SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q

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

                  For the quarterly period ended June 30, 2002

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

    For the transition period from ____________________ to ________________

                       Commission File Number: 001-10382

                         VALLEY FORGE SCIENTIFIC CORP.
             (Exact name of registrant as specified in its charter)

      PENNSYLVANIA                                           23-2131580
(State or other jurisdiction of                        (I.R.S. employer
 incorporation or organization)                          identification no.)

                 136 Green Tree Road, Oaks, Pennsylvania 19456

             (Address of principal executive offices and zip code)
                           Telephone: (610) 666-7500

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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 _____

At August 8, 2002 there were 8,067,812 shares outstanding of the Registrant's no
par value Common Stock.

<PAGE>

                         VALLEY FORGE SCIENTIFIC CORP.

                               INDEX TO FORM 10-Q

                                 June 30, 2002



                                                                   Page
                                                                   Number

Part I - Financial Information

       Item 1.  Financial Statements:

       Balance Sheets -June 30, 2002 and September 30, 2001.           1

       Statements of Operations for the three months and nine months
       ended June 30, 2002 and June 30, 2001.                          2

      Statements of Cash Flows for the nine months
      ended June 30, 2002 and  June 30, 2001.                          3

      Notes to Financial Statements.                                   4

      Item 2.  Management's Discussion and Analysis of
               Financial Condition and Results of Operations.          8

Part II - Other Information                                           14


                                      (i)
<PAGE>

                 VALLEY FORGE SCIENTIFIC CORP. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS



                                            June 30,          September 30,
ASSETS                                        2002                 2001
------                                        ----                 ----
                                           (Unaudited)          (Audited)
Current Assets:
  Cash and cash equivalents                  $ 2,400,261        $ 1,500,622
  Accounts receivable, net                       310,986            605,150
  Inventory                                    1,071,438          1,199,536
  Prepaid items and other current assets         104,127            107,304
  Deferred tax assets                             96,691            104,380
                                               ---------          ---------
      Total Current Assets                     3,983,503          3,516,992

  Property, Plant and Equipment, Net             134,972            145,800
  Goodwill                                       153,616            153,616
  Other Intangible Assets, Net                   310,382            349,360
  Other Assets                                     4,489              5,446
                                               ---------          ---------
      Total Assets                           $ 4,586,962        $ 4,171,214
                                               =========          =========

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

Current Liabilities:
  Accounts payable and accrued expenses      $   200,662        $   191,786
  Income taxes payable                           167,959             91,400
                                                 -------            -------
      Total Current Liabilities                  368,621            283,186

Deferred Tax Liability                            13,817             19,280
                                                 -------            -------

      Total Liabilities                          382,438            302,466
                                                 -------            -------
Commitments and Contingencies

Stockholders' Equity:
 Preferred stock                                       -                  -
  Common stock (no par, 20,000,000 shares
   authorized, 8,067,812 shares issued and
   outstanding at June 30, 2002 and
   September 30, 2001)                         3,748,724          3,748,724
  Retained earnings                              455,800            120,024
                                               ---------          ---------
      Total Stockholders' Equity               4,204,524          3,868,748
                                               ---------          ---------

 Total Liabilities and Stockholders' Equity  $ 4,586,962        $ 4,171,214
                                               =========          =========

___________________

See accompanying notes.

                                      [1]
<PAGE>
<TABLE>
<CAPTION>

                 VALLEY FORGE SCIENTIFIC CORP. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)


                            For the Three Months Ended     For the Nine Months Ended
                                      June 30,                       June 30,
<S>                         <C>             <C>            <C>             <C>
                            2002            2001           2002            2001
                            ----            ----           ----            ----

Net Sales                   $ 1,148,278     $ 1,554,642    $ 3,868,482     $ 3,871,552

Cost of Sales                   545,872         750,679      1,859,422       1,903,629
                              ---------       ---------      ---------       ---------
Gross Profit                    602,406         803,963      2,009,060       1,967,923
                              ---------       ---------      ---------       ---------
Other Costs:
 Selling, general and
 administrative                 362,176         464,846      1,154,334       1,246,184
 Research and development        70,842          83,733        242,895         277,474
 Amortization                    16,010          20,148         47,600          60,445
                                -------         -------        --------       --------
    Total Other Costs           449,028         568,727       1,444,829      1,584,103
                                -------         -------       ---------      ---------

