<PAGE>

                                   FORM 20-F/A

[ ]  REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
     EXCHANGE ACT OF 1934 [FEE REQUIRED]

                                       OR

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934

     FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

     FOR THE TRANSITION PERIOD FROM ________________ TO ________________

     Commission File No. 0-30718

                              Sierra Wireless, Inc.
             ------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

                              Sierra Wireless, Inc.
                 -----------------------------------------------
                 (Translation of Registrant's name into English)

                                     Canada
                 -----------------------------------------------
                 (Jurisdiction of incorporation or organisation)

                13811 Wireless Way, Richmond, BC, Canada V6V 3A4
                ------------------------------------------------

                                 (604) 231-1100
                    ----------------------------------------
                    (Address of principal executive offices)

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

                  Title of each             Name of each exchange
                     Class                   on which registered
                  -------------             ---------------------
                      None                           None

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

                  Title of each               Name of each exchange
                     Class                     on which registered
         ---------------------------        --------------------------
         Common Shares, no par value        The Toronto Stock Exchange
                                            The Nasdaq National Market
<PAGE>

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

                                 Common Shares
                                ----------------
                                (Title of Class)

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

The number of outstanding common stock is 16,375,280.

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

                      Yes   X            No
                          -----             -----

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

                      Item 17   X        Item 18
                              -----              -----
<PAGE>

                                     - i -


                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                          <C>
FORWARD-LOOKING STATEMENTS....................................................................1
CURRENCY EXCHANGE RATES.......................................................................1
PART I........................................................................................2
   ITEM 1.  IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS.............................2
   ITEM 2.  OFFER STATISTICS AND EXPECTED TIMETABLE...........................................2
   ITEM 3.  KEY INFORMATION...................................................................2
      A.   Selected Financial Data............................................................2
      B.   Capitalization and Indebtedness....................................................2
      C.   Reasons for the Offer and Use of Proceeds..........................................2
      D.   Risk Factors.......................................................................2
   ITEM 4.  INFORMATION ON THE COMPANY........................................................9
      A.   History and Development of the Company.............................................9
      B.   Business Overview..................................................................9
      C.   Organisational Structure..........................................................18
      D.   Property, Plant and Equipment.....................................................18
   ITEM 5.  OPERATING AND FINANCIAL REVIEW AND PROSPECTS.....................................18
      A.   Operating Results.................................................................18
      B.   Liquidity and Capital Resources...................................................26
      C.   Research and Development, Patent Licences, Etc....................................27
      D.   Trend Information.................................................................27
   ITEM 6.  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES.......................................29
      A.   Directors and Senior Management...................................................29
      B.   Compensation......................................................................30
      C.   Board Practices...................................................................31
      D.   Employees.........................................................................33
      E.   Share Ownership...................................................................34
   ITEM 7.  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS................................35
      A.   Major Shareholders................................................................35
      B.   Related Party Transactions........................................................35
      C.   Interests of Experts and Counsel..................................................35
   ITEM 8.  FINANCIAL INFORMATION............................................................35
      A.   Consolidated Statements and Other Financial Information...........................35
      B.   Significant Changes...............................................................36
   ITEM 9.  THE OFFER AND LISTING............................................................36
      A.   Offer and Listing Details.........................................................36
      B.   Plan of Distribution..............................................................37
      C.   Markets...........................................................................37
      D.   Selling Shareholders..............................................................37
      E.   Dilution..........................................................................37
      F.   Expenses of the Issue.............................................................37
   ITEM 10. ADDITIONAL INFORMATION...........................................................37
      A.   Share Capital.....................................................................37
      B.   Memorandum and Articles of Association............................................37
      C.   Material Contracts................................................................37
      D.   Exchange Controls.................................................................37
      E.   Taxation..........................................................................38
      F.   Dividends and Paying Agents.......................................................42
      G.   Statement of Experts..............................................................42
      H.   Documents on Display..............................................................43
</Table>
<PAGE>

                                    - ii -


<TABLE>
<S>                                                                                          <C>
      I.   Subsidiary Information............................................................43
   ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.......................43
   ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES...........................43
PART II......................................................................................44
   ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUINCIES..................................44
   ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS.....44
   ITEM 15. CONTROLS AND PROCEDURES..........................................................44
   ITEM 16. [RESERVED].......................................................................44
PART III.....................................................................................44
   ITEM 17. Financial Statements.............................................................44
   ITEM 18. Financial Statements.............................................................44
   ITEM 19. Exhibits.........................................................................45
SIGNATURES...................................................................................45
CERTIFICATIONS...............................................................................46
INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS...............................................50
</TABLE>
<PAGE>

                                    - 1 -


                           FORWARD-LOOKING STATEMENTS

The statements in this annual report that are not based on historical facts are
called "forward-looking statements" within the meaning of the United States
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. These statements appear in a
number of different places in this annual report and can be identified by words
such as "estimates", "projects", "expects", "intends", "believes", "plans", or
their negatives or other comparable words. Forward-looking statements include
statements regarding the outlook for our future operations, plans and timing for
the introduction or enhancement of our services and products, statements about
future market conditions, supply and demand conditions, forecasts of future
costs and expenditures, the outcome of legal proceedings, and other
expectations, intentions and plans that are not historical fact. You are
cautioned that any such forward-looking statements are not guarantees and may
involve risks and uncertainties. Our actual results may differ materially from
those in the forward-looking statements due to risks facing us or due to actual
facts differing from the assumptions underlying our predictions. Some of these
risks and assumptions include:

     o    general economic and business conditions, including changes in
          interest rates;

     o    prices and other economic conditions;

     o    natural phenomena;

     o    actions by government authorities, including changes in government
          regulation;

     o    uncertainties associated with legal proceedings;

     o    changes in the resources market;

     o    future decisions by management in response to changing conditions;

     o    our ability to execute prospective business plans; and

     o    misjudgements in the course of preparing forward-looking statements.

We advise you that these cautionary remarks expressly qualify in their entirety
all forward-looking statements attributable to us or persons acting on our
behalf.

                             CURRENCY EXCHANGE RATES

The Company's reporting currency is the United States dollar. All amounts in
this report and in the consolidated financial statements are expressed in United
States dollars, unless identified otherwise. The following table sets out the
exchange rates, based on the noon buying rates in Toronto, Ontario for cable
transfers in foreign currencies, as provided by the Bank of Canada, and is
believed by the Company to closely approximate the rate certified for customs
purposes by the Federal Reserve Bank in New York, for the conversion of Canadian
dollars into United States dollars in effect at the end of the following
periods, and the average exchange rates (based on the average of the exchange
rates on the last day of each month in such periods).

<TABLE>
<CAPTION>
                                                     YEARS ENDED DECEMBER 31,
                              --------------------------------------------------------------------
                                2002            2001           2000           1999           1998
                              --------------------------------------------------------------------
<S>                            <C>             <C>            <C>            <C>            <C>
End of period                  1.5796          1.5928         1.5002         1.4433         1.5333

Average for the period         1.5699          1.5488         1.4852         1.4858         1.4831
</TABLE>

On May 14, 2003, the noon rate of exchange, as reported by the Bank of Canada
and is believed by the Company to closely approximate the rate certified for
customs purposes by the Federal Reserve Bank in New York, for the conversion of
Canadian dollars into United States dollars was Cdn.$1.3787 per United States
dollar.

The information set forth in this Form 20-F annual report is as at December 31,
2002 unless an earlier or later date is indicated.
<PAGE>

                                    - 2 -


                                     PART I

In this document, references to "we", "our", "us", the "Company" or "Sierra
Wireless" mean Sierra Wireless, Inc. and its subsidiaries unless the context of
the sentence clearly suggests otherwise. Our results are presented in accordance
with United States generally accepted accounting principles ("GAAP").

ITEM 1.   IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2.   OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3.   KEY INFORMATION

A.        SELECTED FINANCIAL DATA

In thousands of US$, except number of shares and per share amounts
In accordance with United States GAAP

<TABLE>
<CAPTION>
                                                   1998        1999        2000        2001       2002
---------------------------------------------------------------------------------------------------------
<S>                                               <C>         <C>         <C>         <C>         <C>
Revenue                                           17,802      23,959      53,801      62,348      77,130
Earnings (loss) from operations                    1,313         867      (5,729)    (26,859)    (38,370)
Earnings (loss) from continuing operations         1,705       3,212      (3,118)    (24,269)    (41,663)
Net earnings (loss)                                1,705       3,212      (3,118)    (24,269)    (41,663)
Basic earnings (loss) per share                     0.16        0.25       (0.20)      (1.50)      (2.56)
Diluted earnings (loss) per share                   0.15        0.23       (0.20)      (1.50)      (2.56)

Total assets                                      16,154      52,393     136,065     110,724      71,089
Net assets                                        13,730      47,693     113,813      90,043      48,754
Capital stock                                     22,757      52,936     122,174     122,673     123,047
Number of shares (in thousands)                   10,882      14,216      16,010      16,186      16,345
Dividends declared                                     0           0           0           0           0
</TABLE>

B.        CAPITALIZATION AND INDEBTEDNESS

Not applicable.

C.        REASONS FOR THE OFFER AND USE OF PROCEEDS

Not applicable.

D.        RISK FACTORS

Our business is subject to significant risks and past performance is no
guarantee of future performance. Some of the risks we face are:
<PAGE>

                                    - 3 -


IF WE CANNOT DELIVER PRODUCTS ASSOCIATED WITH SIGNIFICANT CONTRACTS IN A
PROFITABLE AND TIMELY MANNER OUR MARGINS AND REVENUES WILL BE NEGATIVELY
IMPACTED.

     Since late 1999, we have entered into significant supply contracts with
     AT&T Wireless Services ("AT&T"), Sprint PCS and Verizon Wireless. Our right
     to receive revenues under these contracts depends upon our ability to
     manufacture and supply products that meet defined specifications. As of the
     end of 2002, commercial volume deliveries to AT&T, Sprint PCS and Verizon
     Wireless had commenced. In order to realize the benefits of these
     agreements, we will have to continue to successfully manage the following
     risks:

          o    We priced these contracts based on our estimate of future
               production costs. If we incur higher costs than anticipated, our
               gross margins on these contracts will decrease or these contracts
               may not be as profitable.

          o    If we are unable to continue to commit the necessary resources or
               are unable to deliver our products as required by the terms of
               these contracts, our customers may cancel the contracts. In that
               event, any costs incurred may not be recovered and we may incur
               additional costs as penalties.

          o    If we fail to meet a delivery deadline or if the products we
               deliver do not meet the agreed-upon specifications, we may have
               to reduce the price we can charge for our products, we may be
               liable to pay damages to the customer, or volume commitments may
               be reduced.

     If we are unable to successfully manage these risks or meet required
     deadlines in connection with one or more significant contracts, our
     reputation could be harmed and our margins and revenues could decrease.

OUR PAST REVENUE GROWTH RATES AND OTHER OPERATING RESULTS MAY NOT BE ACCURATE
INDICATORS OF OUR FUTURE PERFORMANCE.

     Although our revenues have increased year-over-year, we may not be able to
     sustain these historical growth rates. We may not achieve or sustain
     profitability in the future, and as a result, our share price may decline.

IF WE ARE UNABLE TO DESIGN AND DEVELOP NEW PRODUCTS THAT GAIN SUFFICIENT
COMMERCIAL ACCEPTANCE, WE MAY BE UNABLE TO RECOVER OUR RESEARCH AND DEVELOPMENT
EXPENSES AND WE MAY NOT BE ABLE TO MAINTAIN OUR MARKET SHARE AND OUR REVENUES
COULD DECLINE.

     We depend on designing and developing new products that have not been
     commercially tested to achieve much of our future growth. Our ability to
     design and develop new products depends on a number of factors, including,
     but not limited to the following:

          o    Our ability to attract and retain skilled technical employees.

          o    The availability of critical components from third parties.

          o    Our ability to successfully complete the development of products
               in a timely manner.

          o    Our ability to manufacture products at an acceptable price and
               quality.

     A failure by us or our suppliers in any of these areas, or a failure of
     these products to obtain commercial acceptance, could mean we are unable to
     recover our research and development expenses and could result in a
     decrease in our market share and our revenues.
<PAGE>

                                    - 4 -


WE MAY NOT BE ABLE TO SUSTAIN OUR CURRENT GROSS MARGINS FOR ANY GIVEN PRODUCT
AND, AS A RESULT, OUR PROFITABILITY MAY DECREASE.

     We generally price our products based on our estimate of future production
     costs. If actual production costs are higher than we anticipated, our gross
     margins will decrease. In addition, competitive pressures may force us to
     lower our product prices, which may further decrease our gross margins if
     we are unable to offset that effect by cost reduction measures. If our
     gross margins are reduced with respect to an important product line, or if
     our sales of lower margin products exceed our sales of higher margin
     products, our profitability may decrease and our business could suffer.

WE DEPEND ON THIRD PARTIES TO MANUFACTURE OUR PRODUCTS AND SUPPLY KEY
COMPONENTS. IF THEY DO NOT MANUFACTURE OUR PRODUCTS PROPERLY OR CANNOT MEET OUR
NEEDS IN A TIMELY MANNER, WE MAY BE UNABLE TO FULFILL OUR PRODUCT DELIVERY
OBLIGATIONS AND OUR COSTS MAY INCREASE, AND OUR REVENUE AND MARGINS COULD
DECREASE.

     We outsource a substantial part of the manufacture of our products to third
     parties and depend heavily on the ability of these manufacturers to meet
     our needs in a timely and satisfactory manner. Some components used by us
     may only be available from a small number of suppliers, in some cases from
     only one supplier. Moreover, with respect to the manufacture of our current
     products, we currently rely on three manufacturers, any one of whom may
     terminate the manufacturing contract with us annually. Our reliance on
     third party manufacturers and suppliers subjects us to a number of risks,
     including the following:

          o    The absence of guaranteed manufacturing capacity.

          o    Reduced control over delivery schedules, production yields and
               costs.

          o    Inability to control the amount of time and resources devoted to
               the manufacture of our products.

