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UNITED STATES SECURITIES AND EXCHANGE COMMISSION  
Washington, DC 20549



FORM 10QSB

|[X] | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities  Exchange Act of 1934
|--- | ----------------------------------------------------------------------------------------
|    | FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001                                       
|    | 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 0-27094



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



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

409 Granville Street
Suite 1003
Vancouver, British Columbia V6C 1V5(Address of principal executive offices)



(604) 681-8656 (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 [ ]

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of September 30, 2001: 132,433,018



---



Board of Directors 
First American Scientific Corp.
Vancouver, BC



ACCOUNTANT



We have reviewed the accompanying consolidated balance sheet of First American Scientific Corp. as of September 30, 2001 and 2000 and the related consolidated statements of operations, stockholders



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, 2001 were audited by us and we expressed an unqualified opinion on them in our report dated September 14, 2000, but we have not performed any auditing procedures since that date.



The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplates continuation of the Company as a going concern.  As discussed in Note 2, realization of a major portion of the assets is dependent upon the Company



/s/ Williams & Webster, P.S.
Williams & Webster, P.S.Certified Public AccountantsSpokane, Washington
November 9, 2001

F-1



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|FIRST AMERICAN SCIENTIFIC CORP.
CONSOLIDATED BALANCE SHEETS
|-----------------------------------------------------------



|                                                                                                                                      |                                                        | September, 30 2001
(Unaudited) |                              | June 30, 2001             
|------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------ | ------------------------------ | ---------------------------- | --------------------------
|ASSETS                                                                                                                                |                                                        |                                |                              |                           
|CURRENT ASSETS                                                                                                                        |                                                        |                                |                              |                           
|                                                                                                                                      | Cash                                                   | $                              | 7,996                        |                           
|                                                                                                                                      | Accounts receivable                                    |                                | 37,348                       |                           
|                                                                                                                                      | Trust account                                          |                                | -                            |                           
|                                                                                                                                      | Prepaid expenses                                       |                                | -                            |                           
|                                                                                                                                      | Inventory                                              |                                | 308,346 ----------------     |                           
|                                                                                                                                      |                                                        |                                | TOTAL CURRENT ASSETS         |                           
|                                                                                                                                      |                                                        |                                |                              |                           
|PROPERTY AND EQUIPMENT                                                                                                                |                                                        |                                |                              |                           
|                                                                                                                                      | Property and equipment                                 |                                | 1,464,669                    |                           
|                                                                                                                                      | Less:  Accumulated depreciation                        |                                | (408,038) ----------------   |                           
|                                                                                                                                      |                                                        |                                | TOTAL PROPERTY AND EQUIPMENT |                           
|                                                                                                                                      |                                                        |                                |                              |                           
|OTHER ASSETS                                                                                                                          |                                                        |                                |                              |                           
|                                                                                                                                      | Technology rights - net of amortization                |                                | 1,343,764                    |                           
|                                                                                                                                      | Investment in technology                               |                                | 250,000                      |                           
|                                                                                                                                      | Website                                                |                                | 126,021                      |                           
|                                                                                                                                      | Patents and manufacturing rights - net of amortization |                                | 180,729                      |                           
|                                                                                                                                      | Deposits                                               |                                | 11,433 ----------------      |                           
|                                                                                                                                      |                                                        |                                | TOTAL OTHER ASSETS           |                           
|                                                                                                                                      |                                                        |                                |                              |                           
|TOTAL ASSETS                                                                                                                          | $                                                      | 3,322,268 ========             |                              | $                         
|                                                                                                                                      |                                                        |                                |                              |                           
|LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                  |                                                        |                                |                              |                           
|CURRENT LIABILITIES                                                                                                                   |                                                        |                                |                              |                           
|                                                                                                                                      | Accounts payable and accrued expenses                  | $                              | 168,851                      |                           
|                                                                                                                                      | Accounts payable to related party                      |                                | 86,737                       |                           
|                                                                                                                                      | Deposit on sale                                        |                                | 17,500 ----------------      |                           
|                                                                                                                                      |                                                        |                                | TOTAL CURRENT LIABILITIES    |                           
|                                                                                                                                      |                                                        |                                |                              |                           
|COMMITMENTS AND CONTINGENCIES                                                                                                         |                                                        | - ----------------             |                              |                           
|                                                                                                                                      |                                                        |                                |                              |                           
|STOCKHOLDERS' EQUITY                                                                                                                  |                                                        |                                |                              |                           
|Common stock - $.001 par value, 200,000,000 shares authorized;132,433,018 and 130,733,018 shares issued and outstanding, respectively |                                                        | 132,433                        |                              |                           
|Additional paid-in capital                                                                                                            |                                                        | 10,064,834                     |                              |                           
|                                                                                                                                      | Stock options                                          |                                | 194,710                      |                           
|                                                                                                                                      | Stock subscriptions                                    |                                | (37,500)                     |                           
|                                                                                                                                      | Accumulated deficit                                    |                                | (7,301,341)                  |                           
|                                                                                                                                      | Accumulated other comprehensive income (loss)          |                                | (3,956) ----------------     |                           
|                                                                                                                                      |                                                        | TOTAL STOCKHOLDERS' EQUITY     |                              | 3,049,180 ----------------
|                                                                                                                                      |                                                        |                                |                              |                           
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                            | $                                                      | 3,322,268 ========             |                              | $                         
|                                                                                                                                      |                                                        |                                |                              |                           

