UNITED STATES                                                         SECURITIES AND EXCHANGE COMMISSION                                                   WASHINGTON, D.C. 20549

FORM 20-F

(Mark One)

[_] REGISTRATION STATEMENT PURSUANT TO SECTION 12(B) OR (G) OF THE SECURITIES EXCHANGE ACT OF 1934



[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002



[_] 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 0-31481

ASTRIS ENERGI INC.

(Exact name of Registrant as specified in its charter)

Not Applicable

(Translation of Registrant's Name into English)

ONTARIO

(Jurisdiction of incorporation or organization)

2175 DUNWIN DRIVE, UNIT 6

MISSISSAUGA, ONTARIO L5L 1X2 CANADA

(Address of principal executive offices)



Securities registered or to be registered pursuant to Section 12(b) of the Act.

NONE

Securities registered or to be registered pursuant to Section 12(g) of the Act.

COMMON SHARES

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

NONE

(Title of Class)

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report.

17,633,030 COMMON SHARES

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such reporting requirements for the past 90 days.

Yes [x]             No [_]

Indicate by check mark which financial statement item the registrant has elected to follow.

Item 17 [X]         Item 18 [_]

(Applicable only to Issuers involved in Bankruptcy proceedings during the past five years) Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.



Yes [_]             No [_]





TABLE OF CONTENTS



Part I



Item 1. Identity of Directors, Senior Management and Advisers



Item 2. Offer Statistics and Expected Timetable



Item 3. Key Information



Item 4. Information on the Company



Item 5. Operating and Financial Review and Prospects



Item 6. Directors, Senior Management and Employees



Item 7. Major Shareholders, Related Party Transactions and Non-Related Party Common Stock Transactions



Item 8. Financial Information



Item 9. The Offer and Listing



Item 10. Additional Information



Item 11. Quantitative and Qualitative Disclosures About Market Risk



Item 12. Description of Securities Other than Equity Securities



Part II



Item 13. Defaults, Dividend Arrearages and Delinquencies



Item 14. Material Modifications to the Rights of Security Holders

and Use of Proceeds



Item 15. [Reserved.]



Item 16. [Reserved.]



Part III



Item 17. Financial Statements



Item 18. Financial Statements



Item 19. Exhibits

















I





FORWARD LOOKING STATEMENTS Certain statements in this annual report are based upon the beliefs of management of Astris Energi Inc., as well as assumptions made by and information currently available to management, and such statements may constitute "forward-looking statements" within the meaning of the U. S. Private Securities Litigation Reform Act of 1995. Investors should note that many factors, some of which are discussed elsewhere in this Report, could affect the future operations and the future financial results of the Company and could cause future operations and future financial results to differ materially from those expressed in such forward-looking statements.



PART I.



ITEM 1.  IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS.

Not Applicable.



ITEM 2.  OFFER STATISTICS AND EXPECTED TIMETABLE.

Not Applicable.



ITEM 3.  KEY INFORMATION.



A.  SELECTED FINANCIAL DATA.



The following table sets forth, in Canadian dollars, selected historical

information concerning the Company presented in accordance with Canadian GAAP

and is qualified by reference to the consolidated financial statements and notes thereto. See "Item 18. Financial Statements".



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As at        As at        As at        As at        As at

December 31, December 31, December 31, December 31, December 31,

2002         2001         2000         1999         1998

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RESTATED

Revenue        $146,874      $26,787      $22,824      $21,919        $6,052

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Net Loss from

Continuing

Operations     (537,300)    (632,073)    (412,228)     (40,666)     (138,650)

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Net Loss       (660,118)    (593,984)     (35,580)     (40,666)     (138,650)

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Net Loss per

Share             (.046)       (.047)       (.003)       (.004)        (.013)

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Total Assets    663,724      177,600      281,705      147,662       165,379

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Long Term

Obligations     423,687      417,287      417,287      452,491       452,491

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Capital

Stock         3,062,114    2,059,226    1,435,298    1,086,676     1,086,676

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Average

Number of

Shares       14,480,284   12,638,160   11,446,010   10,643,556    10,188,556

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Cash                 -             -            -            -             -

Dividends

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Revenue recognition in the consolidated financial statements is not consistent with U.S. GAAP. Pursuant to Canadian GAAP, an initial payment of CDN$25,000 that was received in October 1998 under the terms of a ten-year license agreement between the Company and Energy Ventures Inc. (Canada) was recognized over the first year of the agreement's term (October 1998 to December 1999). Under U.S. GAAP, the initial payment received at the beginning of a multi-year license, not attributable to any specific provision of goods and services, must be pro-rated over the life of the license. Thus, under U.S. GAAP, the initial payment of CDN$25,000 would be recognized differently, with an allocation of CDN$417 to income in 1998, an allocation of CDN$2,500 each year from 1999 to 2006, and a recognition of CDN$2,083 in 2007.



EXCHANGE RATES



The following table sets out the exchange rates for the conversion of Canadian dollars into United States dollars.  The exchange rates used are the noon buying rates in New York City for cable transfers in foreign currencies, as certified for customs purposes by the Federal Reserve Bank of New York.  The table lists the rate in effect at the end of the following periods, the average exchange rates (based on the average of the exchange rates on the last day of each month in such periods), and the range of high and low exchange rates for such periods.



Year ended December 31,

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2002      2001      2000       1999       1998

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End of Period          .63      .63       .67        .68        .68

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Average for Period     .63      .65       .67        .66        .71

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High for Period        .65      .67       .70        .69        .73

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Low for Period         .63      .63       .64        .63        .68

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The following table sets out the range of high and low exchange rates,

for the conversion of Canadian dollars into United States dollars for each of the corresponding months during 2002 and 2003.  The exchange rates used are the noon buying rates in New York City for cable transfers in foreign

currencies, as certified for customs purposes by the Federal Reserve Bank of New York.

-------------------------------------------------

Month              High         Low

-------------------------------------------------

December 2002                .65         .63

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January 2003                 .66         .63

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February 2003                .67         .65

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March 2003                   .68         .67

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April 2003                   .70         .67                                     -------------------------------------------------

May 2003                     .74         .70

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June 2003                    .75         .73

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The exchange rate on December 31, 2002 for the conversion of United States dollars into Canadian dollars was $1.58 (CDN$1.00 = US$.63). As of June 4, 2003 the noon rate of exchange for the conversion of United States dollars into Canadian dollars was $1.36 (CDN$1.00 = US$.74).  The exchange rates used are the noon buying rates in New York City for cable transfers in foreign currencies, as certified for customs purposes by the Federal Reserve Bank of New York.



B.  CAPITALIZATION AND INDEBTEDNESS.

Not Applicable.



C.  REASON FOR THE OFFER AND USE OF PROCEEDS.

Not Applicable.



D.  RISK FACTORS. An investment in the securities of the Company involves a high degree of risk. The following risk factors should be considered carefully in evaluating the Company and its business. If any of the risks described below occurs, the business, results of operations and financial condition of the Company could be adversely affected.



HISTORY OF LOSSES SINCE INCEPTION, EXPECTATION OF LOSSES IN THE IMMEDIATE FUTURE, AND POSSIBILITY THAT THE COMPANY MAY NEVER ACHIEVE OR SUSTAIN PROFITABILITY. The Company has incurred net losses each year since inception. The accumulated deficit of the Company was CDN$3,242,557 as of December 31, 2002. It expects to continue to incur net losses at least through fiscal year 2003, and these losses may be substantial. To implement the current business strategy, the Company will have to incur a high level of fixed operating expenses and will continue to incur considerable research and development expenses and capital expenditures. Accordingly, if additional capital, revenues and positive cash flows cannot be generated, to which no assurance can be given, the Company will not achieve profitability. Even if profitability is achieved, it may not be sustained or increased on a quarterly or annual basis.



THE REPORT OF THE COMPANY'S INDEPENDENT ACCOUNTANT STATES THAT THE ABILITY OF THE COMPANY TO CONTINUE AS A GOING CONCERN IS IN SUBSTANTIAL DOUBT. Whether the Company continues as a going concern is dependent upon the Company's ability to raise additional capital, the successful commercialization of one or more of the Company's research projects, and the attainment of profitable operations. The ability to generate future revenues will depend on a number of factors, many of which are beyond control of the Company. These factors include the rate of market acceptance of its fuel cell products, competitive activities, regulatory developments and general economic trends.



ABILITY TO OBTAIN ADDITIONAL CAPITAL, THEREBY RESULTING IN CURTAILMENT OR CESSATION OF OPERATIONS. At December 31, 2002, the Company had working capital of CDN$230,283. The ability of the Company to realize its objectives depends in large part upon obtaining additional capital. The Company has a present need for capital in connection with its fuel cell development activities and transition to commercial operations. The Company believes that it will require up to US$10 million over the next three to five years to establish manufacturing facility for the production of the various models of fuel cells developed by the Company.  There is no assurance that any additional financing will be available on commercially attractive terms, in a timely fashion, in sufficient amounts, not substantially dilutive to shareholders, or at all. If adequate funds are not available, the Company would have to scale back its operations, including its product development, manufacturing and marketing activities, all of which could lead ultimately to cessation of operations.



LACK OF EXPERIENCE IN MANUFACTURING AND MARKETING PRODUCTS. To date, the Company has derived revenues principally from sales of prototypes or small

ancillary products, contract research and government grants. Sales have been

limited to demonstration products and prototype models. The Company's prototypes are pre-commercial production products assembled on a one-off basis, by hand. The Company is not yet adequately financed to produce commercial products. The Company has not produced any prototypes on an automated basis and has not designed an automated assembly facility. In addition, the Company still has not been able to determine whether or not its prototypes can be assembled through automation or if there is a sufficient level of product acceptance for the Company to sell fuel cells in sufficient volume to become profitable.



The Company may not be able to produce or commercialize any of its products in a cost-effective manner and it may not be able to successfully market these products. Production costs of the initial commercial units may be higher than their sales price.  There can be no assurance that higher production levels will occur or that sales prices will ever exceed production costs.



MARKET ACCEPTANCE OF THE FUEL CELL PRODUCTS MAY TAKE LONGER TO ACHIEVE OR MAY NEVER BE ACHIEVED. The Company's alkaline fuel cell products represent a new technology and any success will depend on this technology achieving market acceptance. Because the Company's products are designed to capitalize on markets that presently utilize or are serviced by products from traditional and well-established power generation sources, such as engine-generators, the Company may face significant resistance from end-users to adopt a new and alternative power source technology. Fuel cell products for portable and mobile applications represent an emerging market. The Company does not know whether its targeted customers will purchase such products.



ABILITY TO MEET PROJECTED DEMAND FOR THE COMPANY'S PRODUCTS. Locating and establishing new manufacturing facilities, if required, will place significant demands on the Company's managerial, technical, financial and other resources.



The Company's business plan contemplates significant growth in sales and personnel which may place a strain upon its current management systems and resources, as well as its ability to obtain capital. As of June 2003, the

Company had fewer than 9 employees. The Company's business plan and anticipated product sales will require the Company to hire, train and manage additional employees and to establish or contract for production capacity. If the Company is unable to hire the skilled employees it needs or to establish its production capacity in a timely manner, it might be unable to fulfill orders for its products or meet its business plans. There can be no assurance that the Company will be able to effectively manage its anticipated growth.



ABILITY TO COMPETE SUCCESSFULLY IN A HIGHLY COMPETITIVE MARKET. The development and marketing of fuel cells and fuel cell systems is extremely competitive. A number of firms throughout the world have established fuel cell development programs. The Company competes directly with alternative energy and entrenched power-generation and power-storage technologies. Competitors range from development stage companies to major domestic and international companies. Other companies may succeed in developing and bringing to market products or technologies that are more cost-effective than those being developed by the Company, or that would render its products and technology obsolete or non-competitive in the marketplace. The Company's competitors have greater name recognition, larger customer bases and significantly greater financial, technical, marketing, public relations, sales, distribution and other resources than the Company. There can be no assurance that the Company will be able to compete effectively with such companies. In addition, the Company expects that additional competition will develop, from both existing businesses in the energy industry and from new entrants.



DEPENDENCE ON THIRD-PARTY MANUFACTURERS. Until the Company has adequate capital resources and sufficient demand for its products, the Company will depend on third parties for the manufacture of its products and for parts necessary to manufacture its products. If manufacturers or suppliers are unable or unwilling to manufacture or provide the materials and components to manufacture the Company's products on commercially reasonable terms, or at all, delays in identifying and contracting for alternative manufacturing and supply sources could adversely affect the ability to market the products.



POSSIBLE LIABILITY FOR INFRINGING THE INTELLECTUAL PROPERTY RIGHTS OF

OTHERS AND DIFFICULTIES IN PROTECTING THE COMPANY'S INTELLECTUAL PROPERTY.

Despite the Company's efforts to protect its proprietary rights, unauthorized parties may attempt to copy aspects of the Company's products and product designs, or to obtain and use information that the Company regards as proprietary. If required, policing unauthorized use of the Company's proprietary technology may be difficult, time-consuming and costly. In addition, the laws of certain countries in which the Company's products may be sold or licensed do not protect its products and related intellectual property rights to the same extent as the laws of Canada or the United States. The Company does not believe that any of its products infringe the proprietary rights of any third parties.  From time to time, however, third parties may contest the Company's rights to use its intellectual property. Any such claims, with or without merit, could be time-consuming, result in costly litigation, cause product shipment delays or require the Company to enter into royalty or licensing agreements. Such royalty or licensing agreements, if required, may not be available on terms acceptable to the Company.



NEED FOR COMPATIBILITY WITH THE PRODUCTS OF THIRD-PARTY MANUFACTURERS OR

POTENTIAL CUSTOMERS. The Company's success will depend in large part upon its ability to make its products compatible with the products of third-party manufacturers. The Company's products will be successful only if manufacturers redesign or modify their existing products to fully incorporate the Company's products and technologies. The Company's failure to make its products and technologies compatible with the products of third-party manufacturers, or the failure of potential customers to redesign or make necessary modifications to their existing products to accommodate the Company's products would significantly impair or preclude its ability to sell its products.



ACCIDENTS INVOLVING THE FLAMMABLE FUELS USED WITH THE PRODUCTS COULD IMPAIR THEIR MARKET ACCEPTANCE. The fuel cell products use hydrogen, which typically is generated from gaseous and liquid fuels such as propane, natural gas or methanol, in a process known as reforming. While the Company's fuel cell products do not use these fuels in a combustion process, natural gas, propane and hydrogen are flammable fuels that could leak into a residence or commercial location and combust, if ignited by another source. Since the Company's products have not yet gained widespread market acceptance, any accidents involving the Company's systems, or other fuel cell-based products, could materially impede demand for the products. At present, the Company does not carry insurance to cover such accidents.



THE COMPANY'S PRODUCTS MAY FROM TIME TO TIME CONTAIN DESIGN DEFECTS THAT

ARE DIFFICULT TO DETECT AND CORRECT. Although the Company does not know of any existing design defects, there can be no assurance that defects or flaws will not be found in new products after commencement of commercial shipments or, if discovered, that the Company will be able to successfully correct such defects or flaws in a timely manner or at all. The occurrence of defects or flaws in the Company's products could result in loss of, or delay in, market acceptance of the Company's products.  Correcting such defects or flaws could require significant expenditures by the Company.



