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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-QSB

[ x ]

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2004

   

OR

 

[     ]

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: 000-27094

FIRST AMERICAN SCIENTIFIC CORP.
(Exact name of registrant as specified in its charter)

NEVADA

88-0338315

(State of other jurisdiction of incorporation or organization)

(IRS Employer Identification Number)

100 Park Royal South
Suite 811
Vancouver, British Columbia
Canada V7T 1A2
(Address of principal executive offices)

(604) 913-9035
(Registrant's telephone number, including area code)

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 [     ]

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PART I.

 

ITEM 1. FINANCIAL STATEMENTS

 

FIRST AMERICAN SCIENTIFIC CORP.
Consolidated Financial Statements

TABLE OF CONTENTS

 

FINANCIAL STATEMENTS

 

Consolidated Balance Sheets

F-1

 

Consolidated Statements of Operations and Comprehensive Income (Loss)

F-2

Consolidated Statement of Stockholders' Equity

F-3

 

Consolidated Statements of Cash Flows

F-4

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

F-5

 

 

 

 

 

 

 

 

 

 

 

-2-

 

FIRST AMERICAN SCIENTIFIC CORP.
CONSOLIDATED BALANCE SHEETS

   

September 30,

   

June 30,

   

2004

   

2004

ASSETS

 

(Unaudited)

     
           

CURRENT ASSETS

         
 

Cash

$

17,081

 

$

59,822

 

Accounts receivable, net of allowance

 

38,938

   

78,626

 

Prepaid expenses and other assets

 

11,178

   

16,867

 

Inventory

 

177,875

   

190,442

     

TOTAL CURRENT ASSETS

 

245,072

   

345,757

           

PROPERTY AND EQUIPMENT

         
 

Property and equipment

 

171,629

   

170,785

 

Less: Accumulated depreciation

 

(93,866)

   

(85,651)

     

TOTAL PROPERTY AND EQUIPMENT

 

77,763

   

85,134

           

OTHER ASSETS

         
 

Technology rights, net of amortization

 

993,992

   

1,025,742

Patents and manufacturing rights, net of amortization

156,220

160,394

 

Deposits

 

71

   

71

     

TOTAL OTHER ASSETS

 

1,150,283

   

1,186,207

           

TOTAL ASSETS

$

1,473,118

 

$

1,617,098

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

Accounts payable and accrued expenses

$

70,334

 

$

77,618

 

Deposit on sale of equipment

 

 

 

 

 

     

TOTAL CURRENT LIABILITIES

 

70,334

   

77,618

           

LONG-TERM LIABILITIES

         
 

Notes and wages payable to related parties

 

182,690

   

230,584

     

TOTAL LONG-TERM LIABILITIES

 

182,690

   

230,584

           

COMMITMENTS AND CONTINGENCIES

 

-

   

-

           

STOCKHOLDERS' EQUITY

         
 

Common stock - $.001 par value,

         
   

200,000,000 shares authorized; 171,313,865 and 169,564,976

         
   

shares issued and outstanding, respectively

 

171,314

   

169,565

 

Additional paid-in capital

 

12,070,467

   

11,972,976

 

Stock options

 

254,291

   

254,291

 

Accumulated deficit

 

(11,267,209)

   

(11,077,014)

 

Accumulated other comprehensive loss

 

(8,769)

   

(10,922)

     

TOTAL STOCKHOLDERS' EQUITY

 

1,220,094

   

1,308,896

           

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

1,473,118

 

$

1,617,098

See accompanying condensed notes to interim financial statements.

F-1

-3-

 

FIRST AMERICAN SCIENTIFIC CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

 

Three Months Ended
September 30,

 

 

2004

 

 

2003

 

 

(unaudited)

 

 

(unaudited)

 

 

 

 

 

 

REVENUES

$

147,646

 

$

13,653

 

 

 

 

 

 

COST OF SALES

 

70,221

 

 

-

 

 

 

 

 

 

GROSS PROFIT

 

77,425

 

 

13,653

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

Advertising

 

821

 

 

-

 

Amortization and depreciation

 

44,510

 

 

62,462

 

Professional services

 

68,800

 

 

18,288

 

Wages and benefits

 

100,874

 

 

211,778

 

Commissions

 

9,240

 

 

-

 

Research and development

 

2,885

 

 

24,044

 

General and administration

 

40,490

 

 

141,419

 

 

Total Operating Expenses

 

267,620

 

 

457,991

 

 

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) BEFORE INCOME TAXES

 

(190,195)

 

 

(444,338)

 

 

 

 

 

 

INCOME TAXES

 

-

 

 

-

 

 

 

 

 

 

NET INCOME (LOSS) BEFORE ALLOCATION TO MINORITY INTEREST

 

(190,195)

 

 

(444,338)

 

 

 

 

 

 

ALLOCATION OF LOSS TO MINORITY INTEREST

 

-

 

 

56,818

 

 

 

 

 

 

NET INCOME (LOSS)

 

(190,195)

 

 

(387,520)

 

 

 

 

 

 

OTHER COMPREHENSIVE INCOME (LOSS)

 

 

 

 

 

 

Foreign currency translation gain (loss)

 

2,153

 

 

(1,097)

 

 

 

 

 

 

COMPREHENSIVE NET INCOME (LOSS)

$

(188,042)

 

$

(388,617)

 

 

 

 

 

 

 

NET LOSS PER COMMON SHARE,

 

 

 

 

 

 

 

BASIC AND DILUTED

$

nil

 

$

nil

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF COMMON SHARES

 

 

 

 

 

 

OUTSTANDING, BASIC AND DILUTED

 

170,370,532

 

 

154,943,310

See accompanying condensed notes to interim financial statements.