See accompanying notes and accountant



F-2



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|FIRST AMERICAN SCIENTIFIC CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
|-----------------------------------------------------------------------------------------------------
|                                                                                                     
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|REVENUES                                                                                             
|                                                                                                     
|COST OF SALES                                                                                        
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|GROSS PROFIT                                                                                         
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|OPERATING EXPENSES                                                                                   
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|LOSS BEFORE INCOME TAXES                                                                             
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|INCOME TAXES                                                                                         
|                                                                                                     
|NET LOSS                                                                                             
|                                                                                                     
|OTHER COMPREHENSIVE INCOME (LOSS)                                                                    
|                                                                                                     
|                                                                                                     
|                                                                                                     
|COMPREHENSIVE NET LOSS                                                                               
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     

See accompanying notes and accountant



F-3



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|FIRST AMERICAN SCIENTIFIC CORP.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY                               
|-------------------------------------------------------------------------------------------------------------
|                                                                                                             
|
|Shares                                                                                                       
|                                                                                                             
|Balance, June 30, 2000                                                                                       
|                                                                                                             
|Issuance of options for compensation and consulting services                                                 
|                                                                                                             
|Common stock issued for cash, compensation, services and other expenses at an average of $0.09 per share     
|                                                                                                             
|Common stock issued for cash at an average of  $0.01 per share                                               
|                                                                                                             
|Common stock issued for cash at an average of  $0.05 per share                                               
|                                                                                                             
|Common stock issued for cash and equipment inventory at $0.12 per share                                      
|                                                                                                             
|Common stock issued for website development and video inventory at an average of $0.07 per share             
|                                                                                                             
|Common stock issued from options for cash at $0.03 per share and services of $91,960 and inventory of $12,000
|                                                                                                             
|Common stock issued from options for services at $0.08 per share                                             
|                                                                                                             
|Common stock issued from options for cash at $0.08 per share                                                 
|                                                                                                             
|Common stock issued from options for legal settlement at $0.14 per share                                     
|                                                                                                             
|Common stock issued for commissions at $0.11 per share                                                       
|                                                                                                             
|Foreign currency translation gain (loss)                                                                     
|                                                                                                             
|Net loss for the year ended June 30, 2001                                                                    
|                                                                                                             
|Balance, June 30, 2001                                                                                       
|                                                                                                             
|Common stock issued as compensation at $0.50 per share                                                       
|                                                                                                             
|Common stock issued for cash at $0.05 per share                                                              
|                                                                                                             
|Foreign currency translation gain (loss)                                                                     
|                                                                                                             
|Net loss for the three months ended September 30, 2001 (unaudited)                                           
|                                                                                                             
|                                                                                                             



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



See accompanying notes and accountant

F-5



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FIRST AMERICAN SCIENTIFIC CORP.
Notes to the Consolidated Financial Statements
September 30, 2001



NOTE 1



First American Scientific Corp. (hereinafter Athe Company@) 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 Vancouver, British Columbia, Canada.

The Company, through its wholly owned subsidiary, VMH, has developed an internet sales site known as VMH Videomoviehouse.com Inc.  The site is designed to sell videos, CDs and books and, as technology advancements permit, is expected to become a virtual video rental store.

