United States
                       Securities and Exchange Commission
                             Washington, D.C. 20549

                                    FORM 10-Q
  (Mark One)

     [X]  QUARTERLY  REPORT  PURSUANT  TO SECTION 13 OR 15(d) OF THE  SECURITIES
          EXCHANGE ACT OF 1934

          For the quarterly period ended October 31, 2005
                                         ----------------
                                              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 0-21995
                                                -------

                          FIRST AVIATION SERVICES INC.
                          (Exact name of registrant as
                            specified in its charter)

          Delaware                                    06-1419064
          --------                                    ----------
          (State or other jurisdiction                (I.R.S. Employer
          of incorporation or organization)           Identification No.)

             15 Riverside Avenue, Westport, Connecticut, 06880-4214
             ------------------------------------------------------
                    (Address of principal executive offices)

                                 (203) 291-3300
                                 --------------
                        (Registrant's telephone number)

                                       N/A
              ----------------------------------------------------
              (Former name, former address and formal fiscal year,
                         if changed since last report)


Indicate by check mark whether the registrant (1) 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  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [_] No [X]

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [_] No [X]

The number of shares outstanding of the registrant's common stock as of December
1, 2005 is 7,346,168

<PAGE>


                          First Aviation Services Inc.

                                      Index

                         Part I - Financial Information
                         ------------------------------


Item 1.  Financial Statements  (Unaudited):

         Consolidated Condensed Balance Sheets.................................3
         Consolidated Condensed Statements of Operations.....................4-5
         Consolidated Condensed Statements of Cash Flows.......................6
         Notes to Consolidated Condensed Financial Statements...............7-12

Item 2.  Management's Discussion and Analysis of Financial Condition,
         Results of Operations and Liquidity and Capital Resources.........13-18

Item 3.  Quantitative and Qualitative Disclosures about Market Risks..........18

Item 4.  Controls and Procedures..............................................18



                           Part II - Other Information
                           ---------------------------

Item 1.   Legal Proceedings...................................................19

Item 2.   Unregistered Sales of Equity Securities
          and Use of Proceeds.................................................19

Item 3.   Defaults Upon Senior Securities.....................................19

Item 4.   Submission of Matters to a Vote of Security Holders.................19

Item 5.   Other Information ..................................................19

Item 6.   Exhibits............................................................19

                                       2
<PAGE>


                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements
----------------------------

<TABLE>
<CAPTION>
<S>                                                         <C>           <C>
                          First Aviation Services Inc.

                      Consolidated Condensed Balance Sheets
                      (in thousands, except share amounts)


                                                            October 31,   January 31,
                                                               2005          2005
                                                            -----------   -----------
                                                            (unaudited)        *
Assets
Current assets:
  Cash and cash equivalents                                 $   12,937    $   22,584
  Trade receivables, net of allowance for doubtful
   accounts of $576 and $806, respectively                      18,295        14,563
  Inventory, net of allowance for slow moving and
   obsolete inventory of $1,767 and $1,656, respectively        37,804        24,156
  Prepaid expenses and other                                     1,008           900
                                                            -----------   -----------

Total current assets                                            70,044        62,203

Plant and equipment, net                                         4,389         2,996
                                                            -----------   -----------

Total Assets                                                $   74,433    $   65,199
                                                            ===========   ===========

Liabilities and stockholders' equity
Current liabilities:
  Accounts payable                                          $   15,427    $   10,495
  Accrued compensation and related expenses                      1,378         1,205
  Other accrued liabilities                                      1,912         2,424
  Notes Payable                                                  2,218             -
  Income taxes payable                                           1,033           900
                                                            -----------   -----------

Total current liabilities                                       21,968        15,024

  Revolving line of credit                                      14,500        14,500
  Notes Payable, less current portion                            1,935             -
  Minority interest in subsidiary                                    -         1,041
                                                            -----------   -----------

Total liabilities                                               38,403        30,565

Stockholders' equity:

  Common stock, $0.01 par value, 25,000,000 shares
   authorized, 9,135,699 shares issued                              91            91
  Additional paid-in capital                                    38,813        38,318
  Retained earnings                                              5,999         5,325
  Accumulated other comprehensive income                           457           374
                                                            -----------   -----------

                                                                45,360        44,108
  Less:  Treasury stock, at cost, 1,789,631 and
   1,814,191 shares, respectively                              (9,330)       (9,474)
                                                            -----------   -----------

Total stockholders' equity                                      36,030        34,634
                                                            -----------   -----------

Total liabilities and stockholders' equity                  $   74,433    $   65,199
                                                            ===========   ===========
</TABLE>


See accompanying notes.

* Balances were derived from the audited balance sheet as of January 31, 2005.

                                       3
<PAGE>


<TABLE>
<CAPTION>
<S>                                                          <C>             <C>
                          First Aviation Services Inc.

           Consolidated Condensed Statements of Operations (Unaudited)
                      (in thousands, except share amounts)


                                                                 Three months ended
                                                                    October 31,

                                                                 2005            2004
                                                             -----------      ----------

Net sales                                                    $   33,611      $   32,050
Cost of sales                                                    27,969          26,698
                                                             -----------      ----------

Gross profit                                                      5,642           5,352
Selling, general and administrative expenses                      4,971           4,945
Corporate expenses                                                  557             602
                                                             -----------      ----------

Income (loss) from operations                                       114            (195)
Net interest income (expense) and other                               5             148
Minority interest in subsidiary                                       -             (10)
                                                             -----------      ----------

Income (loss) before income taxes                                   119             (57)
Provision for income taxes                                          (29)            (73)
                                                             -----------      ----------

Net income (loss)                                            $       90      $     (130)
                                                             ===========      ==========


Basic net income (loss) per share, and net income (loss)
     per share - assuming dilution:

Basic net income (loss) per share, and net income (loss)
     per share - assuming dilution                           $     0.01      $    (0.02)

                                                             ===========     ===========

Weighted average shares outstanding - basic                   7,341,451       7,304,914
                                                             ===========     ===========

Weighted average shares outstanding - assuming dilution       7,343,852       7,304,914
                                                             ===========     ===========
</TABLE>


See accompanying notes.

                                       4
<PAGE>


<TABLE>
<CAPTION>
<S>                                                         <C>            <C>
                          First Aviation Services Inc.

           Consolidated Condensed Statements of Operations (Unaudited)
                      (in thousands, except share amounts)


                                                                Nine months ended
                                                                   October 31,

                                                                2005           2004
                                                            -----------    -----------

Net sales                                                   $   98,297     $   93,337
Cost of sales                                                   81,459         77,604
                                                            -----------    -----------

Gross profit                                                    16,838         15,733
Selling, general and administrative expenses                    14,760         14,694
Corporate expenses                                               1,744          2,377
                                                            -----------    -----------

Income (loss) from operations                                      334         (1,338)
Net interest income (expense) and other                              4            102
Other income                                                       417              -
Minority interest in subsidiary                                    (10)           (31)
                                                            -----------    -----------

Income (loss) before income taxes                                  745         (1,267)
Provision for income taxes                                         (71)          (107)
                                                            -----------    -----------

Net income (loss)                                           $      674     $   (1,374)
                                                            ===========    ===========


Basic net income (loss) per share, and net income (loss)
     per share - assuming dilution:

Basic net income (loss) per share, and net income (loss)
     per share - assuming dilution                          $     0.09     $    (0.19)
                                                            ===========    ===========

Weighted average shares outstanding - basic                  7,333,249      7,297,732
                                                            ===========    ===========

Weighted average shares outstanding - assuming dilution      7,337,331      7,297,732
                                                            ===========    ===========
</TABLE>


See accompanying notes.

