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

                     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 December 31, 2002


                                    000-28745
                              (Commission File No.)

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

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

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


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


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


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


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

There were  63,795,485  shares of Common Stock,  par value $.01 per share,  were
outstanding at February 10, 2002.

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



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<PAGE>

                         NATIONAL SCIENTIFIC CORPORATION

                                   FORM 10-QSB

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

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

         Balance Sheet - December 31, 2002 and September 30, 2002.................................3

         Statements of Operations - Three Months ended December 31, 2002, 2001
              and Cumulative from October 1, 1997 (Inception) through December 31, 2002...........4

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

         Statement of Changes in Shareholders' Equity (Deficit) - Three Months Ended
              December 31, 2002...................................................................7

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

Item 2 - Management's Discussion and Analysis of Financial or Plan of Operation..................11

Part II - Other Information

         Item 1 - Legal Proceedings..............................................................13

         Item 2 - Changes in Securities and Use of Proceeds......................................14

         Item 3 - Defaults upon Senior Securities................................................15

         Item 4 - Submission of Matters to a Vote of Security Holders............................15

         Item 5 - Other Information..............................................................15

         Item 6 - Exhibits and reports on Form 8-K...............................................15

Signatures.......................................................................................16
</TABLE>



                                       2
<PAGE>

                         PART I - FINANCIAL INFORMATION

                         NATIONAL SCIENTIFIC CORPORATION
                          (A Development Stage Company)
                        Unaudited Condensed Balance Sheet
                    December 31, 2002 and September 30, 2002


                                                 December 31,      September 30,
                                                     2002              2002
                                                 ------------      ------------
                                     ASSETS

Current Assets:
   Cash and cash equivalents                     $    193,565      $      1,405
   Inventory                                           11,490            14,916
   Other assets                                         7,984             7,462
                                                 ------------      ------------
        Total current assets                          213,039            23,783

Property and equipment, net                            41,776            45,007
                                                 ------------      ------------
                                                 $    254,815      $     68,790
                                                 ============      ============


                 LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

Current Liabilities:
   Accounts payable and accrued expenses         $    785,312      $    765,457
   Private placement deposits                         300,000                --
   Notes payable                                       75,079            75,079
                                                 ------------      ------------
        Total current liabilities                   1,160,391           840,536
                                                 ------------      ------------

Shareholders' equity (deficit):
   Common stock, par value $.01; 120,000,000
   shares authorized, and shares issued
   52,182,521 and 51,587,062 outstanding at
   December 31,2002 and September 30, 2002
   respectively                                       521,825           515,871
   Additional paid-in capital                      18,734,450        18,621,152
   Common stock warrants and options
   exercisable                                        834,382           896,567
   Accumulated deficit                            (20,996,233)      (20,805,336)
                                                 ------------      ------------
        Total shareholders' equity                   (905,576)         (771,746)
                                                 ------------      ------------
                                                 $    254,815      $     68,790
                                                 ============      ============


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


                                       3
<PAGE>

                         NATIONAL SCIENTIFIC CORPORATION
                          (A Development Stage Company)
                  Unaudited Condensed Statements of Operations
      For the Quarters Ended December 31, 2002, 2001, and Development Stage

<TABLE>
<CAPTION>
                                                                                   Development
                                                      2002            2001            Stage
                                                  --------------------------------------------
<S>                                               <C>             <C>             <C>
Revenues                                          $      5,455    $         --    $    891,084
Cost of Sales                                            3,313              --         874,952
                                                  ------------    ------------    ------------
Gross profit                                             2,142              --          16,132

