,000  restricted  common  shares
were issued for  consulting  services at a total value of $30,600.  In addition,
2,847,009  options were issued and 924,000 shares were issued in connection with
the exercise of options granted under the 2000 Stock Option Plan.  These options
had an exercise price of approximately $0.13 per share, resulting in $119,690 of
cash  proceeds  from the  exercise to the  Company.  Also during the nine months
ended June 30, 2002,  1,862,373 common shares were issued in connection with the
draws under the equity line of credit.  These draws yielded net cash proceeds of
$161,873.

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, warrants to purchase 770,500 common
shares 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 the Company  and to promote  its  business  and growth
strategy.

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.



                                       18
<PAGE>

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

(a)      Exhibits.  None.

(b)      Reports on Form 8-K.

         On  May 10, 2002, the  Registrant  filed a report on Form 8-K to report
               the sale of 240,000 shares of common stock by the Chairman of the
               Board,  Mr.  Lou L.  Ross,  and the loan of the  proceeds  to the
               Company.

         On  July 29, 2002, the Registrant  filed a report on Form 8-K to report
               the sale of 260,000 shares of common stock by the Chairman of the
               Board,  Mr.  Lou L.  Ross,  and the loan of the  proceeds  to the
               Company.



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



                                             /s/ LOU L. ROSS
                                             -----------------------------------
                                             Lou L. Ross
                                             Chairman of the Board


                                       19
<PAGE>

                                INDEX TO EXHIBITS

Exhibit 10.1   Promissory Note Dated April 29, 2002 between National  Scientific
               Corporation and Mr. Lou L. Ross, Chairman.

Exhibit 10.2   Promissory  Note dated July 9, 2002 between  National  Scientific
               Corporation and Mr. Lou L. Ross, Chairman.

Exhibit 10.3   Consulting  Agreement between Sam H. Carr and National Scientific
               Corporation.

Exhibit 10.4   Mutual  Settlement and Release  Agreement between Sam H. Carr and
               National Scientific Corporation.

Exhibit 99.1   Certification  pursuant  to 18 U.S.C.  Section  1350,  as adopted
               pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


                                       20