<PAGE>   1

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                 --------------
                                   FORM 10-QSB

(Mark One)

    [X]       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
              EXCHANGE ACT OF 1934

For the quarterly period ended:  March 31, 2001

                                       OR

    [ ]       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
              SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________ to ________________


                                    000-28745
                              (Commission File No.)
                                 --------------
                         NATIONAL SCIENTIFIC CORPORATION
        (Exact name of small business issuer as specified in its charter)
                                 --------------

<TABLE>
<S>                                                  <C>
                  TEXAS                                       86-0837077
     (State or other jurisdiction of                       (I.R.S. Employer
     incorporation or organization)                       Identification No.)

  4455 EAST CAMELBACK ROAD, SUITE E160
              PHOENIX, AZ                                        85018
(Address of Principal Executive Offices)                      (Zip Code)

                                                            (602) 954-1492
                                                     (Issuer's telephone number)
</TABLE>


         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 47,357,498 shares of Common Stock, par value $.01 per share, were
outstanding at May 11, 2001.

Transitional Small Business Disclosure Format (Check One):  Yes____ No__X_


                                       1
<PAGE>   2
                         NATIONAL SCIENTIFIC CORPORATION

                                   FORM 10-QSB

                                      INDEX

<TABLE>
<S>                                                                                     <C>
Part I -  Financial Information

          Item 1.  Financial Statements (unaudited)

             Balance Sheet - March 31, 2001

             Statements of Operations - Three Months and Six Months ended March
             31, 2001, 2000 and Cumulative from October 1, 1997 (Inception)
             through March 31, 2001

             Statements of Cash Flows - Six Months ended March 31, 2001, 2000 and
             Cumulative from October 1, 1997 (Inception) through March 31, 2001

             Statements of Changes in Shareholders' Equity - Six Months ended
             March 31, 2001

             Notes to Financial Statements

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

Part II - Other Information

          Item 2 - Changes in Securities and Use of Proceeds

          Item 5 - Other Information

          Item 6 - Exhibits and reports on Form 8-K

          Signatures
</TABLE>


                                       2
<PAGE>   3
                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                         NATIONAL SCIENTIFIC CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                        UNAUDITED CONDENSED BALANCE SHEET
                                 MARCH 31, 2001

<TABLE>
<CAPTION>
                                     ASSETS

                                                                                    2001
                                                                                    ----
<S>                                                                             <C>
Current assets:
      Cash and cash equivalents                                                 $  1,934,817
      Loan to officer                                                                200,000
      Notes receivable                                                               150,000
      Other assets                                                                    69,177
                                                                                ------------
        Total current assets                                                       2,353,994
                                                                                ------------

Property and equipment, net                                                          123,564
                                                                                ------------

        Total assets                                                            $  2,477,558
                                                                                ============

                 LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

Current liabilities:
      Accounts payable and accrued expenses                                     $     42,923
                                                                                ------------
        Total current liabilities                                                     42,923
                                                                                ------------

Commitments, contingencies and subsequent events (see notes)

Shareholders' equity (deficit):
      Preferred stock, par value $.10; 4,000,000 shares authorized,
        No shares issued and outstanding                                                  --
        Common stock, par value $.01; 120,000,000 shares authorized,
        47,282,498 shares issued and outstanding                                     472,825

      Additional paid-in-capital                                                  20,300,703

      Add common stock options exercisable                                         1,835,442

      Accumulated deficit                                                        (20,174,335)
                                                                                ------------
                                                                                   2,434,635
                                                                                ------------

        Total liabilities and stockholders' equity                              $  2,477,558
                                                                                ============
</TABLE>


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

                                       3
<PAGE>   4
                         NATIONAL SCIENTIFIC CORPORATION
                          (A Development Stage Company)
                  Unaudited Condensed Statements of Operations
    For the Quarters Ended and Six Months Ended March 31, 2001 and 2000, and
      For the Period from October 1, 1997 (Inception of Development Stage)
                             Through March 31, 2001