     If we are unable to successfully manage any of these risks or to locate
     alternative or additional manufacturers or suppliers in a timely and
     cost-effective manner, we may not be able to deliver products in a timely
     manner. In addition, our results of operations could be harmed by increased
     costs, reduced revenues and reduced margins.

WE HAVE A CUSTOMER CONCENTRATION RISK, AS A FEW CUSTOMERS REPRESENT A
SIGNIFICANT PORTION OF OUR EXPECTED FUTURE REVENUE.

     We depend on a small number of customers for a significant portion of our
     revenues. In the last two fiscal years, there have been four different
     customers that individually accounted for more than 10% of our revenues. If
     any of these customers reduce their business with us or suffer from
     business failure, our revenues could decline, perhaps materially.

IF DEMAND FOR OUR CURRENT PRODUCTS DECLINES AND WE ARE UNABLE TO LAUNCH
SUCCESSFUL NEW PRODUCTS, OUR REVENUES WILL DECREASE.

     Demand for one or all of these products could decline as a result of
     competition, technological change or other factors. If we are unable to
     launch successful new products, reduced demand for our current products
     would cause our results of operations to decline and harm our financial
     condition.
<PAGE>

                                    - 5 -


WE MAY HAVE DIFFICULTY RESPONDING TO CHANGING TECHNOLOGY, INDUSTRY STANDARDS AND
CUSTOMER PREFERENCES, WHICH COULD CAUSE US TO BE UNABLE TO RECOVER OUR RESEARCH
AND DEVELOPMENT EXPENSES AND LOSE REVENUES.

     Our success will depend in part on our ability to develop products that
     keep pace with the continuing changes in technology, evolving industry
     standards and changing customer and end-user preferences and requirements.
     Our products embody complex technology that may not meet those standards,
     changes and preferences. In addition, wireless communications service
     providers require that wireless data systems deployed in their networks
     comply with their own standards, which may differ from the standards of
     other providers. We may be unable to successfully address these
     developments on a timely basis or at all. Our failure to respond quickly
     and cost-effectively to new developments through the development of new
     products or enhancements to existing products could cause us to be unable
     to recover significant research and development expenses and reduce our
     revenues.

COMPETITION FROM BIGGER, MORE ESTABLISHED COMPANIES WITH GREATER RESOURCES MAY
PREVENT US FROM INCREASING OR MAINTAINING OUR MARKET SHARE AND COULD RESULT IN
PRICE REDUCTIONS AND REDUCED REVENUES.

     The wireless data industry is intensely competitive and subject to rapid
     technological change. We expect competition to intensify. More established
     and larger companies with greater financial, technical and marketing
     resources sell products that compete with ours. Existing or future
     competitors may be able to respond more quickly to technological
     developments and changes or may independently develop and patent
     technologies and products that are superior to ours or achieve greater
     acceptance due to factors such as more favourable pricing or more efficient
     sales channels. If we are unable to compete effectively with our
     competitors' pricing strategies, technological advances and other
     initiatives, our market share and revenues may be reduced.

WE DEPEND ON THIRD PARTIES TO OFFER WIRELESS DATA COMMUNICATIONS SERVICES. IF
THESE SERVICES ARE NOT DEPLOYED AS ANTICIPATED, CONSUMERS WILL BE UNABLE TO USE
OUR PRODUCTS, AND OUR SALES AND REVENUES WILL DECLINE.

     Our customers can only use our products over wireless data networks
     operated by third parties. If these network operators cease to offer
     effective and reliable service, or fail to market their services
     effectively, sales of our products will decline and our revenues will
     decrease.

     In addition, our future growth depends on the successful deployment of next
     generation wireless data networks by third parties, especially the
     successful deployment by AT&T Wireless Services, Sprint PCS and Verizon
     Wireless of networks for which we have developed products. If these next
     generation networks are not deployed or widely accepted, or if deployment
     is delayed, there will be no market for the products we are developing to
     operate on these networks. As a result, we will not be able to recover our
     research and development expenses and our results of operations will be
     harmed.

WE MAY HAVE DIFFICULTY MANAGING OUR GROWTH, WHICH MAY DAMAGE OUR ABILITY TO
RETAIN KEY PERSONNEL AND TO COMPETE EFFECTIVELY.

     Our revenues have increased from approximately $9.3 million in 1997 to
     $77.1 million in 2002 and our number of employees has more than doubled
     during that period. Our growth has placed significant demands on our
     management and other resources. Our future success will depend on our
     ability to manage our growth, including:

          o    Continuing to train, motivate, manage and retain our existing
               employees and attract and integrate new employees.
<PAGE>

                                    - 6 -


          o    Maintaining and growing manufacturing capacity.

          o    Developing new products in a timely manner.

          o    Improving and upgrading our financial and management information
               systems and controls.

     If we are unable to manage our growth effectively, our ability to retain
     key personnel and to compete effectively may be damaged.

OTHERS COULD CLAIM THAT WE INFRINGE ON THEIR INTELLECTUAL PROPERTY RIGHTS, WHICH
MAY RESULT IN SUBSTANTIAL COSTS, DIVERSION OF RESOURCES AND MANAGEMENT ATTENTION
AND HARM TO OUR REPUTATION.

     It is possible that other parties may claim that we have violated their
     intellectual property rights. Rights to intellectual property can be
     difficult to verify. Competitors could assert, for example, that former
     employees of theirs whom we have hired have misappropriated their
     proprietary information for our benefit. A successful infringement claim
     against us could damage us in the following ways:

          o    We may be liable for damages and litigation costs, including
               attorneys' fees.

          o    We may be prohibited from further use of the intellectual
               property.

          o    We may have to license the intellectual property, incurring
               licensing fees.

          o    We may have to develop a non-infringing alternative, which could
               be costly and delay or result in the loss of sales.

     Regardless of the outcome, an infringement claim could result in
     substantial costs, diversion of resources and management attention and harm
     to our reputation.

MISAPPROPRIATION OF OUR INTELLECTUAL PROPERTY COULD PLACE US AT A COMPETITIVE
DISADVANTAGE.

     Our intellectual property is important to our success. We rely on a
     combination of patent protection, copyrights, trademarks, trade secrets,
     licenses, non-disclosure agreements and other contractual agreements to
     protect our intellectual property. Third parties may attempt to copy
     aspects of our products and technology or obtain information we regard as
     proprietary without our authorization. If we are unable to protect our
     intellectual property against unauthorized use by others it could have an
     adverse effect on our competitive position. Our strategies to deter
     misappropriation could be inadequate due to the following risks:

          o    Non-recognition of the proprietary nature or inadequate
               protection of our methodologies in the United States, Canada or
               foreign countries.

          o    Undetected misappropriation of our intellectual property.

          o    The substantial legal and other costs of protecting and enforcing
               our rights in our intellectual property.

          o    Development of similar technologies by our competitors.

     In addition, we could be required to spend significant funds and our
     managerial resources could be diverted in order to defend our rights, which
     could disrupt our operations.
<PAGE>

                                    - 7 -


OUR REVENUES AND EARNINGS MAY FLUCTUATE FROM QUARTER TO QUARTER WHICH COULD
AFFECT THE MARKET PRICE OF OUR COMMON SHARES.

     Our revenues and earnings may vary from quarter to quarter as a result of a
     number of factors, including:

          o    The timing of releases of our new products.

          o    The timing of substantial orders.

          o    Possible seasonal fluctuations in demand.

          o    Possible delays in the manufacture or shipment of current or new
               products.

          o    Possible delays or shortages in component supplies.

     Because our operating expenses are determined based on anticipated sales,
     are generally fixed and are incurred throughout each fiscal quarter, any of
     the factors listed above could cause significant variations in our revenues
     and earnings in any given quarter. Thus, our quarterly results are not
     necessarily indicative of our overall business, results of operations and
     financial condition. However, quarterly fluctuations in our revenues and
     earnings may affect the market price of our common shares.

POTENTIAL ACQUISITIONS MAY RESULT IN INCREASED EXPENSES AND DIVERT MANAGEMENT'S
ATTENTION.

     In the past, our strategy has included expanding our operations and
     business through strategic acquisitions of businesses and products. We may
     continue to pursue this strategy in order to further expand our business.
     Acquisitions involve a number of risks, including:

          o    Diversion of management's attention during the acquisition
               process.

          o    Impact on our financial condition due to the timing of the
               acquisition.

          o    The failure of the acquired business to achieve anticipated
               revenue levels, cost savings or other synergies.

     If realized, these risks could result in substantial costs and disrupt our
     operations. In addition, acquisitions could result in issuances of
     securities that may dilute the value of our common shares.

FLUCTUATIONS IN EXCHANGE RATES BETWEEN THE UNITED STATES DOLLAR AND THE CANADIAN
DOLLAR MAY AFFECT OUR OPERATING RESULTS.

     Approximately 78% of all of our sales are in United States dollars to
     United States-based customers. We are exposed to fluctuations in the
     exchange rate between the United States dollar and the Canadian dollar
     through our operations in Canada. To reduce our risk because of currency
     fluctuations, we purchase inventory, other costs of sales items and many of
     our services in United States dollars. If the Canadian dollar rises
     relative to the United States dollar, our operating results may be
     impacted. To date, we have not entered into any foreign currency futures
     contracts as part of a hedging policy to cover our Canadian currency
     requirements.  During 2002, we continued to enter into additional
     distribution agreements in Europe and the Asia-Pacific region that are
     denominated primarily in U.S. dollars. We expect that as our
<PAGE>

                                    - 8 -


     business expands in Europe, we will also be exposed to Euro transactions
     and to the associated currency risk.  To date, we have not entered into any
     futures contracts.

AS OUR BUSINESS EXPANDS INTERNATIONALLY, WE WILL BE EXPOSED TO ADDITIONAL RISKS
RELATING TO INTERNATIONAL OPERATIONS.

     Our expansion into international operations exposes us to additional risks
     unique to such international markets, including the following:

          o    Increased credit management risks and greater difficulties in
               collecting accounts receivable.

          o    Unexpected changes in regulatory requirements, wireless
               communications standards, exchange rates, trading policies,
               tariffs and other barriers.

          o    Uncertainties of laws and enforcement relating to the protection
               of intellectual property.

          o    Language barriers.

          o    Potential adverse tax consequences.

     Furthermore, if we are unable to develop distribution channels in Europe
     and the Asia-Pacific region we may not be able to grow our international
     operations and our ability to increase our revenue will be negatively
     impacted.

OUR BUSINESS MAY SUFFER IF GROWTH IN THE WIRELESS DATA COMMUNICATIONS DEVICES
MARKET DECLINES.

     The market for our products may not continue to grow, firms within the
     industry may not adopt our technology for integration with their wireless
     data communications solutions, and we may be unsuccessful in independently
     establishing markets for our products. If the markets in which we compete
     fail to grow, or grow more slowly than we currently anticipate, or if we
     are unable to establish markets for our new products, it would
     significantly harm our business, results of operations and financial
     condition.

     Certain factors that may limit the growth of the market include, but are
     not limited to, failure of carriers to successfully deploy new services on
     schedule or the failure of the services to achieve satisfactory price and
     performance conditions.

GOVERNMENT REGULATION COULD RESULT IN INCREASED COSTS AND INABILITY TO SELL OUR
PRODUCTS.

     Our products are subject to certain mandatory regulatory approvals in the
     United States, Canada and other countries in which we operate. In the
     United States, the Federal Communications Commission regulates many aspects
     of communications devices. In Canada, similar regulations are administered
     by the Ministry of Industry, through Industry Canada. Although we have
     obtained all the necessary Federal Communications Commission, Industry
     Canada and other required approvals for the products we currently sell, we
     may not obtain approvals for future products on a timely basis, or at all.
     In addition, regulatory requirements may change or we may not be able to
     obtain regulatory approvals from countries other than the United States and
     Canada in which we may desire to sell products in the future.
<PAGE>

                                    - 9 -


ITEM 4.   INFORMATION ON THE COMPANY

A.        HISTORY AND DEVELOPMENT OF THE COMPANY

Sierra Wireless, Inc. was incorporated under the CANADA BUSINESS CORPORATIONS
ACT on May 31, 1993. The Articles of Sierra were amended by a Certificate of
Amendment issued March 29, 1999 to remove the private company provisions and
restrictions on share transfer. The Articles of the Company were further amended
by Certificates of Amendment issued May 13, 1999 and May 14, 1999 to: (i)
re-designate and change all existing common shares in the capital of the Company
to new common shares in the capital of the Company (the "Common Shares"); (ii)
change the rights attached to all preference shares in the capital of the
Company (the "Preference Shares") and to remove each existing series of
Preference Shares; and (iii) consolidate the Common Shares on the basis of one
post-consolidation Common Share for 1.5 pre-consolidation Common Shares. We
completed our initial public offering and secondary offering of Common Shares on
May 17, 1999, on which date the Common Shares were listed for trading on The
Toronto Stock Exchange. On May 10, 2000, we completed a new issue and secondary
offering of 2,221,139 Common Shares. In addition, the Common Shares were
co-listed on the NASDAQ National Market. Of the 2,221,139 Common Shares sold
under this new issue and secondary offering, 1,461,106 Common Shares were
offered by the Company and 760,033 Common Shares were offered by certain
shareholders of the Company.

The Company's registered and records office is located at Suite 2600, Three
Bentall Centre, 595 Burrard Street, Vancouver, British Columbia, Canada, V7X
1L3, and the head office and principal place of business is located at 13811
Wireless Way, Richmond, British Columbia, Canada, V6V 3A4. The Company's
telephone number is (604) 231-1100.

