UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                -----------------
                                    FORM 20-F

                     Annual Report Pursuant to Section 13 or
                  15(d) of the Securities Exchange Act of 1934

                   For the Fiscal Year Ended December 31, 2002
                         Commission File Number 0-28882
                                -----------------
                             World Heart Corporation
             (Exact name of Registrant as specified in its charter)

                                     ONTARIO
                 (Jurisdiction of incorporation or organization)

                                 1 Laser Street
                         Ottawa, Ontario, Canada K2E 7VI
                    (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

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

                                      None

     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:

                     Common shares . . . . . . . .17,970,127

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

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

                           Item 17 [ ]     Item 18 [X]

                                       1
<PAGE>

In this document, World Heart Corporation is referred to as the "Corporation" or
"WorldHeart", the ventricular assist device, HeartSaverVAD(TM), being developed
by WorldHeart is referred to as "HeartSaver" and its left ventricular assist
system, Novacor(R)LVAS, is referred to as "Novacor LVAS".

The Corporation publishes its audited financial statements in Canadian dollars.
In this Annual Report, references to "dollars" or "$" or "Cdn $" are to Canadian
dollars and references to "US dollars" or "US$" are to United States dollars.

Unless otherwise stated, all translations of Canadian dollars into United States
dollars in this Annual Report have been made at the rate of Cdn$1.00 =
US$0.6976, which was the exchange rate of Canadian currency in exchange for
United States currency, as reported by the Bank of Canada on April 30, 2003.

                                       2
<PAGE>

         CAUTIONARY STATEMENT WITH RESPECT TO FORWARD-LOOKING STATEMENTS

Statements made in this Annual Report with respect to WorldHeart's plans,
strategies and beliefs and other statements that are not historical facts are
forward-looking statements within the meaning of U.S. federal securities laws.
The forward-looking statements contain information that is generally stated to
be anticipated, expected or projected by the Corporation, and involves known and
unknown risks, uncertainties and other factors that may cause the actual results
and performance of the Corporation to be materially different from any future
results and performance expressed or implied by such forward-looking
information. Potential risks and uncertainties include, without limitation, the
uncertainties inherent in the development of a new product for use in the human
body, the Corporation's need for significant additional funding, the
Corporation's need for acceptance from third-party payers, extensive Government
regulation of the Corporation's products, and rapid developments in technology,
including developments by competitors.

                                       3
<PAGE>

                             WORLD HEART CORPORATION

                               INDEX TO FORM 20-F

20-F Part and Item No.                                                  Page No.

PART I

Item 1.   Identity of Directors, Senior Management and Advisers................5
Item 2.   Offer Statistics and Expected Timetable..............................5
Item 3.   Key Information......................................................5
Item 4.   Information on the Company..........................................14
Item 5.   Operating and Financial Review and Prospects........................27
Item 6.   Directors, Senior Management and Employees..........................39
Item 7.   Major Shareholders and Related Party Transactions...................49
Item 8.   Financial Information...............................................50
Item 9.   The Offer and Listing...............................................51
Item 10.  Additional Information..............................................52
Item 11.  Quantitative and Qualitative Disclosures about Market Risk..........61
Item 12.  Description of Securities Other than Equity Securities..............62

PART II

Item 13.  Defaults, Dividend Arrearages and Delinquencies.....................62
Item 14.  Material Modifications to the Rights of Security Holders
              and Use of Proceeds.............................................62
Item 15.  Controls and Procedures.............................................62
Item 16A. Audit Committee Financial Expert....................................63
Item 16B. Code of Ethics......................................................63
Item 16C. Principal Accountant Fees and Services..............................63

PART III

Item 17.  Financial Statements................................................63
Item 18.  Financial Statements................................................63
Item 19.  Exhibits............................................................64

                                       4
<PAGE>

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

3.A. Selected Financial Data

The selected consolidated balance sheet data as at December 31, 1998 through
December 31, 2002, and consolidated statement of loss data for the twelve months
then ended set forth below in Canadian dollars is derived from the audited
consolidated financial statements of the Corporation, including the notes
thereto, included elsewhere in this Annual Report. Certain financial data are
also presented in United States dollar amounts for the year ended December 31,
2002 using an exchange rate of Cdn$1.00 = US$0.6976, which represents the Bank
of Canada buying rate as at April 30, 2003, solely for the convenience of the
reader. Such translations should not be construed as representations that the
Canadian dollar amounts represent, or have been or could be converted into,
United States dollars at any other rate. The selected financial data should be
read in conjunction with the audited consolidated financial statements,
including notes thereto.

                                       5
<PAGE>

Canadian GAAP Consolidated Statements of Loss Data:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
                                                   For the Twelve Months Ended
                         -------------------------------------------------------------------------------------
                               Dec. 31, 2002         Dec. 31, 2001  Dec. 31, 2000  Dec. 31, 1999  Dec. 31, 1998
                         -------------------------------------------------------------------------------------
                             Cdn$        U.S$         Cdn$          Cdn$           Cdn$          Cdn$
--------------------------------------------------------------------------------------------------------------

<S>                        <C>          <C>           <C>            <C>           <C>           <C>
Revenue(1)                 10,106,931   7,050,595     8,252,624      4,674,485              -             -

Loss from operations       42,599,743  29,717,581    62,097,024     35,242,887     18,671,650      4,215,663

Loss before income taxes   49,761,139  34,713,371    70,654,812     35,928,382     17,442,741      3,665,269

Net loss                   49,761,139  34,713,371    65,666,568     30,385,422     17,442,741      3,665,269

Basic and diluted net
loss per common share            2.80        1.95          4.36           2.04          1.30            0.33

Weighted average number
of common shares (#)       17,779,385  17,779,385    15,069,229     14,878,625    13,463,943      11,078,948
-------------------------------------------------------------------------------------------------------------
</TABLE>

Canadian GAAP Consolidated Balance Sheet Data:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
                                       Dec. 31,             Dec. 31,      Dec. 31,     Dec. 31,     Dec. 31,
                                        2002                  2001          2000         1999         1998
                                 Cdn$            US$          Cdn$          Cdn$         Cdn$         Cdn$
-------------------------------------------------------------------------------------------------------------
<S>                               <C>            <C>       <C>           <C>          <C>           <C>
Cash and cash equivalents         248,181        173,131   15,345,159    23,624,549   10,969,399    5,561.941

Short-term investments                  -              -    6,881,300    22,696,677   13,680,708    8,571,098

Working capital               (8,052,555)    (5,617,462)   26,197,918    51,027,060   23,601,991   13,489,597

Goodwill and other
intangibles                    27,412,369     19,122,869   34,734,872    49,941,394      170,000      178,000

Total assets                   45,045,913     31,424,029   77,883,118   115,924,848   27,019,716   16,482,589

Long-term debt                          -              -       63,829       226,316      377,247      517,444

Preferred share debt           72,750,188     50,750,531   65,684,726    55,211,759           -             -

Common stock                   87,788,808     61,241,472   72,902,159    73,752,739   57,738,796   30,347,768

Special warrants and
rights                          3,420,016      2,385,803   18,306,665             -            -             -

Contributed surplus            40,683,222     28,380,616   38,885,336    36,951,336            -             -

Shareholders' equity
(deficiency)                 (47,485,194)   (33,125,671)      478,059    47,191,567    24,611,710   14,663,423

Number of common shares
outstanding                    17,970,127     17,970,127   14,943,127    15,117,427    14,150,539   12,243,000

Dividend per share                      -              -            -             -             -             -
-----------------------------------------------------------------------------------------------------------
</TABLE>

     (1)  Commercial activities commenced with the Corporation's acquisition of
          Edwards Novacor LLC from Edwards Lifesciences LLC on June 30, 2000.

                                       6
<PAGE>

U.S. GAAP Consolidated Statements of Loss Data:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
                                                   For the Twelve Months Ended
----------------------------------------------------------------------------------------------------------------
                              Dec. 31, 2002          Dec. 31, 2001   Dec. 31, 2000  Dec. 31, 1999  Dec. 31, 1998
                         ---------------------------------------------------------------------------------------
                             Cdn$        US$            Cdn$             Cdn$           Cdn$            Cdn$
----------------------------------------------------------------------------------------------------------------
<S>                       <C>         <C>           <C>              <C>            <C>            <C>
Net loss in accordance    38,552,725  26,894,381     54,216,851      38,885,092     17,442,741      3,665,269
with U.S. GAAP

Accretion on preferred
shares                     7,000,098   4,883,268      7,071,611       3,080,000              -              -

Net loss applicable to
common shares             45,552,823  31,777,649     61,288,462      41,965,092     17,442,741      3,665,269

Basic and diluted net
loss per common share           2.56        1.79           4.07            2.82           1.30           0.33

Weighted average number
of common shares (#)      17,779,385  17,779,385     15,069,229      14,878,625     13,463,943     11,078,948
----------------------------------------------------------------------------------------------------------------
</TABLE>

Selected U.S. GAAP Balance Sheet Data:

The following balance sheet items, as presented under U.S. GAAP, differ from
Canadian GAAP:

<TABLE>
------------------------------------------------------------------------------------------------------------
                                   Dec. 31,              Dec. 31,       Dec. 31,      Dec. 31,      Dec. 31,
                                     2002                  2001           2000          1999          1998
                         -----------------------------------------------------------------------------------
                             Cdn$           US$            Cdn$           Cdn$          Cdn$          Cdn$
------------------------------------------------------------------------------------------------------------

<S>                      <C>            <C>            <C>            <C>           <C>           <C>
Goodwill and other
intangibles                26,128,916     18,227,532     30,216,648    42,188,399       170,000      178,000

Total assets               43,762,460     30,528,692     73,364,894   108,171,853    27,019,716   16,482,589

Preferred shares          111,411,319     77,720,536    105,319,402    92,671,602             -            -

Common stock              136,451,958     95,188,886    121,565,309   122,415,889   106,401,946   79,010,918

Special warrants and
rights                              -              -     14,886,649             -             -            -

Shareholders' equity
(deficiency)             (90,849,794)   (63,376,816)   (47,094,857)     1,740,561    24,611,710   14,663,423
------------------------------------------------------------------------------------------------------------
</TABLE>

                                       7
<PAGE>

Exchange Rates

On April 30, 2003, the exchange rate of Canadian currency in exchange for United
States currency, as reported by the Bank of Canada, was Cdn$1.00 = US$0.6976.

The following tables set forth, for each period indicated, the high and low
exchange rates for one Canadian dollar expressed in United States dollars and,
for the annual periods, the average of such exchange rates on the last day of
each month during such period, and the rates for each such period end, based
upon the Noon Buying Rate:

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

 Year ended
December 31,             High           Low          Average      Period End
--------------------------------------------------------------------------------
    2002                0.6618        0.6199        0.6368          0.6339
    2001                0.6695        0.6242        0.6458          0.6279
    2000                0.6973        0.6413        0.6733          0.6666
    1999                0.6929        0.6537        0.6730          0.6929
    1998                0.7105        0.6343        0.6743          0.6534
--------------------------------------------------------------------------------

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

Month                          High                     Low
-----------------------------------------------------------------------
April 2003                    0.6976                  0.6736
March 2003                    0.6823                  0.6708
February 2003                 0.6724                  0.6531
January 2003                  0.6570                  0.6350
December 2002                 0.6462                  0.6331
November 2002                 0.6439                  0.6289
-----------------------------------------------------------------------

3.B. Capitalization and Indebtedness

Not applicable.

3.C. Reasons for the Offer and Use of Proceeds

Not applicable.

3.D. Risk Factors

Risk Related To Our Financial Results

If we cannot operate as a going concern, our stock price will decline and you
may lose your entire investment. Our auditors included an explanatory paragraph
in their report on our financial statements for the year ended December 31, 2002
which states that, due to recurring losses from operations since our inception,
there is substantial doubt about our ability to continue as a going concern. Our
financial statements for the three months ended March 31, 2003 do not include
any adjustments that might result from our inability to continue as a going
concern. These adjustments could include additional liabilities and the
impairment of certain

                                       8
<PAGE>

assets. If we had adjusted our financial statements for these uncertainties, our
operating results and financial condition would have been materially and
adversely affected.

The Company Has High Levels of Debt Which it May Not be Able to Repay

The Company has structured debt in the form of a senior loan, a subordinated
loan and preferred shares. As of March 31, 2003, the Company's total structured
debt amounted to $79,725,138. The total debt includes senior and subordinated
loans totalling $10,147,945 and preferred shares totalling $69,577,193. The
senior and subordinated loans will mature on July 31, 2003. We may not be able
to pay off these loans when they come due without the completion of a large
capital transaction. Failure by the Company to repay these amounts when due
could have a material adverse effect on the Company's financial condition and
operations. These loans also require that the Company comply with certain
covenants. Failure to comply with these covenants may allow lenders to elect to
accelerate the repayment dates.

Limited Revenues Earned Since Incorporation

The Corporation generated revenues of $10,106,931 from commercial sales of its
Novacor LVAS for the year ended December 31, 2002 but does not expect to
generate substantial revenues until such time, if ever, as it receives a U.S.
Food and Drug Administration, or "FDA", "destination therapy" indication for the
Novacor LVAS, or as development efforts relating to, and clinical trials of,
HeartSaver are successfully completed and regulatory approvals for its
commercial sale are obtained. Destination therapy is the use of a device to
support a patient who has no predictable prospect of future heart transplant or
recovery of their natural heart. The Corporation does not contemplate commercial
production of HeartSaver until 2006 or 2007. Moreover, no assurance can be given
that any regulatory approvals will ever be obtained or, even if obtained, that
such approvals will lead to the successful commercialization of HeartSaver.

Significant Capital Requirements and Need for Significant Additional Financing

The Corporation will continue to be dependant on its ability to obtain
additional capital in order to fund its HeartSaverVAD research and development
program and to fund its current commercial operations until such time, if ever,
as they achieve profitability. The Corporation has no current arrangements with
respect to sources of additional financing, and there can be no assurance that
additional financing will be available to the Corporation when needed, on
commercially reasonable terms. The inability to obtain additional financing when
needed could have a material adverse effect on the Corporation's business,
financial condition and results of operations.

Regulatory Approvals May Not Be Obtained

Most countries, including the United States, Canada and countries in the
European Union, require regulatory approval prior to the commercial distribution
of medical devices. In particular, implanted medical devices generally are
subject to rigorous clinical testing as a condition of approval by the FDA and
by similar authorities in Canada, in Europe and in other countries. The approval
process for the HeartSaverVAD is expensive and time consuming. Non-compliance
with applicable regulatory requirements can result in, among other things,
fines, injunctions, civil penalties, recall or seizure of products, total or
partial suspension of production, refusal of the government to grant marketing
approval for devices, withdrawal of marketing approvals, and criminal
prosecution. The inability to obtain the appropriate regulatory approvals for
the Corporation's products in the United States, Canada and the rest of the
world could have a material adverse effect on the Corporation's business,
financial condition and results of operations.

                                       9
<PAGE>

The Corporation plans to apply to Health Canada in 2005, which administers the
Food and Drugs Act (Canada) governing the sale and advertising of medical
devices in Canada, for its approval to commence human clinical trials of
HeartSaver in 2005 and, if such trials are successful, the Corporation expects
to apply in 2005 for Health Canada's approval to market HeartSaver in Canada in
late 2006 or early 2007. The Corporation will also seek the necessary regulatory
approvals for clinical trials and market approval in the United States and the
European Union. There can be no assurance that Health Canada, the FDA or any
other regulatory authority will act favourably or quickly in its review of the
Corporation's applications, if and when made, and significant difficulties and
costs may be encountered by the Corporation in its efforts to obtain such
approvals that could delay or preclude the Corporation from selling HeartSaver
in Canada, the United States and elsewhere. Failure to receive, or delays in
receiving, such approvals, including the need for extended clinical trials or
additional data as a prerequisite to approval, limitations on the intended use
of HeartSaver, the restriction, suspension or revocation of any approvals
obtained or any failure to comply with approvals obtained could have a material
adverse effect on the Corporation's business, financial condition and results of
operations.

Although Novacor LVAS has already been approved in Europe for use in end-stage
heart failure patients without restriction to indication ("bridge to
transplant," "alternative to transplant" and "bridge to recovery") and in Japan
for use by cardiac patients at risk of imminent death from non-reversible left
ventricular failure for with there is no alternative but a heart transplant, it
is currently approved in the United States and Canada as a
"bridge-to-transplant" therapy only, for recipients awaiting a donor heart.
While Novacor LVAS clinical trial is continuing in the United States for the
expanded destination-therapy market indication, on August 14, 2002 the
Corporation submitted a supplement to its PreMarket Approval with the FDA for
such indication. The submission was accepted for filing on an expedited review
basis by the FDA on November 22, 2002. However, there can be no assurance that
any further regulatory approvals will be obtained. The inability to expand the
indicated uses of Novacor LVAS in the United States and other countries could
have a material adverse effect on the Corporation's future earnings.

Dependence on a Limited Number of Products

The Corporation's future financial performance will depend on the successful
sales and marketing of Novacor LVAS and the development, introduction, customer
acceptance and successful sales and marketing of the Corporation's proposed
HeartSaver, which is currently under development. To date, all of the
Corporation's revenues have resulted from sales of Novacor LVAS. There is
presently no pre-clinical data relating to HeartSaver, and no applications for
any clinical trials or regulatory approvals have been made. Prior to any
commercial use, the technologies relating to HeartSaver currently under
development will require pre-clinical and extensive clinical testing, and
regulatory approvals. New product development is highly uncertain and
unanticipated developments, clinical and regulatory delays, adverse or
unexpected side effects or inadequate therapeutic efficacy could delay or
prevent the successful commercialization of HeartSaver. There can be no
assurance that the Corporation will not experience difficulties that could delay
or prevent the commercialization of HeartSaver. Any significant delays in, or
premature termination of, clinical trials of the Corporation's products under
development could have a material adverse effect on the Corporation's business,
financial condition and results of operations.

Uncertainty of Market Acceptance

HeartSaver and Novacor LVAS represent ventricular assist technologies that must
compete with other pulsatile assist products as well as with other therapies for
heart failure, such as medication, transplants, cardiomyoplasty and
non-pulsatile flow (continuous flow) pumps. Failure of the

                                       10
<PAGE>

Corporation's products to achieve significant market acceptance could have a
material adverse effect on the Corporation's business, financial condition and
results of operations.

Competition; Technological Obsolescence

In addition to competing with other less-invasive therapies for heart failure,
including drugs and pacing, the Corporation's products will compete with
ventricular assist technology being developed and sold by a number of companies.
Competition from device companies and medical device subsidiaries of healthcare
and pharmaceutical companies is intense and expected to increase.

Some of the Corporation's competitors have substantially greater financial,
technical, manufacturing, distribution and marketing resources than the
Corporation. There can be no assurance that third parties will not succeed in
developing or marketing technologies and products that are more effective than
those developed or marketed by the Corporation or that could render the
Corporation's technology and products non-competitive or obsolete, or that the
Corporation will be able to keep pace with technological developments.

Limitations on Third-Party Reimbursement

Individual patients will seldom be able to pay directly for the costs of
implanting the Corporation's devices. Successful commercialization of the
products will depend in large part upon the availability of reimbursement for
the treatment and medical costs associated with the products from third-party
payers, including governmental and private health insurers and managed care
organizations. Consequently, the Corporation expects that its products will
typically be purchased by healthcare providers, clinics, hospitals and other
users who will bill various third-party payers, such as government programs and
private insurance plans, for the healthcare services provided to their patients.

Coverage and the level of payment provided by United States and foreign
third-party payers vary according to a number of factors, including the medical
procedure, third-party payer, location, outcome and cost. In the United States,
many private payers follow the recommendations of the Center for Medicare and
Medicaid Services (CMS), which establishes guidelines for the government
coverage of procedures, services and medical equipment and the payment by
healthcare providers.

While CMS has announced pending increases in reimbursement for LVADs, and
extension of coverage to include both bridge and destination
therapy-indications, there can be no assurance with respect to any markets in
which the Corporation seeks to distribute its products that third-party coverage
and reimbursement will be adequate, that current levels of reimbursement will
not be decreased in the future or that future legislation, regulation or
reimbursement policies of third-party payers will not otherwise adversely affect
the demand for the Corporation's products or its ability to sell its products on
a profitable basis, particularly if the installed cost of the Corporation's
systems and devices should be more expensive than competing products or
procedures. The unavailability of third-party payer coverage or the inadequacy
of reimbursement could have a material adverse effect on the Corporation's
business, financial condition and results of operations.

Potential Product Liability

The Corporation's business exposes it to an inherent risk of potential product
liability claims related to the manufacturing, marketing and sale of HeartSaver
and Novacor LVAS by device recipients in whom the devices are implanted or by
their families. Claims of this nature, if successful, could result in
substantial damage awards to the claimants, which may exceed the

                                       11
<PAGE>

limits of any applicable insurance coverage held by the Corporation. A
successful claim brought against the Corporation in excess of, or outside of,
its insurance coverage could have a material adverse effect on the Corporation's
business, financial condition and results of operations. Claims against the
Corporation, regardless of their merit or potential outcome, could also have a
material adverse effect on the Corporation's ability to obtain physician
endorsement of its products or expand its business.