                                       5
<PAGE>


                          First Aviation Services Inc.

           Consolidated Condensed Statements of Cash Flows (Unaudited)
                                 (in thousands)


<TABLE>
<CAPTION>
<S>                                                                  <C>            <C>
                                                                        Nine months ended
                                                                           October 31,

                                                                        2005           2004
                                                                     ---------      ---------
Cash flows from operating activities
Net income (loss)                                                    $    674       $ (1,374)
Adjustments to reconcile net income (loss) to net
  cash from operating activities - non-cash charges:
   Depreciation and amortization                                          860            676
   Compensation paid through issuance of stock                             99            117
(Increase) decrease in current assets:
   Trade receivables                                                   (3,651)        (3,451)
   Inventory                                                           (9,441)         1,054
   Prepaid and other                                                     (107)           425
Increase (decrease) in current liabilities:
   Accounts payable                                                     4,920          2,876
   Accrued compensation and related expenses, and other accrued
    liabilities                                                          (404)            69
   Income taxes payable                                                   132            (27)
                                                                     ---------      ---------

Net cash provided by (used in) operating activities                    (6,918)           365

Cash flows from investing activities
Purchases of plant and equipment                                       (2,247)          (579)
Proceeds from disposals of plant and equipment                              -              3
                                                                     ---------      ---------

Net cash used in investing activities                                  (2,247)          (576)

Cash flows from financing activities
Borrowings on revolving line of credit                                 41,500         41,650
Repayments on revolving line of credit                                (41,500)       (41,650)
Repurchase of preferred stock of subsidiary                              (500)             -
                                                                     ---------      ---------

Net cash provided by financing activities                                (500)              -
                                                                     ---------      ---------

Net decrease in cash and cash equivalents                              (9,665)          (211)

Effect of exchange rates on cash                                           18            103

Cash and cash equivalents at beginning of period                       22,584         25,144
                                                                     ---------      ---------

Cash and cash equivalents at end of period                           $ 12,937       $ 25,036
                                                                     =========      =========

Supplemental cash flow disclosures:
   Interest paid                                                     $     72       $     30
   Income taxes paid                                                 $     12       $     65
</TABLE>



See accompanying notes.

                                       6
<PAGE>


                          First Aviation Services Inc.

        Notes to Consolidated Condensed Financial Statements (Unaudited)
                      (in thousands, except share amounts)

                                October 31, 2005

1.  Basis of Presentation
First Aviation Services Inc. ("First Aviation"),  together with its wholly owned
subsidiaries Aerospace Products International,  Inc. ("API"),  Aircraft Products
International, Ltd. ("API Ltd."), and API Asia Pacific Inc. ("API Asia Pacific")
(collectively,  the "Company"),  is one of the premier  suppliers of services to
the aviation industry worldwide.  The services the Company provides the aviation
industry  include the sale of aircraft  parts and  components,  the provision of
supply chain  management  services,  overhaul and repair services for brakes and
starter/generators,  and the assembly of custom hoses.  The Company's  principal
executive  offices are located at 15  Riverside  Avenue,  Westport,  Connecticut
06880.  Customers  of the  Company  include  original  equipment  manufacturers,
aircraft manufacturers, passenger and cargo airlines, fleet operators, corporate
aircraft  operators,  flight training schools,  fixed base operators,  certified
repair facilities, governments and military services. The accompanying unaudited
consolidated condensed financial statements of the Company have been prepared in
accordance  with U.S.  generally  accepted  accounting  principles  for  interim
financial information,  and with the instructions to Form 10-Q and Article 10 of
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnotes  required  for  complete  financial  statements.  In  the  opinion  of
management, all material adjustments,  including the elimination of intercompany
balances and transactions,  and normal recurring accruals  considered  necessary
for a fair  presentation,  have  been  included  in the  accompanying  unaudited
consolidated  condensed  financial  statements.  Operating results for the three
months and six months ended October 31, 2005 are not  necessarily  indicative of
the  results  that may be expected  for the full fiscal year ending  January 31,
2006. For further  information,  refer to the consolidated  financial statements
and footnotes  thereto  included in the  Company's  Form 10-K for the year ended
January 31, 2005.


2.  Weighted Average Shares Outstanding - Assuming Dilution

The following sets forth the  denominator  used in the computation of net income
(loss) per share - assuming dilution:


<TABLE>
<CAPTION>
<S>                                                     <C>               <C>             <C>               <C>
                                                           Three months ended                 Nine months ended
                                                               October 31,                       October 31,
                                                          2005              2004            2005              2004
                                                      ------------      ------------    ------------      ------------
   Denominator:
     Denominator for basic net income (loss)
        per share - weighted average shares             7,341,451         7,304,914       7,333,249         7,297,732

     Effect of dilutive employee stock options              2,401                 -           4,082                 -
                                                      ------------      ------------    ------------      ------------

     Denominator for net income (loss) per
        share - assuming dilution, adjusted
           weighted average shares and assumed
           dilutions                                    7,343,852         7,304,914       7,337,331         7,297,732
                                                      ============      ============    ============      ============
</TABLE>


For the three and nine months ended October 31, 2004,  the  denominator  used in
the  calculation  of loss  per  share  from  continuing  operations  -  assuming
dilution,  was the same as the denominator used for basic loss per share because
the effect of  options  would have been  antidilutive.  The number of  potential
shares of common  stock  that were  excluded  from the  computation  of  diluted
earnings per share because their effect was  antidilutive for the three and nine
months ended October 31, 2004, were 7,097, and 9,532 shares, respectively.

                                       7
<PAGE>


3.  Stock Options Issued to Employees

The  Company's   non-employee  directors  receive  a  portion  of  their  annual
compensation in the Company's  stock. The value of stock issued is equivalent to
the compensation expense, and the number of shares issued is based upon the fair
market value per share at the date issued. The Company's  non-employee directors
receive  compensation in cash for committee meetings and special board meetings,
excluding  the  four   regularly   scheduled   board  meetings  and  the  annual
shareholders'   meeting   that  is  paid  in  stock  as  part  of  their  annual
compensation.  For the three months ended October 31, 2005 and 2004, the Company
issued 4,617 and 6,457 shares respectively, to directors for board fees. For the
nine  months  ended  October 31, 2005 and 2004,  the Company  issued  21,828 and
25,452 shares respectively, to directors for board fees.

The Company  generally  grants stock options to its employees for a fixed number
of shares with an exercise  price equal to the fair market value of the stock on
the date of grant. As permitted under Statement of Financial Accounting Standard
No. ("FAS") 123,  "Accounting  for  Stock-Based  Compensation",  the Company has
elected to follow  Accounting  Principles Board Opinion No. 25,  "Accounting for
Stock Issued to Employees",  and related interpretations in accounting for stock
awards to employees. No compensation expense was recognized during the three and
nine months  ending  October 31, 2005 and 2004 because all grants were issued at
the fair market value of the Company's common stock at the date of grant.