Costs and expenses
   Salaries and benefits                                66,133         166,162       1,804,685
   Research and development                              9,690          74,536       3,638,524
   Stock compensation                                   12,900         165,897       2,801,936
   Consulting Fees, related party                        7,500              --       8,165,823
   Other                                                95,672         197,383       2,353,730
                                                  ------------    ------------    ------------
   Total costs and expenses                            191,895         603,978      18,764,698
                                                  ------------    ------------    ------------
Net loss from operations                              (189,753)       (603,978)    (18,748,566)
                                                  ------------    ------------    ------------
Other income (expense)
   Interest and other income                                --          60,507         173,228
   Interest expense                                     (1,144)           (641)        (26,215)
                                                  ------------    ------------    ------------
                                                        (1,144)         59,866         147,013
                                                  ------------    ------------    ------------
Net loss before income taxes benefit                  (190,897)       (544,112)    (18,601,553)
Provision for income taxes (benefit)                        --              --              --
                                                  ------------    ------------    ------------
Net loss                                              (190,897)       (544,112)    (18,601,553)
                                                  ============    ============    ============

   Net loss per common share, basic and diluted   $      (0.00)   $       0.01
                                                  ============    ============
</TABLE>


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


                                       4
<PAGE>

                         NATIONAL SCIENTIFIC CORPORATION
                          (A Development Stage Company)
                  Unaudited Condensed Statements of Cash Flows
      For the Quarters Ended December 31, 2002, 2001, and Development Stage

<TABLE>
<CAPTION>
                                                                                            Development
                                                               2002            2001            Stage
                                                           ------------    ------------    ------------
<S>                                                        <C>             <C>             <C>
Cash flows from operating activities:
   Net loss                                                $   (190,897)   $   (544,112)   $(18,601,553)
   Adjustments to reconcile net loss to net cash used in
   operating activities:
   Noncash transactions
      Depreciation                                                3,231           7,902          55,502
      Loss on disposal of assets                                     --              --          30,960
      Impairment loss on equipment                                   --              --          64,187
      Stock and options issued for services, net                 33,170          47,097      11,271,574
      Warrants issued below market                                   --         118,800              --
      Decrease (increase) in inventory                            3,426              --         (11,490)
      Deferred offering costs                                        --              --         (85,171)
      Decrease in receivables                                        --              --         130,000
      Decrease in other assets                                     (522)          3,677           2,587
      Increase in accounts payable and accrued expenses          19,855           8,082         762,732
                                                           ------------    ------------    ------------
         Net cash used in operating activities                 (131,737)       (358,554)     (6,380,672)
                                                           ------------    ------------    ------------
Cash flows from investing activities:
   Acquisition of property and equipment                             --              --        (153,692)
   Repayment of loans                                                --              --         200,000
   Proceeds from the sale of furniture and equipment                 --              --           6,050
   Loans issued                                                      --              --        (400,000)
                                                           ------------    ------------    ------------
         Net cash used in investing activities                       --              --        (347,642)
                                                           ------------    ------------    ------------
Cash flows from financing activities:
   Repayment on the line of credit                                   --        (430,000)        430,000
   Loan from (to) officer                                            --              --          65,079
   Repayment of notes payable                                        --              --        (110,000)
   Repayment of line of credit                                       --              --        (430,000)
   Repayment of capital lease obligations                            --              --          (1,819)
   Deferred offering costs                                           --         193,015              --
   Proceeds from the exercise of options                         23,897          22,950         193,429
   Proceeds from the exercise of warrants                            --              --          92,460
   Proceeds from equity line of credit                               --         (23,761)        414,824
   Proceeds from the issuance of preferred stock                     --              --         482,500
   Deposits for private placement                               300,000              --         300,000
   Proceeds from issuance of common stock                            --              --       5,481,788
                                                           ------------    ------------    ------------
         Net cash provided by financing activities              323,897        (237,796)      6,918,261
                                                           ------------    ------------    ------------
</TABLE>


                                       5
<PAGE>

                         NATIONAL SCIENTIFIC CORPORATION
                          (A Development Stage Company)
            Unaudited Condensed Statements of Cash Flows (Continued)
      For the Quarters Ended December 31, 2002, 2001, and Development Stage