Risks Associated with Manufacturing Operations; Risks Resulting From Dependence
on Third-Party Manufacturers; Dependence on Sole Suppliers

The manufacture of the Corporation's products is a complex operation involving a
number of separate processes and components. Material costs are high and certain
of the manufacturing processes involved are labour-intensive. Achieving
significant cost reductions will depend upon the Corporation's ability to reduce
material costs and reduce the time required to complete certain manufacturing
processes. The conduct of manufacturing operations is subject to numerous risks,
including reliance on third-party manufacturers, unanticipated technological
problems and delays. There can be no assurance that the Corporation, or any
entity manufacturing products or components on behalf of the Corporation, will
be able to comply with applicable manufacturing regulations or satisfy
regulatory inspections in connection with the manufacture of the Corporation's
products. Failure or delay by the Corporation or any third-party manufacturer of
the Corporation's products or product components to comply with applicable
regulations or to satisfy regulatory inspections could have a material adverse
effect on the Corporation's business, financial condition and results of
operations.

The Corporation is currently dependent on single source third-party
manufacturers for several of the components used in Novacor LVAS and HeartSaver.
The Corporation does not have agreements with many of such single-source
manufacturers and purchases these components pursuant to purchase orders placed
from time to time in the ordinary course of business. The Corporation is
substantially dependent on the ability of these manufacturers to provide
adequate inventories of these components on a timely basis and on favourable
terms. These manufacturers also produce components for certain of the
Corporation's competitors, as well as other large customers, and there can be no
assurance that such manufacturers will have sufficient production capacity to
satisfy the Corporation's inventory or scheduling requirements during any period
of sustained demand, or that the Corporation will not be subject to the risk of
price fluctuations and periodic delays. Although the Corporation believes that
its relationship with its manufacturers is satisfactory and that alternative
sources for the components it currently purchases from single-source suppliers
are currently available, the loss of the services of such manufacturers or
substantial price increases imposed by such manufacturers, in the absence of
readily available alternative sources of supply would have a material adverse
effect on the Corporation. Failure or delay by such manufacturers in supplying
components to the Corporation on favourable terms could also adversely affect
the Corporation's operating margins and the Corporation's ability to develop and
deliver its products on a timely and competitive basis.

Dependence on Key Personnel

As a result of the specialized scientific nature of the Corporation's business,
the Corporation is dependent on its ability to attract and retain qualified
scientific, technical and key management personnel.

Potential Conflicts of Interest

Dr. Tofy Mussivand, Chairman and Chief Scientific Officer of the Corporation, is
also the Director and Principal Investigator of the University of Ottawa's
Ottawa Heart Institute Research Corporation, Cardiovascular Devices Division
("CVD"). In addition, Ottawa Heart Institute Research Corporation ("OHIRC") (the
research entity of which

                                       12
<PAGE>

CVD is a division) is a principal shareholder of the Corporation, beneficially
owning 3.8% of the outstanding common shares at the fiscal year ending December
31, 2002. The foregoing arrangements and relationships may give rise to
conflicts of interest with respect to future interpretations of the agreements
between the Corporation and CVD or with respect to future transactions between
the Corporation and CVD. Moreover, there can be no assurance that in carrying
out his duties with respect to CVD, Dr. Mussivand will not find himself in
situations that could give rise to conflicts of interest with his duties to the
Corporation. There can be no assurance that if conflicts do arise, they will be
resolved in a manner favourable to the Corporation. There can also be no
assurance that future transactions or arrangements between the Corporation and
any of such entities will be advantageous to the Corporation.

Volatility of Stock Price

The Corporation is in the biotechnology industry and, as such, the price of its
common shares has been, and is likely to continue to be, highly volatile. Future
announcements concerning the Corporation or its competitors, quarterly
variations in operating results, introduction of new products, delays in the
introduction of new products or changes in product pricing policies by the
Corporation or its competitors, acquisition or loss of significant customers,
partners, distributors and suppliers, changes in earnings' estimates by
analysts, regulatory developments, or fluctuations in the economy or general
market conditions, among other factors, could cause the market price of the
common shares to fluctuate substantially. There can be no assurance that the
market price of the common shares will not decline below its current price or
that it will not experience significant fluctuations in the future, including
fluctuations that are unrelated to the Corporation's performance.

Reliance on Edwards Lifesciences LLC ("Edwards")

On June 30, 2000, the Corporation entered into a distribution agreement with
Edwards whereby Edwards will be the sole distributor, except in the United
States, of the Corporation's heart assist products, including Novacor LVAS and
HeartSaver, until June 30, 2005. Moreover, pursuant to the terms of the
distribution agreement, the Corporation is obligated to pay Edwards a minimum
annual fee of US$2,000,000 less the actual gross margin for the duration of the
agreement. Distribution and sales of Novacor LVAS through Edwards accounted for
a significant portion of the Corporation's total revenue in fiscal 2000, 2001
and 2002. On June 30, 2000, the Corporation also entered into a supply agreement
with Edwards whereby Edwards is the sole supplier of certain components of the
heart assist products of the Corporation, including Novacor LVAS and HeartSaver,
until June 30, 2005. In the event Edwards is unable to provide adequate
inventories of such components to the Corporation on a timely basis it could
have a material adverse effect on the Corporation. In addition, the existence of
the Corporation's relationship with Edwards may limit the ability of the
Corporation to establish, or preclude the establishment of, relationships with
competitors of Edwards.

Risks Associated with Acquisitions

The Corporation from time to time evaluates potential acquisitions of
complementary businesses, products and technologies. Such acquisitions could
subject the Corporation to numerous risks, including risks associated with the
integration into the Corporation of new employees and technology. Moreover, the
negotiation and completion of such transactions involves the diversion of the
Corporation's resources. In addition, acquisitions could result in immediate and
substantial dilution of the Corporation's existing shareholders, large one-time
write-offs or the creation of goodwill or other intangible assets. The failure
to successfully evaluate, negotiate, effect and integrate an acquisition
transaction could have a material adverse effect on the

                                       13

<PAGE>

Corporation's business, financial condition and results of operations.

ITEM 4. INFORMATION ON THE COMPANY

4.A. History and Development of the Company

The Corporation was incorporated by Articles of Incorporation under the laws of
the Province of Ontario, Canada, on April 1, 1996. The legal and commercial name
of the Corporation is World Heart Corporation. The Corporation's head office is
located at 1 Laser Street, Ottawa, Ontario, Canada, K2E 7V1 and its telephone
number is (613) 226-4278. The Corporation has registered HeartSaverVAD(TM) as a
trademark in Canada, and has applied to register it in the United States and in
several other countries. World Heart Inc., a wholly owned subsidiary, is located
at 7799 Pardee Lane, Oakland, CA, USA, 94621 and with the telephone number (510)
563-5000. 2007262 Ontario Inc., an associated research and development company,
is located at the Corporation's head office address.

WorldHeart was organized in April 1996 to develop a global scale medical device
business focused initially on HeartSaver through licensed artificial heart and
related technology developed by the CVD. HeartSaver is designed to be an
affordable, implantable heart assist device to provide long-term support of
pulsatile blood flow to patients suffering from heart failure and to permit the
recipient to return to near normal activities. On August 21, 2002, the
Corporation announced the amalgamation of its HeartSaver I, II and III
development programs, with the objective of reducing overall research and
development costs to bring an optimized (smaller and more efficient)
HeartSaverVAD to commercial production in 2007.

On June 30, 2000, the Corporation, through World Heart Inc., its wholly owned
subsidiary, acquired the assets and liabilities of Edwards Novacor LLC
("Novacor") from Edwards for a total purchase price of approximately $62.5
million. As a result of this acquisition, WorldHeart began commercial operations
with the sale of Novacor LVAS. Development of Novacor LVAS commenced in 1969
with the objective of developing a long-term circulatory support device and with
the focus on an implantable electrically driven pump. Novacor LVAS is
commercially available as a bridge to transplantation in Europe, the United
States and Canada. In Europe, it is also available as an alternative to
transplantation and as a bridge to recovery to support patients who may have an
ability to recover use of their natural heart. In Japan, Novacor LVAS is
approved for use by cardiac patients at risk of imminent death from
non-reversible left ventricular failure for which there is no alternative but a
heart transplant. Additionally, in the U.S., the Corporation submitted a PMA
(pre-marketing approval) Supplement to the FDA for use of the Novacor LVAS by
end-stage heart-failure patients who are not candidates for heart
transplantation. The FDA accepted the submission for filing and has accorded the
submission expedited review status. Novacor LVAS has been implanted in more than
1,400 patients worldwide.

4.B. Business Overview

WorldHeart's business is currently focused on the development and
commercialization of ventricular assist devices (VADs). VADs are mechanical
assist devices that can provide an effective treatment for end-stage heart
failure by supplementing the circulatory function of the heart by rerouting
blood flow through a mechanical pump. There have been more than 10,000 VADs used
clinically over the past 10 years.

                                       14
<PAGE>

The Corporation currently is focused on two VAD technologies: the Novacor LVAS
and the HeartSaverVAD. The Novacor LVAS represents the Corporation's current
generation of implantable pulsatile VADs. HeartSaverVAD is currently under
development and is expected to result in the Corporation's next-generation
implantable-pulsatile VAD.

Current Treatment Methods for End-Stage Heart Failure

The search for an effective treatment for end-stage heart failure is ongoing.
Therapies such as medication and transplantation have significant limitations,
and alternative emerging technologies, such as xenografts, cardiomyoplasty,
genetic tissue engineering, multiple site pacing and implantable artificial
hearts (total artificial hearts and ventricular assist devices, pulsatile and
non-pulsatile), are being investigated. The following are treatment methods
currently being employed for heart failure:

Medication. Pharmaceutical drugs are the first line of defence against heart
failure; however, in spite of many advances, drug therapies continue to be able
to provide only very limited relief. Drug therapies do not treat the underlying
disorder and, thus, can only slow the disease's progression. Moreover, a
significant number of heart-failure patients may be resistant to treatment with
drug therapies and often such therapies have side effects, some of which can be
quite serious for certain patients.

Heart Transplantation. Heart transplantation is currently the intervention of
choice for some patients with end-stage heart failure. Patients receiving heart
transplants have a 71% five-year survival rate [source: American Heart
Association ("AHA"), 2003 Update]. However, the availability of donor organs as
well as other major limitations, described below, has limited the number of
transplants worldwide to about 4,000 per year. In the United States, the number
of heart transplants is just over 2,000 annually (2001 - 2,202, 2000 - 2,198,
1999 - 2,184, 1998 - 2,340, 1997 - 2,290, 1996 - 2,342), according to the AHA,
despite the fact that the AHA estimates that each year at least 40,000 Americans
under age 65 would benefit from heart transplants. Another negative feature of
transplants is the need for immuno-suppressive medication, which can make
patients vulnerable to other diseases and may have other side effects. In
addition, heart transplantation procedures are rarely used in emergency
situations because of the time required to obtain a suitable donor organ. The
quality of donor hearts is not always optimal and, once implanted, little can be
done about the quality of the graft. The transplanted natural heart can itself
develop complications. Finally, the costs of heart transplants are reported to
be up to US$250,000 for the first year.

Artificial Heart Technology. Both total artificial hearts and VADs (each a form
of mechanical circulatory support) have been used clinically and have been
demonstrated to be viable treatments for end-stage heart failure. These devices
have already saved thousands of lives during temporary use as a bridge to
transplant while the recipients await a heart transplant and recently have been
used as a bridge-to-recovery therapy or as an alternative to transplantation.
However, the devices currently on the market are designed for implantation in
the abdomen or placement outside the body with connections to the heart, both
requiring perforation of the diaphragm and/or skin tissue. The external devices
typically require at least two perforations of the protective skin and tissue,
and connection to a console, which restricts patient mobility. Implantable
devices typically require a percutaneous lead for air and power.

Advantages of VADs

VADs that are either externally placed or abdominally implanted have been
demonstrated as being effective in supporting blood circulation in patients with
a failing heart. More than 10,000

                                       15
<PAGE>

patients have been supported while awaiting transplant by pulsatile VADs that
are in the market, including over 1,400 that have been supported using the
Novacor LVAS. Three Novacor LVAS recipients have been supported for more than
four years; one of whom has been supported for more than five years.

The following advantages of VADs over other treatments generally apply to VADs
that are currently approved and in use. The Corporation expects that these
advantages will also apply to HeartSaver:

Unlimited Supply. As a manufactured device, VADs are available as and when
needed, including on an emergency basis, to treat end-stage heart-failure
patients.

Potential Reduced Hospitalization. An implantable VAD patient can typically be
discharged from the hospital one to two weeks following implant of the VAD.
These patients often require less hospitalization than an otherwise similar
patient who is suffering from end-stage congestive heart failure.

Potential Improved Patient Health. After VAD implantation, blood circulation is
improved throughout the body and most patients experience improved levels of
health. This has been shown in a number of clinical studies, including those for
the Novacor LVAS.

Potential Reduction in Medication Use. Unlike transplants, VADs do not cause
rejection responses and, as a result, VAD patients do not need the
administration of immuno-suppressive medication. Patients are accordingly not
subject to the risks and costs associated with long-term administration of these
medications. Unlike other treatment methods for heart failure, substantially
less medication may be required, thereby potentially limiting the side effects
that may be associated with these medications.

Potential Natural Heart Recovery. Unlike total artificial heart systems, VADs
leave the natural heart intact and assist it when it is unable to provide
sufficient cardiac function to maintain life. VADs have, in some cases,
permitted recovery of natural heart function to the point where the device was
eventually removed.

Novacor LVAS

Novacor LVAS is an electromechanically driven pump, about the size of a human
heart, which is implanted within the abdominal wall. It provides circulatory
support by taking over most of the workload of the left ventricle, the heart's
main pumping chamber. Blood enters the pump though an inflow conduit connected
to the left ventricle and is ejected through an outflow conduit into the
ascending aorta.

Novacor LVAS is controlled by an electronic controller and powered by primary
and reserve battery packs, worn on a belt around the waist or carried in a
shoulder bag, or by a small bedside monitor. The controller is connected to the
implanted pump by a percutaneous lead (a small tube containing control and power
wires) through the recipient's skin.

Novacor LVAS is completely self-regulating, responding instantaneously to the
recipient's changing heartbeat and circulatory demands. It was designed
primarily for long-term use, and was the only one of four devices to
successfully complete stringent testing to standards set by the National
Institutes of Health ("NIH") for an implantable LVAS, exceeding the NIH
reliability criteria.

Novacor LVAS is commercially available as a bridge to transplantation in Europe,
the United States and Canada. In Europe, it is also available as an alternative
to transplantation and as a

                                       16
<PAGE>

bridge to recovery to support patients who may have an ability to recover use of
their natural heart. In Japan, the Corporation's Novacor LVAS is approved for
use by cardiac patients at risk of imminent death from non-reversible left
ventricular failure for which there is no alternative but a heart transplant. On
August 14, 2002, the Corporation submitted a PMA Supplement to the FDA for use
of the Novacor LVAS by end-stage heart-failure patients who are not candidates
for heart transplantation. The FDA accepted the submission for filing on
November 22, 2002, and has accorded the submission expedited review status. The
Novacor LVAS has also been implanted in limited numbers in certain other
countries.

More than 1,400 patients have received the Novacor LVAS device, primarily as a
bridge to transplantation. The experience in long-term support continues to
grow. To date, more than 300 Novacor LVAS recipients have been supported for at
least six months. Over 120 recipients have been supported for more than one
year, 28 of who have lived with the device for more than two years. The longest
time of support on a Novacor LVAS is more than five years.

A clinical trial is underway in the United States and Canada to study and
evaluate long-term use of the device as a destination therapy. The multi-center
"INTrEPID" clinical trial (Investigation of Non-Transplant-Eligible Patients who
are Inotrope Dependent) is comparing survival rates and quality of life between
end-stage heart failure patients who receive the Novacor LVAS and those
supported by the best available pharmacological therapies.

HeartSaver

The goal of the Corporation in its development of the HeartSaverVAD is to
produce, at a cost that is competitive with the costs of alternative treatments,
a VAD that is suitable for continuous use outside of the hospital setting and
that provides recipients with an enhanced quality of life by allowing freedom of
movement and minimal limitations to their normal activities.

The HeartSaver is designed to be a pulsatile left ventricular assist device that
will be fully implantable in the body. It is intended to assume part or all of
the left ventricle's pumping action.

HeartSaver System Pump/Drive Unit

The electrically powered, implantable pump/drive unit incorporates two small,
single pusher-plate pump chambers, connected in series. A single, common, pusher
plate is positioned between the valveless pre-chamber and the valved pumping
chamber. During the eject stroke, the pumping chamber ejects blood, via an
outflow conduit, into the recipient's aorta, while the pre-chamber
simultaneously fills from the left ventricle through an inflow conduit. During
the return stroke, fluid transfers from the pre-chamber to the pumping chamber,
with no net inflow or outflow. Since the combined volume of the two chambers
remains constant throughout the cycle, the device does not require a volume
compensator which will allow it to be fully implanted. This results in a
physiologic stroke volume from a compact pumping system.

The pusher plate, supported by the two pump chamber diaphragms, is driven by
direct magnetic actuation, without coupling members or bearings. Eject bias
springs are compressed during the return stroke and deliver their stored energy
during the eject stroke, efficiently utilizing the driver throughout the pumping
cycle and leveling the power load through the system. This contributes to system
efficiency, while optimizing the size of both electrical and electromagnetic
subsystems. The driver's linear force-versus-current characteristics enhance
system control capabilities.

                                       17
<PAGE>

The Internal Controller/Battery

An implanted, microprocessor-based controller and battery (ICB) will deliver
power to the pump/drive unit. Responding to position sensors within the
pump/drive unit, the ICB will regulates system operation, adapting pump output
to physiologic needs. The ICB will normally be powered by the transcutaneous
energy transfer system (TET). However, an implanted rechargeable battery will
provide a backup power source, as well as supporting operation without the
external accessories (e.g., for bathing or swimming). The ICB will include a
radio frequency (RF) telemetry system for bi-directional communication with the
external controller.

The Transcutaneous Energy Transmission System

The Transcutaneous Energy Transmission (TET) system will transmit power from the
external battery to the implanted system by means of electromagnetic induction.
An external coil, energized by the external battery and controller, transmits
power across the intact skin to an internal coil implanted under the skin. The
current induced in the implanted TET coil will be delivered to the implanted
controller to power the pump and recharge the implanted battery.

The Biotelemetry System

The HeartSaver will also be remotely monitored and controlled by an integrated
Biotelemetry data transfer system. The Biotelemetry system transfers data
bi-directionally through intact skin and tissue using RF transmitter/receiver
modules in the internal and external controllers. The Biotelemetry system is
expected to be able to transmit information between the implanted HeartSaverVAD
and healthcare professionals.

Advantages of the HeartSaverVAD

The HeartSaver is expected to offer several distinct advantages over other VADs
currently used or under development to treat end-stage heart failure, including:

Pulsatile (physiologic) Output

Unlike the continuous flow VADs currently under development, the HeartSaverVAD
generates a pulsatile output, emulating the pumping action of the natural heart.
Many clinicians believe that a physiologic pulse is essential for adequate
long-term perfusion of body tissue and organs.

Fully Implantable without a Volume Compensator

Due to the alternating action of the pre-chamber and pumping chamber, the total
blood volume within the device does not vary as the pump cycles. Since there is
no variable blood volume within the implanted device, the pump can be fully
implantable (i.e., with no air vent through the skin) without the need for an
implanted volume compensator. This contributes to the simplicity and compactness
of the device.

The TET and Biotelemetry systems are expected to provide power, communication
and control of the implanted system across the intact skin. These systems,
together with the elimination of an air vent to atmosphere, permit the device to
operate with no penetrations through the skin. Currently marketed VADs require
openings in the skin for connection to electrical or pneumatic power sources and
to communicate with atmospheric pressure. These skin penetrations potentially
increase the risk of infection and affect comfort and convenience.

                                       18
<PAGE>

Reduced Size and Weight

The HeartSaverVAD will be a highly integrated and compact design, with a
projected pump/drive unit volume and weight approximately one half that of
current pulsatile VADs. Its compact size and lack of a volume compensator
provide surgical flexibility, permitting it to be implanted in either the
abdominal or thoracic cavity.

Reliability and Durability

The HeartSaverVAD design is derived from the Novacor LVAS, which has a record
for multiyear clinical reliability and durability unmatched by any other VAD.
The extreme simplicity of the HeartSaverVAD design, with no bearings or other
mechanical elements subject to wear, is expected to allow it to be highly
reliable and durable.

Quality of Life

When patients leave the hospital with an implanted HeartSaverVAD, it is expected
that they will have an improved quality of life that will allow them to be
mobile, to exercise and to perform near-normal work and other life activities.
HeartSaverVAD's external batteries will provide five to eight hours of power
without charging; the internal battery will allow operation, for shorter
intervals, without the use of the TET or connection to any external power
source.

Cost Savings

The HeartSaverVAD's relative simplicity and absence of high-tolerance components
should make it a cost-competitive technology. Its expected multiyear durability
should also make the cost per year of circulatory support competitive.

Overview of Clinical Experience and Trials

Novacor LVAS

Novacor LVAS is the only VAD that has provided more than four years of
continuous circulatory support with a single device. In use since 1984, it is
the only electrical system with more than 18 years of clinical experience and
the only technology to successfully complete an NIH-sponsored two-year
pre-clinical device readiness-testing program.

