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FIRST AMERICAN SCIENTIFIC CORP.
(Name of small business issuer in its charter)

Nevada	88-0338315
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

811 - 100 Park Royal South
West Vancouver, British Columbia
Canada V7T 1A2
(Address of principal executive offices, including postal code.)

(604) 913-9035
(Registrant's 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 [    ]

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by referenced in Part III of this Form 10-KSB or any amendment to this Form 10-KSB [    ]

State issuer's revenues for its most fiscal year June 30, 2005: $851,817

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of June 30, 2005: $6,713,426

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State the number of shares outstanding of each of the issuer's classes of common equity, as of September 10, 2005: 183,593,955

We make forward-looking statements in this document. Our forward-looking statements are subject to risks and uncertainties. You should note that many factors, some of which are described in this section or discussed elsewhere in this document, could affect our company in the future and could cause our results to differ materially from those expressed in our forward-looking statements. Forward-looking statements include those regarding our goals, beliefs, plans or current expectations and other statements regarding matters that are not historical facts. For example, when we use the words "believe," "expect," "anticipate" or similar expressions, we are making forward-looking statements. We are not required to release publicly the results of any revisions to these forward-looking statements we may make to reflect future events or circumstances.

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General

FIRST AMERICAN SCIENTIFIC CORP. (the "Company") was incorporated under the laws of Nevada on April 12, 1995. The Company owns the patented kinetic disintegration system called the KDS Micronex System and two additional process patents using the equipment. One other process patent application is pending. The System consists of an electrically powered disintegration/drying chamber and feeding system that utilizes kinetic energy and standing sound waves to pulverize various waste materials such as biomass (wood waste), pulp sludge, animal waste, food waste, rubber, glass, and other feed stocks into valuable, fine, dry, talcum-like powders that can be used as a combustible fuel or a high nutrient fertilizer. The goal of the Company is to identify and develop commercially viable " waste to resources" industrial applications for the KDS System, then market, manufacture, and sell, lease and/or license it to end users in the forest and pulp and paper industries, in agriculture, in recycling, and others.

Applications

1. Biomass to Green Energy
The Company's research and testing to date indicates that the highest potential use for the equipment is found in pulverizing and drying (micronizing) biomass (wood waste) into a fine, dry combustible fuel that can be incinerated in specialized burners to create BTUs (heat energy), which, in turn, can be converted to electrical power through conventional means. For biomass, the critical value of the process is its ability to act as an industrial dryer which can extract water from wood at below boiling temperature at a significantly lower cost than through other conventional methods.

To this end, the Company has designed a complete system that will economically convert waste biomass into electrical energy by creating and burning the micronized powder in combination with conventional boilers and power generating systems. The design will also accommodate any type of waste biomass as a feedstock, making it suitable for any operation which produces large quantities of waste biomass, such as racetracks, farming operations, poultry operations, sawmills, palm plantations, or furniture factories and others where feedstock is less than 60% moisture content. In July 2004, one machine was sold to a newly formed Malaysian company FASCM (of which FASC owns 50 %), to be used to process palm tree waste in Malaysia. A new, higher capacity model KDS - MF 777 was designed and fabricated in Malaysia and has been successfully installed and is in full operation at the first ever renewable green energy co-generation power plant to be connected to the power grid in Malaysia.

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2. Pulp Sludge
The Company has also processed wet (80% moisture) pulp sludge, and has shown that potential exists in converting waste pulp sludge to a dry, fibre-like powder and releasing the kaolin clay concurrently, then burning to create BTUs which are recycled back into the paper making process as heat and/or electrical power. This could reduce energy costs, disposal costs, and environmental problems in the pulp and paper industry. An demonstration system is now operating in the UK, and an installation at a local pulp mill in Eastern Canada is planned for November 2005 by AGES.

3. Animal waste/munincipal sewage/food waste
When micronizing animal manures, the system has proven its ability to kill 99% of all pathogens and coliforms during processing earning it an EPA rating as a pesticide device with registered establishment number 73753 CAN - 001 granted to the Company in January 2001. This "cleansing" of these types of waste products could bring large animal and poultry producers into compliance with EPA regulations as well as create a nutrient rich "clean" end product suitable for recycling as fertilizer.

When micronizing a mixture of food waste, wood waste and chicken manure, a fine, dry, pathogen-free dry powder is produced which is suitable as a high nutrient fertilizer base, as a filler, or, depending on the content, as cattle feed.

Recent testing has been done processing and combusting municipal secondary sludge with excellent results. An installation is planned at a local B.C. municipality for December 2005.

4. Comminution (pulverizing) of mineral rock
When micronizing mineral rock, the process reduces the rock to a consistent fine dry powder as small as -600 mesh which has proven sufficient to separate and release precious and heavy metals mechanically without the use of chemicals. Development work continues to increase the durability of the equipment to withstand the heavy wear imposed when processing hard rock. Although the process has proven to be 97% efficient, commercially viable processing volumes have not yet been achieved. This process has now been patented. There are three separate companies in the mining industry currently using the technology.

5. Re-cycling scrap rubber
When micronizing rubber, a cryogenic cooling process can facilitate the recycling of scrap rubber by pre-freezing it in a cooling chamber and injecting it through a pneumatic feed system into a pulverizing chamber. The method has proven that the KDS system can pulverize (shatter) rubber into a fine mesh suitable for re-cycling as a base material for other rubber based products. Commercially viable quantities are not yet proven. This process has now been patented and the company is seeking a joint venture partner who will participate in the development of this application to commercial viability. No further work has been done this year, and the application is dormant.

6. Recycling Glass
When micronizing glass, the process reduces it to a consistent fine dry powder as small as 20 microns which has proven valuable as a strengthener in asphalt, concrete and ceramics. Three machines were sold into this industry last year and are currently in operation.

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The KDS Equipment

The KDS uses a patented high speed rotary action to create sufficient kinetic energy to pulverize and dry (micronize) raw materials that are introduced into the chamber without cutting.

The KDS machine weighs approximately five tons and measures sixteen feet high, by ten feet long by eight feet wide. It is powered by a 150 or 250 hp main drive electric motor and uses 5 smaller ancillary motors to move product though the chamber and out through the taurus. The feed material is typically one inch in diameter and carried by a pneumatic lift or conveyor and material grading system, passing through the KDS system at various rates, dependent up product size, moisture content and hardness. The life span of the KDS machine is greater than ten (10) years and requires ongoing service and replacement of consumables on a daily basis. Maintenance is minimal and requires less than thirty minutes per day and twenty-four hour servicing twice a year.

There are currently three models and variations thereof available designed for various feedstocks and applications.

Device and Method for Comminution - US Patent #6,024,307 and Canadian patent # 2,218,429

A patent was issued for the KDS as for a "device for comminution" on November 24, 1998, and its U.S. patent number is 6,024,307 with additional patent applications filed in Australia, Canada, Europe (EEC), Finland, France, Germany, Ireland, Italy, Mexico, New Zealand, Spain, Sweden, Switzerland, and the United Kingdom.

Cryogenic Comminution of Rubber - US Patent # 6,655,167 B2

On April 20, 2001, the Company filed a patent application in the United States to protect its research into developing a process for cryogenically freezing non-tire scrap rubber and processing in into a micro-fine powder using the KDS equipment. This patent has now been issued.

