**UNITED STATESSECURITIES AND EXCHANGECOMMISSION**

**Washington, D.C. 20549**

 

**FORM 10-QSB**

 

**(Mark One)**

 

**ý****        ****QUARTERLYREPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934**

 

**For quarterly period ended   ****March 31, 2006**

 

**o****        ****TRANSITIONREPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT**

 

**For the transition periodfrom       to       **

 

**Commission filenumber:  000-28882**

 

**WORLD HEART CORPORATION**

(Exact name of Company as specified in itscharter)

 
| **Canada**                                                      | ** ** | **52-2247240**                     |
|-----------------------------------------------------------------|------------|------------------------------------|
| (State  or other jurisdiction of incorporation or organization) |       | (IRS  Employer Identification No.) |

 

**7799 PardeeLane, Oakland, California, USA, 94621**

(Addressof principal executive offices)

 

**(510)563-5000**

(Issuer’stelephone number)

 

**N/A**

(Former name, former address and former fiscal year, if changed sincelast report)

 

Check whether the issuer(1) filed all reports required to be filed by Section 13 or15(d) of the Exchange Act during the past 12 months (or for such shorterperiod that the registrant was required to file such reports), and (2) hasbeen subject to such filing requirements for the past 90 days.                   Yes ý             No o

 

Indicate by check mark whether the Registrant isa shell company (as defined in Rule 12b-2 of the Securities Exchange Actof 1934).

Yes o             No ý

 

State the number of shares outstanding of eachof the issuer’s classes of common equity, as of the latest practicable date:

 

The number of common shares outstanding as ofMay 5, 2006 was 55,479,549.

 

Transitional Small Business Disclosure Format(Check one):                   Yes o             No ý

 

 

----

 

**TABLE OF CONTENTS**

 
| ** **   | ** ** | **Item** | ** ** | ** **                                                      |   |
|--------------|------------|----------|------------|-----------------------------------------------------------------|--------|
|         |       |     |       |                                                            |   |
| Part I  |       | 1        |       | Financial Statements                                            |   |
|         |       |     |       |                                                            |   |
|         |       | 2        |       | Management’s Discussion and  Analysis or Plan of Operation |   |
|         |       |     |       |                                                            |   |
|         |       | 3        |       | Controls and Procedures                                         |   |
|         |       |     |       |                                                            |   |
| Part II |       | 1        |       | Legal Proceedings                                               |   |
|         |       |     |       |                                                            |   |
|         |       | 2        |       | Unregistered Sales  of Equity Securities and Use of Proceeds    |   |
|         |       |     |       |                                                            |   |
|         |       | 3        |       | Defaults Upon  Senior Securities                                |   |
|         |       |     |       |                                                            |   |
|         |       | 4        |       | Submission of  Matters to a Vote of Security Holders            |   |
|         |       |     |       |                                                            |   |
|         |       | 5        |       | Other Information                                               |   |
|         |       |     |       |                                                            |   |
|         |       | 6        |       | Exhibits                                                        |   |
|         |       |     |       |                                                            |   |
|         |       |     |       | Signatures                                                      |   |

 

2

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**PART I—FINANCIAL INFORMATION**

 

**ITEM1.  FINANCIAL STATEMENTS.**

 

**WORLD HEARTCORPORATION**

## **Consolidated Balance Sheets**

(United States Dollars)

 
| ** **                                                                                         | ** ** | **March 31, 2006** | ** **     | **December 31, 2005** | ** ** |
|----------------------------------------------------------------------------------------------------|------------|--------------------|----------------|-----------------------|------------|
| ** **                                                                                         | ** ** | **(Unaudited)**    | ** **     | ** **            | ** ** |
| **ASSETS**                                                                                         | ** ** | ** **         | ** **     | ** **            | ** ** |
| **Current  assets**                                                                                | ** ** | ** **         | ** **     | ** **            | ** ** |
| Cash and cash equivalents                                                                          |       | $                  | 7,227,517      |                  | $          | 10,661,682 |   |
| Trade and other receivables                                                                        |       | 2,661,610          |           | 3,896,281             |       |
| Prepaid expenses                                                                                   |       | 1,223,662          |           | 778,007               |       |
| Inventory                                                                                          |       | 7,860,424          |           | 8,215,995             |       |
|                                                                                               |       | 18,973,213         |           | 23,551,965            |       |
| **Long-term  assets**                                                                              | * *   | * *           | * *       | * *              | * *   |
| Cash pledged as collateral for lease                                                               |       | 750,000            |           | 750,000               |       |
| Capital assets                                                                                     |       | 1,714,129          |           | 1,837,540             |       |
| Intangible assets                                                                                  |       | 634,332            |           | 682,188               |       |
|                                                                                               |       | 3,098,461          |           | 3,269,728             |       |
| **Total  assets**                                                                                  | ** ** | **$**              | **22,071,674** | ** **            | **$**      | **26,821,693** | ** ** |
| * *                                                                                           | * *   | * *           | * *       | * *              | * *   |
| **LIABILITIES  AND SHAREHOLDERS’ EQUITY**                                                     | ** ** | ** **         | ** **     | ** **            | ** ** |
| **Current  liabilities**                                                                           | ** ** | ** **         | ** **     | ** **            | ** ** |
| Accounts payable and accrued liabilities                                                           |       | $                  | 3,316,860      |                  | $          | 3,754,620 |   |
| Indirect taxes payable                                                                             |       | 344,027            |           | 343,082               |       |
| Accrued compensation                                                                               |       | 751,156            |           | 806,367               |       |
| Deferred revenue                                                                                   |       | 357,149            |           | 1,205,107             |       |
| **Total  liabilities**                                                                             | ** ** | **$**              | **4,769,192**  | ** **            | **$**      | **6,109,176** | ** ** |
| ** **                                                                                         | ** ** | ** **         | ** **     | ** **            | ** ** |
| **Shareholders’  equity**                                                                     |       |               |           |                  |       |
| Share capital:                                                                                     |       |               |           |                  |       |
| Issued and outstanding - 55,479,549 common  shares  (December 31, 2005 - 55,479,549 common shares) |       | 276,908,002        |           | 276,908,002           |       |
| Additional paid-in-capital                                                                         |       | 2,170,321          |           | 2,138,765             |       |
| Cumulative other comprehensive income                                                              |       | (6,285,577         | )              | (6,285,577            | )          |
| Accumulated deficit                                                                                |       | (255,490,264       | )              | (252,048,673          | )          |
| Total shareholders’ equity                                                                    |       | 17,302,482         |           | 20,712,517            |       |
|                                                                                               |       |               |           |                  |       |
| **Total liabilities and shareholders’ equity**                                                | ** ** | **$**              | **22,071,674** | ** **            | **$**      | **26,821,693** | ** ** |

 

(The accompanying notes are an integral part of these consolidated financialstatements.)