In September 1999, the Company entered into an agreement with VMH Videomoviehouse.com Inc., (AVMH@) 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 and the technology.



The Company formed 521345 BC Ltd., a wholly owned subsidiary, in 1998 in order to provide research and development services exclusively to First American Scientific Corp. that are eligible for Canadian research and development credits and, when feasible, operate a profitable production facility in Canada.

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

NOTE 2 BSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



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

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.



F-6



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FIRST AMERICAN SCIENTIFIC CORP.
Notes to the Consolidated Financial Statements
September 30, 2001



NOTE 2 BSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Going Concern (continued)

As shown in the accompanying financial statements, the Company has incurred an accumulated deficit of $7,301,341 through September 30, 2001 and has very limited sales volume.  The Company is currently putting technology in place which will, if successful, mitigate these factors which raise substantial doubt about the Company=s ability to continue as a going concern.  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.

Management has established plans designed to increase the sales of the Company=s products.  Management intends to seek additional capital from new equity securities offerings that will provide funds needed to increase liquidity, fund internal growth and fully implement its business plan.

Accounting Method

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



Loss Per Share

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

Derivative Instruments

The Financial Accounting Standards Board issued Statement of Financial Accounting Standards (ASFAS@) No. 133,AAccounting for Derivative Instruments and Hedging Activities,@as amended by SFAS No. 137,AAccounting for Derivative Instruments and Hedging ActivitiesBDeferral of the Effective Date of FASB No. 133@, and SFAS No. 138,AAccounting for Certain Derivative Instruments and Certain Hedging Activities@, which is effective for the Company as of January 1, 2001.  This standard establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities.  It requires 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.

F-7



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FIRST AMERICAN SCIENTIFIC CORP.
Notes to the Consolidated Financial Statements
September 30, 2001NOTE 2BSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)



Derivative Instruments (continued)

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



At September 30, 2001 the Company has not engaged in any transactions that would be considered derivative instruments or hedging activities.



Principles of Consolidation

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.



Cash and Cash Equivalents

For purposes of the 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 commissions and salaries paid in advance that will be amortized as earned.

Fair Value of Financial Instruments

The carrying amounts for cash, accounts receivable, the trust account, 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 account, which is not insured, is a business checking account in United States dollars.

Reclassification

Certain amounts from prior periods have been reclassified to conform with the current period presentation.  This reclassification has resulted in no changes to the Company's accumulated deficit or net losses presented.

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 results of operations.

F-8



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FIRST AMERICAN SCIENTIFIC CORP.
Notes to the Consolidated Financial Statements
September 30, 2001NOTE 2BSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Provision for Taxes

Income taxes are provided based upon the liability method of accounting pursuant to SFAS No. 109 AAccounting for Income Taxes.@Under this approach, deferred income taxes are recorded to reflect the tax consequences on 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 theAmore likely than not@standard imposed by SFAS No. 109 to allow recognition of such an asset.

At September 30, 2001, the Company had net deferred tax assets of approximately $750,000, principally arising from net operating loss carryforwards for income tax purposes, and stock and options issued for services.  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 September 30, 2001.



At September 30, 2001, the Company has net operating loss carryforwards of approximately $5,000,000, which expire in the years 2015 through 2020.  The Company recognized approximately $2,000,000 of losses for the issuance of restricted common stock and stock options for services in 2001, which were not deductible for tax purposes and are not included in the above calculation of deferred tax assets.



Use of Estimates

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



Impairment of Long-lived Assets

The Company evaluates the recoverability of long-lived assets when events and circumstances indicate that such assets might be impaired.  The Company determines impairment by comparing the undiscounted future cash flows estimated to be generated by these assets to their respective carrying amounts.

Compensated Absences

Employees of the Company are entitled to paid vacation, paid sick days and personal days off, depending on job classification, length of service, and other factors.  The Company=s policy is to recognize the costs of compensated absences when actually paid to employees.

F-9



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FIRST AMERICAN SCIENTIFIC CORP.
Notes to the Consolidated Financial Statements
September 30, 2001



NOTE 2 BSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Segment Information

The Company adopted SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," 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.

Revenue and Cost Recognition

Revenues are recognized at the time that products are delivered.

Product costs include all direct material, 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.

