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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION  
Washington, DC 20549

FORM 10-QSB



|[X]   | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities  Exchange Act of 1934
|----- | ----------------------------------------------------------------------------------------
|      | FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2004                                           
|OR    |                                                                                         
|[   ] | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|      | For the transition period from ________ to ________                                     

Commission File Number:   000-27094

FIRST AMERICAN SCIENTIFIC CORP.



|NEVADA                                                         | 88-0338315                          
|-------------------------------------------------------------- | ------------------------------------
|(State of other jurisdiction of incorporation or organization) | (IRS Employer Identification Number)

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

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes [X]   No [   ]

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PART I.

ITEM 1.    FINANCIAL STATEMENTS



FIRST AMERICAN SCIENTIFIC CORP.



TABLE OF CONTENTS





|INDEPENDENT ACCOUNTANT'S REVIEW REPORT     | F-1                                                                  
|------------------------------------------ | ---------------------------------------------------------------------
|                                          
|FINANCIAL STATEMENTS                      
|                                           | Consolidated Balance Sheets                                          
|                                           | Consolidated Statements of Operations and Comprehensive Income (Loss)
|                                           | Consolidated Statement of Stockholders' Equity                       
|                                           | Consolidated Statements of Cash Flows                                
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | F-6                                                                  





















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Board of Directors
First American Scientific Corp.
Vancouver, B.C.

INDEPENDENT ACCOUNTANT'S REVIEW REPORT

We have reviewed the accompanying consolidated balance sheet of First American Scientific Corp. as of March 31, 2004 and the related consolidated statements of operations and comprehensive income (loss), stockholders' equity, and cash flows for the six months ended March 31, 2004 and 2003.  All information included in these consolidated financial statements is the representation of the management of First American Scientific Corp.

We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants.  A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters.  It is substantially less in scope than an audit in accordance with auditing standards generally accepted in the United States of America, the objective of which is the expression of an opinion regarding the financial statements taken as a whole.  Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with accounting principles generally accepted in the United States of America.

The financial statements for the year ended June 30, 2003 were audited by us and we expressed an unqualified opinion on them in our report dated July 11, 2003, but we have not performed any auditing procedures since that date.

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplates continuation of the Company as a going concern.  As discussed in Note 2, the Company has an accumulated deficit of 10,743,982 at March 31, 2004 and has limited sales volume.  These factors raise substantial doubt about the Company's ability to continue as a going concern.  Management's plans regarding those matters also 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
April 27, 2004

Members of Private Companies Practice Section, SEC Practice Section, AICPA and WSCPA
Bank of America Financial Center * 601 W. Riverside, Suite 1940 * Spokane, WA 99201
Phone (509) 838-5111 * Fax (509) 838-5114 * www.williams-webster.com

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|FIRST AMERICAN SCIENTIFIC CORP.           
|------------------------------------------
|CONSOLIDATED BALANCE SHEETS               
|                                          
|                                          
|ASSETS                                    
|CURRENT ASSETS                            
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|PROPERTY AND EQUIPMENT                    
|                                          
|                                          
|                                          
|OTHER ASSETS                              
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|TOTAL ASSETS                              
|LIABILITIES AND STOCKHOLDERS' EQUITY      
|CURRENT LIABILITIES                       
|                                          
|                                          
|                                          
|LONG-TERM LIABILITIES                     
|                                          
|                                          
|COMMITMENTS AND CONTINGENCIES             
|MINORITY INTEREST IN SUBSIDIARY           
|STOCKHOLDERS' EQUITY                      
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

See accompanying notes and accountant's review report.
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|FIRST AMERICAN SCIENTIFIC CORP.                                      
|---------------------------------------------------------------------
|CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|REVENUES                                                             
|                                                                     
|COST OF SALES                                                        
|GROSS PROFIT                                                         
|OPERATING EXPENSES                                                   
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|OTHER INCOME (EXPENSE)                                               
|                                                                     
|                                                                     
|INCOME (LOSS) FROM CONTINUING                                        
|OPERATIONS                                                           
|LOSS FROM DISTRIBUTED SUBSIDIARY                                     
|INCOME (LOSS) BEFORE INCOME TAXES                                    
|INCOME TAXES                                                         
|NET INCOME (LOSS) BEFORE                                             
|ALLOCATION TO MINORITY INTEREST                                      
|ALLOCATION OF LOSS TO MINORITY                                       
|INTEREST                                                             
|NET INCOME (LOSS)                                                    
|OTHER COMPREHENSIVE INCOME (LOSS)                                    
|                                                                     
|COMPREHENSIVE NET INCOME (LOSS)                                      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                     

