UNITED STATES

State the number of shares outstanding of each of the issuer's classes of common equity, as of September 26, 2003: 155,809,976

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.

PART I

Item 1. DESCRIPTION OF BUSINESS

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 horse bedding (sawdust and manure) 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, or furniture factories and others where feedstock is less than 60% moisture content.

2. Pulp Sludge

The Company has also processed wet (80% moisture) pulp sludge, and believes 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. Trials are now underway at Atlantic Packaging Ltd’s pulp mill in Whitby, Ontario.

3. Animal waste/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 creating nutrient rich "clean" end products 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.

4. Commination 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.

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.

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.

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.

Patents

Device and Method for Comminution - US Patent #6,024,307 - (issued)

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, Europe (EEC), Finland, France, Germany, Ireland, Italy, Mexico, New Zealand, Spain, Sweden, Switzerland, and the United Kingdom. As of the date hereof, patents have been issued in the United States.

Cryogenic Comminution of Rubber - Apn # 3918-0142P - (patent allowed)

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 application has now been allowed. Patent allowed is one which has been approved for issuance subject to the payment of US$650.00

Method of Recovery of Precious Metal and Heavy Minerals - Apn # 125538 - (patent allowed)

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 application has now been allowed. Patent allowed is one which has been approved for issuance subject to the payment of US$650.00

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.

Research and Testing

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, in Montreal and Whitby, Ontario by Alternative Green Energy Systems, Inc (“AGES”). Significant progress has been made converting biomass to a fine dry fuel which can be combusted in the dust burning system. Progress has been made processing pulp sludge at the Atlantic Packaging installation. Further testing of hardened beater bar systems with various coatings and alloys for added strength and longevity to withstand the impact when processing hard rock is continuing, as well as tests for the dewatering of food waste, and grinding of other materials. All research on rubber processing has been discontinued until a suitable research partner can be identified. While some results have been very promising, there is no assurance that any operations will ever be initiated as a result of these tests. Further, the Company still has no firm contracts with anyone to buy the KDS System or buy, sell or dispose of any waste products or powders processed by the equipment.

Government/Environment Regulation

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.

Manufacturing

Manufacturing of the KDS is contracted out to Vancouver Blower and Sheet Metal Fabrication Limited (VBS) in Vancouver, British Columbia. When needed, the Company will contract will VBS to construct a machine. Two other backup manufacturers have been identified should demand increase beyond the capacity of VBS or if VBS is unwilling or unable to manufacture the KDS machine. Since the Company’s inception, the Company has manufactured twelve KDS machines and sold five.

Licenses

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. The purchase price of this license and one KDS machine was $550,000, with license rights valued at $250,000. Since then, modifications were made to the first KDS machine, bringing its total cost to $440,740. This machine was transferred to the Company's subsidiary, First American Power Corp., at its book value of $55,669.

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. The purchase price of this license and one KDS machine for gypsum-related use was $775,000, with the parties agreeing that the technology license was valued at $425,000 and the gypsum KDS machine was valued at $350,000. During the year ended June 30, 2002, this machine was impaired and moved to inventory and sold for $150,000.

On May 17, 1996, the Company executed another agreement with Spectrasonic for the worldwide licenses to equipment (as yet unpatented) developed by Spectrasonic for use in disintegration, disposal, recycling, remanufacturing or manufacturing "any and all kinds of materials" for a period of ninety-nine years. The purchase price of this license was $1,047,000, which the Company paid by issuing to Spectrasonic 5,500,000 shares of First American common stock (with an aggregate deemed value of $802,000) and paid $168,000 in varying installment amounts between September 30, 1996 and January 2, 1997. The Company recognized $77,000 in forgiveness of debt, which has been recorded as additional paid-in capital.

On July 2, 1997, the Company finalized negotiations with Spectrasonic to purchase 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.

class=Section3>

In February 2003, the Company licensed biomass and pulp sludge applications to AGES on a conditional basis. AGES has until February 21, 2004 to meet those conditions. Under the license agreement, the Company retains ownership of all patents for the KDS technology, and owns all the research conducted by AGES. To perfect its license, AGES must sell two machines, one machine in each industry, biomass and pulp sludge, and pay US$100,000 for the one machine delivered. However, until a unit is sold for either purpose contemplated in the agreement and payment of US$100,000 is received by the Company, the license agreement is not perfected.

Summary of Agreements

Green Leaf Fibre Company Ltd (Ireland)

In 1998, the Company entered into a research agreement with Green Leaf Fibre Company Ltd. of Northern Ireland and continued its research into sludge and animal waste processing at GLF's research site. The project was funded by Green Leaf and the Irish government under the Radian Award Program. Some progress was made with animal waste and with rubber, but not sufficient to meet economical viability. As of the date of this report, this project has terminated and the KDS is now being stored in a warehouse in Castleblaney, Ireland.

Organic Waste Returns Inc (Ireland)

In March 2002, we announced an agreement for the sale of two systems to Organic Waste Returns Inc., in Ireland. The first machine was delivered but not put into operation pending upgrades. Upgrades were made to a second machine in Vancouver. To date the second machine has not been delivered, and the first machine has not been put into production. We delayed delivery when it became apparent that the purchaser was unable to raise sufficient funds to meet final payment under the agreement. This sale did not close as the purchaser subsequently advised us that they were unable to raise sufficient funds to complete the project.

Hollywood Park Racetrack

In June 2002 our subsidiary 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 is currently considering our proposal and a decision is expected this fall. This proposal has now been extended to cover Calder Race Course in Florida. Both tracks are owned by Churchill Downs Inc.

Vancouver Island Recycling Corp.

In December 2002, Vancouver Island Recycling purchased three used machines. The machines have been delivered and Vancouver Island Recycling Corp. has paid CDN$260,000 in full for the machines. The machines are being set-up by the customer in its glass recycling operations on Vancouver Island.

Beaupre Explorations Ltd

In August 2000, the Company entered into an agreement with Beau Pre Explorations Ltd, a Canadian mining company, to process ore from their mine through a KDS. Preliminary work to increase durability of chain system to handle hard rock was required. The Company hired Robert Salter Ph.D. to develop a new impact system, to protect the process with a new patent, and if successful, implement the program on Beaupre's mineral claims on Valentine Mountain. The re-design and patent process was completed with patent pending status obtained in May 2001, and testing continued throughout the summer of 2001. The patent was allowed on September 4, 2003.

Honeywell Inc.

In March 2001, the Company signed a letter of interest with Honeywell to determine how the KDS could fit into Honeywell's overall business plans for creation of energy from alternative green fuel sources. To date some work has been done with product provided by Honeywell's clients and initial tests have proven the systems ability to produce a useable end product, but not at sufficient volumes to be economically viable. Last year we announced our discussions with Honeywell had been put on hold pending more accurate scientific analysis of our process and completion of cost/benefit feasibility analysis. Upon completion of either the Hollywood Park or the Atlantic projects, we hope that we can re-open these discussions based on the latest available results. We believe the technical analysis and result from the Hollywood Park study and other research is now adequate to meet some of the concerns raised by Honeywell in their expression of interest last year. We expect to re-visit the Honeywell proposal once the racetrack or pulp sludge facility can produce long term test results.

Mikuniya Environmental Management Systems (EMSI)

Last year, 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. Subsequent to the date of these statements, in January 2003, we hosted a delegation of five Japanese companies who have expressed serious interest in importing our equipment to Japan. Serious discussion are ongoing with two of these companies, however, to date, no sales have closed.

Alternative Green Energy Systems Inc.

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 redesigned and enhanced to adapt to processing biomass and pulp sludge. Subsequently, in March 2003, it was moved to Atlantic Packaging in Whitby, Ontario on approval for live trials. Trials are still underway.

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.

Under the license agreement with AGES, the Company retains ownership of all patents for the KDS technology, and owns to all the research conducted by AGES. To perfect its license agreement with the Company, AGES must sell two machines, one machine in each industry, biomass and pulp sludge, and pay $100,000 for the KDS machine that was delivered in January 2002. Until a unit is sold for each purpose contemplated in the agreement and payment of US$100,000 is paid by AGES to the Company, the license agreement is not perfected.

Until these conditions are met, the Company remains in control of the venture because of the contractual agreement. When these conditions are met, the Company becomes a minority shareholder, and no longer controls AGES.

In February 2003, the Company deferred payment of the US$100,000 from AGES for one additional year until February 21, 2004.

Market

The KDS machine is viable for softer industrial rock, such as gypsum and zeolite, and dry wood chips or chicken manure (embedded in dry sawdust), biomass at moisture levels below 60%. The Company continues to research and seek potential markets where operation of the equipment is economically viable. Research work continues looking for solutions to 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. Until these adaptations are successfully researched and implemented, there is no certainty that the equipment will be accepted by the market place for economically processing these materials.

Competition

The Company has competition from other producers of microfine powders, most of who have greater financial resources than the Company. The Company believes its system is more cost effective than its competitors.

Company Facilities

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

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

First American Power Corp. - 100 % owned

The Company owns 100% of the outstanding shares of common stock of First American Power Corp. ("FAPC"). FAPC was formed for the purpose of providing research and development services exclusively to the Company that are eligible for Canadian research and development credits.

VMH VideoMovieHouse.com Inc - 0% owned as of September 1, 2002

On September 1, 2002, the Company spun off its wholly owned subsidiary VMH VideoMovieHouse.com Inc ("VMH") a British Columbia corporation, to holders of the Company's common stock on June 30, 2002. Each Company shareholder received one share of VMH's common stock for each ten shares of the Company's common stock held on June 30, 2002. The Company shareholders did not receive cash in lieu of fractional shares, but fractional shares were rounded up to the next whole share. The Company has no further involvement with VMH.

Pending Contracts

Atlantic Packaging Ltd

During the quarter ended December 31, 2002, AGES entered into a contingent sales agreement and delivered one machine to Atlantic Packaging Ltd. in which it gave a six-month trial period of the KDS machine. The trial period has been extended to the end of September 2003. This contingent sale has not been recognized in the accompanying financial statements as the terms of the contract have not yet been satisfied and the machine could be returned to us.