 

3

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**WORLDHEART CORPORATION**

**Consolidated Statements of Operations**

(United States Dollars)

(unaudited)

 
| ** **                                                | ** ** | **Three Months Ended March 31,** | ** ** |
|-----------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                                | ** ** | **2006**                         | ** ** | **2005** | ** ** |
|                                                      |       |                             |       |   |   |
| **Revenue**                                               |       | $                                | 3,284,816  |   | $ | 3,416,988 |   |
| **Cost of  goods sold**                                   |       | (1,411,741                       | )          | (2,111,702 | ) |
|                                                      |       |                             |       |   |   |
| **Gross  margin**                                         |       | 1,873,075                        |       | 1,305,286 |   |
|                                                      |       |                             |       |   |   |
| **Operating  expenses**                                   |       |                             |       |   |   |
| Selling, general and administrative                       |       | 2,455,842                        |       | 3,445,829 |   |
| Research and development                                  |       | 2,898,898                        |       | 1,187,558 |   |
| Restructuring costs                                       |       | —                           |       | 129,498 |   |
| Amortization of intangibles                               |       | 47,856                           |       | 127,514 |   |
|                                                      |       |                             |       |   |   |
| **Total operating expenses**                              |       | 5,402,596                        |       | 4,890,399 |   |
|                                                      |       |                             |       |   |   |
| **Operating  loss**                                       |       | (3,529,521                       | )          | (3,585,113 | ) |
|                                                      |       |                             |       |   |   |
| **Other  income (expenses)**                              |       |                             |       |   |   |
| Foreign exchange gain (loss)                              |       | (6,698                           | )          | (24,372 | ) |
| Investment and other income                               |       | 93,272                           |       | 20,026 |   |
| Loss on disposal of capital assets                        |       | (271                             | )          | — |   |
| Interest expense and financing costs                      |       | 1,627                            |       | (352,937 | ) |
|                                                      |       |                             |       |   |   |
| **Net loss  for the quarter**                             |       | $                                | (3,441,591 | ) | $ | (3,942,396 | ) |
|                                                      |       |                             |       |   |   |
| **Weighted  average number of common shares outstanding** |       | 55,479,549                       |       | 16,556,950 |   |
|                                                      |       |                             |       |   |   |
| **Basic  and diluted loss per common share**              |       | $                                | (0.06      | ) | $ | (0.24 | ) |

 

(The accompanying notes are an integral part of theseconsolidated financial statements.)

 

4

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**WORLDHEART CORPORATION**

**Consolidated Statements of Cash Flow**

(United States Dollars)

(unaudited)

 
| ** **                                                                                   | ** ** | **Three Months Ended March 31,** | ** **    |
|----------------------------------------------------------------------------------------------|------------|----------------------------------|---------------|
| **CASH FLOWS FROM (USED IN)**                                                                | ** ** | **2006**                         | ** **    | **2005** | ** ** |
| **Operating  activities**                                                                    |       |                             |          |   |   |
| Net loss for  the period                                                                     |       | $                                | (3,441,591    | ) | $ | (3,942,396 | ) |
| Items not  involving cash –                                                             |       |                             |          |   |   |
| Amortization and depreciation                                                                |       | 199,705                          |          | 294,522 |   |
| Loss on disposal of capital assets                                                           |       | 271                              |          | — |   |
| Non-cash expense of stock options                                                            |       | 31,556                           |          | — |   |
| Non-cash interest on debt                                                                    |       | —                           |          | 347,322 |   |
| Unrealized foreign exchange loss (gain)                                                      |       | 945                              |          | 97,547 |   |
| Change in  operating components of working capital                                           |       | (196,342                         | )             | (971,549 | ) |
| **Cash  used in operating activities**                                                       | ** ** | **(3,405,456**                   | **)**         | **(4,174,554** | **)** |
|                                                                                         |       |                             |          |   |   |
| **Investing  activities**                                                                    |       |                             |          |   |   |
| Redemption  (purchase) of short-term investments                                             |       | —                           |          | 4,999,034 |   |
| Purchase of  capital assets                                                                  |       | (28,709                          | )             | (92,912 | ) |
| **Cash  provided by (used in) investing activities**                                         | ** ** | **(28,709**                      | **)**         | **4,906,122** | ** ** |
|                                                                                         |       |                             |          |   |   |
| **Effect  of exchange rates on cash and cash equivalents**                                   |       | —                           |          | (13,474 | ) |
| ** **                                                                                   |       |                             |          |   |   |
| **Change  in cash and cash equivalents for the period**                                      | ** ** | **(3,434,165**                   | **)**         | **718,094** | ** ** |
|                                                                                         |       |                             |          |   |   |
| **Cash and  cash equivalents, beginning of the period**                                      | ** ** | **10,661,682**                   | ** **    | **3,818,767** | ** ** |
|                                                                                         |       |                             |          |   |   |
| **Cash and  cash equivalents, end of the period**                                            | ** ** | **$**                            | **7,227,517** | ** ** | **$** | **4,536,861** | ** ** |
| ** **                                                                                   | ** ** | ** **                       | ** **    | ** ** | ** ** |
| ** Supplementary  Cash Flow Information**                                               |       |                             |          |   |   |
|                                                                                         |       |                             |          |   |   |
|  Convertible  debentures settled with the issuance of common shares                     |       | —                           |          | $ | 1,679,461 |   |
|                                                                                         |       |                             |          |   |   |
|  Accrued  interest on convertible debentures settled with the issuance of common shares |       | —                           |          | 19,977 |   |

 

(The accompanying notes are anintegral part of these consolidated financial statements.)

 

5

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**WORLD HEART CORPORATION**

#### **Notes toUnaudited Consolidated Financial Statements**

 

**1.****              GoingConcern Assumption**

 

These interim unaudited financial statements havebeen prepared on the basis of accounting principles applicable to a goingconcern, which assume that WorldHeart Corporation (the Corporation orWorldHeart) will continue in operation for the foreseeable future and will beable to realize its assets and discharge its liabilities in the normal courseof operations.