Inventory

Inventories are stated at the lower of average cost or market. 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:





|                          | September 30, 2001  
|------------------------- | --------------------
|Finished goods - videos   | $  47,483           
|Finished goods - machines | 260,863 ------------
|                          | $308,346 ========   



Accounting Pronouncements

In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS No. 130").  SFAS 130 establishes standards for reporting and displaying comprehensive income, its components and accumulated balances. SFAS 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.

F-10



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FIRST AMERICAN SCIENTIFIC CORP.
Notes to the Consolidated Financial Statements
September 30, 2001

NOTE 2



Accounting pronouncements (continued)

In September 2000, the FASB issued SFAS No. 140 AAccounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities.@This statement provides accounting and reporting standards for transfers and servicing of financial assets and extinguishment of liabilities and also provides consistent standards for distinguishing transfers of financial assets that are sales from transfers that are secured borrowings.  SFAS No. 140 is effective for recognition and reclassification of collateral and for disclosures relating to securitization transactions and collateral for fiscal years ending after December 15, 2000, and is effective for transfers and servicing of financial assets and extinguishments of liabilities occurring after March 31, 2001.  The Company believes that the adoption of this standard will not have a material effect on the Company=s results of operations or financial position.



NOTE 3 - PROPERTY AND EQUIPMENT

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



|                                 |  |  | September 30, 2001        
|-------------------------------- |  |  | --------------------------
|Kinetic disintegration equipment |  |  | $    1,302,110            
|Plant assets and equipment       |  |  | 99,860                    
|Office equipment                 |  |  | 57,223                    
|Leasehold improvements           |  |  | 5,476 ------------        
|Total assets                     |  |  | 1,464,669                 
|Less accumulated depreciation    |  |  | (408,563) ------------    
|                                 |  |  | $   1,056,631 ------------

Depreciation and amortization expense for the year ended September 30, 2001 was $29,154.  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 undiscounted 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.

F-11



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FIRST AMERICAN SCIENTIFIC CORP.
Notes to the Consolidated Financial Statements
September 30, 2001NOTE 4BTECHNOLOGY RIGHTS AND PATENTS

Technology Licenses

On June 22, 1995, the Company entered into a license agreement with Spectrasonic Corp. (hereinafter "Spectrasonic"), a related party, for the worldwide license to its unpatented Kinetic Disintegration Equipment (KDS) for use in rubber and glass recycling and disposal, for a period of ninety-nine years.  The purchase price of this license and one SDM machine was $550,000, with license rights valued at $250,000.  Since then, modifications were made to the first KDS machine, bringing its total cost to $440,740.  This machine was transferred to the Company=s subsidiary, 521345 BC Ltd., at its book value of $55,669.



On February 22, 1996, the Company entered into an additional license agreement with Spectrasonic for the worldwide license to its unpatented Ultrasound Equipment for exclusive use in gypsum disintegration, disposal, recycling, remanufacturing or manufacturing of used or new raw materials.  The purchase price of this license and one KDS machine for gypsum-related use was $775,000, with the parties agreeing that the technology license was valued at $425,000 and the gypsum KDS machine was valued at $350,000.

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



On July 2, 1997, the Company finalized negotiations with Spectrasonic 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 $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 are five and fifteen years.

F-12



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FIRST AMERICAN SCIENTIFIC CORP.
Notes to the Consolidated Financial Statements
September 30, 2001NOTE 4BTECHNOLOGY RIGHTS AND PATENTS (continued)

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



|                                              |  | September 30, 2001    
|--------------------------------------------- |  | ----------------------
|                                              |  |                       
|VMH Videomoviehouse.com Inc. Website          |  | $    126,021          
|VMH Videomoviehouse.com Inc technology assets |  | 250,000               
|Technology license and rights                 |  | 1,905,000             
|Patents and manufacturing rights              |  | 250,000 ------------  
|                                              |  | 2,531,021             
|Less accumulated amortization                 |  | (603,507) ------------
|                                              |  | $1,900,514 -----------



NOTE 5



During the three months ended September 30, 2001, the Company issued from options 700,000 shares of common stock as compensation valued at $34,000 and 1,000,000 shares of common stock for $12,500 and a subscription receivable of $37,500.