Method of Recovery of Precious Metal and Heavy Minerals - US Patent # 6,682,005 B2

On May 4, 2001, the Company filed a patent application in the United States to protect its research into developing a process for disintegrating and separating precious metal from hard rock without the use of chemicals. This patent has now been issued.

Method and apparatus for Recovery of Fuel and Clay from Biomass - (pending)

In November 2002, the Company filed a provisional patent application in the United States to protect its research for the processing wet biomass through the KDS equipment. This application is pending in Canada, USA, Europe, Malaysia and Japan.

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The Company continues research with various materials to improve operating efficiencies; increase volume throughput to economically viable levels; and identify markets where profitable operation of the equipment can be achieved. Of particular interest is adapting the equipment to dry out heavily moisture laden materials such as biomass from the forest industry, and pulp sludge. In this regard, testing is being carried out in Vancouver, British Columbia by FASC, in Kuala Lumpur, Malaysia by FASCM, in Whitby, Ontario by AGES and in London, England by FASC/WRAP. Significant progress has been made converting biomass to a fine dry fuel which can be combusted in the dust burning system Testing of hardened beater bar systems with various coatings and alloys for added strength has resulted increased bar life. Tests for the dewatering of food waste, municipal sewage, and animal wasted and the grinding of other materials continues. All research on rubber processing has been discontinued until a suitable research partner can be identified.

The Company is subject to various federal, provincial and local environmental laws and regulations. Management believes that the Company's operations currently comply in all material respects with applicable laws and regulations. Management believes the trend in environmental litigation and regulation is toward stricter standards, and that these stricter standards may result in higher costs for the Company and its competitors. Such changes in the laws and regulations may require the Company to make additional capital expenditures which, while not presently estimable with certainty, are not presently expected to be material. Costs for environmental compliance and waste disposal have not been material in the past. In the future, stricter regulations may increase the demand for our products which offer solutions to some environmental problems

Manufacturing of the KDS is contracted out to Mainland Machinery Limited (MML) in Vancouver, British Columbia. When needed, the Company sub-contracts MML to construct a machine on a fixed price basis. Two other backup manufacturers have been identified should demand increase beyond the capacity of MML.

On June 22, 1995, the Company entered into a license agreement with Spectrasonic Corp. (hereinafter "Spectrasonic"), a related party, for the worldwide license to its unpatented KDS for use in rubber and glass recycling and disposal, for a period of ninety-nine years.

On February 22, 1996, the Company entered into an additional license agreement with Spectrasonic for the worldwide license to its unpatented Ultrasound Equipment for exclusive use in gypsum disintegration, disposal, recycling, remanufacturing or manufacturing of used or new raw materials.

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On July 2, 1997, the Company purchased from Spectrasonic Corp all patents to be issued or pending, including all data pertaining to the patent process with respect to the KDS. Final payment to Spectrasonic of 1,000,000 common shares of the Company's stock valued at $0.25 per share was made on December 1, 1999 when unencumbered title to the patents passed to the Company.

Alternative Green Energy Systems Inc
In February 2002, the Company granted a conditional license to AGES to manufacture and sell the KDS equipment for applications using biomass and/or pulp sludge. On February 21, 2004, that license expired. On February 23, 2004, the Company granted AGES a modified exclusive license for 21 years, to design, manufacture and sell a large scale version of the KDS machine to be used in the pulp and paper industry in Canada, the USA, and the European Union.

In October 2001, the Company signed an agreement with Thermix Combustion Systems Inc, a designer and manufacturer of computer controlled dust burning furnaces and systems. Under the agreement, the Company and Thermix Combustion combined their respective technologies for micronizing and burning wood waste/powder and jointly formed a corporation named the Alternative Green Energy Systems Inc. ("AGES"). AGES goal is adapt the KDS system to create a continuous flow of suitable micronized hog fuel/ wood dust that will be used as a fuel for Thermix's specialized dust burners.

In January 2002, a KDS machine was shipped to Montreal where it has been enhanced to adapt to the processing of biomass and pulp sludge. Subsequently, in March 2003, it was moved to Atlantic Packaging's pulp & paper recycling plant in Whitby, Ontario for testing on a trial basis. Scientific advancements were made, but commercially viable throughput volumes were not achieved with this small scale model.

In February 2002, AGES signed an agreement with Hydro Quebec Capitech Inc. wherein Hydro Quebec Capitech agreed to invest CDN$1,000,000 equity in AGES's for research and development. The initial payment of CDN$600,000 was received in March 2002 and the balance of CDN$400,000 was received in March 2003.

Despite the inability to achieve sufficient volume with the small machine, on February 23, 2004, the Company granted AGES a modified license for the exclusive rights, to design, manufacture and sell a large scale version of the KDS machine to be used in the pulp and paper industry in Canada, the USA, and the European Union.

Under the license agreement with AGES, the Company retains ownership of all patents for the KDS technology, and owns rights to all the research conducted by AGES. AGES must sell one machine per year or pay $25,000 in lieu to maintain the exclusive rights granted in the agreement.

The Company owns 40 % of the outstanding shares of AGES.

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FASC ( Malaysia ) SDN. BHD.

On July 8, 2004, the Company granted an exclusive license for 21 years to First American Scinetific Corp (Malaysia) Bhd. Sdn., to market the KDS system in Malaysia. The newly formed company in Malaysia is 50 % owned by FASC. The agreement required FASCMBS to purchase one KDS machine and set up a fully operational demonstration plant in Malaysia. The machine was delivered and paid for in September 2004.

In June 2005, FASCM sold, manufactured and delivered its first commercial production size KDS machine to a biomass power plant operation in East Malaysia. The new model KDS - MF 777 was designed and fabricated in Malaysia and has been successfully installed and is in full operation at the first ever renewable green energy co-generation power plant to be connected to the power grid in Malaysia. The 14 megawatt TSH Biomass power plant in Kunak, Sabah, Malaysia, brought online in December 2004, operates continuously, 24 hours per day, 365 days per year generating electrical energy and steam for its palm oil operations.

Hollywood Park Racetrack (California)

In June 2002 AGES, received a request to prepare a detailed proposal to install a turnkey power generating system for Hollywood Park Racetrack of Inglewood California which would be fueled by horse manure processed through our KDS system. The preliminary report was successfully presented in August 2002, and the final quotation was presented in November 2002. Hollywood Park has considered our proposal and has indicated that they are still interested in purchasing and installing the equipment once they can arrange a suitable location and meet local government regulations. As of July 2004, the project has been put on hold.

Mikuniya Environmental Management Systems Inc - EMSI (Japan)

In 2002 , we made two visits to Japan to present our equipment to interested purchasers. As a result, on December 5, 2002, we signed a one year agreement with Mikuniya Environmental Management Systems Institute Inc of Tokyo, Japan to represent the Company in developing a market for its KDS equipment in Japan.,In January 2003, we hosted a delegation of five Japanese companies who have expressed serious interest in importing our equipment to Japan. In December 2003, the agreement with EMSI was not renewed, but EMSI advise that they remain interested in working with the us on an ad hoc basis. EMSI continues to negotiate with a potential licensee on our behalf.