See accompanying notes and accountant's review report.
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|FIRST AMERICAN SCIENTIFIC CORP.               
|----------------------------------------------
|CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
|                                              
|                                              
|                                              
|                                              
|                                              
|Balance, June 30, 2002                        
|Distribution to shareholders of               
|VideoMovieHouse.com Inc.,                     
|Options issued for compensation               
|Common stock issued for cash at $0.06         
|per share                                     
|Common stock issued for consulting            
|services at $0.06 per share                   
|Common stock issued as compensation           
|at $0.06 per share                            
|Common stock issued for legal fees at         
|$0.05 per share                               
|Common stock issued for professional          
|services at $0.05 per share                   
|Common stock issued for prepaid rent          
|at $0.05 per share                            
|Common stock issued for prepaid lease         
|at $0.06 per share                            
|Common stock issued for debt at $0.05         
|per share                                     
|Foreign currency translation  gain            
|Net loss for the year ended                   
|June 30, 2003                                 
|Balance, June 30, 2003                        
|Common stock issued for cash at $0.04         
|per share                                     
|Common stock issued for services at           
|$0.03 per share                               
|Common stock issued for services at           
|$0.048 per share                              
|Common stock issued for services at           
|$0.05 per share                               
|Common stock issued as compensation           
|at $0.05 per share                            
|Common stock issued for rent expense          
|at $0.05 per share                            
|Common stock issued in payment of             
|financing expense at $0.05 per share          
|Options issued for expenses,                  
|compensation & consulting                     
|Foreign currency translation loss             
|Net loss for the nine months ended            
|March 31, 2004 (unaudited)                    
|Balance, March 31, 2004 (unaudited)           

See accompanying notes and accountant's review report.
F-4



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|FIRST AMERICAN SCIENTIFIC CORP.                   
|--------------------------------------------------
|CONSOLIDATED STATEMENTS OF CASH FLOWS             
|                                                  
|                                                  
|                                                  
|                                                  
|CASH FLOWS PROVIDED (USED) IN OPERATING ACTIVITIES
|                                                  
|                                                  
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|                                                  
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|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|Net cash (used) in operating activities           
|CASH FLOWS PROVIDED (USED) IN INVESTING ACTIVITIES
|                                                  
|                                                  
|                                                  
|                                                  
|Net cash provided by investing activities         
|CASH FLOWS PROVIDED (USED) IN FINANCING ACTIVITIES
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|Net cash provided (used) by financing activities  
|NET INCREASE (DECREASE) IN CASH                   
|Other comprehensive income (loss)                 
|CASH - Beginning of year                          
|CASH - End of period                              
|SUPPLEMENTAL CASHFLOW DISCLOSURES:                
|                                                  
|                                                  
|NON-CASH TRANSACTIONS:                            
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  

See accompanying notes and accountant's review report.
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|FIRST AMERICAN SCIENTIFIC CORP.           
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2004                            

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.

During the period ended March 31, 2004, the Company entered into an agreement with Zeo-Tech Enviro Corp, ("ZEO") United Zeolite Products Ltd. ("United") and CZC Zeolite Corporation Ltd. ("CZC")  to restructure United Zeolite Products Ltd. so that FASC, CZC and ZEO each own one-third of United.  See Note 10.

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 had management control of AGES.  William E. Barber and Hydro Quebec Capitech Inc. own 60% of AGES.  The Company reported financial information from AGES on a consolidated basis due to the control feature in the agreement.  AGES maintains a facility in Montreal, Canada.  During the three months ended March 31, 2004 the Company sold the use of its technology and a KDS machine to AGES thereby giving up control in AGES.  Accordingly, the Company will report in future financial statements its investment in AGES using the equity method.  See Note 10.

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 FASC and, when feasible, to operate a profitable production facility in Canada.

The Company's year-end is June 30th.







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|FIRST AMERICAN SCIENTIFIC CORP.           
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2004                            

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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.

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 $10,743,982 through March 31, 2004 and has limited cash resources.  The Company recorded increased sales during the nine months ended March 31, 2004, but generated a net loss of $553,656.  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 with AGES.