During the year ended June 30, 2001, the Company issued 22,166,545 shares of common stock for services valued at $1,353,805, which includes services for website development, inventory valued at $138,000, and cash of $222,724, compensation valued at $262,762, commissions valued at $22,500.  In addition, the Company issued 5,931,818 shares of common stock for cash in the amount of $231,050 and 1,813,637 shares of common stock as legal settlements valued at $262,500.



By September 30, 2000, the Company had issued 1,000,000 shares of common stock in settlement of accounts payable of $17,500; 4,500,000 common stock shares in a settlement agreement of the balance due on the technology licenses for $225,000, 2,000,000 common stock shares for the purchase of two KDS machines valued at $100,000; and 9,075,000 common stock shares for services and expenses of $156,750, of which $34,000 was considered prepaid.



During the year ended September 30, 2000, the Company issued 18,100,000 common stock shares for cash totaling  $550,500.



In June 2000, an amendment to the Company



F-13



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FIRST AMERICAN SCIENTIFIC CORP.
Notes to the Consolidated Financial Statements
September 30, 2001



NOTE 6



In September 1998, the Company adopted the First American Scientific Corp. 1998 Directors and Officers Stock Option Plan, a non-qualified plan.  This plan allows the Company to distribute up to 15,000,000 shares of common stock to officers, directors, employees and consultants through the authorization of the Company=s Board of Directors.



On June 8, 2000, the Company=s board of directors approved the First American Scientific Corp. 2000 Non-qualifying Stock Option Plan.  This plan allows the Company to distribute up to 30,000,000 shares of common stock at $0.20 per share to persons employed or associated with the Company.



During the year ended June 30, 2001, the Company granted 33,912,000 options of which 24,906,273 were issued for services and compensation, 1,240,000 were issued for video inventory and website development, 900,000 for equipment inventory and cash.  6,865,727 options were issued for cash.



The fair value of each option granted during fiscal 2001 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 6%, volatility of 30%.  Expected life of 1 to 5 years and no expected dividends.  The value of these options in the amount of $411,891 is included in operating expense in the accompanying financial statements.

The following is a summary of stock option activity:



|                                                                                                |  | Number of Shares          |  | Weighted Average Exercise Price | 
|----------------------------------------------------------------------------------------------- |  | ------------------------- |  | ------------------------------- | 
|Options outstanding at July 1, 2000                                                             |  | 3,300,000                 |  | $ 0.027                         | 
|Granted                                                                                         |  | 33,912,000                |  | 0.065                           | 
|Exercised                                                                                       |  | (29,912,000) ------------ |  | 0.042--------                   | 
|Options outstanding at June 30, 2001                                                            |  | 7,300,000========         |  | $   0.11=====                   | 
|                                                                                                |  |                           |  |                                 | 
|Options exercisable at June 30, 2001                                                            |  | 7,300,000========         |  | $   0.11=====                   | 
|                                                                                                |  |                           |  |                                 | 
|Options outstanding at July 1, 2001                                                             |  | 7,300,000                 |  | $   0.11                        | 
|Granted                                                                                         |  | -                         |  | -                               | 
|Exercised                                                                                       |  | (1,700,000) ----          |  | $   0.05 -------                | 
|Options outstanding at September 30, 2001                                                       |  | 5,600,000========         |  | $   0.13=====                   | 
|                                                                                                |  |                           |  |                                 | 
|Options exercisable at September 30, 2001                                                       |  | 5,600,000========         |  | $   0.13=====                   | 
|                                                                                                |  |                           |  |                                 | 
|Weighted average fair value of options granted during the three months ended September 30, 2001 |  | $0.00========             |  |                                 | 

F-14



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FIRST AMERICAN SCIENTIFIC CORP.
Notes to the Consolidated Financial Statements
September 30, 2001NOTE 7BRELATED PARTIES



During the year ended June 30, 2000, the Company=s officers, directors and board members were issued 3,225,000 common stock options, of which 1,725,000 were issued for services valued at $58,650 and 1,500,000 were issued for $37,500 in cash.  All options were exercised.  During the year ended June 30, 2001 the Company=s president was granted 7,342,000 common stock options, of which 3,842,000 were exercised and recorded as compensation expense.  See Note 6.



The president of the Company was the former sole shareholder of VMH Videomoviehouse.com Inc., a firm which was purchased for $250,000 in 2000 and is now the wholly owned subsidiary of First American Scientific Corp.  See Note 9.