Employees

The Company currently has six full-time employees, including Messrs. Nichols and Kantonen members of the board of directors, and retains outside consultants when necessary.

Other

During the fiscal period ending June 30, 2003, 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.

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, 2003, there were 152,646,376 shares of common stock or 76.3% of the 200,000,000 authorized shares of Common Stock of the Company outstanding and 47,353,624 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.

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.

ITEM 2. DESCRIPTION OF PROPERTIES

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 has been pre-paid until March 2004.

In July 2003, the Company leased a new sales office at 6473 64 ^thStreet, 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 for two years.

The Company owns seven KDS machines. One machine is being stored in Northern Ireland. Three machines are located at Vancouver Blower as inventory. One machine is located at the new Delta demonstrations center and is being used as test and demonstration machine. One machine was delivered to Sooke, British Columbia, Canada as part of the Beau Pre mining joint venture, and one machine was delivered to at Atlantic Packaging Ltd in Whitby, Ontario, Canada by AGES on a trial basis.

The Company had other fixed assets located in California. The net book value of these assets was US$112,176 and consisted of bagging equipment, hoppers, electrical paneling, site preparation, paving, construction of building, and general storage bins. At June 30, 2002, these were totally impaired. The Company has office furniture and equipment costing $47,874 located in Delta British Columbia, Canada and West Vancouver, British Columbia, Canada.

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

ITEM 3. LEGAL PROCEEDINGS

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 v. 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.

The Company has a number of other commercial creditors who have the ability to bring actions to recover money due them. Some of these claims will entitle the creditor to attorneys' fees spent in recovering these funds. The Company offered settlements on approximately $24,000 of trade payables which were outstanding for more than five years. None of these creditors have initiated lawsuits or further claims. There are currently no further discussions or actions contemplated concerning these disputed trade payables.

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

No matters were submitted to a vote of shareholders in the fourth quarter of 2003.

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS.

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:

Quarter ended		High		Low
2001	September 30 December 31		0.15 0.16		0.08 0.05

2002	March 31 June 30 September 30 December 31		0.23 0.15 0.085 0.05		0.10 0.07 0.06 0.085

2003	March 31 June 30		0.075 0.07		0.051 0.034

The Company has no outstanding options or warrants, or other securities convertible into, common equity other than as disclosed herein. Of the 155,809,976 shares of common stock outstanding as of September 24, 2003, all are free trading with the exception of 9,048,000 shares which may only be resold in compliance with Rule 144 of the Securities Act of 1933.

At September 29, 2003, the Company had 486 shareholders of record of its Common Stock.

Dividends

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.

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.

Securities authorized for issuance under equity compensation plans

The Company currently has three equity compensation plans. 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 includes 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 6,856,803 shares have been granted, leaving 3,143,197 shares available for issuance under the Plan.

Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)			Weighted-average exercise price of outstanding options, warrants and rights (b)	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders	None			None	None
Equity compensation plans not approved by securities holders	2001 2001 2003	A	0 0 3,309,000	0 0 $0.05	0 0 3,143,197
Total

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 and are now entering our marketing phase. We are the owner of the KDS disintegration technology which is patented in the USA, Canada, UK, Europe, Mexico, Australia, and New Zealand. During the year, applications for two new process patents, one for the cryogenic freezing and shattering scrap rubber and one for extraction of precious metals from hard rock using our equipment have been allowed. Patents will be issued in the next quarter upon payment of fees. One other patent application for drying and recovery of fuel and clay from biomass using our equipment has been submitted and is pending status.

On June 30, 2003, we had current assets of $306,696 and current liabilities of $178,315, compared to current assets of $785,475 and current liabilities of $127,880 on June 30, 2002. Our working capital ratio on June 30, 2003 was 1.72:1 compared to 6.1:1 on of June 30, 2002. Cash on hand as of June 30, 2003 was $64,762 down from $126,144 on June 30, 2002.

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.

In February 2003, AGES received an equity investment of CDN$400,000 from HydroQuebec Capitech Inc. which was the final installment under its agreement to acquire its equity position in AGES. In order to close the financing, we had to agree to a one year deferral of the receipt of US$100,000 due to us from AGES under its licensing agreement with us and allow the entire CDN$400,000 investment to go solely towards AGES research and development. Under our licensing agreement with AGES, all benefits of the Hydro Quebec funded research and improvements to the KDS technology will belong exclusively to the Company, but will be licenced to AGES without further charges within the territories specified in AGES licence. However, AGES must also sell at least one machine in each category (biomass and sludge) and pay the $100,000 in order to perfect their license. Until these conditions are met, the Company is considered to have de facto control of AGES, and we will continue to consolidate our statements until all conditions are met.

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 sales and receipt of receivables not materialize. In the short term, some relief has come from loans from our officers and by the deferment of payment of officers' salaries. This cannot be expected to continue indefinitely.

As of September 26, 2003, there were 155,809,976 shares issued and outstanding.

Results of Operations – Year ending June 30, 2003

Revenue for the year ended June 30, 2003 was $200,834 compared to $453,655 for last year. This years sales included the sale of three used machines to Vancouver Island Re-Cycling Ltd. Full payment has been received and all machines delivered. The cost of the machines sold in 2003 was $150,000. This is the impaired value of the three used machines. The cost of the three machines sold in 2002 was $290,893.

Sales efforts are ongoing with several major projects in final stage of negotiation.

Net losses for the year ending June 30, 2003 were $1,371,252 or $0.01 per share compared to $2,137,651 for last year which was $0.02 per share. Efforts to control and reduce operating costs are being made.

In accordance with GAAP, our three used machines were written down to the lower cost or net realizable before they were sold. All other fixtures located in California have been written off and we no longer have any assets in California.

The loss on distribution of subsidiary in the amount of $191,501 reflects the distribution of the assets and liabilities associated with the spin-off of VMH and is reported consistent with generally accepted accounting principles.

We continue to focus on improving the KDS equipment’s processing capacity and commercial viability 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 much needed sales. With the injection of capital provided by Hydro Quebec Capitech, research continues into processing biomass and pulp sludge. On a conditional sale basis, AGES has installed our equipment at Atlantic Packaging’s Ontario pulp mill for live on-line trials. A decision is expected shortly.

Research and testing of animal waste, food waste, sewage, mineral rock, alluvial clay, zeolite, and glass continues. We have achieved economically viable production levels with chicken and horse manures, and are currently seeking suitable candidates interested in purchasing our equipment. On May 30, 2003, we were awarded a research grant by the US Department of Energy, the “Small Business Technology Transfer (STTR) – Phase I Award.” Funding has not occurred. There is no assurance that funding will ever occur. In the event funding does occur, it will be used to further our work improving the drying and grinding efficiencies of our KDS machines. Funding will not exceed $100,000 all of which will be spent on research related to drying and grinding. Our research will be conducted by the Oak Ridge National Laboratory in Tennessee.

In June 2002, our subsidiary, AGES prepared a detailed proposal to install a turnkey power generating system for Hollywood Park Racetrack of Inglewood California which would be fuelled by horse manure processed through our KDS system. The report was successfully presented in August 2002, and the final quotation was presented in November 2002. We understand that Hollywood Park is satisfied with our proposal, but a decision will not be made until permit requirements and California regulatory issues are resolved.

In August 2000, the Company entered into a proposed joint venture agreement with Beau Pre Explorations Ltd., a Canadian mining company, to process ore from their mine through a KDS. Work to increase durability of chain system to handle hard mineral rock was required. The re-design and patent application was completed and a new patent has now been allowed. This puts us in a position to proceed once both Beaupre and the Company are satisfied of the economic feasibility of the project. In the meantime, further work to improve the durability of the equipment to operate under harsh, abrasive conditions being done by the Company, while Beaupre is working on site preparations at Valentine Mountain.

In March 2002, we announced an agreement for the sale of two machines in Ireland. One machine was delivered but not put into operation pending upgrades. Upgrades to the second machine were made in Vancouver. Subsequent to the date of these statements, the purchaser advised us that they were unable to raise sufficient funds to proceed with their project and the machine has been returned to inventory.

Last year we announced our discussions with Honeywell had been put on hold pending more accurate scientific analysis of our process and completion of cost/benefit feasibility analysis. Responsibility for this has been transferred to AGES. To date, discussions have not re-opened.

In December 2002, we signed a one year agreement with Mikuniya Environmental Management Systems Institute Inc of Tokyo, Japan to represent us in developing a market for our 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. EMSI are currently negotiating with a qualified potential Japanese licensee and are hopeful that this will lead to an agreement.

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. AGES rents office space in Montreal, Quebec.

Accounting Pronouncements

In May 2003, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity” (hereinafter “SFAS No. 150”). SFAS No. 150 establishes standards for classifying and measuring certain financial instruments with characteristics of both liabilities and equity and requires that those instruments be classified as liabilities in statements of financial position. Previously, many of those instruments were classified as equity. SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003 and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The Company has not yet determined the impact of the adoption of this statement.

In April 2003, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities” (hereinafter “SFAS No. 149”). SFAS No. 149 amends and clarifies the accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”. This statement is effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003. The adoption of SFAS No. 149 is not expected to have a material impact on the financial position or results of operations of the Company.

In December 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure” (hereinafter “SFAS No. 148”). SFAS No. 148 amends SFAS No. 123, “Accounting for Stock-Based Compensation,” to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, the statement amends the disclosure requirements of SFAS No. 123 to require prominent disclosure in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The provisions of the statement effective for financial statements for fiscal years ending after December 15, 2002, are not expected to impact the Company’s financial statements.

The Company currently reports stock issued to employees under the rules of SFAS No. 123. Accordingly, there is no change in disclosure requirements due to SFAS No. 148.

In June 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” (hereinafter “SFAS No. 146”). SFAS No. 146 addresses significant issues regarding the recognition, measurement, and reporting of costs associated with exit and disposal activities, including restructuring activities. SFAS No. 146 also addresses recognition of certain costs related to terminating a contract that is not a capital lease, costs to consolidate facilities or relocate employees, and termination benefits provided to employees that are involuntarily terminated under the terms of a one-time benefit arrangement that is not an ongoing benefit arrangement or an individual deferred-compensation contract.