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|FIRST AMERICAN SCIENTIFIC CORP.           
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2004                            

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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.

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 March 31, 2004, 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 for FASC is the same as basic net loss per share, as the inclusion of common stock equivalents would be antidilutive.



F-8

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|FIRST AMERICAN SCIENTIFIC CORP.           
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2004                            

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Principles of Consolidation
Historically, has owned 40% of the outstanding shares of AGES, as well ownership of all AGES technology.  AGES's license to use the technology has been conditional upon it meeting certain conditions. Because, as of December 31, 2003, these conditions had not been met, FASC was deemed to be in a position of control and AGES was treated as a majority owned subsidiary of FASC with its financial statements consolidated with FASC.

During the three months ended March 31, 2004, the agreement between FASC and AGES was renegotiated.  Under the new agreement, AGES purchased the aforementioned technology and a KDS machine for $100,000.  As a consequence of this transaction, it was determined that FASC no longer controlled AGES and that FASC will in this and future financial statements report its investment in AGES using the equity method.  Its investment in AGES has been off set against net losses generated by AGES.  See Note 10.

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 December 31, 2003, minority shareholders held a 60% interest in AGES.  The related minority interest is shown on the accompanying consolidated balance sheet at December 31, 2003 when FASC had 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 $3,403 at March 31, 2004 is not insured.

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|FIRST AMERICAN SCIENTIFIC CORP.           
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2004                            

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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 Statement of Financial Accounting Standards 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. 109 to allow recognition of such an asset.  At March 31, 2004, the Company had net deferred tax assets of approximately $2,200,000 principally arising from net operating loss carryforwards, at an expected rate of 34%, 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 March 31, 2004. The prior period has been restated to reflect a change in management's extimate.  The change in the deferred tax asset valuation allowance from June 30, 2003 to March 31, 2004 was $24,000.

The significant components of the deferred tax asset at March 31, 2004 and June 30, 2003 were as follows:



|                                                 |                                  | March 31,   |         | June 30,   
|------------------------------------------------ | -------------------------------- | ----------- | ------- | -----------
|                                                 |                                  | 2004        |         | 2003       
|Net operating loss carryforward                  | $                                | 6,600,000   | $       | 6,400,000  
|Stock options issued under a non-qualified plan: |                                  |             |         |            
|                                                 | For the year ended June 30, 2004 | $           | 112,300 |            
|                                                 | For the year ended June 30, 2003 |             | -       | $          
|                                                 |                                  |             |         |            
|Deferred tax asset                               | $                                | 2,200,000   | $       | 2,176,000  
|Deferred tax asset valuation allowance           | $                                | (2,200,000) | $       | (2,176,000)

At March 31, 2004, the Company has net operating loss carryforwards of approximately $6,600,000, which expire in the years 2015 through 2023.  The Company recognized approximately $112,300 of expenses from issuance of stock options for services in fiscal 2004, which are not deductible for tax purposes and are not included in the above calculation of deferred tax assets.  There was approximately $9,100 of expenses recognized from the issuance of stock options for the nine months ended March 31, 2004.



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|FIRST AMERICAN SCIENTIFIC CORP.           
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2004                            

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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, by Canadian law, for paid time off equal to four percent of their wages.  At March 31, 2004, the accrued amount is approximately $14,300.

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, 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 March 31, 2004, accounts receivable were $157,344 with no allowance for doubtful accounts.

The Company's policy is to accrue interest on trade receivables 30 days after invoice date.  A receivable is considered past due if payments have not been received by the Company for 90 days.  Every effort is made to collect on the accounts or to take possession of the equipment.

During the nine months ended March 31, 2004, the Company had $367,327 in revenue from the sale of two machines and related services.

F-11

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|FIRST AMERICAN SCIENTIFIC CORP.           
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2004                            

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Accounts Receivable (continued)
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 by June 30, 2003.  A receivable from one sale recorded in the year ended June 30, 2002 has been fully reserved 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 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.  Subsequent to December 31, 2003, the Company received cash reimbursement of $82,840 for the year ended June 30, 2002.