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Mitsui Engineering & Shipbuilding Co. Ltd - MES (Japan)

In July 2004, FASC signed a collaboration with Mitsui Engineering and Shipbuilding Co. Ltd. (MES). Patent applications have been filed and the MES has expressed interest to continue working with FASC. In June 2005 MES advised us the they were not willing to purchase an exclusive license to market the KDS in Japan, but they would continue to express interest in utilizing the technology.

Sustainable Development Technology Canada (SDTC) Funding - AGES

In October 2004, Sustainable Development Technology Canada (SDTC) awarded a $600,000 Cdn research grant to AGES to construct and install a complete waste to energy KDS 3000 system at a pulp mill in Eastern Canada.

Flakeboard Company Limited - AGES

Alternative Green Energy Systems (AGES) has signed a Contribution Agreement for $600,000 Cdn with SDTC (Sustainable Development Technology Canada) for a wet 'Wood Waste to Energy' project to be hosted by Flakeboard Company Limited (FCL), at their St. Stephen New Brunswick facility. SDTC is mandated to act as the primary catalyst in building a sustainable development technology infrastructure in Canada and help meet the Kyoto accords. Flakeboard Company Limited will be installing all infrastructure equipment to handle wood waste to the project and to convey and store the fuel dust after it has been processed. The FCL total investment includes a reclaimer, silo, various conveyors, a major area electric upgrade, DCS modifications and a civil engineering project to site and enclose all the equipment. Installation of the equipment expected to be completed before the end of November 2005.

Halliburton Group Canada - UZP

In February 2004, FASC became a 1/3rd partner, along with C2C Zeolite Corp and Zeotech Enviro Corp, in United Zeolite Products Ltd, a BC company formed to build and operate a specialty zeolite processing plant in Princeton, B.C. UZP has a $5,000,000 Cdn contract to supply of micronized zeolite to Halliburton Group Canada. In August 2004 Thelon Ventures Ltd., a Canadian company committed $450,000 Cdn in cash to UZP as a condition to become a fourth equal partner in UZP, thereby by reducing each of the existing partners' equity position to 25 % each of UZP's outstanding shares, but providing the balance of funds needed to complete the construction of the Princeton facility. As of the date of writing this report the building construction is complete and KDS equipment has been delivered is operational. Delays with rock blasting at the Zeotech mine in Princeton has resulted in no raw material being delivered for processing so far this year.

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US Department of Energy Grant

In 2003, the Company was awarded an $84,000 USD Phase I STTR grant by the US Dept of Energy and completed research for improving the drying component of its equipment. This research was successfully completed this year resulting in several significant advances being made to the technology. In 2004, the Company was also selected for a $750,000 USD Phase II STTR research grant, but subsequent to the date of these statements, this grant was not awarded as the Company was determined not to be a qualifying small business pursuant to the rules of the US Small Business Administration Act.

US Dept of Agriculture Grant - University of Tennessee

In July 2004, we were selected to participate with the University of Tennessee in a Biomass Research Initiative project funded by the US Dept of Agriculture. First American Scientific Co. was identified as a key industry partner for its history of developing novel size reduction and separation processes. The research is underway. Results will be announced when they become available.

The Waste and Resources Action Programme - UK (WRAP)

In Septemeber 2004, we signed an agreement wherein WRAP has agreed to provide funding to develop "value enhanced end-products" from the output of the KDS machine. WRAP has agreed to provide $1,000,000 USD for the purchase and installation of one complete KDS system to be located at an industrial site in England. The fund will also pay for market research, scientific research, re-design and adaptation costs for the equipment and supplementary systems for industry-specific applications. FASC engineering staff will manage the project which will run for approximately 18 months. The goals of the project are to demonstrate the KDS technology in a working environment, optimize ancillary equipment to improve its efficiency, and identify markets for recycled end products. The first machine was shipped to Aylesford Newsprint in London, England and an evaluation is now ongoing. Results will be announced when they become available.

The KDS machine is viable for softer industrial rock, such as gypsum and zeolite, wood chips or chicken manure (embedded in sawdust), and any biomass at moisture levels below 60%. The Company continues to research and seek potential markets where operation of the equipment is economically viable. Improvements to the equipment continue and we are constantly experimenting to find solutions that increase throughput on various types of products. Each situation presents unique hurdles to be overcome. In the case of rubber, feedstock becomes elastic with rise in temperature and must be pre-frozen before processing to maintain efficient shattering. In the case of biomass and pulp sludge, the product must not exceed 60% moisture content to avoid clogging of the equipment. In the case of minerals rock, chains must be replaced with hardened steel bars to avoid rapid wear and breakage. In the case of human and animal waste, a de-watering is required prior to processing. Some of these adaptations require additional research and until implemented, there is no certainty that the equipment will be accepted in all the proposed markets.

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The Company has competition from other producers of microfine powders, most of who must use a series of equipment to achieve similar results. Some have much greater financial resources than the Company, but the Company believes its system is more cost effective than these competitors and that we can reasonably expect to attract a share of the marketplace.

The Company's corporate offices are located at 811 - 100 Park Royal, West Vancouver, British Columbia, Canada, V7T 1A2 and the Company's sales and demonstration site moved to 6473 64 ^th Street, Delta, British Columbia, Canada V4K 4E2. The phone numbers are (604) 913-9035 and (604) 940-6220, respectively. Fax numbers are (604) 925-1118 and (604) 940-6221.

Subsidiaries and other equity positions

Alternative Green Energy Systems Inc (AGES) - 40 % owned by FASC

The Company owns 40% of the outstanding shares of common stock of Alternative Green Energy Systems Inc., a Canadian federally incorporated corporation ("AGES")

United Zeolite Products Ltd. (UZP) - 25 % owned by FASC

In February 2004, FASC became a 1/3 rd partner, along with C2C Zeolite Corp and Zeotech Enviro Corp, in United Zeolite Products Ltd, a BC company formed to build and operate a specialty zeolite processing plant in Princeton, B.C. The plant is currently under construction and expected to be operational this fall. UZP has a $5,000,000 Cdn contract to supply of micronized zeolite to Halliburton Group Canada. Subsequent to the date of these statements, Thelon Ventures Ltd. committed $450,000 Cdn in cash to UZP and became the fourth partner in UZP, thereby by reducing each of the partner's equity position to 25 % each of UZP's outstanding shares. The funds are to be used to complete the construction of the Princeton facility.

First American Scientific ( Canada ) Ltd. - 100 % owned by FASC

The Company owns 100% of the outstanding shares of common stock of First American Scientific ( Canada) Ltd ( formerly First American Power Corp ). The Company changed its name on May 26, 2005. FAS ( Canada ) was formed to operate in Canada for the purpose of providing research, development, and other services exclusively to FASC.

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FASC (Malaysia) Bhd. Sdn. - 50 % owned by FASC

On July 8, 2004 the Company signed an agreement to form a new Malaysian company, FASC (Malaysia) Sdn. Bhd to construct a fully operational palm waste processing plant to be financed by the Malayian partners. A machine was purchased by FASCMBS and shipped to Malaysia in August 2004. FASCM designed, manufactured and sold its first system in June 2005.

FAS (Canada) currently has four full-time employees. Messrs. Nichols and Kantonen are Officers of, and members of the boards of directors of both FASC and FAS (Canada) Ltd. The compny also retains outside consultants when necessary.