B.        BUSINESS OVERVIEW

Our principal business is in the wireless communications industry. We are a
provider of wireless data communications equipment supplying wireless data
modems, original equipment manufacturer (OEM) modules and other devices, as well
as software that enables the modems, modules and devices to work with computers
and other equipment. Wireless data modems, modules and enabling software are the
components that permit computing devices and other equipment to access a
wireless data communications network. Wireless data communications involves the
transmission of data using radio frequencies between appropriately configured
computers and communications networks, such as the Internet and corporate
intranets. Wireless data communications is an expanding market positioned at the
convergence of wireless communications, portable computing and the Internet,
each a growing market.

We develop and market a broad range of wireless data modems, modules and
enabling software for use with handheld computing devices, notebook computers,
personal digital assistants (PDAs), vehicle-based systems and monitoring
applications. Our products are based on open standards, including the Internet
protocol, and operate on wireless data networks supported by major wireless
communications service providers. Our products are used for a range of wireless
applications including Internet access, e-mail, messaging, corporate Intranet
access, remote database inquiry and computer aided dispatch

OUR PRODUCTS

Our product line of wireless data modems includes PC cards, vehicle-mounted
modems and original equipment manufacturer (OEM) modules that are built into
computers and other devices, as well as enabling software. Many of our products
support more than one communications protocol. All of our modems have an
integrated radio, eliminating the need to connect the modem to a cellular phone.
<PAGE>

                                    - 10 -


The following chart outlines our current products.

<TABLE>
<CAPTION>
                ------------------------------------------------------------------------------------------------------
                Product               Network     Description
----------------------------------------------------------------------------------------------------------------------
<S>             <C>                   <C>         <C>
    Wireless    Sierra Wireless       GPRS/       Wireless wide area network card for GPRS networks around the world.
    Modems      AirCard 710-750       GSM
                ------------------------------------------------------------------------------------------------------
                Sierra Wireless       CDMA        Wireless network interface card (NIC) for CDMA 1xRTT networks
                AirCard 550-555       2000 1X
                ------------------------------------------------------------------------------------------------------
                Sierra Wireless       CDMA        The first true Type II CDMA PC Card modem offering access to CDMA
                AirCard 510                       IS95A networks
                ------------------------------------------------------------------------------------------------------
                Sierra Wireless       AMPS/       Single PC card wireless modem for use with handheld or notebook
                AirCard 350           CDPD        computers or in conjunction with the Sierra Wireless AirBooster
                ------------------------------------------------------------------------------------------------------
                                                  Wireless wide area network interface card (NIC) for notebook and
                Sierra Wireless       AMPS/       handheld computers running Windows CE, Pocket PC, Handheld PC
                AirCard 300           CDPD        2000, Windows 95, 98, 2000, Me, XP and NT operating systems
                ------------------------------------------------------------------------------------------------------
                Sierra Wireless       AMPS/
                SB Embedded           CDPD/       Modem modules for integration into original equipment manufacturer
                Module                CDMA        products
                ------------------------------------------------------------------------------------------------------
                Sierra Wireless MP
                Modem and Sierra      AMPS/
                Wireless AirBooster   CDPD        Rugged, high powered, vehicle-mounted modems
                Amplifier
----------------------------------------------------------------------------------------------------------------------
Enabling        Sierra Wireless       n/a         Graphical user interface for use with our modems
Software        Watcher Software
                ------------------------------------------------------------------------------------------------------
                Sierra Wireless
                WirelessExpert        n/a         Software utility used to install and configure our modems
                Software
----------------------------------------------------------------------------------------------------------------------
</TABLE>

SIERRA WIRELESS AIRCARD 700 SERIES WIRELESS NETWORK CARDS

The Sierra Wireless AirCard 700 series wireless network cards include the Sierra
Wireless AirCard 750 and the Sierra Wireless AirCard 710. Both are designed to
operate as wide-area wireless network interface cards (NIC), providing local
area network (LAN) like connectivity for computer users on the GPRS network.
Using these modems, mobile computer users have full access to e-mail, intranet,
corporate applications and full Web browsing wherever GPRS network service is
available. The AirCard 700 series PC Cards may be used with handhelds operating
Pocket PC, Pocket PC 2002 and Handheld PC 2000, or with laptops running Windows
95 (OSR 2 and higher), 98, NT 4.0, 2000, Me and XP.

The Sierra Wireless AirCard 750 is a tri-band wireless PC Card for use on GSM
and GPRS data networks worldwide and, accordingly, provides worldwide wireless
access to the World Wide Web. The AirCard 750 provides packet data, voice,
circuit switched data and short messaging service (SMS) support. We began
commercial volume shipments of this product in March 2002.

The Sierra Wireless AirCard 710 is a single-band wireless PC Card for North
American GPRS networks. The AirCard 710 provides packet data, circuit switched
data and short messaging service (SMS) support. We began commercial volume
shipments of this product in July 2002.
<PAGE>

                                    - 11 -


SIERRA WIRELESS AIRCARD 550/555 WIRELESS NETWORK CARDS

The Sierra Wireless AirCard 550 and 555 for CDMA2000 1X networks operate as
wide-area wireless network interface cards (NIC) providing easy access to the
Internet, LAN/intranet and remote software applications. These modems are
backward compatible to CDMA IS95-A and IS95-B networks.

Both are true Type II PC Card designs, and together with their application
software, seamlessly integrate into a Windows notebook or handheld device and
support Windows 95 (OSR 2 and higher), 98, NT 4.0, 2000, Me, XP, Pocket PC,
Pocket PC 2002 and Handheld PC2000.

The Sierra Wireless AirCard 555 wireless network card is a dual-band wireless PC
Card for North American cellular and PCS networks, enabling mobile users to
enhance the functionality of their laptop or handheld device by adding voice and
2-way messaging. We began commercial volume shipments of this product in January
2002.

The Sierra Wireless AirCard 550 wireless network card is a single-band wireless
PC Card for the Sprint PCS network providing users with seamless wireless
Internet connectivity, connecting notebook or handheld devices at increased
speeds. We began commercial volume shipments of this product in October 2002.

SIERRA WIRELESS AIRCARD 510 WIRELESS NETWORK CARD

The Sierra Wireless AirCard 510 wireless network card is the world's first true
type II PC Card for the CDMA network. This product works with laptops running
Windows 95, 98, NT, and 2000, and handhelds running Pocket PC and Windows CE 3.0
for Handheld PC, connecting the user directly to the Internet, intranet,
corporate e-mail and other corporate applications over the CDMA networks. Once
connected, mobile users can conduct business as if they were at the office, with
access to mission critical corporate applications.

SIERRA WIRELESS AIRCARD 350 WIRELESS NETWORK CARD

The Sierra Wireless AirCard 350 wireless network card is a product for use by
end-users who need the portability of a PC Card product and the coverage
provided by an in-vehicle mobile product. Used alone, the Sierra Wireless
AirCard 350 PC Card provides all the features of the Sierra Wireless AirCard 300
PC Card. It has the added capability of being connected to an external three
watt Sierra Wireless AirBooster Amplifier mounted in a vehicle. This feature
enables a police officer to take a notebook computer to a crime scene or into
the office to access data over the wireless network. Upon returning to the
vehicle, the officer can plug the Sierra Wireless AirCard 350 Modem to a simple
connector and achieve the coverage gain provided by the more powerful modem. The
Sierra Wireless AirCard 350 Modem and Sierra Wireless AirBooster Amplifier may
be purchased separately or as a combination marketed as the Sierra Wireless
AirCombo.

SIERRA WIRELESS AIRCARD 300 WIRELESS NETWORK CARD FOR NOTEBOOKS AND HANDHELDS

The Sierra Wireless AirCard 300 wireless network card is the first wireless NIC
offering a true extension of the desktop or LAN work environment when on the
road. This single PC Card may be used with handheld PCs running Windows CE,
Pocket PC, Pocket PC 2002 and Handheld PC 2000 and notebook computers running
Windows 95, 98, 2000, NT and Me.

Common applications for the Sierra Wireless AirCard 300 Modem include:

     o   Mobile professionals accessing enterprise e-mail, corporate databases,
         customer account information or stock prices.
<PAGE>

                                    - 12 -


     o   Community healthcare professionals at a patient's home accessing
         hospital charts and records, filing reports and communicating with
         physicians located at a hospital.

SIERRA WIRELESS SB EMBEDDED MODEM PRODUCT LINE

The Sierra Wireless SB Embedded Modem product line of wireless modules includes
the SB300 and SB320 product models for CDPD, and the SB508, SB519 and SB555
product models for CDMA. These embedded modules deliver cellular data
connectivity that original equipment manufacturers integrate into products
ranging from handheld computers, laptops and mobile terminals, to fixed
terminals including industrial meters, monitoring equipment and point-of-sale
devices. This product line offers a broad range of packaging options, providing
original equipment manufacturers' customers with wide design flexibility.

The Sierra Wireless SB555 is our newest embedded module and is designed for
CDMA2000 1X networks. It is the smallest product in our OEM line, is based on
our Core Wireless Engine architecture and offers complete wireless
functionality, high efficiency and low power consumption. The Sierra Wireless
SB555 integrates easily into hardware applications. We commenced commercial
volume shipments of the SB555 in the first quarter of 2002.

The Sierra Wireless SB320 delivers multi-mode functionality including CDPD,
circuit-switched data and wireline data capability. The Sierra Wireless SB300
delivers CDPD-only functionality to those original equipment manufacturers who
consider size, price and reliability in challenging environments to be
important.

SOFTWARE DEVELOPMENT KITS: To support our original equipment manufacturer
customers, we provide Software Development Kits (SDK), development support and
integration services to rapidly and cost-effectively integrate the Sierra
Wireless SB modules.

Applications where Sierra Wireless SB modules are used by customers of original
equipment manufacturers include:

     o   Mobile professionals using wirelessly-enabled Pocket PC devices such as
         Toshiba's new Thera Pocket PC device, marketed under the Audiovox
         brand.

     o   Telecommunications field service technicians receiving dispatch
         instructions, accessing service instructions and schematics, closing
         service calls via reports and filing time sheets.

     o   Consumer packaged goods sales agents placing and tracking orders or
         checking inventory in stores, vending machines and warehouses.

     o   Remotely monitoring flow in a pipeline or usage at a utility meter
         through a wireless communications unit.

SIERRA WIRELESS MP MODEM AND SIERRA WIRELESS AIRBOOSTER AMPLIFIER PRODUCT LINES

The Sierra Wireless MP product line consists of a group of rugged, high powered,
vehicle mounted modems including the MP200, MP210 and the MP200-GPS product
models. Generally, these products are mounted in a vehicle and connected to a
computer or data terminal. The Sierra Wireless MP product line is designed to
operate in harsh conditions, including extremes of temperature, humidity,
vibration and vehicle ignition noise. With three watts of power output, these
products provide communications in areas where signal coverage is marginal but
mission-critical data still needs to get through.
<PAGE>

                                    - 13 -


The Sierra Wireless MP750 GPS is our newest rugged, high powered, vehicle
mounted module and is designed to operate on GSM and GPRS networks. The MP750
GPS offers high-speed, tri-band GPRS wireless data and voice connections and
features integrated GPS (Global Positioning System) tracking and digital
input/output ports for accurate reporting of location, velocity and alarm
states.

The Sierra Wireless MP product line consists of a number of other models, each
of which supports one or more of CDPD, circuit-switched data, circuit-switched
cellular digital packet data, voice and the global positioning system, known as
GPS. The Sierra Wireless MP200-GPS allows a dispatcher to track the location and
status of individual vehicles. The AirBooster Amplifier is a Sierra Wireless MP
modem used in conjunction with a Sierra Wireless AirCard 350 wireless network
card.

Common applications for Sierra Wireless MP products include:

     o   Police officers looking up license plates, checking criminal databases,
         communicating with the dispatcher and other officers and filing service
         reports from a patrol car.

     o   Utility field service technicians receiving dispatch instructions,
         consulting service instructions and diagrams, filing service call
         reports and time sheets.

ENABLING SOFTWARE

Our line of software allows our modems and devices to work with personal and
handheld computers and other devices:

SIERRA WIRELESS WATCHER SOFTWARE is a graphical user interface designed for
everyday use with our modems. While the modem is in use, the Watcher program
provides ongoing information on registration status and signal strength and
allows the user to switch operating modes where applicable. Sierra Wireless
Watcher supports the Windows 95, 98, NT 4.0, 2000, Me, XP, Pocket PC, Pocket PC
2002, and Handheld PC 2000 operating systems.

SIERRA WIRELESS WIRELESSEXPERT SOFTWARE is a utility used for modem installation
and configuration. Sierra Wireless WirelessExpert offers the end-user an easy
and quick path to install our modems by following a short series of "fill in the
blank" screens. This software is sold bundled with Sierra Wireless Watcher for
notebook PCs and handheld computers. We began commercial shipments of the
original version in 1997.

DEVELOPER'S CENTRAL, INCLUDING SIERRA WIRELESS SOFTWARE DEVELOPMENT KITS,
provide tools and information that support Sierra Wireless PC Card and network
adapter products to application developers. Using these tools, developers can
include important modem status information into their own user interface. This
level of integration supports easy-to-use, complete bundled solutions.

We continue to add features and new releases for all of our enabling software
products.

FUTURE PRODUCTS

We continually test and develop new products and technologies that will allow us
to take advantage of the expanding and changing market. The following
technologies are areas of significant new product development interest.

EDGE. EDGE is designed to offer packet data communications at speeds of up to
384 kbps over suitably configured networks using the Emerging Data rates for
Global Evolution, or EDGE, standard. This technology is on the evolution path of
TDMA and some GSM network operators.
<PAGE>

                                    - 14 -


UMTS. UMTS is designed to offer transmission of text, digitized voice, video and
multimedia at broadband data rates. Once fully implemented, it will allow
customers to remain attached to the Internet at high-speeds while on the move.
UMTS is an evolutionary path for GSM, TDMA, GPRS and EDGE networks.

CDMA 1XEV-DO. 1X-EVDO is designed to offer high-speed data capability (up to
2.4Mbps) for systems utilizing CDMA technology. In 2002, we signed a development
agreement with Lucent Technologies to collaborate on products based on the
1xEV-DO standard.