Income from Operations          153,378         235,236         564,231        383,820

Other Income (Expense), Net       8,349           6,431          12,881         30,651
                                -------         -------         -------        -------

Income before Income Taxes      161,727         241,667         577,112        414,471

Provision for Income Taxes       71,058          86,137         241,336        157,537
                                -------         -------         -------        -------
Net Income                  $    90,669     $   155,530    $    335,776    $   256,934
                                =======         =======         =======        =======


Earnings per Share:
  Basic earnings per
   common share             $      0.01     $      0.02    $       0.04    $      0.03
                                   ====            ====            ====           ====
  Diluted earnings per
   common share             $      0.01     $      0.02    $       0.04    $      0.03
                                   ====            ====            ====           ====
  Basic common shares
   outstanding                8,067,812       8,067,812       8,067,812      8,086,635

  Diluted common shares
   outstanding                8,186,268       8,140,984       8,166,693      8,137,107

</TABLE>
____________________

See accompanying notes.

                                      [2]
<PAGE>

                 VALLEY FORGE SCIENTIFIC CORP. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)



                                                For the Nine Months Ended
                                                          June 30,
                                                     2002           2001
                                                     ----           ----

Cash Flows from Operating Activities:
  Net income                                         $   335,776    $   256,934
  Adjustments to reconcile net income to net cash
    provided by operating activities:
      Depreciation and amortization                       63,125         88,905
       Write-down of property, plant and equipment         5,300              -
      Reduction of allowance for loans and advances
        to employees                                     (47,790)             -
      Interest accrued on loans and advances to
        employees                                         (2,089)        (3,508)

   Changes in assets and liabilities, net of effect from:
    (Increase) decrease in accounts receivable           294,164       (243,279)
    (Increase) decrease in inventory                     128,098       (273,665)
    Decrease in deferred tax assets                        7,689         79,174
    Increase in prepaid items and other current assets    (2,769)       (18,372)
    Decrease in other assets                                 957          1,781
    Increase in accounts payable and accrued
      expenses and income taxes payable                   85,435        155,020
    Decrease in deferred tax liability                    (5,463)       (15,587)
                                                         -------        -------
        Net cash provided by operating activities        862,433         27,403
                                                         -------        -------
Cash Flows from Investing Activities:
  Purchase of property, plant and equipment               (9,997)       (15,225)
  Purchase of intangible assets                           (8,622)             -
  Proceeds from repayment of employee loans and advances  57,261          5,650
  Loans and advances to employees                         (1,436)        (3,000)
                                                         -------         ------
        Net cash provided by (used in) investing
          activities                                      37,206        (12,575)
                                                         -------         ------
Cash Flows from Financing Activities:
  Repurchase of common stock                                   -       (110,706)
                                                         -------        -------
        Net cash used in financing activities                  -       (110,706)
                                                         -------        -------
Net Increase (Decrease) in Cash and Cash
  Equivalents                                            899,639        (95,878)

 Cash and Cash Equivalents, beginning of period        1,500,622        965,240
                                                       ---------        -------
 Cash and Cash Equivalents, end of period            $ 2,400,261    $   869,362
                                                       =========        =======

Supplemental Disclosures of Cash Flow Information:
  Cash paid during the period for:
    Interest                                         $         -    $         -
                                                        ========       ========
    Income taxes                                     $   166,050    $     2,500
                                                         =======       ========

____________________

See accompanying notes.