During the fiscal period ending June 30, 2005, the Company settled various accounts owing by issuance of common stock.

Risk Factors

1. Going Concern Opinion. At this time, the Company cannot be sure that it will be successful in its operations. Therefore the Company's independent certified public accountants have issued an opinion that there is substantial doubt about the Company's ability to continue in business as a going concern.

2. Development and Market Acceptance of New Products. The Company's success and growth will depend upon its ability to improve and market its KDS machines and KDS processes and to successfully develop, and generate revenues from its processes. To date the Company has been unable to achieve the foregoing.

3. Liquidity; Need for Additional Financing. The Company believes that it will need additional cash during the next twelve months. If the Company is unable to generate a positive cash flow before its cash is depleted, it will need to seek additional capital. There is no assurance that the Company will be able to obtain additional capital if required, or obtain the capital on terms and conditions acceptable to it. The Company is currently suffering from a lack of liquidity although its current obligations are not significant, in spite of this, the Company continues its sales efforts while it continuously seeks out additional capital. The Company's auditors have also issued a going concern opinion.

4. Dependence on Suppliers. The Company relies on a number of suppliers to provide certain raw materials for its products. The interruption of certain sources of supply or the failure to adapt materials to the Company's changing technological requirements could disrupt the Company's ability to manufacture products or cause the Company to incur costs associated with the development of alternative sources, either of which could adversely affect the Company's financial performance.

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5. Technology Risk. All manufacturers, including the Company, utilize different applications of known technology. Should a competitor develop a technology breakthrough that cannot be adapted to the Company's systems or develop a more effective application of existing technology, the KDS and its processes would be at risk of becoming obsolete.

6. Competition. Most of the competition are companies with substantially greater financial, technical and marketing resources than the Company. If the market for the KDS or its process are established, the Company expects that additional competition will emerge and that existing competitors may commit more resources to those markets.

7. Issuance of Additional Shares. At June 30, 2005, there were 181,443,955 shares of common stock or 90.5 % of the 200,000,000 authorized shares of Common Stock of the Company outstanding and 18,556,045 shares remain unissued. The Board of Directors has the power to issue such shares, subject to shareholder approval, in some instances. Although the Company presently has no commitments, contracts, or intentions to issue any additional shares to other persons, other than in the exercise of options, the Company may in the future attempt to issue shares to acquire products, equipment, or properties, or for other corporate purposes. Any additional issuance by the Company, from its authorized but unissued shares, would have the effect of diluting the interest of existing shareholders.

8. Indemnification of Officers and Directors for Securities Liabilities. The Articles of Incorporation of the Company provide that any Director, Officer, agent and /or employee will be indemnified as to those liabilities and on those terms and conditions as are specified in the Company Act of the State of Nevada. Further, the Company may purchase and maintain insurance on behalf of any such persons whether or not the Corporation would have the power to indemnify such person against the liability insured against. The foregoing could result in substantial expenditures by the Company and prevent any recovery from such Officers, Directors, agents and employees for losses incurred by the Company as a result of their actions. Further, the Company has been advised that in the opinion of the Securities and Exchange Commission, indemnification is against public policy as expressed in the Securities Act of 1933, as amended, and is, therefore, unenforceable.

9. Cumulative Voting, Preemptive Rights and Control . There are no preemptive rights in connection with the Company's Common Stock. Shareholders may be further diluted in their percentage ownership of the Company in the event additional shares are issued by the Company in the future. Cumulative voting in the election of Directors is not provided for. Accordingly, the holders of a majority of the shares of Common Stock, present in person or by proxy, will be able to elect all of the Company's Board of Directors.

10. No Dividends Anticipated. At the present time the Company does not anticipate paying dividends, cash or otherwise, on its Common Stock in the foreseeable future. Future dividends will depend on earnings, if any, of the Company, its financial requirements and other factors.

11. Lack of Market Research. The Company has neither conducted nor has the Company engaged other entities to conduct market research such that management has assurance market demand exists for the transactions contemplated by the Company.

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12. Product Liability. The Company could incur liability for product defects, which result in damage from the use of its equipment and products. Any such claims, if successful, could result in substantial losses to the Company.

13. No Insurance Coverage. The Company, like other companies in its industry, is finding it increasingly difficult to obtain adequate insurance coverage against possible liabilities that may be incurred in conducting its business activities. At present, the Company has not secured any liability insurance. The Company has potential liability from its general business activities, and accordingly, it could be rendered insolvent by serious error omission.

14. Non-arms Length Transactions and Conflicts of Interest. The Company has engaged in transactions with its Officers, Directors and principal shareholders. Such transactions may be considered as not having occurred at arms length. The Company will be engaged in transactions with management and others involving conflicts of interest, including conflicts on salaries and other payments to such parties.

15. Reliance Upon Current Management. The Company's current operations and future success are greatly dependent upon the participation of its officers, Cal Kantonen and Brian Nichols.

16. Lack of Key Man Insurance. The Company has not obtained key man life insurance on the life of its officers and directors. The death or unavailability of any one of them could have a material adverse impact on the operation of the Company.

The Company owns no real property. It leases a 300 square feet of office space at 811 - 100 Park Royal, West Vancouver, West Vancouver, British Columbia V6T 1A2. The office is leased from Smythe Ratcliffe, Chartered Accountants, on an annual basis. The rent is US$1,100 per month which includes full reception and office services.

In July 2003, the Company leased a new sales office at 6473 64 ^th Street, Delta, British Columbia, Canada containing 900 square feet plus a 1000 sq ft covered area for the KDS equipment. The sales office is sub-leased from Aquadine Industries Ltd under a two year sub-lease agreement. The monthly rental is US$700 which has been pre-paid until June 2005. This lease is now expired and the company is seeking to re-locate to a more central location.

As of June 30, 2005, the Company owns three KDS machines. Two machines are being stored in Abbotsford as inventory. and one machine is owned by FASC and is installed in Princeton for processing zeolite for Halliburton.

The Company has office furniture and office equipment, and tools and test equipment costing at total of $47,874 located in Delta British Columbia, Canada and West Vancouver, British Columbia, Canada.

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The Company's registered office is # 700 - 101 Convention Center Drive, Las Vegas, Nevada 89109.

The Company is not a party to any pending litigation and none is contemplated or threatened other than as described below:

Ford Motor Credit Company vs. First American Scientific Corp. , Kern County Municipal Court, Bakersfield Judicial District, Case No. 148129, filed on October 10, 1998. This complaint seeks $3,549.96, plus attorneys' fees and costs for failure to pay on a lease executed by the Company. No trial date has been set and discovery has been propounded by plaintiff. Management would like to settle this matter prior to trial. Plaintiff has made an offer to settle for $3,549.96, but this offer was not accepted by the Company's management. It is likely that plaintiff will prevail at trial and thus out of court settlement is sought. As of the date hereof, the case has not been settled.

Interface Consultants Ltd. commenced an action in the Supreme Court of BC in July 2004 to collect $28,555 Cdn they claim is owed for services they rendered to the Company in 1998. This claim was settled out of court by the issuance of 300,000 common shares of FASC in September, 2004.