PRODUCT DEVELOPMENT

We have built a reputation in the wireless data industry for creating
state-of-the-art, high-quality products within aggressive time-frames. Our
development team of approximately 86 persons, located in our headquarters in
Richmond, BC, are skilled in the areas of radio frequency (RF), hardware,
embedded software, windows software and mechanical design. Combined, this team
has several hundred years of experience in the design of small form factor
wireless devices, particularly for data applications. Our product development
team combines leaders with extensive experience in their fields with younger
graduates from leading universities.

We take a Core Team approach to product development. Our goal is develop a
"whole" product and to ensure products are managed closely throughout their
entire life cycle. As part of this approach, individuals from our product
development group form product-specific teams with employees from other
functional areas, including product management, operations, technical support
and quality. These teams work closely to bring new products through the
development phase, while balancing the market requirements of performance, time
to market and product cost. Concepts and prototypes are validated by working
with lead customers, channel partners and industry consultants.

Products that result from this process are designed and tested to cellular
industry standards and introduced to our high-volume contract manufacturing
partners for production and delivery to our customers. Included in the
development effort is the certification of our products with industry and
regulatory standards bodies.

A central group of senior engineers develops and monitors our development
standards. These standards are applied across all development projects to ensure
uniformity. For example we have adopted a Core Wireless Engine design approach
to deliver a common physical, electrical and software interface for products
utilizing different wireless standards. This allows our customers to utilize our
different products with minimal additional integration effort on their part.

Our product development staff stays current in technology by participating in
industry groups such as the Personal Computer Communications Association (PCCA),
the Cellular Telecommunications Industry Association (CTIA), the Mobile Advisory
Council (MAC) and the International Wireless Packaging Consortium, and through
ongoing technical education. We maintain close relationships with local
universities by hiring co-op students, giving lectures, supporting visiting
professorships and participating in regular informal meetings with faculty
members.

DISTRIBUTION

Our products are used by a variety of end-users, ranging from sales people and
mobile executives, to police officers and utility workers. These various types
of customers will often purchase and use our products in a different manner.
Accordingly, we have built a distribution channel that responds to the unique
purchasing and usage requirements of our customer base.
<PAGE>

                                    - 15 -


Historically, a substantial majority of our sales have come from North American
markets. This has been driven by our historical technology platform and the
relative maturity of the North American market. As our wireless technology
platforms have diversified, we have built sales and distribution teams to focus
on developing our business outside of North America. In 2001 we opened our new
European sales and distribution office near London's Heathrow Airport.
Currently, we have dedicated sales and distribution efforts for the European,
Asia Pacific and Latin American regions, as well as for North America.

Our approach to distribution takes advantage of our existing relationships
with wireless carriers, resellers and original equipment manufacturers in
order to maximize the productivity of our sales team.

WIRELESS CARRIERS

Wireless carriers play two key roles in our distribution strategy. First,
wireless carriers are often resellers for us, purchasing our products and then
reselling them to end-user customers. Additionally, the cellular carrier sales
team often works with our sales team to jointly sell wireless data solutions and
our equipment to the end-user customer. The cellular carrier channel gives us
extended customer reach, while the carriers are able to use our wireless data
expertise to help sell their products or services. We have invested a great deal
of time and resources in cultivating our relationships with wireless carriers
and view these relationships as a critical success factor and competitive
differentiator.

RESELLERS

Resellers purchase our products either directly from us or from a distributor,
and resell them to end-user customers. In order to support resellers who prefer
to purchase through a distributor, we have selectively formed distribution
relationships. Distributors ensure that our products are available to a large
number of resellers that buy products. We have adopted a selective distribution
strategy in our approach to distributor recruitment. We partner with the
recognized leader for each of the reseller categories that sell wireless
technology. Currently, we have distributors that specialize in selling to the IT
VAR community, traditional wireless resellers, big box retail and independent
cellular dealer agents. From time to time, our distributors also act as agent to
our carrier partners and receive commissions from the carriers for activating
our cellular data modems on the carrier networks.

Resellers generally combine our modems with other elements of an overall
solution, such as computer hardware and application software, and deliver a
complete package to the end-user customer. Resellers include computer resellers,
wide area network resellers, application developers, system integrators,
wireless Internet service providers and wireless application service providers.
This channel provides us with direct access to markets and users that are often
not served by the wireless carriers. Each reseller provides a mix of value to
the end-user customer depending on the market segment being served, such as
public safety, mobile professional, government and mobile office.

ORIGINAL EQUIPMENT MANUFACTURERS

Original equipment manufacturers are companies that integrate our modem
technology into devices they manufacture and sell to end-user customers through
their own direct sales force and indirect distribution channels. Our modems are
integrated into a range of devices, such as handheld and notebook personal
computers, which are sold into the public safety, field service, field sales,
mobile professional, transportation and insurance markets. Many original
equipment manufacturers select us, not only for our high-quality advanced
technology, but also for our engineering support during the complex modem
integration process, and for the subsequent sales and channel development
assistance we provide.

In addition to these more traditional original equipment manufacturers, a
growing percentage of our business is with notebook computer and PDA
manufacturers. Often, these manufacturers will bundle our
<PAGE>

                                    - 16 -


finished products, such as wireless PC Cards, with their computing devices and
then resell the complete solution through their own distribution channels.

DIRECT SALES

A small percentage of our end-user customers choose to purchase products
directly from us. Typically, these are accounts requiring direct sales and
technical support, or existing customers ordering additional products or
accessories. Direct sales are facilitated through our web site, inside sales
department and regionally organized sales team.

INTERNATIONAL

In addition to North America, our products are sold in the European,
Asia-Pacific and Latin American regions. In order to service these markets,
we have built dedicated sales, distribution and technical support teams for
each region. Our European, Middle East and Africa (EMEA) sales, distribution
and support team is located in our London office. These teams utilize four
primary channels to sell our products to end-users:

     o   Infrastructure equipment suppliers

     o   Original equipment manufacturers

     o   Wireless carriers

     o   Local distributors and resellers

Infrastructure equipment suppliers, including Ericsson, Nokia, Siemens, Lucent
Technologies and Nortel Networks, often work with us to introduce our sales
teams to their international distributors and cellular carrier customers.
Cellular carrier relationships play a similar role as in North America.
Distributors are appointed to import our products and resell them to local
resellers.

MARKETING

Our marketing team is responsible for providing product management, strategic
marketing, marketing communications and customer support for our products on an
increasingly global basis. Members of the product management team play an active
role in our Core Team approach to developing and managing individual products
through their entire product life cycle. Product management emphasis is placed
on understanding customer needs, developing the business case, determining
competitive positioning and pricing, and on ensuring product completeness, which
includes documentation, promotional material and marketing programs.

CUSTOMER SUPPORT

We provide customers and channel partners with product and technical support in
English, Spanish and German using telephone, e-mail and our Web site. In
addition, we provide a Chinese Website to support Sierra Wireless AirCards
localized for the Chinese market. Online resources include product
documentation, technical specifications, frequently asked questions, application
notes, troubleshooting notes, troubleshooting tools, and software downloads.

STRATEGIC MARKETING/MARKETING COMMUNICATIONS

We communicate our corporate and product positioning to channels and customers
in our global markets in several ways, including:
<PAGE>

                                    - 17 -


     o    Actively seeking editorial coverage and placing advertisements in
          industry, business and trade publications.

     o    Through industry associations.

     o    By meeting with opinion leaders and industry analysts.

     o    Participation in targeted conferences and trade shows.

We work with our channel partners to develop programs to encourage end-user
adoption.

In addition, we use the WirelessReady Alliance(TM), including its Web site,
member communications, member programs and events, for marketing and promoting
interest in wireless data solutions and products. The WirelessReady Alliance(TM)
is an alliance consisting of leading computer hardware manufacturers, software
application vendors, wireless telephony companies and value-added enterprise
service providers aimed at accelerating the availability of compelling and
complete wireless data solutions.

MANUFACTURING

We outsource some of our manufacturing services, including parts procurement,
kitting, assembly and repair. We believe that outsourcing allows us to:

     o    Focus on research and development, sales and marketing.

     o    Participate in contract manufacturer economies of scale.

     o    Access high quality manufacturing resources.

     o    Achieve rapid production scalability.

     o    Reduce equipment capital costs and equipment obsolescence risk.

In addition, we perform certain manufacturing related functions in-house,
including manufacturing engineering, and development of manufacturing test
procedures and fixtures.

Our products are currently manufactured by:

SANMINA-SCI CORP., UNITED STATES: (MANUFACTURED IN MEXICO)

SOLECTRON CORPORATION, UNITED STATES: (MANUFACTURED IN MEXICO)

CREATION TECHNOLOGIES, CANADA
<PAGE>

                                    - 18 -


C.        ORGANISATIONAL STRUCTURE

The following table lists subsidiaries of Sierra Wireless and their
jurisdictions of incorporation or organization. All such entities are
wholly-owned, directly or indirectly, by Sierra Wireless.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
NAME                               JURISDICTION OF INCORPORATION OR ORGANIZATION
--------------------------------------------------------------------------------------
<S>                                <C>
Sierra Wireless Data, Inc.         Delaware, U.S.A.
--------------------------------------------------------------------------------------
Sierra Wireless ULC(1)             Nova Scotia, Canada
--------------------------------------------------------------------------------------
Sierra Wireless (UK) Limited       United Kingdom
--------------------------------------------------------------------------------------
</TABLE>

--------------
NOTES:

(1)  An unlimited liability corporation.

D.        PROPERTY, PLANT AND EQUIPMENT

We lease our head office premises at 13811 and 13911 Wireless Way, Richmond,
British Columbia. The two integrated buildings comprise a total of 152,541
square feet. Our base rent for both of these buildings is approximately $128,700
per month or $1,544,900 per year for 2003, 2004 and 2005, $1,593,000 per year
for 2006, and $1,641,500 for the balance of the term of the lease which expires
December 31, 2011. We have two three-year renewal options at market rents.

ITEM 5.   OPERATING AND FINANCIAL REVIEW AND PROSPECTS

A.        OPERATING RESULTS

RESULTS OF OPERATIONS

The following table sets forth our operating results for the three years ended
December 31, 2002, expressed as a percentage of revenue:

<TABLE>
<CAPTION>
                                                                  YEARS ENDED DECEMBER 31,
                                                              -------------------------------
                                                                 2000        2001      2002
                                                              ---------   ---------  --------
<S>                                                              <C>         <C>        <C>
Revenue....................................................      100.0%      100.0%     100.0%
Cost of goods sold.........................................       54.0        75.4       89.6
                                                                 -----       -----      -----
Gross margin...............................................       46.0        24.6       10.4
                                                                 -----       -----      -----
Expenses
  Sales and marketing......................................       18.4        20.4       15.0
  Research and development, net............................       24.0        27.1       19.3
  Administration...........................................       11.0        16.8        6.1
  Restructuring and other charges..........................          -           -       16.7
  Amortization.............................................        3.3         3.3        3.0
                                                                 -----       -----      -----
                                                                  56.7        67.6       60.1
                                                                 -----       -----      -----
Loss from operations.......................................      (10.7)      (43.0)     (49.7)

Other income...............................................        7.4         3.7        0.2
                                                                 -----       -----      -----
Loss before income taxes...................................       (3.3)      (39.3)     (49.5)

Income tax expense (recovery)..............................        2.5        (0.4)       4.5
                                                                 -----       -----      -----
Net loss...................................................       (5.8)      (38.9)     (54.0)
                                                                 =====       =====      =====
</TABLE>
<PAGE>

                                    - 19 -


YEAR ENDED DECEMBER 31, 2002 COMPARED TO YEAR ENDED DECEMBER 31, 2001

During 2002, we announced and implemented a business restructuring program. We
reduced operating expenses and asset levels as a result of our assessment of
current and visible future demand. We expect sales growth to continue to be
constrained by the slowdown in enterprise spending and by overall conditions
affecting the wireless communications industry.

During the second quarter of 2002, we recorded restructuring and other costs of
$36.1 million. We have reduced our workforce from 275 to 181 people. In
addition, the restructuring and other costs included a writedown for excess
inventory, impairment of fixed, intangible and other assets, and a provision for
facilities restructuring and other costs related to the restructuring. The
provisions related to our restructuring and other charges reflected many
estimates which we revised during the last half of 2002, based on actual
experience, resulting in a net charge of $1.6 million. Our restructuring and
other costs for 2002 were $37.7 million. We have substantially completed
implementation of our restructuring program at December 31, 2002.

We recorded a writedown of inventory, including purchase commitments, amounting
to $16.7 million. The writedown was related primarily to CDPD and 2G CDMA
products. In the fourth quarter of 2002, we recorded an additional net writedown
of inventory of $1.9 million which was a result of faster than expected decline
in sales of CDPD products. During 2002, we sold $1.2 million of products that
had a written down net book value of nil.

Fixed assets impairment charges of $4.8 million consisted of writedowns
primarily for research and development equipment, test equipment, and corporate
assets. The fixed assets have been written down to the current fair value for
this type of equipment. The net reversal of the second quarter impairment charge
was $0.5 million, of which $0.1 million was included in cost of sales, and
related primarily to adjusting our estimates of equipment to be disposed of.

Intangible assets impairment charges of $3.0 million consisted of writedowns
primarily for research and development licenses. The research and development
licenses that are no longer required have been written down to nil. In addition,
our deferred tax asset valuation allowance has been increased by $3.8 million to
record the reduction in the portion of our deferred tax assets that we believe
is more likely than not to be realized.

Workforce reduction charges of $1.6 million, of which $0.1 million was included
in cost of sales, were related to the cost of severance and benefits associated
with 95 employees and contractors notified of termination. Of the 95 employees
and contractors, 63 were involved in product development, seven were involved in
manufacturing, 18 were sales and marketing personnel, and seven were in
administration. At December 31, 2002, the workforce reduction provision of $1.5
million estimated in the second quarter, excluding the portion that was included
in cost of sales, has been drawn down by cash payments of $1.3 million and a
reversal of $0.2 million, resulting in an ending provision balance of $0.05
million. We expect the remaining provision to be substantially drawn down by
April 30, 2003.