Novacor LVAS has supported more than 1,400 people around the world for as long
as 5+ years, providing many recipients with an active out-of-hospital life. To
date, Novacor LVAS has supported:

     o    317 recipients for more than six months;
     o    127 recipients for more than one year;
     o    28 recipients for more than two years;
     o    11 recipients for more than three years;
     o    three recipients for more than four years; and
     o    one recipient for more than five years.

In the United States, Novacor LVAS is available to clinicians for use as a
bridge to transplantation. In Europe, Japan and elsewhere in the world, the
device is used as a bridge to transplantation, an alternative to transplantation
and a bridge to recovery.

                                       19
<PAGE>

The Corporation's multi-center INTrEPID feasibility clinical trial in the United
States and Canada to provide additional support for the Novacor LVAS's use as
destination therapy is ongoing.

The trial design overview is as follows:

     o    a non-randomized, two-arm, controlled clinical trial;
     o    enrollment of 51 subjects at 10 centers
     o    primary study endpoint: all cause mortality at six months; and
     o    secondary study endpoints: cardiac mortality at six months and
          health-related quality of life.

HeartSaver

The optimized HeartSaverVAD is now in the prototype design and development
stage, and is expected to commence initial animal tests late in 2003. It is
targeted to enter the clinical evaluation trial stage in late 2005.
HeartSaverVAD is intended to ultimately meet the clinical requirements for a
fully implantable device.

Upon initiation of formal clinical trials, each enrolled site will receive
training on the implantation and operation of HeartSaverVAD. Senior medical
practitioners in the field of cardiovascular medicine, such as cardiologists and
cardiac surgeons, will be familiarized with HeartSaverVAD to ensure its wide
acceptance, after approval, within the medical community in the treatment of
end-stage heart failure.

Marketing, Training and Distribution Strategy

The Corporation's principal markets are currently North America and Europe.
Revenues for each geographic market for 2000, 2001 and 2002 were as follows:

-----------------------------------------------------------------------
                                                Revenue
                                 --------------------------------------
                                    2002          2001          2000
-----------------------------------------------------------------------

Canada                           $   941,259   $   158,974   $   93,963
United States                      5,421,570     5,463,618    2,712,946
Europe and rest of world (1)       3,744,102     2,630,032    1,867,576
                                 --------------------------------------
Total                            $10,106,931   $ 8,252,624   $4,674,485
-----------------------------------------------------------------------

     (1)  Sales in Europe are made by the Corporation to Edwards Lifesciences'
          operations in The Netherlands.

During the year ended December 31, 2002, revenue included $4,685,361 (2001 -
$2,789,006) resulting from sales to Edwards less obligations owing to Edwards
for the shortfall of the guaranteed gross margin on sales included as a
reduction of revenue of $657,542 (2001 - $833,880).

With the acquisition of Novacor LVAS in mid-2000, WorldHeart immediately gained
access to many key medical centres involved in cardiac transplantation in North
America, Europe, Japan and Asia. Novacor LVAS has been available for implant in
93 centres in these geographic markets. Outside the United States, Novacor LVAS
is represented by Edwards, which has an extensive network of direct sales people
in addition to distributors and distribution capabilities close to major
international markets.

                                       20
<PAGE>

Additionally, the Oakland, California and European-based operations of the
Novacor business have experienced clinical and technical personnel who support
active implant centres and are well connected with the leading clinicians. It is
WorldHeart's intent to continue to leverage this experience, knowledge and the
positive relationships that have been established over many years.

Product improvements to the Novacor LVAS, which were introduced in Europe during
2002, are also expected to be introduced to the U.S. and Canada in 2003, subject
to FDA and Health Canada approvals. In addition, the Corporation's submission to
the FDA to expand the product indication for the Novacor LVAS is expected to
expand clinical interest in the product. These product improvements and
regulatory activities have been quickly followed by expansion of the
Corporation's U.S. sales force in order to optimize the potential sales impact
of these developments.

Commercialization

The Corporation expects to apply in 2005 for approval to commence human clinical
trials of HeartSaver in the United States, Europe and Canada. Assuming clinical
trials are satisfactory, the Corporation expects to commence commercial sales in
late 2006 or early 2007.

Sources and Availability of Raw Materials

To date, the Corporation has not encountered any major difficulty in obtaining
quality raw materials or quality subassemblies of raw materials. It is not
anticipated that the prices of raw materials will be subject to volatility.

Intellectual Property

To date, two patents have been granted for HeartSaverVAD in the United States
and a European patent has been granted covering United Kingdom, France, Germany,
Italy, Switzerland and Liechtenstein. Patents for HeartSaverVAD have been
applied for in Canada and in Japan. The TET technology incorporated in
HeartSaverVAD has been patented in the United States, Canada and the United
Kingdom.

Sixteen U.S. patents have been granted for Novacor LVAS and its associated
subsystems. A subset of these patents have also been filed and granted in the
major European countries, in Canada and in Japan. A U.S. patent has been granted
on the Novacor II LVAS technology, which is being integrated into the
next-generation HeartSaverVAD.

The Corporation has registered HeartSaverVAD(TM) and WorldHeart(TM) as
trademarks in Canada, and has applied to register them in the United States and
in several other countries.

The Corporation and CVD generally enter into confidentiality or license
agreements with their employees, consultants and vendors, and generally control
access to and distribution of information related to their technology or
products, documentation and other proprietary information. Despite these
precautions, it may be possible for a third party to copy or otherwise obtain
and use the Corporation's products or technology without authorization, or to
develop similar technology independently. In addition, effective patent,
copyright, trademark and trade secret protection may be unavailable or limited
in certain countries, including the United States. Despite the Corporation's
efforts to protect its proprietary rights, unauthorized parties may attempt to
copy aspects of the Corporation's products or to obtain and use information that
the Corporation regards as proprietary. Policing unauthorized use of the
Corporation's products is

                                       21
<PAGE>

difficult. There can be no assurance that the steps taken by the Corporation
will prevent misappropriation of its technology or that such agreements will be
enforceable. In addition, litigation may be necessary in the future to enforce
the Corporation's intellectual property rights, to protect patents licensed to
or owned by the Corporation, to protect the Corporation's trade secrets, to
determine the validity and scope of the proprietary rights of others, or to
defend against claims of infringement or invalidity. Such litigation could
result in substantial costs and diversion of resources and could have a material
adverse effect on the Corporation's business, financial condition and result of
operations.

Product Liability Insurance

The Corporation maintains product liability insurance in the amount of
US$10,000,000. Upon the commencement of commercial production of HeartSaverVAD,
the Corporation will seek to increase such product liability insurance, if
appropriate.

Competition

Overview

In addition to competing with other less-invasive therapies for heart failure,
the Corporation's Novacor LVAS and HeartSaverVAD will compete with VADs being
developed and sold by a number of existing and emerging companies. Competition
from medical device companies and medical device subsidiaries of healthcare
companies is intense and may increase. Many of the Corporation's competitors may
have substantially greater financial, technical, manufacturing, distribution and
marketing resources than the Corporation.

At present, only two companies in North America have implantable pulsatile VADs
approved for commercial sale: WorldHeart and Thoratec Laboratories Corporation
("Thoratec"). In 2000, Thoratec acquired Thermo Cardiosystems Inc. ("TCI"), one
of the leading suppliers of implantable left ventricular assist devices. The
combined entity assumed the Thoratec name. Thoratec has three pulsatile left
ventricular assist device models of its HeartMate(R) LVAS that have been
approved in the United States for commercial sale. One is pneumatically driven
(the IP LVAS), and the other two are electrically driven (the VE LVAS and XVE
LVAS). The HeartMate(R)VE and XVE and Novacor LVAS have been approved for
commercial sale for bridge-to-transplant indications in the United States and
without restriction in use for heart-failure patients in Europe. Each of these
VADs is implanted in the abdomen and has power leads and/or venting tubes, which
perforate the recipient's skin and tissue.

The HeartMate(R) VE received approval for destination-therapy indication in
November 2002 and the HeartMate(R) XVE received destination-therapy approval in
April 2003. The FDA is reviewing, on an expedited basis, WorldHeart's PMA
Supplement for the use of its Novacor LVAS for destination therapy.

Other companies, such as Abiomed, Inc. ("Abiomed") and Thoratec both have VADs
which are designed for temporary use, but are not implanted in the body. Their
pumping/power console is external and attached to the natural heart via
connecting tubes running through the recipient's skin and tissue. Abiomed's VAD
is approved by the FDA for in-hospital use only. In 2001, Thoratec received
approval from the FDA for a portable console driver that can enable recipients
to leave the hospital.

To date the only VADs that have been approved in the United States for
commercial sale are not totally implantable or remotely powered, monitored and
controlled, and, with the exception

                                       22
<PAGE>

of the Novacor LVAS and HeartMate(R) VE and XVE, are primarily for acute
(short-term) use or for bridge-to-transplant applications.

In Europe and certain other countries outside North America, Berlin Heart
Institute and Medos Medizentechnik AG provide extracorporeal VADs comparable to
those manufactured and distributed by Thoratec.

Future Competition

The Corporation believes that the only fully implantable, pulsatile LVADs under
development are the Arrow LionHeart(TM) LVAD and the HeartSaverVAD. There are a
large number of non-pulsatile VADs in varying stages of development. One such
device, which has been undergoing U.S. clinical trials as a bridge to transplant
and which is approved for use in Europe, is the MicroMed DeBakey VAD(R) being
developed by MicroMed International, Inc. This device provides non-pulsatile
left ventricular assist via a small rotary pump that is implanted in the abdomen
and is powered via wires that perforate the skin, connected to an external
controller and rechargeable battery pack.

Pulsatile Versus Non-Pulsatile VADs

Currently, most heart assist devices intended for chronic use are pulsatile,
mimicking the natural heart's pumping motion. Non-pulsatile, or continuous blood
flow VADs, are under development and have been tested in animals and in human
trials as a bridge to transplant or recovery. However, at the present time, the
scientific community has varying opinions as to whether they will be viable for
chronic long-term implantation in humans. Continuous flow VADs are expected to
be less complex than current generation VADs, smaller, valveless and have lower
energy needs and potentially be less costly. However, the natural heart is
pulsatile and pulsatility may be a physiological requirement for long-term
health. There is a lack of long-term clinical data on non-pulsatile pump
reliability and on human physiological, immunological and haematological
responses. The Corporation has opted to pursue pulsatile VADs that have proven
successful in extending life, and to make its pulsatile devices smaller, longer
lasting and less costly.

Third-party Reimbursement

The United States and Canada currently provide for public reimbursement of VADs
used as a bridge to transplant. In addition, private insurance carriers in the
U.S. provide reimbursement for VAD use. Currently there is no public
reimbursement in the United States or Canada for destination-therapy use of
VADs. However, in 2002 the Centers for Medicare and Medicaid Services in the
United States approved a new reimbursement category and appear to be in the
process of providing expanded coverage by the end of 2003.

The European Union, generally, provides reimbursement for VADs. Reimbursement
varies between countries or jurisdictions and budget constraints, to date, have
limited reimbursement.

In Japan, a decision on reimbursement is scheduled for April 2004.

Employees

At December 31, 2002, the Corporation employed approximately 150 full-time staff
and consultants. Of these employees, approximately 50 were employed in Ottawa
and the balance in Oakland. Approximately 70% of the employees are involved with
research, development and manufacturing.

                                       23
<PAGE>

In addition to these staff members, there are approximately 90 clinical and
professional staff and volunteers affiliated with the Ottawa Heart Institute
involved in the HeartSaver project.

The Corporation currently maintains compensation, benefits, equity participation
and work environment policies intended to assist in attracting and retaining
qualified personnel.

The Corporation believes that the success of its business will depend, to a
significant extent, on its ability to attract and retain such personnel. There
is a well-developed high technology industry in the regions in which the
Corporation conducts its business and in which CVD conducts its research and
development. The Corporation has access to highly skilled labour pools.

None of the Corporation's employees is subject to a collective bargaining
agreement nor has the Corporation experienced any work stoppages. The
Corporation believes that its relations with its employees are good.

Facilities

As of December 31, 2002, WorldHeart occupied two locations. The principal
Ottawa, Ontario location is comprised of 22,755 square feet of manufacturing and
office space with a lease that is being renewed on an annual basis on terms
consistent with those of prior years. A 4,000-square-foot satellite office in
Ottawa was vacated in the fourth quarter of 2002, and the Corporation has
negotiated an early cancellation of the lease. The second location is in
Oakland, California with two buildings and approximately 40,000 square feet of
manufacturing and office space. This space was obtained by the Corporation as
part of the Novacor acquisition and continues to be the sole manufacturing
facility for Novacor LVAS. The Oakland lease was renewed for five years during
2002, and expires on April 30, 2007.

Under a research agreement between OHIRC and WorldHeart dated July 10, 1996,
OHIRC continues to provide facilities and clinical support for the operation of
CVD. The research facilities continue to occupy a significant part of the
90,000-square-foot research wing of OHIRC's cardiovascular healthcare facility
located in Ottawa, Ontario.

The Corporation currently has excess capacity for manufacturing purposes. The
Corporation is not aware of any environmental issues that may affect the use of
its properties.

Government Regulation

Overview

Most countries, including the United States, Canada and countries in the
European Union, require regulatory approval prior to the commercial distribution
of medical devices. In particular, implanted medical devices generally are
subject to rigorous clinical testing as a condition of approval by the FDA and
by similar authorities in Canada, in Europe and in other countries. The approval
process for HeartSaver, an implantable medical device, will be expensive and
time consuming.

Canadian Regulation

The sale and advertising of medical devices in Canada is governed by the Food
and Drugs Act (Canada) through the Medical Devices Regulations, administered by
the Medical Devices Bureau of Health Canada ("MDB"). The current Medical Devices
Regulations are undergoing revisions that may align the Canadian regulatory
process with those of Canada's international trading

                                       24
<PAGE>

partners. The Corporation believes that international harmonization of the
regulatory process will be more likely to accelerate than slow the approval
process as it relates to HeartSaver.

HeartSaver will be classified as a Class IV medical device under the Medical
Devices Regulations, requiring the Corporation to apply for authorization from
the MDB to conduct investigational testing on human subjects in Canada. At the
conclusion of the human clinical trials, the Corporation will apply for a
medical device license that will allow for general marketing of the device. The
Corporation intends to apply in 2005 for approval of Health Canada to commence
human clinical trials and, assuming such trials are successful, the Corporation
intends to apply for Health Canada approval to market the device, which is
expected to occur in 2007.

United States Regulation

In the United States, the FDA regulates the manufacture, distribution and
promotion of medical devices pursuant to the Federal Food, Drug and Cosmetic Act
("FDC Act") and the regulations promulgated thereunder. The Corporation's
Novacor LVAS and HeartSaverVAD devices are regulated as Class III medical
devices. Human clinical trials are conducted pursuant to an investigative device
exemption, the results of which must demonstrate, to the satisfaction of the
FDA, the safety and efficacy of the system.

Before commercial distribution of devices such as Novacor LVAS and HeartSaver
are permitted in the United States, a PMA approval must be obtained from the
FDA.

In addition, any medical device distributed in the United States is subject to
pervasive and continuing regulation by the FDA. Products must be manufactured in
registered establishments and must be manufactured in accordance with the
Quality System Regulation (formerly known as Good Manufacturing Practices).
Labeling and promotional activities are subject to scrutiny by the FDA and, in
certain instances, by the Federal Trade Commission. Failure to comply with these
requirements could result in enforcement action, including seizure, injunction,
prosecution, civil penalties, recall and suspension of FDA approval.

Regulatory Requirements in Other Countries

It is also the Corporation's intention to market HeartSaverVAD in European and
other countries. The Corporation will, therefore, be required to meet the
applicable medical devices standards in each such country or region. Although
harmonization has been under negotiation for some time among various countries,
the approval process varies from country to country and approval in one country
does not necessarily result in approval in another.

The Corporation intends to apply for various certifications under the applicable
International Standards Organization ("ISO"), a worldwide federation of national
bodies, founded in Geneva, Switzerland in 1946. ISO has over 92 member
countries, including the United States and Canada. ISO standards are integrated
requirements which, when implemented, form the foundation and framework for an
effective quality management system. These standards were developed and
published by the ISO. ISO certification is widely regarded as essential to enter
Western European markets. ISO 13485 certification is the most stringent standard
in the ISO series and covers design, production, installation and servicing of
products. The Corporation currently has ISO EN46001 certification which is the
equivalent to ISO 13485 and is in the process of demonstrating its compliance
with ISO 13485 certification requirements. All companies are required to obtain
the "CE" mark in order to market medical devices in Europe. The Corporation will
be required to receive a "CE" mark certification for HeartSaverVAD, an


                                       25
<PAGE>

international symbol of quality and compliance, with applicable European medical
device directives.

Other Regulatory Requirements

The Corporation and CVD are also subject to various Canadian and/or United
States federal, provincial, state and local laws and regulations relating to
such matters as safe working conditions, laboratory and manufacturing practices
and the use, handling and disposal of hazardous or potentially hazardous
substances used in connection with the Corporation's and CVD's research and
development work. The manufacture of biomaterials will be subject to compliance
with various federal environmental regulations and/or those of various
provincial, state and local agencies. Although the Corporation believes that
both it and CVD are in compliance with these laws and regulations in all
material respects, there can be no assurance that the Corporation will not be
required to incur significant cost to comply with environmental and health and
safety regulations in the future.

4.C. Organizational Structure

The consolidated operations of the Corporation include its wholly owned
subsidiary, World Heart Inc., of Oakland, California, U.S.A., and an associated
research and development company, 2007262 Ontario Inc., of Ottawa, Ontario,
Canada.

The Corporation has one wholly owned subsidiary, World Heart Inc., a corporation
duly incorporated under the laws of the State of Delaware. World Heart Inc. was
created to acquire the assets and liabilities of Novacor from Edwards and
conduct commercial operations related to the sale of Novacor LVAS. 2007262
Ontario Inc., an associated research and development company of the Corporation,
was duly incorporated under the laws of the Province of Ontario, Canada on
November 29, 2001 to carry out specified research and development related to the
HeartSaver Implanted Controller, the HeartSaver External Controller and all the
software developed to control, monitor and power the HeartSaverVAD. WorldHeart
and New Generation Biotech (Equity) Fund Inc., an Ontario labour sponsored
venture capital corporation, subscribed for an equal number of common shares of
2007262 Ontario Inc.

4.D. Property, Plants and Equipment

As of December 31, 2002, WorldHeart occupied two locations. The principal
Ottawa, Ontario location is comprised of 22,755 square feet of manufacturing and
office space with a lease that is being renewed on an annual basis on terms
consistent with those of prior years. A 4,000-square-foot satellite office in
Ottawa was vacated in the fourth quarter of 2002, and the Corporation has
negotiated an early cancellation of the lease. The second location is in
Oakland, California with two buildings and approximately 40,000 square feet of
manufacturing and office space. This space was obtained by the Corporation as
part of the Novacor acquisition and continues to be the sole manufacturing
facility for Novacor LVAS. The Oakland lease was renewed for five years during
2002, and expires on April 30, 2007.

Under a research agreement between OHIRC and WorldHeart dated July 10, 1996,
OHIRC continues to provide facilities and clinical support for the operation of
CVD. The research facilities continue to occupy a significant part of the
90,000-square-foot research wing of OHIRC's cardiovascular healthcare facility
located in Ottawa, Ontario.

                                       26
<PAGE>

The Corporation currently has excess capacity for manufacturing purposes. The
Corporation is not aware of any environmental issues that may affect the use of
its properties.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

WorldHeart is a medical device company currently focused on the development and
commercialization of pulsatile ventricular assist devices through operations in
Oakland, California, United States and Ottawa, Ontario, Canada. WorldHeart is
currently focused on two technologies, Novacor LVAS and HeartSaverVAD.

The HeartSaver program originated from licensed artificial heart and related
technologies developed by the CVD. During 1996, the Corporation entered into a
research agreement with CVD under which the Corporation agreed to fund a
substantial portion of CVD's remaining research efforts relating to the
HeartSaver artificial heart technology, and all of the costs related to the
commercialization of the technology.

On June 30, 2000, the Corporation, through World Heart Inc., a wholly owned
subsidiary of World Heart Corporation, acquired the business, including assets
and liabilities, of Novacor from Edwards. The total purchase price of the
acquisition was approximately $62.5 million, which included $58.9 million of
Series A cumulative participating preferred shares of World Heart Inc. The
acquisition was accounted for using the purchase method and World Heart Inc.'s
operating results have been included in the consolidated financial statements
from June 30, 2000.

As a result of the acquisition, WorldHeart manufactures and distributes the
Novacor LVAS. The Corporation sells this product internationally through
Edwards, with the exception of the United States where the Corporation sells
directly. Prior to the acquisition, the Corporation had no commercial sales.