The  Company is required to  disclose  the fair  value,  as defined,  of options
granted to employees and the related compensation expense. The fair value of the
stock options  granted was estimated at the date of grant using a  Black-Scholes
option-pricing  model. The Black-Scholes  option-pricing model was developed for
use in  estimating  the fair  value  of  traded  options  that  have no  vesting
restrictions and are fully  transferable.  In addition,  option valuation models
require the input of highly subjective assumptions, including the expected stock
price volatility.  In management's opinion, because the Company's employee stock
options  are  not  publicly  traded,  and  have  characteristics   significantly
different from those of traded  options,  and because  changes in the subjective
input  assumptions can materially  affect the fair value estimate,  the existing
models do not necessarily provide a reliable single measure of the fair value of
its employee stock options.

The fair value of each option  issued was  estimated  at the date of grant.  The
following  assumptions were used for options issued during the nine months ended
October 31, 2005 and 2004:

                                                 2005               2004
                                            ---------------    ---------------

   Expected dividend yield                       0.0%               0.0%

   Risk-free interest rate                       4.3%               3.6%

   Expected volatility                          31.0%              32.3%

   Expected life of option                       5.0 years          5.0 years

   Weighted-average fair value of
      options granted                         $ 1.40             $ 1.55

                                       8
<PAGE>


Using the above noted  assumptions and the  weighted-average  fair value of each
option  granted,  the net income (loss) and earnings (loss) per share that would
have been  recorded  if the  estimated  fair value of options  granted  had been
recorded as an expense was:


<TABLE>
<CAPTION>
<S>                                                      <C>             <C>              <C>             <C>
                                                              Three months ended               Nine months ended
                                                                 October 31,                      October 31,
                                                             2005             2004            2005            2004
                                                         ------------    -------------    ------------    ------------

Net income (loss) as reported                            $        90     $       (130)    $       674     $    (1,374)

Pro forma net compensation expense for issuance of
  stock options                                                   13               13              39              44
                                                         ------------    -------------    ------------    ------------

Pro forma net income (loss)                              $        77     $       (143)    $       635     $    (1,418)
                                                         ============    =============    ============    ============

Basic net income (loss) per share, and net income
(loss) per share - assuming dilution as reported
                                                         $      0.01     $      (0.02)    $      0.09     $     (0.19)

Pro forma basic net income (loss) per share, and
net income (loss) per share - assuming dilution
                                                         $      0.01     $      (0.02)    $      0.09     $     (0.19)
                                                         ============    =============    ============    ============
</TABLE>



In December 2004, the FASB issued Statement No. 123 (Revised 2004), or Statement
123(R),  Share-Based  Payment,  which  is  a  revision  of  Statement  No.  123,
Accounting for Stock-Based Compensation. Statement 123(R) supersedes APB Opinion
No. 25,  Accounting for Stock Issued to Employees,  and amends Statement No. 95,
Statement  of Cash Flows.  The  approach in  Statement  123(R) is similar to the
approach  described in Statement 123;  however,  Statement  123(R)  requires all
share-based  payments to employees,  including grants of employee stock options,
to be recognized in the statement of operations based on their fair values.  Pro
forma  disclosure,  as allowed  under  Statement  No. 123,  will no longer be an
alternative.

In April 2005,  the  Securities and Exchange  Commission  ("SEC")  announced the
adoption of a new rule that amends the  compliance  dates for Statement  123(R).
The SEC's new rule allows  companies to implement  Statement  No.  123(R) at the
beginning of their next fiscal year, instead of the reporting period that begins
after June 15, 2005. The Company plans to adopt Statement  123(R) for the period
beginning February 1, 2006.

The impact of adoption of  Statement  123(R)  cannot be  predicted  at this time
because it will depend on levels of share-based  payments granted in the future,
among other  factors.  The Company is currently  evaluating  the impact that the
adoption  of  Statement  123(R)  will  have  on  its  consolidated   results  of
operations, financial position and cash flows.


4.  Accumulated Other Comprehensive Income (Loss)

The accumulated other comprehensive  income (loss) resulted from the translation
of accounts  into U.S.  dollars  where the  functional  currency is the Canadian
dollar. The increase to net income to arrive at comprehensive  income during the
three and nine months ended  October 31, 2005 was due to a decrease in the value
of the U.S. dollar relative to the Canadian dollar.  Comprehensive income (loss)
for the periods shown was as follows:

                                       9
<PAGE>


<TABLE>
<CAPTION>
<S>                                                  <C>            <C>               <C>             <C>
                                                         Three months ended                Nine months ended
                                                             October 31,                      October 31,
                                                        2005            2004              2005             2004
                                                     -----------    -------------     ------------    -------------

Net income (loss) as reported                        $       90     $       (130)     $       674     $     (1,374)

Net impact of foreign currency translation
  adjustments - gain                                         63              122               83              155
                                                     -----------    -------------     ------------    -------------

Net comprehensive income (loss)                      $      153     $         (8)     $       757     $     (1,219)
                                                     ===========    =============     ============    =============
</TABLE>



5.  Income Taxes

The Company  recorded a provision  (benefit) for income taxes related to foreign
income tax expense  estimates for operations in Canada and the  Philippines.  No
provision  is made for U.S.  taxation  because the Company  has  sufficient  net
operating loss  carryforwards that would be utilized to offset any provision for
pre-tax income. No deferred tax provision is recorded because it would be offset
by a change in the deferred tax valuation allowance. The Company does not record
a tax benefit for U.S. tax purposes due to the deferred tax valuation  allowance
recorded, as it is more likely than not that some portion or all of the deferred
tax asset will not be realized.


6.  Related Parties

The Company and First Equity Development Inc. ("First Equity"), the wholly-owned
subsidiary  of First Equity Group,  Inc.,  and the majority  stockholder  of the
Company,  have an agreement  relating to the allocation of potential  investment
and acquisition  opportunities in the aerospace parts distribution and logistics
businesses.  The agreement was approved by the independent  members of the Board
of Directors on a month-to-month  basis effective February 1, 2004. First Equity
Group,  Inc. is beneficially  owned by Mr. Aaron P. Hollander and Mr. Michael C.
Culver,  respectively  Chairman of the Board and Chief Executive  Officer of the
Company.  Pursuant  to  the  agreement,  neither  First  Equity  nor  any of its
majority-owned  subsidiaries  will  consummate  any  acquisition  of a  majority
interest in any aerospace parts  distribution and logistics business anywhere in
the world (a "Covered  Acquisition"),  without  first  notifying the Company and
providing the Company with the opportunity to effect the Covered Acquisition for
its own  account.  The  Company's  decision  as to whether to effect the Covered
Acquisition will be made by the independent members of the Board of Directors of
the  Company.  The  agreement  can be  terminated  by either  party upon 30 days
written notice to the other party.  The agreement does not apply to any proposed
acquisition  by First Equity of any business that generates less than 15% of its
aggregate net sales from aerospace parts  distribution  or logistics,  or to any
advisory services performed by First Equity on behalf of third parties.

The Company and First  Equity  also had an advisory  agreement,  approved by the
independent  members  of  the  Board  of  Directors  on a  month-to-month  basis
effective  February  1, 2004.  Pursuant  to the terms of this  agreement,  First
Equity  provided the Company with  investment  and financial  advisory  services
relating  to  potential  acquisitions  and  other  financial  transactions.  The
agreement  could be terminated  by either party upon 30 days' written  notice to
the other  party.  The Company  paid First  Equity a $30 monthly  retainer,  and
reimbursed First Equity for its out-of-pocket  expenses.  In addition,  upon the
successful  completion of certain  transactions,  the Company would pay a fee to
First  Equity  (the  "Success  Fee").  The  amount of any  Success  Fee would be
established  by the  independent  members of the Board of Directors and would be
dependent upon a variety of factors, including, but not limited to, the services
provided  and the size and the type of  transaction.  Up to one year's  worth of
retainer fees paid could be applied as a credit against any Success Fee, subject
to certain limitations. The advisory agreement was terminated by First Equity on
January 31, 2005.  During the three and nine months ended October 31, 2005,  and
2004,  the Company  paid First  Equity  retainer  fees of $0 and $90, and $0 and
$270, respectively, and no Success Fee.