As a result of the above noted workforce reduction and our assessment of current
and visible demand, we have leased facilities that are excess to our current
requirements. We recorded a provision that represents the estimated net present
value of future contractual obligations that are in excess of our estimated
future requirements. Our provision at June 30, 2002 of $4.7 million has been
drawn down by cash payments of $0.5 million and increased by an additional net
charge of $0.3 million, resulting in a provision balance of $4.5 million at
December 31, 2002. During the second half of 2002, real estate market conditions
in our location softened, resulting in very little progress on our facilities
restructuring. The remaining cash outlays of approximately $4.5 million related
to the facilities restructuring are expected to be paid over the remaining term
of the lease, which expires December 31, 2011, and will be funded from available
sources of liquidity.
<PAGE>

                                    - 20 -


Other charges of $1.5 million include provisions for purchase commitments, a
writedown of investments, and professional fees in connection with the
restructuring activities. Our provision at June 30, 2002 of $0.8 million has
been drawn down by non-cash reductions of $0.4 million, cash payments of $0.3
million, and an additional charge of $0.1 million resulting in a provision
balance of $0.2 million at December 31, 2002. The additional charges relate to
revised estimates for professional fees. The remaining provision is expected to
be substantially drawn down by March 31, 2003. The remaining cash outlays of
approximately $0.2 million related to other costs are expected to be
substantially paid by April 30, 2003 and will also be funded from available
sources of liquidity.

During the second quarter of 2001, one of our customers, Metricom, Inc., refused
shipments and subsequently filed for a Chapter 11 reorganization under the U.S.
bankruptcy laws. In 2002, we negotiated a settlement with the reorganized debtor
and will receive $1.8 million. The recovery of $1.8 million is recorded in the
determination of our net loss for 2002.

In 2001, in addition to the financial impacts from Metricom's bankruptcy, there
was also an overall economic slowdown that impacted our business. As a result of
these developments, we recorded a writedown of inventory of $11.0 million, which
is included in cost of sales, and a provision for doubtful accounts of $3.0
million in 2001, which is included in administration expense.

The adjusted information provided below for the years ended December 31, 2002
and December 31, 2001 excludes these charges. We have presented adjusted
information for both years as it provides investors with information which
excludes those items that are not expected to be recurring. The adjusted
information is not used for any additional purposes.

REVENUE

Revenue amounted to $77.1 million in 2002, compared to $62.3 million in 2001, an
increase of 23.7%. Included in our revenue was research and development funding
of $3.7 million in 2002, compared to $2.6 million in 2001. The increase in
revenue was a result of sales of our 2.5G products as well as increasing sales
to new channels in Europe and the Asia-Pacific region. We commenced commercial
shipment of our AirCard 550, AirCard 555, AirCard 710, and AirCard 750 next
generation products during 2002. Our revenue by product and by distribution
channel was:

<TABLE>
<CAPTION>
                                                      YEARS ENDED DEC. 31,
                                                      --------------------
                                                        2001       2002
                                                        ----       ----
<S>                                                    <C>         <C>
Revenue by product
        AirCard..................................        62%         58%
        OEM......................................        15          25
        Mobile...................................        13          10
        Other....................................        10           7
                                                       -----       -----
                                                        100%        100%
                                                       =====       =====
Revenue by distribution channel
        Wireless carriers........................        31%         43%
        OEM......................................        17          25
        Resellers................................        44          25
        Direct and Other.........................         8           7
                                                       -----       -----
                                                        100%        100%
                                                       =====       =====
</TABLE>

87% of our product revenue was earned in North America, 7% in Europe and 6% in
the Asia Pacific, compared to 97%, nil, and 3%, respectively, in 2001.
<PAGE>

                                    - 21 -


GROSS MARGIN

Gross margin amounted to $8.0 million in 2002, compared to $15.3 million in
2001. Included in our gross margin was research and development funding of $3.7
million in 2002, compared to $2.6 million in 2001. During the year, our gross
margin was negatively affected as we recorded restructuring and other charges of
$20.8 million. As a result of the funding and charges, our gross margin
percentage decreased to 10.4% of revenue in 2002, compared to 24.6% of revenue
in 2001. Our adjusted gross margin, excluding restructuring and other charges
and research and development funding, amounted to $25.1 million in 2002,
compared to adjusted gross margin of $23.7 million in 2001. Our adjusted gross
margin percentage decreased to 34.2% in 2002, compared to 39.6% in 2001. This
decrease was a result of changes in our product mix and new product introduction
costs.

SALES AND MARKETING

Sales and marketing expenses amounted to $11.6 million in 2002, compared to
$12.7 million in 2001, a decrease of 9.1%. This decrease was due primarily to
cost reductions under our restructuring plan. In addition, some costs related to
the initial introduction of new products for 2.5G wireless networks and entry
into the Europe and Asia-Pacific regions occurred in the prior year. Sales and
marketing expenses as a percentage of revenue amounted to 15.0% in 2002,
compared to 20.4% in 2001.

RESEARCH AND DEVELOPMENT, NET

Research and development expenses, net of conditionally repayable government
research and development funding and investment tax credits, amounted to $14.9
million in 2002, compared to $16.9 million in 2001, a decrease of 11.9%.
Research and development expenses in 2002 decreased due primarily to cost
reductions under our restructuring plan. Gross research and development
expenses, before government research and development funding and investment tax
credits, were $16.8 million or 21.8% of revenue in 2002, compared to $19.4
million or 31.2% of revenue in 2001.

ADMINISTRATION

Administration expenses amounted to $4.7 million in 2002, compared to $10.5
million in 2001. Adjusted administration expenses were $6.5 million in 2002,
excluding the Metricom recovery of $1.8 million, compared to adjusted
administration expenses of $7.5 million, excluding the $3.0 million provision
for doubtful accounts in 2001. This decrease of 12.7% is due primarily to cost
reductions under our restructuring plan. Adjusted administration expenses as a
percentage of revenue amounted to 8.4% in 2002, compared to 12.0% in 2001.

OTHER INCOME

Other income decreased to $0.2 million in 2002, compared to $2.3 million in
2001. This decrease is due to a reduction in cash and short-term investment
balances, as well as a reduction in interest rates.

INCOME TAX EXPENSE (RECOVERY)

Income tax expense amounted to $3.5 million in 2002, compared to an income tax
recovery of $0.3 million in 2001. Adjusted income tax recovery, excluding
restructuring and other costs of $4.0 million, was $0.6 million in 2002,
compared to an income tax recovery of $0.3 million. The income tax recovery
recorded in 2002 is a recovery of taxes paid in prior periods.

NET LOSS

Our net loss amounted to $41.7 million in 2002, compared to a net loss of $24.3
million in 2001. Our adjusted net loss amounted to $5.8 million, excluding
<PAGE>

                                    - 22 -


restructuring and other costs of $37.7 million and the Metricom recovery of
$1.8 million, in 2002, compared to an adjusted net loss of $10.3 million in
2001. Our loss per share amounted to $2.56 in 2002, compared to a loss per
share of $1.50 in 2001. Our adjusted loss per share was $0.35 in 2002,
compared to an adjusted loss per share of $0.64 in 2001. The weighted average
number of shares outstanding increased to 16.3 million in 2002, as compared
to 16.1 million in 2001. Our reconciliation of our net loss in accordance
with United States GAAP to our adjusted net loss is as follows:

<TABLE>
<CAPTION>
                                                               YEARS ENDED DECEMBER 31,
                                                    ---------------------------------------------
                                                             2001                    2002
                                                    ----------------------   --------------------
                                                      NET LOSS       EPS      NET LOSS      EPS
                                                    ----------    --------   ----------  --------
<S>                                                 <C>           <C>        <C>         <C>
As reported.....................................    $ (24,269)    $ (1.50)   $ (41,663)  $  (2.56)
Add:  Inventory writedown.......................       11,000        0.68            -          -
Add:  Provision for doubtful accounts...........        3,000        0.18            -          -
Add:  Restructuring and other costs.............            -           -       37,707       2.31
Less: Recovery related to Metricom settlement...            -           -       (1,808)     (0.10)
                                                    ----------    --------   ----------  --------
Adjusted.......................................     $ (10,269)    $ (0.64)   $  (5,764)  $  (0.35)
                                                    ==========    ========   ==========  ========
</TABLE>

YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

During the year ended December 31, 2001, we recorded a provision for excess
inventory of $11.0 million and a provision for doubtful accounts of $3.0
million. In the year ended December 31, 2000, we recorded charges amounting to
$0.8 million, related to the acquisition of the Qualcomm CDMA data modules
business. The adjusted information provided below excludes these charges. We
have presented adjusted information for both years as it provides investors with
information which excludes those items that are not expected to be recurring.
The adjusted information is not used for any additional purposes.

REVENUE

Revenue amounted to $62.3 million in 2001, compared to $53.8 million in 2000, an
increase of 15.9%. Included in our revenue was research and development funding
of $2.6 million in 2001, compared to $0.3 million in 2000. The increase was a
result of strong growth in our base business, including CDPD AirCards and
original equipment modules (OEM), as well as the introduction of new products.
In accordance with our supply agreement with Metricom, we were to supply
approximately $33.0 million of our AirCard 400 over a twelve-month period
beginning March 2001 for Metricom's Ricochet2 network. In the first quarter of
2001, we commenced commercial shipments of our AirCard 400 to Metricom. On July
2, Metricom filed for Chapter 11 reorganization, and as a result, we ceased
further manufacturing and sales of our AirCard 400. Our total revenue for the
year from sales to Metricom amounted to approximately $4.5 million, the balance
of the revenue for the year that was expected under the supply agreement was
lost, and we ceased operations on the Ricochet2 network standard. We had
expected to commence commercial shipment of our AirCard 555 to Verizon in the
fourth quarter. We decided to delay the commencement of commercial volume
shipments of this product, and this had a material impact on our revenue for the
fourth quarter. Our revenue by product segment for 2001 was Aircards 62%, Mobile
13%, OEM 15% and Other 10%, compared to 47%, 18%, 30% and 5%, respectively, in
2000. Our revenue by distribution channel for 2001 was Resellers 44%, Wireless
carriers 31%, OEM 17% and Direct and Other 8%, compared to 39%, 21%, 32% and 8%,
respectively, in 2000. In 2001, 92% of our revenue was earned in the United
States, compared to 78% in 2000.

GROSS MARGIN

Our gross margin amounted to $15.3 million in 2001, compared to $24.7 million in
2000. Included in our gross margin was research and development funding of $2.6
million in 2001, compared to $0.3 million in 2000. During the year, our gross
<PAGE>

                                    - 23 -


margins were negatively affected as we recorded a charge of $11.0 million to
provide for excess inventory as a result of the Metricom Chapter 11 filing
and our assessment of demand. As a result of the funding and these charges,
our gross margin percentage decreased to 24.6% of revenue in 2001, compared
to 46.0% of revenue in 2000. Our adjusted gross margin, excluding the
provision for excess inventory and research and development funding, amounted
to $23.7 million in 2001, compared to $24.4 million in 2000. Our adjusted
gross margin percentage decreased to 39.6% in 2001, compared to 45.6% in
2000. This decrease was a result of changes in our product and pricing mix
and new product introduction costs.

SALES AND MARKETING

Our sales and marketing expenses increased significantly in 2001 and amounted to
$12.7 million in 2001, compared to $9.9 million in 2000, an increase of 28.4%.
This increase was due to increased sales and marketing initiatives related to
the introduction of new products for 2.5G wireless networks. In addition, we
continued our market entry activities in Europe and the Asia-Pacific region.
Sales and marketing expenses as a percentage of revenue amounted to 20.4% in
2001 compared to 18.4% in 2000.

RESEARCH AND DEVELOPMENT, NET

Research and development expenditures, net of conditionally repayable government
research and development funding and investment tax credits, amounted to $16.9
million in 2001, compared to $12.9 million in 2000, an increase of 31.2%.
Research and development expenses in 2001 increased due to costs relating to the
development of new products based on the CDMA and GPRS standards. Research and
development expenses, before government research and development funding and
investment tax credits, were $19.4 million or 31.2% of revenue in 2001 compared
to $13.6 million or 25.3% of revenue in 2000.

ADMINISTRATION

Administration expenses amounted to $10.5 million in 2001, compared to $5.9
million in 2000, an increase of 76.8%. During the year, we increased our
provision for doubtful accounts by $3.0 million, as a result of the Metricom
Chapter 11 filing. Our adjusted administration expenses were $7.5 million
compared to $5.9 million in 2000. This increase is due to investment in people,
systems and infrastructure to support our operations growth and to scale for
volume and international expansion. Adjusted administration expenses as a
percentage of revenue amounted to 12.0% in 2001, compared to 11.0% in 2000.

OTHER INCOME

Other income decreased to $2.3 million in 2001, compared to $4.0 million in
2000. This decrease is due to a reduction in cash and short-term investment
balances, as well as a reduction in interest rates.