                                      [3]
<PAGE>


                 VALLEY FORGE SCIENTIFIC CORP. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

                                 JUNE 30, 2002


1.  DESCRIPTION OF BUSINESS

Valley Forge Scientific Corp. ("VFSC") was incorporated on March 27, 1980 in the
Commonwealth of Pennsylvania and is engaged in the business of developing,
manufacturing and selling medical devices and products.  On August 18, 1994,
VFSC formed a wholly-owned subsidiary, Diversified Electronics Company, Inc.
("DEC"), a Pennsylvania corporation, in order to continue the operations of
Diversified Electronic Corporation, a company which was merged with and into
VFSC on August 31, 1994.  In January 1993, VFSC formed a wholly-owned
subsidiary, Valley Consumer Products, Inc. ("VCP") to market specific product
lines.  During each of the years reported with these financial statements VCP
has been inactive.  Collectively, VFSC, DEC and VCP are referred to herein as
the "Company".

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Basis of Presentation
-----------------------------------------------------

The accompanying financial statements consolidate the accounts of VFSC and its
wholly-owned subsidiaries.  All significant intercompany accounts and
transactions have been eliminated in consolidation.  Certain amounts from prior
years have been reclassified to conform to the current year presentation.

The accompanying unaudited consolidated financial statements have been prepared
pursuant to rules and regulations of the Securities and Exchange Commission and,
therefore, do not include all information and footnote disclosures normally
included in audited financial statements.  However, in the opinion of
management, all adjustments that are of a normal and recurring nature necessary
to present fairly the results of operations, financial position and cash flows
have been made.  It is suggested that these statements be read in conjunction
with the financial statements included in the Company's Annual Report on Form
10-K for the year ended September 30, 2001.

The statements of operations for the three months and nine months ended June 30,
2002 and 2001 are not necessarily indicative of results for the full year.

Earnings (Loss) per Share
-------------------------

The Company computes earnings or loss per share in accordance with the Financial
Accounting Standards Board Statement No. 128 "Earnings Per Share" (SFAS 128)
which replaced the calculation of primary and fully diluted earnings per share
with basic and diluted earnings per share.  Unlike primary earnings per share,
basic earnings per share excludes the dilutive effects of options, warrants and
convertible securities and thus is computed by dividing income available to
common stockholders by the weighted average number of common shares outstanding.
Diluted earnings per share is similar to the previous fully diluted earnings per
share.  Diluted earnings per share reflects the potential dilution that could
occur if securities or other agreements to issue common stock were exercised or
converted into common stock.  Diluted earnings per share is computed based upon
the weighted average number of common shares and dilutive common equivalent
shares outstanding.

                                      [4]
<PAGE>

                 VALLEY FORGE SCIENTIFIC CORP. AND SUBSIDIARIES

                TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

                                 JUNE 30, 2002
                                  (Continued)


2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent Accounting Pronouncements
--------------------------------

In June 2001, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 141 (SFAS 141), "Business Combinations",
which eliminates the pooling of interests method of accounting for all business
combinations initiated after June 30, 2001 and addresses the initial recognition
and measurement of goodwill and other intangible assets acquired in a business
combination.  As of July 1, 2001, the Company adopted this accounting standard.

In addition, as of October 1, 2001, the Company early-adopted SFAS 142,
"Goodwill and Other Intangible Assets", which addresses the financial accounting
and reporting standards for goodwill and other intangible assets subsequent to
their acquisition.  This accounting standard requires that goodwill no longer be
amortized, and instead, be tested for impairment on a periodic basis.  In
conjunction with the adoption of the accounting standard, a transitional
impairment test was completed, and no impairment was identified which required a
cumulative effect of a change in accounting principle.

In accordance with SFAS 142, the Company discontinued the amortization of
goodwill effective October 1, 2001.

A reconciliation of previously reported net income and earnings per share to the
amounts adjusted for the exclusions of goodwill amortization, net of the related
income tax effect, follows:


                                    For the                  For the
                                Three Months Ended       Nine Months Ended
                                    June 30,                 June 30,
                                2002       2001          2002       2001
                                ----       ----          ----       ----
Reported net income             $  90,669  $ 155,530     $ 335,776  $ 256,934
Add: Goodwill amortization,
net of tax                              -      4,389             -     13,167
                                   ------    -------       -------    -------
Adjusted net income             $  90,669  $ 159,919     $ 335,776  $ 270,101
                                   ======    =======       =======    =======

