##### 



EXHIBIT 1.1

WESTAIM LOGO







THE WESTAIM CORPORATION













ANNUAL INFORMATION FORM







APRIL 29, 2003





---



##### 



EXHIBIT 1.1



|1. |  | The Annual Information Form dated April 29, 2003 for the year
ended December 31, 2002 is attached.                                                                                                                                                      
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Contractual Obligations                                                                                                                                                                                                                                 
|  
|   |  | The Companys obligations with respect to future commitments are
disclosed in note 18 to the Companys annual audited consolidated
financial statements for the year ended December 31, 2002 which are
attached as Exhibit 1.3 to this Form 40-F filing.





---



##### 



THE WESTAIM CORPORATION
ANNUAL INFORMATION FORM

APRIL 29, 2003

TABLE OF CONTENTS

|                                            |                            |                               |    |      |   | 
|------------------------------------------- | -------------------------- | ----------------------------- | -- | ---- | - | 
|                                            |                            |                               |    | PAGE
|                                            |                            |                               |    |     
|CORPORATE STRUCTURE                         |                            |                               | 1  |     
|GENERAL DEVELOPMENT OF THE BUSINESS         |                            |                               | 2  |     
|DESCRIPTION OF THE BUSINESS                 |                            |                               | 3  |     
|                                            | Emerging Technologies      |                               |    | 3    |  
|                                            |                            | iFire Technology Inc.         |    |      | 3 | 
|                                            |                            | Nucryst Pharmaceuticals Corp. |    |      | 5 | 
|                                            | Industrial Technologies    |                               |    | 8    |  
|                                            |                            | Ambeon                        |    |      | 8 | 
|                                            | Discontinued Operations    |                               |    | 9    |  
|                                            | Investments                |                               |    | 9    |  
|                                            | Revenue by Segment         |                               |    | 10   |  
|                                            | Supplies and Raw Materials |                               |    | 10   |  
|                                            | Environmental              |                               |    | 10   |  
|                                            | Employees                  |                               |    | 11   |  
|RISK FACTORS                                |                            |                               | 11 |     
|FORWARD-LOOKING STATEMENTS                  |                            |                               | 15 |     
|SELECTED CONSOLIDATED FINANCIAL INFORMATION |                            |                               | 15 |     
|                                            | Quarterly Information      |                               |    | 16   |  
|MANAGEMENTS DISCUSSION AND ANALYSIS        |                            |                               | 16 |     
|MARKET FOR SECURITIES                       |                            |                               | 16 |     
|DIRECTORS AND OFFICERS                      |                            |                               | 16 |     
|ADDITIONAL INFORMATION                      |                            |                               | 18 |     





---



##### 



CORPORATE STRUCTURE

The Westaim Corporation (Westaim or the Company) was incorporated under the
Business Corporations Act (Alberta)by Articles of Incorporation dated May 7,
1996, as a wholly owned subsidiary of Viridian (Viridian means Viridian Inc.
and its predecessors). The Companys Articles were amended effective June 26,
1996 to remove private company restrictions on the transfer of securities, to
create preferred share classes designated as Class A Preferred Shares and Class
B Preferred Shares and to increase the maximum number of directors to 15. The
shareholders of Westaim approved a further amendment to the Articles on April
17, 2000 to permit meetings of shareholders to be held in certain specified
cities outside of Alberta, or in any other city in Canada or the United States.

On June 26, 1996, the Company, through a reorganization, issued 75,000,000
common shares to Viridian in exchange for $180 million of cash along with its
specialty materials businesses and related research and development activities,
plus other industrial businesses. The transaction was effective June 1, 1996
and was accounted for as a reorganization, with the carrying value of the
assets and liabilities transferred to the Company reflected in the Companys
balance sheet as at June 1, 1996 at Viridians carrying value.

On July 8, 1996 and September 16, 1996, Viridian distributed to holders of its
common shares, as dividends-in-kind, an aggregate total of 70,923,248 common
shares of Westaim. Viridian subsequently disposed of the remainder of its
Westaim shares through market sales. Westaims principal and head office is
located at 144  4th Avenue S.W., Calgary, Alberta, T2P 3N4.

The following are the material subsidiaries of the Company, including
jurisdiction of incorporation or continuance and percentage share ownership by
the Company and the operating divisions of the Company:

CORPORATE STRUCTURE CHART

1



---



##### 



GENERAL DEVELOPMENT OF THE BUSINESS

In 1990, as a result of Viridians research and development capabilities in
advanced industrial materials, Viridian entered into an agreement with the
governments of Alberta and Canada to expand its specialty materials businesses.
The undertaking, formed as a result of this agreement, is referred to as the
Westaim Initiative. During the six-year period of the Westaim Initiative,
$140 million was spent on research and development of advanced industrial
materials. Of this $140 million, $40 million was funded by the Alberta
Government, $30 million was funded by the Government of Canada, and $70 million
was funded by Viridian and other industry research participants.

In 1997, the Company sold substantially all its assets related to the battery
materials and cobalt powders business units for cash proceeds of $36 million.
Also in 1997, the Companys investment in its electronic ceramics and
structural ceramics technologies, together with $15.4 million in cash, were
rolled into a new corporate entity, ThermicEdge Corporation. In March of 1998,
the Company distributed approximately 90.6% of the shares of ThermicEdge
Corporation to the common shareholders of Westaim by way of a dividend-in-kind.
The balance of 9.4% of the shares was transferred to the Province of Alberta
as partial consideration for the release of Westaim by the Province of Alberta
of any remaining obligations under the Westaim Initiative.

As noted in the chart above, the Company holds its interest in its two emerging
technologies through wholly-owned, or majority-owned, subsidiaries. The
related assets and intellectual property of these technologies were rolled into
these subsidiaries effective January 1, 1998.

In February 2000, the Companys subsidiary, iFire Technology Inc. (iFire),
entered into a strategic business arrangement with Japan-based TDK Corporation
for technology collaboration and production of iFire Displays. In addition,
TDK Corporation purchased a 2.5% common equity investment in iFire for US$7.5
million.

In December 2000, the Company sold substantially all assets related to its
Chemicals business segment for proceeds of $18 million.

In May 2001, the Companys subsidiary, Nucryst Pharmaceuticals Corp., sold its
North American burn dressing business and entered into an exclusive global
licensing agreement for the sale and marketing of Acticoat Burn and Wound Care
Dressings as discussed more in the Emerging Technologies section below.

On May 29, 2002, the Company announced its intention to sell non-core assets
and to increase the focus of management and financial resources on its two
high-potential emerging businesses, iFire and Nucryst Pharmaceuticals Corp. In
July 2002, the Coinage business was shut down permanently and in February 2003
the ethylene coatings business (Surface Engineered Products Corporation) was
shut down. See Discontinued Operations.

In January 2003, the Companys Board of Directors retained Griffiths McBurney &
Partners (GMP) as its financial advisor to undertake a review during 2003 of
the operations of the Corporation. GMP has been tasked to either reaffirm the
Companys commitment to its high potential technologies and operating
businesses or recommend a revised Corporate strategy.

2



---



##### 



DESCRIPTION OF THE BUSINESS

Westaim develops, commercializes and launches high potential technologies into
the fast growing sectors of the economy. Westaims portfolio of business
opportunities includes flat panel displays and anti-microbial medical devices
and pharmaceuticals. These proprietary technologies resulted from the Westaim
Initiative and from the Companys advanced materials expertise. In addition,
Westaim develops, manufactures and markets nickel composite powders and expects
that this business will provide a source of cash flow to help fund the
Companys operations and research and development expenditures.