 

The use of these principles may not be appropriatebecause, at March 31, 2006, there was substantial doubt that theCorporation would be able to continue as a going concern. The Corporation’sability to continue as a going concern is primarily dependent upon its abilityto obtain additional financing, reduce expenses or enter into corporatecollaborations.

 

Asshown in the interim unaudited consolidated financial statements, theCorporation incurred a net loss of $3.4 million and used cash in its operationsof $3.4 million during the quarter ended March 31, 2006. WorldHeart had cashand cash equivalents of $7.2 million at March 31, 2006, which it believes issufficient to fund operations into the****thirdquarter of 2006. The current financial condition, among other factors,indicates that there is significant doubt about the Corporation’s ability tocontinue as a going concern. The interim unaudited consolidated financialstatements do not include any adjustments relating to the recoverability ofassets that might be necessary should the Corporation be unable to continue asa going concern. Such adjustments could be material.

 

TheCorporation’s continuation as a going concern is dependent upon its ability toobtain additional cash to allow for the satisfaction of its obligations on atimely basis. WorldHeart is actively exploring various financing alternatives,including equity financing transactions and corporate collaborations. Equityfinancings could include, but are not limited to, private investment in publicequity transactions, as well as public offerings. Corporate collaborationscould include licensing of one or more products for upfront and milestone payments,or co-development and co-funding of WorldHeart’s products. Management put inplace cost reduction programs beginning in the last half of 2004 and willcontinue to control and reduce expenses until sufficient funding is in place.WorldHeart has engaged an investment banker to assist the Corporation in theevaluation and completion of financing and implementation of strategicalternatives. While the Corporation is exploring all opportunities to improveits financial condition within the next several months, there is no assurancethat these programs will be successful. This would result in a significantdelay in the completion, reduction in scope, or termination of the Corporation’sdevelopment programs and raise further doubt about WorldHeart’s ability to dobusiness.

 

**2.****              SignificantAccounting Policies**

 

*Basis of presentation*

* *

The accompanying interim unaudited consolidatedfinancial statements have been prepared by management in accordance withaccounting principles generally accepted in the United States (U.S. GAAP), andinclude all assets, liabilities, revenues and expenses of the Corporation andits wholly owned subsidiaries: World Heart Inc. and World Heart B.V. Allmaterial inter-company transactions and balances have been eliminated. These interimunaudited consolidated financial statements follow the same accounting policiesand methods of application as the Corporation’s audited consolidated financialstatements for the year ended December 31, 2005, except the accounting forstock-based compensation as noted in Note 3. These interim unauditedconsolidated financial statements do not conform in all respects to therequirements of U.S. GAAP for annual financial statements. These condensednotes to the interim unaudited consolidated financial statements should be readin conjunction with the audited consolidated financial statements and notes forthe year ended December 31, 2005. In the opinion of management, theseinterim unaudited consolidated financial statements reflect all normal andrecurring adjustments considered necessary to state fairly the results for theperiods presented.

 

6

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The accounting principles used as a basis for theseconsolidated financial statements also conform in all material respects withCanadian generally accepted accounting principles (Canadian GAAP) except asdescribed in Note 5. The consolidated financial statements are expressedin U.S. dollars.

 

*Use of estimates*

 

The preparation of these consolidated financialstatements in conformity with U.S. GAAP requires management to make estimatesand assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent assets and liabilities at the dates of the financialstatements and the reported amounts of revenues and expenses during thereporting periods. Actual results could differ from these estimates.

 

**3.**Stock-based Compensation

** **

The Corporation has an employee stock optionplan (ESOP). The maximum number of shares reserved and set aside under optionsto eligible persons pursuant to the ESOP is 9,757,904 common shares. Theexercise price for all options issued under the ESOP is based on the fairmarket value of the common share price which is the closing price quoted on theToronto Stock Exchange on the last trading day before the date of grant. Theoptions generally vest annually in equal portions over either a five-yearperiod or a three-year period and expire from seven to nine years from the dateof grant. All stock option grants are compensatory and shares issued uponexercise of options are in accordance with the Plan.

 

Prior to January 1, 2006, the Corporationaccounted for its stock option plan in accordance with the Financial AccountingStandards Board’s (FASB) Statement of Financial Accounting Standards (SFAS)No. 123, “Accounting for Stock Based Compensation,” and AccountingPrinciples Board (APB) Opinion No. 25, “Accounting for Stock Issued toEmployees.”  Under these standards nocompensation expense was recognized when options were issued to employees withexercise prices at the grant date equal to prevailing market prices.

 

Effective January 1, 2006, the Corporationadopted Statement of Financial Accounting Standards (“SFAS”) No. 123(Revised 2004), “Share –Based Payment”. SFAS 123(R)  requires the recognition of the fair value ofstock compensation as an expense in the calculation of net income. WorldHeartrecognizes the stock compensation expense over the vesting period of theindividual equity instruments.  Stockoptions issued in lieu of cash to non-employees for services performed arerecorded at the fair value of the options at the time they are issued and areexpensed as service is provided.

 

7

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WorldHeart has elected the modified prospectivetransition method for adopting SFAS 123 (R). Under this method, the provisionsof SFAS 123 (R) apply to all stock-based awards granted after the effectivedate. The unrecognized expense of awards not yet vested as of January 1, 2006,the date of SFAS 123 (R) adoption by the Corporation, are also recognized as anexpense in the calculation of net income.

 

In December 2005, the Board of Directors ofWorldHeart approved the accelerated vesting of all outstanding stock optionsheld by current employees or consultants, except for the options held by thenon-employee members of the Board of Directors. The purpose of the accelerationof vesting was to improve employee morale and to minimize the amount ofcompensation expense in future periods following the adoption of SFAS 123(R).

 

Accordingly, WorldHeart recorded $32,000 ofstock compensation expense in the unaudited consolidated statement ofoperations and accumulated deficit for the three months ended March 31,2006. This stock compensation expense had a negligible impact on theCorporation’s earnings per common share for the quarter. The unrecognizedexpense of awards not yet vested is $219,000 and the related stock-basedcompensation expense will be recognized over the following eight quartersbeginning March 31, 2006. 

 

WorldHeart uses the Black-Scholes valuationmodel for estimating the fair value of the stock compensation.