At September 30, 2001, the Company owed its officers $80,000 for three months of accrued salary and $6,737 for reimbursed expenses.  These amounts are recorded in the accompanying financial statements under the caption of accounts payable, related party.

One of the Company=s shareholders was issued a valid option to purchase 1,200,000 shares of common stock at $0.019 per share in April 1999.  When this shareholder was prepared to exercise these options, the Company had insufficient authorized capital available.



The Company authorized additional common stock in June 2000, however during this period the market price of the Company=s common stock dropped and the shareholder suffered a potential loss of approximately $480,000.  First American=s management agreed to issue this shareholder an additional 1,200,000 options for common stock shares to compensate for this potential loss.  The options were exercised and recorded as an operating expense in the year ended June 30, 2001.



The Company issued the former president of the Company 1,295,455 options for common stock to terminate his employment agreement.  These options were exercised for $75,000 and the balance of $70,500 recorded as compensation expense in the year ended June 30, 2001.

NOTE 8 BCOMMITMENTS AND CONTINGENCIES



Lease Commitments

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

F-15



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FIRST AMERICAN SCIENTIFIC CORP.
Notes to the Consolidated Financial Statements
September 30, 2001NOTE 8BCOMMITMENTS AND CONTINGENCIES (continued)



In May 1996, the Company signed a lease to rent facilities in Bakersfield, California for the industrial processing of gypsum, limestone and specialty products.  The lease expired on April 14, 1998.  Negotiations with a proposed joint venture partner to operate this facility have ended in dispute between the parties and operations of the plant have ceased.  It appears that the legal issues which relate to control and possession of the property and equipment are near resolution.  At the present time, the Company is utilizing the facility for storage of equipment.  No rental payments have been made since the expiration of this lease.



Sales Commitment

The Company has a sales contract with Vesuvius Inc. (hereinafter AVesuvius@) for the sale of a KDS Micronex(TM).  The purchase price of the machine is $225,000 of which Vesuvius paid $112,500 as a non-refundable deposit.  Under the terms of this agreement, the KDS machine was to be delivered at the time of payment in full.  Because Vesuvius could not meet its obligation to pay the balance, First American and Vesuvius subsequently reached an agreement wherein Vesuvius would find a third party acceptable to First American to purchase the KDS machine and pay the balance due of $112,500.  First American has agreed to apply the forfeited deposit to the sale if a third party is found.  This amount was recognized as revenue during the year ended June 2001.



NOTE 9 BSEGMENT REPORTING



As described in Note 2, the Company has adopted SFAS No. 131.  The Company=s operations are classified into two pricipal reporting segments that provide different products or services.



The table below presents information about the Company=s reportable segments:





| | For Three Months Ending September 30, 2001
| | ------------------------------------------



|                              | VMH Videomoviehouse. com Inc.    | First American Scientific Corp. 521 345 BC Ltd. | Eliminations                     | Consolidated                    
|----------------------------- | -------------------------------- | ----------------------------------------------- | -------------------------------- | --------------------------------
|External revenue              | $        81,898                  | $                   -                           | $                 -              | $        81,898                 
|Intersegment revenue          | - ------------                   | - ------------                                  | - ------------                   | - ------------                  
|Total net revenue             | $        81,898 ------------     | $                   - ------------              | $                 - ------------ | $        81,898 ------------    
|Operating income (loss)       | $     (14,409)------------       | $     (273,183)------------                     | $                 -------------  | $   (287,592) ------------      
|Depreciation and amortization | $                 - ------------ | $         65,366 ------------                   | $                 - ------------ | $        65,366 ------------    
|Interest expense              | $                 - ------------ | $                   - ------------              | $                 - ------------ | $                 - ------------

F-16



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FIRST AMERICAN SCIENTIFIC CORP.
Notes to the Consolidated Financial Statements
September 30, 2001

NOTE 9



| | For Three Months Ending September 30, 2001
| | ------------------------------------------



|                         | VMH Videomoviehouse. com Inc. | First American Scientific Corp. 521 345 BC Ltd. | Eliminations             | Consolidated            
|------------------------ | ----------------------------- | ----------------------------------------------- | ------------------------ | ------------------------
|Net identifiable assets  | $ 451,957 ------------        | $ 3,630,534 ------------                        | $ (760,223) ------------ | $ 3,322,268 ------------
|General corporate assets |                               |                                                 |                          | -                       
|Total assets             |                               |                                                 |                          | $ 3,322,268 ------------

VMH Videomoviehouse.com Inc., the first reportable segment, derives its revenue from sales of videos DVD

First American Scientific Corp and 521345 BC Ltd., the second reportable segment, derive their revenues from the sale of KDS equipment throughout the United States and Europe.

