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 JULY 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
September 1, 2005 is 7,341,451



<PAGE>

<TABLE>
<CAPTION>

                          FIRST AVIATION SERVICES INC.

                                      INDEX

                         PART I - FINANCIAL INFORMATION


Item 1.  Financial Statements  (Unaudited):
<S>                                                                                                              <C>
         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 and Results of Operations................13-17

Item 3.  Quantitative and Qualitative Disclosures about Market Risks.............................................17

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 ......................................................................................20

Item 6.  Exhibits................................................................................................20

</TABLE>

                                       2
<PAGE>


                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                          FIRST AVIATION SERVICES INC.

                      Consolidated Condensed Balance Sheets
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)



<TABLE>
<CAPTION>
                                                                              July 31,             January 31,
                                                                                2005                  2005
                                                                              -------------        -----------
                                                                             (unaudited)               *
Assets
Current assets:
<S>                                                                           <C>                  <C>
      Cash and cash equivalents                                               $ 19,516             $ 22,584
      Trade receivables, net of allowance for doubtful                          17,210               14,563
         accounts of $651 and $806, respectively
      Inventory, net of allowance for slow moving and obsolete                  26,881               24,156
         inventory of $1,740 and $1,656, respectively
      Prepaid expenses and other                                                 1,166                  900
                                                                              --------             --------
Total current assets                                                            64,773               62,203
Plant and equipment, net                                                         3,346                2,996
                                                                              --------             --------
Total Assets                                                                  $ 68,119             $ 65,199
                                                                              ========             ========
Liabilities and stockholders' equity
Current liabilities:
      Accounts payable                                                        $ 13,100             $ 10,495
      Accrued compensation and related expenses                                  1,254                1,205
      Other accrued liabilities                                                  2,380                2,424
      Income taxes payable                                                       1,026                  900
                                                                              --------             --------
Total current liabilities                                                       17,760               15,024
      Revolving line of credit                                                  14,500               14,500
      Minority interest in subsidiary                                             --                  1,041
                                                                              --------             --------
Total liabilities                                                               32,260               30,565

Stockholders' equity:
      Common stock, $0.01 par value, 25,000,000 shares authorized,                  91                   91
          9,135,699 shares issued
      Additional paid-in capital                                                38,822               38,318
      Retained earnings                                                          5,909                5,325
      Accumulated other comprehensive income                                       394                  374
                                                                              --------             --------
                                                                                45,216               44,108
      Less:  Treasury stock, at cost, 1,794,248 and 1,814,191                   (9,357)              (9,474)
          shares, respectively
                                                                              --------             --------
Total stockholders' equity                                                      35,859               34,634
                                                                              --------             --------
Total liabilities and stockholders' equity                                    $ 68,119             $ 65,199
                                                                              ========             ========
See accompanying notes.
</TABLE>

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


                                       3
<PAGE>





                          FIRST AVIATION SERVICES INC.

           Consolidated Condensed Statements of Operations (Unaudited)
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)




<TABLE>
<CAPTION>
                                                                    Three months ended
                                                                          July 31,
                                                               2005                      2004
                                                            -----------              -----------
<S>                                                         <C>                      <C>
Net sales                                                   $    32,706              $    31,072
Cost of sales                                                    27,164                   26,303
                                                            -----------              -----------
Gross profit                                                      5,542                    4,769
Selling, general and administrative expenses                      4,928                    4,759
Corporate expenses                                                  583                      845
                                                            -----------              -----------
Income (loss) from operations                                        31                     (835)
Net interest income (expense) and other                              36                       36
Other income                                                        417                     --
Minority interest in subsidiary                                    --                        (11)
                                                            -----------              -----------
Income (loss) before income taxes                                   484                     (810)
Provision for income taxes                                          (52)                     (23)
                                                            -----------              -----------
Net income (loss)                                           $       432              $      (833)
                                                            ===========              ===========
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                          $      0.06              $     (0.11)
                                                            ===========              ===========
Weighted average shares outstanding - basic                   7,333,457                7,298,069
                                                            ===========              ===========
Weighted average shares outstanding - assuming dilution       7,337,753                7,298,069
                                                            ===========              ===========

See accompanying notes.