Basic and dilutive net
 income per share:
  Reported net income per share-
   basic and dilutive           $    0.01  $    0.01     $    0.04  $    0.03

Add: Goodwill amortization,
      net of tax                        -          -             -          -
                                     ----       ----          ----       ----
Adjusted net income per
 share basic and dilutive       $    0.01  $    0.01     $    0.04  $    0.03
                                     ====       ====          ====       ====

                                      [5]
<PAGE>

                 VALLEY FORGE SCIENTIFIC CORP. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

                                 JUNE 30, 2002
                                  (Continued)

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent Accounting Pronouncements (Continued)
--------------------------------

In October 2001, the FASB issued SFAS 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets".  SFAS 144 supersedes SFAS 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be disposed
of".  The primary objectives of SFAS 144 are to develop one accounting model
based on the framework established in SFAS 121 for long-lived assets to be
disposed of by sale, and to address significant implementation issues.  At this
time, the Company is evaluating the impact of SFAS 144 on its financial position
and results of operations.  The Company will adopt SFAS 144 for its fiscal year
beginning October 1, 2002.

3.  GOODWILL AND OTHER INTANGIBLE ASSETS

In accordance with SFAS 142, Goodwill has been reflected on the balance sheet
separate from other intangible assets which continue to be amortized.  The
Company completed its transitional impairment test during the quarter ending
March 31, 2002.  No changes were required to be made to the carrying amount of
goodwill.

Information regarding the Company's other intangible assets is as follows:

<TABLE>
<CAPTION>

                          As of June 30, 2002                       As of September 30, 2001
                      -------------------------------------         ----------------------------------------
                       Gross                                        Gross
                       Carrying    Accumulated                      Carrying      Accumulated
                       Amount      Amortization   Net               Amount        Amortization    Net
                       ---------   ------------   ---               ---------     ------------    ---
<S>                    <C>         <C>            <C>               <C>           <C>             <C>
Patents, trademarks,
logos, licensing
agreements            $  569,010   $  474,753     $   94,257        $  560,388    $  449,771      $  110,617

Proprietary
 know-how                452,354      236,229        216,125           452,354       213,611         238,743

Acquistion
 costs                    55,969       55,969              -            55,969        55,969               -
                         -------      -------        -------           -------       -------         -------
                      $1,077,333   $  766,951     $  310,382        $1,068,711    $  719,351      $  349,360
                       =========      =======        =======         =========       =======         =======

</TABLE>

Amortization expense of other intangible assets was $16,010 and $15,759 for the
three months ended June 30, 2002 and 2001, respectively, and $47,600 and $47,278
for the nine months ended June 30, 2002 and 2001, respectively.

                                      [6]
<PAGE>

                 VALLEY FORGE SCIENTIFIC CORP. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

                                 JUNE 30, 2002
                                  (Continued)


4.  COMMITMENTS AND CONTINGENCIES

During the quarter ended March 31, 2002, the Company, without admitting
liabilities, entered into a settlement agreement relating to a litigation
previously disclosed in the Company's financial statements for the 2001 fiscal
year.  Pursuant to the settlement, the Company paid the plaintiff $37,000, net
of certain monies due from plaintiff, which is reflected in other costs under
selling, general and administrative expenses.

                                      [7]
<PAGE>

                         VALLEY FORGE SCIENTIFIC CORP.
               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS OF OPERATIONS


      The following discussion should be read in conjunction with the
consolidated financial statements and notes thereto appearing elsewhere in this
Form 10-Q.  Statements in this Management's Discussion and Analysis of Financial
Conditions and Results of Operations which express that we "believe",
"anticipate", "expect" or "plan to" as well as other statements which are not
historical fact, are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995.  Actual events or results may
differ materially as a result of the risks and uncertainties described herein
and elsewhere including, but not limited to, those factors discussed in section
entitled "ADDITIONAL CAUTIONARY STATEMENTS." We do not intend to update these
forward looking statements.