 

**Stock Option Activity for theFirst Quarter ended March 31, 2006**

 

The following table summarizesthe number of options outstanding and the weighted average exercise prices: 

 
| ** **                             | ** ** | **Employee  options** | ** ** | **Weighted  Average  exercise price** | ** ** | **Non-Employee  options** | ** ** | **Weighted  Average  exercise price** | ** ** | **Total Options** | ** ** |
|----------------------------------------|------------|-----------------------|------------|---------------------------------------|------------|---------------------------|------------|---------------------------------------|------------|-------------------|------------|
| ** **                             | ** ** | **#**                 | ** ** | **$**                                 | ** ** | **#**                     | ** ** | **$**                                 | ** ** | **#**             | ** ** |
| Outstanding  at December 31, 2005 |       | 6,182,321             |       | $                                     | 1.69       |                      | 621,482    |                                  | 2.03       |              | 6,803,803  |   |
| Granted                                |       | 3,000                 |       | 0.59                                  |       | —                    |       | —                                |       | 3,000             |       |
| Expired/forfeited                      |       | (52,777               | )          | 38.57                                 |       | (1,591                    | )          | 56.89                                 |       | (54,368           | )          |
| Outstanding  at March 31, 2006         |       | 6,132,544             |       | $                                     | 1.39       |                      | 619,891    |                                  | $          | 1.89              |       | 6,752,435 |   |
|                                        |            |                       |            |                                       |            |                           |            |                                       |            |                   |            |  |  |

 

AtMarch 31, 2006, the aggregate intrinsic value of all outstanding options was $1,110 with a weighted average remaining contractual term of approximately 3.9years, of which 6,402,768 of the outstanding options are currently exercisable,with nil aggregate intrinsic value. Since December 31, 2005, the weightedaverage grant date fair value of options granted was $0.44, with no optionsexercised and about 12,300 options that have vested, net of forfeitures, with atotal fair value of $32,000.

 

The following assumptions were used to value theoptions granted in the quarter.

 

| ** **                | ** ** | **Three Months Ended  March 31, 2006** | ** ** |
|---------------------------|------------|-------------------------------------------------------|------------|
|                      |       |                                                  |       |
| Risk free  interest rate  |       | 4.55                                                  | %          |
| Expected  life (in years) |       | 6.0                                                   |       |
| Expected  volatility      |       | 84                                                    | %          |
| Dividend  yield           |       | 0                                                     | %          |

 

The dividend yield of zero is based on the factthat WorldHeart has never paid cash dividends and has no present intention topay cash dividends. Expected volatility is based on the historical volatilityof the Corporations’ common stock over the period commensurate with theexpected life of the options. The risk free interest rate is based on averagerates for 5 and 7 year treasury notes as published by the Federal Reserve.

 

SFAS 123 (R) requires the Corporation to presentpro forma information for the comparative period prior to adoption as ifWorldHeart had accounted for all employee stock options under the fair valuemethod of the original SFAS 123. The following table illustrates the effect onnet income and earnings per share if WorldHeart had applied the fair valuerecognition provisions of SFAS 123 to stock-based employee compensation to theprior-year periods (dollars in thousands, except per share data)

 

8

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| ** **                                                        | ** ** | **Three Months  Ended** | ** ** |
|-------------------------------------------------------------------|------------|-------------------------|------------|
| ** **                                                        | ** ** | **March 31, 2005**      | ** ** |
| Net loss as  reported                                             |       | $                       | (3,942     | ) |
| Add:  Employee stock compensation included in reported net income |       | —                  |       |
| Less:  employee stock compensation under SFAS No. 123        |       | $                       | (332       | ) |
| Pro forma  net loss                                               |       | $                       | (4,274     | ) |
| Net loss per  basic share as reported                             |       | $                       | (0.24      | ) |
| Pro forma  net loss per basic share                               |       | $                       | (0.02      | ) |
| Pro forma  basic and diluted net loss per share                   |       | $                       | (0.26      | ) |

 

During the three months ended March 31, 2005,the weighted average fair values of the options granted under the stock optionplan were $1.02, using the following assumptions. 

 

| ** **                | ** ** | **Three Months Ended  March 31, 2005** | ** ** |
|---------------------------|------------|-------------------------------------------------------|------------|
| Risk free  interest rate  |       | 4.0                                                   | %          |
| Expected  life (in years) |       | 6.0                                                   |       |
| Expected  volatility      |       | 89                                                    | %          |
| Dividend  yield           |       | 0                                                     | %          |

 

9

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**4.**              Comprehensive Income

 

For the three months ended March 31, 2006 and March31, 2005, there were no significant differences between the Corporation’scomprehensive income or loss and its net income or loss. 

 

**5.**              Canadian Accounting Principles

** **

The interim unaudited consolidated financialstatements have been prepared in accordance with U.S. GAAP. These principlesdiffer, as they affect the Corporation, for the three-month period ended March31, 2006 and 2005 and for the balance sheets as at March 31, 2006 andDecember 31, 2005, in the following material respects from Canadian GAAP. 

 

**BalanceSheets - Canadian GAAP**

 
| ** **                                     | ** ** | **March 31,**   | ** ** | **December 31,** | ** ** |
|------------------------------------------------|------------|-----------------|------------|------------------|------------|
| ** **                                     | ** ** | **2006**        | ** ** | **2005**         | ** ** |
| ** **                                     | ** ** | **(unaudited)** | ** ** | ** **       | ** ** |
| **ASSETS**                                     |       |            |       |             |       |
| **Current  assets**                            |       | $               | 18,973,213 |             | $          | 23,551,965 |   |
| Cash pledged as collateral for lease           |       | 750,000         |       | 750,000          |       |
| Capital assets                                 |       | 1,714,129       |       | 1,837,540        |       |
| In-process research and development, net       |       | 16,362,025      |       | 17,317,249       |       |
|                                           |       | $               | 37,799,367 |             | $          | 43,456,754 |   |
|                                           |       |            |       |             |       |
| **LIABILITIES  AND SHAREHOLDERS’ EQUITY** |       |            |       |             |       |
| **Current  liabilities**                       |       | $               | 4,769,192  |             | $          | 6,109,176 |   |
|                                           |       | 4,769,192       |       | 6,109,176        |       |
|                                           |       |            |       |             |       |
| **Shareholders’  equity (deficiency)**    |       |            |       |             |       |
| Common shares                                  |       | 238,597,956     |       | 238,597,956      |       |
| Contributed surplus                            |       | 18,384,292      |       | 18,352,736       |       |
| Cumulative translation adjustment              |       | (6,490,184      | )          | (6,490,184       | )          |
| Accumulated deficit                            |       | (217,461,889    | )          | (213,112,930     | )          |
|                                           |       | 33,030,175      |       | 37,347,578       |       |
|                                           |       | $               | 37,799,367 |             | $          | 43,456,754 |   |