</TABLE>

                                       4
<PAGE>


                          FIRST AVIATION SERVICES INC.

           Consolidated Condensed Statements of Operations (Unaudited)
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)



<TABLE>
<CAPTION>
                                                                        Six months ended
                                                                           July 31,
                                                                 2005                    2004
                                                             -----------              -----------
<S>                                                          <C>                      <C>
Net sales                                                    $    64,687              $    61,287
Cost of sales                                                     53,491                   50,906
                                                             -----------              -----------
Gross profit                                                      11,196                   10,381
Selling, general and administrative expenses                       9,788                    9,749
Corporate expenses                                                 1,187                    1,775
                                                             -----------              -----------
Income (loss) from operations                                        221                   (1,143)
Net interest income (expense) and other                               (2)                     (46)
Other income                                                         417                     --
Minority interest in subsidiary                                      (10)                     (21)
                                                             -----------              -----------
Income (loss) before income taxes                                    626                   (1,210)
Provision for income taxes                                           (42)                     (33)
                                                             -----------              -----------
Net income (loss)                                            $       584              $    (1,243)
                                                             ===========              ===========
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                           $      0.08              $     (0.17)
                                                             ===========              ===========
Weighted average shares outstanding - basic                    7,329,077                7,294,102
                                                             ===========              ===========
Weighted average shares outstanding - assuming dilution        7,333,590                7,294,102
                                                             ===========              ===========
</TABLE>



See accompanying notes.

                                       5
<PAGE>


                          FIRST AVIATION SERVICES INC.

           Consolidated Condensed Statements of Cash Flows (Unaudited)
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)



<TABLE>
<CAPTION>
                                                                                        Six months ended
                                                                                           July 31,
                                                                                     2005              2004
                                                                                   --------          --------
Cash flows from operating activities
<S>                                                                                <C>               <C>
Net income (loss)                                                                  $    584          $ (1,243)
Adjustments to reconcile net income (loss) to net
     cash from operating activities - non-cash charges:
      Depreciation and amortization                                                     538               455
      Compensation paid through issuance of stock                                        80                90
(Increase) decrease in current assets:
      Trade receivables                                                              (2,642)           (2,533)
      Inventory                                                                      (2,720)              430
      Prepaid and other                                                                (253)              207
Increase (decrease) in current liabilities:
      Accounts payable                                                                2,599               624
      Accrued compensation and related expenses, and other accrued liabilities            3               517
      Income taxes payable                                                              125                 6
                                                                                   --------          --------
Net cash used in operating activities                                                (1,686)           (1,447)
Cash flows from investing activities
Purchases of plant and equipment                                                       (885)             (415)
Proceeds from disposals of plant and equipment                                         --                   3
                                                                                   --------          --------
Net cash used in investing activities                                                  (885)             (412)
Cash flows from financing activities
Borrowings on revolving line of credit                                               29,000            27,150
Repayments on revolving line of credit                                              (29,000)          (27,150)
Repurchase of preferred stock of subsidiary                                            (500)             --
                                                                                   --------          --------
Net cash used in financing activities                                                  (500)             --
                                                                                   --------          --------
Net decrease in cash and cash equivalents                                            (3,071)           (1,859)

Effect of exchange rates on cash                                                          3                 3

Cash and cash equivalents at beginning of period                                     22,584            25,144
                                                                                   --------          --------
Cash and cash equivalents at end of period                                         $ 19,516          $ 23,288
                                                                                   ========          ========
Supplemental cash flow disclosures:
      Interest paid                                                                $     63          $     19
      Income taxes paid                                                            $     12          $     41


See accompanying notes.
</TABLE>



                                        6


<PAGE>




                          FIRST AVIATION SERVICES INC.

        Notes to Consolidated Condensed Financial Statements (Unaudited)
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)

                                  July 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 July 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>
                                                           Three months ended                   Six months ended
                                                                July 31,                             July 31,
                                                          2005              2004              2005              2004
                                                        ---------         ---------         ---------         ---------
Denominator:
<S>                                                     <C>               <C>               <C>               <C>
  Denominator for basic net income (loss)
     per share - weighted average shares                7,333,457         7,298,069         7,329,077         7,294,102
  Effect of dilutive employee stock options                 4,296               n/a             4,513               n/a
                                                        ---------         ---------         ---------         ---------
  Denominator for net income (loss) per
     share - assuming dilution, adjusted
        weighted average shares and assumed
        dilutions                                       7,337,753         7,298,069         7,333,590         7,294,102
                                                        =========         =========         =========         =========
</TABLE>

For the three and six months ended July 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 six months ended
July 31, 2004, were 11,882, and 10,910 shares, respectively.