Westaims strategy is to develop the independent technical, operating and
marketing and sales capabilities of each technology investment through the
early years of product introduction and commercialization with the objective of
taking these technologies public through initial public offerings. Management
recognizes that, in circumstances where it lacks technical or marketing
expertise or the necessary capital to complete development of a product, it may
be in Westaims best interests to pursue commercialization through joint
venture arrangements, strategic acquisitions, alliances, licensing or selling
its technology.

EMERGING TECHNOLOGIES

iFire Technology Inc.

iFire Technology Inc. (iFire) has developed a proprietary flat panel display
with solid state, thick-film dielectric electroluminescent (TDEL) technology.
iFire is commercializing its proprietary technology for both large-screen
consumer television applications and small graphic displays. The Companys
primary target is the mid-30-inch diagonal screen size television market.
iSuppli/Stanford Resources, an independent research firm that follows the flat
panel display industry, predicts that the market opportunity for mid-30-inch
TVs will exceed US$23 billion by 2006 and the market for small graphic displays
to exceed US$6 billion by 2005.

For mid-30-inch screens, the Company believes that in high-volume production,
iFire displays will have a 30% to 40% cost advantage over other flat panel
technologies due to TDELs simpler structure, less complex manufacturing
methods and fewer processing steps compared with liquid crystal displays
(LCD) and plasma display panels (PDP). Unlike other flat panel
technologies, the iFire displays do not contain gases (as with PDP), liquids
(as with LCD) or vacuum (as with the cathode ray tube), making it inherently
rugged, less susceptible to shock, vibration and breakage. TDEL technologys
solid state structure and thick-film manufacturing process also make an iFire
display less sensitive to cleanroom contamination that is associated with PDP
and LCD, resulting in lower capital investment, higher manufacturing yield and
reduced production cost. In addition, iFire displays feature full colour,
rapid video response, unrestricted viewing angles and a wide operating
temperature range. The technology is scalable from five inches to 50 inches.

iFires primary strategy is to become a significant supplier of high definition
modules for large-screen flat panel televisions. The Company intends to
initially target the mid-30-inch screen size market due to the lack of
competitor presence. PDP technology is best suited for TVs greater than
40-inches; LCD technology is best suited for TVs less than 30-inches; and
organic light emitting diodes (OLED) are best suited for small graphics
applications with screen sizes less than 10-inches. iFire intends to establish
partnerships with commercial consumer electronics companies to jointly
manufacture iFire flat panel modules for consumer television sets. iFire
believes that its technology can achieve significant market penetration in the
flat panel television market segment and achieve a retail price advantage
compared with PDP and LCD.

In 2002, iFire entered a non-exclusive technology collaboration agreement with
Sanyo Electric Company, Ltd. (Sanyo) of Japan. The agreement focuses on the
advancement of iFires TDEL technology for large-screen flat

3



---



##### 



panel televisions through a series of joint development projects. iFire
retains exclusive use of any new joint developments in the inorganic
electroluminescent display sector while Sanyo has exclusive rights to use any
joint developments in the OLED field. Nine projects have been identified and
initiated in the product categories of video electronics, manufacturing
technologies for defect reduction and phosphor process development. The
projects are on schedule with five completed. Two additional projects have
been identified and are expected to begin in 2003.

In March 2003, iFire announced a non-exclusive joint development agreement with
Dai Nippon Printing Co., Ltd. (DNP) of Japan for commercial production of
mid-30-inch screen size flat panel television modules. To support the
partnership with DNP, iFire and Sanyo have expanded their technology
collaboration agreement to transfer technological and electronics advancements
on 17-inch prototypes to the larger, mid-30-inch displays.

Under the terms of the agreement, DNP intends to utilize its primary flat panel
production line in Kashiwa, Japan in 2003 for developing front-end
manufacturing processes for iFires TDEL technology, including the substrate
preparation and the fabrication of the row electrodes and thick-film dielectric
layer. Back-end processes such as the deposition of phosphors, column
electrodes and colour correction layers, as well as electronics assembly, are
planned to be developed by iFire at its facility in Toronto, Canada. Three
projects related to the development of low-cost manufacturing process for large
size substrates have been identified. Two have been completed and one is
underway. A fourth project has been proposed and is expected to begin in 2003.

For small graphic applications, iFire has pursued a licensing strategy. In
February 2000, iFire entered into a non-exclusive licensing agreement with
Japan-based TDK Corporation (TDK) for technology collaboration and production
of iFire displays less than 12-inches. The agreement included a 2.5% equity
investment in iFire, an up-front licensing fee and ongoing royalties on all
sales. In 2001, TDK began demonstrating prototypes and in 2002, TDK announced
that it plans to begin production at the earliest possible date.

In March 2001, iFire entered into an agreement with Technology Partnerships
Canada (TPC), a technology investment fund established by the Government of
Canada under which TPC will contribute up to $30 million over two years towards
eligible research and development costs and related capital expenditures
incurred by iFire. In consideration for this funding, TPC will receive a
royalty of 1.065% on future sales of iFire products and has received warrants
to purchase common shares of iFire for future consideration of $6.3 million.
The warrants expire on April 30, 2007 and represented approximately 0.5% of the
outstanding common shares of iFire as at March 31, 2001. In 2002, contribution
claims totaled $9.1 million (2001  $14.5 million). Of this amount, $8.1
million (2001  $12.9 million) was credited to research and development expense
and $1.0 million (2001  $1.6 million) was credited to capital assets. The
final contribution, amounting to $6.5 million, will be received in 2003.

In 2002, iFire demonstrated a 17-inch flat panel prototype with
commercial-quality luminance, colour, contrast and pixel geometries equivalent
to a 34-inch screen with a wide XGA (1280 x 768) pixel format. In addition,
iFire prepared for mid-30-inch panel development by commissioning new column
driver integrated circuits that are capable of supporting HDTV signals and are
expected to be capable of driving iFire displays of up to 42 inches. iFire has
begun securing the tools needed to produce a mid-30-inch television module.
iFire also developed a new, lower cost, Efficient Resonant Integrated Supply
(ERIS) power management system that should allow iFire wide- XGA products in
the mid-30-inch screen size range to operate on less than 200 watts of power.
Additionally, iFire substantially completed the basic material development to
achieve the luminance required for a commercial product and identified a
lower-cost substrate that will lead to manufacturing cost savings and better
performance.

In April 2003, iFire announced a simplification of their manufacturing process
which will result in capital and production cost reductions of approximately
15% compared to previous estimates. The development, called Colour by Blue,
will replace the current triple patterned (red, green and blue) phosphor system
with a single high performance blue phosphor system, simplifying the
manufacturing process.

iFire will begin the technology transfer to scale up to larger modules in 2003
which the Company believes will lead to an initial HDTV product in the
mid-30-inch screen size market priced lower than comparably sized LCD and PDP
products. Other flat panel display technologies have not been able to
competitively offer products in this screen

4



---



##### 



size, creating a major opportunity for iFire. In addition, this segment is
currently one of the most lucrative parts of the television market because it
is a size that is attractive to a broader range of consumers.

In conjunction with industry partners, production of mid-30-inch screen size
products in both high definition and standard definition is expected to begin
in the 2005 timeframe. This strategy includes iFires non-exclusive agreements
with Sanyo and DNP.