                                       10
<PAGE>


The  Company and First  Equity had entered  into an  arrangement  whereby  First
Equity  provided  the Company  with  various  additional  services to assist the
Company.  These  services  were not part of the  advisory  agreement,  described
above,  but derived from the work First Equity  performed  under the  agreement.
Therefore, First Equity did not charge the Company additional fees in connection
with providing such services under the advisory agreement,  because the services
were derived from the work First Equity  performed under the advisory  agreement
consistent with their role as financial advisor.  The advisory agreement expired
on January 31, 2005. These services included (i) detailed financial modeling for
new business proposals,  (ii) Board of Directors  presentation  analysis,  (iii)
investor relations  marketing and presentations,  (iv) various analysis for API,
including benchmarking, financial analysis, and competitive market analyses, and
(v)  other  financial  analyses  for  the  Company,  including  stock  buy-back,
valuations,  and  capital  structure  analyses.  The  Company's  CEO and CFO had
unlimited  access to these  resources when  requested.  These services were also
terminated  by First Equity with the  expiration  of the  advisory  agreement on
January 31, 2005, as described above.

The Company  subleases  from First  Equity  approximately  3,000  square feet of
office  space in  Westport,  Connecticut.  The leased  space is  utilized by the
Company as its corporate  headquarters.  First Equity also utilizes space in the
same premises. The sublease,  which became effective on April 21, 1997, is for a
period of ten years,  and is cancelable by either party with six months  notice.
The Company has the option to renew the  sublease for two  additional  five-year
periods.  Lease payments under this sublease totaled  approximately $22, for the
three  months  ended  October 31,  2005,  and 2004 and $67 and $62, for the nine
months ended October 31, 2005, and 2004. The Company and First Equity also share
certain common  expenses that arise from sharing  office space in Westport,  CT.
The Company  reimburses  First Equity and vice versa,  for expenses  each entity
incurs related to the common usage of the office space. The amounts are included
in the Company's  corporate  expenses,  and include  expenses such as telephone,
computer  consulting,  office  cleaning,  office  supplies  and  utilities.  The
expenses  are  allocated  based on base  salaries  of the  Company's  and  First
Equity's personnel working in the shared space.  Common expenses are approved by
the  Company and First  Equity,  prior to  expenditure,  when not of a recurring
nature.  The allocations are reviewed by the Company's CFO and the Controller of
First Equity each month. In addition,  a member of the Company's audit committee
reviews  the  allocation  of  expenses  quarterly.   Some  business  development
expenses,  such as joint marketing expense and business organizational dues, are
shared on an equal  basis.  Management  believes  this method of  allocation  is
reasonable.  In addition,  the amounts  reimbursed by the Company are the actual
costs incurred for the expense.  The Company  reimbursed  First Equity,  $12 and
$13, for the three months ended October 31, 2005,  and 2004,  respectively,  and
$32 and $39, for the nine months ended October 31, 2005, and 2004, respectively.

In order to simplify the  administration  of payroll,  certain  employees of the
Company who are  authorized  to perform  services for both the Company and First
Equity are paid  through the payroll of First  Equity.  Employees of the Company
who work  exclusively  for the Company are paid  through the payroll of API, the
Company's principal subsidiary.


7.  Interest income (expense) and other

The components  relate to interest  income on investments,  interest  expense on
external debt,  realized and unrealized foreign exchange gain (loss) on Canadian
dollar transactions by the Canadian operations, and other charges.


<TABLE>
<CAPTION>
<S>                                        <C>        <C>              <C>            <C>
                                       Three months ended            Nine months ended
                                           October 31,                  October 31,
                                        2005         2004           2005           2004
                                      -------      -------        -------        -------

   Interest income                    $     4      $    18        $    45        $    40
   Interest expense                       (53)          (3)          (116)           (32)
   Foreign exchange gain                   54          133             75             94
                                      -------      -------        -------        -------

                                      $     5      $   148        $     4        $   102
                                      -------      -------        -------        -------
</TABLE>

                                       11
<PAGE>


8.  Replacement of Revolving Line of Credit

On July 29, 2005,  Aerospace  Products  International  Inc., (the  "Borrower") a
direct   wholly-owned   subsidiary  of  First  Aviation   Services,   Inc.  (the
"Guarantor")  entered into a Commercial  Revolving  Loan and Security  Agreement
(the " Agreement")  and Guaranty  Agreement  (the  "Guaranty")  by and among the
Borrower, Guarantor and Hudson United Bank (the "Lender").

The  facility  created  by the  Agreement  replaces  the  Borrower's  previously
existing,  $20 million  revolving  credit facility  scheduled to expire July 31,
2006. The Agreement has a commitment  expiration  date of September 1, 2007. The
Guaranty replaces the previously existing guaranty agreement that existed on the
previous credit facility.

The  Agreement  provides  a 25  month  senior  revolving  credit  facility  (the
"Facility I") to the Borrower in the amount of $20 million, subject to terms and
conditions  set forth in the  Agreement.  The  facility  may be  increased by $5
million to $25  million  should the  Company  make an  acquisition  of assets of
another company,  subject to the Lender's approval.  In October 2005, the lender
approved the  increase in the  facility to $25 million  after the Company made a
large initial inventory  purchase in September 2005 from a leading aircraft OEM.
The  proceeds  of any loans made under the  Agreement  will be used for  working
capital purposes in the ordinary course of business of the Borrower.

The Agreement  also provides for a one-time  advance (the  "Facility  II") in an
amount up to $3 million,  subject to  borrowing  availability.  The  Facility II
advance is repaid over 60 months at a fixed rate  determined  at the time of the
drawdown of the advance, with the portion of the advance to be repaid within one
year reported in current liabilities on the balance sheet.

Borrowings  under  Facility  I bear  interest  equal to LIBOR  plus 1.5% and are
limited to specified  percentages of eligible trade  receivables and inventories
of API. The Agreement contains a number of covenants,  including restrictions on
mergers,  consolidations  and  acquisitions,  the  incurrence  of  indebtedness,
transactions with affiliates,  the creation of liens, and limitations on capital
expenditures. Pursuant to the terms and conditions of the Agreement, the payment
of  dividends  on API's  common  stock is  prohibited,  except with the lender's
consent,  and API is  required  to  maintain  minimum  levels  of net  worth and
specified interest expense coverage ratios.  Substantially all of API's domestic
assets  are  pledged  as  collateral  under the  Agreement,  and First  Aviation
guarantees all borrowings under the Agreement.