The Company has a number of other commercial creditors in the state of California who have the ability to bring actions to recover money due them resulting from the close of operation of the Bakersfield plant. Some of these claims will entitle the creditor to attorneys' fees spent in recovering these funds. The Company offered settlements on approximately $24,000 for these trade payables which have been outstanding for more than five years. The company disputes the amounts owing. None of these creditors have initiated lawsuits or further claims. There are currently no further discussions or actions contemplated concerning these disputed payables. After 7 years, (in 2006 ) if no legal action is initiated, the company will cancel the debts on its books and records.

No matters were submitted to a vote of shareholders in the fourth quarter of 2005.

The Company's securities are traded over-the-counter on the Bulletin Board operated by the National Association of Securities Dealers, Inc. under the symbol "FASC." The table shows the high and low bid of the Company's Common Stock for the past two years:

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The Company has no outstanding options or warrants, or other securities convertible into, common equity other than as disclosed herein. Of the 181,443,955 shares of common stock outstanding as of June 30, 2005, all are free trading with the exception of approximately 11,000,000 shares which may only be resold in compliance with Rule 144 of the Securities Act of 1933.

At September 15, 2005, the Company had approximately 5,700 shareholders of record of its Common Stock.

The Company has not declared any cash dividends, nor does it intend to do so. The Company is not subject to any legal restrictions respecting the payment of dividends, except that dividends may not be paid to render the Company insolvent. Dividend policy will be based on the Company's cash resources and needs and it is anticipated that all available cash will be needed for the Company's operations in the foreseeable future.

Section 15(g ) of the Securities Exchange Act of 1934

The Company's shares are covered by Section 15(g) of the Securities Exchange Act of 1934, as amended that imposes additional sales practice requirements on broker/dealers who sell such securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouses). For transactions covered by the Rule, the broker/dealer must make a special suitability determination for the purchase and have received the purchaser's written agreement to the transaction prior to the sale. Consequently, the Rule may affect the ability of broker/dealers to sell our securities and also may affect your ability to sell your shares in the secondary market.

- 16 -

Section 15(g) also imposes additional sales practice requirements on broker/dealers who sell penny securities. These rules require a one page summary of certain essential items. The items include the risk of investing in penny stocks in both public offerings and secondary marketing; terms important to in understanding of the function of the penny stock market, such as "bid" and "offer" quotes, a dealers "spread" and broker/dealer compensation; the broker/dealer compensation, the broker/dealers duties to its customers, including the disclosures required by any other penny stock disclosure rules; the customers rights and remedies in causes of fraud in penny stock transactions; and, the NASD's toll free telephone number and the central number of the North American Administrators Association, for information on the disciplinary history of broker/dealers and their associated persons.

The Company currently has one equity compensation plan. Prior to 2000, the Company had three additional stock option plans. All shares which were authorized under those plans have been exhausted.

The 2001 Incentive Stock Option Plan provides for the issuance of stock options for services rendered to the Company. The board of directors is vested with the power to determine the terms and conditions of the options. The Plan included 30,000,000 shares. To date option to purchase 30,000,000 shares have been granted and all options have been exercised, leaving no shares available for issuance under the Plan.

The 2001A Incentive Stock Option Plan provides for the issuance of stock options for services rendered to the Company. The board of directors is vested with the power to determine the terms and conditions of the options. The Plan includes 20,000,000 shares. To date options to purchase 20,000,000 shares have been granted and all options have been exercised, leaving no shares available for issuance under the Plan.

The 2003 Incentive Stock Option Plan provides for the issuance of stock options for services rendered to us. The board of directors is vested with the power to determine the terms and conditions of the options. The Plan includes 10,000,000 shares. To date options to purchase 10,000,000 shares have been granted and all options have been exercised, leaving no shares available for issuance under the Plan.

The 2004 and 2004A Incentive Stock Option Plans provides for the issuance of stock options for services rendered to us. The board of directors is vested with the power to determine the terms and conditions of the options. The Plans include 20,000,000 shares. To date options to purchase 20,000,000 shares have been granted, leaving no shares available for issuance under the Plans.

The 2005 Incentive Stock Option Plan provides for the issuance of stock options for services rendered to us. The board of directors is vested with the power to determine the terms and conditions of the options. The Plan includes 10,000,000 shares. At June 30, 2005, options to purchase 1,206,493 shares have been granted, leaving 8,793,507 shares available for issuance under the Plan.

- 17 -

					Number of securities
	Number of securities to			Weighted-average	remaining available for future
	be issued upon exercise			exercise price of	issuance under equity
	of outstanding options,			outstanding options,	compensation plans
	warrants and rights			warrants and rights	(excluding securities
Plan category	(a)			(b)	in column (a)) (c)
Equity compensation plans
approved by security holders	None			None	None
Equity compensation plans	2001		0		0
not approved by	2001	A	0		0
securities holders	2003		0		0
	2004		0		0
	2004	A	0		0
	2005		1,206,493		8,793,507
Total	1,206,493				8,793,507

ITEM 6.     MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

Liquidity and Capital Resources

We were incorporated April 12, 1995 as a development stage company. We are the owner of the KDS disintegration technology which is patented in the USA, Canada, UK, Europe, Mexico, Australia, and New Zealand. In addition to the core patent, new patents for two new applications, one for the cryogenic freezing and shattering scrap rubber and one for separation of precious metals from mineral rock using our equipment have been granted. One other patent application for drying and recovery of fuel and clay from biomass has been submitted and is pending status. Further new applications have been submitted in Japan, Korea, and Malaysia. We have now reached proven commercial viability for several of our applications and have entered our marketing phase. To date, we have sold systems in Canada, the Unites States, Poland, Malaysia, Korea, and the UK.

On June 30, 2005 we had current assets of $333,320 and current liabilities of $176,804 compared to the previous year on June 30, 2004 when we had $345,757 in current assets and $77,618 in current liabilities. Our working capital ratio on June 30, 2005 was 1.89:1, compared to the working capital ratio was 4.4:1 on June 30, 2004. Despite the decline, the company is still in a positive working capital position and has no long term debt other than advances from two of its directors.

- 18 -

In October 2004, Sustainable Development Technology Canada (SDTC) awarded a $600,000 Cdn research grant to AGES to construct and install a complete waste to energy KDS 3000 system at a pulp mill in eastern Canada. To date approximately one half of the funds have been received on a 2:1 matching basis.

In Septemeber 2004, we signed an agreement wherein WRAP has agreed to provide funding to develop "value enhanced end-products" from the output of the KDS machine. WRAP has agreed to provide $1,000,000 USD for the purchase and installation of one complete KDS system to be located at an industrial site in England. The fund will also pay for market research, scientific research, re-design and adaptation costs for the equipment and supplementary systems for industry-specific applications. FASC engineering staff will manage the project which will run for approximately 18 months. The goals of the project are to demonstrate the KDS technology in a working environment, optimize ancillary equipment to improve its efficiency, and identify markets for recycled end products. The first machine was sold and paid for, then shipped to Aylesford Newsprint in London, England where it is now in operation. An evaluation is now ongoing with positive looking results so far.

In July 2004, we were selected to participate with the University of Tennessee in a Biomass Research Initiative project funded by the US Dept of Agriculture. First American Scientific Co. was identified as a key industry partner for its history of developing novel size reduction and separation processes. The research is underway. Results will be announced when they become available.