While there are numerous current and emerging flat panel technologies, to date
we know of no other competitor that has produced a full-colour, thick-film
surface luminescent technology based on solid state electroluminescence.
Westaim believes that the iFire display will have superior characteristics at
a lower cost than competing technologies. However, successful commercialization
is dependent upon meaningful progress in partner discussions which, in turn,
are influenced by many factors including the state of the economy in the
potential partners home market, particularly Japan, and the success or failure
of competing technologies (previous and current) to profitably penetrate the
flat panel display market with cost-effective products. As a result, the
Company has found that investment in new technologies by large commercial
electronics companies is taking longer and requiring lengthier technical due
diligence than in the past.

The Company owns and operates a 36,000-square-foot research and trial
manufacturing facility in Toronto, Ontario. The Toronto facility is capable of
producing displays from 2-inches to 17-inches in diagonal screen size. In
preparation for mid-30-inch display production, iFire has leased an adjacent
49,700 square-foot building. iFire employed 155 people at December 31, 2002.

With respect to iFires technology, the Company holds 7 patents related to TDEL
technology in the United States, has 25 pending patent applications in the
United States for advancements and improvements to the technology, and has
numerous corresponding issued patents and patent applications in various other
countries. Where appropriate, iFire also maintains certain proprietary
technology as trade secrets.

Nucryst Pharmaceuticals Corp.

Nucryst Pharmaceuticals Corp. (NUCRYST) has developed a proprietary
nanocrystalline form of noble metals such as silver, gold and platinum. While
all three of these metals have medical uses, the Companys first focus is
nanocrystalline silver. Silver has antimicrobial properties and has been used
in medicine for many years for infections. To be an effective antimicrobial
agent, normally stable silver must be converted into a soluble form. NUCRYSTs
proprietary technology can produce thin soluble films that release an effective
concentration of silver over several days. As silver is consumed, additional
silver is released to provide continued antimicrobial activity.

Medical Devices NUCRYSTs technology can be applied to a wide range of
medical devices, including wound dressings and various implants, to prevent
infections. The Company chose the in-patient burn segment of the North
American wound dressing market as its first target market because large burns
present a life-threatening risk of infection.

In 1998, the Company launched its first product, Acticoat antimicrobial
dressings for serious wounds. The product is currently being used in more than
100 of 120 major burn centres in North America and, in 2002, sales of Acticoat
dressings were up more than 50% from 2001. NUCRYSTs dressings have been
approved by the U.S. Food and Drug Administration (FDA) and by the Health
Protection Branch in Canada and have also been given European certification (CE
mark) which permits the marketing of the products in the United States, Canada
and Europe.

5



---



##### 



As part of Westaims strategy to enter into partnerships and licensing
agreements to accelerate its products market penetration, in May 2001, NUCRYST
entered into a global partnership with Smith & Nephew plc (Smith & Nephew).
Under a series of agreements, Smith & Nephew acquired NUCRYSTs North American
burn dressing business and entered into an exclusive global licensing agreement
for the sale and marketing of Acticoat wound care dressings developed by
NUCRYST. NUCRYST receives reimbursement of manufacturing costs and royalties
based on Smith & Nephews sales of these products, as well as milestone
payments for the achievement of certain regulatory and sales accomplishments.
In 2001, NUCRYST received a US$1.0 million milestone payment for the first
Acticoat sale in Europe. Under a collaborative agreement, the two companies
are working together to develop new wound care products and obtain additional
regulatory approvals. In January 2003, NUCRYST received a US$3.0 million
payment following the achievement of a regulatory milestone in Europe in which
NUCRYST and Smith & Nephew collaborated to provide additional scientific
evidence reinforcing the superior antimicrobial performance of Acticoat
products. NUCRYST continues to manufacture all Acticoat products for Smith &
Nephew at its Fort Saskatchewan, Alberta plant under a long-term manufacturing
agreement.

Smith & Nephew is now selling Acticoat burn and chronic would products in 22
countries around the world. Chronic wounds affect more than 4 million patients
in North America alone and the Company estimates that more than US$1 billion is
spent annually on chronic wound products worldwide. Chronic wounds include:
diabetic foot ulcers, a serious condition affecting 700,000 individuals in the
United States alone (Medical Data International, 1996) that results in over
80,000 amputations each year (Center for Disease Control, Diabetes
Surveillance, 1999); venous stasis ulcers, a condition caused by venous
insufficiency which affects 1.2 million individuals in the United States every
year (Medical Data International, 1996); and pressure ulcers, which commonly
affect elderly, bed-ridden or chair-bound patients, of which, there are more
than 2 million cases per year (Frost & Sullivan, 1998). Currently, there is no
dominant treatment in the chronic wound dressing market.

NUCRYST believes that its products are superior to other existing products.
The most commonly used competitive products use silver in various chemical
forms in creams and solutions which must be applied to wounds several times a
day. NUCRYSTs antimicrobial technology releases silver over several days,
leaves the wound bed undisturbed while fighting infection and has been shown in
the laboratory to be effective against more than 150 pathogens. Findings from
in vitro studies published in peer-reviewed journals have demonstrated that
NUCRYSTs coatings kill bacteria rapidly and have a longer release of silver
than conventional treatments. Use of Acticoat dressings provides health care
cost savings by preventing infections and reducing the required number of
dressing changes, thereby saving nursing time and medical supply costs.

Already used commercially on Acticoat dressings, NUCRYSTs proprietary
nanocrystalline silver coatings, trademarked Silcryst, have proven safe for
use by humans and have demonstrated their efficacy as a barrier to infection.
NUCRYST will now focus on developing drugs based on customized formulations of
its patented nanocrystalline technology. These drugs may be offered in a
variety of delivery formats including creams, solutions or gels.

Pharmaceuticals NUCRYSTs Rx nanocrystalsappear to have two very important
therapeutic effects: broad-spectrum antimicrobial activity and
anti-inflammatory activity. This dual activity could be useful for treating a
wide range of diseases. Pre-clinical work by NUCRYST has pointed to two broad
areas: dermatological and respiratory diseases. In both these areas, the
Company sees new product opportunities. Diseases of the skin affect millions
of people and are not optimally treated with todays drugs. Nosocomial
(hospital acquired) lung infections are a leading cause of death among
hospitalized patients. The total US market size is over US$2 billion for
dermatology products and US$3 billion for respiratory products (IMS 2002 data).

The first indication that NUCRYST plans to target is eczema, a very common skin
disease characterized by inflammation and itching. Infection often accompanies
eczema as a result of excessive scratching, which damages or excoriates the
skin, and because eczema patients may lack endogenous antimicrobial substances
in their skin. The two leading anti-inflammatory therapies are topical
steroids and topical immunomodulators (TIMS). Today,

6



---



##### 



there are no drugs available for eczema that are both anti-inflammatory and
antimicrobial. Due to nanocrystalline silvers dual action (providing both
antimicrobial and anti-inflammatory activity), NUCRYST believes that its
proprietary silver formulation will be more effective than the leading drug
classes available today.

Topical steroids are typically the first line of treatment for many skin
diseases, but are not always the most effective. Steroids are known to cause
many side effects such as atrophy (thinning of the skin), telangiectasia
(visible spider-like blood vessels) and striation (striping) of the skin. In
addition, topical steroids are vulnerable to tachyphylaxis (loss of efficacy
over time) and run the risk of systemic absorption.