9.  Notes Payable

API entered into an initial parts purchase  agreement on September 20, 2005 with
a leading  aircraft  original  equipment  manufacturer  ("OEM") to purchase $8.3
million of  inventory,  including a  long-term  agreement  to sell parts.  As of
October 31, 2005, API had received approximately $7.1 million of this inventory.
The OEM vendor  agreed to  partially  finance the purchase  with two  promissory
notes from API of $2.5 million and $1.8 million,  with the Company entering into
a guarantee  agreement to ensure  payment by API. The  promissory  note for $2.5
million is for a term of 4 years,  at 5.0%  interest per annum.  The  promissory
note for $1.8 million is a non-interest  bearing  short-term note due within one
year. The vendor  financing  promissory  notes are subordinated to the Company's
revolving line of credit. Subsequent purchases from this OEM will be on standard
vendor  terms,  and the Company has  purchased  an  additional  $4.8  million of
inventory from the OEM as of October 31, 2005.


10. Repurchase of Preferred Stock of Subsidiary

Pursuant to an agreement dated June 20, 2005, API  repurchased  10,407 shares of
API Series A Cumulative  Convertible  Preferred Stock  (Preferred  Stock) for an
aggregate  purchase price of $500, from Signature Combs,  Inc. (f/k/a AMR Combs,
Inc.). The Preferred Stock was all the issued and outstanding preferred stock of
API, issued in conjunction  with the Company's  purchase of API in 1997 from AMR
Combs,  Inc. The difference  between the repurchase price of the Preferred Stock
and the book value of $541 was credited to Paid-in Capital in June 2005.

11. Other Income

In July  2005,  the  Company  received  $567  in  settlement  of a  distribution
agreement contract dispute between API and a vendor. The settlement consisted of
$417 in damages  recorded in other  income,  and $150 recorded as a reduction in
inventory from the repurchase of inventory held by API.

                                       12
<PAGE>


Item 2. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations

Safe Harbor  Statement  Under the Private  Securities  Litigation  Reform of Act
1995.

Certain statements discussed in Item 2, "Management's Discussion and Analysis of
Financial  Condition  and  Results of  Operations",  Item 3,  "Quantitative  and
Qualitative  Disclosures  about  Market  Risks",  Item  1  of  Part  II,  "Legal
Proceedings"  and  elsewhere in this  Quarterly  Report on Form 10-Q  constitute
forward-looking   statements  within  the  meaning  of  the  Private  Securities
Litigation Reform Act of 1995.  Forward-looking statements are not statements of
historical  facts,  but  rather  reflect  the  Company's  current   expectations
concerning future events and results. Such forward-looking statements, including
those  concerning the Company's  expectations,  involve known and unknown risks,
uncertainties and other factors, some of which are beyond the Company's control,
that may cause the Company's  actual results,  performance or  achievements,  or
industry  results,   to  be  materially   different  from  any  future  results,
performance  or  achievements  expressed  or  implied  by  such  forward-looking
statements.  Such risks,  uncertainties and other important factors include, the
Company's ability to obtain parts and components from its principal suppliers on
a timely  basis,  depressed  domestic  and  international  market  and  economic
conditions,  especially those currently facing the aviation industry as a whole,
the  impact of changes in fuel and other  freight-related  costs,  relationships
with its  customers,  the  ability  of the  Company's  customers  to meet  their
financial  obligations to the Company,  the ability to obtain and service supply
chain management contracts,  changes in regulations or accounting standards, the
ability to consummate  suitable  acquisitions and expand, the loss of the use of
facilities and distribution hub in Memphis,  significant failure of our computer
systems or networks,  efforts to comply with  section 404 of the  Sarbanes-Oxley
Act of 2002, and other items that are beyond the Company's control and may cause
actual results to differ from management's expectations.  In addition,  specific
consideration  should  be  given to the  various  factors  described  in Item 7,
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations",  in the  Company's  Annual  Report on Form 10-K for the year  ended
January 31, 2005, and Item 3,  "Quantitative  and Qualitative  Disclosures about
Market Risks",  in this report for the quarter and nine months ended October 31,
2005.  The  Company  undertakes  no  obligation  to update  any  forward-looking
statements or cautionary factors.

General

First Aviation Services Inc. ("First Aviation"),  together with its wholly owned
subsidiaries,  Aerospace Products  International,  Inc. ("API"),  Aircraft Parts
International, Ltd. ("API Ltd."), and API Asia Pacific Inc. ("API Asia Pacific")
(collectively,  the "Company"),  is one of the premier  suppliers of services to
the aviation industry worldwide.  The services the Company provides the aviation
industry  include the sale of aircraft  parts and  components,  the provision of
supply chain  management  services,  overhaul and repair services for brakes and
starter/generators, and the assembly of custom hoses.

The Company's  principal executive offices are located at 15 Riverside Avenue in
Westport,  Connecticut 06880. Certain filings that First Aviation makes with the
U.S.  Securities  and Exchange  Commission  are  available  on First  Aviation's
corporate website at www.favs.com.  These public filings also can be obtained by
calling our investor relations department, by e-mail at first@firstaviation.com,
or on the SEC website at www.sec.gov.

Critical Accounting Policies

There have been no significant  changes in those accounting policies the Company
considers  critical from those described under the caption "Critical  Accounting
Policies",  included  in  Item  7,  "Management's  Discussion  and  Analysis  of
Financial  Condition and Results of Operations",  in the Company's Annual Report
on Form 10-K for the year ended January 31, 2005.

Results of Operations

Net Sales

The Company's  net sales consist of sales of services to the aviation  industry,
including  parts  and  components  supply  services,   supply  chain  management
services,  and component  overhaul and repair  services.  Net sales are recorded
when parts and components are shipped and title transfers to the customer,  when
supply chain  management  services have been  provided to the customer,  or when
overhauled  and repaired  items are  completed and shipped back to the customer.
Shipping and handling  billed to customers are included in net sales.  The terms
and nature of supply chain  management  services are  stipulated  in a long-term

                                       13
<PAGE>


contract  between  the  Company  and the  customer.  The  Company  provides  its
facilities,  personnel  and systems to provide the  services at less cost to the
customer.  In  providing  services  where the Company  distributes  inventory on
behalf  of its  customer,  the  Company  may use its own  inventory  or hold its
customers' inventory without taking ownership of such inventory.  In cases where
the Company  does not take  ownership  of its  customers'  inventory,  net sales
generally  are  recognized  as a fee  based on the  sales  value of the  product
shipped through the Company's facilities, and not the sales value of the product
itself. Alternatively, the Company, when providing services to handle customer's
inventory  without  taking  ownership,  can  take a fee  based  on the  cost  of
providing services, and not on the sales value of the product.

Net sales for the three months ended October 31, 2005 increased $1.6 million, or
4.9%, to $33.6 million from $32.0 million for the three months ended October 31,
2004.  The  increases  were largely due to increases in the  corporate  aviation
sectors the company serves, a rebound in general aviation related sales,  offset
by lower sales to original  equipment  manufacturers  ("OEM"),  the airlines and
airline maintenance providers.

Net sales for the nine months ended October 31, 2005 increased $5.0 million,  or
5.3%,  to $98.3 million from $93.3 million for the nine months ended October 31,
2004.  The  reasons  for the  increase  in net sales for the nine  months  ended
October 31, 2005,  compared to the comparable  period of the prior year, was due
to the  reasons  described  above,  except  general  aviation  sales,  excluding
corporate  aviation  and  retail, were down  approximately  5% as of the quarter
ending October 31, 2005.