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:



|                              |   | March 31, 
2004 |   | June 30, 
2003
|----------------------------- | - | --------------- | - | --------------
|                              |   |                 |   |               
|Finished goods - KDS machines | $ | 276,593         | $ | 190,422       
|                              | $ | 276,593         | $ | 190,442       





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|FIRST AMERICAN SCIENTIFIC CORP.           
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2004                            

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Inventory (continued)
During the year ended June 30, 2003, the Company determined that the value of the 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.  There were no further impairments for the nine months ended March 31, 2004.

During the three months ended March 31, 2004, the Company reclassified two KDS machines previously held as property and equipment to inventory.  At March 31, 2004, the Company has four KDS machines held as inventory.

Recent 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 determined that there was no impact to 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 has not impacted the financial position or results of operations of the Company.

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.



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|FIRST AMERICAN SCIENTIFIC CORP.           
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2004                            

NOTE 3 - PROPERTY AND EQUIPMENT

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.

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 VMH, which was spun off in 2002, are included in discontinued operations.

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:



|                                       |   | March 31, 2004 |   | June 30, 2003
|-------------------------------------- | - | -------------- | - | -------------
|Kinetic disintegration equipment (KDS) | $ | 81,993         | $ | 240,865      
|Plant assets and equipment             |   | 30,425         |   | 24,359       
|Office equipment                       |   | 32,385         |   | 41,249       
|Total assets                           |   | 144,802        |   | 306,473      
|Less accumulated depreciation          |   | (78,738)       |   | (145,867)    
|                                       | $ | 66,064         | $ | 160,606      

Depreciation expense for the nine months ended March 31, 2004 and the year ended June 30, 2003 was $37,768 and $55,572, 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



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|FIRST AMERICAN SCIENTIFIC CORP.           
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2004                            

NOTE 3 - PROPERTY AND EQUIPMENT (Continued)

values 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.

In the second quarter of 2003, the Company's management changed the estimated value of three machines to a net realizable value of $50,000 each based on the final physical assessment of the machines upon arrival in Vancouver, British Columbia.  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 was 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 recognized an impairment expense at June 30, 2003 of $152,732.

NOTE 4 - TECHNOLOGY RIGHTS AND PATENTS

Accounting Pronouncements
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 the nine months ended March 31, 2004 or the fiscal year ended June 30, 2003, as the Company does not have recorded assets with indeterminate lives.

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 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,



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|FIRST AMERICAN SCIENTIFIC CORP.           
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2004                            

NOTE 4 - TECHNOLOGY RIGHTS AND PATENTS (Continued)

Technology Licenses (continued)
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.

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:



|                                 |   | March 31, 2004 |   | June 30, 2003
|-------------------------------- | - | -------------- | - | -------------
|Technology licenses and rights   | $ | 1,905,000      | $ | 1,905,000    
|Patents and manufacturing rights |   | 266,224        |   | 266,224      
|                                 |   | 2,171,224      |   | 2,171,224    
|Less accumulated amortization    |   | (948,765)      |   | (846,597)    
|                                 | $ | 1,222,459      | $ | 1,324,627    

Amortization expense for the nine months ended March 31, 2004 and the year ended June 30, 2003 was $102,168 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.



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|FIRST AMERICAN SCIENTIFIC CORP.           
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2004                            

NOTE 4 - TECHNOLOGY RIGHTS AND PATENTS (Continued)

The following is a summary of the costs of patents approved at the nine months ended March 31, 2004 and 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    
|Balance, June 30, 2003  |   | 266,224 |   | (94,340)                 |   | 171,884   
|Fiscal 2004 Activity    |   | -       |   | (8,874)                  |   | (8,874)   
|                        |   |         |   |                          |   |           
|Balance, March 31, 2004 | $ | 266,224 | $ | (103,214)                | $ | 163,010   

NOTE 5 - COMMON STOCK

Accounting Pronouncements
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.

During the nine months ended March 31, 2004, the Company issued stock upon the exercise of options as follows: 5,865,000 shares of common stock as payment for services with a fair market value of $212,005; 5,216,600 shares of common stock for compensation with a fair market value of $212,470; 340,000 shares of common stock in payment of rent with a fair market value of $15,000; 300,000 shares of common stock in payment of financing expenses of $15,000 and 800,000 share of common stock for cash of $46,000.

During the year ended June 30, 2003, the Company issued stock upon the exercise of options as follows: 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



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|FIRST AMERICAN SCIENTIFIC CORP.           
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2004                            

NOTE 5 - COMMON STOCK (Continued)

Accounting Pronouncements (continued)
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.