TIMS produce their anti-inflammatory effect by inhibiting the immune system.
Since they are potent immunosuppressants, they are generally indicated after
other treatments (such as topical steroids) have proven to be ineffective or
are deemed inadvisable. In addition to a burning sensation often experienced
upon application, side effects may include the increased risk of superficial
skin infections, such as shingles (herpes zoster virus infection) or eczema
herpeticum, due to TIMS potent immunosuppressant activity.

NUCRYSTs nanocrystalline silver does not appear to significantly suppress the
immune system or damage the skin. Nanocrystalline silver has the added
potential benefit of combating secondary infections that are common to eczema
sufferers, something that steroids and TIMS cannot do. NUCRYSTs in vivo
laboratory results are very encouraging.

Despite the risks and limitations of both topical steroids and TIMS, they have
a sizeable market, generating US$665 million and US$165 million in 2002 sales
respectively (IMS 2002 data), in the United States alone. TIMS have only been
on the market for two years, demonstrating that physicians and patients are
seeking and willing to try new, more effective treatments. NUCRYST believes
that a new dual action drug that addresses both inflammation and infection
without the risks associated with steroids and TIMS will be well received by
doctors and patients.

NUCRYST has filed an Investigational New Drug (IND) application with the FDA
for a nanocrystalline silver cream. NUCRYST began Phase I clinical studies in
April 2003 following clearance of the IND.

In general, the regulatory pathway to FDA product approval for pharmaceuticals
includes:



|(i)   |  | Pre-clinical Animal Studies These studies evaluate the safety
and potential efficacy of a therapeutic drug or medical device and
are necessary prior to initiation of human clinical studies.                                                                                                                             
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     
|(ii)  |  | Phase I Clinical Studies These studies test the product in a
small number of volunteers to determine toxicity (safety), maximum
dose tolerance and pharmacokinetic (the absorption, distribution
and excretion of a drug) properties.                                                                                     
|     
|(iii) |  | Phase II Clinical Studies These studies assess safety and
efficacy in patients.                                                                                                                                                                                                                                           
|     
|(iv)  |  | Phase III Clinical Studies These studies involve a controlled
evaluation in an expanded patient population at multiple sites to
determine longer-term clinical safety and efficacy. It is from the
data of these studies that the benefit/risk relationship is
established and the final drug labeling claims are defined.

Results of these controlled clinical studies are detailed in the filing of a
New Drug Application (NDA) for pharmaceuticals, together with detailed
information related to the drug manufacturing process. The FDA full approval
process is expected to take four to seven years.

7



---



##### 



The Company owns and operates a 43,000 sq. ft. production facility in Fort
Saskatchewan, Alberta and leases 19,000 sq. ft. of office and laboratory space
in Wakefield, Massachusetts for administration, marketing, and pharmaceutical
research and development. Depending on product specifications, the Fort
Saskatchewan facility is capable of producing up to $60 million of burn or
wound care product per year.

NUCRYST employed 62 people in Canada and the U.S. as at December 31, 2002.

NUCRYST holds 14 issued patents in the United States, has 19 pending
applications in the United States, and has numerous corresponding patents and
patent applications in various other countries. Where appropriate, NUCRYST
also maintains certain proprietary technology as trade secrets.

Acticoat is a trademark of Smith & Nephew and Silcryst is a trademark of
NUCRYST.

INDUSTRIAL TECHNOLOGIES

Ambeon

The Ambeon division designs, manufactures and markets advanced materials and
products under three major product lines: turbine engine materials, electronics
materials and catalyst materials.

Turbine Engine Materials  Ambeon produces and markets composite powders and
honeycomb for use in gas turbine engines (under the trademarks Durabrade and
Neomet, respectively). The principal market for these turbine engines is
commercial and military airplanes. The Companys products create an abradable
seal between moving and stationary metal parts. These products are also used
in land-based turbine power generators.

As a turbine engine heats up, metal parts expand; conversely, as the engine
cools, metal parts contract. The Companys composite powders and honeycomb are
designed to minimize the clearance between the stationary and rotating parts of
the engine resulting in improved efficiency and fuel economy. As an engine
blade rotates, the outer edge of the blade cuts through the material allowing
precise control of the gap between stationary and moving parts, effectively
creating a seal.

The Companys competitive advantage lies in its ability to identify
opportunities to leverage its extensive experience in the manufacturing
processes that it has developed to produce composite powders in commercial
quantities. Additionally it has extensive experience in the qualification and
certification of products to meet aerospace standards.

Ambeon has a long history and successful track record of design, qualification
and large-scale production of composite powders technology. In addition, the
Companys honeycomb products are complementary to its composite powders with
higher temperature capabilities that enable the Company to provide material for
abradable seals in most sections of the turbine engine. Ambeon is actively
pursuing key performance advances in coating materials that will help its
customers define and implement the next generation of abradable seals to work
in all temperature ranges of turbine engines. Many of these products are
currently being tested for approval by key customers.

Principal customers are major jet engine manufacturers and distributors to the
jet engine repair and overhaul market. The Company is an ISO 9002 approved
supplier to all three major original equipment manufacturers, (Rolls-Royce,
Pratt & Whitney, GE Aircraft Engines) and holds a National Aerospace and
Defence Contractors Accreditation Program (NADCAP) certification. These
approvals are difficult to obtain and represent a significant barrier to entry
for new competitors.

8



---



##### 



Electronics Materials  The Company also produces materials for use in
electromagnetic shielding applications. The Companys powders are incorporated
into tapes, gaskets, adhesives and other materials used in the manufacture of
portable devices such as cell phones. The powders provide these materials with
the conductive and shielding characteristics required for their high-tech
applications, allowing electronic devices to be made smaller and lighter
without losing functionality. In 2002, Ambeon introduced gold-coated composite
powders for the conductive materials used in electronics packaging.

Catalyst Materials During 2002, Ambeon used its proprietary technology and
existing production capability to make nickel-based catalyst powder materials.
The Company currently produces a unique catalyst that is used in the production
of hydrogen from natural gas. Sales of catalyst materials in other industrial
product areas are currently being developed. Catalyst material production
capability is expected to lead to the Companys participation in the growing
hydrogen fuel cell market within the next 3 to 5 years.

The Company owns a 62,000 sq. ft. production facility for aerospace and
electronics powders in Fort Saskatchewan, Alberta, with an annual capacity of
approximately 300 tonnes of composite nickel powders for turbine engines and
electronics materials. Westaim manufactures its nickel-based honeycomb
products at a 13,000 sq. ft. leased facility in Marple, England, operated by
its wholly-owned subsidiary, Neomet Limited. This facility has an annual
capacity of approximately 15 tonnes of honeycomb.

The Company protects its coating and catalyst products intellectual property
through patents, where appropriate, or through trade secrets. The Company has
14 issued patent applications for advancements and improvements to its
technology worldwide related to its current product lines and 16 pending patent
applications.

The Westaim Ambeon business segment employed 109 people as at December 31,
2002.

DISCONTINUED OPERATIONS

In May 2002, the Company announced its intention to close the Coinage division
and to sell or close its ethylene coatings business. As a result, these
businesses have been accounted for as discontinued operations.

The decision to discontinue the Coinage business followed several quarters of
operating losses. The outlook for the business was unsustainable as a result
of weak demand and global over-capacity in the coin blank industry following
completion of the multi-year Euro coin project. The Company continues to own
and maintain the 120,000 sq. ft. former Coinage facility in Fort Saskatchewan,
Alberta, which is available for, and in partial use by, other Westaim
businesses. Production assets were sold in late 2002. At December 31, 2002,
the Company had no employees engaged in the Coinage division.