Although we were selected for a further US Dept of Energy (DOE) Phase II grant, that application did not proceed as we did not have a principle place of business in the USA. After remedying the deficiency, we subsequently reapplied for a new Phase I grant on December 14, 2004. Unfortunately our project was not chosen for funding this year round. We hope to re-apply next year.

Management believes that the carrying value of its technology licenses, patents and manufacturing rights are fairly stated at cost less amortization using the straight line method over 15 years based upon the estimated present value of cash flows and the Company's projections to sell at least two machines each year through 2006. The Company met this minimum sales target in fiscal year 2004, and has already exceeded the target for fiscal year 2005 with three sales so far and a fourth contract signed awaiting deposit. Sales are booked when the equipment is delivered.

- 19 -

Our auditors have issued a going concern statement because we do not have sufficient cash flow for us to maintain our operation for the next year. Consequently, our management will have to seek additional capital from new equity securities offerings, loans, or other fund raising activities to maintain our operation should new sales and receipt of receivables not materialize. Some relief has come from deferment of payment of salaries and loans due to our senior management which aggregate approximately $239,530 USD as of June 30, 2005.

As of June 30, 2005 there were 181,443,955 shares issued and outstanding.

Results of Operations - Year ending June 30, 2005

Revenue for the year ended June 30, 2005 was $851,817 compared to $373,569 for the same period last year. This years revenue included equipment sales, consulting and license fees and royalties. Sales efforts are ongoing with several major projects in final stage of negotiation.

Net losses for the year ended June 30, 2005 were $429,815 or less than $0.01 per share compared to a a loss of $886,688 for the same period last year. Efforts increase revenue and to control and reduce operating costs are continual.

The company will participate in profits and royalties from three separate joint venture agreements as follows:

In February 2004, FASC became a 1/3rd partner, along with C2C Zeolite Corp and Zeotech Enviro Corp, in United Zeolite Products Ltd, a BC company formed to build and operate a specialty zeolite processing plant in Princeton, B.C. UZP has a $5,000,000 Cdn contract to supply of micronized zeolite to Halliburton Group Canada. In August 2004 Thelon Ventures Ltd., a Canadian company committed $450,000 Cdn in cash to UZP as a condition to become a fourth equal partner in UZP, thereby by reducing each of the existing partners' equity position to 25 % each of UZP's outstanding shares, but providing the balance of funds needed to complete the construction of the Princeton facility. As of the date of writing this report the building construction is complete and KDS equipment has been delivered is operational. Delays in rock blasting and crushing at the Zeotech mine has caused further delays in reciept of raw material for processing. No royalties or payments have been received to date.

In July 2004 the Company signed an agreement to form a new Malaysian company, FASC (Malaysia) Sdn. Bhd to construct a fully operational palm waste processing plant to be 100 % financed by the Malaysian partners. Upon completion, FASC (Malaysia) Sdn. Bhd. will be granted exclusive license to market the KDS equipment in Malaysia. In addition to earning royalties for all KDS equipment sold in Malaysia, A machine was purchased by FASCM and shipped to Malaysia in August 2004. Operation of the equipment is now ongoing with and sampling runs of empty bunch, shell & coconut fibre underway. The first sale in Malaysia was to a biomass power plant, with the potential for 5 more sales to come. FASC earned approximately $15,000 in royalties on this sale.

- 20 -

In February 2004 , AGES was granted a new 21 year exclusive license to design, manufacture and sell a large scale KDS machine for exclusive use in the pulp & paper industry in Canada, the USA and Europe. Plans for construction of the new KDS Model 3000 have been finalized and the first sale is under negotiation. The smaller Model 250 test machine remains at Atlantic Packaging Ltd.'s paper recycling facility in Whitby, Ontario for experimentation and demonstration purposes. The first KDS 3000 is currently being built for delivery later this year. FASC recieved $25,000 in royalties from AGES this year. As the model 3000 has yet to have been built and tested, there is no certainty that it will meet the requirements of the customer, and the sale is conditional upon performance.

Other material contracts :

Under agreement with FASC, WRAP has agreed to provide up to $1,000,000 USD for the purchase and installation of one complete KDS system to be located at a local pulp mill in the UK and for market research, scientific research and re-design of supplementary systems for industry-specific applications. The site will be announced when details are finalized. FASC engineering staff will be working with WRAP for the duration of the project which will run for approximately 18 months. For the project, the KDS will be the key technology to dewater sludge and enable the separation and recycling of fiber and clay for a variety of applications.

In July 2004, FASC signed a collaboration with Mitsui Engineering and Shipbuilding Co. Ltd. (MES). Patent applications have been filed and the MES has expressed interest to continue working with FASC, but MES no formal license agreement will be entered into with MES. Negotiations are now underway with another potential licensee. More details will be provided when they materialize.

We continue to focus on improving the KDS equipment's processing capacity and improve efficiencies for several different applications. We have determined that processing of softer materials such as biomass and pulp sludge currently represent the highest and best use for our technology and the most probable to generate sales. With the funding provided by SDTC, WRAP, the USDA, and FASCM our research is continuing into developing commercially viable applications for our technology. We have now constructed and tested a larger system MF -777 with higher volume capacity in Malaysia on palm waste which has proven to be the solution for higher capacity applications. As all improvements to our technology become part of FASC s core technology, the MF -777 has wide potential for use in all our other projects.

- 21 -

Inflation

Inflation has not been a factor effecting current operations, and is not expected to have any material effect on operations in the near future.

Foreign Operations

We rent office space in West Vancouver, British Columbia, Canada which serve as administrative and rent a sales offices and demonstration facility in Delta, British Columbia.

Trends

Sales efforts are beginning to bring results with four systems sold in the last five quarters and two new sales contracted for delivery next quarter. Based upon the sale of a minimum of eight machines per year, plus royalties and license fees, we have projected sales of at least $1,500,000 to $2,000,000 next year .

Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 153 (hereinafter "SFAS No. 153"). This statement addresses the measurement of exchanges of nonmonetary assets. The guidance in APB Opinion No. 29, "Accounting for Nonmonetary Transactions," is based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. The guidance in that opinion, however, included certain exceptions to that principle. This statement amends Opinion 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. This statement is effective for financial statements for fiscal years beginning after June 15, 2005. Earlier application is permitted for nonmonetary asset exchanges incurred during fiscal years beginning after the date of this statement is issued. During the year ended June 30, 2005, the Company adobted SFAS No. 153. The Company has determined that there was no financial impact from the adoption of this statement.

In November 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 151, " Inventory Costs - an amendment of ARB No. 43, Chapter 4". This statement amends the guidance in ARB No. 43, Chapter 4, "Inventory Pricing," to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). Paragraph 5 of ARB 43, Chapter 4, previously stated that ". . . under some circumstances, items such as idle facility expense, excessive spoilage, double freight, and rehandling costs may be so abnormal as to require treatment as current period charges. . . ." This statement requires that those items be recognized as current-period charges regardless of whether they meet the criterion of "so abnormal." In addition, this statement requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. This statement is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. Management does not believe the adoption of this statement will have any immediate material impact on the Company.