                                       7
<PAGE>





                          FIRST AVIATION SERVICES INC.

        Notes to Consolidated Condensed Financial Statements (Unaudited)
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
                                  (Continued)

                                  July 31, 2005



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 July 31, 2005 and 2004,  the Company
issued 5,837 and 6,128 shares respectively, to directors for board fees. For the
six months ended July 31, 2005 and 2004,  the Company  issued  17,211 and 18,995
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
six months  ending  July 31,  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.  No
options  were  issued  for the three or six  months  ended  July 31,  2005.  The
following assumptions were used for options issued during the six months ended
July 31, 2004:

                                                                     2004
                                                                ------------
        Expected dividend yield                                      0.0%
        Risk-free interest rate                                      3.6%
        Expected volatility                                         31.9%
        Expected life of option                                      5.0 years
        Weighted-average fair value of
           options granted                                         $ 1.56




                                       8
<PAGE>





                          FIRST AVIATION SERVICES INC.

        Notes to Consolidated Condensed Financial Statements (Unaudited)
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
                                  (Continued)

                                  July 31, 2005


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>
                                                              Three months ended               Six months ended
                                                                   July 31,                        July 31,
                                                              2005           2004            2005             2004
                                                            -------         -------         -------         --------
<S>                                                         <C>             <C>             <C>             <C>
Net income (loss) as reported                               $   432         $  (833)        $   584         $(1,243)

Pro forma net compensation expense for issuance of
  stock options                                                  13              12              26              31
                                                            -------         -------         -------         -------
Pro forma net income (loss)                                 $   419         $  (845)        $   558         $(1,274)
                                                            =======         =======         =======         =======
Basic net income (loss) per share, and net income
(loss) per share - assuming dilution as reported
                                                            $  0.06         $ (0.11)        $  0.08         $ (0.17)
Pro forma basic net income (loss) per share, and
net income (loss) per share - assuming dilution
                                                            $  0.06         $ (0.12)        $  0.08         $ (0.17)
                                                            =======         =======         =======         =======
</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 six months  ended July 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>
                          FIRST AVIATION SERVICES INC.

        Notes to Consolidated Condensed Financial Statements (Unaudited)
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
                                  (Continued)

                                  July 31, 2005
<TABLE>
<CAPTION>
                                                         Three months ended                 Six months ended
                                                              July 31,                          July 31,
                                                        2005             2004               2005            2004
                                                       -------          -------           -------          -------
<S>                                                    <C>              <C>               <C>              <C>
Net income (loss) as reported                          $   432          $  (833)          $   584          $(1,243)

Net impact of foreign currency translation
  adjustments - gain                                        43               60                20               33
                                                       -------          -------           -------          -------
Net comprehensive income (loss)                        $   475          $  (773)          $   604          $(1,210)
                                                       =======          =======           =======          =======
</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 terminated on January 31, 2005.
During the three and six months ended July 31, 2005,  and 2004, the Company paid
First Equity retainer fees of $0 and $90, and $0 and $180, respectively,  and no
Success Fee.

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  also
terminated with the expiration of the advisory agreement on January 31, 2005, as
described above.
                                       10
<PAGE>




                          FIRST AVIATION SERVICES INC.

        Notes to Consolidated Condensed Financial Statements (Unaudited)
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
                                  (Continued)

                                  July 31, 2005



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 and $20,
for the three months ended July 31, 2005,  and 2004 and $45 and $40, for the six
months  ended July 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,  $10 and
$16, for the three months ended July 31, 2005, and 2004,  respectively,  and $20
and $26, for the six months ended July 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>
                                                 Three months ended                    Six months ended
                                                     July 31,                              July 31,
                                              2005               2004               2005             2004
                                              ----               ----               ----             ----
<S>                                           <C>                <C>                <C>              <C>
Interest income                               $ 14               $ 12               $ 41             $ 22
Interest expense                               (29)               (13)               (63)             (29)
Foreign exchange gain (loss)                    51                 37                 20              (39)
                                              ----               ----               ----             ----
                                              $ 36               $ 36               $ (2)            $(46)
                                              ----               ----               ----             ----
</TABLE>


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").