NET LOSS

Our net loss amounted to $24.3 million compared to a net loss of $3.1 million in
2000. Our adjusted net loss amounted to $10.3 million in 2001 compared to an
adjusted net loss of $2.3 million. Our loss per share amounted to $1.50 in 2001
compared to a loss per share of $0.20 in 2000. Our adjusted loss per share was
$0.64 in 2001 compared to an adjusted loss per share of $0.15 in 2000. The
weighted average number of shares outstanding increased to 16.1 million in 2001
as compared to 15.3 million in 2000. Our reconciliation of our net loss in
accordance with United States GAAP to our adjusted net loss is as follows:
<PAGE>

                                    - 24 -


<TABLE>
<CAPTION>
                                                                               YEARS ENDED DECEMBER 31,
                                                                   --------------------------------------------
                                                                             2000                   2001
                                                                   ----------------------   -------------------
                                                                     NET LOSS      EPS       NET LOSS      EPS
                                                                   ----------    --------   ----------  -------
<S>                                                                <C>           <C>        <C>         <C>
As reported.....................................................   $  (3,118)    $ (0.20)   $ (24,269)  $ (1.50)
Add:  Charges related to Qualcomm CDMA data modules business....         798        0.05            -         -
Add:  Inventory writedown.......................................           -           -       11,000      0.68
Add:  Provision for doubtful accounts...........................           -           -        3,000      0.18
                                                                   ----------   --------    ---------   --------
Adjusted........................................................   $  (2,320)    $ (0.15)   $ (10,269)  $ (0.64)
                                                                   ==========   =========   ==========  ========
</TABLE>

CRITICAL ACCOUNTING POLICIES

We prepare our consolidated financial statements in accordance with accounting
principles generally accepted in the United States, and we make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenue and
expenses, and the related disclosure of contingent liabilities. We base our
estimates on historical experience and other assumptions that we believe are
reasonable in the circumstances. Actual results may differ from our estimates.

During the year ended December 31, 2002, we did not adopt any new accounting
policies that have a material impact on our consolidated financial statements,
or make changes to existing accounting policies. Senior management has discussed
with our audit committee the development, selection, and disclosure of
accounting estimates used in the preparation of our consolidated financial
statements.

The following critical accounting policies affect our more significant estimates
and assumptions used in preparing our consolidated financial statements:

     o    We maintain an allowance for doubtful accounts for estimated losses
          that may arise if any of our customers are unable to make required
          payments. If the financial condition of any of our customers
          deteriorates, increases in our allowance may be required.

     o    We value our inventory at the lower of cost, determined on a
          first-in-first-out basis, and estimated market value. We assess the
          need for an inventory writedown based on our assessment of estimated
          market value using assumptions about future demand and market
          conditions. If market conditions are worse than our projections, an
          additional inventory writedown may be required.

     o    We evaluate our deferred income tax assets, and we believe their
          realization is more likely than not. However if their realization is
          not considered more likely than not, we provide for a valuation
          allowance. The ultimate realization of our deferred tax assets is
          dependent upon the generation of future taxable income during the
          periods in which temporary differences become deductible. We consider
          projected future taxable income and tax planning strategies in making
          our assessment. If we determine that we would not be able to realize
          our deferred tax assets, an adjustment to our deferred tax asset would
          be charged to income.

     o    We recognize revenue from sales of products and services upon the
          later of transfer of title or upon shipment of the product to the
          customer or rendering of the service, so long as collectibility is
          reasonably assured. Customers include resellers, original equipment
          manufacturers, wireless service providers and end-users. We record
          deferred revenue when we receive cash in advance of the revenue
          recognition criteria being met.

          An increasing amount of our revenue is generated from sales to
          resellers. We recognize revenue on the portion of sales to certain
          resellers that are subject to provisions allowing various rights of
<PAGE>

                                    - 25 -


          return and stock rotation when the rights have expired or the products
          have been reported as sold by the resellers.

          Funding from research and development agreements, other than
          government assistance, is recognized as revenue when certain criteria
          stipulated under the terms of those funding agreements have been met,
          and when there is reasonable assurance the funding will be received.
          Certain research and development funding will be repayable only on the
          occurrence of specified future events. If such events do not occur, no
          repayment would be required. We will recognize the liability to repay
          research and development funding in the period in which conditions
          arise that would cause research and development funding to be
          repayable.

     o    We accrue product warranty costs to provide for the repair or
          replacement of defective products. Our accrual is based on an
          assessment of historical experience and estimates are made by
          management. If we suffer a decrease in the quality of our products, an
          increase in our accrual may be required.

     o    We recorded a lease provision by estimating the net present value of
          the future cash outflows over the remaining lease period. The estimate
          was based on various assumptions including the sublease rates
          obtainable and the time it will take to find a suitable tenant. These
          assumptions are influenced by market conditions and the availability
          of similar space nearby. If market conditions deteriorate, an increase
          in our provision may be required.

MARKET RISK DISCLOSURE

During the year ended December 31, 2002, 78% of our revenue was earned from
United States-based customers compared to 92% in the year ended December 31,
2001. Our risk from currency fluctuations between the Canadian and U.S. dollar
is reduced by purchasing inventory, other costs of sales and many of our
services in U.S. dollars. We are exposed to foreign currency fluctuations since
the majority of our research and development, sales and marketing, and
administration costs are incurred in Canada. We monitor our exposure to
fluctuations between the Canadian and U.S. dollars. As a result of the adoption
of U.S. dollars as our currency of measurement in the year ended December 31,
1999, our foreign currency risk has changed from U.S. dollar denominated
monetary assets and liabilities to non-U.S. dollar denominated monetary assets
and liabilities and the risk of the impact of exchange rate changes relative to
the U.S. dollar. As we have available funds and very little debt, we have not
been adversely affected by significant interest rate fluctuations.

With our international expansion into Europe and the Asia-Pacific region, we are
transacting business in additional foreign currencies and the potential for
currency fluctuations is increasing. The risk associated with currency
fluctuations between the U.S. dollar and foreign currencies in Europe and the
Asia-Pacific region has been minimal as such transactions have not been material
to date. During 2002, we continued to enter into additional distribution
agreements in Europe and the Asia-Pacific region that are denominated primarily
in U.S. dollars. We expect that as our business expands in Europe we will also
continue to be exposed to Euro transactions. To date we have not entered into
any futures contracts. To manage our foreign currency risks, consideration will
be given to entering into such contracts should we consider it to be necessary
to reduce our exposure to future foreign exchange fluctuations.

Currently, we do not have any hedging activities or derivative instruments,
hence the impact of FAS No. 133 is not material to our financial results.
<PAGE>

                                    - 26 -


GOVERNMENT REGULATION

Our products are subject to certain mandatory regulatory approvals in the United
States, Canada and other countries in which we operate. In the United States,
the Federal Communications Commission regulates many aspects of communications
devices. In Canada, similar regulations are administered by the Ministry of
Industry, through Industry Canada. We have obtained all the necessary Federal
Communications Commission, Industry Canada and other required approvals for the
products we currently sell.

B.        LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2002, we did not have any off-balance sheet finance or
special purpose entities. During the year ended December 31, 2002, we entered
into a number of capital and operating leases relating to purchases of research
and development equipment and information systems. These leases and commitments
are disclosed in the consolidated financial statements.

We do not have any trading activities that involve any type of commodity
contracts that are accounted for at fair value but for which a lack of market
price quotations necessitate the use of fair value estimation techniques.

In May 2000, we completed a new issue and secondary public offering in the
United States and Canada. Our net proceeds after selling commissions and
expenses of the offering amounted to approximately $65.8 million. The net
proceeds from the secondary public offering were used for continuing research
and development, sales and marketing initiatives, strategic investments and
working capital.

In May and June 1999, we completed an initial public offering in Canada. Our net
proceeds after selling commissions and expenses of the offering amounted to
approximately Cdn.$42.5 million. The net proceeds from the initial public
offering were used for continuing research and development, sales and marketing
initiatives and working capital.

We have continued to utilize these financings to fund our operations and have
generated positive cash flow in the second half of 2002. Therefore, to date we
have not needed to return to the capital markets for additional funding.

Prior to our initial public offering in 1999, our operations and growth were
funded by cash flow from operations, private placements of our equity, research
and development funding and an operating line of credit.

Cash used by operations amounted to $4.7 million in 2002 compared to $21.1
million in 2001, an improvement of $16.4 million. The use of cash during 2002
was due mainly to our operating loss, restructuring costs and changes in working
capital. Cash used for capital expenditures was $2.2 million in 2002, compared
to $10.5 million in 2001, and was primarily for research and development
equipment and leasehold improvements. Expenditures on intangible assets were
$1.4 million in 2002, compared to $3.3 million in 2001 and were primarily for
license fees.

One of our significant sources of funds is expected to be our future operating
cash flow. Our future revenue is dependent on us fulfilling our commitments in
accordance with agreements with major customers. We have a customer
concentration risk, as a few customers represent a significant portion of our
expected future revenue. We have a risk of impairment to our liquidity should
there be any interruption to our business operations.

The sources of funds for our future capital expenditures and commitments are
cash on hand, accounts receivable, research and development funding, borrowings
and cash from operations, as follows:
<PAGE>

                                    - 27 -


     o    Net cash and short-term investments amounted to $34.8 million at
          December 31, 2002 compared to $44.0 million at December 31, 2001.

     o    Accounts receivable amounted to $13.9 million at December 31, 2002
          compared to $10.5 million at December 31, 2001.

     o    During 2002, we increased our operating line of credit with a Canadian
          chartered bank. The available facility was increased to $10.0 million
          from $0.9 million (Cdn.$1.5 million). The expanded facility bears
          interest at prime plus 1.25% and is secured by a general security
          agreement providing a first charge against all assets. At December 31,
          2002, there were no borrowings under this line of credit.

Currently, we do not have any material commitments which obligate us to make
capital expenditures.

In our opinion, our working capital is sufficient for our present and
foreseeable requirements.

C.        RESEARCH AND DEVELOPMENT, PATENT LICENCES, ETC.

Our research and development expenses were $14.9 million in 2002, compared
with $16.9 million in 2001 and $12.9 million in 2000. These figures are net
of government research and development funding and investment tax credits of
$1.9 million in 2002, $2.5 million in 2001 and $0.7 million in 2000.

We expense research and development costs as they are incurred. To date we have
had no significant software development costs that would be required to be
capitalized pursuant to Financial Accounting Standards ("FAS") No. 86,
"Accounting for the Costs of Computer Software to Be Sold, Leased or Otherwise
Marketed".

We follow the cost reduction method of accounting for government research and
development funding, whereby the benefit of the funding is recognized as a
reduction in the cost of the related expenditure when certain criteria
stipulated under the terms of those funding agreements have been met, and there
is reasonable assurance the research and development funding will be received.
Certain research and development funding is repayable only on the occurrence of
specified future events. If such events do not occur, no repayment is required.
We recognize the liability to repay research and development funding in the
period in which conditions arise that will cause research and development
funding to be repayable.

D.        TREND INFORMATION

WIRELESS DATA GROWTH

The wireless communications industry provides fixed and mobile voice and data
communications. According to the Cellular Telecommunications Industry
Association, the industry has achieved significant market penetration over the
past five years.

To date, demand for wireless data has come primarily from corporations, public
organizations and individuals seeking to improve customer service and
productivity. Increased coverage, significant technological improvements to
wireless data networks, devices and software, and price reductions for data
communications have also contributed to growth in the wireless data
communications industry. The ability to meet the demand for anytime, anyplace
communications is made possible by the convergence of trends in portable
computing, the growth of the Internet, and wireless communications.

PORTABLE COMPUTING. Portable computers are now mainstream. In addition, handheld
computers or Personal Digital Assistants (PDAs) are increasing in popularity.
These include devices based on the Palm and Microsoft Windows CE platforms.
<PAGE>

                                    - 28 -


THE INTERNET. The Internet has become an indispensable tool for many business
professionals, and the volume of Internet traffic has grown rapidly as new
applications and e-commerce have become widely adopted. Wireline
telecommunications carriers continue to make significant investments in Internet
protocol-based networks to handle the growing volume of data traffic.
International Data Corp. estimates that both the number of Internet users
worldwide and the volume of data traffic will continue to grow.

WIRELESS COMMUNICATIONS. While wireline communications networks were
historically dominated by voice traffic, data now comprises more than half of
the traffic on these networks. A similar evolution is now occurring on wireless
networks as wireless service providers address the growing demand for growing
data communications with additional technical and commercial offerings. The
Yankee Group projects that the wireless data market will continue to expand.

EXISTING AND EMERGING CELLULAR AND PCS TECHNOLOGY STANDARDS

Wireless data communications over cellular networks are currently being
transmitted with various technologies ranging from analog technologies using
circuit-switched data and Cellular Digital Packet Data (CDPD) using
packet-switched data, to newer digital technologies such as CDMA, Global System
for Mobile (GSM) and Generalized Packet Radio Service (GPRS).

Circuit-switched data over analog cellular, or Advanced Mobile Phone System
(AMPS), was one of the original wireless data standards in North America and
continues to have broad geographic coverage. In such a system, the user is
temporarily connected to the network and pays for the total connection time. In
good coverage areas, users may expect data rates of 9.6 kbps.

CDPD networks followed AMPS and today cover approximately 60% of the U.S.
population. The CDPD user is continually connected to the network and pays
either a flat monthly service fee, or for the amount of data transferred. CDPD
networks securely transmit data at a nominal rate of 19.2 kbps.

More recently, the major communications providers have begun to augment their
existing networks with newer digital technologies that offer significant
performance and technical advantages over both AMPS and CDPD. These new
technologies include CDMA and GPRS.

CDMA is a digital technology which significantly improves the capacity and
quality of both voice and data communications, and supports a broader range of
applications including voice, wireless Internet and multimedia. Initially,
second generation CDMA offered increased data rate capabilities of 14.4 kbps. In
2001, North American CDMA carriers began deploying their 2.5G CDMA solution
called CDMA2000 1X. Other CDMA carriers undertook similar efforts in Asia, Latin
America and the Middle East. CDMA2000 1X supports faster wireless data transfers
typically ranging from 40 to 60 kbps with a top nominal speed as currently
deployed of 153 kbps.

Leading GSM carriers in North America, Europe and Asia also began shifting from
2G GSM to next generation GPRS in 2001. Like the next generation CDMA networks,
GSM/GPRS significantly improves the capacity and quality of data communications,
and supports a broader range of applications including voice, wireless Internet
and multimedia. GPRS offers increased data rate capabilities ranging from 20 to
40 kbps, with a top nominal speed as currently deployed of 56 kbps.