<TABLE>
<CAPTION>
                                                                                            Development
                                                               2002            2001            Stage
                                                           ------------    ------------    ------------
<S>                                                        <C>             <C>             <C>
Net (decrease) increase in cash and cash equivalents            192,160        (596,350)        189,947
Cash and cash equivalents, beginning of year                      1,405         604,761           3,618
                                                           ------------    ------------    ------------
Cash and cash equivalents, end of  the quarter             $    193,565    $      8,411    $    193,565
                                                           ============    ============    ============

Supplementary Disclosure of Cash Flow Information
Cash paid during the year for interest                     $      1,144    $         --          23,618
                                                           ============    ============    ============
Cash paid during the year for income taxes                 $         50    $         50             100
                                                           ============    ============    ============
</TABLE>


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


                                       6

<PAGE>

                         NATIONAL SCIENTIFIC CORPORATION
                          (A Development Stage Company)
   Unaudited Condensed Statement of Changes in Shareholders' Equity (Deficit)
                  For the Three Months Ended December 31, 2002

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

Exercise of options                 528,653        5,286           --           --         18,611              --         23,897

Stock issued for services            66,806          668           --           --          6,832              --          7,500

Common stock options granted             --           --           --           --         25,670              --         25,670

Net loss                                 --           --           --           --             --        (190,897)      (190,897)
                                 ----------   ----------   ----------   ----------   ------------    ------------    -----------
Balance, December 31, 2002       52,182,521   $  521,825           --   $       --   $ 19,568,832    $(20,996,233)   $  (905,576)
                                 ==========   ==========   ==========   ==========   ============    ============    ===========

</TABLE>

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


                                       7
<PAGE>

                         NATIONAL SCIENTIFIC CORPORATION

                          NOTES TO FINANCIAL STATEMENTS


1.   BASIS OF PRESENTATION

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

     These financial statements should be read in conjunction with the financial
statements  and notes thereto  included in the  Company's  annual report on Form
10-KSB for the fiscal year ended  September 30, 2002,  and the  Company's  Proxy
Statement for 2003,  filed January 27, 2003,  which is incorporated by reference
in the Company's Form 10-KSB annual report.

2.   ISSUANCE OF COMMON STOCK

     During the three  months  ended  December  31,  2002,  the  Company  raised
approximately  $60,000 in  consideration  for the issuance of 528,653  shares of
common stock under common stock  option  agreements,  primarily to  consultants.
These shares were issued at an average per share price of $0.05.

     Also during the three months ended  December  31,  2002,  66,806  shares of
common stock were issued for services at an average per share price of $0.11.

3.   STOCK OPTIONS AND WARRANTS

     The Company  from time to time  issues  stock  options for the  purchase of
common stock to  directors,  officers,  employees and  consultants.  The Company
adopted a qualified  stock  option  plan for its  executives,  consultants,  and
employees in December 2000.

     During  the three  months  ended  December  31,  2002,  a total of  360,000
non-qualified stock options were granted under the 2000 Stock Option Plan, at an
average exercise price of $0.04 per share. Also during the same period,  528,653
stock options were exercised at $0.05 per share.

     The  Company  adopted  APB  Opinion  25  and  related   interpretations  in
accounting  for the  plan.  Accordingly,  compensation  expense  is equal to the
difference  between the exercise price of the options granted and the fair value


                                       8
<PAGE>

of the  common  stock at the date of grant.  Compensation  of  $20,400  has been
recognized for the fiscal  quarter ended  December 31, 2002.  Under the terms of
the Company's stock options granted to certain  directors,  officers,  employees
and consultants,  the Board of Directors, at its sole discretion, will determine
when certain options granted shall be fully vested and exercisable.  At December
31,  2002,   3,354,676   outstanding  stock  options  were  vested,   and  fully
exercisable, and 10,000 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
proforma footnote purposes with the following assumptions used for grants in all
years;  dividend yield of 0%, risk-free interest rate of 5%, and expected option
life of 10 years.  Expected  volatility was assumed to be 100% as of the date of
issue.