 

10

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**Statementsof loss - Canadian GAAP**

 
| ** **                                                        | ** ** | **March 31,**   | ** ** |
|-------------------------------------------------------------------|------------|-----------------|------------|
| ** **                                                        | ** ** | **2006**        | ** ** | **2005** | ** ** |
| ** **                                                        | ** ** | **(unaudited)** | ** ** | **(unaudited)** | ** ** |
| **Net loss  in accordance with U.S. GAAP**                        |       | $               | (3,441,591 | ) | $ | (3,942,396 | ) |
| Adjustments  to reconcile to Canadian GAAP:                       |       |            |       |   |   |
| Non-cash share based compensation costs (1)                       |       | —          |       | (331,720 | ) |
| Interest and accretion on convertible debentures                  |       | —          |       | (273,866 | ) |
| Amortization of purchased in-process research and development (2) |       | (907,368        | )          | — |   |
|                                                              |       |            |       |   |   |
| **Net loss  in accordance with Canadian GAAP**                    |       | $               | (4,348,959 | ) | $ | (4,547,982 | ) |
|                                                              |       |            |       |   |   |
| **Weighted  average number of common shares outstanding**         |       | 55,479,549      |       | 16,556,950 |   |
|                                                              |       |            |       |   |   |
| **Basic  and diluted loss per common share**                      |       | $               | (0.08      | ) | $ | (0.27 | ) |

 

----

Footnotes

 

(1)          Prior to January 2006, under U.S. GAAP,the Corporation accounted for its stock option plan in accordance with APB OpinionNo. 25 and provided pro froma net income and pro forma income per sharedisclosure as if the fair value based method as defined in SFAS No. 123 hadbeen applied to stock-based awards. Under Canadian GAAP, the Corporation accountedfor its stock option plan in accordance with CICA 3870 which requires entitiesto account for employee stock options using the fair value based method, wherecompensation cost is measured at fair value at the date of grant and isexpensed over the stock-based awards vesting period. With the January 1, 2006adoption of FAS 123(R), this difference has been eliminated.

 

(2)          Under U.S. GAAP,acquired in-process research and development is required to be expensed if therelated technology has not reached technological feasibility and does not havean alternative future use. Under Canadian GAAP, this amount is capitalized andamortized over its useful life. As a result of the MedQuest acquisition in July2005, in-process research and development and work force intangible assets werecapitalized and are being amortized over their useful lives. 

 

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**ITEM 2.   MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLANOF OPERATION**

** **

**INTRODUCTION**

 

World Heart Corporation and its subsidiariesare collectively referred to as WorldHeart. The following Management Discussionand Analysis of Financial Condition and Results of Operations (MD&A)discusses material changes in WorldHeart’s financial condition and results ofoperations and cash flows for the three months ended March 31, 2006 and March31, 2005. Such discussion and comments on the liquidity and capital resourcesshould be read in conjunction with the information contained in WorldHeart’saudited consolidated financial statements for the year ended December 31,2005, prepared in accordance with U.S. GAAP included in our Annual Report onForm 10 – KSB, as amended for the fiscal year endedDecember 31, 2005. Significant differences between Canadian GAAP and U.S.GAAP are presented in Note 5 to the interim unaudited consolidated financialstatements. In this discussion, all amounts are in U.S. dollars unlessotherwise stated.

 

The discussion and comments contained hereunderinclude both historical information and forward-looking information. Theforward-looking information, which generally is information stated to beanticipated, expected, or projected by management, involves known and unknownrisks, uncertainties and other factors that may cause the actual results andperformance to be materially different from any future results and performanceexpressed or implied by such forward-looking information. Potential risks anduncertainties include, without limitation: numerous uncertainties and timedelays inherent in the research and clinical development of new products foruse in the human body; WorldHeart’s need to establish reimbursement mechanismsand product acceptance from third-party payers; extensive government regulationof our products; rapid developments in technology by competitors who havesignificantly greater financial, production and marketing resources; lack ofcontinued synergies and efficiencies related to the acquisition of MedQuestProducts, Inc. (MedQuest), slower than anticipated growth in the DestinationTherapy (DT) market and the need for and our ability to raise additionalfunding.

 

**OVERVIEW**

 

WorldHeartis a global technology leader in mechanical circulatory support systemscurrently developing and commercializing implantable ventricular assist devices(VADs), which are mechanical pumps that allow for the restoration of normalblood circulation to patients suffering from advanced heart failure. WorldHeartbelieves that it has the broadest next generation product platform underdevelopment for long-term circulatory support and that both pulsatile androtary pumps are required to treat the full spectrum of clinical needs of endand late-stage heart failure patients. The Corporation believes that pulsatiledevices are best suited for end-stage patients with poor ventricularcontractility, who require full support, or functional replacement.Alternatively, rotary devices are best suited to late-stage patients, with somecontractility, who require only partial support, or an assist. The Corporationhas facilities in Oakland, California, Salt Lake City, Utah and Heesch,Netherlands. WorldHeart currently derives substantially all of its revenue fromits Novacor LVAS and related peripheral equipment which it manufactures inOakland and sells directly to medical clinics and hospitals in the UnitedStates, most of Europe and Canada and through a distributor in certain othercountries.

 

The Novacor LVAS iscommercially approved as a bridge-to-transplantation device in the UnitedStates and Canada. In Europe, the Novacor LVAS has unrestricted approval foruse as an alternative to transplantation, a bridge-to-transplantation, and tosupport patients who may have an ability to recover the use of their naturalheart. In Japan, the device is commercially approved for use in cardiacpatients at risk of imminent death from non-reversible left ventricular failurefor which there is no alternative except heart transplantation.

 

WorldHeart is conducting a long-term use pivotaltrial in the United States called RELIANT (Randomized Evaluation of the NovacorLVAS in a Non-Transplant Population). Data from the RELIANT Trial is expectedto support a Pre-market Approval Supplement that will request approval for theuse of the Novacor LVAS by non-transplant eligible, or DestinationTherapy, patients in the United States. InApril 2006, the FDA conditionally approved significant changes to the RELIANTTrial protocol, including an approximate 50% reduction in patient sample sizeand several changes in patient enrollment criteria. The Corporation believesthese changes will accelerate trial completion. At May 5, 2006, 21 centers and41 patients were enrolled in the RELIANT Trial.