The ethylene coatings business, Surface Engineered Products (SEP), produced
anti-coking coatings for furnaces used in the production of ethylene. SEPs
main target market, the ethylene industry, has been experiencing harsh economic
conditions and the rate of adoption of the anti-coking technology has not met
expectations. SEP operations were discontinued in February 2003 after the
completion of contracted production. The Company plans to sell the operating
assets and the 120,000 sq. ft. former ethylene coatings manufacturing facility
in Edmonton, Alberta. SEP had 39 employees at December 31, 2002.

INVESTMENTS

Until early 2002, Westaim, and its Westaim Partners division, made early stage
investments in emerging technology businesses. In May 2002, the Company made
the decision to discontinue further early stage investments and began reducing
its existing investment portfolio. The Company recorded equity losses and
write downs related to these

9



---



##### 



investments of $3.4 million in 2002. The Companys voting interest in each of the remaining investments is 12% or
less and is accounted for on a cost basis, with a total book value of $0.5
million.

REVENUE BY SEGMENT

|                        |                                  |                   |            |                     |                   |   |            |        | 
|----------------------- | -------------------------------- | ----------------- | ---------- | ------------------- | ----------------- | - | ---------- | ------ | 
|                        |                                  |                   |            |                     |                   |   | Year Ended
|                        |                                  |                   | Year Ended |                     | December 31, 2001
|($000)                  |                                  | December 31, 2002 |            | (restated) (Note 2)
|                        |                                  |                   |            |                    
|Emerging Technologies   |                                  |                   |            |                     |                   |   |            |       
|                        | Nucryst Pharmaceuticals          |                   | $          | 8,344               |                   |   | $          | 9,835  | 
|                        | iFire Technology                 |                   |            | 4,270               |                   |   |            | 4,272  | 
|                        | Ambeon (Note 1)                  |                   |            | 36,449              |                   |   |            | 36,160 | 
|                        |                                  |                   |            |                     |                   |   |            |       
|                        |                                  | $                 | 49,063     |                     |                   | $ | 50,267     |       
|                        | Discontinued Operations (Note 2) |                   |            | 10,283              |                   |   |            | 18,616 | 
|                        |                                  |                   |            |                     |                   |   |            |       
|Consolidated Operations |                                  | $                 | 59,346     |                     |                   | $ | 68,883     |       
|                        |                                  |                   |            |                     |                   |   |            |       
|                        |                                  |                   |            |                     |                   |   |            |       

|       |  |                                                                                                                                                                                                
|------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Note 1 |  | In 2002, Ambeon recorded revenue from one customer which represented
20.3% (2001  21.7%) of revenue from continuing operations of the
Company.                                                
|      
|Note 2 |  | In 2002, the Coinage division and the ethylene coatings business,
Surface Engineered Products, have been accounted for on a discontinued
basis. 2001 information has been restated accordingly.

SUPPLIES AND RAW MATERIALS

Owing to the diversity of its products, Westaim purchases its raw materials
from a number of sources. Westaim suppliers are both domestic and
international. Nickel, graphite, hydrogen, and ammonia are the major raw
materials required by the Company, most of which can be purchased in the open
market.

Westaim is provided certain utilities, services and materials from an unrelated
company at the Fort Saskatchewan plant site under long term supply and service
agreements. These agreements ensure the continued supply of these inputs which
are required for Westaims operations and which Westaim is not presently
equipped to supply itself. Westaim has the right under these agreements to
construct new facilities to supply its needs or to obtain supplies from third
parties in the open market.

ENVIRONMENTAL

Westaims businesses are subject to extensive federal, provincial and municipal
environmental statutes and regulations, including those relating to air
emissions, wastewater discharges, contaminated soil and groundwater and the
handling and disposal of hazardous substances and wastes. Westaim believes
that its operations are in substantial compliance with these statutes and
regulations, and it has an extensive environmental program in place to comply
with environmental regulations and to maintain its facilities in an
environmentally safe condition.

The Company anticipates that it will continue to incur capital expenditures and
operating costs to comply, on an ongoing basis, with environmental statutes and
regulations. It does not believe that the costs of compliance will have a
material adverse affect on its operations, its competitiveness or its financial
position. However, Westaims businesses involve potential environmental risks,
including the risk of harmful substances entering the environment, which could
cause damage or injury.

10



---



##### 



Environmental liabilities under applicable statutes and regulations may arise
in respect of events which occurred prior to completion of the Viridian
Reorganization, when the businesses transferred to Westaim belonged to
Viridian. The agreements under which the Viridian Reorganization was
completed provide that Viridian, or its successors, will bear all costs
associated with these environmental liabilities that existed prior to June 1996
for the Fort Saskatchewan site. With respect to Westaims operations in
Ontario, the previous owner of iFires trial manufacturing plant has provided a
limited environmental indemnity to Westaim in respect of any pre-existing soil
or groundwater contamination.

Westaims operations in Alberta are conducted under an environmental operating
approval issued under the Environmental Protection and Enhancement Act
(Alberta) on March 31, 1998 and expiring on February 28, 2008. iFire operates
under a Certificate of Approval granted by the Ministry of the Environment
(Ontario) on February 16, 1999.

EMPLOYEES

As at December 31, 2002, Westaim and its subsidiaries employed a total of 399
employees which included 26 hourly employees represented by the Communications,
Energy and Paperworkers Union. Union-management relations are positive and
stable. The current collective agreement expires in March 2004. Westaims
workforce includes a number of highly skilled professional, technical and
operational personnel. Many employees have specialized knowledge and skills
and are leaders in their fields.

RISK FACTORS

Westaim is primarily in the business of developing and commercializing new
technologies. There are a number of risks inherent in this type of business
model, including those set out below. The occurrence of events arising from
these risks could have a material adverse effect on the Companys business,
financial condition, and results from operations.

Westaim may be unable to develop commercially viable products.

Many of the Companys products, such as iFires flat panel television displays,
are still in the developmental stage. Westaim will likely incur significant
research and development costs before any of these products are commercially
viable, and there is no assurance that any of its products will ever reach this
stage or that the Company will achieve the level of market penetration that it
expects. Some or all of the technological obstacles that will need to be
overcome in order to make these products commercially viable may prove to be
insurmountable. Conversely, a market for these products may never materialize,
even if they prove to be technically sound. If new products have reliability
or quality problems, then reduced orders, higher manufacturing costs, delays in
acceptance of and payment for new products, and additional service and warranty
expenses may result.

Some of the Companys proposed products, such as medical devices and
pharmaceutical products, will require regulatory approval before the Company is
allowed to sell them. The Company expects the regulatory approval process to
be lengthy and expensive and the Company will have the burden of proving that
its products are safe and effective. Regulatory agencies may make their
approval subject to conditions that the Company may be unable to satisfy or
that, if satisfied, would cause its products to become prohibitively expensive.
There is no assurance that the Company will ever obtain regulatory approval to
sell any of its proposed products, or that the conditions imposed by regulators
will be satisfactory to the Company. Regulatory requirements imposed on its
products could limit the Companys ability to test, manufacture and
commercialize its products.

11



---



##### 



If Westaim fails to raise the capital necessary to fund its operations, it may
be unable to advance the development and commercialization of its technologies.