DEPENDENCE ON ATTRACTING AND RETAINING KEY PERSONNEL. The success of the

Company is largely dependent on the performance of its key employees, particularly Jiri K. Nor. Mr. Nor started Astris in 1983 and is the principal developer of Astris' alkaline fuel cell technology. Additionally, the Company is dependent on a small number of employees who have been with Astris for numerous years and who actually construct Astris' technological components and are familiar with its proprietary designs. Loss of the services of Mr. Nor or the failure to attract and retain additional key employees with necessary skills could have a material adverse impact upon the Company's growth and profitability. Competition for highly skilled management, technical, research and development and other employees is intense and the Company may not be able to currently maintain key person life insurance policies on any of its employees.



RISKS INHERENT IN INTERNATIONAL OPERATIONS INCLUDING CURRENCY EXCHANGE RATE FLUCTUATIONS AND TARIFF REGULATIONS. A substantial portion of the Company's revenues is expected to be realized in currencies other than Canadian dollars. The Company's operating expenses are primarily paid in Canadian dollars. Fluctuations in the exchange rate between the Canadian dollar and such other currencies may have a material effect on the Company's results of operations. In particular, the Company may be adversely affected by a significant strengthening of the Canadian dollar against the U.S. dollar and the Czech Republic koruna. In addition, the Company does not intend to enter into any hedging or other similar agreements or arrangements to protect it against any of these currency risks. The Company may also be subject to tariff regulations and requirements for export licenses, particularly with respect to certain technologies, unexpected changes in regulatory requirements, difficulties in managing international operations, potentially adverse tax consequences, restrictions on repatriation of earnings and the burdens of complying with a wide variety of foreign laws.



POSSIBLE DIFFICULTIES BY UNITED STATES PERSONS TO EFFECT SERVICE OF PROCESS WITHIN THE UNITED STATES UPON THE COMPANY OR ITS DIRECTORS OF OFFICERS, OR TO REALIZE IN THE UNITED STATES UPON JUDGMENTS. The Company is an Ontario corporation with its principal place of business in Canada. All of its Directors and Officers are residents of Canada and all of the assets of such persons and of the Company are located outside the United States. US Persons should not assume that Canadian courts (i) would enforce judgments of United States courts obtained in actions against the Company or its Officers and Directors predicated upon the civil liability provisions of the United States federal securities laws or the securities or "blue sky" laws of any state within the United States or (ii) would enforce, in original actions, liabilities against the Company or its Officers and Directors predicated upon the United States federal securities laws or any such state securities or blue sky laws.



THE COMPANY HAS NEVER PAID DIVIDENDS AND IT DOES NOT ANTICIPATE PAYING

DIVIDENDS IN THE FUTURE. The Company has never declared any cash dividends on its Common Shares, and if the Company were to become profitable, it would be expected that all of such earnings would be retained to support the business. As a result, shareholders must rely on stock appreciation for any return on their investment in the Common Shares.



VOLATILE AND LIMITED MARKET FOR THE COMPANY'S COMMON SHARES. The Company's Common Shares are not actively traded.  The Company's Common Shares began trading on the O.T.C. On June 20, 2001.  The Common Shares traded in 2002 from a high of US$.93 to a low of US$0.13 per share. The Common Shares are not presently publicly traded in Canada. There can be no assurance given that trading activity will increase investor recognition.



APPLICATION OF THE SEC PENNY STOCK REGULATIONS AND RESTRICTIONS. The

Securities and Exchange Commission has adopted regulations which generally define Penny Stocks to be an equity security that has a market price less than $5.00 per share or an exercise price of less than US$5.00 per share.  This is subject to certain exemptions based upon minimum assets or revenues. As of June 6, 2003, the closing bid and asked prices for the Common Shares were US$.48 and US$.61 per share. As a Penny Stock, the Company's Common Shares may become subject to Rule 15g-9 under the Securities Exchange Act of 1934, as amended, or the Penny Stock Rule. This Rule imposes additional sales practice requirements on broker-dealers that sell such securities to persons other than established customers and "accredited investors" (generally defined as individuals with a net worth in excess of US$1,000,000 or annual incomes exceeding US$200,000, or combined annual income with spouse of US$300,000).  For transactions covered by Rule 15g-9, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser's written consent to the transaction prior to sale. As a result, this Rule may affect the ability of broker-dealers to sell the Company's securities and may affect the ability of purchasers to sell any of the Company's securities in the secondary market.



For any transaction involving a Penny Stock, unless exempt, the Rule requires that prior to any transaction in a Penny Stock, a disclosure schedule prepared by the SEC relating to the Penny Stock market is delivered. Disclosures about sales commissions payable to both the broker-dealer and the registered representative and about current quotations for the securities are also required. Finally, monthly statements are required to be sent disclosing recent price information for the Penny Stock held in the account and information on the limited market in penny stock.



ITEM 4. INFORMATION ON THE COMPANY.



A. HISTORY AND DEVELOPMENT OF THE COMPANY.



Astris Energi Inc. ("AEI" or the "Company") was incorporated as Kayty

Exploration Ltd. on March 18, 1981, pursuant to the Companies Act of the

Province of Alberta, Canada to engage in oil and gas exploration activities. The Company subsequently changed its name to Kayty Inc. in August 1987, changed the place of incorporation to the Province of Ontario, Canada, and effected a one-for-ten reverse split of its Common Shares. In December 1994, the Company changed its name to WLD Inc. ("WLD") and effected a one-for-three reverse split of its Common Shares, reducing the outstanding Common Shares to 5,000,000 shares. By 1995, WLD had ceased exploration activities and sought other business activities. In February 1996, the Company acquired Astris Inc. in exchange for 1,500,000 Common Shares and warrants for the purchase of 3,500,000 Common Shares, which warrants were subsequently exercised in 1997 at an exercise price of CDN$0.05 per warrant.  Additionally in June 1995 the Company changed its name to Astris Energi Inc. The purpose of the acquisition was for the Company to obtain a potentially promising business activity, and Astris Inc. was seeking to be part of a public company to facilitate raising working capital to further the development of its fuel cell research.  AEI began trading on the OTC.BB under the trading symbol ASRNF on June 20, 2001.



The Company's principal business office is located at 2175 Dunwin Drive,

Unit 6, Mississauga, Ontario, Canada L5L 1X2 and its telephone number is (905)608-2000. The Company's e-mail address is mail@astrisfuelcell.com. The Company maintains a website at astrisfuelcell.com. The Company is not incorporating, by reference in this Form 20-F, the information on its website.



B. BUSINESS OVERVIEW.



THE COMPANY'S PURPOSE



The Company's mission is to develop and manufacture affordable fuel cells, fuel cell power generators, and related small products for industrial, commercial, educational, scientific, transportation and similar applications. The Company intends to penetrate existing portable and other small generator markets with quiet, odorless, non-polluting and highly efficient fuel cell generators, which can compete both technically and economically with traditional energy sources.



DESCRIPTION OF THE COMPANY'S BUSINESS ACTIVITIES

Astris Energi Inc. is a Canadian (Mississauga, Ontario) company that since 1983 has been pioneering the development of alkaline fuel cell electric generators and now has three such power systems fully tested and ready for commercialization. While most fuel cell companies are aiming for the eventual car-truck-bus market or large utility type generating stations, Astris has specialized, almost alone, in one-to-ten kilowatt systems which have tremendous global market potential. The company also anticipates linking modules together in larger units for broader applications.

Since 1995, the Company has been engaged in the design, production and commercialization of alkaline fuel cell systems for industrial, commercial and retail markets. Specifically, the Company's main focus has been to develop and market a one kilowatt alkaline fuel cell ("AFC") system which could be used to power golf cars and similar small vehicles. In March 2001, the Company completed an operating golf car powered by an AFC fuel cell system.



The company's development and manufacturing affiliate in the Czech Republic completed and delivered:



A 1-kilowatt portable system for extensive testing by the Czech military



A 1-kilowatt fuel cell engine capable of powering golf cars, in-plant delivery vehicles and other small vehicles, airport ramps and retirement communities.



A 4-kilowatt power unit capable of providing electricity, heat and hot water for individual homes, motor homes and boats



The company is now demonstrating the world's first fuel cell-powered golf car.  To realize the full potential of these markets, Astris intends to partner with or license major manufacturers in each field and initial negotiations have already begun.

In addition, assuming success with the one to four kilowatt fuel cell projects, in the future the Company will also seek to develop and market AFC systems up to ten or more kilowatts for other uses, such as powering small vehicles, power supplies in individual homes and emergency, uninterruptible power supplies for hospital emergency rooms and computers.



The past two years have yielded exceptional progress for Astris and worldwide leadership in alkaline fuel cell technology. With prospects currently in view, Astris has three separate field-tested systems ready to "go commercial".



DESCRIPTION OF FUEL CELLS



Fuel cells are electrochemical devices, similar in certain respects to batteries that supply electricity for a wide variety of `off-grid' requirements, presently served by gasoline and diesel generators. Fuel cells generate electricity in an efficient and clean manner from the electrochemical reaction of hydrogen and oxygen. Hydrogen is typically derived from conventional fuels such as natural gas or propane, while oxygen is drawn from the air. Fuel cells enable chemical energy of fuels to be converted directly into electricity, thereby avoiding the fundamental loss of efficiency and emission of pollutants associated with the combustion process. The fuel cell is a potential substituted for both mobile and stationary applications currently using a generator or gasoline powered engine today. Examples of these applications included all kinds of vehicles, home energy requirements, commercial buildings, remote sites and situations requiring electricity that are not connected to distributed power supplies.



Fuels cells are designed to be environmentally cleaner and more cost-effective than power generation sources using fossil fuels. Fuel cells produce little sound and only water as a waste product. These benefits offer great advantages over gasoline generators, as such generators are often responsible for producing large amounts of air and noise pollution. In addition, fuel cells are nominally at least two times more energy efficient than current gasoline generators.



There are currently five basic types of fuel cell technologies: Alkaline

("AFCs"), Proton Exchange Membrane ("PEMFCs"), Phosporic Acid ("PAFCs"), Molten Carbonate ("MCFCs"), and Solid Oxide ("SOFCs"). In addition to AFCs, the other fuel cell systems are generally all considered to have viable commercial applications.  PAFCs, MCFCs and SOFCs are not considered competitors of the two smaller fuel cell types, namely AFCs and PEMs. The Company believes that AFCs and PEMFCs are the only fuel cells that currently have relevance for relatively small power applications, which are either stationary or portable.  This premise is based on the fact that AFCs and PEMFCs operate at ambient temperatures (0 to 100 degrees Celsius) and deliver kilowatts which are more suited to meet the needs of small, off-grid applications.



The largest issue hindering fuel cell production today is that fuel

cells are still relatively expensive to produce. One key reason for the high cost of manufacturing fuel cells is that the low volume of production does not allow for economies of scale. As demand for fuel cells increases and research and development continues, the cost of manufacturing should be reduced to make alkaline fuel cells more competitive with traditional energy sources.



In addition, while fuel cells can produce energy more efficiently and are environmentally cleaner than traditional sources of power, other energy sources are more entrenched in the world economy. For instance, all golf cars currently being manufactured are designed to be powered from batteries or internal combustion engines. In order for fuel cells to be used in such products, manufacturers must adjust their current designs to be compatible with the fuel cell design.



However, due to new government pollution regulations, increased energy costs and a growing demand for "off-grid" power supplies, demand for fuel cells is increasing. As fuel cells become better known to the public and more cost competitive with other energy sources, this demand will increase.



AFCs vs. PEMFCs



Astris engineers have been engaged in development of alkaline fuel cells since 1983, deciding early that this concept had both technical and economic advantages over the PEMFC technology that was being pursued by most U.S. companies in the field. Both NASA and the Russian space program had chosen AFCs over PEMFCs to provide electricity, heat and pure water for all manned space vehicles.  This certainly supported the Astris' choice as a credible option. Additionally, developers in nearly all foreign countries have pursued alkaline technology.



Originally, critics said only governments with deep pockets could afford AFCs, that they could never be "brought down to earth" and be commercially competitive. Astris has proved that view completely wrong. In fact, AFCs are inherently more economical to produce and operate than PEMFCs. AFCs also provide the highest electrochemical conversion efficiency.  The advantage of instant start, wide temperature range, even sub-freezing has been discussed above.  Broad range of low-cost electrocatalysts (not platinum that PEMFCs require) can be built from inexpensive materials - plastics, carbon, base metals and metal oxides, etc. AFCs allow for easier heat and water management as well.



ASTRIS FUEL CELL SYSTEM



Fuel cells are like batteries that never run down. They generate electric power in a chemical reaction between hydrogen gas and oxygen from the air. They are odourless, noiseless, have no moving parts to fail or wear out and produce no polluting emissions - their only by-product is pure water. The fuel cells designed and built by the Company are AFCs. While both AFC and PEMFC fuel cells have potential environmental and efficiency advantages over traditional power sources, the Company believes that AFCs can be manufactured less expensively, operated more efficiently and are more practical in small-scale applications.



ONE-KILOWATT ENGINES



The company first demonstrated the one-kilowatt commercial version in May 2001 - the fuel cell replaces either the gasoline engine, eliminating noise and fumes, or the multiple batteries in an electric cars, eliminating the long and expensive recharging. Furthermore, fuel cell power extends the range of electric vehicles (NEVs) from the prevailing one hour and 30 miles to 8 hours and more than 250 miles. The fuel cell needs only air and a bottle of compressed hydrogen gas, which can be refilled in less than a minute. Pure hydrogen is a common industrial gas and is widely available - just fill several bottles at a time to keep the fleet running without interruption.



The same advantages apply for use of fuel cells to power a wide variety of small vehicles. All feature compact size, no polluting effluents and no noise - just smooth, steady power.



FOUR-KILOWATT SYSTEMS



Earlier Astris' Czech affiliate, Astris s.r.o., completed and delivered its first four kilowatt fuel cell generator to a government agency in the Czech Republic for extensive testing. It is designed to supply electricity, heat and hot water for individual homes or similar structures. Discussions have been held with several gas utility companies interested in pursuing a program for installation of such systems in homes with the cost included in the resident's monthly gas bill.



A similar version of this unit appears to be ideal to replace generators in RV vehicles, since it would be quiet, emit no fumes and eliminate the gallon of gas per hour present generators consume. There are 3.5 million motor homes in the U.S. alone and a joint venture is planned to address the potential of this significant niche market.



Yachts and boats comprise another huge prospective market where the fuel cell's benefits would be especially valuable, providing the same potential benefits as for the RV market.



PORTABLE FUEL CELL SYSTEM



Also completed and delivered recently was the Company's first portable fuel cell generator. This portable, fully functional fuel cell power source was originally developed for the Czech Ministry of National Defense. It has many possible applications wherever a small amount of power is needed from a utility grid.



This alkaline system will start and operate at temperatures under 0 degrees centigrade. This ability to work in extreme temperatures is one of several advantages alkaline fuel cells (AFC) have over the competing polymer electrolyte membrane (PEM) fuel cells being developed by others.



FACILITIES



The Company's headquarters are located at 2175 Dunwin Drive, Mississauga, Ontario, Canada. That facility houses management, administrative and marketing activities, as well as system development, assembly and testing of fuel cell systems.  Components are currently fabricated in the plant and laboratory of the Companys Czech affiliate, Astris s.r.o. located in Benesov, Czech Republic.  Research and development activities are conducted in both locations.



ALKALINE FUEL CELLS



An AFC system is an assembly comprised of fuel cell "stack(s)", which

generate electricity, together with ancillary components.  In an integrated assembly, these stack(s) constitute a complete, operating fuel cell system.