                                               Number of      Weighted Average
                                                Shares         Exercise Price
                                               -------------------------------
     Options Outstanding, September 30, 2002   3,582,829          $   1.97
        Granted                                  360,000              0.04
        Forfeited                                 49,500              1.04
        Exercised                                528,653              0.05
                                               -------------------------------
     Options Outstanding, December 31, 2002    3,364,676          $   2.11
                                               ===============================


     Had the  Company  fully  adopted  SFAS  123,  the first  quarter  loss from
operations  would have been  $(194,197) and basic loss per share would have been
$(0.00).

4.   RELATED PARTY TRANSACTION

     During the quarter  ended  December  31, 2002,  the former  Chairman of the
Board,  currently a Director,  was paid for his services as an active  member of
the board in shares of  restricted  common  stock,  in lieu of cash.  The former
Chairman  received  66,806  restricted  common shares at an average price on the
date of grant of $0.11 per share.

     As described in the Company's  10-KSB filing for the year ending  September
30, 2002, and also in the Company's  Proxy  Statement for 2003 filed January 27,
2003,  the  Company's  Board  initiated  in September  2002 a  restricted  stock
retainage  program  ("Stock  Retainage  Program")  to retain key staff  during a
period of financial difficulty.  The Company allocated approximately $150,000 in
restricted  Common  Stock from this Stock  Retainage  Program  pool of shares in
fiscal  2002,  to be granted to key  employees  during the year,  subject to the
Company exceeding sales growth  objectives and expense  reduction  objectives in
2003.  Failure  to meet  these  objectives  under the plan  would  result in the
forfeiture  by staff of this entire stock grant by all  participants.  All stock
grants under this  program  were  granted in September  2002 but shares were not
finally  issued  until  January of 2003.  All of the stock under this program is
restricted  under SEC Section 144,  and cannot be traded by the Stock  Retainage
Program participants for at least one year from date of issue.


                                       9
<PAGE>

     The Company's CEO Michael Grollman was granted 750,000 shares of stock from
this Stock Retainage Program pool of shares, subject to the Company achieving in
excess of $200,000 in sales in calendar year 2003,  and subject to him accepting
a $60,000 per year pay reduction for the calendar year 2003, reducing his annual
payable  salary to  $120,000  per year for 2003.  Mr.  Grollman  was  granted an
additional  500,000  shares  of  stock  under  this  program,  subject  to sales
exceeding  $1,000,000  for calendar year 2003.  The Company's Vice President and
Director  Graham Clark was granted  500,000  shares of stock from the  Company's
Stock Retainage  Program pool of shares discussed above,  subject to the Company
achieving  in excess of $200,000 in sales in calendar  year 2003.  Mr. Clark was
granted an additional  500,000  shares of stock under this  program,  subject to
sales exceeding $1,000,000 for calendar year 2003. The majority of the remaining
restricted  stock  allocated  under this program was granted to other  Company's
staff, and is subject to substantially  the same risk of forfeiture as the stock
granted to Grollman and Clark under the Program.

5.   NET LOSS PER SHARE

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

                                                  Three months ended
                                                  December 31, 2002
                                            -----------------------------
                                                2002            2001
                                            -----------------------------
     Basic net income (loss) per
     common share:

     Net income (loss)                      $   (190,897)   $   (544,112)
                                            ============    ============
     Weighted average common shares           51,965,954      47,722,135
                                            ============    ============
     Basic per share amount                 $      (0.00)   $      (0.01)
                                            ============    ============


6.   SUBSEQUENT EVENT

     In November  2002, the Company  commenced a private  offering of restricted
common stock and common stock  purchase  warrants.  As of February 10, 2003, the
Company had raised approximately $330,000 in cash and debt forgiveness from this
effort.  Subsequent to the end of December 2002,  the Company  issued  8,000,000
shares of  restricted  common stock and granted  3,100,000  warrants to purchase
common  stock at an  exercise  price of $0.30 and  200,000  warrants at a strike
price of $0.50 per share. As a part of this transaction,  the $300,000 liability


                                       10
<PAGE>

entry for private  placement  deposits was converted to equity.  No underwriters
are involved in connection with this private placement.  The sales and issuances
of the securities  issued pursuant to the foregoing private placement are exempt
from  registration  under the  Securities  Act of 1933, as amended,  pursuant to
Section 4(2) thereof, and Rule 506 of Regulation D.