SFAS No. 146 was issued in June 2002 and is effective for activities after December 31, 2002. There has been no impact on the Company’s financial position or results of operations from adopting SFAS No. 146.

In April 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 145, “Rescission of SFAS Statements No. 4, 44 and 64, Amendment of SFAS Statement No. 13, and Technical Corrections” (hereinafter “SFAS No. 145”), which updates, clarifies and simplifies existing accounting pronouncements. SFAS No. 4, which required all gains and losses from the extinguishment of debt to be aggregated and, if material, classified as an extraordinary item, net of related tax effect was rescinded. As a result, SFAS No. 64, which amended SFAS No. 4, was rescinded, as it was no longer necessary. SFAS No. 145 amended SFAS No. 13 to eliminate an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions. The Company adopted SFAS No. 145 which did not have a material effect on the financial statements of the Company.

In August 2001, the FASB issued Statement of Financial Accounting Standards No. 144 (hereinafter “SFAS No. 144”), “Accounting for the Impairment of Long-Lived Assets”, which requires a single accounting model to be used for long-lived assets to be sold and broadens the presentation of discontinued operations to include a “component of an entity” (rather than a segment of a business). A component of an entity comprises operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity. A component of an entity that is classified as held for sale, or has been disposed of, is presented as a discontinued operation if the operations and cash flows of the component will be (or have been) eliminated from the ongoing operations of the entity and the entity will not have any significant continuing involvement in the operations of the component.

The Company adopted SFAS No. 144 effective August 1, 2001. Consequently, the operating results of VideoMovieHouse.com Inc. which was spun off in 2002 and are included in discontinued operations. Assets and liabilities of VideoMovieHouse.com Inc. are included in net assets distributed to subsidiary at June 30, 2002.

In October 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 143, “Accounting for Asset Retirement Obligations” (hereinafter “SFAS No. 143”). SFAS No. 143 establishes guidelines related to the retirement of tangible long-lived assets of the Company and the associated retirement costs. This statement requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived assets. This statement is effective for financial statements issued for the fiscal years beginning after June 15, 2002. The Company adopted SFAS No. 143 and the adoption did not have a material impact on the financial statements of the Company at June 30, 2003.

In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 141, "Business Combinations" (hereinafter “SFAS No. 141”) and Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" (hereinafter “SFAS No. 142”). SFAS No. 141 provides for the elimination of the pooling-of-interests method of accounting for business combinations with an acquisition date of July 1, 2001 or later. SFAS No. 142 prohibits the amortization of goodwill and other intangible assets with indefinite lives and requires periodic reassessment of the underlying value of such assets for impairment. SFAS No. 142 is effective for fiscal years beginning after December 15, 2001. On June 30, 2001, the Company adopted SFAS No. 142. Application of the nonamortization provision of SFAS No. 142 resulted in no change to reported earnings in fiscal 2003 or 2002 as the Company does not have recorded assets with indeterminate lives.

ITEM 7. FINANCIAL STATEMENTS

TABLE OF CONTENTS

INDEPENDENT AUDITOR’ REPORT

F-1

FINANCIAL STATEMENTS

Balance Sheets

Statements of Operations

Statement of Stockholders’ Equity (Deficit)

Statements of Cash Flows

F-2

F-3

F-4

F-6

NOTES TO FINANCIAL STATEMENTS

F-7

class=Section5>

To the Board of Directors and Stockholders

First American Scientific Corp.

Vancouver, British Columbia

CANADA

INDEPENDENT AUDITOR’S REPORT

We have audited the accompanying balance sheets of First American Scientific Corp., a Nevada corporation, as of June 30, 2003 and 2002 and the related 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 auditing standards generally accepted in the United States of America. 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 estimated 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, 2003 and 2002 and the results of its operations 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. This factor raises 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

July 11, 2003

F-1

class=Section6>

FIRST AMERICAN SCIENTIFIC CORP. CONSOLIDATED BALANCE SHEETS

					June 30,		June 30,
ASSETS					2003		2002
CURRENT ASSETS
	Cash			$	64,762	$	126,144
	Accounts receivable, net of allowance				3,019		130,932
	Sales tax refunds				24,876		27,957
	Prepaid expenses and other assets				23,597		10,000
	Inventory				190,442		490,442
			TOTAL CURRENT ASSETS		306,696		785,475
PROPERTY AND EQUIPMENT
	Property and equipment				306,473		311,631
	Less: Accumulated depreciation				(145,867)		(90,295)
			TOTAL PROPERTY AND EQUIPMENT		160,606		221,336
OTHER ASSETS
	Technology rights, net of amortization				1,152,743		1,279,743
	Patents and manufacturing rights, net of amortization				171,884		172,327
	Research and development refund receivables				83,085		83,085
	Deposits				166		1,432
			TOTAL OTHER ASSETS		1,407,878		1,536,587
NET ASSETS DISTRIBUTED TO SUBSIDIARY IN SPIN-OFF					-		268,835
TOTAL ASSETS				$	1,875,180	$	2,812,233

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
	Accounts payable and accrued expenses			$	178,315	$	127,880
			TOTAL CURRENT LIABILITIES		178,315		127,880
LONG-TERM LIABILITIES
	Notes and wages payable to related parties				110,276		152,192
			TOTAL LONG-TERM LIABILITIES		110,276		152,192
COMMITMENTS AND CONTINGENCIES					-		6,127
MINORITY INTEREST IN SUBSIDIARY					225,116		243,590
STOCKHOLDERS' EQUITY
	Common stock - $.001 par value,
		200,000,000 shares authorized; 152,646,376 and
		142,213,018 share issued and outstanding, respectively			152,646		142,213
	Additional paid-in capital				11,200,120		11,105,694
	Stock options				204,831		195,780
	Accumulated deficit				(10,190,326)		(9,151,400)
	Accumulated other comprehensive loss				(5,798)		(9,843)
			TOTAL STOCKHOLDERS' EQUITY		1,361,473		2,282,444
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY				$	1,875,180	$	2,812,233

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

F-2

FIRST AMERICAN SCIENTIFIC CORP. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
				Year Ended June 30, 2003		Year Ended June 30, 2002

REVENUES			$	200,834	$	453,655
COST OF SALES				150,000		290,893
GROSS PROFIT (LOSS)				(50,834)		162,762
OPERATING EXPENSES
	Advertising			37,214		14,775
	Amortization and depreciation			205,995		167,110
	Consulting			136,332		186,744
	Legal			55,819		113,681
	Accounting			100,297		56,125
	Wages			536,060		378,834
	Research and development			109,531		529,413
	General and administration			177,973		225,791
	Reserve for uncollectible accounts			119,046		258,383
	Rent			32,668		21,164
	Loss on impairment of assets			152,732		371,870
		Total Operating Expenses		1,663,667		2,323,890
LOSS FROM CONTINUING OPERATIONS				(1,612,833)		(2,161,128)
OTHER INCOME (EXPENSE)
	Research and development credit			-		83,085
		Total Other Income (Expense)		-		83,085
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES				(1,612,833)		(2,078,043)
INCOME TAXES				-		-
NET LOSS FROM CONTINUING OPERATIONS BEFORE
	ALLOCATION TO MINORITY INTEREST			(1,612,833)		(2,078,043)
ALLOCATION OF LOSS TO MINORITY INTEREST				318,463		(133,769)
LOSS FROM DISTRIBUTED SUBSIDIARY				(76,882)		(193,377)
NET LOSS				(1,371,252)		(2,137,651)
OTHER COMPREHENSIVE INCOME (LOSS)
	Foreign currency translation gain (loss)			4,045		(7,286)
COMPREHENSIVE NET LOSS			$	(1,367,207)	$	(2,144,937)
	NET LOSS PER COMMON SHARE,
		BASIC AND DILUTED FROM CONTINUING OPERATIONS	$	(0.01)	$	(0.02)

	NET LOSS PER COMMON SHARE,
		BASIC AND DILUTED FROM DISTRIBUTED SUBSIDIARY	$	nil	$	nil
	WEIGHTED AVERAGE NUMBER OF
		COMMON SHARES OUTSTANDING,
		BASIC AND DILUTED		147,600,687		137,809,276

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

F-3

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, June 30, 2001	130,733,018	$	130,733	$	9,959,034	$	218,210	$	(7,013,749)	$	(2,557)	$	3,291,671
Common stock issued for cash of
$189,850 and services	2,885,000		2,885		269,815		-		-		-		272,700
Common stock issued for
compensation at $0.09 per share	3,600,000		3,600		316,880		-		-		-		320,480
Common stock issued for legal
services at $0.10 per share	250,000		250		24,750		-		-		-		25,000
Common stock issued for KDS
machine at $0.09 per share	500,000		500		44,500		-		-		-		45,000
Common stock issued for
equipment at $0.13 per share	100,000		100		12,740		-		-		-		12,840
Common stock issued for accounts
payable at $0.095 per share	100,000		100		9,400		-		-		-		9,500
Common stock issued from options
for services at $0.09 per share	3,925,000		3,925		453,695		(100,210)		-		-		357,410
Common stock issued for rent
expenses at $0.125 per share	120,000		120		14,880		-		-		-		15,000
Options issued for services	-		-		-		77,780		-		-		77,780
Foreign currency translation loss	-		-		-		-		-		(7,286)		(7,286)
Net loss for the year ended
June 30, 2002	-		-		-		-		(2,137,651)		-		(2,137,651)
Balance, June 30, 2002	142,213,018		142,213		11,105,694		195,780		(9,151,400)		(9,843)		2,282,444
Distribution to shareholders of
VideoMovieHouse.com Inc.,
a former wholly owned subsidiary	-		-		(523,827)		-		332,326		-		(191,501)
Options issued for compensation	-		-		-		56,870		-		-		56,870
Common stock issued for cash at
$0.06 per share	505,747		506		29,494		-		-		-		30,000
Common stock issued for consulting
services at $0.06 per share	1,529,489		1,529		95,296		-		-		-		96,825
Common stock issued as
compensation at $0.06 per share	5,558,455		5,558		352,603		(47,819)		-		-		310,342
Common stock issued for legal
fees at $0.05 per share	750,000		750		37,000		-		-		-		37,750
Common stock issued for profess-
ional services at $0.05 per share	225,000		225		10,825		-		-		-		11,050
Common stock issued for prepaid
rent at $0.05 per share	400,000		400		19,600		-		-		-		20,000
Common stock issued for prepaid
lease at $0.06 per share	166,667		167		9,833		-		-		-		10,000
Common stock issued for debt
at $0.05 per share	1,298,000		1,298		63,602		-		-		-		64,900
Foreign currency translation gain	-		-		-		-		-		4,045		4,045
Net loss for the year ended
June 30, 2003	-		-		-		-		(1,371,252)		-		(1,371,252)
Balance, June 30, 2003	152,646,376	$	152,646	$	11,200,120	$	204,831	$	(10,190,326)	$	(5,798)	$	1,361,473