A commitment of substantial resources by the Company and its collaborators to
conduct research and development, construct pilot manufacturing facilities and
conduct clinical studies will be required to successfully commercialize
products under development. It has not been necessary for the Company to raise
new capital since its inception and the Company believes that its current
financial position is strong. Nevertheless, the Company believes that many of
its businesses, particularly the flat panel television display, medical
products and pharmaceuticals businesses, may grow extremely rapidly and the
Company may not be able to raise additional capital at the time it is needed to
complete product development and build manufacturing facilities. Additional
capital may be required to fund operations, fund clinical studies, continue the
research and development of product candidates, commercialize products and
construct pilot and full scale manufacturing facilities.

If the Company is unable to raise additional funds when required, it may be
necessary to delay, reduce or eliminate some or all of its development
programs.

The commercial potential of the Companys products depends upon certain issues
regarding pricing, production costs and medical reimbursement.

The Companys ability to commercialize its pharmaceutical products successfully
will depend in part on the extent to which reimbursement for the cost of such
products and related treatments will be available from government health
administration authorities, private health insurers and other organizations.
Third party payers are increasingly challenging the price of medical products
and services. Significant uncertainty exists as to the reimbursement status of
newly approved healthcare products and there can be no assurance that adequate
third party coverage will be available for the Company to realize an
appropriate return on its investment in product development.

The ability to commercialize iFires flat-screen technology successfully will
depend in part on its ability to price its products at a point that will
generate consumer demand, while allowing for an adequate profit margin. The
Company believes that its product can be produced at costs lower than other
flat-screen technologies but there is no assurance that there will be consumer
demand for the iFire product or that competing products will not be developed
and priced below the prices required by iFire to be profitable.

Westaim will need to form partnerships to develop and sell its products.

The Companys ability to successfully develop, manufacture and market its
current and proposed products will depend, to a large extent, on its ability to
form partnerships or joint ventures with established corporations or other
collaborators. Except as described elsewhere in this document, the Company has
not yet entered into any material partnerships or joint ventures for the
development or marketing of these products, nor will it necessarily be able to
do so in the future. The Company may be unable to find suitable partners or be
unable to form a partnership or joint venture on terms that are beneficial. If
the Company does enter into a partnership or joint venture, it may suffer loss
if the partner becomes insolvent or otherwise fails to meet its obligations to
the Company.

Westaims products may become technologically obsolete.

The Company competes, and intends to compete, in markets that are characterized
by rapid adaptation to technological change. These markets include, but are
not limited to the medical devices, pharmaceuticals and flat-screen television
monitor markets. The Companys current and future products may be quickly
rendered obsolete and unmarketable. The Company will need to continually
develop new products and enhance existing products to keep pace with evolving
technologies, customer preferences and industry standards.

12



---



##### 



Westaim is developing products for highly competitive markets.

The Company faces, and will face, competition from a number of other companies
including major domestic and international companies which have substantially
greater financial, technical, marketing, sales, distribution and other
resources. Many of these competitors may also have greater name or brand
recognition. The Companys competitors may produce more
technologically-advanced products, at a lower cost, than the Company is capable
of producing. Competition may cause the Company to lose market share and may
reduce profit margins on any products that it is able to sell.

Westaim may be unable to protect its intellectual property.

In order to succeed, the Company will need to prevent its intellectual property
from being misappropriated by third parties. To protect its intellectual
property, the Company relies primarily on its confidentiality agreements,
physical security at research and manufacturing facilities, as well as the
copyright, trade secret, trademark and patent laws of Canada, the United
States, and other countries in which the Company conducts, or will conduct,
business. The laws of other countries may not protect intellectual property
rights to the same extent as the laws of Canada and the United States and, in
any event, the methods that the Company has chosen may fail to adequately
prevent misappropriation of its intellectual property.

The Company currently holds over 210 patents worldwide and an additional 190
patent applications are pending. The Company cannot provide assurance that it
will succeed in obtaining new patents, that it will be able to enforce existing
patents against third parties, or that existing patents will not be
successfully challenged by third parties.

Even if the Company is able to prevent the misappropriation of intellectual
property, others may independently, and legally, develop technologies that are
substantially equivalent or superior.

Westaim may become involved in expensive intellectual property or product
liability litigation.

The Company may be required to commence litigation to enforce its intellectual
property rights. Others may claim that it has infringed upon their
intellectual property rights and commence litigation against the Company. The
Company believes that it will be subject to an increasing number of
infringement claims as it begins to produce more products in more industries.

Some of the Companys existing and proposed products, such as its medical
devices and pharmaceuticals, are part of a class of product that is
particularly vulnerable to product liability litigation for a number of
reasons:



| |  | These types of products are extremely complex and the Company may fail
to discover product faults, despite its best efforts;                                                                                                      
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | These types of products will interact with very complex biological and
man-made systems and the Companys products may interact with these
systems in harmful ways that it was unable to anticipate, despite its
best efforts; and
| 
| |  | Because these products may be used by a large number of people, if the
Companys products do cause harm, it may be exposed to a large number
of claims for damages.                                                               

The Company has tried to protect itself against product liability litigation by
including limitation of liability provisions in some of its sales agreements.
There is no assurance, however, that existing or future limitation of liability
provisions will be sufficient to protect the Company in all circumstances, nor
can the Company provide assurance that any of these provisions will be held to
be enforceable by the Courts.

The Company believes that it has obtained sufficient product liability
insurance coverage to protect it against claims. However, the wording of its
insurance policies may exclude some claims. Furthermore, the Company cannot
provide assurance that its insurance limits will be sufficient, nor can it
ensure that it will be able to acquire satisfactory insurance in the future.

13



---



##### 



Westaim may be unable to retain the required highly skilled people.

The Companys technology businesses are dependent upon the talents and
knowledge of certain key individuals in each of the businesses. The
marketplace for people with these skills is highly competitive, and the Company
may not be able to retain a sufficient number of people with the skills that it
requires.

Some of Westaims businesses may inadvertently harm the environment.

The Company is subject to extensive federal, state, provincial and local laws
in Canada, the United States, and elsewhere, regarding pollution, the
protection of the environment and the use or cleanup of hazardous substances.
Although Westaim believes that it is in compliance with all of these laws, some
of its businesses may inadvertently harm the environment in violation of these
laws. If this occurs, the Company may be required to pay significant fines,
the cost of investigation and cleanup and civil damages. The Company may also
be ordered to permanently stop some of its operations, or it may be ordered to
cease its operations temporarily until it has adopted new and potentially
expensive environmental controls. The Company may suffer a significant loss of
reputation and risk lengthy and expensive litigation if it harms the
environment in breach of environmental laws.

Westaim is subject to certain risks because of the international character of
its business.

The Company estimates that sales to international customers accounted for
approximately 98% of its net sales in the fiscal year ended December 31, 2002
and Westaim anticipates that international sales will continue to represent a
material portion of net sales in the future. International sales are subject
to inherent risks, including variations in local economies, fluctuating
exchange rates, greater difficulty in the collection of accounts receivable,
changes in tariffs and other trade barriers, adverse foreign tax consequences
and burdens of complying with a variety of foreign laws. The Company may also
encounter exchange rate risk in the event international sales are denominated
in a currency other than Canadian dollars.

The Companys financial results are reported in Canadian dollars. A
significant portion of the Companys revenue and expenses, as well as accounts
payable, accounts receivable and other balance sheet items, are frequently
denominated in currencies other than the Canadian dollar, primarily in United
States dollars. Fluctuations in the exchange rate between these other
currencies and the Canadian dollar could reduce the Companys reported revenue,
increase the Companys costs or give rise to a charge related to foreign
currency translation, all of which could adversely affect operating results.