The Company believes that all principal material developmental issues in

alkaline fuel cell technology have been resolved by both the Company and the

industry at large. However, the Company believes that continued research and

development will improve alkaline fuel cell catalysts and electrode materials. This should improve the cost/performance ratio of alkaline fuel cells to more traditional energy sources.



The ancillary components to the AFC system supply, filter and re-circulate hydrogen, air and liquid electrolyte to the stack(s), deliver electricity to the end-use application, remove the aqueous by-product of the fuel cell operation, and electrically and electronically control, coordinate and integrate all the functions of the system into a single operating whole.



THE COMPANY'S PRODUCTS



The Company presently offers commercial products ranging from demonstration and educational fuel cells and accessories, to scientific products such as electrochemical test cells, to associated electronic and computer based test equipment. This test equipment is useful in research and development and the testing of electrodes, fuel cells and batteries, and sub-kilowatt fuel cells and stacks.



The Company's principal fuel cell product is a prototype system supplied in sizes up to four kilowatts of electrical output. These prototypes are pre-commercial products provided on a one-off basis to individual customers and assembled by hand to the specification of the customer. Prototypes are in contrast to "pilot production" systems, which are systems manufactured in a pilot production facility not on a full commercial basis, and to commercial systems, which are manufactured by volume production methods.



The Company has developed a one kilowatt AFC system to power a golf car. The Company believes that this project is the first stage toward the commercialization of its AFC technology for larger systems, capable of powering forklifts, yachts and motor homes.



The Company is primarily targeting markets in North America and Europe for the sale of small stationary and mobile applications including light vehicles and emergency power supplies.



The Company is also developing a new, larger proprietary alkaline fuel cell stack, the POWERSTACK MC250 that could be used for fuel cell systems larger than five kilowatts or more for use in small vehicles such as forklifts. The Company anticipates that such a fuel cell will be ready for commercial application within the next one to five years.



The Company has also completed the initial research in the development of an advanced fuel cell stack design for systems of up to 25 kilowatts or larger for use in commercial buildings and automobiles. Such fuel cells will be developed initially as prototypes and will later be developed as commercial products.



In addition to the Company's fuel cell systems, the Company has several small fuel cells and products for sale through its website.



RESEARCH AND DEVELOPMENT



AEI has been involved in fuel cell research since its formation in 1983.

More than CDN$14 million has been expended on research activities, which includes approximately CDN$6 million expended by the Institute of Hydrogen

Studies at the University of Toronto, whose rights AEI acquired in 1986.  AEI had entered into the 1995 acquisition with WLD to be in a better position to raise capital for additional research and development. As sufficient financing was not obtained as part of the AEI acquisition, the research and development activities in Canada were curtailed. Because labor costs are significantly lower in the Czech Republic than Canada and the capital needs of Astris s.r.o. for research and development activities are less than what would have been required in Canada, the Company's research and development has primarily been carried out in the Czech Republic, through the Company's 30%-owned subsidiary, Astris s.r.o.  In January 1995, pursuant to a License Agreement, AI granted a non-exclusive license to Astris s.r.o. for the production and sale of products embodying or utilizing AI's fuel cell technology. The royalty fee is two percent (2%) of the net sale price of licensed products sold by Astris s.r.o. to third parties. Astris s.r.o. is obligated to grant the Company a free worldwide irrevocable license on improvements of, and additions to, the technology made by Astris s.r.o., and also to assign any patent rights thereto to the Company. The License Agreement is to remain in effect until the expiration of all Company patents related to the technology, subject to earlier termination upon certain events.



Astris s.r.o. has been engaged in fuel cell research and development since 1992. Its current research and development efforts are primarily focused on electrode technology to improve the electrochemical efficiency, durability and economy of alkaline fuel cells.  These research and development efforts have also been focused on reduction of production costs, improving product quality and consistency, and on identifying new features and innovations for future product development. Expenditures on research and development at Astris s.r.o. were approximately CDN$285,710 for 2002. For the year ended December 31, 2002, the Company expended a total of approximately CDN$417,000 on research and development. The research and development budget for 2003 is contingent upon the Company's ability to raise capital.



Since "going public" in Canada in December 1995, the Company's research and development activities have been performed both at the Mississauga, Ontario headquarters and at the Astris s.r.o. facility in the Czech Republic. Of the research and development completed in Canada during 2002 and 2001, the Company received or received notification of investment tax credit refunds of $246,613 and $ Nil, respectively.



The Company's projected research and development budget for 2003 is US$1 million subject to financing. Such amount will be used to continue development and production of the MC250 fuel cell power module. If less than US$1 million is obtained from financing, the Company will reduce its research and development budget and the development and production of the fuel cell power module will continue, albeit at a slower pace. If no adequate funding is secured, the research and development of the Company's fuel cell products will have to be deferred until such financing is in place.



INTELLECTUAL PROPERTY



In 1986, Josef V. Soltys of Mississauga, Canada (a shareholder and former director of the Company), assigned to AI a Canadian patent application for QUICKCELL, a test cell structure for fuel cell technology. The patent, Canadian Patent #1,295,679, issued February 11, 1992, expires February 11, 2009. The Company also holds a United States patent, #5,0008,162, which was issued on April 16, 1991, and expires on April 16, 2008, for the same product. A former employee of AI, who was a co-inventor of such technology, did not assign any right in such patents to the Company prior to his departure. Management does not believe that these patents are material to the development of the intended business goal. When appropriate the Company will seek patent protection for other aspects of its fuel cell technology. However, the Company's policy is to maintain the confidentiality of its products, and any disclosure in patent applications could threaten the security of such information.



The Company has unregistered trademarks on some of its products, including LABCELL 50, LABCELL 200, QUICKELL QC200, POWERSTACK and TESTMASTER.



SMALL FUEL CELLS AND RELATED PRODUCTS



In addition to developing fuel cells, the Company presently sells by mail order small fuel cells, test cells and electronic test equipment. These products were initially developed by Mr. Nor for use in the development of the Astris fuel cell technology. They are described briefly, as follows:



LABCELL50 is a 50 square centimeter, small alkaline fuel cell for laboratory demonstration and experimentation which produces 1.5 to 6 volts.



LABCELL200 is a 200 square centimeter, medium size alkaline fuel cell for laboratory experimentation and small power applications which produces .75 to 12 volts.



QUICKCELLQC200 is an electrochemical test cell designed for the testing of gas diffusion or solid electrodes in a controlled laboratory environment for fuel cell and battery research, development and quality control.



MODEL TL4 TEST LOAD is a monitor for fuel cells and batteries with a built-in microprocessor. It functions to briefly interrupt the current and take resistance-free cell readings up to 20 volts.



TESTMASTER is a powerful, integrated software package designed for

testing fuel cells and batteries. TESTMASTER performs all the tasks

required for short-tern or long-term testing of fuel cells or batteries,

monitoring, control, data collection and storage, and graphical data

representation.



POWERSTACK MC250. In September 2002, the Company completed the first prototype fuel cells for commercial power generators in portable, stationary and vehicular applications. The completion of the prototype molds for the advanced POWERSTACK MC250 marked a major milestone in development. The MC250 was developed using the alkaline technology, which is more efficient, starts instantly, operates over a wide temperature range and is less expensive than the Proton Exchange Membrane technology. The initial testing of the MC250 took place in October 2002, subsequent to the quarter ended. Interim test results were 35 percent beyond the design projection. Extensive test protocol will be conducted through 2003. The power generator is nearly twice as powerful as the Company's LABCELL, yet lower in weight. This is the first Astris model that will enter, when in pilot production, the varied global commercial fuel cell markets.



E7. Another advanced fuel cell system, the E7 fuel cell generator, is being developed by the Company's Czech Republic subsidiary in a joint project partially funded by the Czech Ministry of Industry and Trade.



Astris s.r.o. produces and ships the small products on behalf of the

Company. The Company does not presently have any insurance on these products.

Insurance is obtained at the customer's request and expense. Astris s.r.o. does not maintain a substantial inventory of the small products.



The Company currently derives minor amounts of revenues from the sale of the small products. It remains unknown whether the Company will be able to further develop a market for these products. The Company is not aware of any other entity, which markets products similar to its small products.



MARKETING



The Company has a limited production capacity for its demonstration and scientific products. While direct sales efforts will continue through the Internet, Astris' principal strategy is to form joint ventures with leading manufacturers of the products that can use fuel cell power.  Manufacturers in the golf car, NEV and/or recreational vehicle industries are believed to be a primary market.  As an alternative, the Company is also considering licensing such manufacturers to both produce and market the Astris power sources on an O.E.M. basis, with Astris collecting both license fees and royalties based on sales.



Such established industry specific companies already have manufacturing facilities and marketing organizations in place and provide an intimate knowledge of their respective markets. These types of strategic business relationships will allow Astris to continue specializing in its business expertise, which is the development of new products for the burgeoning international fuel cell field.



The Company's small products have been sold by mail order over an

Internet website created for the Company by Macnor Corp. Macnor Corp. pays

the Company a fee of five percent (5%) of the sales price. See Item 7 "Major Shareholders and Related Party Transactions" of this Report. Subsequent to the 2002 year end, this agreement has been terminated as of May 31, 2003 and the Company will maintain its website and consummate the sales directly.



In October 2000, the Company entered into an agreement with

FuelCellStore.com, Inc. for the inclusion of the Company's products on the

FuelCellStore.com internet website on a non-exclusive basis for sales anywhere in the world. FuelCellStore.com, Inc. receives a ten percent (10%) commission based upon sales of the Company's products over its internet website.



Currently, the Company's fuel cell products are shipped to the customer from Canada. Earlier shipments were from both the Czech Republic and Canada. It is expected that the future customers of the Company's fuel cell systems will be manufacturers of all types of products which will be adapted to utilize the Company's fuel cell technology. The Company expects such fuel cell systems will be shipped directly from its facilities to such manufacturers or through a network of distributors and agents to such manufacturers.



RAW MATERIALS AND SUPPLIES



The principal raw materials that the Company uses are common and widely available from numerous suppliers. The Company's principal materials are largely various plastics, carbons, metals and their compounds and conventional components, which are all relatively inexpensive to obtain and which currently do not present supply problems.



COMPETITION



Fuel cells are a competitive business. Competition arises from other fuel cell companies and from entities engaged in offering other more conventional energy services. The Company competes with companies that are developing all types of fuel cells. While there are currently five basic types of fuel cell technologies (see "Description of Fuel Cells" above), the Company believes that AFCs and PEMFCs are the only fuel cells that are presently of competitive relevance for the relatively small power, stationary and portable applications that the Company intends to focus upon. This is because AFCs and PEMFCs operate at ambient temperatures (above 0 degrees Celsius to 100 degrees Celsius) and deliver kilowatts, which are more suited to meet the needs of small, off-grid applications. The Company constructs only AFCs. While both AFC and PEM fuel cells have potential environmental and efficiency advantages over traditional power sources, the Company believes that AFCs can be manufactured less expensively, more efficiently and more practically than PEMFCs in small-scale applications.



The Company has always believed that its main competitor is Ballard Power Systems ("Ballard"), located in Vancouver, Canada, which concentrates on PEMFCs. Ballard enjoys the most high-profile status of any fuel cell developer in the world today. Because of its market status, any developer of AFC or PEMFC technology must compete directly or indirectly with Ballard.  Ballard appears committed, for the foreseeable future, to developing fuel cells for use in buses and private automobiles.  The Company is focusing instead on fuel cells for light vehicles, such as golf cars and retirement vehicles.  However, there are no barriers to Ballard, or any other known or unknown competitor of the Company, entering the market covering lightweight vehicles.



Astris has essentially no competition in any application area using alkaline fuel cells where its under-10 kilowatt power systems are targeted. In addition to mobile applications, the Company is also focusing on the potential market in stationary applications of small-capacity fuel cells, as are other fuel cell companies. There are several competitors in this market.



Apart from specific market competition, the Company believes that AFCs have inherent advantages over PEMFCs, regardless of specific applications. AFCs use potassium hydroxide electrolyte, a chemically basic substance, while PEMFCs are chemically acidic, requiring platinum as a catalyst. They also use an expensive membrane as an electrolyte. In addition, AFCs have been scientifically proven to be 10% more energy-efficient than PEMFCs and offer a higher electricity yield from a given quantity of fuel. That is to say, while PEMFCs might be 40-50% efficient, AFCs are 50-60% efficient. This provides a significant advantage in terms of raw energy consumption and cost savings. In addition, AFCs are able to start instantly, without warm-up, and operate at low temperatures, even below freezing, to minus 30-40 degrees Celsius. PEMFCs can only operate above freezing from 0 degrees Celsius to 100 degrees Celsius.



LEGAL PROCEEDINGS



On November 10, 1999, E. Roy Birkett, a former director and officer of the Company, instituted an action against the Company in the Superior Court of Justice (Ontario) (File No. 99-CV-179868) seeking recovery of Cdn $315,000 he had advanced on behalf of the Company. Mr. Birkett was President of the Company in 1995 when it acquired Astris Inc. Included in a March 1995 Letter of Intent for the acquisition of Astris Inc. was the binding obligation of Mr. Birkett and the other then principals of the Company to advance funds to keep AEI operating until such time as they had raised or arranged a financing for the Company of a minimum of US$5,000,000. Such financing was never obtained. Mr. Birkett originally sought actual damages in excess of Cdn $315,000, plus costs.



In February 2001, Mr. Birkett's counsel requested the Company to consent to an expansion of Mr. Birkett's initial claim to Cdn $1,942,301, in order to cover additional expenses he allegedly incurred on behalf of the Company in 1995 with regards to the proposed financing. The Company has chosen not to oppose this request as Canadian civil procedure allows permissive amendments to pleadings up until judgment. The pretrial hearing was held on July 12, 2002, before an independent judge in the Ontario Court.



The trial date was scheduled for October 7, 2002. Subsequent to quarter ended September 30, 2002, the lawsuit was dismissed by the Superior Court of Justice of Ontario. The Company was completely successful in its defense and the entire claim was dismissed.



On December 18, 2002, the court ordered Mr. Birkett to pay $81,000 to the Company as partial indemnity for the legal costs it incurred in its successful defence.  Mr. Birkett has appealed to the Ontario Court of Appeal from the judgment dismissing his claim.  As yet no date has been set for the hearing of his appeal.



GOVERNMENTAL REGULATION



The Company knows of no governmental license or approval required in connection with the manufacture or sale of the Company's current products. There are no extraordinary governmental regulations known to the Company that affects its ability to sell or produce its products. The Company does not believe that it will be subject to existing regulations governing traditional electric utilities.



The Company knows that its products must comply, where applicable, with the existing rules and regulations for electrical and electronic products, and is prepared to meet such requirements.



The Company anticipates that its products and their installation may be subject to oversight and regulation related to their safety due to their use of hydrogen, which is highly flammable and regarded as a hazardous gas. However, hydrogen is a commonplace industrial gas, which is produced in enormous quantities every day in numerous industrial facilities around the world. Regulations have been in place for decades regarding hydrogen, which provide routine specifications for manufacturers of hydrogen-using equipment.  Therefore, the Company does not anticipate any new regulations regarding hydrogen, or any difficulties in complying with existing regulations.



ENVIRONMENTAL COMPLIANCE



There are no environmental laws known to the Company, which may affect any of its operations as they are currently constituted. The Company is not involved in a business which involves the use of materials which are likely to result in a violation of any existing environmental laws, rules or regulations, nor does it own any real property which would lead to liability as a land owner.