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

F-4

FIRST AMERICAN SCIENTIFIC CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS
				Year Ended June 30,
				2003		2002
CASH FLOWS FROM OPERATING ACTIVITIES
	Net loss Discontinued operations Loss allocated to minority interest		$	(1,371,252) 76,882 (318,463)	$	(2,137,651) 193,377 (133,769)
				(1,612,833)		(2,078,043)
	Depreciation and amortization Impairment and disposal of assets Impairment of inventory Bad debt expense Stock and options issued for services and compensation Stock issued for services Stock issued for rent Stock issued for services and current debt Options issued for compensation			205,995 7,758 150,000 119,046 310,342 145,625 20,000 64,900 56,870		167,110 371,870 - 258,383 863,520 - 15,000 - -
	Adjustments to reconcile net loss to net cash provided (used) by operations:
		Amounts used from trust for accounts payable Decrease (increase) in accounts receivable Decrease (increase) in taxes and tax credits Increase (decrease) in deposits for sales Decrease (increase) in inventory Decrease (increase) in deposits and prepaid expenses Increase (decrease) in accounts payable Increase (decrease) in commitments (Decrease) increase in payable to related parties Cash provided by distributed subsidiary		- 8,867 3,081 100 150,000 (12,331) 50,435 (6,127) 70,000 -		42,793 (387,785) (88,539) (17,500) 67,725 - 15,268 6,127 126,992 89,152
Net cash provided (used) by operating activities				(268,272)		(547,927)
CASH FLOWS FROM INVESTING ACTIVITIES
		Purchase of equipment Investment in technology rights and patents Investment in discontinued operations		(9,359) (16,224) 14,143		(44,495) - (16,504)
Net cash provided (used) in investing activities				(11,440)		(60,999)
CASH FLOWS FROM FINANCING ACTIVITIES
		Repayment of debt Proceeds from borrowing Proceeds from borrowing, related parties Cash provided by minority interest Proceeds from sales of stock		(20,315) 51,415 54,176 101,531 30,000		- - - 377,358 189,850
Net cash provided by financing activities				216807		567208
NET INCREASE (DECREASE) IN CASH Other comprehensive gain (loss) - foreign currency translation CASH - Beginning of year				(62,905) 1,523 126,144		(41,718) (7,285) 175,147
				(62,905) 1,523 126,144		(41,718) (7,285) 175,147
CASH - End of period			$	64,762		126,144
SUPPLEMENTAL CASH FLOW DISCLOSURES:
	Interest expense		$	-		-
	Income taxes		$	-		-
NON-CASH FINANCING AND INVESTING TRANSACTIONS:
	Common stock issued for services and compensation Common stock issued for rent Common stock issued for services Distribution of VMH VideoMovieHouse in spin-off Stock issued for accounts payable and current debt Options issued for compensation Common stock issued for inventory Common stock issued for equipment Common stock issued for equipment lease		$ $ $ $ $ $ $ $ $	310,342 20,000 145,625 (191,501) 64,900 56,870 - - 10,000	$ $ $ $ $ $ $ $ $	863,520 15,000 - - 9,500 - 45,000 12,840 -

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

class=Section7>

FIRST AMERICAN SCIENTIFIC CORP.

Notes to Consolidated Financial Statements

June 30, 2003

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.

In September 1999, the Company entered into an agreement with VMH VideoMovieHouse.com Inc., (hereinafter “VMH”), a British Columbia company, whereby the Company acquired 100% of the common shares and the technology of VMH in return for a cash consideration of $250,000. (See Note 7.) VMH possesses domain names, a web page, and technology for the sale of videos, DVD’s, and CD’s through the internet. In 2001, the Company elected to spin-off VMH into its own separate entity which became a fully reporting OTC publicly traded company in August 2002. See Note 11.

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 First American Scientific Corp. and, when feasible, to operate a profitable production facility in Canada.

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 owns 40% of AGES and has management control of AGES. William E. Barber owns 40% and a Quebec based capital venture company owns 20% of AGES. The Company reports financial information from AGES on a consolidated basis due to the control feature in the agreement. AGES maintains a facility in Montreal, Canada. See Note 10.

The Company’s year-end is June 30^th.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies of First American Scientific Corp. 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.

F-6

FIRST AMERICAN SCIENTIFIC CORP.

Notes to Consolidated Financial Statements

June 30, 2003

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Impairment of Long-Lived Assets

In October 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (hereinafter “SFAS No. 144”). SFAS No. 144 replaces SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of.” This standard establishes a single accounting model for long-lived assets to be disposed of by sale, including discontinued operations. SFAS No. 144 requires that these long-lived assets be measured at the lower of carrying amount or fair value less cost to sell, whether reported in continuing operations or discontinued operations. This statement is effective beginning for fiscal years after December 15, 2001. The Company believes the adoption of SFAS No. 144 did not have a material impact on the financial statements of the Company at June 30, 2003.

In March 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 121 titled “Accounting for Impairment of Long-lived Assets.” In complying with this standard, the Company reviews its long-lived assets quarterly to determine if any events or changes in circumstances have transpired which indicate that the carrying value of its assets may not be recoverable. The Company determines impairment by comparing the present value of future cash flows estimated to be generated by its assets to their respective carrying amounts.

The Company impaired the carrying value of its assets used in its former facility in California. See Note 3.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. This basis of accounting contemplates the recovery of the Company’s assets and the satisfaction of its liabilities in the normal course of operations.

As shown in the accompanying financial statements, the Company has incurred an accumulated deficit of $10,190,326 through June 30, 2003. Although the Company recorded $200,834 in sales during the year ended June 30, 2003, it also generated a net loss of $1,371,252. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

Management plans to undertake a comprehensive review of its ongoing business to substantially increase sales through current channels and develop new sales opportunities. Management has also established plans designed to increase the sales of the Company’s products by continued research and development and combining technology through AGES.

Management intends to seek new capital from new equity securities offerings that will, if successful, provide funds needed to increase liquidity, fund internal growth and fully implement its business plan. However, there is no assurance that the Company will raise the required capital. If the Company is unable to raise the required capital, then it will assess its future business viability.

F-7

FIRST AMERICAN SCIENTIFIC CORP.

Notes to Consolidated Financial Statements

June 30, 2003

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Going Concern (continued)

The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

Accounting Method

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

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, 2003, the Company has not engaged in any transactions that would be considered derivative instruments or hedging activities.

Loss Per Share

In June 1999, the Company adopted Statement of Financial Accounting Standards Statement No. 128, “Earnings Per Share”. Basic earnings (loss) per share is computed using the weighted average number of common shares outstanding. Diluted net loss per share is the same as basic net loss per share, as the inclusion of common stock equivalents would be antidilutive.

Principles of Consolidation

FASC owns 40 % of the outstanding shares of AGES, as well ownership of all AGES technology. AGES's license to use the technology is conditional upon it meeting certain conditions. As of June 30, 2003, these conditions have not been met and until such time as AGES meets its obligations and perfects its license to use FASC's technology, FASC is deemed to be in a position of control and AGES will be treated as a majority owned subsidiary of FASC with its financial statements consolidated with FASC.

F-8

FIRST AMERICAN SCIENTIFIC CORP.

Notes to Consolidated Financial Statements

June 30, 2003

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Principles of Consolidation (continued)

The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant inter-company transactions and balances have been eliminated in consolidation.

Minority Interest

At June 30, 2003, minority shareholders held an approximately 60% interest in Alternative Green Energy Systems, Inc. (“AGES”). The related minority interest is shown on the accompanying balance sheet. FASC has financial and management control of AGES. See Note 10.

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.

Prepaid Expenses

Prepaid expenses consist of facility rent paid in advance and an equipment operating lease paid one year in advance. These prepaid expenses will be amortized as used.

Fair Value of Financial Instruments

The carrying amounts for cash, accounts receivable, accounts payable, and accrued liabilities approximate their fair value.

Concentration of Risk

The Company maintains its cash accounts in primarily one commercial bank in Vancouver, British Columbia, Canada. The Company’s cash accounts are business checking accounts in Canadian and United States dollars. The United States dollar account (which had a balance of $751 at June 30, 2003) is not insured.

Restatement and Reclassification

Certain prior year amounts in the accompanying financial statements have been reclassified to conform to the fiscal 2003 presentation.

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.

Provision for Taxes

Income taxes are provided based upon the liability method of accounting pursuant to SFAS No. 109 “Accounting for Income Taxes” (hereinafter “SFAS No. 109”). Under this approach, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end. A valuation allowance is recorded against deferred tax assets if management does not believe the Company has met the “more likely than not” standard imposed by SFAS No.

F-9

FIRST AMERICAN SCIENTIFIC CORP.

Notes to Consolidated Financial Statements

June 30, 2003

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Provision for Taxes (continued)

109 to allow recognition of such an asset. At June 30, 2003, the Company had net deferred tax assets of approximately $3,400,000 principally arising from net operating loss carryforwards for income tax purposes. As management of the Company cannot determine that it is more likely than not that the Company will realize the benefit of the net deferred tax asset, a valuation allowance equal to the net deferred tax asset has been established at June 30, 2003. The significant components of the deferred tax asset at June 30, 2003 and 2002 were as follows:

			June 20, 2003		June 30, 2002
Net operating loss carryforward		$	10,000,000	$	6,500,000
Stock options issued under a non-qualified plan:
	For the year ended June 30, 2003	$	56,870
	For the year ended June 30, 2002			$	77,870

Deferred tax asset		$	3,400,000	$	2,900,000
Deferred tax asset valuation allowance		$	(3,400,000)	$	(2,900,000)

At June 30, 2003, the Company has net operating loss carryforwards of approximately $10,000,000, which expire in the years 2015 through 2021. The Company recognized approximately $56,870 of losses from issuance of stock options for services in fiscal 2003, which are not deductible for tax purposes and are not included in the above calculation of deferred tax assets.