The Company

The accounting policies for the aforementioned reportable segments are the same as those described in the summary of significant accounting policies.  The Company allocates resources to and evaluates performance of its operating segments based on operating income.

NOTE 10

Forgiveness of Debt

During the years ended June 30, 2001 and 2000, the Company negotiated debt settlement agreements with various suppliers and vendors.  These transactions resulted in an extraordinary gain of $146,500 and $73,486 for the years ending June 30, 2001 and 2000, respectively.



NOTE 11



On June 11, 2001 the Board of Directors recommended and approved a motion that VMH Videomoviehouse.com Inc. spin off into its own separate fully reporting OTC Company.  First American Scientific Corp. is taking steps to divest itself of VMH Videomoviehouse.com Inc.



F-17



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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Liquidity and Capital Resources

First American Scientific  (the Company) was incorporated April 12, 1995 as a development stage company. From May 1997 until June 1998 it operated a pilot project in Bakersfield, which confirmed that, the technology worked for industrial minerals, primarily gypsum. A joint venture to operate the plant ended in dispute between the parties and operation of the plant ceased. The dispute, where the Company is the plaintiff,  is still before the courts to resolve the legal issues surrounding the matter and to regain control of the equipment. There are two fully operational KDS machines and complete material handling systems and bagging equipment belonging to the Company on the site.

The Company irrevocably acquired all patent rights to the KDS technology in December 1999, free and clear of all encumbrances or future royalty obligations.  In April 2001, the Company filed for two new process patents, one for the cryogenic freezing and shattering scrap rubber, and the other for extraction of precious metals using the KDS equipment. Both applications are patent pending status.

In June 2000, the Company reclaimed one of its KDS systems and relocated to a temporary site near Vancouver, British Columbia, Canada where it is now being used for sales demonstrations and for testing of improvements to the technology.

Research and development of the KDS system at the Company=s research facility in Ireland  has been finalized with marginal success with rubber and human waste. Negotiations are currently in progress to move the equipment to a location outside Dublin to be put into production processing a combination of food and wood waste. Details of the negotiations will be announced soon as they are finalized.

On March 7, 2000, the Board of Directors passed a resolution to increase its authorized capital from 100 million to 200 million common shares which was subsequently ratified by a majority of all shareholders. As of September  30, 2001, there were 132,433,018 shares issued and outstanding.

Construction of the new Cloverdale demonstration and sales center was delayed due to problems encountered by the landlord with the engineered roof trusses. We are now advised that the landlord has resolved the issue surrounding the roof trusses, has received the required municipal approvals and expects to be in a position  to give the Company occupancy of the building  sometime in November 2001. The sales offices, located adjacent to the proposed demonstration center on the same property, was completed and occupied by the Company in July 2001. The landlord=s delay in the completion of the building to house our Cloverdale test center has proven to be costly to the Company in lost opportunity and sales.  Other locations are being considered, including a cooperative arrangement with B & B Poultry Waste Management Inc, to use their facilities for high volume testing.

Development of the Internet site VideoMovieHouse.com  is complete with and the site was launched and open for business on May 15, 2001. The site initially offers catalogue merchandise for sale over the Internet, and plans to develop into a full-scale sales and rental operation as advancement in technology permits. The project is expected to produce modest positive cash flow in its first year of operation. Plans are currently underway to Aspin off A the business which will be taken public based on its own merits.  Documents have been filed with the SEC and are currently under their review.



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The Company continues to focus on strengthening its balance sheet with current assets of  $353,690 and current liabilities of  $273,088  providing for a positive working capital  ratio of  1.3  to 1. This  compares to current assets of $438,796 and current liabilities of $172,185 as of June 30, 2001. As of  September  30, 2001, the Company had $7,996 cash on hand which is insufficient to maintain its operation for the short term, however, there are sales of two machines pending which should  provide cash receipts of $247,500 before the end of November 2001 and the balance of  $243,500 before year end. Should these payments materialize, the Company will have sufficient cash to sustain its operations for at least the next year, otherwise the Company will need to raise capital to continue its operation and plans to actively pursue fund raising activities, either by way of loans, sale of stock or a combination of both.