Third generation, or 3G, systems including Universal Mobile Telecommunications
System (UMTS), CDMA 1xEV-DO and Enhanced Data over GPRS Evolution (EDGE), are
now being developed to eventually replace second generation and 2.5G digital
cellular systems. They are expected to combine the newer services of 2.5G with
voice services in a more integrated way, enabling future multimedia services.
The public discussion on 2.5G and third generation systems and the announcement
of technology trials has broadened awareness of the possibilities of wireless
data. We expect that future deployment of
<PAGE>

                                    - 29 -


commercial service will further increase this awareness and expand the market
for wireless data products and services.

ITEM 6.   DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.        DIRECTORS AND SENIOR MANAGEMENT

The following table sets out the names of the directors and executive officers
of the Company as at May 14, 2003, their ages, all offices of the Company now
held by each of them, their outside occupations or other directorships and the
period of time for which each has been with the Company.

<TABLE>
<CAPTION>
NAME, AGE AND POSITION                          OUTSIDE OCCUPATION OR EMPLOYMENT               LENGTH OF SERVICE
-------------------------------------------------------------------------------------------------------------------
<S>                                             <C>                                            <C>
DAVID B. SUTCLIFFE (43)                         None                                           8 years
Chairman, CEO and Director

GREGORY D. AASEN (47)                           Chief Operating Officer of PMC-Sierra, Ltd.,   5 years
Director                                        a wholly-owned subsidiary of PMC-Sierra, Inc.

S. JANE ROWE (44)                               Senior Vice President, Global Risk             5 years
Director                                        Management Division of Scotiabank from 2002
                                                to present; Managing Director and Co-Head of
                                                Scotia Merchant Capital Corporation from
                                                1997 to 2002

PAUL G. CATAFORD (39)                           Managing Partner of HorizonOne Asset           5 years
Director                                        Management from December 2002 to present;
                                                Consultant from March 2002 to
                                                December 2002; Executive
                                                Managing Director of BMO Nesbitt
                                                Burns Equity Partners Inc. from
                                                2001 to 2002; Managing Director
                                                and President BCE Capital Inc.
                                                from 1997 to 2001

PETER CICERI (47)                               Executive in residence at the Faculty of       3 years
Lead Independent Director                       Commerce and Business Administration at the
                                                University of British Columbia
                                                from September 2001 to present;
                                                President of Rogers Telecom,
                                                Inc. from 2000 to May 2001;
                                                President and Managing Director
                                                of Compaq Canada Ltd. and
                                                Vice-President Compaq Computer
                                                Corporation (US) from 1996 to
                                                2000

NADIR MOHAMED (47)                              President and Chief Executive Officer of       1 month
Director                                        Rogers Wireless Communications Inc. from
                                                2001 to present; President and Chief
                                                Operating Officer of Rogers Wireless
                                                Communications Inc. from 2000 to 2001;
                                                Senior Vice President, Marketing and
                                                Sales of Telus Communications Inc. from
                                                1999 to 2000; President and Chief
                                                Operating Officer of BC Tel Mobility
                                                from 1997 to 1999

NORMAN TOMS (58)                                None                                           10 years
Chief Technical Officer
</Table>
<PAGE>
                                    - 30 -


<TABLE>
<CAPTION>
NAME, AGE AND POSITION                          OUTSIDE OCCUPATION OR EMPLOYMENT               LENGTH OF SERVICE
-------------------------------------------------------------------------------------------------------------------
<S>                                             <C>                                            <C>
PETER W. ROBERTS (59)                           None                                           4 years
Chief Financial Officer and Secretary

ANDREW S.G. HARRIES (41)                        None                                           10 years
Senior Vice-President, Corporate Development

JASON W. COHENOUR (41)                          None                                           7 years
Senior Vice-President, Worldwide Sales and
Marketing
</TABLE>

There is no arrangement or understanding with major shareholders, customers,
suppliers or others pursuant to which any of the above persons was selected as a
director or executive officer.

B.        COMPENSATION

The following table sets forth all compensation paid in respect of executive
officers of the Company during the fiscal year ended December 31, 2002.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
                                   ANNUAL COMPENSATION                  LONG TERM COMPENSATION
                           ----------------------------------     ---------------------------------
                                                                         AWARDS          PAYOUTS
                                                                  ---------------------------------
                                                                                            LONG
                                                     OTHER(3)     SECURITIES                TERM
                                                      ANNUAL        UNDER                INCENTIVE     ALL OTHER(5)
                                                     COMPEN-       OPTIONS   RESTRICTED    PLAN          COMPEN-
NAME AND PRINCIPAL            SALARY     BONUS(2)    SATION       GRANTED(4)   SHARES     PAYMENTS       SATION
POSITION(1)                    ($)         ($)         ($)           (#)         ($)        ($)             ($)
--------------------------------------------------------------------------------------------------------------------
<S>                          <C>         <C>         <C>          <C>        <C>         <C>           <C>
David B. Sutcliffe(6)
Chairman and Chief
Executive Officer            222,930           -           -      110,000          -           -           3,857
--------------------------------------------------------------------------------------------------------------------
Norman Toms
Chief Technical Officer      143,312           -           -       12,500          -           -           1,089
--------------------------------------------------------------------------------------------------------------------
Andrew S. G. Harries(7)
Senior Vice-President,
Corporate Development        143,312           -           -       50,000          -           -           1,234
--------------------------------------------------------------------------------------------------------------------
Jason W. Cohenour(8)
Senior Vice-President,
Worldwide Sales and
Marketing                    191,000          -            -       50,000          -          -           24,917
--------------------------------------------------------------------------------------------------------------------
Peter W. Roberts
Chief Financial Officer
and Secretary                133,758          -            -       12,500          -          -            1,060
====================================================================================================================
Glen Brownlee(9)
President and Chief
Operating Officer             98,726          -            -       25,000          -          -          288,657(10)
--------------------------------------------------------------------------------------------------------------------
</TABLE>

NOTES:

(1)  All compensation is paid in Cdn.$, except for Mr. Cohenour who is paid in
     U.S.$. All amounts on this table are reflected in U.S.$ at an exchange rate
     of 1.570.

(2)  Bonuses are generally granted pursuant to the management incentive plan,
     which has been approved by the Compensation Committee, to reward management
     team performance and are based on actual revenues and
<Page>

                                    - 31 -


     profits versus budgeted revenues and profits. Bonuses may also be granted
     to reward outstanding performance. No bonuses were granted during fiscal
     2002.

(3)  Other Annual Compensation relates to income from commissions.

(4)  All options were granted under the Company's Amended and Restated 1997
     Stock Option Plan.

(5)  All Other Compensation relates to severance, moving compensation, vehicle
     leases and/or other taxable benefits.

(6)  Mr. Sutcliffe served as both President and Chief Executive Officer of the
     Company from May 1995 to May 2001. In May 2001, Mr. Sutcliffe resigned as
     President of the Company and was appointed as the Chairman and Chief
     Executive Officer of the Company.

(7)  Mr. Harries was previously the Vice-President, Marketing from 1993 to 2000.

(8)  Mr. Cohenour was previously the Senior Vice-President, Distribution from
     February 2000 to June 2002.

(9)  Mr. Brownlee joined the Company in January 2000 and served as both
     Executive Vice-President and Chief Operating Officer of the Company from
     January 2000 to May 2001. In May 2001, Mr. Brownlee resigned as Executive
     Vice-President and was appointed as the President and Chief Operating
     Officer of the Company. Mr. Brownlee resigned from the Company in June 2002
     and accordingly amounts shown for 2002 reflect only 6 months of employment.

(10) This figure includes the amount of U.S.$288,071 paid to Mr. Brownlee
     pursuant to the terms of a termination agreement entered into upon his
     resignation from employment with the Company on June 24, 2002.

The aggregate amount paid to all directors and executive officers as a group in
2002 was U.S.$1,300,610.

The following table provides details of the options granted to executive
officers:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                                                                                 MARKET VALUE OF
                                                                                  COMMON SHARES
                                                % OF TOTAL                         UNDERLYING
                                 COMMON           OPTIONS                            OPTIONS
                              SHARES UNDER      GRANTED TO        EXERCISE           ON THE
                            OPTIONS GRANTED    EMPLOYEES IN       PRICE PER       DATE OF GRANT        EXPIRATION
NAME                              (#)           FISCAL YEAR     COMMON SHARE    ($/COMMON SHARE)          DATE
----------------------------------------------------------------------------------------------------------------------
<S>                         <C>                <C>            <C>               <C>                 <C>
David B. Sutcliffe               60,000              8.19      Cdn. $27.15          Cdn. $27.15     January 24, 2007
                                 50,000              6.83      Cdn. $3.50           Cdn. $3.50       July 26, 2007
----------------------------------------------------------------------------------------------------------------------
Norman Toms                      12,500              1.71      Cdn. $3.50           Cdn. $3.50       July 26, 2007
----------------------------------------------------------------------------------------------------------------------
Andrew S.G. Harries              25,000              3.41      Cdn. $27.15          Cdn. $27.15     January 24, 2007
                                 25,000              3.41      Cdn. $3.50           Cdn. $3.50       July 26, 2007
----------------------------------------------------------------------------------------------------------------------
Jason W. Cohenour                25,000              3.41      U.S. $17.00          U.S. $17.00     January 24, 2007
                                 25,000              3.41      U.S. $2.23           U.S. $2.23       July 26, 2007
----------------------------------------------------------------------------------------------------------------------
Peter W. Roberts                 12,500              1.71      Cdn. $3.50           Cdn. $3.50       July 26, 2007
======================================================================================================================
Glen Brownlee                    25,000              3.41      Cdn. $27.15          Cdn. $27.15     January 24, 2007
----------------------------------------------------------------------------------------------------------------------
</TABLE>

There have been no amounts set aside or accrued by the Company or its
subsidiaries to provide pension, retirement, or similar benefits for any
executive officer.

C.        BOARD PRACTICES

The Board of Directors of the Company presently consists of six directors,
indicated above under Item 6.A. Each of the directors was elected on April 28,
2003 at the Company's annual and special meeting of shareholders for 2003, and
the terms of the directors will expire at the Company's 2004 annual meeting of
shareholders.

MANDATE OF THE BOARD OF DIRECTORS

The Board of Directors of the Corporation manages or supervises the management
of the affairs and business of the Corporation pursuant to the powers vested in
the Board of Directors by the CANADA BUSINESS CORPORATIONS ACT, the Restated
Articles of Incorporation and By-laws of the Corporation and all other statutory
and legal requirements generally applicable to directors of a business
corporation that is also a "reporting issuer" under applicable securities
legislation. Management is responsible for the day-to-day operation of the
business and affairs of the Corporation.
<Page>

                                    - 32 -


In fulfilling its mandate, the Board of Directors is responsible, among other
things, for the following:

     o    adoption of a strategic planning process to establish the
          Corporation's intermediate and long-term goals;

     o    ensuring the establishment of systems to manage the principal risks
          arising from or incidental to the business activities of the
          Corporation;

     o    appointing, defining functions for, and monitoring the performance of
          all senior management which includes establishing executive
          compensation policies and their implementation with respect to
          individual performance and attainment of established goals;

     o    overseeing the Corporation's public communications policy and
          implementation, including disclosure of material information and
          shareholder communications; and

     o    the integrity of the Corporation's internal control and management
          information systems.

In order to carry out its functions, the Board of Directors holds regular
meetings and additional meetings as necessary to consider particular matters or
evaluate matters between formal meetings, wherever appropriate.

In the year ended December 31, 2002, the Board of Directors met on 7 occasions.
Independently of formal meetings, management communicates informally with
members of the Board of Directors on a regular monthly basis, and solicits the
advice of Board of Directors members falling within their special knowledge or
experience.

The Board of Directors expects members of management of the Corporation to carry
out their duties and to discharge their responsibilities in a professional,
competent and ethical manner. The Board of Directors approves senior executive
appointments and accepts only those individuals who bring exemplary
qualifications and demonstrated abilities to the position. The Board of
Directors fully expects each executive to strive diligently and effectively to
improve the fortunes of the Corporation and contribute to shareholder value.

BOARD OF DIRECTORS COMMITTEES

The Audit Committee is composed of three unrelated directors, who are Ms. S.
Jane Rowe, Mr. Paul G. Cataford and Mr. Nadir Mohamed. The Audit Committee is
authorized to review and approve the financial statements of the Corporation and
the overall scope and results of the audit and internal financial controls of
the Corporation.

The Compensation Committee is composed of two unrelated directors, who are Mr.
Gregory D. Aasen and Ms. S. Jane Rowe. The Compensation Committee is authorized
to determine compensation for, and monitor the performance of, the executives
and senior management of the Corporation. The Committee has reviewed the
adequacy and form of the compensation of the directors and has determined that
the compensation realistically reflects the responsibilities and risk involved
in being an effective director of the Corporation.

The Governance and Nominating Committee was formed in December 2002 and is
composed of two unrelated directors, who are Mr. Peter Ciceri and Mr. Paul G.
Cataford. The mandate of the Governance and Nominating Committee is, among other
things, to monitor external corporate governance requirements and ensure
corporate compliance with such requirements, to make disclosure of the Company's
system of corporate governance annually, to ensure that the Board and Committees

<Page>

                                    - 33 -


of the Board have documented mandates that are reviewed annually, and to
assess the effectiveness of the Board, committees of the Board, and
individual directors.

COMPENSATION OF DIRECTORS

During the financial year ended December 31, 2002, the directors of the
Corporation who were not officers of the Corporation each received remuneration
as follows:

<TABLE>
<S>                                              <C>
Annual Retainer                                  U.S.$10,000
Lead Independent Director's Retainer             U.S.$25,000
In-person board or committee meeting                U.S.$750
Board or committee conference call                  U.S.$375
</TABLE>

Directors are limited to one participation fee payable per calendar day. All
directors are reimbursed for travel and other reasonable expenses incurred in
attending board or committee meetings.