                                       11
<PAGE>

        Notes to Consolidated Condensed Financial Statements (Unaudited)
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
                                  (Continued)

                                  July 31, 2005

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.  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.  REPURCHASE OF PREFERRED STOCK OF SUBSIDIARY

Per 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.


10. 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 the  remainder  to  repurchase
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 SIX MONTHS  ENDED JULY 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
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 July 31, 2005  increased  $1.6 million,  or
5.3%,  to $32.7  million from $31.1  million for the three months ended July 31,
2004.  The  corporate,  retail,  and corporate  maintenance  repair and overhaul
facilities  sectors  were largely  responsible  for the increase in sales in the
quarter,  offset by general  aviation  sales that were  impacted  by rising fuel
prices. The increases are attributable to increased levels of global air traffic
leading to increases in maintenance and repairs, and the corresponding parts and
services the Company provides.
                                       13
<PAGE>
Net sales for the six months  ended July 31, 2005  increased  $3.4  million,  or
5.5%,  to $64.7  million  from $61.3  million for the six months  ended July 31,
2004.  The reasons for the  increase in net sales for the six months  ended July
31, 2005,  compared to the  comparable  period of the prior year, was due to the
reasons described above.

Sales increased in the three and six months ended July 31, 2005 versus the prior
year periods in two of the four foreign  geographic  regions the Company serves.
Sales in Asia improved for the three and six months ended July 31, 2005 over the
similar periods ended July 31, 2004 due to increases in airline sales.  Sales in
Canada for the three and six months ended July 31, 2005  improved in the general
aviation  and  retail  customer  sectors,  compared  to the  three and six month
periods ended July 31, 2004.  Sales in Europe for the three and six months ended
July 31, 2005,  decreased in the airline and general aviation  customer sectors,
versus the comparable  periods ended July 31, 2004.  The Company's  sales in the
Latin America  region  decreased,  for the three and six month period ended July
31, 2005 over the same periods ended July 31, 2004. The Company  continues to be
cautious  with  respect to providing  credit to customers in the Latin  American
region, and this has 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 six months  ended July 31,  2005
decreased  7.6%, to $473,000 from $512,000 for the prior year three month period
ended July 31,  2004,  and  decreased  13.2% or  $146,000  to  $962,000  for the
comparable six 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 July 31, 2005  increased  $0.9 million,
or 3.3%, to $27.2 million from $26.3 million for the three months ended July 31,
2004.  Cost of sales for the six  months  ended  July 31,  2005  increased  $2.6
million,  or 5.1%,  to $53.5 million from $50.9 million in the prior year period
ended July 31,  2004.  Cost of sales for the three and six months ended July 31,
2005 increased compared to the prior year principally due to the increase in net
sales, and a marginal increase in freight expense.  An increase in the inventory
reserve incurred in the prior year quarter ended July 31, 2004 offset the effect
of increases to cost of sales for the three and six months ended July 31, 2005.


As a percentage of net sales, cost of sales decreased for the periods ended July
31,  2005,  to 83.1% from  84.7%,  and 82.7% from  83.1%,  for the three and six
months, respectively,  over the three and six month periods ended July 31, 2004.
The decrease in the  percentage  of cost of sales  compared to net sales for the
three and six months  ended July 31,  2005  compared to the three and six months
ended July 31, 2004, was primarily due to the reasons described above.

GROSS PROFIT

Gross profit for the three  months ended July 31, 2005 of $5.5 million  exceeded
the prior year  quarter  gross  profit by $773,000 or 16.2% 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  to 16.9% for the three  months
ended July 31, 2005, from 15.3% for the three months ended July 31, 2004, due to
charges in the prior period  described above, in the discussion of cost of sales
for the adjustments to the inventory reserve.