Volatility of Share Price

Market prices for securities of companies developing new technologies are
generally volatile. Factors such as announcements of technological
innovations, new commercial products, patents, the development of proprietary
rights, results of clinical trials, regulatory actions, publications, quarterly
financial results, the Companys financial position, public concern over the
safety of biotechnology, future sales of shares by the Company or by our
current shareholders, and other factors, could have a significant effect on the
market price and volatility of the Companys common shares.

14



---



##### 



FORWARD-LOOKING STATEMENTS

Forward-looking statements involve significant risks, uncertainties and
assumptions, and Westaims actual results could differ materially from those
anticipated by these forward-looking statements for various reasons generally
beyond Westaims control.

Certain statements contained in this Annual Information Form, as well as other
public statements by Westaim, include forward-looking statements within the
meaning of Section 21E of the U.S. Securities Exchange Act of 1934. The words
may, could, should, would, will, suspect, outlook, believe,
anticipate, estimate, expect, intend, plan, and words and expressions
of similar import, are intended to identify forward-looking statements
concerning expected iFire and NUCRYST product introductions, performance,
market penetration, technology development, production costs, price advantages
and applications; potential size of the market for iFire and NUCRYST
technology; the timing of clinical studies and expected date and cost of
certain regulatory approvals, including from U.S. and Canadian authorities, for
NUCRYST pharmaceutical products; the expected commencement of iFire product
manufacturing and its introduction of new products into the market for consumer
television products; and the expected global demand in 2006 for television
products, including for flat panel televisions. Forward-looking statements are
not guarantees of future performance. They involve significant risks,
uncertainties and assumptions and the Companys actual results could differ
materially from those anticipated by these forward-looking statements for
various reasons generally beyond our control, including: (i) hurdles in the
completion and patenting of the iFire technology; (ii) complexities associated
with developing the flat screen manufacturing process; (iii) market and
competing technology developments which might affect the willingness of
potential iFire partners to manufacture and market iFire products; (iv) cost
estimates based upon assumptions which may prove not to be realistic; (v)
delays or problems in receiving regulatory approvals for NUCRYSTs products;
(vi) market or economic conditions which might affect the products
development, clinical studies and demand for iFires or NUCRYSTs products;
(vii) general economic and financing conditions which may affect the ability to
raise new capital or affect potential partner ability to contribute
financially; (viii) general industry and market conditions and growth rates;
and (ix) the other risk factors set forth above.

SELECTED CONSOLIDATED FINANCIAL INFORMATION

The following table sets forth certain financial information for the Company
for 2000  2002:

|                                                 |  |               |         |               |  |               |         |   |  |   |         |  
|------------------------------------------------ |  | ------------- | ------- | ------------- |  | ------------- | ------- | - |  | - | ------- | -
|                                                 |  | Year Ended    |         | Year Ended    |  | Year Ended   
|($000, except per share data)                    |  | Dec. 31, 2002 |         | Dec. 31, 2001 |  | Dec. 31, 2000
|                                                 |  |               |         |               |  |              
|Revenue from Continuing Operations               |  | $             | 49,063  |               |  | $             | 50,267  |   |  | $ | 51,324  |  
|Loss from Continuing Operations                  |  |               | (30,095 | )             |  |               | (8,428  | ) |  |   | (18,541 | )
|Loss per Common Share from Continuing Operations |  |               | (0.39   | )             |  |               | (0.11   | ) |  |   | (0.24   | )
|Net Loss                                         |  |               | (49,762 | )             |  |               | (67,459 | ) |  |   | (14,648 | )
|Net Loss per Common Share                        |  |               | (0.64   | )             |  |               | (0.87   | ) |  |   | (0.19   | )
|Total Assets                                     |  |               | 185,748 |               |  |               | 238,179 |   |  |   | 309,482 |  
|Total Long Term Debt                             |  |               |        |               |  |               |        |   |  |   |        |  
|Dividends Declared                               |  |               |        |               |  |               |        |   |  |   |        |  

In 2002, the Company made the decision to close the Coinage division and to
divest or shutdown the ethylene coatings business. Accordingly, the results
of these operations and the cost of shutdown have been accounted for on a
discontinued basis. Prior years information has been restated accordingly.

In 2000, the Company sold substantially all its assets related to the
Chemicals business segment for proceeds of $18 million. Accordingly, the
results of these operations and the costs of disposition have been accounted
for on a discontinued basis.

15



---



##### 



QUARTERLY INFORMATION

|                                                 |  |      |        |      |  |      |         |      |  |      |        |      |  |                   |        |      |  |   |        |   |  |   |        |  |  |   |        |   |  |   |         |  
|------------------------------------------------ |  | ---- | ------ | ---- |  | ---- | ------- | ---- |  | ---- | ------ | ---- |  | ----------------- | ------ | ---- |  | - | ------ | - |  | - | ------ |  |  | - | ------ | - |  | - | ------- | -
|($000, except per share data)                    |  |      |        |      |  |      |         |      |  |      |        |      |  | Restated (Note 1)
|                                                 |  |      |        |      |  |      |         |      |  |      |        |      |  |                   |        |      |  |  
|                                                 |  | Q1   |        | Q2   |  | Q3   |         | Q4   |  | Q1   |        | Q2   |  | Q3                |        | Q4  
|                                                 |  | 2002 |        | 2002 |  | 2002 |         | 2002 |  | 2001 |        | 2001 |  | 2001              |        | 2001
|                                                 |  |      |        |      |  |      |         |      |  |      |        |      |  |                   |        |     
|Revenue from
Continuing Operations               |  | $    | 12,018 |      |  | $    | 11,638  |      |  | $    | 11,698 |      |  | $                 | 13,709 |      |  | $ | 13,639 |   |  | $ | 11,660 |  |  | $ | 12,510 |   |  | $ | 12,458  |  
|Loss from
Continuing Operations                  |  |      | (5,997 | )    |  |      | (11,464 | )    |  |      | (6,338 | )    |  |                   | (6,296 | )    |  |   | (3,274 | ) |  |   | 8,628  |  |  |   | (4,846 | ) |  |   | (8,936  | )
|Loss per Common Share
from Continuing
Operations |  |      | (0.08  | )    |  |      | (0.15   | )    |  |      | (0.08  | )    |  |                   | (0.08  | )    |  |   | (0.04  | ) |  |   | 0.11   |  |  |   | (0.06  | ) |  |   | (0.11   | )
|Net Loss                                         |  |      | (8,362 | )    |  |      | (25,617 | )    |  |      | (6,338 | )    |  |                   | (9,445 | )    |  |   | (8,005 | ) |  |   | 2,018  |  |  |   | (7,718 | ) |  |   | (53,754 | )
|Net Loss Per Common Share                        |  |      | (0.11  | )    |  |      | (0.33   | )    |  |      | (0.08  | )    |  |                   | (0.12  | )    |  |   | (0.10  | ) |  |   | 0.03   |  |  |   | (0.10  | ) |  |   | (0.69   | )

|       |  |                                                                                                                                                                                                                                                                                                              
|------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Note 1 |  | In 2002, the Company made the decision to close the Coinage division
and to divest or shutdown the ethylene coatings business. Accordingly,
the results of these operations and the cost of shutdown have been
accounted for on a discontinued basis. Prior years information has been
restated accordingly.