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS 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 MONTHS ENDED DECEMBER 31, 2002 COMPARED TO THREE MONTHS ENDED
DECEMBER 31, 2001

     From 1996  through  roughly  February of 2002,  our  business  strategy was
primarily  to  develop,  patent  and  license  technology  related  to  discrete
semiconductor related  technologies.  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
in some cases licensing this technology to other  companies.  Due to significant
semiconductor   industry  market  difficulties  in  2002,  we  decided  to  move
semiconductor  research efforts from our primary short-term business strategy to
a secondary, longer-term business strategy, although efforts continue at a lower
level to produce  revenue from existing  semiconductor-related  investments.  We
devoted much of calendar year 2002 to developing a new primary business strategy
around electronic  products in the location services field. We believe that such
a  transition  would  be  consistent  with  our  mission  and,  if  successfully
consummated and integrated into our operations,  will enhance shareholder value.
This  strategy  began to yield small  amounts of revenue late in the fiscal year
ending  September 30, 2002.  This small revenue stream roughly doubled to $5,455
in the first  quarter of the fiscal  year  ending  September  30,  2003 from the
previous  calendar  quarter.  This compares with no revenue generated during the
same quarter of the previous fiscal year,  prior to the adoption of the location
services business model.

     As of December 31, 2002,  the Company's cash and cash  equivalents  totaled
approximately $193,565 and total current assets were approximately  $213,039. As
of December 31, 2002, the Company has a $300,000 liability for private placement
deposits.  Subsequent to December 31, 2002, the liability was converted entirely
into equity,  in connection  with the issuance of shares under the November 2002


                                       11
<PAGE>

private  placement  (See  Liquidity and Capital  Resources).  The Company has no
other  long  or  short-term  debt,  other  than  accounts  payable  and  accrued
liabilities  as of December  31, 2002.  We believe that our cash  position as of
December 31, 2002, combined with other sources of cash including but not limited
to the sale of secured  plant  assets  from legal  settlements,  equity  private
placement sales,  product sales, and continued  aggressive expense control 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 Company's most recent results of operations.

     Operating expenses for the three months ended December 31, 2002 of $191,895
are down  from the  comparable  period  ended  December  31,  2001,  which  were
approximately  $603,978. This decrease was primarily due to staff reductions and
the shift away from investments in semiconductor technology development.

     Salary and benefits have  decreased for the three months ended December 31,
2002 from the three months ended  December 31, 2001 by  approximately  $100,029.
This decrease is attributable  to the staff  reductions and the movement of some
staff from a full time to part time  basis.  The  Chairman of the Board was paid
board fees for the three  months  ended  December  31,  2002 in shares of common
stock, in lieu of cash. The Chairman received 66,806 restricted common shares at
an average price on the date of the grant of $0.11 per share.

     Research and development  costs have decreased from  approximately  $74,536
for the three months ended  December  31, 2001 to  approximately  $9,690 for the
three months ended  December 31, 2002,  primarily  due to the shift of resources
from capital intensive  semiconductor related development projects to more labor
intensive location service technology related projects.

     Net cash used in operating activities decreased from $358,554 for the three
months ended  December 31, 2001 to $131,737 for the three months ended  December
31, 2002,  primarily  due to decreases  in operating  expenses,  and to a lesser
extent due to salary deferrals by several senior managers during the period.

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

LIQUIDITY AND CAPITAL RESOURCES

     At December 31, 2002, our liquidity  included cash and cash  equivalents of
$193,565  compared  to $1,405 at  September  30,  2002.  Our total  cash used in
operating activities from developmental stage inception in 1997 through December
31, 2002 was $6,380,672.  We have an accumulated  deficit of $20,996,233 million
and expect operating losses in the foreseeable future as we continue our efforts


                                       12
<PAGE>

to develop and market 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,  and to a very  limited
extent and only just  recently,  though the sale of our products.  We expect our
ability to finance operations through sales to improve during the course of this
fiscal year.