 

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WorldHeart is developing a next-generationsmall implantable pulsatile VAD (the Novacor II) and, during the thirdquarter of 2005, acquired MedQuest’s technology and development programsassociated with a magnetically levitated centrifugal rotary VAD (the WorldHeartRotary VAD). Development work on the Novacor II achieved importantmilestones with a successful initial animal implant completed in July 2005and a second successful chronic animal implant completed in March 2006. Furtheranimal trials are planned for 2006. A successful first in-human clinical trialof the WorldHeart Rotary VAD was initiated in Europe in March 2006 withadditional clinical implants planned in 2006.

 

Research and development byWorldHeart’s competitors is proceeding for several next-generationnon-pulsatile continuous flow assist devices. Certain of these devices havereceived the CE Mark in Europe and are advancing through clinical trials in theUnited States and Europe. 

 

Although the DestinationTherapy patient population continues to be largely untreated by cardiac assistdevices, WorldHeart believes that the DT market will evolve more rapidly whendevices are accepted as reliable and durable. A wider adoption of VADs for DTwill likely occur with the next-generation VADs, and we believe that late-stageand end-stage heart failure will be best served by a combination of rotary andpulsatile flow VADs.

 

**Summary ofQuarterly Results**

In thousands (000’s) except for per shareamounts

 
| ** **                                  | ** ** | **Three Months Ended**           | ** ** |
|---------------------------------------------|------------|----------------------------------|------------|
| ** **                                  | ** ** | **March 31,**                    | ** ** | **December 31,** | ** ** | **September 30,** | ** ** | **June 30,** | ** ** |
| ** **                                  | ** ** | **2006**                         | ** ** | **2005** | ** ** | **2005** | ** ** | **2005** | ** ** |
|                                        |       |                             |       |   |   |   |   |   |   |
| Net revenue                                 |       | $                                | 3,285      |   | $ | 3,630 |   | $ | 2,150 |   | $ | 2,449 |   |
| Net loss for  the period                    |       | (3,442                           | )          | (21,998 | ) | (22,251 | ) | (4,643 | ) |
| Net loss  applicable to common shareholders |       | (3,442                           | )          | (21,998 | ) | (28,111 | ) | (4,643 | ) |
| Basic and diluted loss per share            |       | $                                | (0.06      | ) | $ | (0.40 | ) | $ | (0.64 | ) | $ | (0.27 | ) |
|                                        |       |                             |       |   |   |   |   |   |   |
| ** **                                  | ** ** | **Three Months Ended** | ** ** |
| ** **                                  | ** ** | **March 31,**               | ** ** | **December 31,** | ** ** | **September 30,** | ** ** | **June 30,** | ** ** |
| ** **                                  | ** ** | **2005**                         | ** ** | **2004** | ** ** | **2004** | ** ** | **2004** | ** ** |
|                                        |       |                             |       |   |   |   |   |   |   |
| Net revenue                                 |       | $                                | 3,417      |   | $ | 2,987 |   | $ | 2,250 |   | $ | 2,146 |   |
| Net loss for  the period                    |       | (3,942                           | )          | (5,609 | ) | (11,621 | ) | (5,403 | ) |
| Net loss  applicable to common shareholders |       | (3,942                           | )          | (6,294 | ) | (10,936 | ) | (5,403 | ) |
| Basic and diluted loss per share            |       | $                                | (0.24      | ) | $ | (0.41 | ) | $ | (0.71 | ) | $ | (0.35 | ) |

 

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**RESULTS OF OPERATIONS FOR THE THREE MONTH PERIODENDED MARCH 31, 2006 COMPARED WITH THE THREE MONTH PERIODS ENDED MARCH 31,2005**

** **
| ** **                           | ** ** | **Three Months Ended March 31,** | ** ** |
|--------------------------------------|------------|----------------------------------|------------|
| ** **                           | ** ** | **2006**                         | ** ** | **2005** | ** ** |
|                                 |       |                             |       |   |   |
| **Revenue**                          |       | $                                | 3,284,816  |   | $ | 3,416,988 |   |
| **Cost of  goods sold**              |       | (1,411,741                       | )          | (2,111,702 | ) |
|                                 |       |                             |       |   |   |
| **Gross  margin**                    |       | 1,873,075                        |       | 1,305,286 |   |
|                                 |       |                             |       |   |   |
| **Operating  expenses**              |       |                             |       |   |   |
| Selling, general and administrative  |       | 2,455,842                        |       | 3,445,829 |   |
| Research and development             |       | 2,898,898                        |       | 1,187,558 |   |
| Restructuring costs                  |       | —                           |       | 129,498 |   |
| Amortization of intangibles          |       | 47,856                           |       | 127,514 |   |
|                                 |       |                             |       |   |   |
| **Total operating expenses**         |       | 5,402,596                        |       | 4,890,399 |   |
|                                 |       |                             |       |   |   |
| **Operating  loss**                  |       | (3,529,521                       | )          | (3,585,113 | ) |
|                                 |       |                             |       |   |   |
| **Other  income (expenses)**         |       |                             |       |   |   |
| Foreign exchange gain (loss)         |       | (6,698                           | )          | (24,372 | ) |
| Investment and other income          |       | 93,272                           |       | 20,026 |   |
| Loss on disposal of capital assets   |       | (271                             | )          | — |   |
| Interest expense and financing costs |       | 1,627                            |       | (352,937 | ) |
|                                 |       |                             |       |   |   |
| **Net loss  for the quarter**        |       | $                                | (3,441,591 | ) | $ | (3,942,396 | ) |

 

***Revenue:*******The sale of Novacor LVAS implantkits and related peripheral equipment and services accounts for substantiallyall of WorldHeart’s revenues. We primarily sell our products directly, exceptfor a few countries where we sell through distributors.

 

The composition of revenue inthousands ($000’s) is as follows except for units:

 
| ** **             | ** ** | **Three Months Ended March 31,** | ** ** |
|------------------------|------------|----------------------------------|------------|
| ** **             | ** ** | **2006**                         | ** ** | **2005** | ** ** |
| ** **             | ** ** | **$**                            | ** ** | **Units** | ** ** | **$** | ** ** | **Units** | ** ** |
|                   |       |                             |       |   |   |   |   |   |   |
| Implant kits           |       | $                                | 2,225      |   | 32 |   | $ | 2,146 |   | 32 |   |
| Peripherals  and other |       | 1,060                            |       |   |   | 1,271 |   |   |   |
|                   |       |                             |       |   |   |   |   |   |   |
| Revenue                |       | $                                | 3,285      |   |   |   | $ | 3,417 |   |   |   |

 

Net revenue for the first quarter endedMarch 31, 2006 was $3,285,000 reflecting a decreased of $132,000, or 4%,compared with the first quarter ended March 31, 2005. Implant kit revenue inthe first quarter of 2006 increased by $79,000, or 4%, compared with thefirst quarter of 2005. During the first quarter of 2006, the average price perkit was $70,000, compared with $67,000 during the first quarter of 2005,reflecting primarily a reduction in discounted sales in the 2006 first quarter.Implant kits recognized as revenue were 32 in both the quarters endedMarch 31, 2006 and March 31, 2005.