Gross  profit  for the six  months  ended  July 31,  2005 of $11.2  million  was
increased by $815,000, or 7.9% compared to gross profit for the six months ended
July  31,  2004.   Gross  profit  as  a  percentage   of  net  sales   increased
correspondingly  to 17.3% for the six months ended July 31, 2005, from 16.9% for
the six months ended July 31, 2004. Gross profit margin for the six months ended
July 31,  2005  increased  compared to the  comparable  period of the prior year
principally due to the adjustments to the inventory  reserve  described above in
the cost of sales.

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 6.5% and 6.3%, respectively
for the three and six months ended July 31, 2005,  compared to decreases of 6.4%
and 4.9%  respectively in the comparable 2004 periods.  These decreases were due
primarily to increased customer incentives from promotional  activities offering
customers reduced freight on shipments.

                                       14
<PAGE>

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses for the three months ended July 31,
2005 increased  $0.1 million,  or 3.6% to $4.9 million from $4.8 million for the
three months  ended July 31, 2004.  The increase for the three months ended July
31, 2005, over the comparable  prior year period is due to increases in contract
labor for IT systems  maintenance,  higher  depreciation  charges,  and  charges
related to bad debt reserves,  offset by lower payroll  costs,  travel and legal
charges.  Selling general and administrative expense as a percentage of revenues
was 15.1% for the three  months  ended July 31, 2005 versus  15.3% for the three
months ended July 31, 2004.

Selling,  general and administrative  expenses for the six months ended July 31,
2005 of $9.8 million was  substantially  on par with the expense incurred in the
prior year  period.  Increases  in  contract  labor for IT systems  maintenance,
higher depreciation charges,  property taxes, and bad debt reserves, were offset
by  lower  payroll  costs,  travel,  and  legal  charges.  Selling  general  and
administrative  expense as a percentage  of revenues  decreased to 15.1% for the
six months  ended July 31, 2005 versus  15.9% for the six months  ended July 31,
2004.

CORPORATE EXPENSES

Corporate expenses for the three months ended July 31, 2005 decreased  $262,000,
or 31.0%, to $583,000,  from the $845,000 incurred during the three months ended
July 31, 2004. The decrease in corporate  expenses in the quarter ended July 31,
2005  resulted  primarily  from  reductions  in legal fees  related to corporate
governance  regulations and a dissident  shareholder's proxy contest incurred in
the prior year period,  First Equity  Development's  termination  of an advisory
agreement  January 31, 2005, and lower franchise taxes that were incurred in the
prior year  quarter  ended July 31, 2004 and not  incurred  in the current  year
quarter.  The expense  reductions in the quarter  ended July 31, 2005  described
above, were offset by increases in payroll costs.

Corporate expenses for the six months ended July 31, 2005 decreased $588,000, or
33.1%,  to $1.2 million,  from the $1.8 million  incurred  during the six months
ended July 31, 2004. The decrease in corporate  expenses in the six months ended
July 31, 2005 resulted from the reductions  cited for the quarter above.

NET INTEREST INCOME (EXPENSE) AND OTHER

During the three months ended July 31, 2005, Net Interest  Income  (Expense) and
Other increased $14,000 as a result of gains on foreign currency transactions in
the quarter,  due primarily to a  strengthening  Canadian dollar that is used as
the functional  currency of the Canadian  subsidiary.  Interest  expense for the
three months ended July 31, 2005 was $29,000 or $16,000  higher than the amounts
recorded in the three months ended July 31, 2004.

During the six months ended July 31, 2005,  interest  income from  investing the
Company's cash in short term investments, increased by $19,000 to $41,000 in the
current  year over the  comparable  prior year  period.  The increase was due to
higher interest rates, and a revised investment strategy  maximizing  investment
yield while minimizing market risk for the current year ended July 31, 2005. Net
Interest Income  (Expense) and Other  increased  $44,000 in the six months ended
July 31, 2005, as gains on foreign currency transactions of $20,000, for the six
months ended July 31, 2005, replaced a loss on foreign currency  transactions of
($39,000),  due primarily to the  strengthening  Canadian dollar that is used as
the functional currency of the Canadian subsidiary. Interest expense for the six
months ended July 31, 2005  increased by $34,000 in the current six month period
versus the prior year period.


