UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-KSB

[ x ]	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended June 30, 2004
[ ]	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from

Commission file number 000-27094

FIRST AMERICAN SCIENTIFIC CORP.

(Name of small business issuer in its charter)

Nevada

State or other jurisdiction of incorporation or organization

88-0338315

(I.R.S. Employer Identification No.)

811 - 100 Park Royal South

West Vancouver, British Columbia

Canada V7T 1A2

(Address of principal executive offices, including postal code.)

(604) 913-9035

(Registrant's telephone number, including area code)

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

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

State issuer's revenues for its most fiscal year June 30, 2004: $373,569

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of September 24, 2004: $8,478,250

State the number of shares outstanding of each of the issuer's classes of common equity, as of September 24, 2004: 169,564,976

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.

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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, palm plantations, or furniture factories and others where feedstock is less than 60% moisture content. In July 2004, one machine was sold to a newly formed Malaysian company (of which FASC owns 50 %), to be used to process palm tree waste in Malaysia. Operation of that machine is expected to commence in September 2004.

2. Pulp Sludge

The Company has also processed wet (80% moisture) pulp sludge, and has shown that potential exists in converting waste pulp sludge to a dry, fibre-like powder and releasing the kaolin clay concurrently, then burning to create BTUs which are recycled back into the paper making process as heat and/or electrical power. This could reduce energy costs, disposal costs, and environmental problems in the pulp and paper industry. Trials and testing are being conducted by Alternative Green Energy Systems Inc (of which FASC owns 40 % ) at Atlantic Packaging Ltd’s pulp mill in Whitby, Ontario.

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3. Animal waste/municipal sewage/food waste

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

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

Recent testing has been done processing and combusting munincipal secondary sludge with promising results. Further work on this application in conjunction with the local munincipality will continue into next fiscal year.

4. Commination (pulverizing) of mineral rock

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

In March 2004, one machine was sold and delivered to a mining company in Utah. It is currently on site and expected to commence production in September 2004. In June 2004, another machine was sold and delivered to an mining company in Poland where it is currently being assembled. This machine is also expected to be operational by September 2004.

The company is a 25 % shareholder in a BC company ( United Zeolite Products Ltd. ) that has a contract to supply Halliburton Group Canada with CDN$5,000,000 of micronized zeolite over three years for Halliburton’s oil well capping program. Two machines will be installed to service this contract in the fall 2004.

5. Re-cycling scrap rubber

When micronizing rubber, a cryogenic cooling process can facilitate the recycling of scrap rubber by pre-freezing it in a cooling chamber and injecting it through a pneumatic feed system into a pulverizing chamber. The method has proven that the KDS system can pulverize (shatter) rubber into a fine mesh suitable for re-cycling as a base material for other rubber based products. Commercially viable quantities are not yet proven. This process has now been patented and the company is seeking a joint venture partner who will participate in the development of this application to commercial viability.

6. Recycling Glass

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

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The KDS Equipment

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

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

Patents

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

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

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

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

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

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

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

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

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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 and some progress has been made processing pulp sludge at the Atlantic Packaging installation, but commercially viable production levels have not been achieved. Testing of hardened beater bar systems with various coatings and alloys for added strength has resulted increased bar life. Tests for the dewatering of food waste, municipal sewage, and animal wasted and the grinding of other materials continues. All research on rubber processing has been discontinued until a suitable research partner can be identified.

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. In the future, stricter regulations may increase the demand for our products which offer solutions to some environmental problems

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 sub- contracts VBS to construct a machine on a fixed price basis. . Two other backup manufacturers have been identified should demand increase beyond the capacity of VBSMF or if VBSMF is unwilling or unable to manufacture the KDS machine. Since the Company’s inception, the Company has manufactured or subcontracted twelve KDS machines and to date, has sold nine.

Ownership of Patents

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

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

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

Technology Licenses granted

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

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

FASC ( Malaysia ) SDN. BHD

In July 2004 the Company signed an agreement to form a joint venture within two Malaysian companies to construct a fully operational palm waste processing plant to be 100 % financed by the Malayian partners. Upon completion, the joint venture will be granted exclusive license for 21 years, to market the KDS equipment in Malaysia. In addition to earning royalties for all KDS equipment sold in Malaysia, FASC will share equally in the operating profits of the joint venture. A machine was purchased by the joint venture and shipped to Malaysia in August 2004.

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. The KDS Model 150 has been stored in a warehouse in Castleblaney, Ireland and is being shipped to Vancouver for refurbishing. This contract has expired.

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. This contract has expired

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Hollywood Park Racetrack (California)

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 has considered our proposal and has indicated that they are still interested in purchasing and installing the equipment once they can arrange a suitable location and meet local government regulations.

Beaupre Explorations Ltd (Canada)

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, however, this project has not proceeded due to Beaupre’s inability to raise the required funding. Therefore, the KDS machine was returned to the Company in June 2004. Should funding be procured, then this project will be re-opened. Beaupre advises that they are making new plans which, if realized, could reactivate the project.

Honeywell Inc. ( Canada )

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. To date, no further discussions have been opened up with Honeywell.

Mikuniya Environmental Management Systems (Japan)

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

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Alternative Green Energy Systems Inc. (Canada)

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

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

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

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

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

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

Mitsui Engineering & Shipbuilding Co. Ltd (Japan)

In July 2004, subsequent to the date of these statements, the Company entered into a collaboration agreement with Mitsui Engineering to evaluate the opportunity of Mitsui entering into a license agreement to introduce the KDS technology to Japan. Mitsui’s review and analysis of the technology and the market is now underway.