 

Peripherals and other revenues, includingNovacor LVAS hardware and peripheral sales, services and other revenue for thequarter ended March 31, 2006  were$1,060,000, a decrease of 17% compared with peripherals and other revenue of$1,271,000 recorded in the quarter ended March 31, 2005. 

 

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At December 31, 2005, 11 implant kits wererecorded as deferred revenue. During the first quarter of 2006, revenue wasrecognized on nine previously deferred kits (primarily from two medicalcenters), and revenue from one kit was deferred resulting in three implant kitsremaining in deferred revenue at March 31, 2006. Resulting deferred revenue atMarch 31, 2006 was $357,000 compared with $1,205,000 at December 31, 2005.

 

***Cost of goodssold:***  For the three months ended March 31, 2006,the cost of goods sold as a percent of revenue was 43%, compared with 62% forthe three months ended March 31, 2005. The significantly lower cost of goodssold in this year’s first quarter was due, principally, to favorablemanufacturing variances compared with unfavorable manufacturing variancesincurred in last year’s first quarter. In addition, our other, non-implant kitproduct revenue mix in the recently completed quarter was at a lower averagecost of sales than in the comparative quarter of 2005. These factors willlikely not be as significant in future periods.

 

***Selling******, general and administrative:*** Selling, general and administrativeexpenses consist primarily of payroll and related expenses for executives,sales, marketing, accounting and administrative personnel, professional fees,communication expenses, promotional activities, costs associated with meetingmulti-jurisdictional regulatory requirements, insurance premiums, facilitycosts and other general corporate expenses. 

 

The composition of selling,general and administrativein thousands ($000’s) is as follows:

 
| ** **                  | ** ** | **Three Months Ended March 31,** | ** ** |
|-----------------------------|------------|----------------------------------|------------|
| ** **                  | ** ** | **2006**                         | ** ** | **2005** | ** ** |
|                        |       |                             |       |   |   |
| Selling                     |       | $                                | 1,023      |   | $ | 1,768 |   |
| General and  administrative |       | 1,433                            |       | 1,678 |   |
| Total                       |       | $                                | 2,456      |   | $ | 3,446 |   |

 

Selling, general andadministrative expense for the three months ended March 31, 2006 decreased$990,000, or 29%, versus the same period in 2005. Selling expenses for thethree months ended March 31, 2006 decreased by $745,000, or 42%, compared withthe same period in 2005. Selling expenses decreased due to lower promotionalcosts and sales commissions, as well as reduced personnel costs in Europe.

 

General and administrativeexpenses decreased by $245,000, or 15%, in the first quarter of 2006 comparedwith the first quarter of 2005. These reductions are primarily due to costsavings associated with the consolidation of our North American Novacoroperations. For the three months ended March 31, 2006, WorldHeart recorded$32,000 in stock-based compensation expense under the new accounting principal,SFAS 123 (R), as compared to none recorded in the quarter ended March 31, 2005.Administrative expenses are expected to decrease slightly in the next severalquarters resulting from previously implemented cost reduction programs, offsetsomewhat by costs associated with implementation of informationsystem upgrades and internal control improvements, as well as administrativesupport of our product development programs.

 

***Research anddevelopment:***Research and development expenses consist principally of salaries andrelated expenses for research personnel, prototype manufacturing, testing,clinical trial expenses, factory costs and regulatory affairs expenses incurredat our Oakland and Salt Lake City facilities.

 

Research and development expenses for the three months ended March 31,2006 increased by $1,711,000, or 144%, compared with the three months endedMarch 31, 2005. This increase is primarily due to the acquisition of MedQuestin July 2005 and related development costs of our WorldHeart Rotary VAD.Development work and related expenses on the next-generation Novacor II andWorldHeart Rotary VAD are expected to increase in preparation for continuinganimal and human clinical trials.

 

***Restructuring costs:***  On August 25, 2004, weapproved a plan to consolidate the Ottawa, Ontario operations into ourfacilities in Oakland, California where the Novacor LVAS is manufactured. Theconsolidation of the North American operations into one location has and isexpected to continue to reduce ongoing business expenses and improveoperational efficiency and effectiveness. The restructuring was completed bythe end of

 

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June 2005. During the three months endedMarch 31, 2006, no restructuring costs were recorded compared with $129,000recorded in the three months ended March 31, 2005.

 

***Amortizationof intangibles:*****Amortization of intangibles for the three months ended March 31,2006 was $48,000. These intangible assets were recorded as part of the MedQuestacquisition and represent the estimated intangible value of the MedQuestworkforce of $765,000, which is being amortized on a straight-line basis over 4years. The amortization of the Novacor asset intangibles for the three-monthperiod ended March 31, 2005 was $128,000. At June 30, 2005, the Novacorassets were fully amortized.

 

***ForeignExchange:***Foreign exchange transactions resultedin a loss of $6,698 for the three-month period ended March 31, 2006, comparedwith a loss of $24,000 for the three-month period ended March 31, 2005

** **

***Investmentand other Income:*** Investment and other income forthe quarter ended March 31, 2006 was $93,000, compared with $20,000 during thethree months ended March 31, 2005. The increase reflects higher average cashbalances and higher investment interest rates in the first quarter of 2006.

 

***Interestand financing costs:***  Interest and financing costs during the threemonths ended March 31, 2006 were negligible compared with a significant expenseof $353,000 during the three months ended March 31, 2005, consisting primarilyof non-cash interest and accretion related to convertible debentures, all ofwhich were converted in July 2005.

 

**LIQUIDITY AND CAPITAL RESOURCES**

 

Historically, WorldHeart hasfunded losses from operations through the sale of equity and issuance of debtinstruments. Combined with revenues and investment income, these funds haveprovided WorldHeart with the resources to operate our business, sell andsupport our products, fund our research and development program and clinicaltrials, apply for and obtain the necessary regulatory approvals and develop newtechnologies and products.