C.  ORGANIZATIONAL STRUCTURE.



The Company has two subsidiaries, which are Astris Inc. ("AI") and Astris s.r.o. The Company owns a 96.3% interest in AI and non-exchanging shareholders hold the remaining interests. AI was incorporated initially as Astris Science Inc. on April 8, 1983, in the Province of Ontario, and changed its name to Astris Inc. in 1986. The Company also owns a 30% minority interest in Astris s.r.o., which was organized under the laws of the Czech Republic. The remaining 70% interest in Astris s.r.o. is owned by Macnor Corp., an Ontario corporation that is wholly owned by Jiri K. Nor, an Executive Officer, Director and principal shareholder of the Company. Unless otherwise indicated or outside the context of the disclosure, all references to the Company shall include AI and Astris s.r.o.



D.  PROPERTY, PLANTS AND EQUIPMENT.



AEI has leased an 3,750 square foot industrial unit located at 2175 Dunwin Drive, Mississauga, Ontario, Canada for a period of three years ending October 31, 2003, with an option to renew for an additional three years.



Astris s.r.o. has leased premises in Benesov, Czech Republic. These facilities include about 325 sq. ft. of office space and about 1,100 sq. ft. of laboratory space with a chemistry lab, electrode lab, test lab, mechanical shop and assembly room. The lease is open-ended, requiring a notice of three months to terminate, and an annual review for cost adjustment.



In May 2003, Astris s.r.o. purchased an industrial building in the town of Vlasim (near Benesov) with approximately 8,000 square feet of manufacturing and office space on two floors.  The building is situated on a 1.5 acre lot, allowing for future expansion, if necessary.



The Company believes that the present premises are suitable for its present requirements.



ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS.



This discussion and analysis of the operating results and the financial position of the Company should be read in conjunction with the financial statements and the notes thereto forming a part of this Annual Report. In addition to historical information, the following discussion contains forward-looking statements that reflect the Company's plans, estimates, intentions, expectations and beliefs. The Company's actual results could differ materially from those discussed in such forward-looking statements.



The accountant's report to the Company's audited financial statements notes that the Company's ability to continue as a going concern is in substantial doubt.  It is dependent upon the success of the efforts of its Directors and principal shareholders in providing financial support in the short term.  It is additionally dependent on the ability of the Company to raise additional long-term financing, either from their own resources or from third parties, the successful commercialization of one or more of the Company's research projects, and attaining profitable operations.



In 1998, the Company obtained limited funds, which it used to recommence research and development activities in Canada and to market certain ancillary products. As noted under Liquidity and Capital Resources herein, the future of the Company is dependent upon its ability to raise additional capital to fund the commencement of the commercialization of products based upon the Companys fuel cell technology. Management is of the opinion that the Company should continue to exist and grow, based upon encouraging results of research and development to date, recent world-wide interest in fuel cell technology and the completion of the golf car program. With the advancement of this research and development program, and the completion of the Companys golf car program, the Company is in a better position to pursue financing in the form of private placements of its Common Shares.



A.  OPERATING RESULTS.



The financial statements included in this report are stated in Canadian dollars.



During the year ended December 31, 2002, a total of 3,150,225 common shares of the Company were issued.  During this fiscal year, 486,060 common shares of the Company were issued in settlement of outstanding liabilities to non-related parties of CDN$166,801, and 657,925 common shares were issued in settlement of outstanding liabilities to related parties, and 2,006,250 common shares were sold in exchange for CDN$628,631.



During the year ended December 31, 2001, a total of 1,202,435 common shares of the Company were issued.  During this fiscal year, 524,185 common shares of the Company were issued in settlement of outstanding liabilities of CDN$307,722, 325,000 common shares were issued on the exercise of options in exchange for CDN$121,206, and 353,250 common shares of the Company were sold in exchange for CDN$195,000.



The Company has incurred operating losses during the last three fiscal years ended December 31. The net loss for 2002 was CDN$660,118 (after a non-recurring write off of deferred costs of CDN$122,818) on revenues of CDN$146,874. The net loss for 2001 was CDN$593,984 (after a non-recurring gain of CDN$38,089 from the sale of shares of EVI held by the Company) on revenues of CDN$26,787.  The net loss for 2000 was CDN$35,580 (after a non-

recurring gain of CDN$376,648 from the sale of shares of EVI held by the Company) on revenues of CDN$22,824.



Revenue in 2002 was CDN$146,874 and was comprised of CDN$1,582 from GST (Goods and Service Tax) compensation, CDN$12,863 from a currency exchange gain, and CDN$132,429 from the sale of literature and other related products and services regarding the Company's fuel cell business.  Revenue in 2001 was CDN$26,787 and was comprised of a CDN$10,000 royalty payment receivable from EVI, CDN$NIL from interest on the funds derived from the sale of the EVI shares, CDN$2,083 from GST (Goods and Service Tax) compensation, CDN$7,751 from a currency exchange gain, and CDN$6,953 from the sale of literature and other related products regarding the Company's fuel cell research.  Revenue in 2000 was CDN$22,824 and was comprised of a CDN$10,000 royalty payment from EVI, CDN$5,521 from interest on the funds derived from the sale of the EVI shares, CDN$1,594 from GST (Goods and Service Tax) compensation, CDN$5,525 from a currency exchange gain, and CDN$184 from the sale of literature regarding the Company's fuel sale research.



No one customer accounted for a majority of the sales of the small fuel cells and related products. Throughout its history, the Company's expenses have varied based upon the amount of funds available to the Company.  Until the year 2000 Astris s.r.o. had been basically self-funded through the sale of ancillary products and government and technical university contracts, none of which resulted in any license fees to the Company.



Operating expenses were approximately CDN$684,174 in 2002, CDN$658,860 in 2001, and CDN$435,052 in 2000.  Also included in operating expenses are costs associated with subcontracts. These costs were CDN$171,418 in 2002, CDN$495,736 in 2001, and CDN$180,807 in 2000, most of which was to Astris s.r.o. for performance of research services for the Company. The amount expended for subcontracts varied according to the amount of service, which was provided to the Company.



The Company's net loss was CDN$660,118 for the year ended December 31,

2002 as compared to a net loss of CDN$593,984 for 2001.  The increased loss in 2002 can be attributed to the deferred costs write off of CDN$122,818 by the Company.



Transfers of funds from accounts containing U.S. dollars into Canadian

dollar accounts give rise to gains on U.S. exchange and, conversely, transfers of funds from accounts containing Canadian dollars into U.S. dollar accounts gives rise to losses on U.S. exchange.



B.  LIQUIDITY AND CAPITAL RESOURCES.



The Company has been hindered by a lack of capital. Its recent source of

capital has been the sale of shares of Common Stock in the Company. In the year 2002, the Company recognized proceeds of CDN$628,631 for the sale of its Common Stock.  In the first quarter of year 2001, the Company sold its remaining 102,900 shares of EVI Common Stock, resulting in net proceeds of US$65,957.  In the year 2000, the Company sold 97,100 shares of EVI Common Stock and received net proceeds of US$292,380.



In the year 2002, there was an increase in the advances from related parties of $6,400.  In March 2001, three Directors of the Company loaned an aggregate of CDN$67,500 to the Company.  These loans were subsequently retired by the Company and the Directors in exchange for options to purchase shares of the Company's Common Stock. See "Compensation" below.



The Company will seek further outside capital through a sale of its Common Stock in a private placement offering. The Company has been approached by interested parties that are active in arranging such financing for the fuel cell industry. The Company succeeded in 2001 in posting its Common Stock on the O.T.C. Bulletin Board in order to facilitate such a financing.



A financing agreement dated May 22, 2003 with First Energy Advisors Inc. (First Energy) states that First Energy will put forth its best efforts to raise up to US$10,000,000 in stages. Within the last six months affiliates of First Energy have invested over CDN$500,000 into the Company.



C.  JOINT VENTURE PROSPECTS



In addition, the Company is in final negotiations to establish a

strategic partnership with a manufacturer of a related product.  In February 2003, subsequent to the end of the fiscal year, the Company announced details of the proposed joint venture with CareAction Inc., a diversified company based near Montreal, Quebec.



Astris will provide its technology under license to the new jointly owned fuel cell development and manufacturing enterprise, called Astris Transportation Systems Inc. (ATSI). CareAction will supply financing, manufacturing know-how and general management. The initial goal of ATSI is to become the first volume producer of alkaline fuel cell systems for use in transportation.



For its contribution Astris receives (1) a 40 percent equity interest in ATSI,(2) a direct investment in the company of CDN$500,000, (3) monthly license payments totaling CDN$1,440,000 over the next three years, (4) payment of Astris' technical staff engaged in continuing research and development, and (5) a royalty on all fuel cell production based on Astris technology.  In exchange for this, CareAction acquires the leading alkaline fuel cell technology upon which it can now build a global operation in the burgeoning fuel cell industry. Of the direct investment CDN$250,000 has been paid to the Company in return for 625,000 Common Shares and 625,000 Warrants at US$0.50 per share.



Under the terms of the agreement, Astris remains free to license its technology to, or form joint ventures with, manufacturers of products outside the transportation area, such as portable power units and systems to provide electricity, heat, air conditioning and hot water for homes and other buildings.



The potential joint venture increases the possibility of providing the financial resources required to achieve mass production of the fuel cells developed by the Company.



D.  RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.



See "Research and Development" in Section 4.



E.  TREND INFORMATION.



In the year 2003, the Company will move forward with current development and work to finalize the joint venture agreement which is anticipated to lead to full production of the Companys MC250 fuel cell generator. The Company anticipates that this developmental progress will stimulate interest in the Company, which should lead to increased market activity and rising share prices, dependent upon general market conditions. In addition, the Company will continue to seek to enter into private placements, strategic partnerships and joint ventures in order to further finance the on-going development and commercialization of its fuel cell technology. There is no assurance that the Company will be able to find or enter into any private

placements, strategic partnerships or finalize the proposed joint venture, on terms acceptable to the Company or not highly dilutive to shareholders.



ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES.



1. DIRECTORS AND SENIOR MANAGEMENT.



The following table sets forth the name, age and office held with the Company as of June 7, 2003 and the period during which such person has served as a Director, Executive Officer and/or senior management.



---------------------------------------------------------------------------

Name                    Age    Office Held                  Director Since

----                    ---    -----------                  --------------

Jiri K. Nor              63    President, Chief Executive   1996

Officer and Director



Gerald A. Crawford (1)   69    Director                     1996



Donald A. Blenkarn (1)   72    Secretary and Director       1995



Gordon T. Emerson        65    Treasurer, Chief Financial   1999

Officer and Director



Anthony Durkacz          27    Vice President Finance       Not a Director



Notes:



(1) Members of the Company's Audit Committee.



Jiri K. Nor has been a Director and the President of the Company since March 1996. He is a trained engineer, with particular expertise in mechanics, aeronautics, electronics and electrochemistry. He is the principal inventor/developer of the Company's AFC fuel cell technology. Mr. Nor is also an entrepreneur with extensive business experience and the President and sole stockholder of Macnor Corp. He is the founder of Sonotek, an electronics company, inventor of the Minitcharger  ̈ fast battery charging technology and founder of the Norvik group of companies. For more than five years until August 1997, he was Vice President of Research for Norvik Technologies and Norvik Traction, companies in the business of developing fast battery chargers.



Gerald A. Crawford, PhD has been a Director of the Company since March 1996, and has been associated with Astris Inc. since 1987 in marketing and public relations areas. He is a trained metallurgical engineer, and was associated with various companies from 1960 to 1987.  Since 1989, he has been a self-employed consultant primarily in the area of metallurgical engineering environmental matters to the nickel industry, providing services to corporate clients, including Astris, for the past 11 years.  His career embraces process research, patents, metal marketing and alternate energy technologies.



Donald A. Blenkarn, L.L.B., Q.C. has been a Director and Secretary of the Company since October 1995. For over five years, he has been Managing Director of Timagami Financial Services Ltd., located in Mississauga, Canada. From 1972 to 1993, he was a Progressive Conservative Party Member of Parliament.  From 1984 to 1991, he was the Chair of the House of Commons Finance Committee, and Vice-Chair from 1991 to 1993. Mr. Blenkarn practiced law from 1952 to 1983 with the firm of Blenkarn, Kerr and Shadlock, Mississauga, Ontario.



Gordon T. Emerson has been a Director of the Company since 1999 and its Treasurer and Chief Financial Officer since April 2000. During his career, Mr. Emerson has raised capital for a number of Canadian companies, including Spar Aerospace, Corona Mining and Morgan Hydrocarbons. For more than the past five years, he has been a consultant to public companies in Canada with respect to capital structure and financing transactions.



Anthony Durkacz, Vice President Finance, is a graduate of Brock University in Business Administration,and joined the Astris team in summer 2002. He served previously as Manager of Foreign Exchange on the capital market trading floor with TD Securities in Toronto, and as President of Fortius Research and Trading, an investment company servicing high net worth clients.



There are no family relationships between any of the persons named above

nor are there any arrangements or understandings with major shareholders,

customers, suppliers or others, pursuant to which any person referred to above was selected as a Director or member of senior management.



B.  COMPENSATION



For the 2002 fiscal year, the Company paid compensation of CDN$36,000 in

cash. Macnor Corp. received CDN$36,000 and Mr. Emerson received CDN$nil. In addition, the Company issued Common Shares at market value in lieu of cash to its Executive Officers for services rendered to the Company. (See below).



For the 2001 fiscal year, the Company paid compensation of CDN$46,000 in cash.  Macnor Corp. received CDN$36,000 in cash and Mr. Emerson received CDN$10,000.  In addition, the Company issued Common Shares at market value in lieu of cash to its Executive Officers for services rendered to the Company. (See below.)  Additional compensation of CDN$14,100 was accrued as a payable for the year 2001.  At year-end 2001, Macnor Corp. was owed CDN$11,600 and Gordon Emerson was owed CDN$2,500.  The outstanding balance was subsequently settled in April 2002 by issuance of Common Shares in the Company.



There does not currently exist any compensation arrangement for any of the Directors, nor does the Company have any pension, retirement or similar plan for its Executive Officers or Directors.



In fiscal year 2000, the Companys stockholders adopted the 2000 Stock

Option Plan (the Plan), pursuant to which options could be granted to purchase 1,000,000 Common Shares.



On September 25, 2001, the company created a stock option plan that was approved at the Annual Special Meeting of Shareholders held in November 2001 allowing the directors the right to allocate up to 1,200,000 (one million two hundred thousand) common shares in the company to individuals and consultants. On October 30, 2002 the Board of Directors passed a resolution authorizing an amendment to the stock option plan of September 25, 2001, increasing the number of shares available in the plan by an additional 1,400,000 shares. The amendment was adopted by the Companys shareholders at its annual and special meeting of shareholders held in November 2002.



The purpose of the Plans is to advance the interests of the Company by affording its Officers, Directors, employees and consultants the opportunity to acquire equity interests in the Company. These Options had an exercise price of not less than the market price of the Common Shares at the time, or if there were not public market price, at the fair market value as determined by the Board of Directors on the day preceding the date of grant. The options were exercisable over a number of years specified at the time of the grant, which term was not to exceed five years from the date of grant.



On June 14, 2002, the Directors approved the allocation of options to Wintser Investments Limited ("WIL") as an Eligible Consultant under the 2001 Stock Option Plan. The option for 500,000 shares is vested to WIL at an exercise price of US $0.20. The option was not exercised on or before the established deadline of September 15, 2002, therefore the option expired.