Results of Operations - Quarter Ended  September  30, 2001

Revenue from internet video sales by VideoMovieHouse.com was US$81,898 for the quarter or an average of  $27,229 per month for its first three months of  full time operation. Sales for October 2001 were $41,508, and continue to grow in November 2001 averaging $2,350 per day for the first ten days. The current break even point for VideoMovoeHouse.com is US$40,000 per month, which has been reached in October 2001 and, if current growth continues, VideoMovieHouse.com will show a profit during the month of November, ahead of schedule after only five months into its operation.

The Company has three sales pending KDS systems. According to accepted accounting policy, these revenues will be booked when the equipment is delivered. Deposits of US$130,000 have been received to date. In September 2001, Vesuvius Inc requested permission to assign their purchase agreement for one machine to a third party, as they were pursuing other avenues of business.  The Company advised the customer that it would consider assigning the agreement to a Aqualified A entity, but advised that the US$112,500 deposit received is now considered non-refundable. The equipment is completed, but will be held in inventory and not delivered until new arrangements are made. Subsequent to the date of these statements, one of the machines ordered by B & B Poultry Waste Management Inc. was delivered.

The KDS machine previously located in Tonasket, Washington was moved to Vancouver in July 2000. It  has been completely retrofitted and is being used for research, testing and demonstrations on various types of products. Improvements are continually being made to the equipment and a new, more powerful machine, the KDS 250 has also been constructed and is operation at the same location. The more powerful machine was need to process feedstock, such as biomass, which has a  higher moisture content than industrial minerals.  Further design modifications have been made to attach an auxiliary water extraction system to the exhaust blower to further enhance the drying process.  These improvements are in the process of being tested. Results will be announced when they become available.

In August  2000, the Company entered into an agreement with Beaupre Explorations Ltd. to redesign the KDS machine to extract gold from ore taken from Beaupre=s gold claims on Valentine Mountain near Sooke, British Columbia, Canada. The implementation of the agreement was dependant on the Company first patenting the process, then proving sufficient production volume to make the project economically viable. After extensive  testing and re-design, in September 2001, Dr. Robert Salter PhD, P.Eng, mining consultant issued a report indicating that, after makings several recommended changes, the KDS equipment is capable of processing 43 tons of ore per day, sufficient to move the project to the next Phase. In preparation for final  bench testing, a KDS 300 system will  be moved to Sooke, British Columbia before the end of the year to directly process Beaupre ore.   If successful, a 50/50 joint venture partnership between Beaupre and the Company will be implemented.



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In March 2001, the Company entered into an agreement with P.E. Coulter P.Eng, to re-design the KDS system to cryogenically freeze and process scrap rubber. The system was designed and patented (pending) in April 2001. Subsequently,  Coulter and his investment group, under the new name Rubber Black Inc., have agreed to purchase one used KDS system and reconfigure it to process scrap rubber, subject to proving commercial viability of the cryogenic process. Upon satisfactory completion of final bench testing in Vancouver planned for November 2001, the equipment will be moved to Ontario, Canada. The Company is to receive royalties on all rubber processed by the system.

In September 2001, the Company signed a letter of intent with Thermix Combustion Systems Inc. to combine their dust burning and combustion control technology  with the Company=s KDS  disintegration technology to create a new process for turning wood and pulp waste into BTUs. A new Company is being incorporated AAlternative Green Energy Systems Inc.A (AGES) which will be owned 50/50 by the Company and Thermix. The KDS equipment is being re-designed by Thermix engineers to adapt to the combined system and  Thermix management and engineering staff will market the combined system to their existing clients in the forestry and pulp and paper industry.  Responsibility for continuing technical discussions and testing for the Honeywell proposal will now be handled by AGES.

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

The Company rents office space in West Vancouver, and Cloverdale, British Columbia, Canada  which serve as administrative and sales offices. The Cloverdale demonstration site is currently under construction and is expected to be operational before the end of the year.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on this 13th day of November, 2001.

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