Overview

      We design, develop, manufacture and sell medical devices.  Our core
business is in our bipolar electrosurgical generators and related
instrumentation, based on our patented DualWave(TM) technology.  Our bipolar
systems allow a surgeon or dentist to cut tissue in a manner that minimizes
collateral damage to surrounding healthy tissue and to coagulate blood vessels
quickly, safely and efficiently. By essentially eliminating damage to
surrounding healthy tissue, the surgeon can work safely in direct contact with
nerves, blood vessels, bone and metal implants. Our bipolar systems are designed
to replace other surgical tools, such as monopolar systems, lasers and
conventional instruments, used in soft tissue surgery.

      Our patented DualWave(TM) technology is applicable to many surgical
markets. Our bipolar systems are currently used to perform many types of
neurosurgery, spine surgery and dental surgery.  We have entered into a
worldwide exclusive distribution agreement with Codman & Shurtleff, Inc., a
subsidiary of Johnson & Johnson, Inc., to market our neurosurgery bipolar
systems.  We also have entered into an exclusive distribution agreement with
Bident International, L.L.C., an affiliate of Garfield Refinery, Inc., to market
our Bident(R) dental bipolar system.

      Historically, we have derived a significant portion of our sales from our
neurosurgery bipolar system. Sales revenue from our Bident(R) bipolar dental
system commenced in fiscal year 2000.  Our strategy includes expanding our
patented DualWave(TM) technology in neurosurgery and other clinical areas. Our
strategy also includes using our patented DualWave(TM) technology to drive sales
of our complementary disposable handheld instruments and products.

                                      [8]
<PAGE>

Results of Operations

      Results of Operations for the Three and Nine Months Ended June 30, 2002
compared to the Three and Nine Months Ended June 30, 2001.

Summary

        Sales of $1,148,278 for the three months ended June 30, 2002 were 26%
less than sales of $1,554,642 for the three months June 30, 2001.  Net income
for the three months ended June 30, 2002 reached $90,669, compared to $155,530
for the three months ended June 30, 2001.  Through June 30, 2002, we have been
profitable for nine consecutive quarters.

      Sales of $3,868,482 for the nine months ended June 30, 2002 were slightly
less than sales of $3,871,552 for the nine months ended June 30, 2001.  Even
though sales were essentially constant, net income for the nine months ended
June 30, 2002 increased by 31% to $335,776 from the corresponding period in
fiscal 2001.

Revenues

      For the three months ended June 30, 2002, Codman & Shurtleff accounted for
99% of our sales, as compared to 87% of sales for the three months ended March
31, 2002 and 84% of our sales for the three months ended June 30, 2001.  Sales
of the Bident(R) bipolar dental system, made only a minimal contribution to
total sales for the three months ended June 30, 2002 as compared to 15% of
sales, for the three months ended June 30, 2001.  For the nine months ended June
30, 2002, sales of dental products were 10% of sales, as compared to 22% of
sales, for the nine months ended June 30, 2001.

      In January 2002, our dental marketing distributor, Bident International,
LLC, departed from its direct sales marketing strategy, when it entered into an
agreement with ESA Associates.  Under this agreement, Bident International, LLC
agreed to use dealer sales representatives as the primary means of selling our
Bident(R) dental system and related instruments.  Results from this agreement
did not meet expectations, and sales to Bident International, LLC declined over
the first nine months of 2002.  As a result, Bident International, LLC recently
returned back to using direct sales, as the primary means of selling our
Bident(R) dental system and related instruments, while continuing to nurture the
training and education of the ESA Associates' dealer sales representatives as a
supplement to the direct sales efforts. We, therefore, do not expect sales of
dental products to begin to benefit from this change until the first quarter of
fiscal 2003.  Sales of our Bident(R) dental products for the remainder of fiscal
2002 are therefore anticipated to continue to be at lower levels than in fiscal
2001.

        For the three months ended June 30, 2002, sales of bipolar
electrosurgical generators, irrigators and accessories accounted for
approximately 60% of our sales, and sales of disposable products accounted for
approximately 34% of our sales as compared to 63% and 30% of our sales,
respectively, for the three months ended June 30, 2001.  We anticipate
variations in our product mix from quarter to quarter, based on purchasing
patterns of the principal distributors of our products.