<TABLE>
<CAPTION>
                                        Three Months       Three Months        Six Months         Six Months       Cumulative
                                           Ended              Ended              Ended              Ended          Development
                                       March 31, 2001     March 31, 2000     March 31, 2001     March 31, 2000        Stage
                                       --------------     --------------     --------------     --------------        -----

<S>                                    <C>                <C>                <C>                <C>                <C>
Revenues                                $    317,780       $         --       $    317,780       $         --       $    317,780
Cost of sales                                312,000                 --            312,000                 --            312,000
                                        ------------       ------------       ------------       ------------       ------------
  Gross profit                                 5,780                 --              5,780                 --              5,780

Operating expenses
  Salaries and benefits                      181,802                 --            385,033                 --            458,739
  Consulting fees, related party                  --            731,737            422,008          2,130,007          8,158,323
  Research and development                   327,824            218,259            514,259            296,286          2,399,540
  Stock compensation                         571,682                 --          5,664,842             50,320          5,820,118
  Other                                      344,292             41,291            578,901            103,615          1,048,698
                                        ------------       ------------       ------------       ------------       ------------
                                           1,425,600            991,287          7,565,043          2,580,228         17,885,418
                                        ------------       ------------       ------------       ------------       ------------

Net loss from operations                  (1,419,820)          (991,287)        (7,559,263)        (2,580,228)       (17,879,638)
                                        ------------       ------------       ------------       ------------       ------------
Other income (expense)
  Interest and other income                   29,163              9,086             71,907             13,160            144,854
  Interest expense                                --             (2,439)                --             (5,189)           (16,316)
  Loss on disposal of assets                      --                 --                 --                 --            (28,555)
                                        ------------       ------------       ------------       ------------       ------------
                                              29,163              6,647             71,907              7,971             99,983
                                        ------------       ------------       ------------       ------------       ------------
Net loss before income tax                (1,390,657)          (984,640)        (7,487,356)        (2,572,257)       (17,779,655)
Provision for income taxes                        --                 --                 --                 --                 --
                                        ------------       ------------       ------------       ------------       ------------
Net loss                                $ (1,390,657)      $   (984,640)      $ (7,487,356)      $ (2,572,257)      $(17,779,655)
                                        ============       ============       ============       ============       ============

Net loss per common share,              $       (.03)      $       (.02)      $      (0.16)      $       (.06)
basic and diluted                       ============       ============       ============       ============

</TABLE>

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

                                       4
<PAGE>   5
                         NATIONAL SCIENTIFIC CORPORATION
                          (A Development Stage Company)
                  Unaudited Condensed Statements of Cash Flows
              For the Six Months Ended March 31, 2001 and 2000, and
      For the Period from October 1, 1997 (Inception of Development Stage)
                             Through March 31, 2001

<TABLE>
<CAPTION>
                                                               Six Months           Six Months           Cumulative
                                                                 Ended                Ended             Development
                                                             March 31, 2001       March 31, 2000           Stage
                                                             --------------       --------------           -----
<S>                                                          <C>                  <C>                  <C>
Cash flows from operating activities:
 Net loss                                                    $ (7,487,356)        $ (2,572,257)        $(17,779,655)
                                                             ------------         ------------         ------------
 Adjustments to reconcile net loss to net
  cash used in operating activities:
  Depreciation                                                      7,433                  668               17,452
  Loss on disposal of assets                                           --                   --               28,555
  Stock and options issued for services                         2,695,862            2,207,756           13,255,109
                                                             ------------         ------------         ------------
  Amortization of deferred stock compensation                   3,062,500                                 1,000,000
  Decrease in receivables                                              --                   --               30,000
  (Increase) decrease in other assets                              36,379               (4,174)             (58,606)
  Increase (decrease) in accounts payable and accrued
  expenses                                                         16,969               28,669               20,344
  Increase (decrease) in accrued interest expense                      --               (8,530)                  --
                                                             ------------         ------------         ------------
    Net cash used in operating activities                      (1,668,213)            (347,868)          (3,486,801)
                                                             ------------         ------------         ------------
Cash flows from investing activities:
 Loans issued                                                    (200,000)                  --             (400,000)
 Repayment of loans                                                50,000                   --               50,000
 Acquisition of property and equipment                           (123,600)                                 (129,449)
 Proceeds from the sale of furniture and equipment                     --                   --                4,660
                                                             ------------         ------------         ------------
   Net cash used in investing activities                         (273,600)                  --             (474,789)
                                                             ------------         ------------         ------------