Use of Estimates

The process of preparing financial statements in conformity with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions regarding certain types of assets, liabilities, revenues, and expenses. Such estimates primarily relate to unsettled transactions and events as of the date of the financial statements. Accordingly, upon settlement, actual results may differ from estimated amounts.

Compensated Absences

Employees of the Company are entitled to paid vacation, paid sick days and personal days off, depending on job classification, length of service, and other factors. It is impracticable to estimate the amount of compensation for future absences, and, accordingly, no liability has been recorded in the accompanying financial statements. The Company’s policy is to recognize the costs of compensated absences when actually paid to employees.

F-10

FIRST AMERICAN SCIENTIFIC CORP.

Notes to Consolidated Financial Statements

June 30, 2003

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Segment Information

The Company adopted Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information" (hereinafter “SFAS No. 131”) during the second quarter of 1999. SFAS No. 131 established standards for reporting information about operating segments in annual financial statements and requires selected information about operating segments in interim financial reports issued to stockholders. It also established standards for related disclosures about products and services and geographic areas. Operating segments are defined as components of an enterprise about which separate financial information is available, evaluated regularly by the chief operating decision makers, or a decision making group, in deciding how to allocate resources and in assessing performance. At August 2002, because of the spin-off of VMH VideoMovieHouse.com Inc., the Company no longer has more than one operating segment.

Revenue and Cost Recognition

Revenues from the sale of KDS machines are recognized when there is a sales contract, all terms of the contract have been completed, collectibility is reasonably assured and the products are delivered.

KDS machine costs include applicable direct material and labor costs and related indirect costs. Changes in job performance, job conditions, and estimated profitability may result in revisions to product costs, which are recognized in the period in which the revisions are determined.

Accounts Receivable

The Company carries its accounts receivable at cost less an allowance for doubtful accounts. At June 30, 2003, accounts receivable were $122,065 with an allowance for doubtful accounts of $119,046.

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. Every effort is made to collect on the accounts or to take possession of the equipment.

During the year ended June 30, 2003 the Company sold three used KDS machines for $178,000 plus tax. These machines were all delivered and paid for at June 30, 2003. The receivable from one sale recorded in the year ended June 30, 2002 has been fully reserved at June 30, 2003.

During the year ended June 30, 2002, the Company sold a KDS machine for $285,000 plus tax. The purchaser made a non-refundable down payment of $37,500. After June 30, 2002, but before the release of the audited financial statements, the Company became aware that the purchaser would be unable to meet the agreed upon financing arrangements and the balance due on this machine was fully reserved. This balance of $249,372 was held in reserve until March 31, 2003.

F-11

FIRST AMERICAN SCIENTIFIC CORP.

Notes to Consolidated Financial Statements

June 30, 2003

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Accounts Receivable (continued)

The Company held this machine for 90 days on behalf of the original purchaser to allow them time to seek additional funding. The purchaser could not raise the $249,372 and the sale was terminated. This machine is now being used at the Company’s test facility and is included in property, plant and equipment at June 30, 2003.

Reimbursements for Research and Development

The Canadian Government offers incentives to taxpayers carrying out scientific research and experimental development. The Canadian Government encourages Canadian companies to investigate ways of providing better products and better processing using advanced technologies. A 35% research and development reimbursable credit is available for Canadian owned companies with less than $200,000 taxable income in the previous year. AGES has prepared the forms and submitted to Revenue Canada for its reimbursement of $83,085 for the year ended June 30, 2002. The research and development expenses attributed to this reimbursement are included in the Company’s net loss for the U.S. income tax calculation. Payment of this credit was expected before June 30, 2003, however it has not been received. The Company has classified this reimbursable credit as other assets on its balance sheet and expects to receive the payment in the second half of 2003.

Sales Tax Refunds

The Canadian Government taxes goods and services when purchased. These taxes, when paid, can be offset against taxes due from the sales of goods and services by the Company. Any sale outside of Canada is not taxed for this purpose. At the end of each quarter, all taxes paid on goods and services purchased are netted against the taxes due on sales of goods and service sold. If the Company has paid more tax than it owes, then the Company is due a refund.

Inventory

Inventories are stated at the lower of average cost or net realizable value. The cost of finished goods includes the cost of raw material, direct and indirect labor, and other indirect manufacturing costs.

The components of inventory are as follows:

		June 30, 2003		June 30, 2002

Finished goods –3 machines	$	190,422	$	345,000
Work in progress – 2 machines		-		145,442
	$	190,442	$	490,442

During the year ended June 30, 2003, the Company determined that the value of three used KDS machines should be further reduced to $50,000 each, thereby resulting in an aggregate impairment charge of $150,000. See Note 3.

F-12

FIRST AMERICAN SCIENTIFIC CORP.

Notes to Consolidated Financial Statements

June 30, 2003

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Accounting Pronouncements

The Company currently reports stock issued to employees under the rules of SFAS No. 123. Accordingly, there is no change in disclosure requirements due to SFAS No. 148.

F-13

FIRST AMERICAN SCIENTIFIC CORP.

Notes to Consolidated Financial Statements

June 30, 2003

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Accounting Pronouncements (continued)

related to terminating a contract that is not a capital lease, costs to consolidate facilities or relocate employees, and termination benefits provided to employees that are involuntarily terminated under the terms of a one-time benefit arrangement that is not an ongoing benefit arrangement or an individual deferred-compensation contract.

F-14

FIRST AMERICAN SCIENTIFIC CORP.

Notes to Consolidated Financial Statements

June 30, 2003

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Accounting Pronouncements (continued)

in which it is incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived assets. This statement is effective for financial statements issued for the fiscal years beginning after June 15, 2002. The Company adopted SFAS No. 143 and the adoption did not have a material impact on the financial statements of the Company at June 30, 2003.

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.

Reclassifications

Certain prior year amounts in the accompanying financial statements have been reclassified to conform to the fiscal 2003 presentation. See Note 11.

F-15

FIRST AMERICAN SCIENTIFIC CORP.

Notes to Consolidated Financial Statements

June 30, 2003

NOTE 3 - PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Depreciation is provided using the straight-line method over the estimated useful lives of the assets. The useful lives of property, plant and equipment for purposes of computing depreciation is five years. The following is a summary of property, equipment, and accumulated depreciation:

		June 30, 2003		June 30, 2002
Kinetic disintegration equipment (KDS)	$	240,865	$	236,557
Plant assets and equipment		24,359		-
Office equipment		41,249		47,874
Leasehold improvements		-		7,811
Total assets	$	306,473	$	311,631
Less accumulated depreciation		(145,867)		(90,295)
	$	160,606	$	221,336

Depreciation expense for the year ended June 30, 2003 and for the year ended June 30, 2002 was $55,572 and $58,475, respectively. The Company evaluates the recoverability of property and equipment when events and circumstances indicate that such assets might be impaired. The Company determines impairment by comparing the present value of future cash flows estimated to be generated by these assets to their respective carrying amounts. Maintenance and repairs are expensed as incurred. Replacements and betterments are capitalized. The cost and related reserves of assets sold or retired are removed from the accounts, and any resulting gain or loss is reflected in results of operations.

During the year ended June 30, 2002, the Company determined that the value of two KDS machines in the California plant and one machine at the Delta B.C. facility, recorded as property, plant and equipment, had an impaired value of $150,000 each. The Company determined that these KDS machines were in excess of current plant requirements and reclassified these machines as inventory. The Company has changed its focus regarding these machines, which originally was to use them in the processing of an end-product, to the sale of KDS machines. In the second quarter of 2003, the Company’s management changed the estimated value of these machines to a net realizable value of $50,000 each based on the final physical assessment of the machines upon arrival in Vancouver B.C., Canada. These machines needed substantially more reconditioning prior to sale or needed to be sold “as is” at a much lower price. Since the Company’s inventory is recorded at the lower of cost or net realizable value, the write-down of these machines prior to their sale is included in other expenses. This treatment is consistent with the write-down of the same equipment in the prior year in an attempt to correctly value the machines for sale and for comparative purposes in connection to the transfer from plant to inventory classification. The Company also impaired all assets at its former facility in California. The Company recognized an aggregate impairment expense at June 30, 2003 and 2002, of $152,732 and $371,870, respectively.

F-16

FIRST AMERICAN SCIENTIFIC CORP.

Notes to Consolidated Financial Statements

June 30, 2003

NOTE 4 – TECHNOLOGY RIGHTS AND PATENTS

Technology Licenses

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 Kinetic Disintegration Equipment (“KDS”) for use in rubber and glass recycling and disposal, for a period of ninety-nine years. The purchase price of this license and one SDM machine was $550,000, with license rights valued at $250,000.

On May 17, 1996, the Company executed another agreement with Spectrasonic for the worldwide licenses to equipment (as yet unpatented) developed by Spectrasonic for use in disintegration, disposal, recycling, remanufacturing or manufacturing "any and all kinds of materials" for a period of ninety-nine years. The purchase price of this license was $1,047,000, which the Company paid by issuing to Spectrasonic 5,500,000 shares of First American common stock (with an aggregate deemed value of $802,000) and paying $168,000 in varying installment amounts between September 30, 1996 and January 2, 1997. The Company also recognized $77,000 in forgiveness of debt, which was recorded as additional paid-in capital.

On July 2, 1997, the Company finalized negotiations with Spectrasonic for all patents to be issued or pending, including all data pertaining to the patent process with respect to the Kinetic Disintegration Machine (“KDS Machine”) whose worldwide rights had been previously acquired by the Company. In the negotiations, the Company acquired all manufacturing rights applicable to the KDS Machine technology. The Company has sole right and responsibility for manufacturing the machinery. Consideration to Spectrasonic was 1,000,000 common shares of the Company’s stock at a deemed value of $0.25 per share issued on December 1, 1999.