                                      [9]
<PAGE>

Cost of Product Sales
---------------------

        Cost of sales was $545,872 for the three months, and $1,859,422 for the
nine months, ended June 30, 2002, as compared with cost of sales of $750,679 for
the three months, and  $1,903,629 for the nine months, ended June 30, 2001. The
absolute dollar decrease in cost of sales for the three and nine months ended
June 30, 2002 as compared to the three and nine months ended June 30, 2001 was
due to greater manufacturing efficiencies, product mix and lower sales levels in
the third quarter of fiscal 2002. Gross margin increased to 52% for the three
and nine months ended June 30, 2002 as compared to 52% and 51%, respectively,
for the three and nine months ended June 30, 2001.

      Increases in gross margin as a percentage of sales is attributable to
changes in product mix and increased manufacturing efficiency.  We cannot be
sure that gross margins will remain at current levels or show improvement in the
future due to the distribution channels used, product mix, and fluctuation in
manufacturing production levels and overhead costs as new products are
introduced.  In addition, inefficiencies in manufacturing new products and the
distribution channels utilized to sell those products may adversely impact gross
margin.

Operating Expenses
------------------

      Selling, general and administrative expense decreased in absolute dollars
by over $102,000 to $362,176, or 32% of sales, for three months ended June 30,
2002, from $464,846, or 30% of sales, for the three months ended June 30, 2001.
For the nine months ended June 30, 2002, selling, general and administrative
expenses decreased by approximately $90,000 to $1,154,334, or 30% of sales, from
$1,246,184, or 32% of sales, for the nine months ended June 30, 2001.  The
absolute dollar decrease in selling, general and administrative expenses for the
three and nine months ended June 30, 2002 was primarily attributable to
increased cost cutting efforts and reduction in administrative salaries.  In the
future, we anticipate that selling, general and administrative expenses will
increase in absolute dollar amounts as we engage in additional business
development activities.

      Research and development expenses for the three and nine months ended June
30, 2002 were approximately $13,000 and $35,000, respectively, less than
expenditures for the corresponding periods in fiscal 2001. Research and
development expenses were 6% of sales for the three and nine months ended June
30, 2002 as compared to 5% and 7% of sales, respectively, for the three and nine
months ended June 30, 2001.  We continue to invest in research and development
to expand our patented technological base for use in both existing and
additional clinical areas.  On a quarter by quarter basis, our research and
development expenses may vary.  While research and development expenses are
lower this quarter due to completion of various phases of projects, we are
preparing for increased research and development expenditures in the fourth
quarter and in fiscal 2003.

Other Income/Expense, net
-------------------------

        Other income and expense, net, was $8,349 for the three months, and
$12,881 for the nine months, ended June 30, 2002 as compared to $6,431 for the
three months, and $30,651 for the nine months, ended June 30, 2001.  These
changes were primarily attributable to a reduction in interest rates and an
increase in non-operating expenses.  At June 30, 2002, we had $2,400,261 in cash
and cash equivalents as compared to $869,362 at June 30, 2001.

                                      [10]
<PAGE>

Income Tax Provision
--------------------

        The provision for income taxes was $71,058 for the three months, and
$241,336 for the nine months, ended June 30, 2002 as compared to a provision of
$86,137 for the three months, and $157,537 for the nine months, ended June 30,
2001.

Net Income
----------

        As a result of the foregoing, for the three months ended June 30, 2002
our net income  was $90,669, or a 42% decrease from net income of $155,530 for
the three months ended June 30, 2001.  Net income of $335,776 for the nine
months ended June 30, 2002, however, was 31% greater than net income of $256,934
for the nine months ended June 30, 2001.  Basic and diluted income per share was
$.01 for the three months, and $.04 for the nine months, ended June 30, 2002 as
compared to $.02 for the three months, and $.03 for the nine months, ended June
30, 2001. Net income for the current fiscal year reflects an increase in gross
margin and a decrease in our selling, general and administrative expenses and
research and development expenses.  Although we have been profitable on a
quarterly basis since the third quarter of fiscal 2000, due to our operating
history and numerous other factors, we cannot be sure that we can sustain
revenue growth or profitability.