During 2002 there were a number of significant events which impacted on delivery
of the Corporation's key strategic objectives, as follows:

     o    the Corporation's ePTFE enhanced inflow conduit, which leads blood
          from the heart to the device, was released for sale in Europe and,
          subsequent to year-end on January 14, 2003, was approved for use in
          the U.S. by the FDA;

     o    the Corporation submitted a PMA supplemental application to the FDA
          requesting approval for "Destination Therapy" or the long-term use of
          the Novacor LVAS in the U.S. The application was accepted for filing
          by the FDA on November 22, 2002, and granted expedited review status;

     o    the Novacor LVAS became the first implanted heart assist device
          approved for commercial sale in Japan; initial sales to this market
          exceeded our expectations; and

     o    the Corporation suspended its pre-clinical trial program for its
          original HeartSaverVAD, and announced the consolidation of
          next-generation product development efforts into an optimized
          HeartSaverVAD.

                                       27
<PAGE>

5.A. Operating Results

All financial information is prepared in accordance with generally accepted
accounting principles (GAAP) in Canada and is stated in Canadian dollars.

Consolidated results of operations

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
                                      Year ended   As a %      Year ended      As a %     Year ended     As a %
                                    December 31,   of gross   December 31,   of gross   December 31,   of gross
                                            2002   revenue            2001    revenue           2000    revenue
---------------------------------------------------------------------------------------------------------------

<S>                                <C>                  <C>  <C>                 <C>  <C>                  <C>
Revenue
  Gross revenues                   $  10,764,473             $   9,086,504             $   5,173,061
  Less : Edwards guarantee fee         (657,542)         6%      (833,880)         9%      (498,576)        10%
                                   ----------------------------------------------------------------------------
                                      10,106,931        94%      8,252,624        91%      4,674,485        90%

Cost of goods sold
  Direct materials and labour        (4,593,627)        43%    (3,925,702)        43%    (2,443,610)        47%
  Overhead and other                 (5,275,104)        49%    (4,361,356)        48%    (4,825,735)        93%
                                   ----------------------------------------------------------------------------
                                     (9,868,731)        92%    (8,287,058)        91%    (7,269,345)       140%
                                   ----------------------------------------------------------------------------

Gross margin                             238,200         2%       (34,434)         0%    (2,594,860)      (50)%

Selling, general and admin.         (10,499,075)              (11,078,320)               (6,760,277)
Research and development            (25,016,365)              (35,774,623)              (18,395,885)
Amortization of intangibles          (7,322,503)              (15,209,647)               (7,491,865)
Foreign exchange gain (loss)             476,649               (2,913,150)                  (16,686)
Investment income                        134,255                 1,209,125                 2,380,983
Interest and financing
expenses                             (7,772,300)               (6,853,763)               (3,049,792)
Recovery of future income
taxes taxes                                    -                 4,988,244                 5,542,960
                                   ----------------------------------------------------------------------------

Net loss                           $(49,761,139)             $(65,666,568)             $(30,385,422)
----------------------------------------------------------------------------------------------------------------
</TABLE>

Revenues. WorldHeart sells its products through a direct sales force in the
United States and through its distributor, Edwards, outside the United States.
The Novacor LVAS and related equipment account for all of WorldHeart's product
sales.

Revenues for the fiscal years ended December 31, 2002 and December 31, 2001
reflect commercial activities relating to Novacor LVAS for a full fiscal year.
Revenues for the fiscal year ended December 31, 2000 reflect the six-month
period from July 1, 2000 to December 31, 2000. As mentioned above, there were no
commercial activities prior to the June 30, 2000 acquisition of Novacor.

In its distribution agreement with Edwards, WorldHeart is required to pay a
minimum gross margin guarantee in the event that Edwards' gross margin generated
on the sales of WorldHeart's products are below US$2 million annually. The
guarantee shortfall is accounted for as a reduction of revenues.

Revenues from sales of the Novacor LVAS and related equipment during fiscal 2002
increased by 22% from 2001 to $10.1 million. Revenue growth was lower than
anticipated, largely as a result of the later than expected European roll-out of
ePTFE conduits late in the second quarter,

                                       28
<PAGE>

rather than during the first quarter, as had been anticipated. U.S. sales were
also flat, due in part to some clinics preferring to wait for an FDA approval of
the ePTFE conduits (which occurred subsequent to year end) and also to concerns
about product delivery related to the Corporation's strained working capital
position. WorldHeart regards the slowdown in growth of U.S. sales as temporary,
in light of the addition and/or re-activation of 14 U.S. clinics during 2002,
and having in mind strong sales growth in Europe and Canada as well as stronger
than expected sales in Japan during the product's first year of commercial
availability.

The significant increase in gross revenues in 2001 over 2000 is on account of
the acquisition of the revenue-producing Novacor assets at the end of the second
quarter of 2000.

Cost of Goods Sold. With the aforementioned change in product and development
strategy that has resulted in WorldHeart concentrating its commercial efforts
exclusively on the Novacor LVAS until at least 2006, an initiative is now under
way to reduce the cost of sales of the Novacor LVAS and related hardware and
equipment.

Reduced unit cost of sales is expected to result from increased volume and
corresponding pricing and labour efficiencies; by employing more conventional
manufacturing processes; and through the modernization of the manufacturing
operations.

For 2002, the overall cost of sales remained relatively constant at 92% of gross
sales as compared to 91% in 2001.

Direct material and labour costs were 43% of gross sales for both 2002 and 2001
and were 47% in 2000.

Overhead and other costs include direct overhead costs, indirect overhead
allocations and royalties. The Company is currently operating at levels
significantly below its capacity and, therefore, in general, overhead and other
costs should be declining in proportion to increases in gross revenues. In 2002
overhead and other costs increased by $914,000 to $5.3 million from $4.4
million. Overheads were lower in 2001 as a result of an adjustment to previous
periods' estimates for required net realizable inventory reserve and provision
for warranty costs. The effect was an increase of approximately $712,000 to
inventory and correspondingly lower overhead and other costs attributable to
Novacor sales. In addition, royalty costs of 5% of sales have increased during
2002 as a result of higher sales.

Overall, the gross margin is expected to continue to improve as sales volumes of
the Novacor LVAS increase.

Selling, General and Administrative. Selling, general and administrative
expenses consist primarily of payroll and related expenses for executives,
sales, marketing, accounting and administrative personnel, professional fees,
communications, promotional activities, costs associated with meeting
multi-jurisdictional regulatory requirements, insurance, occupancy and other
general corporate expenses.

In 2002 selling, general and administrative expenses decreased by $579,000, or
5%, to approximately $10.5 million. Increases in selling and marketing costs of
approximately $.9 million were mainly on account of higher employee costs
associated with the Corporation's actions to increase its direct sales presence
in the U.S. and as a result of commissions on higher sales. These increases were
more than offset by reductions in general and administration costs of
approximately $1.5 million.

                                       29
<PAGE>

2001 selling, general and administrative expenses increased by $4.3 million or
64% as compared to 2000 and reflect the first full year of operations subsequent
to the mid-year acquisition of Novacor and the corresponding Oakland facility in
2000. These incremental Oakland and Novacor costs added approximately $1.2
million to the selling, general and administrative costs in 2001 as compared to
2000. Also, approximately $2.0 million of the year-over-year increase related to
initiatives the Corporation took in order to increase clinical awareness of
WorldHeart and its products.

The Corporation will continue to increase its marketing and promotional activity
during 2003 associated with enhancements to the Novacor LVAS and, potentially,
in response to a destination therapy approval in the U.S.

Research and Development. The Corporation's research and development activities
are discussed in Item 5.C.

Amortization of Goodwill and Intangibles. Due to changes in accounting
pronouncements (Canadian Institute of Chartered Accountants Section 3062
"Goodwill and Other Intangible Assets"), which was adopted by the Corporation at
the start of the fiscal year beginning January 1, 2002, amortization has been
significantly reduced as goodwill and indefinite life intangibles are no longer
amortized. This has resulted in a significant decrease in amortization from
$15.2 million in 2001 to $7.3 million in 2002. These assets are now tested
annually for impairment. The results of the impairment testing during 2002 led
management to determine that no impairment exists and that no adjustment to
goodwill was required.

Other intangible assets, consisting of purchased technology, patents, trademarks
and other identified rights, continue to be amortized over their legal or
estimated useful lives, whichever is shorter, which range from 3 to 5 years.

Fiscal 2000 reflects only six months of amortization from the date of the
acquisition of the Novacor assets.

Foreign Exchange Gains and Losses. WorldHeart recorded a foreign exchange gain
of $477,000 for 2002 compared to a loss of $2.9 million in 2001 and a nominal
loss in 2000. Certain balance sheet items are denominated in foreign currencies
(predominantly the U.S. dollar). Foreign exchange gains and losses arise when
the value of the Canadian dollar changes relative to the value of these foreign
currencies. The majority of the foreign exchange gains and losses can be
attributed to the Company's preferred shares, which are denominated in U.S.
dollars. In 2002, the Canadian dollar strengthened by approximately 1.1% versus
the U.S. dollar which resulted in a foreign exchange gain of approximately
$477,000. In 2001, the Canadian dollar weakened by approximately 6.2% against
the U.S. dollar which resulted in a foreign exchange loss of $2.9 million.

Investment Income. Interest income primarily represents interest earned by the
Corporation on its cash equivalents and short-term investments.

Interest income has decreased to $134,000 in 2002 from $1.2 million in 2001 and
$2.4 million in 2000 reflecting significantly lower average cash equivalents and
short-term investment balances during the year and, in general, a declining
interest rate environment during the period.

                                       30
<PAGE>

Interest Expense and Financing Costs. The preferred shares are being accounted
for in accordance with their substance and are presented in the financial
statements according to their debt and equity components measured at their
respective fair values at the time of issue. The debt components have been
calculated as the present value of the interest payments discounted at 12%,
approximating the interest rate that would have been applicable to
non-convertible debt at the time the preferred shares were issued. Interest
expense is determined on the debt component as the amount necessary to increase
the debt component to its face amount plus accumulated dividends at maturity.
Total non-cash interest expense for the 2002 fiscal year was approximately $7.7
million. The corresponding amount for the 2001 fiscal year was $6.8 million and
for 2000, which included only six months of interest, was approximately $3.0
million. Other interest and financing costs in 2002 totaled approximately
$122,000.

Recovery of Future Income Taxes. At the date of the acquisition of the Novacor
assets in 2000, the Corporation recognized an income tax liability of $10.5
million. The Corporation has subsequently recognized future income tax recovery
amounts on the losses incurred in the United States only to the extent of the
$10.5 million liability (2001 - $5.0 million; 2000 - $5.5 million). This
recovery was calculated as 41% of the net loss of World Heart Inc. The Canadian
operations have both operating loss carryforwards and scientific research and
experimental development expenditure carryforwards available to offset future
income taxes. The benefit of these carryforwards has not been recorded in the
financial statements.

Capital Expenditures

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

                                        2002            2001             2000
--------------------------------------------------------------------------------

Capital Expenditures                  $610,198     $1,205,121         $902,398
--------------------------------------------------------------------------------

Capital expenditures declined in 2002 and related primarily to various
manufacturing, research, testing and office equipment. Higher capital
expenditures of the same nature were made in 2001 as WorldHeart prepared for
pre-clinical and clinical trials.

At December 31, 2002, WorldHeart occupied two locations. The main Ottawa
location comprises 22,755 square feet of manufacturing and office space with a
lease that is being renewed on an annual basis on terms consistent with prior
years. A satellite office in Ottawa was vacated during the fourth quarter in
light of the reduction in staff resulting from the above-mentioned strategic
change implemented in the third quarter. The lease on this space would have
expired in December 2003, but an early cancellation, at a breakage cost of
$43,000, was negotiated subsequent to year-end. The third location is in Oakland
with two buildings consisting of approximately 40,000 square feet of
manufacturing and office space. The Oakland leases were renewed in 2002 for a
five-year term expiring on April 30, 2007.

Employees

The Corporation is committed to employing qualified personnel with appropriate
expertise in its research and development and its business operations. At
December 31, 2002, the Corporation employed approximately 150 full-time staff
and consultants.

In addition to these staff members, there are approximately 90 clinical and
professional staff and volunteers, affiliated with CVD, involved in the
HeartSaver project.

                                       31
<PAGE>

Critical Accounting Estimates

The Corporation's critical accounting estimates relate to the following:

     o    Estimating future sales to ascertain if an obligation exists under the
          Edwards' distribution agreement;
     o    Estimating slow moving and obsolete inventory;
     o    Valuation of intangible assets and goodwill;
     o    Accounting for government assistance;
     o    Tax credit receivable; and
     o    Income taxes.

Under a distribution agreement with Edwards, Edwards is guaranteed a minimum of
US $2 million in annual gross margin from the sales of the Corporation's
products. The Corporation's policy is to accrue as payable any shortfall in the
US $2 million guaranteed gross margin for the year or for future years when,
based on estimated future sales to Edwards, it appears likely that the
guaranteed gross margin will not be met. If sales to Edwards were to drop from
the current estimates, the amount ultimately owed would be greater than the
current estimate. At December 31, 2002, there is no reserve for additional
guarantee fees that may be incurred subsequent to 2002 as the Corporation
believes that sales levels will be sufficient to meet the minimum guarantee.

The Corporation has established reserves for slow-moving inventory. To the
extent inventory movement is not as anticipated, the current inventory reserve
needed for slow moving items may be higher or lower than that reserved at
December 31, 2002.

During the year, the Corporation adopted the new rules on accounting for
goodwill and other intangible assets. As a result, goodwill is no longer
amortized but, rather, is tested for impairment annually and any impairment
recognized. WorldHeart has completed its goodwill impairment tests and concluded
that no impairment exists and has made no adjustment to goodwill during 2002.
Other intangible assets were also reviewed and it was determined that no
impairment has occurred. The Corporation continues to amortize other intangible
assets over their estimated useful life.

Government assistance is recognized when the expenditures that qualify for
assistance are made and the Corporation has complied with the conditions for
receipt of government assistance. Government assistance is applied first to
reduce the carrying value of any assets and next to reduce eligible expenses
incurred in the year. A liability to repay government assistance, if any, is
recorded in the periods when the conditions arise that cause the assistance to
become repayable. At December 31, 2002, there is no accrual for receivables from
Technology Partnerships Canada ("TPC") because the Company had determined that
it might have been ineligible for further funding as a result of scope changes
that resulted form the merging of the three HeartSaverVAD development programs
in 2002. On May 21, 2003, the Corporation and TPC amended their agreement in
order to allow for these development program changes to be considered eligible
costs and amended TPC's royalty provisions. As at the year-ended December 31,
2002, the Corporation had received approximately $7.0 million of the $10.0
million that was available under the contribution agreement.

Under the Ontario Business Research Institute (OBRI) tax credit program, the
Corporation accrued a tax credit receivable in the amount of $2.8 million during
2001. This was associated

                                       32
<PAGE>

with research payments made to the CVD from 1997 to 2000. At year-end this claim
was in the process of being audited by the Ontario Government's Ministry of
Finance (Ministry).

On April 14, 2003, subsequent to year-end, the Corporation received a
preliminary assessment from the Ministry detailing adjustments that it is
proposing to reduce the Corporation's claim under the OBRI tax credit program.
This preliminary assessment was issued subsequent to changes that were proposed
to the OBRI program in the 2003 Ontario Budget presented on March 27, 2003.

In response to the preliminary assessment, in the first quarter of 2003 the
Corporation determined that it was appropriate to record a reserve of $1.7
million against the $2.8 million that it had previously recorded as a tax credit
receivable for claims that the Corporation had made under the OBRI program.

As part of the process of preparing the Corporation's consolidated financial
statements, the Corporation is required to estimate the income taxes in each of
the jurisdictions in which it operates. This process involves estimating the
Corporation's current tax exposure together with assessing temporary differences
resulting from differing treatment of items for tax and accounting purposes. The
Corporation has future income tax assets, the principal components of which are
undeducted Scientific Research and Experimental Development expenditures and net
operating loss carry forwards. The Corporation believes sufficient uncertainty
exists regarding the realizability of these future income tax assets such that a
valuation allowance has been taken on the entire amounts. Assumptions regarding
the realizability of these future income tax assets are revisited at each
balance sheet date. Any changes in the Corporation's overall operating
environment and financial performance could result in adjustments to the
valuation allowance.

Other Factors

WorldHeart's near-term commercial operations are exclusively focused on its
Novacor LVAS product. Initial commercial success will, therefore, be dependant
on the Corporation's ability to continue to increase Novacor sales. Novacor is
approved for sale, without limitation, in Europe and Japan and as a
bridge-to-transplant device in the United States and Canada. In the U.S. the
Federal Drug Administration has filed, with expedited review status, the
Corporation's PMA supplemental request for use in the long-term or destination
therapy market. We believe that approval of this submission would increase the
market for Novacor substantially.

Pulsatile VADs. WorldHeart has several competitors with commercially approved
pulsatile VADs having pumps that are externally located and one that is
abdominally implanted. The devices developed by the Corporation's competitors
are now primarily used as bridges to transplant. The competitive implantable
product was approved during the fourth quarter for destination-therapy
indication in the U.S. Some of the Corporation's existing known competitors have
significantly greater financial, production and marketing resources than the
Corporation.

Non-pulsatile VADs. Research and development is proceeding in several centres
for non-pulsatile continuous flow assist devices. Some of these devices are
currently being tested in humans. It has not been determined whether these
non-pulsatile devices will be acceptable for long-term use. If proven safe and
effective, and subject to regulatory approval, non-pulsatile assist devices
approved for long-term use could have an adverse effect on the market for
WorldHeart's devices.

                                       33
<PAGE>

HeartSaver Development. During 2002, management merged the three HeartSaver
development programs into one optimized HeartSaver development program. Although
it is expected that the commercialization of the HeartSaver will occur in 2007,
which is two years later than the most recent estimates for the original
HeartSaver, the development program is expected to result in a heart-assist
device that will offer significant improvements over previous versions of
HeartSaver in terms of size, weight, ease and flexibility of implant including
the ability to implant in the chest cavity or abdomen and for use for left,
right or biventricular heart assist, reliability, durability and enhanced
manufacturability. Management believes that the development program, including
pre-clinical and clinical trials, will be successful and that the necessary
regulatory approvals will be received. However, there can be no assurance that
this will occur.

Commercial Sales of the Novacor LVAS. Sales of the Novacor LVAS contribute to
overhead and other indirect costs of producing the Novacor LVAS product. At
current volumes, however, the Novacor commercial operations have contributed
only modest gross margin or have resulted in gross margin deficits. To the
extent that the Corporation is unable to significantly increase sales and/or
reduce per unit manufacturing costs, there is risk that the Corporation could be
adversely affected and the Novacor operations could increase the Corporation's
net cash consumption.

Outlook

External Environment. The market for an effective device treatment for
late-stage heart failure has not diminished during 2002, and despite significant
progress on many fronts, no competitive breakthroughs in heart assist products
have been announced, or are believed to be imminent. The scope of heart failure
is increasing as a result of both population demographic trends, and also as a
response to the increasing number of survivors from sudden cardiac events, many
of who subsequently develop congestive heart failure. The Corporation believes
the potential market for its heart assist devices exceeds 100,000 patients per
annum in North America, Europe, Japan and certain other countries.

There is growing evidence of increasing clinical acceptance of the use of
mechanical circulatory assist therapies in the treatment of late-stage heart
failure, and the current review by the Centers for Medicare and Medicaid
Services in the U.S. of reimbursement coverage for both bridge and
destination-therapy LVAD use is expected to result in increased payments for
procedures using such devices. These developments are expected to accelerate the
use of VADs both in the U.S. and elsewhere.

Internal Environment. The Corporation expects to incur further losses from
operations at least until 2006 as it continues its HeartSaver research and
development program. In addition, increased marketing expenses will result as
WorldHeart continues to promote the use of its enhanced Novacor LVAS product in
response to both recently received and anticipated regulatory approvals. These
cost increases will be potentially offset by increased net contributions from
higher Novacor LVAS sales.

Accounting Policies

Significant differences between GAAP in Canada and the United States are
presented in Note 22 to the consolidated financial statements.

                                       34
<PAGE>

5.B. Liquidity and Capital Resources

WorldHeart will continue to be dependent on its ability to obtain additional
capital in order to fund its HeartSaverVAD research and development program and
to fund its current commercial operations until they achieve profitability.

Financing Transactions. In January 2003, subsequent to year-end, WorldHeart
completed financings for gross proceeds of $13 million. These transactions
consisted of a private placement of equity of $3 million ($2.6 million net of
costs and fees) and debt totaling $10 million. The private placement included
2,343,750 units at a price of $1.28 per unit. Each unit comprises one WorldHeart
common share and one warrant to purchase a common share of WorldHeart for a
period of five years at $1.60 per share. In addition, a total of 234,374
warrants were also granted to the placement agent. Each warrant is exercisable
for two years at a price of $1.60 into one WorldHeart common share and one
compensation warrant. Each compensation warrant is exercisable at a price of
$1.60 into one WorldHeart common share at any time prior to the end of fiscal
2007. The debt consisted of a $7 million senior loan and a $3 million
subordinated loan. The loans mature on July 31, 2003 and bear an annual interest
rate of 18% payable monthly. The Lenders were paid a fee equal to 4% of the
gross loan amounts and also received a total of 3,000,000 warrants, each
exercisable into one WorldHeart common share for a period of five years at a
price of $1.60 per share. As collateral for the loans the Corporation provided
general security agreements over all of its assets.