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.

NOTE 6 - STOCK OPTIONS

The Company's board of directors approved the First American Scientific Corp. 2004 Non-qualified 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 $0.05 to persons employed or associated with the Company.  This plan was not approved by the Company's security holders.

During the nine months ended March 31, 2004, the Company granted 15,468,600 options of which 12,518,600 were immediately exercised. The remaining 2,950,000 stock options were granted 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.

The fair value of each option granted during the period ending March 31, 2004 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 49%, expected life of 1 to 5 years, and no expected dividends.  The value of these options granted during the year ended March 31, 2004 in the amount of $33,600 was included in operating expense in the financial statements.

The Company's board of directors approved the First American Scientific Corp. 2003 Non-qualified 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.





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|FIRST AMERICAN SCIENTIFIC CORP.           
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2004                            

NOTE 6 - STOCK OPTIONS (Continued)

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 Company's 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:



|                          |  | Number of        |  |                     |  |                     
|------------------------- |  | ---------------- |  | ------------------- |  | --------------------
|                          |  | securities to be |  |                     |  | Number of securities
|                          |  | issued upon      |  |                     |  | remaining available 
|Equity compensation plans |  | exercise of      |  | Weighted-average    |  | for future issuance 
|not approved by security  |  | outstanding      |  | exercise price of   |  | under equity        
|holders                   |  | options          |  | outstanding options |  | compensation plans  
|2003 Stock Option Plan    |  | 2,559,000        |  | $0.05               |  | -                   
|                          |  |                  |  |                     |  |                     
|2004 Stock Option Plan    |  | 3,700,000        |  | $0.05               |  | 585,997             
|                          |  |                  |  |                     |  |                     
|Total                     |  | 6,259,000        |  |                     |  | 585,997             



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|FIRST AMERICAN SCIENTIFIC CORP.           
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2004                            

NOTE 6 - STOCK OPTIONS (Continued)

The following is a summary of stock option activity:



|                                               |   |                  |   | Weighted      
|---------------------------------------------- | - | ---------------- | - | --------------
|                                               |   |                  |   | Average       
|                                               |   | Number of Shares |   | Exercise Price
|                                               |   |                  |   |               
|Option outstanding at July 1, 2002             |   | 2,650,000        | $ | 0.12          
|Cancelled                                      |   | (2,037,891)      |   | 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          
|                                               |   |                  |   |               
|Options outstanding at July 1, 2003            |   | 3,309,000        | $ | 0.05          
|Granted                                        |   | 15,468,600       |   | 0.05          
|Exercised                                      |   | (12,518,600)     |   | 0.05          
|Expired                                        |   | -                |   | -             
|Options outstanding and exercisable at         |   |                  |   |               
|March 31, 2004                                 |   | 6,259,000        | $ | 0.05          
|                                               |   |                  |   |               
|Weighted average fair value of options granted |   |                  |   |               
|during the nine months ended March 31, 2004    | $ | 0.05            

NOTE 7 - RELATED PARTIES

At March 31, 2004, the Company owes three of its shareholders $90,000 for accrued wages and $67,670 for loans made to the Company.

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.  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.

An officer of the Company was the former sole shareholder of VMH, a firm which was purchased for $250,000 in 2000 and became a wholly owned subsidiary of FASC.  In August 2002, the Company completed a spin-off of VMH, which then became a separate reporting entity.  See Note 11.



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|FIRST AMERICAN SCIENTIFIC CORP.           
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2004                            

NOTE 8 - NOTES PAYABLE

During the year ended June 30, 2003, the Company repaid $51,415 of notes from a private investor by issuing $45,000 of its common stock and repaying the balance 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.

NOTE 10 - JOINT VENTURES

United Zeolite Products Ltd.
During the period ended March 31, 2004, the Company entered into an agreement with Zeo-Tech Enviro Corp, ("ZEO") United Zeolite Products Ltd. ("United") and CZC Zeolite Corporation Ltd. ("CZC")  to restructure United Zeolite Products Ltd. so that FASC, CZC and ZEO each own one-third of United.  FASC will deliver two KDS machines to United on a five year lease to be used to micronize zeolite.  The lease is for five years with a lump sum payment of approximately $375,000 due at the end of the lease.  United will pay FASC a royalty of $6 for each ton of zeolite processed.  United has the right to terminate the lease during the first three months of the term.