Sales  increased in the three and nine months ended  October 31, 2005 versus the
comparable  prior year periods in three of the four foreign  geographic  regions
the Company services. Sales in Asia improved for the three and nine months ended
October  31,  2005  over the  similar  periods  ended  October  31,  2004 due to
increases in airline sales.  Sales in Canada for the three and nine months ended
October 31, 2005 improved in the general  aviation and retail customer  sectors,
compared to the three and nine month periods  ended  October 31, 2004.  Sales in
Europe for the three and nine months ended  October 31,  2005,  increased in the
independent  airline and corporate  maintenance  repair and overhaul  facilities
sectors,  versus the  comparable  periods ended October 31, 2004.  The Company's
sales in the Latin America region  decreased for the three and nine month period
ended October 31, 2005 over the same periods ended October 31, 2004. The Company
continues to be cautious  with  respect to providing  credit to customers in the
Latin American region, and this has had a negative impact on sales.

Freight  revenue is a component of net sales and  represents  freight  billed to
customers.  Freight revenue for the three and nine months ended October 31, 2005
decreased  6.1%, to $479,000 from $510,000 for the prior year three month period
ended October 31, 2004,  and decreased 10.9%  or $177,000 to $1,440,000  for the
comparable nine month period. These decreases were primarily due to increases in
customer   incentives   resulting  from  promotional   activities  and  industry
competition.  This had an adverse effect on gross profit margin  explained below
under the caption "Gross Profit".

Cost of Sales

Cost of sales consists of costs of inventory sold,  direct costs to overhaul and
repair parts and  components,  and direct costs of providing  services.  Freight
costs for parts and components sold are also included in cost of sales.

Cost of sales for the  three  months  ended  October  31,  2005  increased  $1.3
million, or 4.8%, to $28.0 million from $26.7 million for the three months ended
October  31,  2004.  Cost of sales for the nine  months  ended  October 31, 2005
increased  $3.9  million,  or 5.0%,  to $81.5  million from $77.6 million in the
prior year period ended  October 31, 2004.  Cost of sales for the three and nine
months ended October 31, 2005  increased  compared to the prior year as a direct
result of the increase in net sales.

As a percentage  of net sales,  cost of sales  decreased  for the periods  ended
October 31, 2005, to 83.2% from 83.3%,  and 82.9% from 83.1%,  for the three and
nine months,  respectively,  over the three and nine month periods ended October
31, 2004.  The decrease in the percentage of cost of sales compared to net sales
for the three and nine months ended  October 31, 2005  compared to the three and
nine months ended October 31, 2004,  was primarily due to the reasons  described
above.

                                       14
<PAGE>


Gross Profit

Gross  profit  for the three  months  ended  October  31,  2005 of $5.6  million
exceeded  the prior year  quarter  gross  profit by $290,000  or 5.4%.  With the
increase  in gross  profit in the  current  year  quarter  versus the prior year
quarter, gross profit as a percentage of net sales  increased slightly  to 16.8%
for the three  months ended  October 31,  2005,  from 16.7% for the three months
ended  October 31, 2004,  due  primarily to the increase in gross margin for the
general aviation related and airline sectors.

Gross  profit for the nine months  ended  October 31, 2005 of $16.8  million was
increased by $1.1 million,  or 7.0% compared to gross profit for the nine months
ended  October 31,  2004.  Gross profit as a  percentage  of net sales  improved
correspondingly  to 17.1% for the nine months ended October 31, 2005, from 16.9%
for the nine months  ended  October 31, 2004.  Gross profit  margin for the nine
months ended October 31, 2005 increased compared to the comparable period of the
prior year principally due to margins  increases in the general aviation related
and airline sectors.

Gross profit is also impacted by net freight expense,  which represents  freight
expense  recorded in cost of sales,  less  freight  billed to  customers  in net
sales. Net freight expense decreased gross profit by 6.3% for the three and nine
month periods ended October 31, 2005,  compared to decreases of 5.9% and 5.3% in
the  comparable  2004 periods.  These  decreases were due primarily to increased
customer  incentives  and  promotional  activities  offering  customers  reduced
freight on shipments and competition.

Selling, General and Administrative Expenses

Selling,  general and administrative expenses for the three months ended October
31, 2005  increased  slightly by $26,000,  or 0.4% to $5.0 million for the three
months ended  October 31, 2004.  The increase for the three months ended October
31, 2005, over the comparable  prior year period is due primarily to an increase
in the bad  debt  expense  of  $107,000,  mainly  due to a  customer  receivable
write-off  for a regional  airline that filed for  bankruptcy  protection  under
chapter 11 of the U.S.  federal  bankruptcy  law,  just prior to the October 17,
2005  effective  date  for  changes  in the  U.S.  federal  bankruptcy  law that
generally  is less  favorable  to debtors.  This  regional  airline was a feeder
carrier for a large  international  carrier that also filed for protection under
chapter 11 of the U.S.  federal  bankruptcy law in September 2005.  Increases in
contract labor for IT systems maintenance, and higher depreciation charges, were
mostly  offset by lower  payroll  expenses,  advertising,  legal,  and insurance
charges.  Selling general and administrative expense as a percentage of revenues
decreased to 14.8% for the three months ended  October 31, 2005 versus 15.4% for
the three months ended October 31, 2004.

Selling,  general and administrative  expenses for the nine months ended October
31, 2005 of $14.8 million increased  slightly by $66,000 compared to the expense
incurred for the nine months ended October 31 2004.  Increases in contract labor
for IT systems maintenance, higher depreciation charges, communications, and bad
debt expense were almost completely  offset by lower payroll  expenses,  travel,
postage,  and other expenses.  Selling general and  administrative  expense as a
percentage of revenues  decreased to 15.0% for the nine months ended October 31,
2005 versus 15.7% for the nine months ended October 31, 2004.

Corporate Expenses

Corporate expenses decreased by $45,000 or 7.5% to $557,000 for the three months
ended  October 31, 2005 from  $602,000  incurred  during the three  months ended
October 31,  2004.  The  decrease  in  corporate  expenses in the quarter  ended
October  31,  2005  resulted  primarily  from  reductions  due to  First  Equity
Development's  termination of an advisory  agreement on January 31, 2005,  lower
costs  related  to the  board of  directors  and  other  expenses.  The  expense
reductions in the quarter ended October 31, 2005 described above, were partially
offset by increases in payroll and insurance costs.

Corporate  expenses  for the  nine  months  ended  October  31,  2005  decreased
$633,000,  or 26.6%, to $1.7 million,  from the $2.4 million incurred during the
nine months ended  October 31, 2004.  The decrease in corporate  expenses in the
nine months ended October 31, 2005 resulted from substantially  lower legal fees
related to corporate governance regulations and a dissident  shareholder's proxy
contest  incurred in the prior year period,  as well as the reasons  cited above
for the quarter.

                                       15
<PAGE>


Net Interest Income (Expense) and Other

During the three months ended October 31, 2005,  net interest  income  (expense)
and other decreased $143,000 as a result of a $79,000 decrease on gains reported
from foreign currency transactions in the quarter, due primarily to the relative
strengthening of the Canadian dollar that is used as the functional  currency of
the Canadian subsidiary. Interest expense for the three months ended October 31,
2005 was $53,000 or $50,000 higher than the amounts recorded in the three months
ended  October 31, 2004 due to increased  interest  rates and average  borrowing
levels,  and interest income was $14,000 lower than the $18,000 reported in 2004
due to lower amounts in interest bearing investments.