Late in 2002, the Corporation completed a $2 million loan transaction in order
to fund short-term working capital until the above noted transactions could be
completed. The interest rate was 2% per month and included 400,000 warrants each
exercisable for a five-year period into one WorldHeart common share at a price
of $1.30 per share and with a provision that, in the event that the loan was
repaid prior to its June 18, 2003 maturity date, the number of warrants would be
reduced to 200,000. Subsequent to the 2002 year-end the loan was repaid from the
proceeds of the debt transactions detailed above, and the number of warrants
issued with respect to this transaction was reduced to 200,000.

Also, during the fourth quarter of 2002, WorldHeart sold accounts receivable
totaling US$1,095,000 to Edwards for cash totaling US$540,000 and the set off of
accounts payable owed by WorldHeart to Edwards totaling US$555,000. The proceeds
of this sale were used to fund short-term working capital requirements until the
above-noted transactions could be completed.

Funding in 2001 resulted from the issue of 3,027,000 special warrants through a
private placement for net proceeds of $14.9 million. Each special warrant was
convertible into one common share and one warrant to purchase a common share.
During 2002, the special warrants were converted into an equivalent number of
common shares and warrants. In addition, during 2001 the Corporation and New
Generation Biotech (Equity) Fund ("NewGen"), an Ontario labour sponsored venture
capital investment fund, subscribed for an equal number of common shares of
2007262 Ontario Inc. In return for preferred shares and a promissory note in the
amount of $2.0 million, the Corporation transferred certain technology and
assets to 2007262 Ontario Inc. The promissory note was paid to the Corporation
prior to year-end and the remainder of the cash was used in 2002 to fund
research and development activities. NewGen purchased preferred shares in
2007262 Ontario Inc.for gross proceeds of $3.5 million. The Corporation
consolidated 2007262 Ontario Inc. into its results for the year ended December
31, 2001.

In 2000, the Corporation issued 850,000 common shares for net proceeds of $15
million and as part of the Novacor acquisition, the Corporation issued
convertible preferred shares for US$20

                                       35
<PAGE>

million. The preferred shares are convertible at US$14.55 into 1,374,570 common
shares, plus additional common shares for the accumulated but unpaid dividends
to the date of conversion. Also during 2000, 12,282 shares were issued for
$116,147 upon the exercise of stock options issued under the Employee Stock
Option Plan. Additionally, during 2000, common shares were issued for $765,054
to underwriters of previous equity issues who exercised a portion of their
compensation warrants.

Year-end Liquidity. At December 31, 2002, the Corporation had a working capital
deficiency of $8.1 million as compared to working capital of $26.2 million in
2001. The Corporation had available cash of $248,000, versus cash, cash
equivalents and short-term investments of $22.2 million in 2001.

The decrease in working capital in 2002 and 2001 is the result of an investment
of cash and increase in accounts payable in order to fund research and
development activities associated with the HeartSaverVAD and the net losses
associated with the Novacor LVAS commercial operations and other general
corporate costs.

Cash totaling $1.2 million has been pledged against a US$750,000 letter of
credit issued by WorldHeart in support of the Company's obligations under its
Oakland, California premises leases and is not available for general operations.

As noted previously, WorldHeart completed equity and debt transactions totaling
$13 million subsequent to the 2002 year-end. In order to repay the $10 million
of collateralized loans that mature July 31, 2003, and continue to fund losses
from operations and other obligations, WorldHeart will have to complete one or
more financing transactions.

Commitments

As at December 31, 2002 the Corporation's obligations and commitments to make
payments are as follows.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
                                                       Payments Due by Period
                                                       ----------------------
Contractual Obligations               Total   Less than 1        1 - 3        4 - 5       After 5
                                                     year        years        years         years
--------------------------------------------------------------------------------------------------

<S>                              <C>           <C>          <C>          <C>          <C>
Capital Lease Obligations        $   64,923    $   64,923   $        -   $        -   $        -
Operating Leases                  5,179,528     1,729,141    2,153,939    1,296,448            -
Guaranteed Distribution Fees
    (in US$)                      6,000,000     2,000,000    4,000,000            -            -
Short-term Loan                   2,000,000     2,000,000            -            -            -
--------------------------------------------------------------------------------------------------
</TABLE>

The Guaranteed Distribution Fee amounts relate to the US$2 million minimum gross
profit guarantee under the distribution agreement with Edwards. US$2 million per
year is the maximum exposure; the shortfall offset against revenue in 2002 was
approximately US$426,000 (2001 - US$547,369; 2000 - US$332,074). The 2001
shortfall included an accrual for 2002 in the amount of $318,000; no amounts
have been accrued for years subsequent to 2002.

                                       36
<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
                                                  Amount of Commitment Expiration Per Period
Other Commercial Commitments           Total Amounts    Less than 1          1 - 3          4 - 5        After 5
                                           Committed           year          years          years          years
----------------------------------------------------------------------------------------------------------------

<S>                                          <C>         <C>                     <C>            <C>            <C>
Standby Letters of Credit:
     Canadian dollars                        $78,312        $78,312              -              -              -
     US dollars                           US$750,000     US$750,000              -              -              -
----------------------------------------------------------------------------------------------------------------
</TABLE>

The Canadian dollar letter of credit is in support of obligations under the
capital lease which will be repaid in 2003. The U.S. dollar letter of credit is
in support of WorldHeart's lease obligations for its premises in Oakland,
California. Cash in the amount of US$750,000 has been pledged in support of the
letter of credit.

Market Risk

WorldHeart is subject to interest rate risk occasionally on investments that it
makes with excess cash.

Market risk is mitigated by close adherence to an established investment policy,
which has been approved by the Board of Directors. The policy sets conservative
criteria with respect to liquidity and counter-party diversification. Management
believes the Corporation is not significantly exposed to capital risk as the
portfolio consists of high-quality instruments that are short term in nature and
are well diversified. There exists modest income exposure to a decline in
interest rates. This is not significant due to the short terms to maturity of
the instruments held.

The Corporation has a significant level of assets and liabilities denominated in
foreign currencies, predominantly U.S. dollars as a result of its U.S.
operations, and U.S. dollar-denominated preferred shares. Occasionally
WorldHeart enters into foreign exchange contracts in order to manage its foreign
exchange exposure. At December 31, 2002 there were no outstanding foreign
exchange forward contracts.

While the Corporation's cash reserves and cash from operations will not be
sufficient to meet our anticipated working capital requirements, we are
aggressively pursuing various options to raise additional capital which would
allow WorldHeart to meet its working capital requirement in the future.

5.C. Research and Development

Research and development expenses consist principally of payroll and related
expenses for development staff, prototype manufacturing, testing, and
configuration of equipment, trial expenses, regulatory affairs and quality
control with respect to prototype development.

Research and development costs in 2002 decreased by approximately $10.8 million
or 30% to $25.0 million. Lower research and development costs are on account of
lower Novacor LVAS INTrEPID trial costs in 2002 and the decision that was made
mid-year to merge the three HeartSaver development programs into one optimized
HeartSaverVAD development program. The INTrEPID trial commenced in 2000 to
support the use of the Novacor LVAS as an alternative to medical therapy. The
merged HeartSaver development program resulted in a

                                       37
<PAGE>

reduction of research and development-related employees and costs. In addition,
government assistance accounted for approximately $1.7 million of the decrease
as reductions to research and development expenses on account of government
programs increased in 2002 to $4.5 million from $2.8 million.

In 2001, research and development expenses increased by $17.4 million or 94%
from 2000. A significant portion of the increase is on account of only six
months of activity relating to the Oakland operation in the 2000 fiscal year
from the date of the Novacor acquisition. The increase is also the result of
expenses relating to the INTrEPID trial for Novacor LVAS, research activities
undertaken to further the development of HeartSaver and commencement of a formal
pre-clinical trial of HeartSaver.

5.D. Trend Information

The Corporation expects to incur further losses from operations at least through
2006 as it continues with its HeartSaverVAD research and development program. In
addition, increased marketing and manufacturing expenses are expected as
WorldHeart expands selling and marketing activities related to its Novacor LVAS.
These increases will be potentially offset by an increased contribution from
increased Novacor LVAS sales and lower per unit manufacturing costs.

WorldHeart's business and future depends on the commercial success of
HeartSaverVAD. This success is expected to be assisted by the successful
performance of Novacor LVAS. Both devices provide pulsatile blood flow.
Pulsatile VADs, using pumps that are either externally placed, or abdominally
implanted, have been demonstrated to be effective in supporting the blood
circulation of patients with failing hearts. Although Novacor LVAS has been
successfully implanted in more than 1,400 patients, there can be no assurance
that HeartSaverVAD will also prove safe and effective until successful clinical
trials have been completed.

At December 31, 2002, the Corporation had a working capital deficiency of $8.1
million and available cash of $248,000.

WorldHeart completed equity and debt transactions totaling $13 million
subsequent to the 2002 year-end. In order to repay the $10 million of
collateralized loans that mature on July 31, 2003, and continue to fund losses
from operations and other obligations, WorldHeart will have to complete one or
more financing transactions.

At March 31, 2003, the Corporation had a working capital deficiency of $14.2
million and available cash of $198,964.

5.E.  Off-Balance Sheet Arrangements

Not applicable.

                                       38
<PAGE>

5.F.  Tabular Disclosure of Contractual Obligations

As at December 31, 2002 the Corporation's obligations and commitments to make
payments are as follows.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
                                                                    Payments Due by Period
                                                                    ----------------------
Contractual Obligations                       Total    Less than 1         1 - 3         4 - 5         After 5
                                                              year         years         years           years
--------------------------------------------------------------------------------------------------------------

<S>                                      <C>            <C>            <C>           <C>            <C>
Capital Lease Obligations               $    64,923     $   64,923     $       -    $         -    $         -
Operating Leases                          5,179,528      1,729,141     2,153,939      1,296,448              -
Guaranteed Distribution Fees
    (in US$)                              6,000,000      2,000,000     4,000,000              -              -
Short-term Loan                           2,000,000      2,000,000             -              -              -
Preferred Shares                         72,750,188              -             -     29,368,212     43,381,976
--------------------------------------------------------------------------------------------------------------
</TABLE>

The Guaranteed Distribution Fee amounts relate to the US$2 million minimum gross
profit guarantee under the distribution agreement with Edwards. US$2 million per
year is the maximum exposure; the shortfall offset against revenue in 2002 was
approximately US$426,000 (2001 - US$547,369; 2000 - US$332,074). The 2001
shortfall included an accrual for 2002 in the amount of $318,000; no amounts
have been accrued for years subsequent to 2002.

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
                                                      Amount of Commitment Expiration Per Period
                                                      ------------------------------------------
Other Commercial Commitments           Total Amounts    Less than 1          1 - 3          4 - 5        After 5
                                           Committed           year          years          years          years
----------------------------------------------------------------------------------------------------------------
<S>                                          <C>            <C>                  <C>            <C>            <C>
Standby Letters of Credit:
     Canadian dollars                        $78,312        $78,312              -              -              -
     US dollars                           US$750,000     US$750,000              -              -              -
----------------------------------------------------------------------------------------------------------------
</TABLE>

The Canadian dollar letter of credit is in support of obligations under the
capital lease which will be repaid in 2003. The U.S. dollar letter of credit is
in support of WorldHeart's lease obligations for its premises in Oakland,
California. Cash in the amount of US$750,000 has been pledged in support of the
letter of credit.

5.G. Safe Harbor

Not applicable.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

6.A. Directors and Senior Management

The following table sets forth the name and municipality of residence, the
position held with the Corporation and the principal business activities outside
the Corporation of each director and each member of senior management:

                                       39
<PAGE>

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
Name                                   Director Since      Position with the Corporation and Principal
                                                           Occupation
-------------------------------------------------------------------------------------------------------------
<S>                                    <C>                 <C>
Dr. Donald S. Beanlands(1)(2)(3)       October 29, 1996    Director of the Corporation,
Ottawa, Ontario
                                                           Physician,

                                                           Deputy Director, Professor Emeritus, Acting
                                                           Chief Scientific Officer and Director,
                                                           University of Ottawa Heart Institute,

                                                           Member of the Canadian Immigration Medical
                                                           Advisory Committee, and

                                                           Director, University of Ottawa Heart Institute
                                                           Research Corporation.

Roderick M. Bryden                     April 1, 1996       President and Chief Executive Officer of the
Ottawa, Ontario                                            Corporation from January 2000, Chairman and
                                                           Chief Executive Officer of the Corporation
                                                           from 1996 to January 2000,

                                                           Chairman of SC Stormont Corporation, a
                                                           financial advisory company, since 1991, and

                                                           Director, Gallium Software Inc.

Robert Griffin                         Not applicable      Vice President, Manufacturing of the
Toronto, Ontario                                           Corporation since November 2000,

                                                           Vice President, Manufacturing for Visible
                                                           Genetics Inc., a bio-technology company, from
                                                           1998 to November 2000, and

                                                           Private management consultant from 1996 to
                                                           1998.

Douglas Hillier                        Not applicable      Senior Vice President, Marketing of the
San Francisco, California                                  Corporation since July 2000, and

                                                           President of Novacor Division of Baxter
                                                           Healthcare from April 1999 to June 2000.

Jal S. Jassawalla                      Not applicable      Senior Vice President, Research and
Orinda, California                                         Development of the Corporation since June 2000,

                                                           Founded Novacor Medical Corporation, and

                                                           Vice President of Research and Development at
                                                           Baxter Healthcare Corporation, Novacor
                                                           Division from 1988 to June 2000.
</TABLE>

                                       40
<PAGE>

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
Name                                   Director Since      Position with the Corporation and Principal
                                                           Occupation
-------------------------------------------------------------------------------------------------------------
<S>                                    <C>                 <C>
Daniela Kennedy                        Not applicable      Vice President, Corporate Services of the
Ottawa, Ontario                                            Corporation since 1998,

                                                           Vice President, Corporate Information Systems
                                                           for SHL Systemhouse from 1996 to 1998, and

                                                           Vice President, Management Services for SHL
                                                           Systemhouse from 1992 to 1996.

Dr. Richard L. Lesher(1)(2)(3)         October 29, 1996    Director of the Corporation and Chair of the
Chambersburg, Pennsylvania                                 Compensation Committee,

                                                           Director of e-Lynxx Corporation, a print
                                                           procurement expert,

                                                           Director of International Marketing Inc.,
                                                           producer of an automotive after market product,
                                                           and

                                                           Director of G & L Realty Corp, a REIT.

Ian W. Malone                          April 1, 1996       Vice President, Finance and Chief Financial
Ottawa, Ontario                                            Officer of the Corporation since April 1, 1996,

                                                           Secretary of the Corporation from April 1, 1996
                                                           to January 11, 1999 and from February 22,
                                                           2000, and

                                                           Senior Vice President of SC Stormont
                                                           Corporation, since 1992.

Michael Mussallem(2)(4)                July 25, 2000       Director of World Heart Corporation,
Laguna Beach, California
                                                           Chairman of the Board and Chief Executive
                                                           Officer of Edwards Lifesciences Corporation
                                                           since 2000 and President of Edwards
                                                           Lifesciences LLC,

                                                           Group Vice President of CardioVascular
                                                           Business of Baxter International Inc. ("Baxter")
                                                           from 1994 to 2000,

                                                           Group Vice President of Biopharmaceutical
                                                           Business of Baxter from 1998 to 2000, and

                                                           Chairman of Baxter's Asia Pacific Board from
                                                           1996 to 1998.

Dr. Tofy Mussivand                     May 23, 1996        Chairman and Chief Scientific Officer of the
Navan, Ontario                                             Corporation since January 2000, President and
                                                           Chief Operating Officer of the Corporation
                                                           from 1996 to January 2000,

                                                           Principal Investigator of the HeartSaverVAD
                                                           and related technologies for OHIRC, since
                                                           1991, and

                                                           Professor of Surgery and Professor of
                                                           Engineering at University of Ottawa.
</TABLE>

                                       41
<PAGE>

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
Name                                   Director Since      Position with the Corporation and Principal
                                                           Occupation
-------------------------------------------------------------------------------------------------------------
<S>                                    <C>                 <C>
C. Ian Ross(1)(2)(3)                   February 22,        Director of the Corporation and Chair of the
Collingwood, Ontario                   2000                Audit Committee,

                                                           Chairman, Working Ventures Canadian Fund Inc.
                                                           since April 1999,

                                                           Senior Director, Administration, Richard Ivey
                                                           School of Business, University of Western
                                                           Ontario since July 1999,

                                                           Managing Partner, Killdeer Management, since
                                                           October 1990,

                                                           Director of Comcare Health Services since
                                                           February 1999, and

                                                           Director of Praeda Management Systems Inc.
                                                           since February 1999.

Linda Reed Strauss                     Not applicable      Vice President, Quality and Regulatory Affairs
Oakland, California                                        since June 2000, and

                                                           Vice President, Baxter Healthcare Corporation,
                                                           Novacor Division from 1988 to June 2000.
</TABLE>
-------------------

     (1)  Member of the Audit Committee.
     (2)  Member of the Compensation Committee.
     (3)  Member of the Corporate Governance and Nominating Committee.
     (4)  Pursuant to an agreement among the Corporation, Edwards Lifesciences
          LLC, Edwards Lifesciences (U.S.) Inc., Mr. Bryden, Dr. Mussivand and
          OHIRC, the Corporation is required to have not more than eight
          directors, of whom one shall be the Chief Executive Officer of Edwards
          Lifesciences LLC.

                                       42
<PAGE>

6.B. Compensation

The following table sets forth the summary information concerning the
compensation paid or earned during the years ended December 31, 2002, 2001 and
2000 for each director and each member of senior management of the Corporation.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
                                      Annual compensation                    Long term
                                                                            compensation

                                                            Other annual   Common shares under       All other
Name              Year       Salary          Bonus          compensation   options granted (#)     compensation
---------------------------------------------------------------------------------------------------------------

<S>               <C>        <C>             <C>                  <C>                   <C>
Dr. Donald        2002              Nil             Nil           $5,000                12,000              Nil
Beanlands         2001              Nil             Nil           $7,500                 8,347              Nil
                  2000              Nil             Nil           $6,500                   Nil              Nil

Roderick M.       2002         $250,000         $40,500          $41,640             55,000(5)      $133,605(2)
Bryden (1)        2001         $250,000        $112,500          $41,640                23,000         $189,388
                  2000         $250,000         $80,000          $40,430                 1,672         $187,748

Robert Griffin    2002         $150,000         $18,600              Nil             22,500(5)          $26,000
                  2001         $150,000         $36,450              Nil                 3,500          $26,000
                  2000          $13,500             Nil              Nil                30,196              Nil

Douglas Hillier   2002       US$200,000        US$9,000              Nil             15,000(5)     US$88,789(6)
                  2001       US$300,000             Nil              Nil                   Nil        US$53,665
                  2000       US$150,000       US$20,000              Nil                17,000        US$21,750

Jal S. Jassawalla 2002       US$227,000       US$27,000              Nil             60,000(5)     US$24,000(7)
                  2001       US$227,000      US$102,419              Nil                30,600        US$24,000
                  2000        US$96,000       US$35,000              Nil                54,000              Nil

Daniela Kennedy   2002         $150,000         $18,000              Nil             22,500(5)              Nil
                  2001         $150,000         $28,125              Nil                11,750              Nil
                  2000         $114,500         $24,000              Nil                 1,672              Nil

Dr. Richard       2002              Nil             Nil         US$3,125                12,000              Nil
Lesher            2001              Nil             Nil         US$4,275                 8,000              Nil
                  2000              Nil             Nil           $6,500                   Nil              Nil

Ian W. Malone     2002         $200,000         $30,000          $24,000             30,000(5)              Nil
                  2001         $200,000         $67,500          $22,178                18,500              Nil
                  2000         $163,700         $50,000          $21,467                 1,672              Nil

Michael Mussallem 2002              Nil             Nil              Nil                   Nil              Nil
                  2001              Nil             Nil              Nil                   Nil              Nil
                  2000              Nil             Nil              Nil                   Nil              Nil

Tofy Mussivand    2002         $250,000         $40,500          $41,640             55,000(5)      $133,605(4)
(3)               2001         $250,000        $112,500          $41,640                23,500          $27,721
                  2000          $50,000         $50,000          $40,430                 1,672          $27,727

C. Ian Ross       2002              Nil             Nil           $5,000                12,000              Nil
                  2001              Nil             Nil           $7,500                8, 000              Nil
                  2000              Nil             Nil           $7,250                11,500              Nil
</TABLE>

                                       43
<PAGE>

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
                                      Annual compensation                    Long term
                                                                            compensation

                                                            Other annual   Common shares under       All other
Name              Year       Salary          Bonus          compensation   options granted (#)     compensation
---------------------------------------------------------------------------------------------------------------

<S>               <C>        <C>             <C>                  <C>                   <C>
Linda Reed        2002       US$145,000       US$10,400              Nil             22,500(5)      US$1,375(7)
Strauss           2001       US$141,750       US$27,188              Nil                15,000         US$1,400
                  2000        US$64,700       US$12,750              Nil                10,800              Nil
--------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Mr. Bryden's services have been provided to the Corporation since April 1,
     1996, by SC Stormont Corporation, a corporation controlled by Mr. Bryden.
     Mr. Bryden is also entitled to receive options under the Corporation's ESOP
     and is eligible for performance bonuses during the term of the Service
     Agreement between the Corporation and SC Stormont Corporation.