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 costs incurred for equipment improvements and upgrades for the processing of gold-bearing quartz mineral rock found on the Valentine Mountain mine site.







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|FIRST AMERICAN SCIENTIFIC CORP.           
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2004                            

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 AGES was incorporated to manage the agreement.  Under the original joint venture agreement, FASC retained ownership of all existing KDS technology and all new AGES developed intellectual property which was to be licensed to AGES for use in its designated territories.  The license agreement was 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 joint venture agreement with AGES for one additional year, until February 21, 2004.

In February 2004, the Company finalized its agreement with AGES by granting AGES exclusive rights to the KDS technology for 20 years for applications in the pulp and paper industry in North America and the European Economic Community ("EEC") at which point FASC relinquished management control over AGES.  AGES agreed to purchase the existing test machine in its possession for $100,000 to be paid in four equal installments payable upon closing of the first four sales made by AGES.  In additions, AGES has agreed to pay a minimum of $500,000 in royalties at $25,000 per machine sold, a minimum of one per year, to maintain the exclusive rights in the territory.   During the quarter ended March 31, 2004, FASC has changed its accounting for AGES to the equity method.  The balance of its investment in AGES has been netted with its share of accumulated losses from AGES resulting in a zero balance.

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

Accounting Pronouncements
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









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|FIRST AMERICAN SCIENTIFIC CORP.           
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2004                            

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

Accounting Pronouncements (continued)
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.

On June 11, 2001, the Company's board of directors recommended and approved a motion that the Company would spin off its subsidiary, 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.

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.

The assets 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









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|FIRST AMERICAN SCIENTIFIC CORP.           
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2004                            

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

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



|Accounts payable and accrued expenses | $                 | 107,183
|------------------------------------- | ----------------- | -------
|Accounts payable, related parties     |                   | 118,517
|                                      |                   |        
|                                      | Total Liabilities | $      
|                                      |                   |        
|Assets in excess of liabilities       | $                 | 191,501

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

In accordance with generally accepted accounting principles, the financial results for VMH are reported as discontinued operations or "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 totaled $417,201. The net assets distributed were $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.



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ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS 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, the UK, Europe, Mexico, Australia, and New Zealand. In addition to the core device patent, 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 shortly. One other patent application for drying and recovery of fuel and clay from biomass using our equipment has been submitted and is pending status. A further application for priority has been made pursuant to the Patent Cooperation Treaty (PCT) and the Paris Convention for the Protection of Industrial Property  in Brazil, China, Europe, Indonesia, India, Japan, Korea, Malaysia, Philippines, Poland, Singapore and South Africa.

On March 31, 2004 we had current assets of  $435,695 and current liabilities of $225,341 compared to December 31, 2003 when we had current assets $258,228 and current liabilities of $181,776  and on June 30, 2003 when we had current assets of $306,696 and current liabilities of $178,315.  Our working capital ratio on March 31, 2004 was 1.93 :1 up from 1.42 : 1  on December 2003  and 1.72 : 1 on June 30, 2003.

We believe 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.  This assumption is supported  as we have already sold 2 machines so far this year and have received a deposit on the third sale which is expected to close next quarter.

Last year our joint venture partner, AGES, received an equity investment from HydroQuebec Capitech Inc. for research in processing biomass and pulp sludge. FASC did not receive any direct cash proceeds from this equity investment, however, this investment allowed AGES to continue its research and FASC retained ownership of all improvements to the technology. This year AGES finalized their research and entered the marketing phase. In February 2004 AGES was granted a long term 20 year license to use our KDS technology in North America and Europe in the pulp & paper industry.  Several sales are expected this year.

No new progress has been made by our joint venture with Beaupre Explorations Ltd and we are advised that we may encounter further delays as Beaupre works towards preparing its mine site to install the KDS equipment.  We have, however, made significant progress on extending beater bar life as a result of our research in Canada at the University of BC funded by the National Research Council of Canada.  In the meantime, the machine designated for Beaupre has been booked back into inventory.





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During the period ended March 31, 2004, the Company entered into joint venture agreement with Zeo-Tech Enviro Corp, and CZC Zeolite Corporation Ltd. to own  and operate a zeolite processing plant in Princeton, BC, Canada. The new company,  United Zeolite Products Ltd, owned equally by the three parties has signed a $5,000,000 Cdn contract to supply micronized zeolite to Halliburton Group Canada.  Under the agreement FASC will receive income from royalties, equipment leasing and its share of operating profits. FASC expects to receive approximately  $100,000 to 150,000 US per annum from this project commencing in the second quarter of next year.