Cash flows from financing activities:
 Repayment of shareholder loans                                        --                   --              (10,000)
 Repayment of notes payable                                            --             (110,000)            (110,000)
 Repayment of capital lease obligations                                --                   --               (1,819)
 Proceeds from the issuance of common stock                     1,291,730            2,419,150            5,532,108
 Proceeds from the issuance of preferred stock                         --                   --              482,500
                                                             ------------         ------------         ------------
   Net cash provided by financing activities                    1,291,730            2,309,150            5,892,789
                                                             ------------         ------------         ------------
Net increase (decrease) in cash and cash equivalents             (650,083)           1,961,282            1,931,199

Cash and cash equivalents, beginning of period                  2,584,900               62,185                3,618
                                                             ------------         ------------         ------------
Cash and cash equivalents, end of period                     $  1,934,817         $  2,023,467         $  1,934,817
                                                             ============         ============         ============
</TABLE>

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

                                       5
<PAGE>   6
                         NATIONAL SCIENTIFIC CORPORATION
                          (A Development Stage Company)
                  Unaudited Condensed Statements of Cash Flows
              For the Six Months Ended March 31, 2001 and 2000, and
      For the Period from October 1, 1997 (Inception of Development Stage)
                             Through March 31, 2001


<TABLE>
<CAPTION>
Supplementary Disclosure of Cash Flow Information                                  Cumulative
                                                                                   Development
                                                March 31, 2001    March 31, 2000     Stage
                                                --------------    --------------     -----
<S>                                             <C>               <C>              <C>
Cash paid during the period for interest          $     --          $ 13,720        $  2,597
                                                  ========          ========        ========
Cash paid during the period for income taxes      $     --          $     --        $     --
                                                  ========          ========        ========
</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 accompanying notes are an integral part of these financial statements.


                                       6
<PAGE>   7
<TABLE>
<CAPTION>
                                         COMMON STOCK                PREFERRED STOCK
                                   -------------------------    -----------------------    ADDITIONAL
                                   NUMBER OF                     NUMBER OF                  PAID-IN      ACCUMULATED
                                    SHARES         PAR VALUE      SHARES     PAR VALUE      CAPITAL        DEFICIT         TOTAL
                                    ------         ---------      ------     ---------      -------        -------         -----
<S>                               <C>             <C>            <C>         <C>          <C>            <C>             <C>
Balance, September 30, 2000       47,195,768      $   471,958        --            --     15,086,920     (12,686,979)     2,871,899

Stock issued for services            120,000            1,200        --            --        209,220              --        210,420

Exercise of warrants and
options                            1,291,730           12,917        --            --      1,278,813              --      1,291,730

Amortization of stock
compensation                              --               --        --            --      3,712,500              --      3,712,500

Exchange of stock for options     (1,325,000)         (13,250)       --            --         13,250              --             --

Common stock options
exercisable                               --               --        --            --      1,835,442              --      1,835,442

Net loss                                  --               --        --            --             --      (7,487,356)    (7,487,356)
                                  ----------      -----------     -----      --------     ----------     -----------      ---------
Balance, March 31, 2001           47,282,498      $   472,825        --            --     22,136,145     (20,174,335)     2,434,635
                                  ==========      ===========     =====      ========     ==========     ===========      =========
</TABLE>