(2)  During 2002, the Corporation paid insurance premiums of $133,605 relating
     to $10 million of life insurance coverage of which certain named family
     members of Mr. Bryden are the beneficiaries.

(3)  Dr. Mussivand's services have been provided to the Corporation since June
     1, 1996, by T. Mussivand Professional Services Corporation, a corporation
     controlled by Dr. Mussivand. Dr. Mussivand is also entitled to receive
     options under the ESOP and is eligible for performance bonuses during the
     term of the Service Agreement between the Corporation and T. Mussivand
     Professional Services Corporation.

(4)  During 2001, the Corporation paid insurance premiums of 27,869 relating to
     $3 million of life insurance coverage which certain named family members of
     Dr. Mussivand are the beneficiaries.

(5)  Of these options granted during 2002 to the directors and senior
     management, certain performance-based options were cancelled subsequent to
     year-end as follows: Mr. Bryden - 25,850, Mr. Mussivand - 25,850, Mr.
     Malone - 12,000 Mr. Jassawalla - 28,200, Mr. Griffin - 8,775, Mr. Hillier -
     6,000, Ms. Kennedy - 6,300 and Ms. Strauss - 10,800.

(6)  During 2002, the Corporation paid US$88,789 relating to commissions and
     living accommodations for Mr. Hillier.

(7)  During 2002, the Corporation paid US$24,000 relating to travel to Mr.
     Jassawalla.

Options to Purchase Securities from Registrant

The Corporation adopted the Employee Stock Option Plan ("ESOP") on December 6,
1996 and amended and restated the ESOP on March 6, 1997, October 27, 1997,
October 27, 1998, February 23, 1999, May 15, 2000, April 26, 2001 and May 1,
2002. The ESOP is intended to encourage ownership in the Corporation's shares by
full-time employees, senior officers, directors and consultants of the
Corporation. The ESOP is administered by the Compensation Committee of the board
of directors of the Corporation. The maximum number of common shares which may
be reserved and set aside under options to eligible persons pursuant to the ESOP
is 3,530,000 common shares. The maximum number of common shares at any time
available for issuance under the ESOP or pursuant to other outstanding options
to any one

                                       44
<PAGE>

person may not exceed 2% of the common shares then issued and outstanding.
Pursuant to the ESOP, the option exercise price for all options is determined by
the Compensation Committee based on fair market value at the date of grant.
Unless otherwise determined by the Compensation Committee, options will vest in
equal amounts over a three-year or five-year period and must be exercised within
a four-year period from each date of vesting with the exception of non-employee
directors whose options vest quarterly, in equal amounts, within the fiscal year
in respect of which they are granted and must be exercised within a four-year
period from each date of vesting.


The following table sets forth information as to all employee options to
purchase common shares of the Corporation, which are outstanding as of December
31, 2002:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
   Year of Grant         # of Options Outstanding         Weighted          Expiry Dates
                          as at December 31, 2002         Average
                                                          Exercise
                                                          Price
-------------------------------------------------------------------------------------------------

<S>                            <C>                          <C>             <C>
        1996                      23,000                     $6.80          Dec. 2003 - Dec. 2005
        1997                      26,200                     $6.80          Oct. 2003 - Dec. 2006
        1998                     108,149                     $8.36          Feb. 2003 - Oct. 2007
        1999                     179,789                    $12.61          Mar. 2004 - Dec. 2008
        2000                     303,721                    $16.67          Feb. 2003 - Nov. 2009
        2001                     422,383                    $10.49          Mar. 2005 - Dec. 2008
        2002                     765,839                     $6.36          Mar. 2006 - Dec. 2009

       Total                   1,829,081                     $9.78
-------------------------------------------------------------------------------------------------
</TABLE>

The Corporation is dependent on its ability to attract and retain qualified
scientific, technical and key management personnel. In a competitive job
environment, management has determined that compensation arrangements should
include, where appropriate, stock options. On March 5, 2003, the Board of
Directors approved a proposal to offer employees, officers, directors and
consultants the opportunity to exchange options held by them and granted prior
to 2003, for a reduced number of options at a price that more closely reflected
the then current trading price.

The new option price (the "New Exercise Price") for exchanged options,
established at the weighted five-day average trading price immediately prior to
March 5, 2003, was Cdn$1.95 and US$1.33. Any options granted pursuant to the
exchange will vest as to one third on each of the first, second and third
anniversary of the date of grant and have a four-year date to maturity from the
date of vesting with the exception of options granted to directors of the
Corporation which vest on the first anniversary of the date of grant.

Directors, officers and employees were entitled to exchange options granted
prior to 2003 (the "Existing Options") at the market price as of the date of the
original grants (the "Original Exercise Price") for a reduced number of options
("New Options") at the New Exercise Price based on a formula as follows:

     Number of New Options =  New Exercise Price      x Existing Options
                              -----------------------
                              Original Exercise Price

In total, participants under the ESOP have chosen to exchange holding a total of
848,287 Existing Options for 165,623 New Options. The Corporation has a maximum
of 3,530,000 shares that can be issued under the ESOP. Immediately prior to the
exchange a total of

                                       45
<PAGE>

3,047,016 options had been granted. Upon the completion of the exchange the
total number of granted options will decrease by 682,664 to 2,364,352 and
1,165,648 shares will be available for issuance under the ESOP.

Approval of the shareholders was obtained on June 16, 2003 with respect to
option exchanges for persons considered to be insiders of the Corporation
including the Corporation's executive officers and members of the Board of
Directors.

The Corporation does not provide pension, retirement or any other similar
benefit for directors or officers.

6.C. Board Practices

The Articles of Incorporation of the Corporation provide for a Board of
Directors of not less than one and not more than ten directors, to be elected
annually. All directors hold office until the next annual meeting of the
shareholders, or until their successors are elected or appointed, unless earlier
vacated.

Under laws of the Province of Ontario, a majority of the directors of the
Corporation must be resident Canadians. A resident Canadian is defined,
generally, to be an individual who is: (i) a Canadian citizen ordinarily
resident in Canada; (ii) a Canadian citizen not ordinarily resident in Canada
who is a member of a prescribed class of persons; or (iii) a permanent resident
within the meaning of the Immigration Act (Canada), and ordinarily resident in
Canada. Five of the seven current directors of the Corporation are resident
Canadians.

Roderick M. Bryden and Ian W. Malone are engaged full time in the affairs of the
Corporation and both have held their indicated offices since April 1, 1996. Dr.
Tofy Mussivand is also engaged full time in the affairs of the Corporation and
has held his indicated offices since June 1, 1996.

The Compensation Committee reviews and makes recommendations to the Board of
Directors with respect to compensation for employees of the Corporation and
remuneration of directors of the Corporation and administers the ESOP. The
Compensation Committee is composed of the following individuals: Richard Lesher,
Michael Mussallem, C. Ian Ross and Dr. Donald Beanlands.

The Audit Committee is composed of non-employee directors of the Corporation and
includes Richard Lesher, C. Ian Ross, and Dr. Donald Beanlands. The Audit
Committee reviews and makes recommendations to the Board of Directors with
respect to the financial affairs of the Corporation.

6.D. Employees

At December 31, 2002, the Corporation employed approximately 150 full-time staff
and consultants. Of these employees, approximately 50 were employed in Ottawa
and the balance in Oakland. Approximately 70% of the employees are involved with
research, development and manufacturing.

In addition to these staff members, there are approximately 90 clinical and
professional staff and volunteers affiliated with the Ottawa Heart Institute
involved in the HeartSaver project.

The Corporation currently maintains compensation, benefits, equity participation
and work environment policies intended to assist in attracting and retaining
qualified personnel.

                                       46
<PAGE>

The Corporation believes that the success of its business will depend, to a
significant extent, on its ability to attract and retain such personnel. There
is a well-developed high technology industry in the regions in which the
Corporation conducts its business and in which CVD conducts its research and
development. The Corporation has access to a highly skilled labour pool.

None of the Corporation's employees is subject to a collective bargaining
agreement nor has the Corporation experienced any work stoppages. The
Corporation believes that its relations with its employees are good.

6.E. Share Ownership

The following table sets forth the summary information concerning share
ownership and options to purchase common shares of the Corporation held as of
December 31, 2002 for the directors and senior management of the Corporation.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
                                   Common shares                                   Options
                           ------------------------------ ----------------------------------------------------------
           Name              Number held    Percentage       Grants   Exercise  Expiration date
                                               held                     price
--------------------------------------------------------------------------------------------------------------------

<S>                              <C>             <C>            <C>    <C>      <C>
Dr. Donald S. Beanlands          n/a           < 1%             2,000  $12.00   March 2003 - December 2003
                                                                1,000  $16.70   June 2003 - December 2003
                                                                5,172  $12.65   December 2003 - December 2008
                                                                8,000  $10.65   March 2005 - December 2005
                                                                  347  $10.65   January 2006 - January 2008
                                                               12,000   $6.63   March 2006 - December 2006
                                                          ------------
                                                               28,519           Total
                                                          ------------

Roderick M. Bryden            2,854,731       15.9%            21,000   $6.80   February 2003 - February 2007
                                                                  811   $9.25   July 2003 - July 2007
                                                               13,125  $12.00   January 2004 - January 2008
                                                               18,964  $12.65   December 2004 - December 2008
                                                                1,672  $17.00   January 2006
                                                               22,500  $10.65   January 2006 - January 2008
                                                                  500  $10.65   December 2005
                                                               55,000   $6.63   January 2007 - January 2009
                                                          ------------
                                                              133,572            Total
                                                          ------------

Robert Griffin                   n/a           < 1%               196  $11.65   November 2005 - November 2009
                                                               29,000  $10.50   November 2005 - November 2007
                                                                4,500  $10.65   January 2006 - January 2008
                                                               22,500   $6.63   January 2007 - January 2009
                                                          ------------
                                                               56,196
                                                          ------------

Douglas Hillier                  n/a           < 1%            10,000  $17.00   December 31, 2005
                                                                7,000  $17.00   December 31, 2006
                                                               15,000  US$4.15  January 2007 - January 2009
                                                          ------------
                                                               32,000
                                                          ------------

Jal S. Jassawalla                n/a           < 1%            54,000  $17.00   June 2005 - June 2007
                                                               30,600  US$7.10  January 2006 - January 2008
                                                               60,000  US$4.15  January 2007 - January 2009
                                                          ------------
                                                              144,600
                                                          ------------
</TABLE>

                                       47
<PAGE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
                                   Common shares                                   Options
                           ------------------------------ ----------------------------------------------------------
           Name              Number held    Percentage       Grants   Exercise  Expiration date
                                               held                     price
--------------------------------------------------------------------------------------------------------------------

<S>                              <C>             <C>            <C>    <C>      <C>
Daniela Kennedy                  n/a           < 1%            15,000   $6.80   December 2003 - February 2006
                                                                1,592   $9.25   July 2003 - July 2007
                                                                6,403  $12.00   January 2004 - January 2008
                                                                9,357  $12.65   December 2004 - December 2008
                                                                1,672  $17.00   January 2006
                                                               11,250  $10.65   January 2006 - January 2008
                                                                  500  $10.65   December 2005
                                                               22,500   $6.63   January 2007 - January 2009
                                                          ------------
                                                               68,274
                                                          ------------

Dr. Richard L. Lesher            n/a           < 1%             3,000   $6.80   December 2003 - December 2005
                                                                4,000  $12.00   March 2003 - December 2003
                                                                4,000  $12.65   March 2004 - December 2004
                                                                8,000  $10.65   March 2005 - December 2005
                                                               12,000   $6.63   March 2006 - December 2006
                                                          ------------
                                                               31,000
                                                          ------------

Ian W. Malone                    n/a           < 1%            13,700   $6.80   February 2003 - February 2007
                                                                2,432   $9.25   July 2003 - July 2007
                                                                7,006  $12.00   January 2004 - January 2008
                                                               11,941  $12.65   December 2004 - December 2008
                                                                1,672  $17.00   January 2006
                                                               18,000  $10.65   January 2006 - January 2008
                                                                  500  $10.65   December 2003
                                                               30,000   $6.63   January 2007 - January 2009
                                                          ------------
                                                               85,251
                                                          ------------

Michael Mussallem                n/a           < 1%                 -    n/a                    n/a

Dr. Tofy Mussivand            1,316,000        7.3%            24,000   $6.80   February 2003 - February 2007
                                                                3,243   $9.25   July 2003 - July 2007
                                                               13,125  $12.00   January 2004 - January 2008
                                                               18,964  $12.65   December 2004 - December 2008
                                                                1,672  $17.00   January 2006
                                                               22,500  $10.65   January 2006 - January 2008
                                                                1,000  $10.65   December 2005
                                                               55,000   $6.63   January 2007 - January 2009
                                                          ------------
                                                              139,504
                                                          ------------

C. Ian Ross                      n/a           < 1%            11,500  $20.50   March 2004 - February 2009
                                                                8,000  $10.65   March 2005 - December 2005
                                                               12,000   $6.63   March 2006 - December 2006
                                                          ------------
                                                               31,500
                                                          ------------

Linda Reed Strauss               n/a           < 1%            10,800  $17.00   June 2005 - June 2007
                                                                3,612  US$7.10  January 2006 - January 2008
                                                                8,541  US$5.54  April 2006 - April 2008
                                                               22,500  US$4.15  January 2007 - January 2009
                                                          ------------
                                                               45,453
--------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       48
<PAGE>

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

7.A. Major Shareholders

The following tables set forth, as at April 30, 2003, to the best of the
Corporation's knowledge, information with respect to any person that is the
beneficial owner of more than 5% of the voting securities and the total amount
of voting securities owned by the directors and officers as a group.

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
          Title of class            Identity of person or group      Amount owned        Percentage of
                                                                                             class
----------------------------------------------------------------------------------------------------------
<S>                                 <C>                                <C>                   <C>
Common shares                       Roderick M. Bryden                 2,854,731             13.0%
Common shares                       Tofy Mussivand                     1,316,000              6.0%
Common shares                       Directors and officers as a        4,333,864             19.7%
                                    group
----------------------------------------------------------------------------------------------------------
</TABLE>

All shareholders have the same voting rights.

As at April 30, 2003, there were 21,950,877 shares outstanding. Of these,
2,023,476 (9%) shares were held by those with addresses in the United States,
which is the host country, 18,887,401 (86%) were held in Canada and 1,040,000
(5%) were held abroad.

To the best of the Corporation's knowledge, it is not directly or indirectly
owned or controlled by any other corporation or by the Canadian government or
any foreign government.

The Corporation does not know of any arrangements, the operation of which may at
a subsequent date result in a change in its control.

7.B. Related Party Transactions

The CVD is considered a related party by virtue of the fact that the Chairman
and Chief Scientific Officer of the Corporation is also the Director of CVD.

The following related party amounts are included in amounts receivable and
accounts payable and accrued liabilities:

-----------------------------------------------------------------------------
                               2002               2001                   2000
-----------------------------------------------------------------------------

Due from CVD               $424,615            $69,195               $188,276

Due to CVD               $1,311,940          $ 483,279              $ 443,089
-----------------------------------------------------------------------------

During the year ended December 31, 2002, the Corporation incurred $700,000 (2001
- $1,000,000, 2000 - $1,000,000) for research and development fees to CVD under
a Research Agreement entered into by the two organizations. In addition, the
Corporation paid incurred expenses of $150,000 (2001 - $150,000, 2000 -
$150,000) to CVD relating to the research chair under the Research Agreement.

                                       49
<PAGE>

Also during the year ended December 31, 2002, the Corporation incurred salary
expenses of $667,393 (2001 - $484,387, 2000 - $670,271) relating to employees
that have been seconded by the Corporation to CVD. These expenses are
recoverable by the Corporation from CVD.

7.C. Interests of Experts and Counsel

Not applicable.

ITEM 8. FINANCIAL INFORMATION

8.A. Consolidated Statements and Other Financial Information

Included in Item 18 are the audited consolidated financial statements for the
fiscal year ended December 31, 2002. These include the Corporation's balance
sheets as at December 31, 2002 and 2001, and the statements of loss,
shareholders' equity and cash flows for the years ended December 31, 2002, 2001
and 2000, accompanied by the Auditors' Report thereon.

The Corporation was audited using Canadian and U.S. generally accepted auditing
standards (GAAS).

The Corporation had export sales of approximately $9.8 million consisting of the
United States sales totalling $5.4 million (50% of total revenues), European
sales of $3.4 million (32% of total revenues) and rest of world sales of $1.0
million (9% of total revenues). Canadian sales totalled $.9 million or 9% of
total revenues. The Edwards' guarantee fee of $.7 million is recorded as an
offset against total revenues.

Legal Proceedings

To the best of the Corporation's knowledge, there are currently no legal
proceedings underway that would be expected to have a material impact on the
Corporation's financial position or profitability.

Dividend Distribution

The Corporation has not distributed any dividends since its inception.

8.B. Significant Changes

No significant change has occurred since the date of the annual consolidated
financial statements included in this document.

                                       50
<PAGE>

ITEM 9. THE OFFER AND LISTING

9.A.  Offer and Listing Details

9.A.4. Price History of the Stock

The following are the high and low sales prices of the common shares in the U.S.
on the Nasdaq Small Cap Market and Nasdaq National Market, as furnished by
Nasdaq, and on the Over-the-Counter Bulletin Board and, in Canada, the Toronto
Stock Exchange ("TSX"), as provided by the TSX.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
                                      NASDAQ/OTCBB(1)                      CDN/TSX
                               -----------------------------------------------------------------
                                   High              Low             High            Low
------------------------------------------------------------------------------------------------

<C>                                 <C>               <C>              <C>             <C>
By year:
1996 (Dec. 13 - 31)                  US$5.25          US$4.75           $7.00           $6.40
1997                                 US$5.97          US$2.88           $8.40           $4.25
1998                                 US$9.63          US$3.50          $14.90           $5.20
1999                                US$16.31          US$7.50          $26.00          $12.00
2000                                US$16.88          US$5.50          $23.25           $8.00
2001                                 US$9.00          US$3.20          $13.60           $5.02
2002                                 US$4.52           US$.51           $7.30            $.76

By quarter:
First quarter 2001                   US$9.00          US$3.81          $13.60           $6.00
Second quarter 2001                  US$8.32          US$4.87          $13.00           $7.45
Third quarter 2001                   US$8.60          US$4.04          $13.00           $6.35
Fourth quarter 2001                  US$4.77          US$3.20           $8.45           $5.02

First quarter 2002                   US$4.52          US$3.27           $7.30           $5.20
Second quarter 2002                  US$3.64          US$2.11           $5.40           $3.20
Third quarter 2002                   US$2.50           US$.65           $3.50           $1.09
Fourth quarter 2002                  US$1.75           US$.51           $2.08            $.76

By month:
November 2002                        US$1.75           US$.53           $2.08            $.76
December 2002                        US$1.10           US$.55           $1.55           $1.01
January 2003                         US$1.75           US$.75           $2.70           $1.21
February 2003                        US$1.55          US$1.08           $2.39           $1.62
March 2003                           US$1.39           US$.51           $1.99           $1.40
April 2003                           US$1.15           US$.90           $1.72           $1.33
------------------------------------------------------------------------------------------------
</TABLE>

(1)  On October 15, 2002, the Common Shares were listed for quotation on the
     OTCBB and were delisted from the NASDAQ National Market.

9.B.  Plan of Distribution

Not applicable.

                                       51
<PAGE>

9.C.  Markets

In the United States, the Corporation's shares trade on the Over-the-Counter
Bulletin Board (OTCBB) under the listing symbol "WHRTF". In Canada, the
Corporation's shares trade on the Toronto Stock Exchange (TSX) under the listing
symbol "WHT.

9.D.  Selling Shareholders

Not applicable.

9.E.  Dilution

Not applicable.

9.F.  Expenses of the Issue

Not applicable.

ITEM 10. ADDITIONAL INFORMATION

10.A. Share Capital

Not applicable.

10.B. Memorandum and Articles of Incorporation

The Corporation's Articles of Incorporation, as amended, are incorporated by
reference to the Form F-1 Registration Statement under the Securities Act of
1933, as filed with the Securities and Exchange Commission on October 8, 1996
and Amendment No. 2 to Form F-1 dated December 6, 1996.

On June 22, 2000, the Corporation filed a further amendment to its Articles of
Incorporation creating a first series of 1,374,570 preferred shares that were
designated cumulative redeemable convertible preferred shares, series A ("Series
A preferred shares") and defining the rights, privileges, restrictions and
conditions of the Series A preferred shares. A summary of these rights,
privileges, restrictions and conditions is as follows.

The holders of the Series A preferred shares are entitled to receive dividends
as and when declared by the board of directors of the Corporation. Dividends
accumulate at 5% per year for the first three years and 10% per year for years
four through seven, and are payable semi-annually.

The holders of the Series A preferred shares have the right to convert all or
any part of their Series A preferred shares into fully paid and non-assessable
common shares on a share-for-share basis, subject to adjustment, commencing on
the earlier of the sixth anniversary of the issuance

                                       52
<PAGE>

date or the third anniversary of the issuance date if a takeover bid is
announced for the common shares or if the Corporation agrees to participate in a
capital reorganization.