During the nine months ended October 31, 2005, net interest income (expense) and
other decreased  $98,000 in the nine months ended October 31, 2005, to $4,000 as
gains on foreign currency transactions of $75,000 and interest income of $45,000
was offset by interest  expense on  borrowings  of $116,000  for the nine months
ended October 31, 2005,  versus  interest  income of $40,000,  foreign  currency
transaction gains of $94,000,  and interest expense of $32,000 in the comparable
nine months ended October 31, 2004.

Other Income

During the nine months ended October,  31, 2005, the Company  recorded income of
$417,000  as the  result  of a cash  settlement  from a  distribution  agreement
contract dispute between API and a vendor.

Provision for Income Taxes

The Company  recorded a provision for income taxes related to foreign income tax
expense estimates for operations in Canada and the Philippines.  No provision is
made for U.S.  taxation  because the Company has  sufficient  net operating loss
carryforwards that would be utilized to offset any provision for pre-tax income.
No deferred tax provision is recorded  because it would be offset by a change in
the deferred tax valuation allowance.  The Company does not record a tax benefit
for U.S. tax purposes on any operating  losses  incurred due to the deferred tax
valuation  allowance recorded as it is more likely than not that some portion or
all of the deferred tax asset will not be realized.

Net Income (Loss) and Net Income (Loss) per Share

The Company had net income of $90,000,  or $0.01 per share for the three  months
ended  October 31, 2005,  compared to a net loss of  ($130,000),  or ($0.02) per
share for the three months ended October 31, 2004 and net income of $674,000, or
$0.09 per share for the nine months ended  October 31,  2005,  compared to a net
loss of ($1.4)  million,  or  ($0.19)  per share for the  comparable  prior year
period ended October 31, 2004. The income in the current year periods versus the
losses  in the  prior  year  periods  was due to the  reasons  described  in the
preceding sections.

Liquidity and Capital Resources
-------------------------------

The Company's liquidity  requirements arise principally from its working capital
needs.  In  addition,  the Company has  liquidity  requirements  to fund capital
expenditures  to support  its  current  operations,  and  facilitate  growth and
expansion.  The Company funds its liquidity  requirements  with a combination of
cash on hand,  cash flows  from  operations  and from  borrowings.  The  Company
manages its cash and debt to minimize its interest expense.

Cash and cash  equivalents  at any time may consist of a  combination  of demand
deposits,  money market or  short-term,  high-grade  bond funds,  and short-term
certificates of deposit.

For the nine months ended October 31, 2005 the Company used $6.9 million in cash
for  operating  activities,  compared to $0.4 million cash provided by operating
activities  for the nine months ended  October 31, 2004.  The use of cash in the
nine months  ended  October 31, 2005 versus the cash  provided in the prior year
nine month period was due to increases in inventory  due to a large  purchase of
inventory  parts  from  a  leading   aircraft  OEM,  and  additional   inventory
opportunity buys resulting from price/volume discounts, and an increase in trade
receivables  offset by an increase in accounts  payable.  On September 20, 2005,
API made an initial inventory purchase of $8.3 million,  of which  approximately
$7.1 was  received as of October 31,  2005.  The OEM vendor  agreed to partially
finance the purchase with two promissory notes from API of $2.5 million and $1.8
million,  with the Company entering into a guarantee agreement to ensure payment
by API. The promissory  note for $2.5 million is for a term of 4 years,  at 5.0%
interest per  annum. The  promissory  note  for  $1.8  million is a non-interest



                                       16
<PAGE>

bearing  short term note due within one year.  The vendor  financing  promissory
notes are subordinated to the Company's  revolving line of credit.  In addition,
subsequent to the initial  purchase and pursuant to a separate  transaction with
the same OEM,  API made an  additional  purchase of $4.8 million of inventory to
broaden the product line  offering,  pursuant to usual vendor terms with payment
due before  year-end.  Substantially  all of the $4.8 million in  inventory  was
received by October 31,  2005.  The Company  continues  to focus on managing its
overall working capital.  Cash used in investing activities was $2.2 million and
$0.6  million   during  the  nine  months  ended  October  31,  2005  and  2004,
respectively,  due primarily to purchases related to systems upgrades, and a new
ERP  implementation  of SAP  software.  The Company  expects that its  aggregate
capital expenditure requirements for the year ending January 31, 2006 will range
from  approximately  $2.5 million to $3.0  million.  Management  expects to fund
these  requirements  from cash on hand,  cash  flows from  operations,  and from
borrowings.  Net cash used in financing  activities during the nine months ended
October 31, 2005 was $0.5  million,  compared to zero for the nine months  ended
October  31,  2004,  as the Company  borrowed  $41.5  million  and repaid  $41.5
million, and repurchased preferred stock of API for $500,000.

Effective  July 29,  2005 API has a new $20  million  revolving  line of  credit
facility which under certain conditions may be increased to $25 million, through
a Commercial Revolving Loan and Security Agreement ("Agreement"). This Agreement
which expires on September 1, 2007 replaces the Company's  prior  facility which
was  scheduled  to expire  July 1, 2006.  Borrowings  under this  facility  bear
interest  equal to LIBOR plus 1.5% and are limited to specified  percentages  of
eligible trade  receivables  and  inventories  of API. The Agreement  contains a
number of  covenants,  including  restrictions  on mergers,  consolidations  and
acquisitions, the incurrence of indebtedness,  transactions with affiliates, the
creation of liens,  and  limitations  on capital  expenditures.  Pursuant to the
terms and conditions of the Agreement,  the payment of dividends on API's common
stock is prohibited,  except with the lender's  consent,  and API is required to
maintain  minimum levels of net worth and specified  interest  expense  coverage
ratios.  Substantially  all of API's  domestic  assets are pledged as collateral
under the Facility,  and First  Aviation  guarantees  all  borrowings  under the
Agreement.  In October  2005,  the  lender  agreed to  increase  the line to $25
million due to a large inventory purchase made by the Company in September 2005.
At October 31, 2005,  borrowings under the facility totaled $14.5 million, at an
interest  rate of  approximately  5.4%.  This amount  represented  a draw on the
facility just prior to October 31, 2005,  and shortly after the quarter end, the
Company  repaid  $8.0  million  of  the  borrowings  that  were  outstanding  at
quarter-end.  The Company  regularly  draws down on the  facility  just prior to
quarter  end,  holds this cash,  and then repays some or all of the amount drawn
shortly  after the quarter  end.  The purpose of these draw downs is to indicate
that  the  Company  has  access  to cash  for  potential  acquisitions  or other
investment  opportunities  that  may  arise.   Approximately  $7.6  million  was
available under the facility at October 31, 2005. The new facility  extended the
maturity to  September  1, 2007,  therefore,  borrowings  under the facility are
classified as long term.  Management  believes  that the carrying  amount of the
Company's borrowings approximates fair market value because the interest rate is
variable and resets frequently.

At this time, the Company  anticipates that all future earnings will be retained
for use in the Company's  business.  Any payment of cash dividends in the future
on the Company's  common stock will be dependent  upon the  Company's  financial
condition, its results of operations, current and anticipated cash requirements,
plans for  expansion,  the  ability  of its  subsidiaries  to pay  dividends  or
otherwise make cash payments or advances to it, and restrictions,  if any, under
any future  debt  obligations,  as well as any other  factors  that the Board of
Directors deems relevant.