MANAGEMENTS DISCUSSION AND ANALYSIS

The information set out under the heading Managements Discussion and
Analysis, on pages 18 through 23 of the Companys 2002 Annual Report, is
incorporated herein by reference.

MARKET FOR SECURITIES

The Common Shares of Westaim are listed on The Toronto Stock Exchange under the
symbol WED and on NASDAQ under the symbol WEDX.

16



---



##### 



DIRECTORS AND OFFICERS

The following table sets forth the names, municipality of residence and
principal occupation of the directors of the Company, and the period of service
as a director of the Company.

|                                        |  |                                                                 |  |                     
|--------------------------------------- |  | --------------------------------------------------------------- |  | --------------------
|Name and Municipality                   |  | Principal Occupation                                            |  | Period of Service   
|Of Residence                            |  | At Present5                                                     |  | As Director         
|                                        |  |                                                                 |  |                     
|Neil Carragher1,3,4
Toronto, Ontario    |  | Chairman of The Corporate Partnership Ltd.                      |  | May 1996 to date    
|                                        |  |                                                                 |  |                     
|Ian W. Delaney4
Toronto, Ontario        |  | Chairman of Sherritt International Corporation                  |  | May 1996 to date    
|                                        |  |                                                                 |  |                     
|Barry M. Heck
Calgary, Alberta          |  | President and Chief Executive Officer of the
Company            |  | January 2003 to date
|                                        |  |                                                                 |  |                     
|Frank W. King2,4
Calgary, Alberta       |  | President of Metropolitan Investment Corporation                |  | May 1996 to date    
|                                        |  |                                                                 |  |                     
|Edward M. Lakusta1,2,4
Calgary, Alberta |  | Private Business and Energy Consultant                          |  | May 1996 to date    
|                                        |  |                                                                 |  |                     
|Daniel P. Owen2,3,4
Toronto, Ontario    |  | Chairman of Molin Holdings Limited                              |  | May 1996 to date    
|                                        |  |                                                                 |  |                     
|Guy J. Turcotte1,4
Calgary, Alberta     |  | President and Chief Executive Officer of
Western Oil Sands Inc. |  | April 1998 to date  
|                                        |  |                                                                 |  |                     
|Bruce V. Walter3,4
Toronto, Ontario     |  | Vice-Chairman of Dynatec Corporation                            |  | May 1997 to date    

Notes:



|1. |  | Messrs. Turcotte, Carragher and Lakusta are members of the Audit
Committee.                                                                                                                                                                                                                                                                                                                       
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Messrs. King, Lakusta and Owen are members of the Compensation Committee.                                                                                                                                                                                                                                                                                                                         
|  
|3. |  | Messrs. Walter, Carragher and Owen are members of the Environmental,
Health and Safety Committee.                                                                                                                                                                                                                                                                                                 
|  
|4. |  | Messrs. Delaney, Carragher, King, Lakusta, Owen, Turcotte and Walter are
members of the Corporate Governance Committee.                                                                                                                                                                                                                                                                           
|  
|5. |  | Each of the Directors has been engaged for more than five years in his
present principal occupation except the following:                                                                                                                                                                                                                                                                         
|  
|   |  | Barry M. Heck Prior to becoming President and Chief Executive
Officer of the Company on January 15, 2003, Mr. Heck was Senior Vice
President of the Company from January 1997.                                                                                                                                                                                                                   
|  
|   |  | Guy J. Turcotte Mr. Turcotte became Chief Executive Officer of
Western Oil Sands Inc. in July 1999 and President in January 2002. He
has held the position of Chairman of Fort Chicago Energy Partners L.P.
since December 1997 and was Chief Executive Officer of that company
from December 1997 to December 2002.                                                                             
|  
|   |  | Bruce V. Walter Prior to becoming Vice-Chairman of Dynatec
Corporation in March 2002, Mr. Walter was Chief Executive Officer of
Four Mile Investments Inc. from August 1993; Managing Director, BMO
Nesbitt Burns Inc. from February 1999 to November, 2001; Chief
Executive Officer of Plaintree Systems Inc. from April 1993 to June
1998 and Vice-Chairman of that company until October 1998.

Each of the directors will hold office until the next meeting of shareholders
or until a successor is duly elected or appointed. The Westaim Corporation
does not have a standing executive committee.

17



---



##### 



The following table sets forth the names, municipality of residence and office
of the executive officers of the Company.

|                                     |  |                                                  
|------------------------------------ |  | -------------------------------------------------
|Names and Municipality of Residence  |  | Office with Company                              
|                                     |  |                                                  
|Ian W. Delaney
Toronto, Ontario      |  | Chairman of the Board (non-employee)             
|                                     |  |                                                  
|Barry M. Heck
Calgary, Alberta       |  | President and Chief Executive Officer            
|                                     |  |                                                  
|G.A. (Drew) Fitch
Calgary, Alberta   |  | Senior Vice President and Chief Financial Officer
|                                     |  |                                                  
|Anthony B. Johnston
Calgary, Alberta |  | Senior Vice President                            
|                                     |  |                                                  
|Brian D. Heck
Sherwood Park, Alberta |  | General Counsel and Corporate Secretary          

Barry Heck Before becoming President and Chief Executive Officer of the
Company on January 15, 2003, Mr. Heck was Senior Vice President of the Company
from January 1997.

Brian Heck Mr. Heck has been Counsel to the law firm of Henning Byrne
Whitmore & McKall since June 2001. From November 1999 through October 2000,
Mr. Heck practiced in the areas of corporate law and mergers and acquisitions
with the law firm of Bennett Jones. From October 1997 to May 1999, Mr. Heck
was Vice President, General Counsel and Corporate Secretary to ThermicEdge
Corporation and MicroWear Corporation.

All other officers have been in their current positions and these have been
their principal occupations for the past five years.

The percentage of the Companys common shares beneficially owned, directly or
indirectly, or over which control or direction is exercised by all directors
and executive officers of the Company, as a group, as at April 30, 2003 was
1.95%.

ADDITIONAL INFORMATION

Additional information, including directors and officers remuneration and
indebtedness, principal holders of the Companys securities, options to
purchase securities and interests of insiders in material transactions, where
applicable, is contained in the Companys information circular with respect to
its most recent annual meeting of shareholders. Additional financial
information is contained in the Companys comparative financial statements for
its most recently completed fiscal year.

The Company undertakes, upon request to the Corporate Secretary, The Westaim
Corporation, to provide to any person, when the securities of the Company are
in the course of a distribution pursuant to a short form prospectus or when a
preliminary short form prospectus has been filed in respect of a distribution
of its securities:



|(i) |  | one copy of the Companys AIF, together with one copy of any document, or
the pertinent pages of any document, incorporated by reference in the AIF;
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------

18



---



##### 





|(ii)  |  | one copy of the Companys comparative financial statements for its most
recently completed financial year together with the accompanying report of
the auditors and one copy of the most recent interim financial statements
that have been filed for any period after the end of its most recently
completed financial year;
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     
|(iii) |  | one copy of the Companys information circular in respect of its most
recent annual meeting of shareholders that involved the election of
directors; and                                                                                                                                                                     
|     
|(iv)  |  | one copy of any other documents that are incorporated by reference into
the preliminary short form prospectus or the short form prospectus and are
not required to be provided under (i) to (iii) above;                                                                                                                     

or, at any other time, subject to payment of a reasonable charge if the request
is made by a person who is not a security holder of the Company, one copy of
any document referred to in (i), (ii) and (iii) above.

19