Our auditors have issued a going concern statement because we do not have sufficient cash flow for us to maintain our operations 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 operations should sufficient 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 and we must continue to achieve sales in order to  operate at current levels. To continue operations at the current levels for the next year, the Company will need approximately $1,000,000 in additional funds. Management's expectation is that those funds will come from a combination of government grants, the  collection of accounts receivable, sales of equipment and the Company's  share of operating profits from joint ventures.  The balance, if any, will be provided by loans from officers or the issuances of stock to accredited investors for cash.

As of March 31, 2004 there were 165,164,476 shares issued and outstanding.

Results of Operations - Quarter ending March 31, 2004 compared to quarter ending March 31, 2003

Revenue for the quarter ended March 31, 2004  was $292,464 compared to $7,941  for the same period last year. This quarter's revenue included fees for processing and sampling and machine sales. Other income this quarter included a grant received in the amount of $83,581 from the US Dept of Energy.

Net income for this quarter was $155,735 compared to a loss of $478,258 for the quarter ended March 31, 2003. The net income reported this quarter resulted from changes to the accounting treatment of our investment in AGES Operating losses could resume unless at least eight machines are sold every twelve months.  We have sold two machines this quarter and have a deposit for another for next quarter, so we are on target to meet our goal of profitability by next year. Once royalties and profit sharing from our joint ventures materialize, we should be able to revise our equipment sales requirements.

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 zeolite, soft clays and biomass represent the highest and best use for our technology and the most probable to generate additional sales. AGES research has produced good results in processing biomass and pulp sludge. Our equipment has been installed at a pulp mill in Ontario, Canada for live on-line trials. Based on the trials, the pulp mill's management has indicated they may purchase a large production scale machine, however, to date we have no firm agreement with the pulp mill to purchase our equipment.





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Research and testing of animal waste, food waste, sewage, mineral rock, alluvial clay, zeolite, and glass continues. We have achieved economically viable production levels for several applications and continue to pursue opportunities with suitable candidates interested in purchasing our equipment.

Last year, we were awarded a research grant by the US Department of Energy, the "Small Business Technology Transfer (STTR) - Phase I Award" The agreed funding amount of $84,000 was used to further our work improving the drying and grinding efficiencies of our KDS equipment. The work is now complete and we have applied for an additional Phase II grant  for $750,000 USD in concert with Oak Ridge National Laboratories.

Last year, we signed an 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 March 2004, we commenced negotiations with a potential joint venture partner in Japan which are underway.  In addition, we have identified other partners and opportunities in Asia which we are pursuing.

We continue to believe that our technology is unique and has potential in the waste management industry. We also have proven its value as an EPA designated "pesticide device" and that our process is also capable of killing most pathogens and coliforms contained in animal wastes including the avian flu virus.  We are in discussions with, and running tests for the poultry industry  in efforts to find a solution to that problem. Also, we continue to nurture  relationships with suppliers of complimentary equipment, with the view to offering our equipment as part of an integrated turnkey system designed to provide solutions to a specific need. We hope this will expand our exposure to a wider market and generate sales.

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 offices and rent a sales offices and demonstration facility in Delta, British Columbia. AGES rents office space in Montreal, Quebec.

Trends

Sales efforts are ongoing with several major projects in the final stage of negotiation,. Based upon the sale of eight machines over a one year period, we can expect $2,000,000 sales in the next twelve months plus approximately $100,000 to $150,000 annually as our share of the zeo-lite processing operation.





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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. At September 30, 2003, the Company determined that there was no impact to 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.

Item 3. CONTROLS AND PROCEDURES

Quarterly evaluation of our disclosure controls and internal controls

Within the 90 days prior to the date of this report on Form 10-KSB, we evaluated the effectiveness of the design and operation of our "disclosure controls and procedures" (Disclosure Controls), and our "internal controls and procedures for financial reporting" (Internal Controls). This evaluation (the Controls Evaluation) was done under the supervision and with the participation of our management, including our chief executive officer (CEO) and chief financial officer (CFO). Our CEO performs the same functions as a principal executive officer and our CFO performs the same functions as a principal financial officer. Rules adopted by the SEC require that in this section of the quarterly report we present the conclusions of our CEO and our CFO about the effectiveness of our Disclosure Controls and Internal Controls based on and as of the date of the Controls Evaluation.