     In November  2002, the Company  commenced a private  offering of restricted
common stock and common stock  purchase  warrants.  As of February 10, 2003, the
Company had raised approximately $330,000 in cash and debt forgiveness from this
effort.  Subsequent to the end of December 2002,  the Company  issued  8,000,000
shares of  restricted  common stock and granted  3,100,000  warrants to purchase
common  stock at an  exercise  price of $0.30 and  200,000  warrants at a strike
price of $0.50 per share. No  underwriters  are involved in connection with this
private placement.  The sales and issuances of the securities issued pursuant to
the  foregoing  private  placement  are  exempt  from  registration   under  the
Securities Act of 1933, as amended,  pursuant to Section 4(2) thereof,  and Rule
506 of Regulation D.

     We believe that our current cash  position,  including  cash funds  arising
from the exercise of  outstanding  options,  and secured plant assets from legal
settlements,  the second phase of our November  2002 equity  private  placement,
product sales, and continued  aggressive  expense management to be sufficient to
continue  operations for the next twelve months.  We also believe that we may be
able to reduce outstanding  liabilities through negotiations with our creditors,
or possibly  negotiate to extend the payment  schedule  for these debts.  In the
event these approaches do not provide us with adequate  working capital,  we may
be  required  to  further  curtail or reduce our  development  activities,  seek
alternative funding sources, or seek protection under reorganization laws.

     Cash used in  operations  was $131,737 for the three months ended  December
31, 2002 compared  with  $358,554 for the three months ended  December 31, 2001.
The decrease in cash used in operations  resulted from staff reductions,  salary
deferrals,   and   reductions  in  other   operating   expense   related  areas.
Additionally,  management has sought to reduce cash uses wherever  possible.  We
are  continuing  efforts  to  lower  our  consumption  of cash  through  expense
reduction and through increases in product sales.


PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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


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<PAGE>

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

     During the three months ended December 31, 2002,  66,806  restricted common
shares  were  issued for  consulting  services  at a total  value of $6,680.  In
addition,  528,653 common shares were issued in connection  with the exercise of
options granted under the 2000 Stock Option Plan.  These options had an exercise
price of $0.05  per  share,  resulting  in  $23,897  of cash  proceeds  from the
exercise to the Company.

     As of February 1, 2003, there are 412,201 outstanding  warrants to purchase
common  stock of the  Company at $1.67 per share held by  Coriander  Enterprises
Limited,  3,100,000 warrants outstanding to purchase the Company common stock at
$0.30 per share, expiring December 30, 2004, and 200,000 warrants outstanding to
purchase the Company common stock at $0.50 per share, expiring also December 30,
2004.

     On December 1, 2000, the Board of Directors  instituted a Stock Option Plan
(2000 Plan).  The Board is of the opinion that it is in the best interest of NSC
to reserve not less than  7,000,000  Common  Shares to provide  adequate  Common
Shares  for the  issuance  to  qualified  individuals  under  the  2000  Plan to
encourage  them to remain in the service of NSC and to promote its  business and
growth strategy.



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<PAGE>

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

     Not applicable.

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

     Not applicable.

ITEM 5. OTHER INFORMATION.

     Not applicable.

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

(a)  Exhibits.

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

      99.1       CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
                 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT
                 OF 2002

(b)  Reports on Form 8-K.

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




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<PAGE>

                                   SIGNATURES

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

                                    NATIONAL SCIENTIFIC CORPORATION



February 14, 2003                   /s/ MICHAEL A. GROLLMAN
                                    --------------------------------------------
                                    Michael A. Grollman
                                    Chief Executive Officer, Chairman


                                    /s/ GRAHAM CLARK
                                    --------------------------------------------
                                    Graham Clark
                                    Secretary


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


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