                                       7
<PAGE>   8
                         NATIONAL SCIENTIFIC CORPORATION

                          NOTES TO FINANCIAL STATEMENTS

1.   BASIS OF PRESENTATION

     The accompanying financial statements have been prepared in accordance with
         generally accepted accounting principles ("GAAP"), pursuant to the
         rules and regulations of the Securities and Exchange Commission (the
         "SEC"), and are unaudited. In the opinion of management, all
         adjustments (which include only normal recurring adjustments) necessary
         to present fairly the financial position, results of operations and
         cash flows for the periods presented have been made. Certain
         information and footnote disclosures normally included in financial
         statements prepared in accordance with GAAP have been condensed or
         omitted pursuant to the rules and regulations of the SEC. The results
         of operations for the three and six months ended March 31, 2001, are
         not necessarily indicative of the results to be expected for the full
         fiscal year.

     The financial statements included in this 10-Q have been amended to reflect
         a change in the estimated value of the restricted shares issued as
         compensation for services. The Company has reduced the discount from
         the open market price from 50% to 10% based on SEC Staff comments to a
         filing made in August 2001. Management believes the discount, which
         reflects the lack of marketability of the restricted stock, plus the
         lack of market volume to absorb a large block of stock to be a
         reasonable estimate of value.

     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, 2000.

2.  REVENUES

     We  are a development stage company. Revenues generated during the three
         month period ended totaled $317,780 and resulted from the export of
         electronic products we purchased from a third party. The export of
         purchased product is not representative of the principal operations of
         the Company, which is the development and commercialization of patented
         technology. Therefore, the Company remains in the development stage.
         The profit margins are low on these exports, but generate some cash to
         allow the Company to continue to grow its corporate infrastructure.

3.  EMPLOYMENT AGREEMENT

     The employment agreement with Dr. Hashemi became effective as of December
         1, 2000. The 1,325,000 shares of restricted common stock previously
         granted to him have been exchanged for options to purchase 2,100,000
         and 666,700 shares of common stock at per share exercise prices of $.46
         and $.29, respectively. These exercise prices represented 25% of the
         fair market value of the common stock on December 1, 2000 and January
         1, 2001, respectively. Compensation expense of $3,418,260 for these
         below market option grants was recorded in the quarter ended December
         31, 2000.

4.   ISSUANCE OF COMMON STOCK

     During the three months ended March 31, 2001, there were no issuances of
         common stock. During the three months ended December 31, 2000, the
         Company received $1,291,730 and issued 1,291,730 shares of restricted
         common stock in connection with the exercise of its $1.00 common stock
         warrants. 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 quarter ended March 31, 2000, the Company received $750,000 from
         a private placement of common stock. In conjunction with the private
         placement, the Company issued 600,000 shares of restricted stock valued
         at $1,062,720 to a principal and a consultant of the Company. The
         Company also issued 500,000 shares of restricted common stock to
         consultants as compensation for services.

                                       8
<PAGE>   9
5.   STOCK OPTIONS

     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.

     The Company adopted Accounting Practices Bulletin ("ABP") Opinion 25,
         "Accounting for Stock Issued to Employees" and related interpretations
         in accounting for the plan. Accordingly, for employees and directors
         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 $571,682 was recognized for the
         quarter ended March 31, 2001. 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, determines
         at the time of grant when certain options granted shall be fully vested
         and exercisable. At March 31, 2001, vested options outstanding were
         4,560,001 and non-vested outstanding options were 287,000.

     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 5 years. Expected volatility
         was assumed to be 100% as of the date of issue.


<TABLE>
<CAPTION>
                                                                        Weighted
                                                           Number        Average
                                                             Of         Exercise
                                                           Shares         Price
                                                          --------      --------
<S>                                                      <C>            <C>
     Options Outstanding, September 30, 2000                    --            --
         Granted                                         4,938,668        $ 0.87
         Forfeited                                         (91,667)       $ 0.84
         Exercised                                              --            --
                                                         ---------        ------
     Options Outstanding, March 31, 2001                 4,847,001        $ 0.87
                                                         =========        ======
</TABLE>

     Had the Company fully adopted State of Financial Accounting Standards No.
         123, "Accounting for Stock Based Compensation" the loss from operations
         for the second fiscal quarter ended March 31, 2001, would have been
         approximately ($8.8) million and basic loss per share would have been
         ($0.18).