The Series A preferred shares are non-voting except that the holders of the
Series A preferred shares are entitled to vote on and elect, as a class, one
director of the Corporation.

In the event of any liquidation, dissolution or winding-up of the Corporation,
each holder of Series A preferred shares is entitled to receive before any
distributions to holders of the common shares, an amount equal to the greater of
(a) the stated capital per Series A preferred share plus any accrued but unpaid
cumulative dividends, and (b) the distribution amount which a holder of common
shares would be entitled to receive. Holders of Series A preferred shares are
not entitled to share in any surplus in the event of liquidation.

At the Corporation's option, the Corporation may redeem all or part of the
Series A preferred shares at any time prior to June 30, 2007, and on June 30,
2007, the Corporation shall redeem all of the outstanding Series A preferred
shares on payment for each share to be redeemed of US$14.55 together with unpaid
accumulated dividends.

10.C. Material Contracts

On June 30, 2000, the Corporation entered into a distribution agreement with
Edwards whereby Edwards would be the sole distributor, except in the United
States, of the Corporation's heart assist and heart replacement products for a
period of five years commencing July 1, 2000. As a result of the Distribution
Agreement, WorldHeart is committed to paying a minimum of US$2 million annually
to Edwards in guaranteed gross margin on sales. On June 30, 2000, the
Corporation also entered into a supply agreement with Edwards whereby Edwards
would be the sole supplier of certain components of the heart assist products of
the Corporation for a period of five years.

On June 30, 2000, the Corporation issued redeemable, convertible preferred
shares to Edwards for US$20.0 million that are convertible at Edward's option
after June 30, 2006 into 1,374,570 common shares (representing a per share
conversion price of US $14.55), plus additional common shares for the
accumulated but unpaid dividends to the date of conversion, without payment of
additional consideration. These preferred shares are non-voting except that
Edwards can elect one director of the Corporation. These shares are callable for
cash at the face amount plus accumulated but unpaid dividends at the
Corporation's option at any time up to June 30, 2007, at which time they are
mandatorily redeemable for the face amount of US$20.0 million plus accumulated
dividends. Dividends accumulate at 5% per year for the first three years and 10%
per year for years four through seven.

On May 24, 2000, the Corporation and Edwards entered into an exchange agreement
and a contribution agreement pursuant to which Edwards received the right for
one year following the second anniversary of the issuance to it of 4,981,128
preferred shares of the Corporation to require the Corporation to exchange those
shares for an equal number of World Heart Inc. common shares. On May 8, 2002,
the Corporation and Edwards amended the exchange agreement and the contribution
agreement to extend the period of time within which Edwards may require the
exchange of shares to two years and to extend the commencement date of the
exchange window by one year. As consideration for the extension of this period,
Edwards agreed that the dividend payable on its preferred shares would be
decreased by one percent effective July 1, 2002.

                                       53
<PAGE>

In November 2001, the Corporation was approved for a grant from TPC pursuant to
a TPC Agreement with the Minister of Industry. The amount to be received
pursuant to this grant is equal to the lesser of $9.98 million or 31.1% of
eligible costs incurred by the Corporation in connection with the prototype
development and clinical trials of HeartSaver. These costs are subject to review
and acceptance by Industry Canada. The Corporation is required to pay TPC a
royalty equal to 1% of gross revenues from the first version of HeartSaver for a
period of six years from commencement of commercial sales. If by the end of this
period cumulative royalties have not reached $19.7 million, the royalty period
will continue for a further four years or until cumulative royalties are $19.7
million, whichever comes first. As part of the agreement, TPC received warrants
for 650,000 common shares of WorldHeart, exercisable until December 2006 at an
exercise price of $6.61 per share. On May 21, 2003, the agreement was amended in
order to allow changes in the HeartSaver development program to be considered
eligible costs. TPC's royalty was also amended to .65% of consolidated gross
business revenues for a period commencing in January 2004 and ending in January
2012. In the event that cumulative royalty payments have not reached $26.4
million by this date, the royalty period would continue for a further three
years or until the cumulative royalties reached $26.4 million, whichever comes
first.

On December 19, 2001, pursuant to a private placement, the Corporation issued
3,027,000 special warrants for net proceeds of $14,886,649 after deducting
expenses of the placement of $1,761,851. Each special warrant is convertible
without additional consideration into one common share of the Corporation and
one warrant to purchase one common share. Each warrant is exercisable at a price
of $6.01 for a period of 24 months from the date the special warrants are
exercised or are deemed to have been exercised.

In connection with the private placement of the special warrants, on December
19, 2001, the Corporation entered into a underwriting agreement with Yorkton
Securities Inc. and First Associates Investments Inc. The Corporation granted
the underwriters and agents 157,490 warrants to acquire an aggregate of 157,490
underwriters' compensation options. Each such option entitles the holder to
acquire one common share of the Corporation and one underwriters' underlying
warrant at an exercise price of $6.05 per share. The underwriters' compensation
options are exercisable for a four-year period ending December 19, 2005. Each
underwriters' underlying warrant entitles the holder to acquire one common share
at an exercise price of $6.01 per share at any time for a period ending 24
months from the date of issue.

On January 17, 2002, the Corporation filed a final short-form prospectus with
Canadian securities regulatory authorities to qualify the 3,027,000 common
shares and 3,027,000 warrants issuable upon the exercise of the Special Warrants
and 157,490 underwriters' compensation options issuable upon the exercise of the
underwriters' warrants. All of the special warrants were deemed to have been
exercised by the holders on January 24, 2002.

In connection with the formation of 2007262 Ontario Inc., on December 19, 2001
the Corporation entered into an asset transfer agreement with 2007262 Ontario
Inc. pursuant to which WorldHeart sold to 2007262 Ontario Inc. certain
technology in exchange for 100,000 Series 2 preferred shares of 2007262 Ontario
Inc. and a promissory note in the amount of $2,000,000. The promissory note was
repaid to WorldHeart from the proceeds of Series 1 preferred shares of 2007262
Ontario Inc., subscribed to by NewGen. The balance of the Series 1 preferred
share proceeds were used to improve and enhance the technology transferred by
WorldHeart. On January 31, 2003, and pursuant to the terms of the agreement,
NewGen redeemed the Series 1 preferred shares for 637,000 common shares of
WorldHeart and 637,000 common share purchase warrants (Purchase Warrants) of
WorldHeart. Each Purchase Warrant is exercisable into one common share of
WorldHeart at a

                                       54
<PAGE>

price of $6.01 at any time up to January 24, 2004. The Series 1 preferred shares
were automatically redeemed upon the redemption of the Series 2 preferred
shares.

On December 18, 2002, the Corporation entered into a $2,000,000 non-revolving
term credit. The loan had a maturity of June 18, 2003 and an interest rate of 2%
per month. The loan was collateralized by a general security agreement covering
all of the Corporation's assets. The Corporation issued 200,000 warrants to the
lender each warrant being exercisable for one common share of the Corporation at
a price of $1.30 per share until their expiry on December 18, 2007. This loan
was repaid in full on January 28, 2003.

In separate closes on January 3, 2003 and January 8, 2003, the Corporation
completed private placements of equity totaling 2,343,750 units at a price of
$1.28 per unit for gross proceeds of $3,000,000 (issue costs were $384,728).
Each unit comprises one common share and one warrant to purchase a common share.
Each warrant is exercisable into one common share at an exercise price of $1.60
per share for a period of five years. In association with the transaction the
Corporation also granted 234,374 broker warrants to the placement agent. Each
broker warrant is exercisable at a price of $1.60 into one common share and one
compensation warrant at any time prior to December 31, 2004. Each compensation
warrant is exercisable into one common share of the Corporation at any time
prior to December 31, 2007 at a price of $1.60 per common share.

On January 29, 2003, the Corporation entered into a senior loan agreement
totaling $7,000,000 and a subordinated loan agreement totaling $3,000,000 (the
"Loans"). The Loans will mature on July 31, 2003 and bear interest rates of 18%
per annum payable monthly in arrears. The Loans are to be repaid in full on
earlier of the maturity date or the completion of a replacement financing. The
Corporation paid the lenders a fee of 4% and issued a total of 3,000,000
warrants with each warrant exercisable into one common share for a period of
five years at a price of $1.60 per share. As collateral for the Loans, the
Corporation entered into general security agreements over all of its assets.

On April 2, 2003, the Corporation issued 1,000,000 common shares at a price of
$1.60 per share for gross proceeds of $1,600,000 pursuant to the exercise of
previously issued warrants with an expiry date of January 2, 2008. As
compensation for the early exercise of the warrants an additional 1,760,000
warrants were issued. These warrants are exercisable into common shares of the
Corporation at $1.60 per share until April 2, 2008.

10.D. Exchange Controls

There is no law or Governmental decree or regulation in Canada that restricts
the export or import of capital, or affects the remittance of dividends,
interest or other payments to a non-resident holder of common shares, other than
withholding tax requirements (see Taxation below).

There is no limitation imposed by Canadian law or by the Articles of
Incorporation of WorldHeart on the right of non-resident or foreign owners to
hold or vote the common shares, other than as provided in the Investment Canada
Act (Canada) (the "Investment Act"). The Investment Act requires certain
"non-Canadian" individuals, Governments, corporations or other entities who wish
to acquire a "Canadian business" (as defined in the Investment Act) to file
either a notification or an application for review with the Director of
Investments, Department of Industry, Government of Canada. The Investment Act
requires that certain acquisitions of control of a Canadian business by a
"non-Canadian" must be reviewed and approved in advance by the Minister
responsible for the Investment Act on the basis that the

                                       55
<PAGE>

Minister is satisfied that the acquisition is likely to be beneficial to Canada.
The Investment Act provides detailed rules for the determination of whether
control has been acquired and, pursuant to those rules, the acquisition of
one-third or more of the voting shares of a corporation may, in some
circumstances, be considered as constituting an acquisition of control.

10.E. Taxation

General

The following is a summary of certain Canadian federal income and U.S. federal
income tax matters that may be relevant with respect to the acquisition,
ownership and disposition of common shares.

Canadian Federal Income Tax Considerations

The following summary describes the principal Canadian federal income tax
consequences of the acquisition, ownership and disposition of common shares
generally applicable to holders of common shares of the Corporation ("Common
Shares") who are residents of the United States ("U.S. Holders") for the
purposes of the Canada-United States Income Tax Convention (1980) (the
Convention), who are not residents of Canada for the purposes of the Income Tax
Act (Canada) (the "Tax Act"), who hold their Common Shares as capital property,
who deal at arm's length with the Corporation for the purposes of the Tax Act
and who do not use or hold and are not deemed to use or hold such Common Shares
in connection with a business carried on in Canada. Special rules that are not
described in this summary may apply to a U.S. Holder that is an insurer. Common
Shares will generally be considered to be capital property to a U.S. Holder
unless they are held as inventory in the course of carrying on a business or
were acquired in a transaction considered to be an adventure in the nature of
trade. This summary is based upon the current provisions of the Tax Act, the
regulations thereunder, all specific proposals to amend the Tax Act and
regulations thereunder publicly announced by or on behalf of the Minister of
Finance prior to the date hereof (the "Proposals"), the provisions of the
Convention as in effect on the date hereof and the Corporation's understanding
of the current administrative and assessing practices of the Canada Customs
and Revenue Agency ("CCRA"). Other than the Proposals, this summary does not
take into account or anticipate any changes in law or CCRA administrative and
assessing practices, whether by legislative, governmental or judicial action,
nor does it take into account or consider other federal or any provincial,
territorial or foreign tax laws or considerations, which may differ from the
Canadian federal income tax law or considerations described herein. There can be
no assurance that the Proposals will be enacted as proposed or at all.

This summary is of a general nature only and is not intended to be, nor should
it be construed to be, legal or tax advice to any particular U.S. Holder.
Accordingly, U.S. Holders should consult with their own tax advisors for advice
with respect to their own particular circumstances.

Dispositions

A U.S. Holder will not be subject to tax in Canada on any capital gain realized
on a disposition of Common Shares, provided that the shares do not constitute
"taxable Canadian property" of the U.S. Holder. The Common Shares will not
generally constitute taxable Canadian property of a U.S. Holder unless, at any
time within the 60-month period immediately preceding the disposition, the U.S.
Holder, persons with whom the U.S. Holder did not deal at arm's length or the
U.S. Holder together with all such persons owned 25% or more of the issued
shares of any series or class of the capital stock of the Corporation.

                                       56
<PAGE>

Dividends

Dividends paid or credited or deemed to be paid or credited to a U.S. Holder in
respect of the Common Shares will generally be subject to Canadian withholding
tax on the gross amount of the dividends. Under the Convention, the rate of
Canadian withholding tax which would apply on dividends paid by the Corporation
to a U.S. Holder is generally (i) 5% with respect to dividends paid if the
beneficial owner of the dividends is a company which owns at least 10% of the
voting stock of the Corporation and (ii) 15% in all other cases.

A purchase of Common Shares of a U.S. Holder by the Corporation (other than by a
purchase in the open market in the manner in which shares are normally purchased
by a member of the public) will give rise to a deemed dividend to such U.S.
Holder equal to the amount paid by the Corporation on the purchase in excess of
the paid-up capital of such shares, determined in accordance with the Tax Act.
Any such dividend deemed to have been received by a U.S. Holder will be subject
to non-resident withholding tax as described above. The amount of any such
deemed dividend will reduce, for Canadian tax purposes, the proceeds of
disposition to a U.S. Holder of Common Shares for the purposes of computing the
amount of such U.S. Holder's capital gain arising on the disposition.

United States Federal Income Tax Considerations

The following summary of United States federal income taxes describes certain
United States federal income tax consequences of the ownership of common shares
relating to such securities as in existence on the date hereof, but it does not
purport to address all of the tax considerations that may be relevant with
respect to the acquisition, ownership and disposition of common shares. This
summary addresses only the United States federal income tax considerations of
holders that will hold common shares as capital assets. This summary does not
address tax considerations applicable to holders that may be subject to special
tax rules, such as financial institutions, insurance companies, real estate
investment trusts, regulated investment companies, grantor trusts, dealers or
traders in securities or currencies, tax-exempt entities, persons that received
common shares as compensation for the performance of services, persons that will
hold common shares as part of a "hedging" or "conversion" transaction or as a
position in a "straddle" for United States federal income tax purposes, persons
that have a "functional currency" other than the United States dollar or holders
that own (or are deemed to own) 10% or more (by voting power or value) of the
stock of the Corporation. Moreover, this summary does not address the U.S.
federal estate and gift or alternative minimum tax consequences of the
acquisition, ownership and disposition of common shares. This summary is based
on the Internal Revenue Code of 1986, as amended (the "Code"), United States
Treasury Regulations and judicial and administrative interpretations thereof, in
each case as in effect and available on the date of this Annual Report. All of
the foregoing are subject to change, which change could apply retroactively and
could affect the tax consequences described below.

For purposes of this summary, a "United States Holder" is a beneficial owner of
common shares that, for United States federal income tax purposes, is: (i) a
citizen or resident of the United States, (ii) a partnership or corporation
created or organized in or under the laws of the United States or any state
thereof (including 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 if such trust validly elects to be treated as a United
States person for United States federal income tax purposes or if (x) a court
within the United States is able to exercise primary supervision over its
administration and (y) one or more United States persons have the authority to
control all of the

                                       57
<PAGE>

substantial decisions of such trust. A "Non-United States Holder" is a
beneficial owner (or, in the case of a partnership, a holder) of common shares
that is not a United States Holder.

Each prospective purchaser should consult its own tax advisor with respect to
the United States federal, state, local and foreign tax consequences of
acquiring, owning or disposing of common shares.

Distributions

Subject to the discussion below under "Passive Foreign Investment Company
Considerations", the gross amount of any distribution by the Corporation of cash
or property (other than certain distributions, if any, of common shares
distributed pro rata to all shareholders of the Corporation) with respect to
common shares, before reduction for any Canadian taxes withheld there from, will
be includible in income by a United States Holder as dividend income to the
extent such distributions are paid out of the current or accumulated earnings
and profits of the Corporation as determined under United States federal income
tax principles. Subject to the discussion below under "Passive Foreign
Investment Company Considerations," individuals who are United States Holders
may be taxed on such dividends received in taxable years ending after December
31, 2002 and on or before December 31, 2008 at the lower rates applicable to
long-term capital gains. Such dividends will not be eligible for the dividends
received deduction generally allowed to corporate United States Holders. Subject
to the discussion below under "Passive Foreign Investment Company
Considerations", to the extent, if any, that the amount of any distribution by
the Corporation exceeds the Corporation's current and accumulated earnings and
profits as determined under United States federal income tax principles, it will
be treated first as a tax-free return of the United States Holder's adjusted tax
basis in the common shares and thereafter as capital gain. The Corporation does
not maintain calculations of its earnings and profits under United States
federal income tax principles.

Any such dividend paid in Canadian dollars will be included in the gross income
of a United States Holder in an amount equal to the United States dollar value
of the Canadian dollar on the date of receipt. The amount of any distribution of
property other than cash will be the fair market value of such property on the
date of distribution.

Dividends received by a United States Holder with respect to common shares will
be treated as foreign source income, which may be relevant in calculating such
holder's foreign tax credit limitation. Subject to certain conditions and
limitations, Canadian tax withheld on dividends may be deducted from taxable
income or credited against a United States Holder's United States federal income
tax liability. The limitation on foreign taxes eligible for credit is calculated
separately with respect to specific classes of income. For this purpose,
dividends distributed by the Corporation generally will constitute "passive
income," or, in the case of certain United States Holders, "financial services
income."

Subject to the discussion below under "Backup Withholding Tax and Information
Reporting Requirements," a Non-United States Holder of common shares generally
will not be subject to United States federal income or withholding tax on
dividends received on common shares, unless such income is effectively connected
with the conduct by such Non-United States Holder of a trade or business in the
United States.

Sale or Exchange of Common Shares

Subject to the discussion below under "Passive Foreign Investment Company
Considerations", a United States Holder generally will recognize gain or loss on
the sale or exchange of common

                                       58
<PAGE>

shares equal to the difference between the amount realized on such sale or
exchange and the United States Holder's adjusted tax basis in the common shares.
Such gain or loss will be capital gain or loss. In the case of a non-corporate
United States Holder, the maximum marginal United States federal income tax rate
applicable to such gain will be lower than the maximum marginal United States
federal income tax rate applicable to ordinary income (other than certain
dividends received in taxable years beginning after December 31, 2002) if such
United States Holder's holding period for such common shares exceeds one year.
Gain or loss, if any, recognized by a United States Holder generally will be
treated as United States source income or loss for United States foreign tax
credit purposes. The deductibility of capital losses is subject to limitations.

The initial tax basis of common shares to a United States Holder will be the
U.S. dollar value of the Canadian dollar denominated purchase price determined
on the date of purchase. If the common shares are treated as traded on an
"established securities market," a cash basis United States Holder (or, if it
elects, an accrual basis United States Holder) will determine the dollar value
of the cost of such common shares by translating the amount paid at the spot
rate of exchange on the settlement date of the purchase. The conversion of U.S.
dollars to Canadian dollars and the immediate use of that currency to purchase
common shares generally will not result in taxable gain or loss for a United
States Holder.

With respect to the sale or exchange of common shares, the amount realized
generally will be the U.S. dollar value of the payment received determined on
(i) the date of receipt of payment in the case of a cash basis United States
Holder and (ii) the date of disposition in the case of an accrual basis United
States Holder. If the common shares are treated as traded on an "established
securities market," a cash basis taxpayer (or, if it elects, an accrual basis
taxpayer) will determine the U.S. dollar value of the amount realized by
translating the amount received at the spot rate of exchange on the settlement
date of the sale.

Subject to the discussion below under "Backup Withholding Tax and Information
Reporting Requirements," a Non-United States Holder of common shares generally
will not be subject to United States federal income or withholding tax on any
gain realized on the sale or exchange of such common shares unless (i) such gain
is effectively connected with the conduct by such Non-United States Holder of a
trade or business in the United States or (ii) in the case of any gain realized
by an individual Non-United States Holder, such holder is present in the United
States for 183 days or more in the taxable year of such sale or exchange and
certain other conditions are met.

Passive Foreign Investment Company Considerations

A Non-United States corporation will be classified as a "passive foreign
investment company" (a "PFIC") for U.S. federal income tax purposes in any
taxable year in which, after applying certain look-through rules, either (i) at
least 75 percent of its gross income is "passive income" or (ii) at least 50
percent of the gross value of its assets is attributable to assets that produce
"passive income" or are held for the production of passive income. Passive
income for this purpose generally includes dividends, interest, royalties, rents
and gains from commodities and securities transactions.

The Corporation believes that it was not a PFIC for the calendar year 2002.
Based on certain estimates of its gross income and gross assets and the nature
of its business, the Corporation believes that it will not be classified as a
PFIC for its current taxable year. The Corporation's status in future years will
depend on its assets and activities in those years. The Corporation has no
reason to believe that its assets or activities will change in a manner that
would cause it to be

                                       59
<PAGE>

classified as a PFIC, but there can be no assurance that the Corporation will
not be considered a PFIC for any taxable year. If the Corporation were a PFIC, a
United States Holder of common shares generally would be subject to imputed
interest charges and other disadvantageous tax treatment (including the denial
of the taxation of certain dividends at the lower rates applicable to long-term
capital gains (as discussed above under "Distributions")) with respect to any
gain from the sale or exchange of, and certain distributions with respect to,
the ordinary shares.