On July 22, 2002, the Directors approved the allocation of options to Anthony Durkacz, Vice President of Finance, as eligible under the 2001 Stock Option Plan. The option for 250,000 shares is vested to Durkacz at an exercise price of US $0.20. The option must be exercised on or before the established deadline of July 22, 2007.



In accordance with the terms of a financing agreement, dated November 7, 2002 with 661399 Ontario Inc., the Company had granted an option to purchase 500,000 Common Shares at a price of US$0.20 per share, expiring on February 15, 2003. 661399 Ontario Inc. exercised its rights on February 13, 2003 for proceeds to the Company of CDN$150,000 or the equivalent at the time of US$100,000.



As of June 12, 2003 the Company has 650,000 Common Shares under the options plan to be allocated.



As of June 12, 2003, options outstanding for the purchase of an aggregate of 3,125,000 Common Shares had been granted under the Plan to employees and consultants of the Company, as noted below:



Name                 Number of Shares     Exercise Price

Expiry

-------------------------------------------------------------------

Taylor Made Mgmt Corp.1,000,000

US$0.30

10/22/03i

Jerry Benedik            50,000           US$0.505

08/15/05

Josef Soltys             50,000           US$0.50

08/15/05

Josef Benedik            50,000           US$0.50

08/15/05

Peter Sinkner            50,000           US$0.505

08/15/05

Derek Bullock            50,000           US$0.51

08/15/05

Jiri Nor                 50,000           US$0.505

08/15/05

Gordon Emerson           50,000           US$0.505

08/15/05

Employees: Astris s.r.o.

(Czech Republic)50,000           US$0.50

08/15/05

Maurice Caissie          25,000           US$0.50

08/15/05

IMI Inc.

125,000

US$0.50

11/01/06

Anthony Durkacz

250,000

US$0.20

07/22/07

Jerry Benedik            40,000           US$0.20

10/30/07

Josef Soltys             40,000           US$0.20

10/30/07

Josef Benedik            40,000           US$0.20

10/30/07

Joseph Hasal             40,000           US$0.20

10/30/07

Employees: Astris s.r.o.

(Czech Republic)65,000           US$0.20

10/30/07



i. The Company was notified that an option granted to EVI on October 22, 1998 was sold to the Taylor Made Management Corporation in the first quarter of 2003.



Options still to be issued:



Name                 Number of Shares     Exercise Price

Expiry

-------------------------------------------------------------------

Gordon Emerson          250,000          CDN$0.25

03/08/05

Jiri Nor

300,000

US$0.24

11/12/06

Gordon Emerson

300,000

US$0.24

11/12/06

158560 Canada Inc.

250,000

US$0.40

09/27/07



The Directors approved unanimously the allocation of options to two Directors. The first option is to be vested to Mr. Jiri Nor at an exercise price of US$0.24 upon successful completion of the third generation fuel cell engine.  The second option is to be vested to Mr. Gordon Emerson at an exercise price of US$0.24, when he is successful in raising US$5,000,000 for the corporation. Both options expire on November 12, 2006.



In accordance with the terms of a financing agreement dated October 1, 2002 with 158560 Canada Inc., the Company granted to the agent an option to purchase 250,000 Common Shares at a price of US$0.40 per share, expiring on September 27, 2007. Exercising the option is contingent on 158560 Canada Inc. being able to raise specified funding. Fifty percent of the option may be exercised upon raising CDN$500,000 and the balance upon raising an additional CDN$1,000,000.



C.  BOARD PRACTICES.



The Board of Directors may consist of from three to ten members, and is

currently comprised of four members. Each Director is elected by the shareholders to serve until the next annual meeting or until a successor is

elected or appointed. The next annual meeting will take place on July 22, 2003.



For a list of the Directors and the period during which the current

Directors have served in that office, please see Section 6A above.



The Directors of the Company do not currently have any service contracts

with the Company providing for benefits upon termination of employment. There

does not currently exist any compensation arrangement for any of the Directors. The Company does not have any pension, retirement or similar plan for its Directors.



Gerald A. Crawford and Donald A. Blenkarn are members of the Company's

Audit Committee. There are no additional committees of the Board.



D.  EMPLOYEES.



AEI and AI presently have four Officers and four other employees, including a full-time executive assistant and two part-time technical experts. The President is also the General Manager of the current project on a full-time basis. Job descriptions for employees in such small, entrepreneurial companies as the Company tend to be rather flexible, but clearly the principal role of the General Manager is to oversee the progress of the current project to ensure it is completed satisfactorily, on budget and on time. The executive assistant is responsible for reception, bookkeeping, and other details of general office administration, including assisting the General Manager.  The present employees are not represented by a labor union. The Company considers its relationship with its employees to be satisfactory.



E.  SHARE OWNERSHIP.



The following table lists, as of June 12, 2003, the beneficial share

holdings in the Common Shares, which are the only outstanding voting securities of the Company, of (i) each of the Company's Executive Officers and Directors of the Company; and (ii) all of the Company's Executive Officers and Directors as a group:

Amount and Nature        Percent

Name                               of Beneficial Owner       of Class

----                               -------------------       --------

Jiri K. Nor (1)                                2,374,721           13.47%

Gerald A. Crawford (2)                           848,162

4.81%

Donald A. Blenkarn                               660,000            3.74%

Gordon Emerson (3)                               548,195            3.11%

Anthony Durkacz (4)                              123,190            0.70%



All executive Officers and Directors as        4,554,668           25.83%

a group

---------------------------------------------------------------------------



(1)  Includes (i) 1,736,699 Common Shares held by Jiri K. Nor and (ii) 429,353 Common Shares held by Macnor Corp. and (ii) 208,669 Common Shares held by his wife, Jana Nor.



(2)  Includes (i) 569,076 Common Shares held by Gerald A. Crawford and (ii)

279,086 Common Shares held by his wife, Gail Crawford.



(3)  Includes (i) 25,000 Common Shares by Gordon T. Emerson, (ii) 315,660

Common Shares by his wife, Barbara Emerson, and (iii) 207,535 Common

Shares by Mr. Emerson's children.



(4)

Includes (i) 93,100 Common Shares by Anthony Durkacz and (ii) 30,490

Common Shares by Fortius Research & Trading Inc.



ITEM 7. MAJOR SHAREHOLDERS AND RELATED AND NON-RELATED PARTY TRANSACTIONS.



A. MAJOR SHAREHOLDERS.



The following table lists, as of June 12, 2003, the beneficial share holdings in the Common Shares, which are the only outstanding voting securities of the Company, of all persons who are known to the Company to beneficially own, directly or indirectly, five percent or more of the issued and outstanding Common Shares:

Amount and Nature      Percent              Name                              of Beneficial Owner     of Class

----------------------------------------------------------------------

Jiri K. Nor (1)                          2,374,721             13.47%

----------------------------------------------------------------------



(1)  Includes (i) 1,736,699 Common Shares held by Jiri K. Nor and (ii) 429,353 Common Shares held by Macnor Corp. and (ii) 208,669 Common Shares held by his wife, Jana Nor.



There has not been any significant change in the percentage ownership held by any major shareholder during the past three years.



The Company's major shareholders do not have any different voting rights than other holders of the Common Shares.



For a discussion of the number of shares of Common Stock held in Canada, please see Item 9 below.



To the Company's knowledge, it is not directly or indirectly owned or controlled by another corporation(s), by any foreign government or by any other natural or legal person(s). The Company does not know of any arrangement that may, at a subsequent date, result in a change in control of the Company.



B.  RELATED PARTY TRANSACTIONS.



Certain Directors of the Company continue to support and fund the Companys operating expenses by loaning funds to cover its ongoing requirements. The Directors have agreed to support the Company until a suitable joint venture or private placement is completed.



On March 8, 2000, Jiri K. Nor was granted an option to purchase 250,000 common shares exercisable for five years at an exercise price of CDN$0.25 per share. The option to Mr. Nor was conditional upon his completing the golf car project by March 31, 2001. Since the golf car project was complete by March 31, 2001, the Directors acknowledged that Mr. Nor had earned his option. Mr. Nor had previously loaned the Company CDN$22,500 in March 2001. Mr. Nor exercised his option for 250,000 common shares for CDN$0.25 per share by paying CDN$40,000 in cash, and by agreeing to retire the entire outstanding loan of CDN$22,500 to the Company.



In March 2001, three Directors of the Company loaned an aggregate of CDN$67,500 to the Company. Subsequently, the Company and the Directors retired these loans by issuing options to purchase shares of the Companys common stock. On May 25, 2001 the Directors exercised their options and retired the entire loans.



On March 27, 2002, the Corporation agreed to settle obligations owing by

the Corporation to certain directors and/or officers and consultants of the Corporation.  The following shares were issued April 2nd pursuant to the Directors' Resolution dated March 27, 2002, at a price of US $0.20 per share:



Name of Officer/Director                   Price Paid/    Number of

or Former/Officer/Director                 Debt Owed      Common Shares

--------------------------                 -----------    -------------

Jiri Nor                                   US$10,360

51,800

Gerald A. Crawford                         US$ 5,150

25,750

Donald Blenkarn                            US$15,560

77,800

Gordon Emerson                             US$ 8,750

43,750

Timagami Financial                         US$13,750

68,750



On July 2, 2002, the Corporation agreed to settle obligations owing by the Corporation to certain directors and/or officers and consultants of the Corporation. The Company approved the issuance of the following shares at a price of US$0.20 per share:



Name of Officer/Director          Price Paid/     Number of

Or Former Officer/Director        Debt Owed     Common Shares

--------------------------------------------------------------

Gordon Emerson                    US$14,797        74,000

Macnor Corporation                US$19,756        98,775



On October 18, 2002, the Corporation agreed to settle obligations owing by the Corporation to certain directors and/or officers and consultants of the Corporation. The Company approved the issuance of the following shares at a price of US$0.20 per share:



Name of Officer/Director          Price Paid/     Number of

Or Former Officer/Director        Debt Owed     Common Shares

--------------------------------------------------------------

Gordon Emerson                    US$ 4,725

23,625

Macnor Corporation                US$ 7,560

37,800

Anthony Durkacz

US$12,100

60,500



On January 10, 2003, the Corporation agreed to settle obligations owing by the Corporation to certain directors and/or officers and consultants of the Corporation. The Company approved the issuance of the following shares at a price of US$0.29 per share:



Name of Officer/Director          Price Paid/     Number of

Or Former Officer/Director        Debt Owed     Common Shares

--------------------------------------------------------------

Gordon Emerson                    US$28,945

99,810

Macnor Corporation                US$ 7,765

26,775

Jiri K. Nor

US$ 6,728

23,200

Anthony Durkacz

US$ 5,974

20,600

Donald Blenkarn

US$ 3,234

11,150

Gerald Crawford

US$ 3,234

11,150



On May 8, 2003, the Corporation agreed to settle obligations owing by the Corporation to certain directors and/or officers and consultants of the Corporation. The Company approved the issuance of the following shares at a price of US$0.56 per share:



Name of Officer/Director          Price Paid/     Number of

Or Former Officer/Director        Debt Owed     Common Shares

--------------------------------------------------------------

Gordon Emerson                    US$32,570

58,160

Macnor Corporation                US$ 8,200

14,640

Fortius Research & Trading

US$17,075

30,490



As of September 13, 1999, the Company entered into a royalty arrangement

with Macnor Corp., an Ontario corporation ("Macnor"), which is wholly-owned by Jiri K. Nor, President, Chief Executive Officer and Director of the Company. This arrangement calls for Macnor to sell certain fuel cell products, developed and manufactured by Astris s.r.o. (small fuel cells), through a website and mail order opened and operated by Macnor. Macnor is to pay an annual royalty equal to five percent (5%) from all sales of such goods, based upon gross revenues. No royalty was paid for fiscal 2000. In the year 2001 the Company recognized revenues of CDN$1,201 related to this arrangement, and CDN$2,476 in the year 2002. Subsequently, this agreement has been terminated as of May 31, 2003.



Macnor Corp. also owns 70% of Astris s.r.o., which presently conducts a substantial portion of the research and development of the Company. The Company owns the remaining 30% of Astris s.r.o.



Anthony Durkacz is president and CEO of Fortius Research & Trading. Fortius is 50% owned by Anthony Durkacz.



As at December 31, 2002, the Company owed CDN$2,000 in principal and CDN$12,400 in accrued interest only up to December 31, 1998 to Timagami Financial Services ("Timagami") as per an agreement. This advance was unsecured and is non-interest bearing with no specific repayment terms. All interest accrued on a previous advance, while that advance was repaid in the year 2000, the accrued interest on that advance remains outstanding. Donald A. Blenkarn, a Director and Secretary of the Company, is Managing Director of Timagami.



At years ended December 31, 2000, 1999 and 1998, the Company owed CDN$100,000 in principal and CDN$54,000 of accrued interest to Mr. Blenkarn (CDN$40,000), Mr. Crawford (CDN$20,000) and Mr. Nor (CDN$40,000), as payment for advances made by them to the Company under the terms of a debenture, dated September 30, 1996. The amount owed is secured and bears interest at twelve percent (12%) per annum. Mr. Blenkarn, Mr. Crawford and Mr. Nor have agreed that they will not demand repayment of the principal and interest until after July 7, 2004. The amount owed is collateralized by a lien on all of the assets and business of AI.



The management of the Company believes that each of the aforementioned

transactions was on terms as fair to the Company as any which could have been

made with unaffiliated parties.



C. NON-RELATED PARTY COMMON STOCK TRANSACTIONS.



On March 27, 2002, the Corporation agreed to settle obligations owing to certain individuals and corporations.  The following shares were issued at a price of US$0.20 per share:



Name of Creditor/Consultant                Price Paid/    Number of

Debt Owed      Common Shares

--------------------------                 -----------    -------------

Gordon Molesworth                          US$15,830

79,000



On July 2, 2002, the Corporation agreed to settle obligations owing to certain individuals and corporations.  The following shares were issued at a price of US$0.20 per share:



Name of Creditor/Consultant                Price Paid/    Number of

Debt Owed      Common Shares

--------------------------                 -----------    -------------

Joseph Hasal

US$ 6,480

32,400

Gordon Molesworth                          US$19,723

98,600



For services provided between July and September 2002, the Corporation agreed to settle obligations owing to certain individuals and corporations.  The following shares were issued at a price between US$0.20 and US$0.25 per share:



Name of Creditor/Consultant                Price Paid/    Number of

Debt Owed      Common Shares

--------------------------                 -----------    -------------

Nicholas Muller

US$ 1,250

5,000

158560 Canada Inc.

US$ 7,500

30,000

JCH Technologies

US$ 8,020

40,100

Gordon Molesworth

US$12,049

60,000



For services provided between October and December 2002, the Corporation agreed to settle obligations owing to certain individuals and corporations.  The following shares were issued at a price between US$0.23 and US$0.29 per share:



Name of Creditor/Consultant                Price Paid/    Number of

Debt Owed      Common Shares

--------------------------                 -----------    -------------

Eric Fournie

US$37,500

150,000

Nicholas Muller

US$   790

3,450

Laurie McElrea

US$ 1,725

7,500

JCH Technologies

US$ 8,250

28,450

Gordon Molesworth

US$13,500

46,550



On May 8, 2003, the Corporation agreed to settle obligations owing to certain individuals and corporations.  The following shares were issued at a price at US$0.56 per share:



Name of Creditor/Consultant                Price Paid/    Number of

Debt Owed      Common Shares

--------------------------                 -----------    -------------

JCH Technologies

US$ 6,664

11,900

Gordon Molesworth

US$10,501

18,752



D. INTERESTS OF EXPERTS AND COUNSEL.



Not Applicable.