In conjunction  with the Company's  acquisition of API in 1997, AMR Combs,  Inc.
("AMR Combs")  purchased  10,407  shares of API Series A  Convertible  Preferred
Stock,  $0.001 par value,  with  annual  dividends  of $4.00 per share,  payable
quarterly (the "Convertible  Preferred Stock").  On March 5, 1999, AMR Combs was
acquired by Signature Flight Support, an affiliate of BBA Group Plc. On June 20,
2005, all of the outstanding  shares of Preferred Stock were  repurchased by the
Company for $500,000. The difference between the carrying value and the purchase
price was recorded as additional paid-in capital.

Based upon current and anticipated  levels of operations,  the Company  believes
that cash flow from operations, combined with cash on hand, and the availability
under the  Facility,  will be  sufficient  to meet its current  and  anticipated
operating cash  requirements  for the foreseeable  future,  including  scheduled
interest  and  principal  payments,  capital  expenditures,   minority  interest
requirements, working capital needs, and cash required for acquisitions that the
Company may pursue.

                                       17
<PAGE>


Contractual Obligations
-----------------------

API entered into an initial parts purchase  agreement on September 20, 2005 with
a leading  aircraft OEM to purchase  $8.3 million of  inventory.  As part of the
purchase  financing,  API entered into two promissory  notes of $2.5 million and
$1.8 million,  with the Company  entering  into a guarantee  agreement to ensure
payment by API. The  promissory  note for $2.5 million is for a term of 4 years,
at  5.0%  interest  per  annum.  The  promissory  note  for  $1.8  million  is a
non-interest  bearing  short-term note due within one year. The vendor financing
promissory notes are subordinated to the Company's revolving line of credit.

As of October 31, 2005, there have been no material changes outside the ordinary
course  of  the  Company's  business  in  the  Company's  specified  contractual
obligations  disclosed in the Company's  Annual Report on Form 10-K for the year
ended January 31, 2005.


Item 3. Quantitative and Qualitative Disclosures about Market Risks
-------------------------------------------------------------------

The  Company's  Canadian   operations  utilize  the  Canadian  dollar  as  their
functional  currency,  while the  Company's  Asian  operation  utilizes the U.S.
dollar as its functional currency.  The Company has transactions  denominated in
Canadian  dollars and  Philippine  pesos.  The Company is exposed to market risk
from foreign exchange rates.  Foreign currency  transaction exposure principally
arises from the  transfer of foreign  currency to and/or from U.S.  dollars from
one  subsidiary  to  another  within  the  Company,  and from  foreign  currency
denominated trade receivables.  Currency  transaction and translation  exposures
are not hedged.  Foreign currency  transaction  gains and losses are included in
earnings,  and gains or losses will increase in significance  with the growth of
the  Canadian  operations.  Unrealized  currency  translation  gains and  losses
resulting from the  translation of foreign  subsidiaries  balance sheets to U.S.
dollars are not recorded as income or expense, but are recognized in the Balance
Sheet as other  comprehensive  income or loss as a  component  of  Stockholder's
Equity.  The Company does have risk  principally  relating to the translation of
accounts in which the Canadian  dollar is the functional  currency.  Sensitivity
analysis of foreign  currency  exchange rate risk assumes an  instantaneous  10%
change in the foreign  currency  exchange  rates from their level at October 31,
2005,  with all  other  variables  held  constant.  A 10%  strengthening  of the
Canadian   dollar  versus  the  U.S.  dollar  would  result  in  a  decrease  of
approximately $143,111 in the net liability position of financial instruments at
October 31, 2005. A 10% weakening of the Canadian  dollar versus the U.S. dollar
would  result in an increase  of  approximately  $174,918  in the net  liability
position of financial  instruments at October 31, 2005.  During the three months
ended October 31, 2005, the Company  experienced a foreign currency  translation
gain of $63,000, due to an increase in the value of the Canadian dollar relative
to the U.S.  dollar.  During the nine months ended  October 31, 2005 the Company
experienced a foreign currency  translation gain of $83,000,  due to an increase
in the value of the Canadian dollar relative to the U.S. dollar.

Borrowings of the Company are denominated in U.S. dollars.  Management  believes
that the carrying  amount of the Company's  borrowings  approximates  fair value
because the interest rates are variable and reset frequently.




Item 4. Controls and Procedures
-------------------------------

The Company's  management  evaluated,  with the  participation  of the Company's
principal executive and principal  financial officers,  the effectiveness of the
Company's  disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e)  under the Securities  Exchange Act of 1934, as amended (the "Exchange
Act")),  as of  October  31,  2005.  Based on their  evaluation,  the  Company's
principal   executive  and  principal  financial  officers  concluded  that  the
Company's  disclosure  controls and procedures  were effective as of October 31,
2005.

There  has been no change  in the  Company's  internal  control  over  financial
reporting (as defined in Rules  13a-15(f) and 15d-15(f)  under the Exchange Act)
that occurred  during the Company's  fiscal quarter ended October 31, 2005, that
has  materially  affected,  or is reasonably  likely to materially  affect,  the
Company's internal control over financial reporting.

                                       18
<PAGE>


                           PART II - OTHER INFORMATION
                           ---------------------------

Item 1. Legal Proceedings
-------------------------

The Company's business exposes it to possible claims for personal injury,  death
or property  damage that may result from a failure of certain parts  serviced by
the Company or spare parts and components  sold by it, or in connection with the
provision of its supply chain  management  services.  The Company  takes what it
believes  to be  adequate  precautions  to  ensure  the  quality  of the work it
performs and the  traceability  of the  aircraft  parts and  components  that it
sells.  The  original  equipment   manufacturers  that  manufacture  the  parts,
components and supplies that the Company sells carry liability  insurance on the
products they manufacture.  In addition,  the Company maintains what it believes
is adequate liability insurance to protect it from any claims.

In the normal  conduct of its business,  the Company also is involved in various
claims and lawsuits,  none of which, in the opinion of the Company's management,
will have a material,  adverse  impact on the Company's  consolidated  financial
position. The Company maintains what it believes is adequate liability and other
insurance to protect it from such claims.  However,  depending on the amount and
timing,  unfavorable  resolution  of any of these  matters could have a material
effect on the Company's consolidated  financial position,  results of operations
or cash flows in a particular period.


Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
-------------------------------------------------------------------

NONE

Item 3. Defaults Upon Senior Securities
---------------------------------------

NONE

Item 4. Submission of Matters to a Vote of Security Holders
-----------------------------------------------------------

NONE

Item 5. Other Information
-------------------------

NONE

Item 6. Exhibits
----------------
       31.1    Certification  of  Chief  Executive   Officer  required  by  Rule
               13a-14(a).

       31.2    Certification  of  Chief  Financial   Officer  required  by  Rule
               13a-14(a).

       32.1    Certification  of  Chief  Executive   Officer  required  by  Rule
               13a-14(b) and 18 U.S.C. Section 1350 (furnished herewith).

       32.2    Certification  of  Chief  Financial   Officer  required  by  Rule
               13a-14(b) and 18 U.S.C. Section 1350 (furnished herewith).

                                       19
<PAGE>


                                   SIGNATURES


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

                                   First Aviation Services Inc.
                                   ----------------------------
                                          (Registrant)


Date: December 15, 2005            /S/ Michael C. Culver
                                   -------------------------------------------
                                   Michael C. Culver,
                                   President, Chief Executive Officer and
                                   Director (Principal Executive Officer)


Date: December 15, 2005            /S/ Robert G. Costantini
                                   -------------------------------------------
                                   Robert G. Costantini,
                                   Chief Financial Officer (Principal Financial
                                   and Accounting Officer)

                                       20