                                       15
<PAGE>


OTHER INCOME

During the quarter and six months  ended July,  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 $432,000,  or $0.06 per share for the three months
ended July 31, 2005, compared to a net loss of ($833,000),  or ($0.11) per share
for the three months  ended July 31, 2004 and net income of  $584,000,  or $0.08
per share for the six months  ended  July 31,  2005,  compared  to a net loss of
($1.2) million,  or ($0.17) per share for the comparable prior year period ended
July 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 six months ended July 31, 2005 the Company used $1.7 million in cash for
operating  activities,   compared  to  $1.4  million  cash  used  for  operating
activities  for the six months ended July 31,  2004.  The use of cash in the six
months  ended  July 31,  2005  versus  the cash used in the prior year six month
period was due to an increase in inventory and other working capital needs.  The
Company continues to focus on managing its overall working capital. Cash used in
investing  activities  was $0.9 million and $0.4  million  during the six months
ended July 31, 2005 and 2004, respectively,  due primarily to purchases of plant
and  equipment.  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 six months  ended July 31,  2005 was  $500,000
compared to zero for the six months ended July 31, 2004, as the Company borrowed
$29.0 million and repaid $29.0 million,  and repurchased  preferred stock of API
for $500,000 during the quarter ended July 31, 2005.

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  Agreement,  and First Aviation  guarantees  all borrowings  under the
facility. At July 31, 2005, borrowings under the facility totaled $14.5 million,
at an interest rate of approximately 4.8%. This amount represented a draw on the
facility  just prior to July 31,  2005,  and shortly  after the quarter end, the
Company  repaid  $13.5  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  $2.4  million  was
available  under the  facility at July 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.





                                       16
<PAGE>

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.

CONTRACTUAL OBLIGATIONS

As of July 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 July 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
$183,000 in the net  liability  position of  financial  instruments  at July 31,
2005. A 10% weakening of the Canadian dollar versus the U.S. dollar would result
in an  increase  of  approximately  $221,000  in the net  liability  position of
financial  instruments at July 31, 2005.  During the three months ended July 31,
2005, the Company  experienced a foreign  currency  translation gain of $43,000,
due to an  increase  in the value of the  Canadian  dollar  relative to the U.S.
dollar.  During the six months  ended July 31,  2005 the Company  experienced  a
foreign currency translation gain of $20,000, 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.


                                       17
<PAGE>


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 July 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 July 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 July 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

The  Company's  Annual  Meeting of  Stockholders  was held on June 7,  2005,  in
Memphis, Tennessee, for the purpose of (i) electing one Class III Director for a
term to expire at the Annual Meeting of  Stockholders in the year 2008, and (ii)
ratifying the appointment of Ernst & Young LLP, as independent  auditors for the
year ending  January 31, 2006. The  stockholder  proposal  regarding  cumulative
voting for director  elections  was not  presented at the meeting.  Proxies were
solicited from holders of 7,332,882 outstanding shares of Common Stock as of the
close of business on May 3, 2005, as described in the Company's Definitive Proxy
Statement dated May 10, 2005. The Inspectors of Election,  IVS Associates  Inc.,
certified  the election  results for the Annual  Meeting.  Joseph J. Lhota,  the
nominee for director,  was elected, and the appointment of Ernst & Young LLP was
ratified by the following votes:

  (1)  To elect  one  director  for a  three-year  term to  expire at the
       Annual Meeting of Shareholders in the year 2008 (Class III).



                                     VOTES            VOTES           BROKER
       NAME                           FOR            WITHHELD        NON-VOTES
       ---------------             ---------         --------        ---------
       Joseph J. Lhota             7,192,312          51,771            -0-

     Aaron P. Hollander,  Stanley J. Hill, Michael C. Culver, and Robert L. Kirk
     continue to serve as directors of the Company  after the Annual  Meeting of
     Stockholders.

  (2)  To ratify the  appointment  of Ernst & Young LLP as the  Company's
       independent auditors for the fiscal year ending January 31, 2006.