ITEM 8. FINANCIAL INFORMATION.



A.  CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION.



Reference is made to Item 18 for a list of all financial statements and notes related thereto filed as part of this Annual Report.



B.  SIGNIFICANT CHANGES.



There have been no significant changes, which have occurred since the date of the annual financial statements included in this Report.



DIVIDEND POLICY.



The Company has not paid dividends within the last five fiscal years. For a description of the ability of the Board of Directors to distribute dividends, please see Item 10B below.



ITEM 9. THE OFFER AND LISTING.



MARKETS AND PRICE HISTORY OF THE COMPANY'S STOCK.



As of June 12, 2003, the Company had approximately 1,488 stockholders of

record for its Common Shares and 17,633,030 Common Shares were issued and

outstanding. The Company believes that there are a considerable number of

beneficial holders of the Common Shares, as a substantial number of Common Shares are held of record by principal depositories in Canada and the United States. As at June 7, 2003, the shareholder list showed 43 registered shareholders in the United States holding a total of 478,688 Common Shares, plus 4,439,860 Common Shares in the name of Cede & Co. The Company estimates that the holdings in Cede & Co. represents approximately 940 beneficial shareholders. Thus, United States residents hold approximately 4,918,548 Common Shares, or 27.9% of the Company's outstanding Common Shares. Depositories in Canada held Common Shares for 370 persons.  CDS, the depository in Canada holds 9,663,814 Common Shares.



The Common Shares were previously traded in Canada on the Canadian Dealing Network (CDNX), but presently has an inactive listing on the CDNX. The Company would seek to reactivate such listing once it meets the initial listing requirements of the CDNX. The Company does not presently meet the following requirements to qualify to list on the CDNX: net tangible assets of CDN$750,000, unallocated funds of CDN$100,000 and/or the required amount of working capital to cover the Company's administrative expenses for 12 months. Since June 20, 2001, the Company's Common Shares have been posted for trading on the O.T.C. Bulletin Board under the symbol ASRNF.OB. The quarterly high and low prices for the past two fiscal years are tabulated below:



-----------------------------------------------------

Quarter          High, US$/share   Low, US$/share

-----------------------------------------------------

2001

-------------------------------------------------

First                  .90              .40

-------------------------------------------------

Second                1.00              .44

-------------------------------------------------

Third                  .65              .24

-------------------------------------------------

Fourth                 .35              .15

-------------------------------------------------



2002

-------------------------------------------------

First                  .31              .16

-------------------------------------------------

Second                 .29              .13

-------------------------------------------------

Third                  .32              .13

-------------------------------------------------

Fourth                 .93              .18

-------------------------------------------------



The following table sets forth the high and low market prices for each of the past six months:



-------------------------------------------------

Month           High, US$/share   Low, US$/share

-------------------------------------------------

2003

-------------------------------------------------

January               $.81             $.42

-------------------------------------------------

February               .90              .55

-------------------------------------------------

March                  .75              .42

-------------------------------------------------

April                  .65              .43

-------------------------------------------------

May                    .61              .42

-------------------------------------------------

June (through

June 6)          .61              .44

-------------------------------------------------



ITEM 10. ADDITIONAL INFORMATION.



A.  SHARE CAPITAL.



Not Applicable.



B.  MEMORANDUM AND ARTICLES OF ASSOCIATION.



ORGANIZATION.



The Company was incorporated in the Province of Ontario, Canada.



CORPORATE GOVERNANCE.



The Company's by-laws provide that, subject to any unanimous shareholder

agreement, the Board of Directors shall manage or supervise the management of

the business and affairs of the Corporation. The powers of the board may be

exercised at a meeting at which a quorum is present or by resolution in writing signed by all the Directors entitled to vote on that resolution at a meeting of the Board. Where there is a vacancy in the board, the remaining Directors may exercise all the powers of the Board, so long as a quorum remains in office.



MEETINGS OF THE BOARD OF DIRECTORS.



The Company's by-laws provide that meetings of the Board of Directors may be held at any place within or outside Ontario and in any financial year of the Corporation a majority of the meetings need not be held in Canada. Meetings of the board shall be held from time to time at such time and at such place as the Board of Directors, the Chair of the Board, the Managing Director, the President or any two Directors may determine.



BORROWING POWER.



The Company's by-laws provide that without limiting the borrowing powers of the Corporation, as set forth in the Business Corporation Act (Ontario) (the "Act"), but subject to the articles and any unanimous shareholder agreement, the Board of Directors may from time to time on behalf of the Corporation, without authorization of the shareholders:



borrow money upon the credit of the Corporation;



issue, reissue, sell or pledge bonds, debentures, notes or other

evidences of indebtedness or guarantee of the Corporation, whether

secured or unsecured;



to the extent permitted by the Act, give directly or indirectly

financial assistance to any person by means of a loan, a guarantee or

otherwise on behalf of the Corporation to secure performance of any

present or future indebtedness, liability or obligation of any person;



and



mortgage, hypothecate, pledge or otherwise create a security interest           in all or any currently owned or subsequently acquired real or                  personal, movable or immovable, property of the Corporation including           book debts, rights, powers, franchises and undertakings, to secure              any such bonds, debentures, notes or other evidences of indebtedness            or guarantee or any other present or future indebtedness, liability             or obligation of the Corporation.



DIVIDENDS



The Company's by-laws provide that, subject to the Act, the articles and any unanimous shareholder agreement, the Board of Directors may from time to

time declare dividends payable to the shareholders according to their respective rights and interests in the Corporation. Dividends may be paid in money or property or by issuing fully paid shares of the Corporation or options or rights to acquire fully paid shares of the Corporation. Any dividend unclaimed after a period of six years from the date on which the same has been declared to be payable shall be forfeited and shall revert to the Corporation.



C.  MATERIAL CONTRACTS



The Company entered into a joint venture agreement with CareAction Inc., as previously mentioned under Item 5C Joint Venture Prospects.



D.  EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS



There are no governmental laws, decrees or regulations in Canada relating to restrictions on the import/export of capital affecting the remittance of interest, dividends or other payments to non-residential holders of the Company's Common Shares. Any such remittances to United States residents, however, are subject to a 15% withholding tax pursuant to Article X of the reciprocal tax treaty between Canada and the United States. See Part E below.



Except as provided in the Investment Canada Act (the "Act"), there are no limitations under the laws of Canada, the Province of Ontario or in the charter or any other constituent documents of the Company on the right of foreigners to hold and/or vote the Common Shares of the Company.



The Act requires a non-Canadian making an investment to acquire control of a Canadian business, the gross assets of which exceed certain defined threshold levels, to file an application for review with Investment Canada, the federal agency created by the Act.



As a result of the Canada-U.S. Free Trade Agreement, the Act was amended in January 1989 to provide distinct threshold levels for Americans who acquire control of a Canadian business.



A Canadian business is defined in the Act as a business carried on in

Canada that has a place of business in Canada, an individual or individuals in Canada who are employed or self-employed in connection with the business, and assets in Canada used in carrying on the business.



An American, as defined in the Act, includes: an individual who is an

American national or a lawful permanent resident of the United States; a government or government agency of the United States; an American-controlled entity, corporation or limited partnership or trust which is not controlled in fact through ownership of its voting interests of which two-thirds of its Board of Directors, general partners or trustees, as the case may be, are any

combination of Canadians or Americans.



The following investments by a non-Canadian are subject to review by

Investment Canada:



(a)  all direct acquisitions of control of Canadian businesses with

assets of CDN$5 million or more;



(b)  all indirect acquisitions of control of Canadian businesses with

assets of CDN$50 million or more if such assets represent less

than 50% of the value of the assets of the entities, the control

of which is being acquired; and



(c)  all indirect acquisitions of control of Canadian businesses with

assets of CDN$5 million or more if such assets represent more

than 50% of the value of the assets of the entities, the control

of which is being acquired.



Review by Investment Canada is required when investments by Americans

exceed CDN$150 million for direct acquisitions of control. For the purposes of the Act, direct acquisition of control means: a purchase of the voting interest on a corporation, partnership, joint venture or trust carrying on a Canadian business, or any purchase of all or substantially all of the assets used in carrying on a Canadian business; and indirect acquisition of control means a purchase of the voting interest of a corporation, partnership, joint venture or trust, whether a Canadian or foreign entity, which controls a corporation, partnership, joint venture or trust carrying on a Canadian business in Canada.



The acquisition of certain Canadian businesses is excluded from the higher thresholds set out for Americans. These excluded businesses include oil, gas, uranium, financial services (except insurance); transportation services and cultural services (i.e. the publication, distribution or sale of books, magazines, periodicals (other than printing or typesetting businesses), music in print or machine readable form, radio, television, cable and satellite services; the publication, distribution, sale or exhibitions of film or video recordings or audio or video music recordings).



Direct or indirect acquisitions of control of these excluded businesses are reviewable at the CDN$5 and CDN$50 million thresholds.



A non-Canadian shall not implement an investment reviewable under the Act unless the investment has been reviewed and the Minister responsible for

Investment Canada is satisfied or is deemed to be satisfied that the investment is likely to be of net benefit to Canada. If the Minister is not satisfied that the investment is likely to be a net benefit to Canada, the non-Canadian shall not implement the investment or, if the investment has been implemented, shall divest himself of control of the business that is the subject of the investment.



A non-Canadian or American making the following investments:



(i)  an investment to establish a new Canadian business; and



(ii) an investment to acquire control of a Canadian business which                  investment is not subject to review under the Act, must notify

Investment Canada, within prescribed time limits, of such

investments.



E.  TAXATION.



CANADIAN INCOME TAX CONSEQUENCES



Management of the Company considers that the following discussion respecting taxation fairly describes the principal and material Canadian federal income tax consequences applicable to shareholders of the Company who are residents of the United States and are not residents of Canada and do not hold, and are deemed not to hold, Common Shares of the Company in connection with carrying on a business in Canada (a "non-resident").



Generally, dividends paid by Canadian corporations to non-resident shareholders are subject to a withholding tax of 25% of the gross amount of such dividends. However, Article X of the reciprocal tax treaty between Canada and the United States reduced to 15% the withholdings tax on the gross amount of dividends paid to residents of the United States. A further 10% reduction in 1997 in the withholding tax rates on the gross amount of dividends is applicable when a U.S. corporation owns at least 10% of the voting stock of the Canadian corporation paying the dividends.



A non-resident who holds Common Shares of the Company as capital property will not subject to tax on capital gains realized on the disposition of such Shares unless such Shares are "taxable Canadian property" within the meaning of the Income Tax Act (Canada), and no relief is afforded under any applicable tax treaty. The Common Shares would be taxable Canadian property of a non-resident if, at any time during the five year period immediately preceding a disposition by the non-resident of such Shares (a) not less than 25% of the issued shares of any class of the Company belonged to the non-

resident, (b) the person with whom the non-resident deal did not deal at arm's length, or (c) the non-resident and any person with whom the non-resident did not deal at arm's length.



UNITED STATES FEDERAL INCOME TAX CONSEQUENCES



The following discussion describes the United States federal income tax consequences of the ownership and disposition of Common Shares of the Company. The discussion contained in this summary is based on the Internal Revenue Code of 1986, as amended (the "Code"), existing and proposed Treasury Regulations, judicial decisions and administrative pronouncements, all of which are subject to change. Any such changes may be applied retroactively in a manner that could result in federal income tax consequences different from those discussed below.



This summary discusses only Common Shares of the Company held by a U.S.

Holder (defined below) as a capital asset within the meaning of Section 1221 of the Code, and does not deal with special situations, such as those of banks, thrift institutions, real estate investment trusts, regulated investment companies, insurance companies, dealers in securities or commodities, tax-exempt investors, holders whose functional currency is not the U.S. dollar, persons who hold Common Shares of the Company as a position in a straddle, as part of a synthetic security or hedge, as part of a conversion transaction or other integrated investment, or persons who are not U.S. Holders (as defined below). Further, the summary does not include any description of any alternative minimum tax consequences or any state, local or foreign tax consequences that may be applicable. This summary assumes that no U.S. Holder will own, directly or indirectly, Common Shares of the Company representing 10% or more of the voting power of the Company.



HOLDERS OF COMMON SHARES OF THE COMPANY ARE URGED TO CONSULT THEIR TAX

ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE OWNERSHIP AND

DISPOSITION OF SUCH SHARES IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS, AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL OR OTHER TAX LAWS.



As used herein, a "U.S. Holder" means a beneficial owner of Common Shares of the Company who is (I) a citizen or resident of the United States, (ii) a corporation, partnership or other entity created or organized in or under the laws of the United States or any State thereof or the District of Columbia,(iii) an estate the income of which is subject to United States federal income taxation regardless of its source, or (iv) a trust the administration of which is subject to the primary supervision of a court within the United States and for which one or more U.S. persons have the authority to control all substantial decisions.



Dividends

---------



Distributions with respect to the Common Shares (other than liquidating

distributions and certain distributions in redemption of the Common Shares)

which are paid out of current or accumulated earnings and profits, as calculated for United States federal income tax purposes, generally will constitute dividends taxable as ordinary income. To the extent the amount of any such distribution paid with respect to the Common Shares exceeds current and accumulated earnings and profits, as calculated for United States federal income tax purposes, such excess distribution will not constitute a dividend for United States federal income tax purposes, but will be treated first as a tax-free return of capital to the extent of the holder's adjusted tax basis in his Common Shares (with a corresponding reduction in such basis) and, to the extent the distribution exceeds such basis, as a capital gain.



Foreign Tax Credit

------------------



A U.S. Holder who pays (or has had withheld from distributions) Canadian income tax with respect to the ownership of Common Shares of the Company may be entitled, at the option of the U.S. Holder, to either a deduction or a tax credit for such foreign tax paid or withheld. This election is made on a year-by-year basis and applies to all foreign taxes paid by (or withheld from) the U.S. Holder during that year. There are significant and complex limitations that apply to the credit, among which is the general limitation that the credit cannot exceed the proportionate share of the U.S. Holders United States Federal income tax liability that the U.S. Holders foreign source income bears to his worldwide taxable income. The availability of the foreign tax credit and the application of the limitations on the credit are fact specific and holders and prospective holders of Common Shares should consult their own tax advisors regarding their individual circumstances.



Dispositions, Including Redemptions



Any sale, exchange, redemption (except as discussed below) or other

disposition of the Common Shares generally will result in taxable gain or loss equal to the difference between the amount received upon the sale, exchange, redemption or other disposition and the holder's adjusted tax basis in the Common Shares. Such gain or loss generally will be capital gain or loss and will be long-term capital gain or loss if the holding period for the Shares of the Company exceeds one year.



In certain cases, a redemption of Common Shares may be treated as a

dividend, rather than as a payment in exchange for the Shares of the Company. In such events, the redemption payment will be treated as ordinary dividend income to the extent that such payment is made out of current or accumulated earnings and profits, as calculated for United States federal income tax purposes. The determination of whether the redemption will be treated as a dividend rather than as payment in exchange for the Common Shares of the Company will depend upon whether and to what extent the redemption reduces the holder's percentage stock ownership interest in the Company. A redemption will be treated as an exchange of stock that produces a capital gain if the redemption either (1) completely terminates the holder's interest in the Company under Section 302(b)(3) of the Code, (2) is "substantially disproportionate" with respect to the holder under Section 302(b)(2) of the Code, or (3) is "not essentially equivalent to a dividend" under Section 302(b)(1) of the Code.