- 22 -

In December 2004, the Financial Accounting Standards Board issued a revision to Statement of Financial Accounting Standards No. 123R, "Accounting for Stock Based Compensations." This statement supersedes APB Opinion No. 25, "Accounting for Stock Issued to Employees," and its related implementation guidance. This statement establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity's equity instruments or that may be settled by the issuance of those equity instruments. This statement focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. This statement does not change the accounting guidance for share based payment transactions with parties other than employees provided in Statement of Financial Accounting Standards No. 123. This statement does not address the accounting for employee share ownership plans, which are subject to AICPA Statement of Position 93-6, "Employers' Accounting for Employee Stock Ownership Plans." The Company has not yet determined the impact to its financial statements from the adoption of this statement.

- 23 -

Certified Public Accountants & Business Consultants

First American Scientific Corp.
Vancouver, BC
Canada

We have audited the accompanying consolidated balance sheets of First American Scientific Corp. as of June 30, 2005 and 2004, and the related consolidated statements of operations and comprehensive income (loss), stockholders' equity and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of First American Scientific Corp. as of June 30, 2004 and 2003 and the results of its operations, stockholders' equity and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 2, the Company has sustained losses since inception and has limited cash resources. These factors raise substantial doubt about the Company's ability to continue as a going concern. Realization of a major portion of the assets is dependent upon the Company's ability to meet its future financing requirements and the success of future operations. Management's plans regarding those matters are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Williams & Webster, P.S.
Williams & Webster, P.S.
Certified Public Accountants
Spokane, Washington
September 9, 2005

F-1

- 24 -

FIRST AMERICAN SCIENTIFIC CORP.
CONSOLIDATED BALANCE SHEETS
									June 30,		June 30,
ASSETS									2005		2004
CURRENT ASSETS
	Cash							$	1,020	$	59,822
	Accounts receivable, net of allowance								129,860		78,626
	Sales tax refunds								10,090		-
	Prepaid expenses								184		16,867
	Inventory								192,166		190,442
			TOTAL CURRENT ASSETS						333,320		345,757
PROPERTY AND EQUIPMENT
	Property and equipment								88,856		170,785
	Less: accumulated depreciation								(48,020)		(85,651)
			TOTAL PROPERTY AND EQUIPMENT						40,836		85,134
OTHER ASSETS
	Technology rights, net of amortization								898,742		1,025,742
	Patents and manufacturing rights, net of amortization								142,240		160,394
	Investments in joint ventures								333,420		-
	Deposits								-		71
			TOTAL OTHER ASSETS						1,374,402		1,186,207
TOTAL ASSETS								$	1,748,558	$	1,617,098
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
	Accounts payable and accrued expenses							$	176,804	$	77,618
			TOTAL CURRENT LIABILITIES						176,804		77,618
LONG-TERM LIABILITIES
	Notes and wages payable to related parties								239,530		230,584
			TOTAL LONG-TERM LIABILITIES						239,530		230,584
COMMITMENTS AND CONTINGENCIES									-		-
STOCKHOLDERS' EQUITY
	Common stock - $.001 par value,
		200,000,000 shares authorized; 181,443,955 and
		169,564,976 shares issued and outstanding, respectively							181,444		169,565
	Additional paid-in capital								12,666,452		12,227,267
	Accumulated deficit								(11,506,829)		(11,077,014)
	Accumulated other comprehensive loss								(8,843)		(10,922)
			TOTAL STOCKHOLDERS' EQUITY						1,332,224		1,308,896
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY								$	1,748,558	$	1,617,098

- 25 -

FIRST AMERICAN SCIENTIFIC CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
						Year Ended June 30,
						2005		2004
REVENUES
	Revenues from equipment and machine sales				$	549,494	$	373,569
	Royalty income					302,323		-
		Total Revenue				851,817		373,569
COST OF SALES						252,018		178,971
GROSS PROFIT						599,799		194,598
OPERATING EXPENSES
	Advertising					11,230		43,962
	Amortization and depreciation					173,533		189,861
	Consulting					102,272		151,561
	Professional services					109,632		164,783
	Wages					518,991		542,535
	Research and development					23,229		126,867
	General and administration					188,800		109,099
	Bad debt expense					2,313		-
	Rent					22,300		22,441
		Total Operating Expenses				1,152,300		1,351,109
LOSS FROM OPERATIONS						(552,501)		(1,156,511)
OTHER INCOME (EXPENSE)
	Expenses recovered from joint venture					115,486		-
	Government grant					7,200		91,908
	Income from change in accounting for AGES					-		177,915
		Total Other Income (Expense)				122,686		269,823
LOSS BEFORE INCOME TAXES						(429,815)		(886,688)
INCOME TAXES						-		-
NET LOSS						(429,815)		(886,688)
OTHER COMPREHENSIVE INCOME (LOSS)
	Foreign currency translation gain (loss)					2,079		(5,124)
COMPREHENSIVE NET LOSS					$	(427,736)	$	(891,812)
	NET LOSS PER COMMON SHARE,
		BASIC AND DILUTED			$	nil	$	(0.01)
	WEIGHTED AVERAGE NUMBER OF
		COMMON SHARES OUTSTANDING,
		BASIC AND DILUTED				176,503,903		164,934,976

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

F-3

- 26 -

FIRST AMERICAN SCIENTIFIC CORP.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
										Accumulated
					Additional				Other		Total
		Common Stock			Paid-in			Accumulated	Comprehensive		Stockholders'
		Shares	Amount		Capital			Deficit	Income (Loss)		Equity
Balance, June 30, 2003		152,646,376	$	152,646	$	11,404,951	$	(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		247,780		-		-		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		266,256		-		-		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		12,227,267		(11,077,014)		(10,922)		1,308,896
Common stock issued for cash at $0.072 per share		138,889		139		9,861		-		-		10,000
Common stock issued in settlement of debt		300,000		300		28,255		-		-		28,555
Common stock issued for services at $0.04 per share		2,870,000		2,870		95,995		-		-		98,865
Common stock issued for rent at $0.04 per share		110,090		110		4,294		-		-		4,404
Common stock issued for compensation at $0.04 per share		8,250,000		8,250		291,750		-		-		300,000
Common stock issued for commissions at $0.044 per share		210,000		210		9,030		-		-		9,240
Foreign currency translation gain		-		-		-		-		2,079		2,079
Net loss for the year ended June 30, 2005		-		-		-		(429,815)		-		(429,815)
Balance, June 30, 2005		181,443,955	$	181,444	$	12,666,452	$	(11,506,829)	$	(8,843)	$	1,332,224