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Disclosure controls and internal controls

Disclosure Controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 (Exchange Act), such as this quarterly report, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's (SEC) rules and forms. Disclosure Controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. Internal Controls are procedures which are designed with the objective of providing reasonable assurance that (1) our transactions are properly authorized; (2) our assets are safeguarded against unauthorized or improper use; and (3) our transactions are properly recorded and reported, all to permit the preparation of our financial statements in conformity with generally accepted accounting principles.

Limitations on the Effectiveness of controls

Our management, including our CEO and CFO, confirm that the control systems are at the "reasonable assurance" level, however, management does not expect that our Disclosure Controls or our Internal Controls will prevent all error and all fraud as a control system. No matter how well conceived and operated, they cannot provide absolute assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. However, upon discovery that the controls have become inadequate, they will be changed.

Scope of the Controls Evaluation

Our CEO/CFO evaluation of our Disclosure Controls and our Internal Controls included a review of the controls' objectives and design, the controls' implementation by us and the effect of the controls on the information generated for use in this quarterly report. In the course of the Controls Evaluation, we sought to identify data errors, controls problems or acts of fraud and to confirm that appropriate corrective action, including process improvements, were being undertaken. This type of evaluation will be done on a quarterly basis so that the conclusions concerning controls effectiveness can be reported in our Quarterly Reports on Form 10-QSB and Annual Report on Form 10-KSB. The overall goals of these various evaluation activities are to monitor our Disclosure Controls and our Internal Controls and to make modifications as necessary; our intent in this regard is that the Disclosure Controls and the Internal Controls will be maintained as dynamic systems that change (including with improvements and corrections) as conditions warrant.





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Among other matters, we sought in our evaluation to determine whether there were any "significant deficiencies" or "material weaknesses" in our Internal Controls, or whether we had identified any acts of fraud involving personnel who have a significant role in our Internal Controls. This information was important both for the Controls Evaluation generally and because items 5 and 6 in the Section 302 Certifications of the CEO and CFO require that the CEO and CFO disclose that information to our Board of Directors Audit Committee and to our independent auditors and to report on related matters in this section of the quarterly report. In the professional auditing literature, "significant deficiencies" are referred to as "reportable conditions"; these are control issues that could have a significant adverse effect on the ability to record, process, summarize and report financial data in the financial statements. A "material weakness" is defined in the auditing literature as a particularly serious reportable condition where the internal control does not reduce to a relatively low level the risk that misstatements caused by error or fraud may occur in amounts that would be material in relation to the financial statements and not be detected within a timely period by employees in the normal course of performing their assigned functions. We also sought to deal with other controls matters in the Controls Evaluation, and in each case if a problem was identified, we considered what revision, improvement and/or correction to make in accord with our on-going procedures.

In accord with SEC requirements, our CEO and CFO note that, since the date of the Controls Evaluation to the date of this Quarterly Report, there have been no significant changes in Internal Controls or in other factors that could significantly affect Internal Controls, including any corrective actions with regard to significant deficiencies and material weaknesses.

Conclusions

Based upon the Controls Evaluation, our CEO and CFO have concluded that, our disclosure controls are effective to ensure that material information relating to us and our subsidiary is made known to management, including our CEO and CFO, particularly during the period when our periodic reports are being prepared. Our internal controls are effective to provide reasonable assurance that our financial statements are fairly presented in conformity with generally accepted accounting principles.

PART II.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K



|(a) | Exhibit No. | Document                                                                                                                                                      
|--- | ----------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | 31.1        | Certification of Principal Executive Officer pursuant to Rule 13a-15(a) and Rule 15d-15(a), promulgated under the Securities Exchange Act of 1934, as amended 
|    |             |                                                                                                                                                               
|    | 31.2        | Certification of Principal Financial Officer pursuant to Rule 13a-15(a) and Rule 15d-15(a), promulgated under the Securities 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)              













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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on this 13th day of May, 2004.



| | FIRST AMERICAN SCIENTIFIC CORP.
(Registrant)
| | --------------------------------------------
| |                                             
| | By:                                         
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| |                                             
| | By:                                         
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