Technology licenses, patents and manufacturing rights are stated at cost. Amortization is provided using the straight-line method over the estimated useful lives of the assets, which is fifteen years.

The following is a summary of technology licenses, patents and manufacturing rights and accumulated amortization:

		June 30, 2003		June 30, 2002
Technology license and rights	$	1,905,000	$	1,905,000
Patents and manufacturing rights		266,224		250,000
		2,171,224		2,155,000
Less accumulated amortization		(846,597)		(702,930)
	$	1,324,627	$	1,452,070

F-17

FIRST AMERICAN SCIENTIFIC CORP.

Notes to Consolidated Financial Statements

June 30, 2003

NOTE 4 – TECHNOLOGY RIGHTS AND PATENTS (Continued)

Technology Licenses (continued)

Amortization expense for the years ended June 30, 2003 and the year ended June 30, 2002 was $143,667 and $143,667, respectively.

The Company has determined that the carrying value of its technology rights and patents is fairly stated, based upon the estimated present value of cash flows and the Company’s estimated ability to sell two machines each year through the year ended June 30, 2006.

The following is a summary of the costs of patents approved at the year ending June 30, 2003:

		Cost		Accumulated Amortization		Net Amount

Balance, June 30, 2002	$	250,000	$	(94,340)	$	155,660
2003 Activity		16,224		-		16,224
	$	266,224	$	(94,340)	$	171,884

NOTE 5 – COMMON STOCK

During the year ended June 30, 2003, the Company issued from options: 1,529,489 shares of common stock as payment for consulting services with a fair market value of $96,825; 5,558,455 shares of common stock as compensation with a fair market value of $358,161; 975,000 shares of common stock for professional services with a fair market value of $48,800; and 1,298,000 common stock shares in payment of debt of $64,900; 400,000 common stock shares for prepaid rent in the amount of $20,000 and 166,667 shares of common stock for prepaid lease of equipment in the amount of $10,000; and 255,747 common stock shares for cash of $17,500.

In addition the Company issued 250,000 shares of common stock for cash of $12,500.

During the year ended June 30, 2002, the Company issued from options 2,885,000 shares of common stock for cash of $189,850 and services valued at $82,850; 3,600,000 shares of common stock for compensation valued at $320,480; 250,000 shares of common stock for legal services valued at $25,000; 500,000 shares of common stock for a KDS machine valued at $45,000; 100,000 shares of common stock for equipment valued at $12,840; 100,000 shares of common stock in payment of an account payable of $9,500 and 120,000 shares of common stock as prepaid rent of its offices valued at $15,000. In addition, 3,925,000 common stock options were exercised for services valued at $457,620.

In June 2000, an amendment to the Company’s articles of incorporation was approved, which increased the Company’s authorized capital to 200,000,000 shares of common stock at a par value of $0.001 per share.

F-18

FIRST AMERICAN SCIENTIFIC CORP.

Notes to Consolidated Financial Statements

June 30, 2003

NOTE 6—STOCK OPTIONS

The Company’s board of directors approved the First American Scientific Corp. 2003 Non-qualifying Stock Option Plan. This plan allows the Company to distribute up to 10,000,000 shares of common stock options at a maximum share price of $0.075 to persons employed or associated with the Company. This plan was not approved by the Company’s security holders.

During the year ended June 30, 2003, the Company granted 13,130,249 common stock options at the fair market value of the common stock at the date of grant. These options were granted for compensation, services and operating expenses at the average exercise price of $0.05.

During the year ended June 30, 2002, the Company granted 10,505,000 options for compensation, services, expenses and cash at an average exercise price of $0.09. All options were exercised immediately. The options were granted at the fair market value of the stock on each grant date.

In April 2001, the Company’s board of directors approved the First American Scientific Corp. 2001 Nonqualified Stock Option Plan. This plan allows the Company to distribute up to 20,000,000 shares of common stock options of a maximum share price of $0.275 to persons employed or associated with the Company. This plan was not approved by the Company’s security holders.

The fair value of each option granted during fiscal 2003 and 2002 was estimated on the grant date using the Black-Scholes Option Price Calculation. The following assumptions were made in estimating fair value: risk-free interest of 4%, volatility of 73%, expected life of 1 to 5 years, and no expected dividends. The value of these options granted during the year ended June 30, 2003 in the amount of $56,870 was included in operating expense in the financial statements.

There is no express termination date for the options, authorized by the two plans, although the Board may vote to terminate either Plan. The exercise price of the options will be determined at the date of grant. The following is a summary of the Company's open stock option plans:

Equity compensation plans not approved by security holders	Number of securities to be issued upon exercise of outstanding options	Weighted-average exercise price of outstanding options	Number of securities remaining available for future issuance under equity compensation plans

2003 Stock Option Plan	3,309,000	$0.05	3,143,197

Total	3,309,000		3,143,197

F-19

FIRST AMERICAN SCIENTIFIC CORP.

Notes to Consolidated Financial Statements

June 30, 2003

NOTE 6—STOCK OPTIONS (Continued)

The following is a summary of stock option activity:

		Number of Shares		Weighted Average Exercise Price
Options outstanding at July 1, 2001		3,625,000	$	0.11
Granted		10,505,000		0.09
Exercised		(11,480,000)		0.1
Options outstanding at June 30, 2002		2,650,000	$	0.12

Option outstanding at July 1, 2002		2,650,000	$	0.12
Cancelled		2,037,831		0.12
Granted		13,130,249		0.05
Exercised		(10,433,358)		0.06
Options outstanding and exercisable at June 30, 2003		3,309,000	$	0.05

Weighted average fair value of options granted during the year ended June 30, 2003	$	0.03

NOTE 7 – RELATED PARTIES

During the year ended June 30, 2003, the Company borrowed $54,176 from two of its officers and accrued $70,000 in wages for these same officers. Periodically, loans and accrued wages are repaid, at the Company’s discretion, by the issuance of its common stock options under the current S-8 registered plan. During the year ended June 30, 2003, $170,000 of related party wages were paid with stock options. In addition the Company owes these two officers $40,276 for notes payable.

At June 30, 2002, the Company owed its officers $140,000 for accrued salary and $104,878 for notes payable. These amounts are recorded in the accompanying financial statements under the caption of accounts payable, related parties.

During the year ended June 30, 2002, the Company issued 6,650,000 common stock options to Company officers and employees at exercise prices ranging from $0.06 to $0.18 which were equal to the fair market value of the stock on the date of grant.

An officer of the Company was the former sole shareholder of VMH VideoMovieHouse.com Inc. (“VMH”), a firm which was purchased for $250,000 in 2000 and became a wholly owned subsidiary of First American Scientific Corp. In August 2002, the Company completed a spin-off of VMH which then became a separate reporting entity. See Note 11.

F-20

FIRST AMERICAN SCIENTIFIC CORP.

Notes to Consolidated Financial Statements

June 30, 2003

NOTE 7 – RELATED PARTIES (Continued)

Other related party transactions are described in Note 4.

NOTE 8 – NOTES PAYABLE

The Company borrowed $51,415 from private investors. During the year ended June 30, 2003, $45,000 in notes was repaid by the Company’s issuance of its common stock and the balance was repaid in cash.

NOTE 9 – COMMITMENTS AND CONTINGENCIES

Lease Commitments

On May 29, 2003, the Company signed a two-year lease to rent a test facility in Delta, British Columbia commencing on June 1, 2003. Upon inception of the lease, two years of rent were prepaid by the issuance of 240,000 shares of FASC stock.

The Company owns no real property. On August 1, 1998, the Company negotiated a three-year commercial lease for 740 square feet in Vancouver, British Columbia, at a monthly rental of $1,000.

In May 1996, the Company signed a lease to rent facilities in Bakersfield, California for the industrial processing of gypsum, limestone and specialty products. The lease expired on April 14, 1998. During the year ended June 30, 2002, the Company took possession of its plant assets. See Note 3.

NOTE 10 – JOINT VENTURES

Beau Pre Explorations Ltd.

In August 2000, the Company entered into a joint venture agreement with Beau Pre Explorations Ltd., a Canadian mining company, to process ore from Beau Pre’s mine using a KDS machine. The KDS machine required modifications to increase the durability of the chain system to handle hard rock. The Company hired Robert Salter Ph.D. to develop a new impact system, which it could then protect with a new patent. When the modifications to the KDS machine were successful, implementation of the process commenced on Beau Pre’s mineral mining claims on Valentine Mountain. The redesign and patent process was completed, with patent pending status obtained, in May 2001, and testing continued throughout the summer of 2001. The equipment was moved to a staging site near the Valentine Mountain mining site in 2002 to begin the final testing. The patent was allowed on September 4, 2003. The testing of various new beater bar alloys and coatings is continuing, and progress is being made, however, there is no certainty that commercially viable levels of production can be met. The Company’s investment consists of one KDS machine contributed to the joint venture to process mineral and extract precious metal at the Valentine Mountain mine site.

F-21

FIRST AMERICAN SCIENTIFIC CORP.

Notes to Consolidated Financial Statements

June 30, 2003

NOTE 10 – JOINT VENTURES (Continued)

AGES

In January 2002, FASC entered into a joint venture agreement with Thermix Combustion Systems Inc to combine FASC's KDS System and Thermix's suspension dust burning technology and engineering expertise specifically for the processing of biomass pulp sludge. A new company called Alternative Green Energy Systems, Inc., “AGES” was incorporated to manage the agreement. Under the agreement, FASC retains ownership of all existing KDS technology and all new AGES developed intellectual property which will be licensed to AGES for use in its designated territories. The license agreement is conditional upon AGES achieving pre-defined sales results, the purchase of one test machine, and the payment of royalties before the end of AGES’ second year of business. In March 2002, Hydro Quebec Capitech Inc. was admitted as a shareholder in AGES after agreeing to invest $ 1,000,000 CDN in the joint venture. By March 1, 2003, Hydro Quebec Capitech Inc.’s full investment had been received.

In February 2003, FASC deferred the payment terms of the agreement with AGES for one additional year, until February 21, 2004.