6.   LOAN TO OFFICER

     During the quarter ended December 31, 2000, the Company renewed a loan with
         a director and officer for $200,000, bearing interest at 10% per annum
         and due on December 1, 2001. As of March 31, 2001, accrued interest on
         this note totaled $19,275.

7.   NOTES RECEIVABLE

     In  January 2001, the Company loaned $100,000 to Phoenix Semiconductor,
         Inc., as part of a comprehensive business relationship. This loan bears
         interest at the rate of 12% per annum and is due and payable in two
         installments of $50,000 plus accrued interest in March and April 2001.
         At March 31, 2001, $50,000 of this loan plus accrued interest was
         outstanding. See Note 9 below.

     Also in January 2001, the Company loaned $100,000 to an entity bearing
         interest at the rate of 12% per annum. The Chairman of the Board of the
         entity is also a director of the Company. The loan is due and payable
         in July 2001.

Changed Form 10-QSB March 2001 As Filed.DOC

                                        9

<PAGE>   10
8.  NET LOSS PER SHARE

     Net loss per share is based upon the weighted average shares outstanding.
         Outstanding stock options and warrants are treated as common stock
         equivalents, but are anti-dilutive, for purposes of computing diluted
         net loss per common share. The following is a summary of the
         computation of net loss per common share (amounts in thousands except
         shares and per share amounts):

<TABLE>
<CAPTION>
                                                        Three months ended                         Six months ended
                                                        ------------------                         ----------------
                                                             March 31,                                March 31,
                                                             ---------                                ---------
                                                     2001                 2000                 2001                 2000
                                                     ----                 ----                 ----                 ----
<S>                                              <C>                  <C>                  <C>                  <C>
Basic net income (loss) per common share:
Net income (loss)                                $ (1,390,657)        $   (984,640)        $ (7,487,356)        $ (2,572,257)
Weighted average common shares                     47,282,498           47,282,498           47,474,131           41,898,335
Basic per share amount                           $       (.03)        $       (.02)        $       (.16)        $       (.06)
</TABLE>


9.   SUBSEQUENT EVENT

     In  May 2001, we entered into an agreement with Phoenix Semiconductor, Inc.
         (PSI) which grants the Company exclusive distribution rights for
         certain Thyristor and Schottky wafer related products produced by PSI.
         Under the terms of the agreement, PSI has agreed to manufacture wafers
         containing these products for the Company. In return, the Company
         intends to market and sell these wafers or packaged products to third
         parties. The agreement has a one-year term and is renewable at the
         option of the Company for additional one-year terms. We expect
         production of wafers to begin in the third fiscal quarter of 2001 and
         sales of these products to be recorded in the final quarter of fiscal
         2001.


Changed Form 10-QSB March 2001 As Filed.DOC

                                       10
<PAGE>   11
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

SAFE HARBOR STATEMENT

The statements contained in this report on Form 10-QSB that are not historical
fact are forward-looking statements (as such term is defined in the Private
Securities Litigation Reform Act of 1995). These statements can be identified by
the use of forward looking terminology such as "believes," "expects," "may,"
"will," "should," "anticipates," or "possible," or the negative thereof or other
written variations thereof or comparable terminology. The forward-looking
statements contained herein are based on current expectations that involve a
number of risks and uncertainties. Although the Company believes that the
assumptions underlying the forward-looking statements are reasonable, any of the
assumptions could prove inaccurate and, therefore, there can be no assurance
that the results contemplated in forward-looking statements will be realized. In
addition, the business and operations of the Company are subject to substantial
risks, which increase the uncertainty inherent in such forward-looking
statements. In light of the significant uncertainties inherent in the
forward-looking information included herein, such information should not be
regarded as a representation by the Company, or any other person, that the
objectives or plans for the Company will be achieved.

THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THREE MONTHS ENDED MARCH 31, 2000

We are a development stage company. Revenues generated during the three month
period ended totaled $317,780 and resulted from the export of electronic
products we purchased from a third party. The export of purchased product is not
representative of the principal operations of the Company, which is the
development and commercialization of patented technology. Therefore, the Company
remains in the development stage.

In the next twelve months, we expect to continue research and development
expenditures. The purpose of these expenditures is to bring our existing
products closer to the point of market readiness by producing working prototypes
along with design and process specifications. Additionally, these expenditures
will be used for continued research into RF technologies that are anticipated to
provide wireless products into next generation electronic devices. There can be
no assurance that we will be successful in completing these tasks in the time
period estimated.

Operating expenses for the three months ended March 31, 2001, of approximately
$1.4 million are up from the comparable period ended March 31, 2000, which were
approximately $1.0 million. This increase was primarily due to the employment of
approximately 10 employees in the Company's corporate office, which constitute
the management team for the Company. In addition, in September 2000 we opened
our research and development facility in San Jose, California, which now
consists of five additional full time employees.

The employment agreement with Dr. Hashemi became effective as of December 1,
2000. The 1,325,000 shares of restricted common stock previously granted to him
have been exchanged for options to purchase 2,100,000 and 666,700 shares of
common stock at per share exercise prices of $.46 and $.29, respectively. These
exercise prices represented 25% of the fair market value of the common stock on
December 1, 2000 and January 1, 2001, respectively. Compensation expense of
$3,418,260 for these below market option grants was recorded in the quarter
ended December 31, 2000.

Compensation and benefits have increased by approximately $182,000 due to the
addition of the Chief Executive Officer, Chief Operating and Financial Officers,
the Global Director of Marketing, and other corporate support staff. In
addition, research and development costs increased approximately $110,000.
Research and development costs increased due primarily to our opening our San
Jose, California research facility and hiring an additional research scientist.


COMPARISON OF SIX MONTHS ENDED MARCH 31, 2001 AND 2000

     Revenues generated during the six month period ended March 31, 2001,
totaled $317,780 and resulted from the export of electronic products we
purchased from a third party. The export of products is not representative of
our

Changed Form 10-QSB March 2001 As Filed.DOC

                                       11
<PAGE>   12
principal operations, which is the development and commercialization of patented
technology. Therefore, we remain in the development stage.

     Operating expenses for the six months ended March 31, 2001, increased to
approximately $7.5 million, compared to $2.6 million for the six month period
ended March 31, 2000. This increase was primarily attributable to the issuance
of common stock to Dr. Majid Hashemi, our then President and Chief Technical
Officer. Additionally, beginning in December 2000, we employed an additional 8
employees in our corporate office, which constitutes our entire management team.
In addition, in September 2000 we opened our research and development facility
in San Jose, California, which now consists of five additional full time
employees.

     The employment agreement with Dr. Hashemi became effective as of December
1, 2000. Prior to his employment, Dr. Hashemi served as an independent
consultant to us. The 1,325,000 shares of restricted common stock previously
granted to him have been exchanged for options to purchase 2,100,000 and 666,700
shares of common stock at per share exercise prices of $.46 and $.29,
respectively. These exercise prices represented 25% of the fair market value of
the common stock on December 1, 2000 and January 1, 2001, respectively.
Compensation expense of approximately $3.4 million for these below market option
grants was recorded in the quarter ended December 31, 2000.

     Salaries and benefits have increased for the six months ended March 31,
2001 over the same period in fiscal 2000 by approximately $385,000 due to the
addition of the Chief Executive Officer, Chief Operating and Financial Officers,
the Global Director of Marketing, and other corporate support staff. In
addition, research and development costs have increased approximately $218,000
for the six months ended March 31, 2001 over the same period in fiscal 2000.
Research and development costs increased due primarily to opening our San Jose,
California research facility and hiring an additional research scientist and two
technical support personnel.