A redemption will completely terminate the holder's interest in the Company as a result of the redemption if, as a result of the redemption, the holder no longer has any stock interest in the Company, directly or constructively after application of the attribution rules of Section 302(c) of the Code. A redemption will be "substantially disproportionate" with respect to the holder if (1) the ratio of the voting stock owned by the holder (including stock attributed to the holder under Section 302(c) of the Code) immediately after the redemption to all the voting stock of the Company is less than 80% of the same ratio for the voting stock owned by the holder immediately before the redemption, (2) there is a similar percentage reduction in the ownership by the holder of Common Shares of the Company, and (3) the holder owns less than 50% of the voting stock of the Company. Whether a redemption is "not essentially equivalent to a dividend" with respect to a holder will depend upon the holder's particular circumstances. The IRS has ruled that a minority shareholder in a publicly held corporation whose relative stock interest is minimal and who exercises no control with respect to corporate affairs is considered to have a "meaningful reduction" if such shareholder has a reduction in his percentage stock ownership. In determining whether any of the foregoing tests have been satisfied, the holder is deemed, under the constructive ownership rules of Section 302(c) of the Code, to own any Common Shares in the Company owned by certain related persons and entities and any Common Shares which the holder or certain related persons and entities have an option to acquire. However, because of the ambiguities in applying the foregoing rules, holders should consult their tax advisors to determine whether a redemption of Common Shares will be treated as a dividend or as a payment in exchange for the Common Shares of the Company.



F.  DIVIDENDS AND PAYING AGENTS



Not Applicable.



G.  STATEMENT BY EXPERTS



Not Applicable.



H.  DOCUMENTS ON DISPLAY



The Company is subject to the informational requirements for foreign

private issuers under the Securities Exchange Act of 1934, as amended. In

accordance with these requirements, the Company files reports on Form 20-F and 6-K with the United States Securities and Exchange Commission. These materials, including this annual report and the exhibits thereto, may be inspected and copied at the Commission's Public Reference Room at 450 Fifth Street, N.W., Washington, DC 20549. Copies of the materials may be obtained from the Public Reference Room at prescribed rates. The public may obtain information on the operations of the Commission's Public Reference Room by calling the Commission in the United States at 1-800-SEC-0330. The Commission also maintains a web site at http://sec.gov that contains reports, proxy statements and other information regarding registrants that file electronically with the Commission.



I.  SUBSIDIARY INFORMATION



Not Applicable.



ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



INTEREST RATE RISK.



The Company does not have any outstanding debt with adjustable interest

rates. As a result, the Company will not have any significant exposure to

changes in interest rates.



IMPACT OF CURRENCY FLUCTUATIONS



The Company's operating expenses are primarily paid in Canadian dollars.

Fluctuations in the exchange rate between the Canadian dollar and such other

currencies may have a material effect on the Company's results of operations. In particular, the Company may be adversely affected by a significant strengthening of the Canadian dollar against the U.S. dollar and the Czech Republic koruna. The Company has not previously engaged in, and does not now intend to enter into, any currency hedging or other similar currency hedging transactions. The Company may enter into such transactions on a non-speculative basis to the extent that it might in the future have substantial foreign currency exposure.



ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES



Not Applicable.



PART II.



ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES



None.



ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF

PROCEEDS



None.



ITEM 15. [RESERVED]

ITEM 16. [RESERVED]



PART III.



ITEM 17. FINANCIAL STATEMENTS



See Item 18 below for Financial Statements filed as part of this Report.



ITEM 18. FINANCIAL STATEMENTS



The following documents are filed as Attachment A hereto and are included as part of this Amendment Number 1 to Form 20-F.



ASTRIS ENERGI INC. CONSOLIDATED FINANCIAL STATEMENTS



Description of Document:

Auditors' Report for the years ended December 31, 2002 and 2001.

Consolidated Balance Sheets for the year ended December 31, 2002 and 2001.

Consolidated Statement of Earning and Loss for the years ended December 31,

2002 and 2001.

Consolidated Statement of Cash Flow for the years ended December 31, 2002

and 2001.

Notes to Consolidated Financial Statements for the year ended December

31, 2002 and 2001.



ITEM 19. EXHIBITS

None





SIGNATURES



The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.



ASTRIS ENERGI INC.





By: /s/ Jiri K. Nor

---------------

President and Chief Executive Officer

Date: June 15, 2003





CERTIFICATION PURSUANT TO

18 USC, SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 302 AND 906 OF THE SARBANES-OXLEY ACT OF 2002



I, Gordon Emerson, certify that:

1. I have reviewed this annual report on Form 20 of Astris Energi Inc.;



2. To the best of my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading;



3. To the best of my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report.



4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and I have:



a.  designed such disclosure controls and procedures to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;



b.  evaluated the effectiveness of the company's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report; and



c.  presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation of that date;



5. I have disclosed, based on our most recent evaluation, to the Company's auditors and the board of directors:



a.  all significant deficiencies in the design or operation of internal controls which could adversely affect the Company's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and



b.  any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal controls; and



6. I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.



7. This report on Form 20F fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934.



Dated: June 15, 2003                  By: /s/ Gordon Emerson

-----------------------

Chief Financial Officer

CERTIFICATION PURSUANT TO

18 USC, SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 302 AND 906 OF THE SARBANES-OXLEY ACT OF 2002



I, Jiri K. Nor, certify that:

1. I have reviewed this annual report on Form 20 of Astris Energi Inc.;



2. To the best of my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading;



3. To the best of my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report.



4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and I have:



a.  designed such disclosure controls and procedures to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;



b.  evaluated the effectiveness of the company's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report; and



c.  presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation of that date;



5. I have disclosed, based on our most recent evaluation, to the Company's auditors and the board of directors:



a.  all significant deficiencies in the design or operation of internal controls which could adversely affect the Company's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and



b. any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal controls; and



6. I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.



7. This report on Form 20F fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934.



Dated: June 15, 2003                    By: /s/ Jiri K. Nor

---------------------------

President













Astris Energi Inc.

Consolidated Financial Statements

(Canadian Dollars)

December 31, 2002 and 2001





Auditors Report





To the Shareholders of

Astris Energi Inc.



We have audited the consolidated balance sheets of Astris Energi Inc. as at December 31, 2002 and 2001 and the consolidated statements of loss and deficit and cash flows for the years then ended. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits.



We conducted our audits in accordance with United States and Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.



The Companys ability to continue as a going concern is in substantial doubt and is dependent upon the success of the efforts of its directors and principal shareholders in providing financial support in the short term, the success of the Company in raising additional long-term financing either from their own resources or from third parties, the successful commercialization of one or more of the Companys research projects and the Company attaining profitable operations.



In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2002 and 2001 and the results of its operations and cash flows for the years then ended in accordance with generally accepted accounting principles.



All figures are in Canadian dollars.





Lugowy Associates

CHARTERED ACCOUNTANTS



Hamilton, Ontario

April 30, 2003























Astris Energi Inc.

Consolidated Balance Sheets

(Canadian dollars)

December 31                                         2002             2001

-----------------------------------------------------------------------------



Assets

Current

Cash                                       $  253,938        $   10,989

Receivables                                    30,440            37,563

Prepaid expenses and deposits                 149,777             1,050

Investment tax credits refundable             216,608

Deferred costs (Note 9)                                         122,818

----------        ----------

650,763           172,420



Capital assets (Note 4)                             12,961             5,180

----------        ----------

$  663,724        $  177,600

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

-----------------------------------------------------------------------------

Liabilities

Current

Payables and accruals (Note 5)             $  410,053        $  260,485

Goods and Services Tax payable                 10,427            23,041

----------        ----------

420,480           283,526



Advances from related parties (Note 5)             423,687           417,287

----------        ----------

844,167           700,813

----------        ----------

Shareholders deficiency

Share capital (Note 7)                           3,062,114         2,059,226

Deficit                                         (3,242,557)       (2,582,439)

----------        ----------

(180,443)         (523,213)

----------        ----------



$  663,724        $  177,600

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

-----------------------------------------------------------------------------

Basis of presentation (Note 1)

Contingency (Note 10)



Approved on behalf of the Board:





/s/Jiri K. Nor                        /s/Gordon T. Emerson

----------------------------          ------------------------------

President                             Treasurer



See accompanying notes to consolidated financial statements.









Astris Energi Inc.

Consolidated Statements of Loss and Deficit

(Canadian dollars)

Years ended December 31                               2002              2001

-----------------------------------------------------------------------------



Revenue                                         $   146,874       $    26,787



Expenses

Subcontract (Note 5)                           171,418           495,736

General and administrative                     299,537            65,548

Professional fees                              197,203            76,643

Interest (Note 5)                               12,000            19,267

Amortization                                     4,016             1,666

----------        ----------

684,174           658,860



Net loss before the following                      (537,300)         (632,073)



Deferred costs written off                    (122,818)

Gain on sale of marketable security                               38,089

----------        ----------

Net loss for the year                              (660,118)         (593,984)



Deficit, beginning of year                       (2,582,439)       (1,988,455)

----------        ----------

Deficit, end of year                            $(3,424,557)     $ (2,582,439)

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



Loss per common share (Note 7)                  $    (0.046)      $    (0.047)

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



-----------------------------------------------------------------------------









































See accompanying notes to consolidated financial statements.







Astris Energi Inc.

Consolidated Statements of Cash Flows

(Canadian dollars)

Years ended December 31                              2002              2001

-----------------------------------------------------------------------------



Operating

Net loss for the year                           $ (660,118)       $ (593,984)

Items not requiring cash

- amortization                                  4,016             1,666

- consulting and professional

fees and expenses paid in capital

stock to non-related parties                 166,801            99,672

- consulting fees and expenses paid

in capital stock to related parties          207,456           208,050

Gain on sale of marketable security                                  (38,089)

Net change in non-cash working capital

balances related to operations (Note 8)       (98,440)          (86,789)

----------        ----------

(380,285)         (409,474)

----------        ----------

Investing

Proceeds on sale of marketable security                               89,539

Purchase of capital assets                         (11,797)           (1,544)

----------        --------

(11,797)           87,995

----------        ----------

Financing

Increase in advances from related parties            6,400

Issuance of common shares for cash                 628,631           316,206

----------        ----------

635,031           316,206

----------        ----------



Net increase (decrease) in cash during the year    242,949            (5,273)



Cash, beginning of year                             10,989            16,262

----------        ----------

Cash, end of year                               $  253,938        $   10,989

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



-----------------------------------------------------------------------------























See accompanying notes to consolidated financial statements







Astris Energi Inc.

Notes to Consolidated Financial Statements

(Canadian dollars)

December 31, 2002 and 2001

-----------------------------------------------------------------------------



1.  Basis of Presentation



These consolidated financial statements reflect the accounts of Astris Energi Inc. (the Company) and its wholly-owned subsidiary, Astris Inc., which was acquired on December 31, 1995.  The Company is dedicated to the research and development of alternative energy sources.  The Company has incurred several years of losses and as at December 31, 2002 has a shareholders deficiency of approximately $180,000.



The consolidated 2002 and 2001 financial statements have been prepared in accordance with accounting principles generally accepted in Canada on a going concern basis which presumes the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future.



The Companys ability to continue as a going concern is in substantial doubt and is dependent upon the success of the efforts of its directors and principal shareholders in providing financial support in the short term, the success of the Company in raising additional long-term financing either from their own resources or from third parties, the successful commercialization of one or more of the Companys research projects and the Company achieving profitable operations.



The outcome of these matters cannot be predicted at this time.  These consolidated financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue in business.



These consolidated financial statements also conform to U.S. generally accepted accounting principles and no reconciliation between Canadian and U.S. generally accepted accounting principles is required, except as noted in the second paragraph of the revenue recognition section of Note 2.

-----------------------------------------------------------------------------



2.  Significant Accounting Policies



Revenue recognition



Revenue is recognized at point of sale when goods are shipped and title passes.  In cases where consulting services are provided, revenue is recognized upon completion of the service provision.



A royalty was received in 1998 from the company referred to in Note 3 in the amount of $25,000.  Originally the amount was accounted for as revenue in 1998.  Subsequently, a change was made to reflect $4,750 as revenue and $20,250 as deferred revenue in 1998 and $20,250 as revenue in 1999.  This change is based on the fact that the royalty was for the period from October 1998 through to December 1999 and, therefore, was pro-rated between the years based on the number of months in each year.







Astris Energi Inc.

Notes to Consolidated Financial Statements

(Canadian dollars)

December 31, 2002 and 2001

-----------------------------------------------------------------------------



2.  Significant Accounting Policies (contd.)



This treatment now complies with Canadian generally accepted accounting principles.



Revenue recognition in these consolidated financial statements is not consistent with U.S. GAAP.  Under U.S. GAAP, the initial payment received at the beginning of a contract, not attributable to any specific provision of goods or services, must be pro-rated over the life of the contract.  Accordingly, regarding the ten-year licence agreement between the Company and Energy Ventures Inc. (Canada), dated October 22, 1998, wherein an initial payment of $25,000 was received by the Company on October 22, 1998, annual allocations of $2,500 would be required to

be made to income.



The following is a tabulation of comparative numbers under Canadian and U.S. GAAP:



Canadian GAAP              U.S. GAAP

2002        2001         2002         2001

------------------------------------------------



Royalty income               $           $ 10,000     $  2,500       $ 12,500



Shareholders deficiency     $132,812    $523,213     $147,395       $540,296





Development costs and scientific research



All costs relating to scientific research, development and product evaluation are expensed as incurred.  Investment tax credits and government grants received toward these costs are netted against the related expenses.  As there has been uncertainty concerning recovery of investment tax credits, they are recognized upon notification by regulatory bodies.



Taxes payable



The Company follows the liability method of accounting for income taxes.  Under this method, income taxes reflect the future income tax consequences of differences between the financial statement carrying amounts and income tax bases of assets, liabilities, loss carryforwards and tax credits.



Goods and Services Tax is an amount payable in respect of federal commodity tax which was instituted in Canada in 1991.  The amount became payable upon the sale of the Companys assets (see Note 3).













Astris Energi Inc.

Notes to Consolidated Financial Statements

(Canadian dollars)

December 31, 2002 and 2001

-----------------------------------------------------------------------------



2.  Significant Accounting Policies (contd.)



Use of estimates



The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenue and expenses during the year.  Actual amounts could differ from those estimates.



Financial instruments



The fair value of financial instruments contained in these consolidated financial statements approximates book value unless otherwise indicated.



The financial risk is the risk to the Companys earnings that arises from fluctuations in interest rates and the degree of volatility of these rates.  The Company does not use derivative instruments to reduce its exposure to interest risk.



The Company is exposed to credit risk on the accounts receivable from its customers.  In order to reduce its credit risk, the Company has adopted credit policies which include the analysis of the financial position of its customers and the regular review of their credit limit.



Loss per share



Basic loss per share is calculated on the weighted average number of shares outstanding during the year.

-----------------------------------------------------------------------------



3.  Marketable security



During 1998, all capital assets were sold to a public company (Energy Ventures Inc. (Canada)) in return for 200,000 shares of that company.  As there was not an active market for the shares of the public company, the shares were valued at an amount equivalent to the net book value of the capital assets.  There was a legend on the share certificates restricting sale of the shares for a period of one year from October 1998 and one-half of the shares for a further year from October 1999, by reason of Rule 144 under the Securities Act.  The shares that could be sold were disclosed as a marketable security.  The market value of these shares at December 31, 2000 was not readily determinable, as the shares are not regularly traded.