During the quarter ended December 31, 2002, AGES entered into a contingent sales agreement in which it gave a six-month trial period of the KDS machine to Atlantic Packaging Ltd. This trial period was extended for an additional three months. The contingent sale has not been recognized as the terms of the contract and have not been met at June 30, 2003.

VMH VideoMovieHouse. com Inc.

On June 11, 2001, the Company’s board of directors recommended and approved a motion that the Company would spin off its subsidiary, VMH VideoMovieHouse.com Inc. (“VMH”), into its own separate fully reporting OTC publicly traded company. At that time, management under the discretion of the board of directors began the necessary actions to accomplish the spin-off in a timely manner.

NOTE 11 – SPIN-OFF OF VMH VIDEOMOVIEHOUSE.COM, INC.

In August 2002, VMH finalized its registration with the Securities and Exchange Commission to become a separate reporting entity. In September 2002, the Company issued 14,221,750 shares of common stock in accordance with the spin-off agreement.

F-22

FIRST AMERICAN SCIENTIFIC CORP.

Notes to Consolidated Financial Statements

June 30, 2003

NOTE 11 – SPIN-OFF OF VMH VIDEOMOVIEHOUSE.COM, INC. (Continued)

The assets and liabilities distributed to VMH were as follows as of August 31, 2002:

Cash in bank	$	12,842
Accounts receivable		60,457
Inventory		70,832
Property, plant and equipment		33,081
Technology and website, net of amortization		229,989
Deposits		10,000
Total Assets	$	417,201
Accounts payable and accrued expenses	$	107,183
Accounts payable, related parties		118,517
Total Liabilities	$	225,700
Assets in excess of liabilities	$	191,501

Costs associated with the spin-off VMH were accounted for in discontinued operations.

In accordance with generally accepted accounting principles, the financial results for VMH are reported as discontinued operations “distributions to subsidiary” and the Company’s financial results of prior periods were restated. Condensed results of the discontinued operations “loss from distributed subsidiary” were as follows for the last two years:

		June 30, 2002		June 30, 2001
Net Sales	$	286,869	$	4,222
Loss Before Income Taxes	$	(193,377)	$	(23,151)
Income Tax Expense		-		-
Net Loss	$	(193,377)	$	(23,151)

The loss on distribution of subsidiary reflects expenses related to the distribution of the assets, common stock and certain expenses associated with establishing a capital structure of VMH.

The total assets of VideoMovieHouse.com Inc. at the date of distribution to the shareholders was $417,201 (the classes of assets are listed in the Notes to the Financial Statements). The net assets distributed was $191,501 after allowing for liabilities of $225,700 being allocated to the distributed subsidiary. VideoMovieHouse.com Inc. had equity of $523,827 prior to separation with $332,326 being allocated to deficits accumulated up to the period of separation, leaving net assets of $191,501. The above transaction summarizes the effect of the distribution of the subsidiary. The $332,326 accumulated deficit is the deficit of the subsidiary which is separated from the prior consolidated filing information. With the aforementioned spin-off accounting being consistent with the circumstances described and consistent with historically recorded costs and balances, the Company believes that its accounting for the separation of a subsidiary entity from its parent is consistent with generally accepted accounting principles and properly reported.

F-23

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 8A. CONTROLS AND PROCEDURES

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s Securities Exchange Act of 1934 reports are recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Company’s management, including the chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. Within 90 days prior to the date of this report, the Company’s management carried out an evaluation, under the supervision and with the participation of management, including the Company’s chief executive officer and chief financial officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based upon the foregoing, the Company’s chief executive officer and chief financial officer concluded that the disclosure controls and procedures are effective in connection with the filing of this Annual Report on Form 10-KSB for the year ended June 30, 2003.

There were no significant changes in the Company’s internal controls or in other factors that could significantly affect these controls subsequent to the date of its evaluation, including any significant deficiencies or material weaknesses of internal controls that would require corrective action.

PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Officers and Directors

The directors and officers of the Company are:

Name	Age	Position

John Brian Nichols	66	President, Chief Executive Officer and member of the Board of Directors

Cal Kantonen	52	Treasurer, Chief Financial Officer and Chairman of the Board of Directors

David Gibson	61	Secretary and member of the Board of Directors

John Brian Nichols - President, Chief Executive Officer and a member of the Board of Directors.

Since April 2001, Mr. Nichols has been the President, Chief Executive Officer and a member of the Board of Directors. For the past 32 years, Mr. Nichols has been a self-employed producer and marketer of a live entertainment show and circus which plays in over in 260 cities annually in Canada and the United States.

Cal L. Kantonen - Chairman of the Board of Directors, Treasurer and Chief Financial Officer.

Since February 2000, Mr. Kantonen has been the chairman of the Board of Directors, Treasurer and Chief Financial Officer of the Company. From September 1999 to August 2002, Mr. Kantonen was the President, Secretary/Treasurer and sole member of the Board of Directors of VMH VideoMovieHouse.com Inc., a subsidiary of the Company. Prior to joining the Company in 1999, Mr. Kantonen spent five years as a commercial lender with one of Canada’s largest financial institutions. Mr. Kantonen, CGA has been a member in good standing of the Certified General Accountants of British Columbia since 1984, during which time he practiced in the field of public accounting for ten years providing taxation and business advice to small business.

David L. Gibson - Secretary and member of the Board of Directors

Since April 2001, Mr. Gibson has been the Secretary and a member of the Board of Directors. Mr. Gibson received a BA in Economics and Political Science in 1968 and obtained his law degree from the University of British Columbia in 1971. Mr. Gibson has been in the practice of law in Canada for the past 30 years specializing in the areas of corporate law, commercial practices and estate planning.

Indemnification of Officers and Directors

The Nevada Revised Statues and certain provisions of the Company's Bylaws under certain circumstances provide for indemnification of the Company's Officers, Directors and controlling persons against liabilities which they may incur in such capacities. A summary of the circumstances in which such indemnification is provided for is contained herein, but this description is qualified in its entirety by reference to the Company's Bylaws and to the statutory provisions.

In general, any Officer, Director, employee or agent may be indemnified against expenses, fines, settlements or judgments arising in connection with a legal proceeding to which such person is a party, if that person's actions were in good faith, were believed to be in the Company's best interest, and were not unlawful. Unless such person is successful upon the merits in such an action, indemnification may be awarded only after a determination by independent decision of the Board of Directors, by legal counsel, or by a vote of the shareholders, that the applicable standard of conduct was met by the person to be indemnified.

The circumstances under which indemnification is granted in connection with an action brought on behalf of the Company is generally the same as those set forth above; however, with respect to such actions, indemnification is granted only with respect to expenses actually incurred in connection with the defense or settlement of the action. In such actions, the person to be indemnified must have acted in good faith and in a manner believed to have been in the Company's best interest, and have not been adjudged liable for negligence or misconduct.

Indemnification may also be granted pursuant to the terms of agreements which may be entered in the future pursuant to a vote of shareholders or directors. The statutory provision cited above also grants the power to the Company to purchase and maintain insurance which protects its officers and directors against any liabilities incurred in connection with their service in such a position, and such a policy may be obtained by the Company.

The Company’s President and Chief Executive Officer, Mr. Nichols, and Chief Financial Officer and Treasurer, Mr. Kantonen are employed full time. Mr. Nichols oversees marketing, research and development and plant operations. Mr. Kantonen oversees all financial reporting and legal and regulatory matters.

Audit Committee and Charter

We have an audit committee and audit committee charter. Our audit committee is comprised of all of our officers and directors. None of directors are deemed independent. All directors also hold positions as our officers. A copy of our audit committee charter is filed as an exhibit to this report. Our audit committee is responsible for: (1) selection and oversight of our independent accountant; (2) establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls and auditing matters; (3) establishing procedures for the confidential, anonymous submission by our employees of concerns regarding accounting and auditing matters; (4) engaging outside advisors; and, (5) funding for the outside auditory and any outside advisors engagement by the audit committee. A copy of our audit committee charter is filed as an exhibit to this report.

Audit Committee Financial Expert

We have no financial expert. We believe the cost related to retaining a financial expert at this time is prohibitive. Further, because of our limited operations, we believe the services of a financial expert are not warranted.

Code of Ethics

We have adopted a corporate code of ethics. A copy of the code of ethics is filed as an exhibit to this report. We believe our code of ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the code.

Disclosure Committee and Charter

We have a disclosure committee and disclosure committee charter. Our disclosure committee is comprise of all of our officers and directors. The purpose of the committee is to provide assistance to the Chief Executive Officer and the Chief Financial Officer in fulfulling their responsibilities regarding the identification and disclosure of material information about us and the accuracy, completeness and timeliness of our financial reports. A copy of our disclosure committee charter is filed with this report.

Compliance with Section 16 (a) of the Exchange Act

Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to us pursuant to Rule 16a-3(e) under the Securities Exchange Act of 1934 during our most recent fiscal year and Forms 5 and amendments thereto furnished to us with respect to our most recent fiscal year, all officers, directors and owners of 10% or more of our outstanding shares have filed all Forms 3, 4 and 5 required by Section 16(a) of the Securities Exchange Act of 1934.

ITEM 10. EXECUTIVE COMPENSATION

The following table sets forth the compensation paid by the Company for each officer and director of the Company during the past three years. This information includes the dollar value of base salaries, bonus awards and number of stock options granted, and certain other compensation, if any.

Summary Compensation Table

Long Term Compensation

Annual Compensation

Awards

Payouts

(a)	(b)	(c)	(d)	(e)	(f)	(g)	(h)	(i)
Name and Principal Position [1]	Year	Salary ($)	Bonus ($)	Other Annual Compensation ($)	Restricted Stock Award(s) ($)	Securities Underlying Options / SARs (#)	LTIP Payouts ($)	All Other Compensation ($)

Brian Nichols President	200320022001	120,000 120,000 30,000	0 0 25,000	0 0 0	0 0 0	0 1,809,000 0	0 0 0	0 0 0

Cal Kantonen Treasurer	200320022001	120,000 120,000 82,000	0 0 50,000	0 0 0	0 0 0	0 1,500,000 0	0 0 0	0 0 0

David Gibson Secretary	200320022001	0 0 40,000	0 0 0	0 0 0	0 0 0	0 250,000 0	0 0 0	0 0 0

[1] All compensation received by the officers and directors has been disclosed.