LIQUIDITY AND CAPITAL RESOURCES

For the three months ended March 31, 2001, no additional capital was received.
During the three months ended December 31, 2000, the Company received $1,291,730
and issued 1,291,730 shares of restricted common stock in connection with the
exercise of its $1.00 common stock warrants. 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.

Warrants to acquire 4,250,000 shares of restricted common stock at per share
exercise price of $1.50 were issued in conjunction with our August 1999 private
placement, at an exercise price of $1.50 per share. Prior to the fiscal quarter
ended March 31, 2001, 120,000 of these warrants were exercised, yielding
proceeds to the Company of $180,000. The warrants expire on December 31, 2001.

Cash used in operations was approximately $1,668,000 for the six months ended
March 31, 2001, compared with approximately $348,000 for the six month period
ended March 31, 2000. The increase in cash used in operations was primarily
attributable to the hiring of additional personnel, including the Chief
Operating and Financial Officers, both of whom were hired in October 2000, the
Global Director of Marketing who was hired on December 1, 2000 and a research
scientist in San Jose, California who was hired on November 1, 2000. In
addition, the Group President and Chief Technology Officer of NSC, as an
independent consultant, was engaged on September 1, 2000 and employed on
December 1, 2000.

We believe that our cash position of approximately $1.9 million as of March 31,
2001, combined with expected proceeds from the exercise of outstanding warrants
to be sufficient to continue operations for the next twelve months. Such future
requirements are based upon management's best estimates based upon current
conditions and the most recent results of operations. Should the stock price not
support the exercise of options, alternative financing will be pursued. There
can be no assurance that alternative financing will be available.

Changed Form 10-QSB March 2001 As Filed.DOC

                                       12
<PAGE>   13
                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

On December 31, 1999, we completed a private placement of 4,165,000 restricted
shares of common stock at an average per share price of $.20, yielding proceeds
to the Company of $830,000. Of these totals, $750,000 was raised and 3,765,000
shares were sold during the quarter ended December 31, 1999.

As part of this offering, we also issued warrants to purchase an aggregate of
4,150,000 shares of common stock at a per share price of $1.50. These warrants
are immediately exercisable and expire on December 31, 2001. One hundred twenty
thousand (120,000) of these warrants have been exercised as of the date of this
report. These securities were sold in reliance on the exemption provided by
Sections 4 (2) and 4 (6) of the Securities Act of 1933, as amended, and Rule 506
of Regulation D promulgated thereunder.

During the three months ended December 31, 2000, approximately 1.3 million
warrants were exercised at $1.00 each. These represent a portion of the
9,650,000 warrants issued in conjunction with our March 15, 1998, primate
placement. The remaining and unexercised warrants issued in this private
offering expired on December 31, 2000. The shares were sold 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.

In addition, during the three months ended December 31, 2000, 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.

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

None.

Changed Form 10-QSB March 2001 As Filed.DOC

                                       13
<PAGE>   14
ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits
         Exhibit 10.1 Employment Agreement- Majid Hashemi, Ph.D. dated December
         1, 2000

         Exhibit 10.2 Letter Agreement Between National Scientific Corporation
         and E4World Regarding Electronic Component Logistic Services (ECLS)

(b)  Reports on Form 8-K - No reports on Form 8-K were filed during the quarter.



                                   SIGNATURES

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


                                 NATIONAL SCIENTIFIC CORPORATION

May 15, 2001                          /s/ L.L. Ross
                                      -----------------------------------------
DATE                                  L.L. Ross
                                      Chairman of the Board, President & C.E.O.




                                      /s/ Sam H. Carr
                                      -----------------------------------------
                                      Sam H. Carr
                                      Corporate Secretary


Changed Form 10-QSB March 2001 As Filed.DOC

                                       14
<PAGE>   15
                                INDEX TO EXHIBITS


Exhibit 10.1    Employment Agreement- Majid Hashemi, Ph.D., dated December 1,
                2000

Exhibit 10.2    Letter Agreement Between National Scientific Corporation and
                E4World Regarding Electronic Component Logistic Services (ECLS)


Changed Form 10-QSB March 2001 As Filed.DOC

                                       15