 

At March 31, 2006, we hadcash and cash equivalents of $7.2 million, a decrease of $3.4 million fromDecember 31, 2005. During the first quarter of 2006, cash used to fundoperating activities was $3.4 million, consisting primarily of the netloss for the period of $3.4 million and $.2 million of changes in workingcapital, offset by $.2 million of amortization and depreciation. Workingcapital changes consisted of a decrease in deferred revenue of $.8 million anda decrease in accounts payable and accrued liabilities of approximately $.4million, partially offset by a decrease in accounts receivable of $1.2 million.

 

Investing activitiesrequiring cash resources consisted of capital equipment additions of $29,000.There were no financing activities during the first quarter of 2006.

 

Basedon our current operating expenses and commercial sales, we believe we currentlyhave sufficient cash to fund operations into the third quarter of 2006. Thecurrent financial condition among other factors indicates that there issignificant doubt about the Corporation’s ability to continue as a goingconcern.

 

Weare actively exploring various financing alternatives, including equityfinancing transactions, as well as corporate collaborations. Equity financingscould include, but are not limited to, private investment in public equitytransactions, as well as public offerings. Corporate collaborations couldinclude licensing of one or more of our products for upfront and milestonepayments, or co-development and co-funding of our products. We put in placecost reduction programs beginning in the last half of 2004 and will continue tocontrol and reduce expenses until sufficient funding is in place. We havere-aligned our spending in administration and manufacturing to maintain keydevelopment programs while carefully managing our overall cash usage.WorldHeart has engaged an investment banker to assist the Corporation in theevaluation and completion of financing and implementation of strategicalternatives. While the Corporation is exploring all opportunities to improveits financial condition within the next several months, there is no assurancethat these programs will be successful. This would result in a significantdelay in the completion, reduction in scope, or termination of our developmentprograms and raise further doubt about our ability to continue to do business.

 

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***Our long-termworking capital and capital requirements will depend upon numerous factors,including the following: our continued focus on improving commercialoperations; expanded Novacor LVAS kit sales and enrolment in the RELIANT Trial;decreasing production costs through manufacturing cost reduction programs; therate of investment in our next-generation technologies, including our NovacorII and WorldHeart Rotary VAD; clinical trials costs and the approval processfor the next-generation products; our general efforts to improve operational efficiencyand conserve cash, including continued synergies from the acquisition ofMedQuest and other cost improvement programs.***

*** ***

**CRITICAL ACCOUNTINGPOLICY**

** **

Effective January 1,2006, we adopted Statement of Financial Accounting Standards (“SFAS”)No. 123 (Revised 2004), “Share –Based Payment. SFAS 123(R) requires therecognition of the fair value of stock-based compensation as an expense in thecalculation of net income. We recognize the stock compensation expense over thevesting period of the individual equity instruments. 

 

WorldHeart has electedthe modified prospective transition method for adopting SFAS 123 (R). Underthis method, the provisions of SFAS 123 (R) apply to all stock-based awardsgranted after the effective date. The unrecognized expense of awards not yetvested as of January 1, 2006, the date of SFAS 123 (R) adoption by theCorporation, are also recognized as an expense in the calculation of netincome.

 

**OFF- BALANCE SHEET ARRANGEMENTS**

** **

(None)

 

**ITEM 3.    CONTROLS AND PROCEDURES**

 

*Evaluationof disclosure controls and procedures*: Based on theirevaluation of our disclosure controls and procedures (as defined inRules 13a-15(e) and 15d-14(e) under the Exchange Act) as ofMarch 31,2006, our president and chief executive officer(principal executive officer) and our chief financial officer (principalaccounting and financial officer) have concluded that our disclosure controlsand procedures are designed to ensure that information required to be disclosedin the reports that we file or submit under the Exchange Act is recorded,processed, summarized and reported within the time periods specified in theSecurities and Exchange Commission’s rules and forms and are operating inan effective manner at the reasonable assurances level.

 

*Changes ininternal controls over financial reporting:* There was nochange in our internal controls over financial reporting that occurred duringthe quarter ended March 31, 2006 that has materiallyaffected, or is reasonably likely to materially affect, our internal controlsover financial reporting.

 

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**PART II—OTHER INFORMATION**

** **

**ITEM 1. LEGAL PROCEEDINGS**

** **

(None)

 

**ITEM 2. UNREGISTERED SALES OF EQUITYSECURITIES AND USE OF PROCEEDS**

 

The Corporation has made no repurchases of commonshares during the period.

 

**ITEM 3. DEFAULTS UPON SENIORSECURITIES**

 

(None)

 

**ITEM 4. SUBMISSIONS OF MATTERSTO A VOTE OF SECURITY HOLDERS**

** **

(None)

 

**ITEM 5. OTHER INFORMATION**

** **

(None)

 

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**ITEM 6.  EXHIBITS**

 

(a)               Exhibits

 
| Exhibit 31.1 |   | Certification of  Principal Executive Officer pursuant to Section 302 of the  Sarbanes-Oxley Act of 2002.                 |
|-------------------|--------|--------------------------------------------------------------------------------------------------------------------------------|
|              |   |                                                                                                                           |
| Exhibit 31.2 |   | Certification of  Principal Financial Officer pursuant to Section 302 of the  Sarbanes-Oxley Act of 2002.                 |
|              |   |                                                                                                                           |
| Exhibit 32.1 |   | Certification of  Principal Executive Officer pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002, 18 U.S.C. 1350. |
|              |   |                                                                                                                           |
| Exhibit 32.2 |   | Certification of  Principal Financial Officer pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002, 18 U.S.C. 1350. |

 

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**SIGNATURES**

 

In accordance with the requirements of the Exchange Act, the registrantcaused this report to be signed on its behalf by the undersigned, thereuntoduly authorized.

 

 
|                                         |                                                                    | World Heart  Corporation |
|----------------------------------------------|-------------------------------------------------------------------------|--------------------------|
|                                         |                                                                    | (Registrant)             |
|                                         |                                                                    |                     |
|                                         |                                                                    |                     |
|  Dated:   May 11, 2006             | /s/ Jal S.  Jassawalla                                                  |                     |
|                                         | Jal S. Jassawalla, President and Chief  Executive Officer               |
|                                         |                                                                    |
|                                         |                                                                    |                     |
|    Dated:   May 11, 2006 | /s/ A. Richard  Juelis                                                  |                     |
|                                         | A. Richard Juelis, Vice President, Finance  and Chief Financial Officer |
|                                              |                                                                         |                          |  |

 

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