The value of the shares was corrected in 1998 from the original valuation of $694,485 to $100,000 on the previously issued financial statements.  As a result, the gain previously recorded at $594,487 was reduced to nil.



The per-share effect of this writedown was $0.056 per share.





Astris Energi Inc.

Notes to Consolidated Financial Statements

(Canadian dollars)

December 31, 2002 and 2001

-----------------------------------------------------------------------------



The Company sold 102,900 shares for proceeds of $89,539 during year 2001 and 97,100 shares for proceeds of $425,196 during year 2000, yielding a gain on sale of $38,089 and $376,648, respectively.  Number of shares on hand at December 31, 2002 and 2001 was nil.



4.  Capital Assets



2002       2001

Accumulated   Net Book   Net Book                                       Cost    Amortization   Value      Value

-------------------------------------------



Office furniture and equipment    $ 13,024    $  5,823   $  7,201   $  5,180

Leasehold improvements               7,200       1,440      5,760                                                 --------    --------   --------   --------

$ 20,224    $  7,263   $ 12,961   $  5,180

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



5.  Advances from Related Parties



The following amounts have been advanced from related parties:

2002             2001

--------         --------



Due to a shareholder                               $315,287         $315,287

Due to Timagami Financial Services, a company

controlled by a director and officer                               2,000

Temporary advances from directors                     8,400

Debenture due to shareholders                       100,000          100,000

---------        ---------                                             $423,687         $417,287

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



Due to a shareholder



With respect to the amount due to a shareholder, the amount has arisen primarily as a result of the recognition of amounts subject to reimbursement to the shareholder for expenses incurred on behalf of the Company.  These amounts are to be reimbursed only if external financing amounting to $5,000,000 (U.S.) has been raised by the shareholder (see Note 10).



Due to Timagami Financial Services



This advance was unsecured and bore interest at 12% per annum only to December 31, 1998.  Unpaid interest accrued to December 31, 1998, totalling approximately $12,400, was paid in the year by issuance of the Companys capital stock.  (Please also see Note 7.)  This advance was shown as a long-term liability as there were no specific terms of repayment.







Astris Energi Inc.

Notes to Consolidated Financial Statements

(Canadian dollars)

December 31, 2002 and 2001

-----------------------------------------------------------------------------



5.  Advances from Related Parties (contd.)



Debenture due to shareholders



The debenture due to shareholders is secured and bears interest at 12% per annum.  Unpaid interest, accrued to December 31, 2002, totaling $9,000, is included in payables and accruals.  There are no specific terms of repayment and the debenture holders have indicated that they will not demand repayment until after July 7, 2004.  Accordingly, the amount payable under the debenture has been classified as a long-term liability.  The debenture is collateralized by a fixed and floating charge on all of the assets and business of Astris Inc.



Payables and accruals



The Company has a 30% ownership interest in Astris s.r.o., a Czech company, in which the remaining 70% is owned by a company owned by a shareholder of the Company (Macnor Corporation).  The Companys 30% interest in losses of Astris s.r.o. has been applied to its investment.  This investment is accounted for on the equity basis.  As the Companys share of losses is in excess of the original investment, the investment has been written down to nil in a prior year.



The Company regularly subcontracts portions of its research and development activities to Astris s.r.o.  To facilitate these activities, the Company advances funds to them. In addition, the Company sells its products to Astris s.r.o., as required.  Inter-company transactions and balances are as follows:



As at December 31:                                 2002         2001

---------    ---------

Balance of funds advanced and held as

prepaid expenses and deposits        $ 146,074    $

--------     --------

Accounts payable                         $            $   7,485

--------     --------

Year ended December 31:

Total funds advanced                     $ 230,000    $ 117,000

---------    ---------

Sales                                    $ 140,575    $

---------    ---------

Purchases                                $  89,159    $ 160,089

---------    ---------



















Astris Energi Inc.

Notes to Consolidated Financial Statements

(Canadian dollars)

December 31, 2002 and 2001

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5.  Advances from Related Parties (contd.)

Payables and accruals (contd.)



In addition, payables include the following amounts:

$55,061 owing to Macnor Corporation, owned by a shareholder, ($32,080 for

consulting fees and $22,981 for expenses) (2001 - $20,420 for consulting

fees);

$4,727, $45,900 and $9,231 owing to three shareholders and officers for

consulting fees and expenses (2001 - $ Nil, $ 2,500 and $ Nil);

$3,600, $3,600, $1,800 accrued interest owing to each of the three

shareholders holding the debenture payable (2001 - $ 10,574; $ 18,905;

$ 5,243).



During 2002, the following amounts were expensed as consulting fees to shareholders and other related parties:



Macnor Corporation            $ 120,000 (2001 - $ 120,000)

G. Emerson                    $  80,229 (2001 - $  35,000)

A. Durkacz                    $  28,461 (2001 - $     Nil)



During 2002, the following amounts were expensed as interest to shareholders:



J. Nor                        $   4,800 (2001 - $   5,460)

D. Blenkarn                   $   4,800 (2001 - $  11,107)

G. Crawford                   $   2,400 (2001 - $   2,700)





During a previous year the Company signed an agreement with a company owned by one of the shareholders (Macnor Corporation) under which Macnor would open a website for Astris and market some of Astris products.  Astris will receive 5% of any recorded sales.  Such sales occurred in the year ended December 31, 2002 in the amount of $ 2,476 (2001: $ 1,201) and, accordingly, have been included in the Companys accounts.

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6.  Income Taxes



The Company has tax loss carryforwards of approximately $3,184,000.  If unused, the tax losses will expire as follows:



2009           $  537,000

2008           $  594,000

2007           $   35,000

2006           $   61,000

2004           $   34,000

2003           $1,856,000

2002           $   67,000











Astris Energi Inc.

Notes to Consolidated Financial Statements

(Canadian dollars)

December 31, 2002 and 2001

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The potential income tax benefit arising from loss carryforwards has not been reflected in these consolidated financial statements. The Company will determine its income tax on the liability method when it is in a taxable position.



During 2002 and 2001, the Company received or received notification of investment tax credit refunds of $246,613 and $ Nil, respectively, which are netted against subcontract expense.

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7.  Share Capital



Share capital consists of the following:

Authorized:

60,000,000 common shares

10,000,000 preferred shares



Issued and outstanding:                                Common Share

#                     $

Issued as at December 31, 1998              10,188,556            1,049,301

To be issued as at December 31, 1998           455,000               37,375

----------           ---------                                        10,643,556            1,086,676

Issued in 1999                                     Nil                  Nil

Issued in 2000                               1,494,228              348,622

Issued in 2001                               1,202,435              623,928

----------           ----------

Balance as at December 31, 2001             13,340,219            2,059,226



Issued in 2002

- in exchange for consulting and

professional fees and expenses

from non-related parties                 486,050              166,801

- in exchange for consulting fees and

expenses from related parties            657,925              207,456

- issued for cash                        2,006,250              628,631

----------           ----------

3,150,225            1,002,888

----------           ----------

Balance as at December 31, 2002             16,490,444            3,062,114



No preferred shares have been issued.



At December 31, 2002 the Company had issued capital stock comprising 16,035,444 common shares (2001 12,885,219 common shares).  However, 455,000 common shares are to be issued to shareholders of a predecessor company.  These shareholders will be issued common shares in the Company if and when they present their share certificates in the predecessor company to the registrar.









Astris Energi Inc.

Notes to Consolidated Financial Statements

(Canadian dollars)

December 31, 2002 and 2001

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7.  Share Capital (contd.)



The loss per share calculations were based on a weighted average of 14,480,284 issued and outstanding common shares for 2002 and 12,638,160 issued and outstanding common shares for 2001.



During 1998, an option was granted to the public company which purchased the capital assets (see Note 3), to purchase 1,000,000 common shares of the Company at $ 0.30 (U.S.) per share.  The option will expire on October 22, 2003.



On March 8, 2000, the Board of Directors passed a resolution authorizing a stock option plan.  The plan was adopted by the Companys shareholders at its annual and special meeting of shareholders in August 2000.  The plan consists of 1,000,000 common shares for granting to its officers, directors, employees and consultants. The exercise price shall not be less than the market price prevailing at date of grant and, if the market price is not available, the Board will determine a fair market value on the day preceding the date of grant.  The term of the option will be determined by the Board at time of grant, but may not exceed five years.



On December 31, 2000, options to purchase 675,000 common shares were granted under the plan to employees at prices ranging from $ 0.25 (Canadian) to $ 0.50 (U.S.) and expiring in March and August, 2005.



On April 16, 2001, options to purchase the remaining 325,000 common shares were granted under the plan to directors and consultants at a price of $ 0.501⁄2 (U.S.), expiring on March 5, 2005.



Pursuant to a subscription agreement dated September 21, 2001, with a Canadian controlled private corporation (the subscriber), the Company issued as a private placement, 250,000 units, comprising one common share and one common share purchase warrant each, for an aggregate purchase price of $100,000 (U.S.).  Each common share purchase warrant is exercisable up to September 20, 2004, at $ 0.50 (U.S.) per share.  The Company agreed with the subscriber to allocate to it 275,000 common share purchase warrants in this subscription agreement.



On September 25, 2001, the Board of Directors passed a resolution authorizing a new stock option plan.  The plan was adopted by the Companys shareholders at its annual and special meeting of shareholders held in November 2001.  The plan consists of 1,200,000 common shares for granting to its officers, directors, employees and consultants. The exercise price shall not be less than the market price prevailing on the day prior to the date of grant and, if the market price is not available, the Board will determine a fair market value in good faith on the day preceding the date of grant.  The term of the option will be determined by the Board at time of grant, but may not exceed five years.









Astris Energi Inc.

Notes to Consolidated Financial Statements

(Canadian dollars)

December 31, 2002 and 2001

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7.  Share Capital (contd.)



On September 25, 2001, options to purchase 600,000 common shares were granted under this plan to two employees at a price of $ 0.24 (U.S.) per share, expiring in September, 2006.  Both grants are conditional upon the employees achieving their respective targets in areas of technology and finance.



In accordance with the terms of an agreement, dated November 29, 2001, with a business development consultant (a corporation domiciled in California, U.S.A.), the Company has granted to the consultant, as compensation, an option to purchase 125,000 common shares at a price of $ 0.50 (U.S.) per share, expiring on October 31, 2006.



During the 2002 year, the company entered into six subscription agreements, as private placements, for a total of 1,937,500 units, comprising one common share and one common share purchase warrant each, for a total of $ 389,500 (U.S.).  The common share purchase warrants are exercisable up to 3 and five years, at $ 0.50 (U.S.) per share.



In an employment agreement, details of which follow, a signing bonus of an option of 250,000 common shares was granted to an officer/employee in July 2002, at a price of $ 0.20 (U.S.) per share, expiring in July 2007.



On October 30, 2002, options to purchase 225,000 common shares were granted under the plan to employees at a price of $ 0.20 (U.S.) and expiring in October 2007.



On October 30, 2002, the Board of Directors passed a resolution authorizing an amendment to the stock option plan of September 25, 2001, increasing the number of shares available in the plan by 1,400,000 shares, for a total of 2,600,000 shares.  The amendment was adopted by the Companys shareholders at its annual and special meeting of shareholders held in November 2002.  All features of the plan remain unchanged.



In accordance with the terms of an agreement, dated October 1, 2002, with a financial agent (a Canadian corporation), the Company has granted to the agent an option to purchase 250,000 common shares at a price of $ 0.40 (U.S.) per share, expiring in September 2007.  Exercising the option is contingent on the agent being able to raise specified funding.  50% of the option may be exercised upon raising $ 500,000 (Canadian) and the balance upon raising an additional $ 1,000,000 (Canadian).



In accordance with the terms of a financing agreement, dated November 7, 2002, with a Canadian corporation, the Company has granted to it an option to purchase 500,000 common shares at a price of $ 0.20 (U.S.) per share, expiring on February 15, 2003.



As at December 31, 2002, the Company has 650,000 shares under the options plan to be allocated.







Astris Energi Inc.

Notes to Consolidated Financial Statements

(Canadian dollars)

December 31, 2002 and 2001

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8.  Consolidated Statements of Cash Flows



The net change in non-cash operating working capital balances consists of the following:



2002          2001

---------     ---------

Decrease (increase) in receivables                  $   7,123     $  11,129

Decrease (increase) in prepaid expenses              (148,727)       33,646

Increase in investment tax credits refundable        (216,608)       61,000

Decrease (increase) in deferred costs                 122,818       (58,515)

Increase in payables and accruals                     149,568      (132,617)

Decrease in Goods and Services Tax payable            (12,614)       (1,432)

---------     ---------

$ (98,440)    $ (86,789)

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



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9.  Deferred Costs



In September, 2000, the Company filed a registration statement with the United States Securities and Exchange Commission in order to become eligible for trading its shares on the OTC Bulletin Board Service.  Approval therefore was received on April 17, 2001.



Costs incurred in the filing and subsequent receipt of the approval, are deferred with a view to applying these costs against funds generated from future sales of the Companys capital stock.



Such costs accumulated to December 31, 2001 and 2000, were $122,818 and $64,303, respectively.



As there have been no sales of the Companys capital stock in that regard to date, management decided to write off these deferred costs.

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10.  Contingency



During 1999 a shareholder initiated legal claim against the Company for repayment of advances and expenses in the amount of $315,287.  Management was of the opinion that this advance was repayable only if certain external financing had been raised.  Since this had not been achieved, there was no requirement to repay the advance.



Further, in February 2001, the shareholder mentioned above had given notice to the Company of his intention to increase his claim by $1,627,301 to cover additional expenses he allegedly incurred on behalf of the Company.



The case was tried in the courts.  The Company was completely successful in its defense and the entire claim was dismissed in November 2002.







Astris Energi Inc.

Notes to Consolidated Financial Statements

(Canadian dollars)

December 31, 2002 and 2001

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However, the shareholder has given notice that he will seek leave to file an appeal.  Management is of the opinion that the shareholders position is weak and that the appeal will not succeed.

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11.  Agreements and Long-Term Commitments



By an agreement of employment dated June 13, 2002 and modified in January 2003, the Company engaged the services of an individual to accept the position of Vice President, Finance.  Employment commenced on July 22, 2002, with a probationary period expiring on April 22, 2003.  Salary will be $ 100,000 per annum and will be paid in cash and shares.  The cash portion will be paid only from proceeds of fundraising activities of the individual.  A signing bonus of an option of 250,000 common shares was granted, at a price of $ 0.20 (U.S.) per share, expiring in July 2007.



The Company signed a Memorandum of Agreement with a Canadian company, Care Automotive, Inc. (previously CareAction Inc.), dated December 10, 2002, to enter into a joint venture in order to manufacture and market its present successful prototype and to continue research and development of further models.  Under the terms of the memorandum, Care Automotive was to provide funding of $15,000,000 (Canadian) over the first three years.  The memorandum also provided for the two parties to enter into Investment, Licence and Capital Lease Agreements.  There has been a temporary delay in Care Automotive being able to meet its financial obligations to the Company at times specified in agreements.  It is the hope of both parties that the joint venture program will be consummated in the near future. The Company has a realty lease for two adjacent units.  The lease has an annual cost of $38,160 to October 31, 2003, $39,360 to October 31, 2004 and $40,560 to October 31, 2005, plus proportionate share of common costs and GST.