Liquidity and Capital Resources
-------------------------------

        At June 30, 2002, we had $3,614,882 in working capital compared to
$3,233,800 at June 30, 2001.  The primary measures of our liquidity are cash,
cash equivalents, accounts receivable and inventory balances, as well as our
borrowing ability.  The cash and cash equivalents are highly liquid with
original maturities of ninety days or less.

          Cash generated by operating activities was $862,433 for nine months
ended June 30, 2002, which was mainly attributable to operating profits, a
decrease in inventory of $128,098, a decrease in accounts receivable of $294,164
and an increase in accounts payable, accrued expenses and income taxes payable
of $85,435. The decrease in accounts receivable was principally due to an
improved collection process, timing of shipments and reduced sales levels for
the third quarter of fiscal 2002.

        Inventories decreased by $128,098 during the nine months ended June 30,
2002 to a total of $1,071,438. Inventories were kept at these levels primarily
to support existing and anticipated increasing sales activity.

        Cash generated by investing was $37,206 for the nine months ended June
30, 2002, which is mainly attributable to proceeds of $57,261 received from
repayment of employee loans and advances.  At June 30, 2002, we had cash and
cash equivalents of $2,400,261.

        At June 30, 2002, we plan to finance our operating and capital needs
principally with cash from sales, cash, cash equivalents, and related interest
and existing capital resources, which we believe will be sufficient to fund our
operations in the near future.  However, should it be necessary, we believe we
could borrow adequate funds at competitive rates and terms.  Our future
liquidity and capital requirements will depend on numerous factors, including
the success in commercializing our existing products, development and
commercialization of products in fields other than neurosurgery and the dental
market, the ability of our suppliers to continue to meet our demands at current
prices, the status of regulatory approvals and competition.

                                      [11]


        We have a line of credit of $1,000,000 with First Union National Bank
which calls for interest to be charged at the bank's national commercial rate.
The credit accommodation is unsecured and requires us to have a tangible net
worth of no less than $3,000,000.  At June 30, 2002, there was no outstanding
balance on this line.

Forward Looking Statements
--------------------------

        The information provided in this report may contain "forward looking"
statements or statements which arguably imply or suggest certain things about
our future. Statements which express that we  "believe", "anticipate", "expect",
or "plan to" as well as other statements which are not historical fact, are
forward looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward looking statements include, but are
not limited to statements about: (1) any competitive advantage we may have as a
result of our installed base of electrosurgical generators in the field of
neurosurgery; (2) our  belief that our products exceed industry standards or
favorably compete with other companies' new technological advancements; (3) the
future success of products and disposable instrumentation in the field of
neurosurgery and the dental market; and (4) our ability to attract distributors
for our products outside of neurosurgery and the dental market, and the
acceptance and continued acceptance of our products in those markets. These
statements are based on assumptions that we believe are reasonable, but a number
of factors could cause our actual results to differ materially from those
expressed or implied by these statements. We do not intend to update these
forward looking statements.  You are advised to review the "Additional
Cautionary Statements" section below for more information about risks that could
affect the financial results of Valley Forge Scientific Corp.

Additional Cautionary Statements

We Face Intense Competition
---------------------------
      The markets for our current and potential products are intensely
competitive.    Some surgical procedures which utilize or could utilize our
products could potentially be replaced or reduced in importance by alternative
medical procedures or new drugs which could render our products obsolete or
uncompetitive in these markets.

Our Growth Depends on Introducing New Products and the Market Penetration by
----------------------------------------------------------------------------
Third Party Distributors
------------------------
      Our growth depends on the acceptance of our products in the marketplace,
the market penetration achieved by the companies which we sell to, and rely on,
to distribute our products, and our ability to introduce new and innovative
products that meet the needs of medical professionals.  There can be no
assurance that we will be able to continue to introduce new and innovative
products or that the products we introduce, or have introduced, will be widely
accepted by the marketplace, or that companies which we contract with to
distribute our products will continue to achieve market penetration in the field
of neurosurgery and achieve market penetration in the dental market and other
medical and surgical markets.  Our failure to continue to introduce new products
or gain wide spread acceptance of our products would adversely affect our
operations.