F-2

-4-

 

FIRST AMERICAN SCIENTIFIC CORP.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                                   

Accumulated

     
               

Additional

               

Other

 

Total

     

Common Stock

 

Paid-in

   

Stock

   

Accumulated

   

Comprehensive

 

Stockholders'

Shares

Amount

Capital

Options

Deficit

Income (Loss)

Equity

                                         

Balance, July 1, 2003

 

152,646,376

 

$

152,646

 

$

11,200,120

 

$

204,831

 

$

(10,190,326)

 

$

(5,798)

 

$

1,361,473

                                           

Common stock issued for cash at $0.04 per share

 

800,000

   

800

   

45,200

   

-

   

-

   

-

   

46,000

                                           

Options issued for expenses, compensation &

                                       

consulting

 

-

   

-

   

-

   

83,060

   

-

   

-

   

83,060

                                           

Common stock issued and exercise of options for

                                       
 

services at $0.04 per share

 

6,560,000

   

6,560

   

260,380

   

(12,600)

   

-

   

-

   

254,340

                                           

Common stock issued as repayment of debt

 

400,000

   

400

   

39,600

   

-

   

-

   

-

   

40,000

                                           

Common stock issued for services at $0.048 per

                                       

share

 

455,000

   

455

   

20,410

   

-

   

-

   

-

   

20,865

                                           

Common stock issued for services at $0.05 per

                                       

share

 

1,850,000

   

1,850

   

90,650

   

-

   

-

   

-

   

92,500

                                           

Common stock issued and options exercised as

                                       
 

compensation at $0.04 per share

 

6,213,600

   

6,214

   

287,256

   

(21,000)

   

-

   

-

   

272,470

                                           

Common stock issued for rent expense at $0.05

                                       

per share

 

340,000

   

340

   

14,660

   

-

   

-

   

-

   

15,000

                                           

Common stock issued in payment of financing

                                       
 

expense at $0.05 per share

 

300,000

   

300

   

14,700

   

-

   

-

   

-

   

15,000

                                           

Foreign currency translation loss

 

-

   

-

   

-

   

-

   

-

   

(5,124)

   

(5,124)

                                           

Net loss for the year ended June 30, 2004

 

-

   

-

   

-

   

-

   

(886,688)

   

-

   

(886,688)

                                         

Balance, June 30, 2004

 

169,564,976

   

169,565

   

11,972,976

   

254,291

   

(11,077,014)

   

(10,922)

   

1,308,896

                                           

Common stock issued for cash at approximately $0.07 per share

 

138,889

   

139

   

9,861

   

-

   

-

   

-

   

10,000

                                           

Common stock issued for compensation and other

 

                                   
 

services at prices ranging from approximately to

                                       
 

$0.04 to $0.06 per share

 

1,610,000

   

1,610

   

87,630

   

-

   

-

   

-

   

89,240

                                           

Foreign currency translation loss

 

-

   

-

   

-

   

-

   

-

   

2,153

   

2,153

                                         

Net loss for the period ended September 30, 2004

                                       

(unaudited)

 

-

   

-

   

-

   

-

   

(190,195)

   

-

   

(190,195)

                                         

Balance, September 30, 2004 (unaudited)

 

171,313,865

 

$

171,314

 

$

12,070,467

 

$

254,291

 

$

(11,267,209)

 

$

(8,769)

 

$

1,220,094

See accompanying condensed notes to interim financial statements.

F-3

-5-

 

FIRST AMERICAN SCIENTIFIC CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS

   

Three Months Ended
September 30,

2004

2003

   

(unaudited)

   

(unaudited)

CASH FLOWS PROVIDED (USED) IN OPERATING ACTIVITIES

         
 

Net loss

$

(190,195)

 

$

(387,520)

 

Loss allocated to minority interest

 

-

   

(56,818)

     

(190,195)

   

(444,338)

             
 

Depreciation and amortization

 

44,510

   

62,462

 

Stock issued for services and compensation

 

89,240

   

118,180

 

Stock issued for expenses

 

-

   

27,000

 

Stock issued for services and current debt

 

-

   

11,340

 

Adjustments to reconcile net loss to net cash

         
   

used by operations:

         
   

Decrease (increase) in accounts receivable

 

39,688

   

2,301

   

Decrease (increase) in taxes and tax credits

 

-

   

(24,423)

   

Decrease (increase) in inventory

 

12,567

   

-

   

Decrease (increase) in deposits and prepaid expenses

 

5,689

   

(153)

   

(Decrease) increase in accounts payable

 

(7,284)

   

102,841

   

(Decrease) increase in accounts payable, related party

 

-

   

53,623

Net cash (used) in operating activities

 

(5,785)

   

(91,167)

                 

CASH FLOWS PROVIDED (USED) IN INVESTING ACTIVITIES

         
   

Purchase of plant and equipment

 

(844)

   

-

Net cash provided by investing activities

 

(844)

   

-

 

 

 

 

 

 

 

 

 

CASH FLOWS PROVIDED (USED) IN FINANCING ACTIVITIES

 

 

 

 

 

   

Proceeds from stock transactions

 

10,000

     
   

Notes payable, related parties

 

(47,894)

   

43,882

Net cash provided (used) by financing activities

 

(37,894)

   

43,882

                 

NET INCREASE (DECREASE) IN CASH

 

(44,523)

   

(47,285)

                 

Other comprehensive income (loss)

 

1,782

&