          VOTES                  VOTES              VOTES              BROKER
          FOR                   AGAINST           ABSTAINED           NON-VOTES
       ---------                -------           ---------           ---------
       7,236,235                 3,900              3,948                -0-


                                       19
<PAGE>

ITEM 5. OTHER INFORMATION

NONE

ITEM 6. EXHIBITS

10.1 Compensation  for  Services  of the Board of  Directors  of First  Aviation
     Services  Inc.  (filed as Exhibit 10.1 to the Company's  Current  Report on
     Form 8-K dated  June 7,  2005 (No.  0-21995),  and  incorporated  herein by
     reference).

10.2 Preferred  Stock  Purchase  Agreement,  dated as of June 20, 2005,  between
     Signature  Combs,  Inc.  (f/k/a AMR  Combs,  Inc.) and  Aerospace  Products
     International,  Inc. (filed as Exhibit 10.1 to the Company's Current Report
     on Form 8-K dated June 20, 2005 (No. 0-21995),  and incorporated  herein by
     reference).

10.3 Amended and Restated  Commerical  Revolving  Loan and  Security  Agreement,
     dated  as  of  July  29,  2005,   entered   into  by   Aerospace   Products
     International,  Inc., a direct  wholly-owned  subsidiary of First  Aviation
     Services,  Inc.  and  Hudson  United  Bank  (filed as  Exhibit  10.1 to the
     Company's Current Report on Form 8-K dated July 29, 2005 (No. 0-21995), and
     incorporated herein by reference).

10.4 Amended and Restated  Guaranty,  dated as of July 29, 2005, entered into by
     First   Aviation   Services,   Inc.  (on  behalf  of   Aerospace   Products
     International,  Inc., a direct  wholly-owned  subsidiary of First  Aviation
     Services,  Inc.) and  Hudson  United  Bank  (filed as  Exhibit  10.2 to the
     Company's Current Report on Form 8-K dated July 29, 2005 (No. 0-21995), and
     incorporated herein by reference).

10.5 Compensation for Aaron P. Hollander.


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).



                                       20


<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: September 14, 2005         /s/  Michael C. Culver
                                 -------------------------------------------
                                 Michael C. Culver,
                                 President, Chief Executive Officer and
                                 Director (Principal Executive Officer)


Date: September 14, 2005         /s/  Robert G. Costantini
                                 -------------------------------------------
                                 Robert G. Costantini,
                                 Chief Financial Officer (Principal Financial
                                 and Accounting Officer)

                                       21


<PAGE>



                                INDEX TO EXHIBITS


EXHIBIT
  NO.                DESCRIPTION

10.1 Compensation  for  Services  of the Board of  Directors  of First  Aviation
     Services  Inc.  (filed as Exhibit 10.1 to the Company's  Current  Report on
     Form 8-K dated  June 7,  2005 (No.  0-21995),  and  incorporated  herein by
     reference).

10.2 Preferred  Stock  Purchase  Agreement,  dated as of June 20, 2005,  between
     Signature  Combs,  Inc.  (f/k/a AMR  Combs,  Inc.) and  Aerospace  Products
     International,  Inc. (filed as Exhibit 10.1 to the Company's Current Report
     on Form 8-K dated June 20, 2005 (No. 0-21995),  and incorporated  herein by
     reference).

10.3 Amended and Restated  Commerical  Revolving  Loan and  Security  Agreement,
     dated  as  of  July  29,  2005,   entered   into  by   Aerospace   Products
     International,  Inc., a direct  wholly-owned  subsidiary of First  Aviation
     Services,  Inc.  and  Hudson  United  Bank  (filed as  Exhibit  10.1 to the
     Company's Current Report on Form 8-K dated July 29, 2005 (No. 0-21995), and
     incorporated herein by reference).

10.4 Amended and Restated  Guaranty,  dated as of July 29, 2005, entered into by
     First   Aviation   Services,   Inc.  (on  behalf  of   Aerospace   Products
     International,  Inc., a direct  wholly-owned  subsidiary of First  Aviation
     Services,  Inc.) and  Hudson  United  Bank  (filed as  Exhibit  10.2 to the
     Company's Current Report on Form 8-K dated July 29, 2005 (No. 0-21995), and
     incorporated herein by reference).

10.5 Compensation for Aaron P. Hollander.


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).


                                       22