                                      [12]

We Depend on Attracting New Distributors for Our Products
---------------------------------------------------------

      In order to successfully commercialize our products in new markets, we
will need to enter into distribution arrangements with companies who can
distribute our products in those fields successfully.

Our Products are Extensively Regulated Which Could Delay Product Introduction or
-------------------------------------------------------------------------------
Halt Sales
----------

      The process of obtaining and maintaining required regulatory approvals is
lengthy, expensive and uncertain.  Although we have not experienced any
substantial regulatory delays to date, there is no assurance that delays will
not occur in the future, which could have a significant adverse effect on our
ability to introduce new products on a timely basis.  Regulatory agencies
periodically inspect our manufacturing facilities to ascertain compliance with
"good manufacturing practices" and can subject approved products to additional
testing and surveillance programs.  Failure to comply with applicable regulatory
requirements can, among other things, result in fines, suspensions of regulatory
approvals, product recalls, operating restrictions and criminal penalties.
While we believe that we are currently in compliance, if we fail to comply with
regulatory requirements, it could have an adverse effect on our results of
operations and financial condition.

We Face Uncertainty Over Reimbursement
--------------------------------------

        Failure by physicians, hospitals and other users of our products to
obtain sufficient reimbursement from health care payors for procedures in which
our products are used or adverse changes in governmental and private third-party
payors' policies toward reimbursement for such procedures would have a material
adverse effect on our business, financial condition, results of operations and
future growth prospects.

We May Be Unable to Effectively Protect Our Intellectual Property
-----------------------------------------------------------------

        Our ability to compete effectively depends in part on developing and
maintaining the proprietary aspects of our bipolar technology. We cannot assure
you that the patents we have obtained, or any patents we may obtain, will
provide any competitive advantages for our products.  We also cannot assure you
that those patents will not be successfully challenged, invalidated or
circumvented in the future.  In addition, we cannot assure you that competitors,
many of which have substantial resources and have made substantial investments
in competing technologies, have not already applied for or obtained, or will not
seek to apply for and obtain, patents that will prevent, limit or interfere with
our ability to make, use and sell our products either in the United States or in
international markets.  Patent applications are maintained in secrecy for a
period after filing.  We may not be aware of all of the patents and patent
applications potentially adverse to our interests.


We May Become Subject to a Patent Litigation
--------------------------------------------

        The medical device industry has been characterized by extensive
litigation regarding patents and other intellectual property rights, and
companies in the medical device industry have employed intellectual property
litigation to gain a competitive advantage.  We cannot assure you that we will
not become subject to patent infringement claims or litigation or interference
proceedings declared by the United States Patent and Trademark Office to
determine the priority of invention.

                                      [13]

We May Have Product Liability Claims
------------------------------------

      Our products involve a risk of product liability claims.  Although we
maintain product liability insurance at coverage levels which we believe are
adequate, there is no assurance that, if we were to incur substantial liability
for product liability claims, insurance would provide adequate coverage against
such liability.

Our Operating Results May Fluctuate
-----------------------------------

      Our results of operations may fluctuate significantly from quarter to
quarter based on numerous factors including the following:

*  the introduction of new products;
*  the level of market acceptance of our products;
*  achievement of research and development milestones;
*  timing of the receipt of orders from, and product shipments to,
     our distributors;
*  timing of expenditures;
*  delays in educating and training our distributors' sales force;
*  manufacturing or supply delays;
*  product returns; and
*  receipt of necessary regulation approval.

PART II.  OTHER INFORMATION

Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

     (a)       Exhibits
               None

     (b)       Current Reports on Form 8-K
               None

                                      [14]

                         VALLEY FORGE SCIENTIFIC CORP.

                                   SIGNATURES

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




                                          VALLEY FORGE SCIENTIFIC CORP.


Date:   August 12, 2002                   By:  /s/ Jerry L. Malis
                                          -----------------------
                                          Jerry L. Malis, President
                                          (principal financial officer)