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

F-4

- 27 -

FIRST AMERICAN SCIENTIFIC CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
								Year Ended June 30,
									2005		2004
CASH FLOWS FROM OPERATING ACTIVITIES
	Net loss							$	(429,815)	$	(886,688)
	Depreciation and amortization								173,533		172,424
	Bad debt expense								2,313		-
	Stock and options issued for services and compensation								427,420		723,235
	Stock issued for rent								4,404		15,000
	Stock issued for commissions								9,240		-
	Stock issued for interest expense								-		15,000
	Options issued for compensation								-		49,460
	Income for change in accounting for AGES								-		(177,915)
	Income for licensing fees on Malaysia joint venture
		paid with stock in joint venture company							(263,158)		-
	Adjustments to reconcile net loss to net cash
		used by operations:
		Decrease (increase) in accounts receivable							(51,234)		(75,607)
		Decrease (increase) in taxes and tax credits							-		107,961
		Decrease (increase) in inventory							(56,057)		87,081
		Decrease (increase) in deposits and prepaid expenses							16,754		95
		Decrease (increase) in refunds							(10,090)		-
		Increase (decrease) in accounts payable							99,186		(139,277)
		Increase (decrease) in payable to related parties							90,000		37,981
Net cash provided (used) by operating activities									12,496		(71,250)
CASH FLOWS FROM INVESTING ACTIVITIES
		Purchase of equipment							-		(40,846)
		Investments							-		(44,950)
		Investment in technology rights and patents							-		(6,503)
Net cash provided (used) in investing activities									-		(92,299)
CASH FLOWS FROM FINANCING ACTIVITIES
		Proceeds from borrowing							-		40,000
		Net proceeds from borrowing, related parties							(81,054)		76,907
		Proceeds from sales of stock							10,000		46,000
Net cash used by financing activities									(71,054)		162,907
NET INCREASE (DECREASE) IN CASH									(58,558)		(642)
Other comprehensive gain (loss) - foreign currency translation									(244)		(4,298)
CASH - Beginning of year									59,822		64,762
CASH - End of period								$	1,020	$	59,822
SUPPLEMENTAL CASH FLOW DISCLOSURES:
	Interest expense							$	-	$	-
	Income taxes							$	-	$	-
NON-CASH FINANCING AND INVESTING TRANSACTIONS:
	Common stock issued for services and compensation							$	427,420	$	723,235
	Common stock issued for rent							$	4,404	$	15,000
	Common stock issued for commissions							$	9,240	$	-
	Options issued for compensation							$	-	$	49,460
	Common stock issued for interest expense							$	-	$	15,000

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

F-5

- 28 -

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

First American Scientific Corp. (hereinafter "the Company" or "FASC") was incorporated in April 1995 under the laws of the State of Nevada primarily for the purpose of manufacturing and operating equipment referred to as the KDS Micronex System. This patented process has the capability of reducing industrial material such as limestone, gypsum, zeolite, wood chips, bio-waste, rubber and ore containing precious metals to a fine talcum-like powder. The process can significantly increase the end value of the host material. The Company maintains an office in West Vancouver, British Columbia, Canada and a demonstration and sales office in Cloverdale, British Columbia, Canada. The Company's year-end is June 30 ^th .

During the year ended June 30, 2005, the Company expanded its agreement with Zeo-Tech Enviro Corp, ("ZEO") and CZC Zeolite Corporation Ltd. ("CZC") to admit a fourth shareholder, Thelon Ventures Ltd., ("THV") to United Zeolite Products Ltd. ("United"). With the expanded agreement, FASC, CZC ZEO, THV each own one-fourth of United. See Note 9.

Alternative Green Energy Systems, Inc.
The Company formed Alternative Green Energy Systems, Inc. (hereinafter "AGES") in 2002 for the purpose of using FASC's licensed technology and patents to manufacture, sell, operate and use KDS machines in combination with available expertise in wood dust burning technology. The Company reported financial information from AGES on a consolidated basis due to its control of AGES. During the three months ended March 31, 2004, the Company sold the use of its technology and a KDS machine to AGES thereby giving up control in AGES. Accordingly, the Company after that quarter reports its investment in AGES using the equity method. See Note 9.

First American Scientific Corp ( Malaysia ) Bhd. Sd, ( Joint venture )
On July 8, 2004, the Company entered into a joint venture agreement with two Malaysian companies to sell and market the KDS Micronex Machine. Under the terms of the agreement, the joint venture ordered one KDS Micronex Machine from FASC and set up a demonstration plant in Malaysia for the KDS System utilizing the KDS Micronex Machine acquired from the Company. In September of 2005, the Company sold a license agreement to FASC Bhd. Sd. for 1,000,000 shares of common stock.

The Company accounts for this investment in accordance with APB 18 at cost. FASC does not participate in or influence operating or financial decisions of the joint venture. The investment is valued at the agreed upon purchase price of the 21 year license for the KDS technology.

The Company formed First American Power Corp., formerly 521345 BC Ltd., a wholly owned subsidiary, in 1998 in order to provide research and development services eligible for Canadian research and development credits exclusively to FASC and, when feasible, to operate a profitable production facility in Canada. On May 26, 2005, the subsidiary's name was changed to "First American Scientific (Canada) Ltd."

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This summary of significant accounting policies of FASC is presented to assist in understanding the Company's financial statements. The financial statements and notes are representations of the Company's management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.

Accounting Method
The Company uses the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America.

Accounts Receivable
The Company carries its accounts receivable at cost less an allowance for doubtful accounts. At June 30, 2005, accounts receivable were $129,860 with no allowance for doubtful accounts.

The Company's policy is to accrue interest on trade receivables 30 days after invoice date. A receivable is considered past due if payments have not been received by the Company for 90 days.

During the year ended June 30, 2005, the Company had $521,115 in revenue from the sale of three machines and related services. The Company received $25,000 in royalty fees from AGES and sold a 21 year license for its KDS technology for $263,158 in stock which has been recorded as an investment.

During the year ended June 30, 2004, the Company had $373,569 in revenue from the sale of two machines and related services. These machines were all delivered and paid for by June 30, 2004.

Advertising Expenses
Advertising expenses consist primarily of costs incurred in the design, development, and printing of Company literature and marketing materials. The Company expenses all advertising expenditures as incurred. The Company's advertising expenses were $11,230 and $43,962 for the years ended June 30, 2005 and 2004, respectively.

Cash and Cash Equivalents
For purposes of its statement of cash flows, the Company considers all short-term debt securities purchased with a maturity of three months or less to be cash equivalents.

Compensated Absences
Employees of the Company are entitled, by Canadian law, for paid time off equal to four percent of their wages. At June 30, 2005, the accrued amount is approximately $20,000.

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Comprehensive Income
In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" (hereinafter "SFAS No. 130"). SFAS 130 establishes standards for reporting and displaying comprehensive income, its components and accumulated balances. SFAS No. 130 is effective for periods beginning after December 15, 1997. The Company adopted this accounting standard and its adoption is reflected in the accompanying financial statements.

Concentration of Risk
The Company maintains its Canadian cash accounts in primarily one commercial bank in Vancouver, British Columbia, Canada. Its U.S. dollars are maintained in a bank account in Vancouver, British Columbia, Canada.

Derivative Instruments
The Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended by SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB No. 133", and SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities" and SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities". These statements establish accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. They require that an entity recognize all derivatives as either assets or liabilities in the consolidated balance sheet and measure those instruments at fair value.

If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change.

Historically, the Company has not entered into derivatives contracts to hedge existing risks or for speculative purposes.

At June 30, 2005, the Company has not engaged in any transactions that would be considered derivative instruments or hedging activities.

Fair Value of Financial Instruments
The carrying amounts for cash, accounts receivable, accounts payable, and accrued liabilities approximate their fair value.

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Foreign Currency Translation
Assets and liabilities of the Company's foreign operations are translated into U.S. dollars at the period-end exchange rates, and revenue and expenses are translated at the average exchange rates during the period. Exchange differences arising on translation are disclosed as a separate component of shareholders' equity. Realized gains and losses from foreign currency transactions are reflected in the Company' s results of operations.