If the Corporation were a PFIC, a United States Holder of common shares could
make a variety of elections that may alleviate certain of the tax consequences
referred to above. Such elections may be made retroactively. However, it is
expected that the conditions necessary for making such elections will not apply
in the case of the common shares. United States Holders should consult their own
tax advisors regarding the tax consequences that would arise if the Corporation
were treated as a PFIC.

Backup Withholding Tax Information Reporting Requirements

United States backup withholding tax and information reporting requirements
generally apply to certain payments to certain non-corporate holders of stock.
Information reporting generally will apply to payments of dividends on, and to
proceeds from the sale or redemption of, common shares made within the United
States to a holder of common shares (other than an "exempt recipient," including
a corporation, a payee that is not a United States person that provides an
appropriate certification and certain other persons). A payor will be required
to withhold backup withholding tax at the applicable rate on any payments of
dividends on, or the proceeds from the sale or redemption of, common shares
within the United States to a holder (other than an "exempt recipient") if such
holder fails to furnish its correct taxpayer identification number or otherwise
fails to comply with, or establish an exemption from, such backup withholding
tax requirements. The backup withholding tax rate was 30% for the year 2002 and
is 28% for years 2003 through 2010.

In the case of such payments made within the United States to a foreign simple
trust, a foreign grantor trust or a foreign partnership (other than payments to
a foreign simple trust, a foreign grantor trust or a foreign partnership that
qualifies as a "withholding foreign trust" or a "withholding foreign
partnership" within the meaning of the applicable United States Treasury
Regulations and payments to a foreign simple trust, a foreign grantor trust or a
foreign partnership that are effectively connected with the conduct of a trade
or business in the United States), the beneficiaries of the foreign simple
trust, the persons treated as the owners of the foreign grantor trust or the
partners of the foreign partnership, as the case may be, will be required to
provide the certification discussed above in order to establish an exemption
from backup withholding tax and information reporting requirements. Moreover, a
payor or middleman may rely on a certification provided by a payee that is not a
United States person only if such payor or middleman does not have actual
knowledge or a reason to know that any information or certification stated in
such certificate is incorrect.

THE ABOVE SUMMARY IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL TAX
CONSEQUENCES RELATING TO ACQUISITION, OWNERSHIP AND DISPOSITION OF COMMON
SHARES. PROSPECTIVE PURCHASERS OF COMMON SHARES SHOULD CONSULT THEIR OWN TAX
ADVISORS CONCERNING THE TAX CONSEQUENCES OF THEIR PARTICULAR SITUATIONS.

10.F. Dividends and Paying Agents

Not applicable.

                                       60
<PAGE>

10.G. Statements by Experts

Not applicable.

10.H. Documents on Display

Previous items in this document refer to the Research Agreement with CVD, the
License Agreement with CVD, and employment agreements with Roderick M. Bryden
and Dr. Tofy Mussivand. These documents can be viewed in their entirety in the
Form F-1 Registration Statement under the Securities Act of 1933, as filed with
the Securities and Exchange Commission on October 8, 1996.

10.I. Subsidiary Information

Not applicable.

Item 11. Quantitative and Qualitative Disclosures about Market Risk

The Corporation's business and financial results are affected by fluctuations in
world financial markets, including currency exchange rates and interest rates.
The Corporation's policies attempt to manage these risks to an acceptable level
based on management's judgment of the appropriate trade-off between risk,
opportunity and cost. The Corporation does not hold or issue financial
instruments for trading purposes.

Foreign Exchange Risk

The Corporation conducts business in both Canadian and U.S. currencies. The
Corporation does not enter into foreign exchange contracts for trading purposes.
The management of foreign currency exposures is based upon estimates of the net
asset or net liability position of various currencies and, to the extent that
these estimates are over or understated during periods of currency volatility,
the Corporation could experience unanticipated currency gains or losses.

The Corporation has entered into foreign exchange forward contracts with
maturities ranging from one to three months, under its investment policy. The
Corporation does not expect gains or losses on these contracts to have a
material impact on our financial results.

As at December 31, 2002, the Corporation has no outstanding foreign exchange
financial instruments.

Interest Rate Risk

The Corporation's exposure to market risks for changes in interest rates, relate
primarily to cash equivalents and short-term investments held with four Canadian
financial institutions. The Corporation has established guidelines relative to
credit ratings, diversification, and terms to maturity designed to mitigate this
risk and provide safety and liquidity. Due to the average maturities and the
conservative nature of the investment portfolio, an adverse change in interest
rates of 100 basis points would result in a decrease in the value of the
portfolio of less than $50,000.

Investments

As at December 31, 2002, the Corporation did not hold any investment
instruments.

                                       61
<PAGE>

Capital Leases

The Corporation believes that the carrying value of the capital lease obligation
approximates fair value due to its floating, market rate of interest.

Credit Risk

In the normal course of business, the Corporation provides credit to customers
in the health care industry, performs credit evaluations of these customers and
maintains an allowance for doubtful accounts receivable based upon the expected
collectability of accounts receivable. The Corporation has a limited number of
customers. As of December 31, 2002, approximately 68% (2001 - 18%) of the
accounts receivable balance was due from Edwards.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Not applicable.

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

Not applicable.

ITEM 15. CONTROLS AND PROCEDURES

15.(a) Evaluation of controls and procedures

The Corporation's chief executive office and chief financial officer have
evaluated the effectiveness of WorldHeart's disclosure controls and procedures
(as defined in the Securities Exchange Act of 1934 Rules 13a-15(c) and
15d-15(c)) as of a date within 90 days before the filing date of this annual
report. Based on this review, the chief executive officer and chief financial
officer have concluded that, as of that date, the Corporation's disclosure
controls and procedures were functioning effectively.

15.(b) Changes in controls and procedures

There have been no significant changes in the Corporation's internal controls or
in other factors that could significantly affect these controls subsequent to
the evaluation of the internal controls, including any corrective actions with
regard to significant deficiencies and material weaknesses.

                                       62
<PAGE>

ITEM 16A.  AUDIT COMMITTEE FINANCIAL EXPERT

Not applicable.

ITEM 16B. CODE OF ETHICS

Not applicable.

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

PricewaterhouseCoopers LLP ("PwC"), Chartered Accountants, have been auditors of
the Corporation since April 1, 1996.

Audit and Audit-Related Fees

PwC billed the Corporation an aggregate of $199,800 (2001 - $203,900) for
professional services rendered in connection with the audit of the Corporation's
financial statements for the most recent fiscal year including consultations on
accounting issues relating to items included in the 2002 consolidated financial
statements, the review of the Corporation's quarterly financial information,
quarterly reports, annual information form, annual report and management
information circular during the year.

Tax and All Other Fees

In addition, PwC billed the Corporation $66,800 during the year (2001 - $75,500)
for consultations associated with capital transactions, tax advisory services
and various other general financial consultation services.

PART III

ITEM 17. FINANCIAL STATEMENTS

Not applicable.

ITEM 18. FINANCIAL STATEMENTS

18.(a) See Audited Consolidated Financial Statements attached as EX-10.1 hereof.

Financial Statement Schedule

The following financial statement schedule is filed as part of this report:

                Schedule II       Valuation and Qualifying Accounts

All other schedules are omitted as they are not required or the required
information is shown in the financial statements or notes thereto.

                                       63
<PAGE>

Item 19. Exhibits

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Item                                                       Reference
------------------------------------------------------------------------------------------------------------------

<S>                                                        <C>
1. Articles of Incorporation

Articles of Incorporation                                  See Form F-1 Registration Statement Under The
                                                           Securities Act of 1933 dated October 8, 1996.

Form of Amendments to Articles of Incorporation            See Amendment No. 2 to Form F-1 Registration
                                                           Statement Under The Securities Act of 1933 dated
                                                           December 6, 1996.

Amendment to Articles of Incorporation dated June 12,      See EX-1.1 to Form 20-F Annual Report pursuant to
2000                                                       Section 13 or 15 (d) of the Securities and Exchange
                                                           Act of 1934 dated June 7, 2002.

By-laws of the Registrant                                  See Form F-1 Registration Statement Under The
                                                           Securities Act of 1933 dated October 8, 1996.

Amendment to the By-Laws of the Registrant                 See Amendment No. 2 to Form F-1 Registration
                                                           Statement Under The Securities Act of 1933 dated
                                                           December 6, 1996.

2. Instruments and definition of rights

Form of specimen certificate for Common Shares             See Amendment No. 1 to Form F-1 Registration
                                                           Statement Under The Securities Act of 1933 dated
                                                           November 18, 1996.

Form of Underwriter's Warrant Agreement                    See Form F-1 Registration Statement Under The
                                                           Securities Act of 1933 dated October 8, 1996.

Form of Canadian Underwriter's Warrant Agreement           See Amendment No. 2 to Form F-1 Registration
                                                           Statement Under The Securities Act of 1933 dated
                                                           December 6, 1996.

Exchange Agreement, dated as of May 24, 2000, by and       See EX-4.1 to Form 20-F Annual Report pursuant to
between Edwards Lifesciences LLC, a Delaware limited       Section 13 or 15 (d) of the Securities Exchange Act
liability company, and World Heart Corporation             of 1934 dated May 17, 2001.

Shareholders' Agreement, dated as of June 30, 2000,        See EX-4.2 to Form 20-F Annual Report pursuant to
among World Heart Corporation, Edwards Lifesciences LLC,   Section 13 or 15(d) of the Securities and Exchange
a Delaware limited liability company (Edwards LLC),        Act of 1934 dated May 17, 2001.
Edwards Lifesciences (US) Inc., a Delaware corporation
and Roderick M. Bryden, Dr. Tofy Mussivand and the
Ottawa Heart Institute Research Corporation (the Other
Shareholders)
</TABLE>

                                       64
<PAGE>

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Item                                                       Reference
------------------------------------------------------------------------------------------------------------------

<S>                                                        <C>
Convertible Preferred Share Agreement, dated               See EX-4.3 to Form 20-F Annual Report pursuant to
as of May 24, 2000, between World Heart                    Section 13 or 15(d) of the Securities and Exchange
Corporation and Edwards Lifesciences LLC                   Act of 1934 dated May 17, 2001.

Amendment to Exchange Agreement dated as                   See EX-4.1 to Form 20-F Annual Report pursuant to
of May 8, 2002 by and between World Heart                  Section 13 or 15 (d) of the Securities and Exchange
Corporation and Edwards Lifesciences LLC                   Act of 1934 dated June 7, 2002.

3. Voting trust agreements

Any voting trust agreements and any                        Not applicable.
amendments to those agreements

4. Material contracts

Distribution Agreement made effective as of                See EX-10.1 to Form 20-F Annual Report pursuant to
June 30, 2000, by and between World Heart                  Section 13 or 15(d) of the Securities Exchange Act of
Corporation and Edwards Lifesciences LLC                   1934 dated May 17, 2001.

Transition Services Agreement dated as of                  See EX-10.2 to Form 20-F Annual Report pursuant to
June 30, 2000, among Edwards Lifesciences LLC,             Section 13 or 15 (d) of the Securities Exchange Act
Valentine Acquisition Corp., and World Heart               of 1934 dated May 17, 2001.
Corporation

Supply Agreement dated as of June 30, 2000                 See EX-10.3 to Form 20-F Annual Report pursuant to
between Edwards Lifesciences LLC, Valentine                Section 13 or 15 (d) of the Securities Exchange Act of
Acquisition Corp. and Edward Novacor LLC                   1934 dated May 17, 2001.

Trust Agreement dated as of June 30, 2000  among           See EX-10.4 to Form 20-F Annual Report pursuant to
Edwards Lifesciences LLC, Edwards Lifesciences (U.S.)      Section 13 or 15 (d) of the Securities Exchange Act
Inc., World Heart Corporation and CIBC Mellon Trust        of 1934 dated May 17, 2001.
Company

Certificate of Designation of Series A Cumulative          See EX-10.5 to Form 20-F Annual Report pursuant to
Participating Preferred Stock of Valentine Acquisition     Section 13 or 15 (d) of the Securities Exchange Act
Corp.                                                      of 1934 dated May 17, 2001.

Transfer, Assignment and Assumption Agreement dated as     See EX-10.6 to Form 20-F Annual Report pursuant to
of June 30, 2000 by and among Edwards Lifesciences         Section 13 or 15 (d) of the Securities Exchange Act
LLC, Edwards Lifesciences Corporation and Edward           of 1934 dated May 17, 2001.
Novacor LLC

Special Warrant Indenture Providing for the                See Form 6-K Report of Foreign Private Issuer
Creation and Issue of Special Warrants dated as            pursuant to Rule 13a-16 or 15d-16 of the
</TABLE>

                                       65
<PAGE>

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Item                                                       Reference
------------------------------------------------------------------------------------------------------------------

<S>                                                        <C>
of December 19, 2001 between World Heart                   Securities Exchange Act of 1934 filed on January 23,
Corporation and CIBC Mellon Trust Company                  2002.

Warrant Indenture Providing for the Creation and Issue     See Form 6-K Report of Foreign Private Issuer
Warrants dated as of December 19, 2001 between             pursuant to Rule 13a-16 or 15d-16 of the Securities
World Heart Corporation and CIBC Mellon Trust Company      Exchange Act of 1934 filed on January 23, 2002.

"TPC" Agreement No. 720-483474 made between the            See Form 6-K Report of Foreign Private Issuer
Minister of Industry for Canada and World Heart            pursuant to Rule 13a-16 or 15d-16 of the Securities
Corporation dated November 2, 2001                         Exchange Act of 1934 filed on January 23, 2002.

Asset Transfer Agreement dated December 19, 2001           See Form 6-K Report of Foreign Private Issuer
between 2007262 Ontario Inc. and World Heart               pursuant to Rule 13a-16 or 15d-16 of the Securities
Corporation                                                Exchange Act of 1934 filed on January 23, 2002.

Underwriting Agreement Relating to the Offering of         See Form 6-K Report of Foreign Private Issuer
Special Warrants of World Heart Corporation dated          pursuant to Rule 13a-16 or 15d-16 of the Securities
December 19, 2001 between World Heart Corporation,         Exchange Act of 1934 filed on January 23, 2002.
Yorkton Securities Inc. and First Associates
Investments Inc.

Shareholders Agreement dated as of December 19, 2001       See Form 6-K Report of Foreign Private Issuer
between New Generation Biotech (Equity) Fund Inc., and     pursuant to Rule 13a-16 or 15d-16 of the Securities
World Heart Corporation and 2007262 Ontario Inc.           Exchange Act of 1934 filed on January 23, 2002.

Registration Rights Agreement between New Generation       See Form 6-K Report of Foreign Private Issuer
Biotech (Equity) Fund Inc. and World Heart Corporation     pursuant to Rule 13a-16 or 15d-16 of the Securities
dated as of December 19, 2001                              Exchange Act of 1934 filed on January 23, 2002.

Subscription Agreement by and among New Generation         See Form 6-K Report of Foreign Private Issuer
Biotech (Equity) Fund Inc., 2007262 Ontario Inc. and       pursuant to Rule 13a-16 or 15d-16 of the Securities
World Heart Corporation dated as of December 19, 2001      Exchange Act of 1934 filed on January 23, 2002.

Senior Loan Agreement between Argosy Bridge Fund           See EX-10.3 hereof.
L.P.I., Sherfam Inc., World Heart Corporation and
World Heart Inc. dated as of January 28, 2003

Junior Loan Agreement between Edwards Lifesciences LLC,    See EX-10.4 hereof.
Sherfam Inc., World Heart Corporation and World Heart
Inc. dated as of January 28, 2003

Senior Loan Guarantee by World Heart Inc. to Argosy        See EX-10.5 hereof.
Bridge Fund L.P.I. and Sherfam Inc. dated as of January
28, 2003

Subordinated Loan Guarantee by World Heart Inc. to         See EX-10.6 hereof.
Edwards Lifesciences LLC and Sherfam Inc. dated as of
January 28, 2003

Agency Agreement among World Heart Corporation and         See EX-10.7 hereof.
Northern Securities Inc. dated as of December 30, 2002
regarding the $3,000,000 private placement of shares

Certification of the Chief Executive Officer               See EX-10.8 hereof.

Certification of the Chief Financial Officer               See EX-10.9 hereof.
</TABLE>

                                       66
<PAGE>

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Item                                                       Reference
------------------------------------------------------------------------------------------------------------------

<S>                                                        <C>
5. Material patents

Material foreign patents                                   Not requested.

6. Earnings per share calculation

EPS                                                        Calculation of earnings per share disclosed in the
                                                           attached audited financial statements.  See audited
                                                           financial statements attached.

7. Financial ratios

Calculation of financial ratios                            Not applicable.

8. Subsidiary information

Details relating to subsidiaries                           World Heart Inc.
                                                           Incorporated in Delaware, United States
                                                           Operating as World Heart Inc.

9. Statement relating to 8.A.4                             Not applicable.

10. Audited Consolidated Financial                         See EX-10.1 hereof.
    Statements of World Heart Corporation

11. Management's Discussion and Analysis                   See EX-10.2 hereof.
    of Financial Condition and Results of
    Operations

</TABLE>

                                   SIGNATURES

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

WORLD HEART CORPORATION

Dated: June 30, 2003                            /s/ Ian Malone
                                                --------------------------------
                                                Ian W. Malone
                                                Vice President Finance and
                                                Chief Financial Officer

                                       67
<PAGE>

                                 CERTIFICATIONS

I, Roderick M. Bryden, President and Chief Executive Officer, certify that:

     1.   I have reviewed this annual report on Form 20-F of World Heart
          Corporation;

     2.   Based on 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 statement made, in light of the circumstances
          under which such statements were made, not misleading with respect to
          the period covered by this annual report;

     3.   Based on 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.   The registrant's other certifying officers and I are responsible for
          establishing and maintaining disclosure controls and procedures (as
          defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
          and have:

          a.   designed such disclosure controls and procedures to ensure that
               material information relating to the registrant, 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 registrant's disclosure
               controls and procedures as of a date within 90 days prior to the
               filing of this annual report (the "Evaluation Date"); and

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

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent evaluation, to the registrant's auditors and the
          audit committee of registrant's board of directors (or persons
          performing the equivalent function):

          a.   all significant deficiencies in the design or operation of
               internal controls which could adversely affect the registrant'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 registrant's
               internal controls; and

     6.   The registrant's other certifying officers and 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 any
          significant deficiencies and material weaknesses.

Date:  June 30, 2003                            /s/ Roderick M. Bryden
                                                --------------------------------
                                                Name:   Roderick M. Bryden
                                                Title:  President and Chief
                                                        Executive Officer

                                       68
<PAGE>

                                 CERTIFICATIONS

I, Ian W. Malone, Vice-president, Finance and Chief Financial Officer, certify
that:

     1.   I have reviewed this annual report on Form 20-F of World Heart
          Corporation;

     2.   Based on 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 statement made, in light of the circumstances
          under which such statements were made, not misleading with respect to
          the period covered by this annual report;

     3.   Based on 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.   The registrant's other certifying officers and I are responsible for
          establishing and maintaining disclosure controls and procedures (as
          defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
          and have:

          a.   designed such disclosure controls and procedures to ensure that
               material information relating to the registrant, 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 registrant's disclosure
               controls and procedures as of a date within 90 days prior to the
               filing of this annual report (the "Evaluation Date"); and

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

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent evaluation, to the registrant's auditors and the
          audit committee of registrant's board of directors (or persons
          performing the equivalent function):

          a.   all significant deficiencies in the design or operation of
               internal controls which could adversely affect the registrant'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 registrant's
               internal controls; and

     6.   The registrant's other certifying officers and 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 any
          significant deficiencies and material weaknesses.

Dated: June 30, 2003                            /s/ Ian Malone
                                                --------------------------------
                                                Ian W. Malone
                                                Vice President Finance and
                                                Chief Financial Officer

                                       69
<PAGE>

                                 EXHIBIT INDEX

Exhibit

EX-10.1   Audited Consolidated Financial Statements of World Heart Corporation

EX-10.2   Management's Discussion and Analysis of Financial Condition and
          Results of Operations

EX-10.3   Senior Loan Agreement between Argosy Bridge Fund L.P.I., Sherfam Inc.,
          World Heart Corporation and World Heart Inc. dated as of January 28,
          2003.

EX-10.4   Junior Loan Agreement between Edwards Lifesciences LLC, Sherfam Inc.,
          World Heart Corporation and World Heart Inc. dated as of January 28,
          2003

EX-10.5   Senior Loan Guarantee by World Heart Inc. to Argosy Bridge Fund L.P.I.
          and Sherfam Inc. dated as of January 28, 2003

EX-10.6   Subordinated Loan Guarantee by World Heart Inc. to Edwards
          Lifesciences LLC and Sherfam Inc. dated as of January 28, 2003

EX-10.7   Agency Agreement among World Heart Corporation and Northern Securities
          Inc. dated as of December 30, 2002 regarding the $3,000,000 private
          placement of shares

EX-10.8   Certification of the Chief Executive Officer

EX-10.9   Certification of the Chief Financial Officer

                                       70