Halliburton Group Canada

In March 2004, United Zeolite Products Ltd. received a purchase order from Halliburton Group Canada for the supply of CDN$5,000,000 worth of micronized zeolite over a three years period. The product is to be produced at UZP’s facility in Princeton, BC which is currently under construction. The first delivery of product out of Princeton is expected in the fall of 2004.

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US Department of Energy Grant and USDA Grant

In 2003, the Company was awarded US$100,000 Phase I STTR grant by the US Dept of Energy and completed research for improving the drying component of its equipment. This research was successfully completed this year resulting in several significant advances being made to the technology. In 2004, the Company was also selected for a US$750,000 Phase II STTR research grant, but subsequent to the date of these statements, this grant was not awarded as the Company was determined not to be small US business pursuant to the rules of the Small Business Administration Act. However, the Company will be participating in a US Department of Agriculture funded project in conjunction with the University of Tennessee in the coming year.

The Waste and Resources Action Programme – UK (WRAP)

Subsequent to the date of these statements, on September 1, 2004, the Company signed a US$1,000,000 contract with WRAP, a UK government funded programme to support and improve markets for recycled materials in the UK. The contract provides for the purchase and installation on one complete “waste to energy KDS system” to be located at a soon to be identified industrial site in England. Funds will be provided by WRAP for equipment and its installation, market research, scientific research, re-design and adaptation of the equipment and supplementary systems for specific applications. Both FASC and AGES engineering staff will contribute to the project which will run for 18 months. The goals of the project are to demonstrate the KDS technology in a working environment, optimize ancillary equipment to improve its efficiency, and identify markets for recycled end products.

Market

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

Competition

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

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class=Section2>

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")

United Zeolite Products Ltd. (UZP) – 25 % owned

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

First American Power Corp. - 100 % owned

The Company owns 100% of the outstanding shares of common stock of First American Power Corp. 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.

FASC (Malaysia) Bhd. Sdn.

In July 2004, the Company signed an agreement to form a joint venture within two Malaysian companies to construct a fully operational palm waste processing plant to be 100 % financed by the Malayian partners. Upon completion, the joint venture will be granted exclusive license for 21 years, to market the KDS equipment in Malaysia. In addition to earning royalties for all KDS equipment sold in Malaysia, FASC will share equally in the operating profits of the joint venture. A machine was purchased by the joint venture and shipped to Malaysia in August 2004.

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 interest in VMH.

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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 indefinitely. Atlantic Packaging have advised us that they will not purchase this small machine, but that they remain open to the possible purchase of a large scale machine when it becomes available. In the meantime, the machine remains at Atlantic Packaging’s plant for further testing.

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, 2004, the Company settled various accounts owing by issuance of common stock.

Risk Factors

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

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

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

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

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

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

7. Issuance of Additional Shares. At June 30, 2004, there were 169,564,976 shares of common stock or 84.7 % of the 200,000,000 authorized shares of Common Stock of the Company outstanding and 30,435,024 shares remain unissued. The Board of Directors has the power to issue such shares, subject to shareholder approval, in some instances. Although the Company presently has no commitments, contracts, or intentions to issue any additional shares to other persons, other than in the exercise of options, the Company may in the future attempt to issue shares to acquire products, equipment, or properties, or for other corporate purposes. Any additional issuance by the Company, from its authorized but unissued shares, would have the effect of diluting the interest of existing shareholders.

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

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

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

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

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

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

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

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

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

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 2005.

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 square feet covered area for the KDS equipment. The sales office is sub-leased from Aquadine Industries Ltd under a two year sub-lease agreement. The monthly rental is US$700 which has been pre-paid until June 2005.

On June 30, 2004, the Company owned four KDS machines. One machine is being stored in Northern Ireland. Two machines are located at Vancouver Blower as inventory. One machine is located at the Delta demonstrations center and is being used as a test and demonstration machine. A fifth machine is owned by AGES and is housed at Atlantic Packaging Ltd in Whitby, Ontario, Canada where it is being used for testing and for demonstrations. Subsequent to the date of these statements, in August 2004, one of the machines in inventory was sold to our Malaysian subsidiary for cash. Two of the other machines are destined to be installed in Princeton to process zeolite for Halliburton, leaving one machine remaining in inventory. Two new machines will be built this quarter, of which one is sold and will go to England under our contract with WRAP.

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

Interface Consultants Ltd. commenced an action in the Supreme Court of BC in July 2004 to collect CDN$28,555 they claim is owed for services they rendered to the Company in 1998. The Company denies any liability and counter-claims for costs stating that the services were never performed and that the action is frivolous.

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 2004.

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:

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Quarter ended		High	Low
2002	September 30 December 31	0.085 0.05	0.06 0.085

2003	March 31 June 30 September 30 December 31	0.075 0.07 0.06 0.07	0.051 0.034 0.04 0.04

2004	March 31 June 30	0.06 0.11	0.04 0.05

The Company has no outstanding options or warrants, or other securities convertible into, common equity other than as disclosed herein. Of the 169,564,976 shares of common stock outstanding as of June 30, 2004, all are free trading with the exception of 13,084,400 shares which may only be resold in compliance with Rule 144 of the Securities Act of 1933.

At September 2, 2004, the Company had 5,674 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.

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

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

The 2003 Incentive Stock Option Plan provides for the issuance of stock options for services rendered to us. The board of directors is vested with the power to determine the terms and conditions of the options. The Plan includes 10,000,000 shares. To date options to purchase 10,000,000 shares have been granted and 7,055,600 options have been exercised, leaving no shares available for issuance under the Plan.

The 2004 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 9,918,600 shares have been granted, leaving 81,400 shares available for issuance under the Plan.

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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