Future Compensation of Our Officers

The Company plans to pay the following salaries in 2004, subject to the Company beginning profitable operations and generating sufficient revenues to pay the same:

Cal Kantonen

Brian Nichols

Treasurer and CFO

President and CEO

2004

$ 120,000

Option/SAR Grants.

There are no stock option, retirement, pension, or profit sharing plans for the benefit of the Company’s officers and directors, other than three incentive stock option plans. Under each Plan, the board of directors is vested with discretionary authority to grant options to persons furnishing services to the Company.

The 2001 Plan registered 30,000,000 shares. All shares have been issued as a result of the exercise of options. No shares remain in the Plan.

The 2001A Plan registered 20,000,000 shares. All shares have been issued as a result of the exercise of options. No shares remain in the Plan.

The 2003 Plan registered 10,000,000 shares. 3,547,803 shares have been issued as a result of the exercise of options. 3,143,197 shares remain in the Plan.

Information concerning individual grants of stock options, whether or not in tandem with stock appreciation rights ("SARs"), and freestanding SARs made during fiscal 2003 to each of the named executive officers is reflected in the table below.

Option/SAR Grants in Fiscal 2003

Individual Grants
Name	Number of Securities Underlying Options/SARs Granted (#)	Percent of Total Options/SARs Granted to Employees in Fiscal Yr	Exercise or Base Price	Expiration Date
Brian Nichols [1]	3,217,000	46%	$0.05	Sept. 30, 2004
Cal Kantonen [1]	2,218,000	32%	$0.05	Sept. 30, 2004

Aggregated Option/SAR Exercises and Fiscal 2003 Year-End Option/SAR Value Table.

The following table sets forth certain information with respect to each exercise of stock options and SARs during fiscal 2003 by each of the named executive officers, and the fiscal 2003 year-end value of unexercised options and SARs. The dollar values are calculated by determining the difference between the exercise or base price of the options and the fair market value of the underlying stock at the time of exercise and at fiscal year-end if unexercised, respectively. The unexercised options, some of which may be exercisable, have not been exercised and it is possible they might never be exercised. Actual gains realized, if any, on stock option exercises and common stock holdings are dependent on the future performance and value of the common stock and overall stock market conditions. There can be no assurance that the projected gains and values shown in this Table will be realized.

Aggregated Option/SAR Exercises in Fiscal 2003

and Option/SAR Values at June 30, 2003

Name	Shares Acquired on Exercise (#)	Value Realized	Number of Securities Underlying Unexercised Options/SARs at FY-End (#)		Value of Unexercised In-the-Money Options/SARs at FY-End ($)
			Exercisable	Unexercisable	Exercisable	Unexercisable
Brian Nichols	1,909,000	Nil	1,809,000	nil	$6,250	nil
Cal Kantonen	1,309,000	Nil	1,500,000	nil	nil	nil

Long-Term Incentive Plan Awards.

The Company does not have any formalized long-term incentive plans, excluding restricted stock, stock option and SAR plans, which provide compensation intended to serve as incentive for performance to occur over a period longer than one fiscal year, whether such performance is measured by reference to financial performance of the Company or an affiliate, the Company's stock price, or any other measure.

Compensation of Directors

The Company does not have any plans to pay its directors any money. The directors did not receive any other compensation for serving as members of the board of directors. There are no contractual arrangements with any member of the board of directors.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following schedule sets forth the common stock ownership of each person known by the Company to be the beneficial owner of five percent or more of the Company's common stock, each director individually, and all officers and directors of the Company as a group. Each person has sole voting and investment power with respect to the shares of common stock shown, and all ownership is of record and beneficial.

Name of owner	Number of Shares	Position	Percent of Class

Brian Nichols	3,344,500	President, Principal Executive Officer and a Director	2.15 %

Cal Kantonen	6,654,800	Chairman of Board of Directors, Treasurer and Principal Financial Officer	4.27 %

David Gibson	450,000	Secretary and a Director	0.29 %
All officers and directors as a group (3)	10,449,300		6.71%

Changes in Control

To the knowledge of management, there are no present arrangements or pledges of securities of our company which may result in a change in control of our company.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During the year ended June 30, 2003, the Company borrowed $54,176 from Cal Kantonen and Brian Nichols, two of its officers and accrued $70,000 in wages for these same officers.

During the year ended June 30, 2003, $170,000 of related party wages were paid with stock options to Mr. Kantonen and Mr. Nichols. In addition the Company owes Mr. Kantonen, $17,142, and Mr. Nichols, $23,134 for notes payable.

At June 30, 2002, the Company owed Mr. Kantonen, $73,272 and Mr. Nichols, $78,921, its officers $140,000 for accrued salary and owes Mr. Kantonen, $3,272 and Mr. Nichols, $8,921 for notes payable.

During the year ended June 30, 2003, the Company issued stock options to acquire up to 6,634,650 shares of common stock to its officers and employees at exercise prices ranging from $0.06 to $0.08 which were equal to the fair market value of the stock on the date of grant.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

Reports on Form 8-K.

No Form 8-Ks have been filed during the fourth quarter of 2003.

Exhibits

The following Exhibits are incorporated herein by reference from the Registrant's Form 10SB Registration Statement filed with the Securities and Exchange Commission, SEC file #000-27094, Such exhibits are incorporated herein by reference pursuant to Rule 12b-32:

Exhibit No.

Description

3.1

3.2

4.1

28.1

Articles of Incorporation of First American Scientific Corporation.

Bylaws of First American Scientific Corporation.

Specimen Stock Certificate

Consultant and Employee Stock Compensation Plan.

The following Exhibits are incorporated herein by reference from the Registrant's Form S-8 Registration Statement filed with the Securities and Exchange Commission, SEC file #333-06851 on June 26, 1996. Such exhibits are incorporated herein by reference pursuant to Rule 12b-32:

Exhibit No.

Description

10.1	The 1996 Nonqualified Stock Option Plan.

The following documents are incorporated by reference from the Company's Form 10-KSB for the period ending June 30, 1997:

Exhibit No.	Description
3.3	Articles of Incorporation of 521345 B.C. Ltd.

The following documents are incorporated by reference from the Company's Form 10-KSB for the period ending June 30, 1998:

Exhibit No.	Description
3.4	Amended Articles of Incorporation.

The following Exhibits are incorporated herein by reference from the Registrant's Form S-8 Registration Statement filed with the Securities and Exchange Commission, SEC file #333-63041 on September 8, 1998. Such exhibits are incorporated herein by reference pursuant to Rule 12b-32:

Exhibit No.	Description
10.1	1998 Nonqualified Stock Option Plan.

The following Exhibits are incorporated herein by reference from the Registrant's Form S-8 Registration Statement filed with the Securities and Exchange Commission, SEC file #333-86995 on September 13, 1999. Such exhibits are incorporated herein by reference pursuant to Rule 12b-32:

Exhibit No.	Description
10.11	1999 Nonqualified Stock Option Plan.

The following Exhibits are incorporated herein by reference from the Registrant's Form S-8 Registration Statement filed with the Securities and Exchange Commission, SEC file #333-40234 on June 27, 2000. Such exhibits are incorporated herein by reference pursuant to Rule 12b-32:

Exhibit No.

Description

3.5

10.14

Amendment Articles of Incorporation as at June 12, 2000.

2001 Nonqualified Stock Option Plan.

The following documents are incorporated herein by reference from the Company's Form 10-KSB for the period ended June 30, 2000:

Exhibit No.	Description
10.15	Conditional Agreement with Henry Stritek

The following Exhibits are incorporated herein by reference from the Registrant's Form S-8 Registration Statement filed with the Securities and Exchange Commission, SEC file #333-59926 on May 1, 2001. Such exhibits are incorporated herein by reference pursuant to Rule 12b-32:

Exhibit No.	Description
10.16	2001A Nonqualified Stock Option Plan.

The following documents are incorporated herein by reference from the Company's Form 10-KSB for the period ended June 30, 2002:

Exhibit No.

Description

10.17

10.18

10.19

Alliance between Honeywell Ltd. and the Company

Agreement between Beau Pre Explorations Ltd. and the Company

Agreement between The Rubber Black Corporation and the Company

The following Exhibits are incorporated herein by reference from the Registrant's Form S-8 Registration Statement filed with the Securities and Exchange Commission, SEC file #333-102560 on January 17, 2003. Such exhibits are incorporated herein by reference pursuant to Rule 12b-32:

class=Section8>

Exhibit No.	Description
10.1	2003 Nonqualified Stock Option Plan.

The following exhibits are filed with this report:

14.1*	Code of Ethics

23.1*	Consent of Williams & Webster, P.S., independent certified public accountants.

31.1*	Certification of Principal Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended.

31.2*	Certification of Principal Financial Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended.

32.1*	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer).

32.2*	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer).

99.1*	Representative Agreement Between Environmental Management Systems Institute Inc. and the Company

99.2*	Audit Committee Charter

99.3*	Disclosure Committee Charter

* previously filed

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Williams and Webster, P.S., Certified Public Accountants, are the Company’s independent auditors to examine the financial statements of the Company for the fiscal year ending June 30, 2003. Williams & Webster, P.S. has performed the following services and has been paid the following fees for these fiscal years.

Audit Fees

Williams & Webster, P.S. was paid aggregate fees of approximately $32,400 for the fiscal year ended June 30, 2002 and approximately $52,400 for the fiscal year ended June 30, 2003 for professional services rendered for the audit of the Company’s annual financial statements and for the reviews of the financial statements included in the Company’s quarterly reports on Form 10-QSB during these fiscal years.

[ x ]	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended June 30, 2003.
[ ]	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from

SIGNATURES	TITLE	DATE

/s/ John Brian Nichols John Brian Nichols	President, Principal Executive Officer and member of the Board of Directors	10/28/2003

/s/ Calvin L. Kantonen Calvin L. Kantonen	Treasurer, Principal Financial Officer and Chairman of the Board of Directors	10/28/2003

/s/ David Gibson David Gibson	Secretary and member of the Board of Directors	10/28/2003