All outside directors are eligible to participate in the Amended and Restated
1997 Stock Option Plan. James V. Diller, Gregory D. Aasen, S. Jane Rowe, Paul G.
Cataford, Richard J. Lynch, and Peter Ciceri, all being outside directors of the
Corporation as at December 31, 2002, were each granted options to purchase 5,000
common shares of the Corporation at an exercise price of Cdn.$3.50 (U.S. $2.23).
Executive officers of the Corporation are not permitted to receive any
compensation, including stock options, to which they might be otherwise entitled
by virtue of being directors of the Corporation.

Effective October 1, 2002, the Compensation Committee of the Board of Directors
approved a cash compensation arrangement for the Lead Independent Director in
the form of U.S. $25,000 annual retainer, U.S. $750 for an in-person board or
committee meeting, and U.S. $375 for a board or committee conference call. In
addition, the Lead Independent Director was granted options to purchase 10,000
common shares of the Corporation.

D.        EMPLOYEES

As of December 31, 2002, we had a total of 173 full time employees, 157 of whom
are at our head office in Richmond, British Columbia, Canada, with the balance
being sales and sales support staff in various locations across the United
States, Canada and the United Kingdom. Of the 173 employees, 86 are involved in
product development, 17 are involved in manufacturing, 36 are sales and
marketing personnel, 13 are product management personnel, and 21 are in finance
and administration. Employees have access to corporate funded ongoing training
and professional development opportunities, both on-the-job and through outside
educational programs. Cash compensation and our employee stock option plan are
complemented by internal recognition programs and career advancement
opportunities. We believe our relationships with our employees are good.

We have entered into employment agreements, non-disclosure agreements and
confidentiality agreements with key management personnel and with substantially
all of our employees.
<PAGE>

                                    - 34 -


E.        SHARE OWNERSHIP

As of May 14, 2003, each of the directors and executive officers of the Company
held the following common shares in the Company:

<TABLE>
<CAPTION>
                                         COMMON SHARES BENEFICIALLY
NAME                                     OWNED OR CONTROLLED
<S>                                      <C>
David B. Sutcliffe                       180,542(1)
Gregory D. Aasen                          20,000(2)
S. Jane Rowe                              86,156(3)
Paul G. Cataford                           2,100(4)
Peter Ciceri                               5,500(5)
Nadir Mohamed                                Nil(6)
Norman Toms                               57,778
Peter W. Roberts                           2,500
Andrew S.G. Harries                       97,691
Jason W. Cohenour                         31,466
</TABLE>

(1)  Excludes options to purchase an aggregate of 234,111 Common Shares at
     prices ranging from Cdn.$3.38 per Common Share to Cdn.$104.50 per Common
     Share.

(2)  Excludes options to purchase an aggregate of 30,250 Common Shares at prices
     ranging from Cdn.$3.50 per Common Share to Cdn.$62.00 per Common Share.
     Excludes 718,087 Common Shares held by PMC-Sierra, Inc. According to
     publicly available information, Mr. Aasen holds directly or indirectly
     125,094 common shares of PMC-Sierra, Inc. Mr. Aasen disclaims beneficial
     ownership of Common Shares of the Company held by PMC-Sierra, Inc.

(3)  Excludes options to purchase an aggregate of 30,250 Common Shares at prices
     ranging from Cdn.$3.50 per Common Share to Cdn.$62.00 per Common Share.

(4)  Excludes options to purchase an aggregate of 21,000 Common Shares at prices
     ranging from Cdn.$3.50 per Common Share to Cdn.$16.85 per Common Share.

(5)  Excludes options to purchase an aggregate of 36,250 Common Shares at prices
     ranging from Cdn.$3.50 per Common Share to Cdn.$176.05 per Common Share.

(6)  Excludes options to purchase an aggregate of 16,000 Common Shares at a
     price of Cdn. $5.70 per share.

With the exception of David B. Sutcliffe (who owns 1.1% of the issued and
outstanding common shares), each of the directors and executive officers owns
less than 1% of the issued and outstanding common shares.

Please see Section 6.B., Compensation, for options held by the Company's
directors and executive officers.

STOCK OPTION PLAN

Under the terms of our employee stock option plan, our board of directors may
grant options to employees, officers and directors. The plan provides for the
granting of options at the fair market value of our stock at the grant date.
Options generally vest over four years, with the first 25% vesting at the
first anniversary date of the grant and the balance vesting in equal amounts
at the end of each month thereafter. We determine the term of each option at
the time it is granted, with options having a five year or a ten year term.
Since December 15, 1998, options have been granted with a five year term. We
have reserved 3,882,233 options for issuance under our employee stock option
plan. Stock options have been granted in Canadian and U.S. dollars.

The options outstanding at December 31, 2002 expire between March 29, 2004 and
January 29, 2009.
<PAGE>

                                    - 35 -


ITEM 7.   MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.        MAJOR SHAREHOLDERS

Shareholders of the Company who were beneficial owners of 5% or more of the
outstanding common shares as of May 14, 2003 are as follows:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
NAME                        NUMBER OF SHARES BENEFICIALLY OWNED     PERCENTAGE OF OWNERSHIP
------------------------------------------------------------------------------------------------
<S>                         <C>                                     <C>
Scotia Merchant Capital     1,638,796                               10.0%
 Corporation
------------------------------------------------------------------------------------------------
</TABLE>

The Company's major shareholder does not have voting rights different from
any of the other shareholders of the Company.

At May 14, 2003, 38% of the Common Shares outstanding were held in the U.S. The
number of record holders of Common Shares in the U.S. at May 14, 2003 was 69.

B.        RELATED PARTY TRANSACTIONS

None.

C.        INTERESTS OF EXPERTS AND COUNSEL

Not applicable.

ITEM 8.   FINANCIAL INFORMATION

A.        CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

See Item 17 Financial Statements.

LEGAL PROCEEDINGS

In November 2002, Sierra Wireless, Inc., along with several other defendants,
was served with the second amended complaint of MLR, LLC ("MLR") filed in the
U.S. District Court for the Northern District of Illinois Eastern Division for
alleged patent infringement. We assessed the complaint and believed that there
was no infringement of the patents referred to in this claim and that the claim
was invalid. Subsequent to March 31, 2003, we reached an agreement with MLR.
Under the agreement, we will receive non-royalty bearing licenses to use all of
MLR's present and future patents for certain of our products and MLR will
release us from their claim of alleged patent infringement.

We are engaged in other legal actions arising in the ordinary course of
business and believe that the ultimate outcome of these actions will not have
a material adverse effect on our operating results, liquidity or financial
position.

         DIVIDEND POLICY

Since its incorporation, the Company has not declared or paid, and has no
present intention to declare or to pay in the foreseeable future, any cash
dividends with respect to its common shares. Earnings will be retained to
finance further growth and development of the business of the Company. However,
<PAGE>

                                    - 36 -


if the Board of Directors declares dividends, all common shares will
participate equally in the dividends, and, in the event of liquidation, in
the net assets, of Sierra Wireless.

B.        SIGNIFICANT CHANGES

None.

ITEM 9.   THE OFFER AND LISTING

A.        OFFER AND LISTING DETAILS

Price history of stock

<TABLE>
<CAPTION>
                                1998             1999            2000          2001          2002
---------------------------------------------------------------------------------------------------
<S>                             <C>              <C>             <C>           <C>           <C>
NASDAQ (US$)
       High                     N/A              N/A              82.00        60.94         17.80
       Low                      N/A              N/A              26.50         7.51          1.54

TSX (Cdn$)
       High                     N/A              76.00           232.00        92.30         28.30
       Low                      N/A              11.50            39.75        13.26          2.50
</TABLE>

<TABLE>
<CAPTION>
2002                                 Q1           Q2            Q3           Q4
-------------------------------------------------------------------------------------
<S>                                  <C>          <C>           <C>          <C>
NASDAQ (US$)
       High                          17.80        10.69         3.89         5.97
       Low                            9.55         2.90         1.54         1.60

TSX (Cdn$)
       High                          28.30        17.05         5.95         9.25
       Low                           15.20         4.38         2.50         2.51
</TABLE>

<TABLE>
<CAPTION>
2001                                 Q1           Q2            Q3           Q4
-------------------------------------------------------------------------------------
<S>                                  <C>          <C>           <C>          <C>
NASDAQ (US$)
       High                          60.94        29.34         18.51        19.60
       Low                           16.44        11.88          7.51        10.21

TSX (Cdn$)
       High                          92.30        45.20         26.25        31.00
       Low                           26.10        18.50         13.26        16.05
</TABLE>
<PAGE>

                                    - 37 -


<TABLE>
<CAPTION>
                            Oct 02       Nov 02        Dec 02       Jan 03        Feb 03       Mar 03
---------------------------------------------------------------------------------------------------------
<S>                         <C>          <C>           <C>          <C>           <C>          <C>
NASDAQ (US$)
       High                   4.75         5.45          5.97         5.60          4.24         3.75
       Low                    1.60         3.90          3.90         4.12          3.15         3.00

TSX (Cdn$)
       High                   7.40         8.50          9.25         8.61          6.46         5.55
       Low                    2.51         6.10          6.03         6.28          4.66         4.40
</TABLE>

B.        PLAN OF DISTRIBUTION

Not applicable.

C.        MARKETS

The Company's common shares are presently being traded on The Toronto Stock
Exchange in Canada under the symbol "SW" and on The Nasdaq National Market in
the United States under the symbol "SWIR".

D.        SELLING SHAREHOLDERS

Not applicable.

E.        DILUTION

Not applicable.

F.        EXPENSES OF THE ISSUE

Not applicable.

ITEM 10.  ADDITIONAL INFORMATION

A.        SHARE CAPITAL

Not applicable.

B.        MEMORANDUM AND ARTICLES OF ASSOCIATION

See Registration Statement filed April 12, 2000.

C.        MATERIAL CONTRACTS

All of the material contracts of the Company have been entered into in the
ordinary course of business.

D.        EXCHANGE CONTROLS

There are currently no governmental laws, decrees, regulations or other
legislation of Canada which affect the import or export of capital, including
the availability of cash and cash equivalents for use by the Company.
<PAGE>

                                    - 38 -


E.        TAXATION

                            INCOME TAX CONSIDERATIONS

In this section we summarize the material U.S. federal and Canadian federal
income tax considerations relevant to a purchase and the holding of common
shares in this offering by holders which at all times:

     o    For purposes of United States Internal Revenue Code of 1986 (the
          "Code"), the Income Tax Act (Canada) and the Canada-United States
          Income Tax Convention, are "U.S. Persons" and are not resident in
          Canada;

     o    Hold common shares as capital assets for purposes of the Code and
          capital property for purposes of the Income Tax Act;

     o    Deal at arm's length with us for purposes of the Income Tax Act;

     o    Do not use or hold (and never have used or held) the common shares in
          carrying on a business through a permanent establishment or in
          connection with a fixed base in Canada which is available to such
          individual or corporation for the purpose of performing independent
          personal services.

We will refer to persons who satisfy the above conditions as "Unconnected U.S.
Shareholders."

The term "U.S. Person" means:

     o    an individual citizen or resident of the United States;

     o    a corporation or partnership (including any entity treated as a
          partnership under United States Federal income tax law) created or
          organized in or under the laws of the United States, any State or the
          District of Columbia;

     o    an estate the income of which is subject to United Stated Federal
          income taxation regardless of its source;

     o    a trust that is subject to the primary supervision of a court within
          the United States and the control of one or more U.S. persons as
          described in section 7701(a)(30) of the Code; or

     o    a trust that has a valid election in effect under applicable United
          States Treasury regulations to be treated as a U.S. person.

This discussion is based upon:

     o    The current provisions of the Income Tax Act and regulations under the
          Income Tax Act;

     o    The current provisions of the Code and United States Treasury
          regulations promulgated under the Code;

     o    The current provisions of the Canada-United States Income Tax
          Convention;

     o    Our understanding of the current administrative policies and practices
          published by the Canada Customs and Revenue Agency;
<PAGE>

                                    - 39 -


     o    All specific proposals to amend the Income Tax Act and the regulations
          under the Income Tax Act that have been publicly announced by the
          Minister of Finance (Canada) prior to the date of this prospectus;

     o    Published Revenue Rulings, Revenue Procedures and other administrative
          guidance issued by the United States Internal Revenue Service; and

     o    Judicial decisions.

All of the authorities listed above are subject to change either prospectively
or retroactively. We do not discuss the potential effects of any proposed
legislation in the United States and do not take into account the tax laws of
the various provinces or territories of Canada or the laws of the various state
and local jurisdictions of the United States or of foreign jurisdictions.

We intend this discussion to be a general description of the United States
Federal and Canadian federal income tax considerations material to a purchase
and the holding of common shares. This discussion does not address all possible
tax consequences relating to an investment in our common shares. We have not
taken into account your particular circumstances and do not address consequences
peculiar to you under provisions of United States or Canada income tax law. For
instance, we do not discuss special situations, such as:

     o    Those of dealers in securities or currencies;

     o    Financial institutions;

     o    Tax-exempt entities;

     o    Traders in securities that have elected to mark to market their
          securities holdings;

     o    Life insurance companies;

     o    Persons holding common shares as part of a hedging, integration,
          conversion or constructive sale transaction or a straddle;

     o    Persons owning directly, indirectly or constructively 10% or more of
          our voting shares;

     o    Persons whose "functional currency" is not the United States dollar.

WE STRONGLY URGE YOU TO CONSULT YOUR OWN TAX ADVISOR REGARDING YOUR INDIVIDUAL
TAX CONSEQUENCES OF PURCHASING COMMON SHARES IN THIS OFFERING AND OF HOLDING
SUCH SHARES.

UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

TAXATION OF DIVIDENDS

The gross amount of dividends paid to you will be treated as ordinary income to
the extent of our current or accumulated earnings and profits. You must include
in income an amount equal to the U.S. dollar value of such dividends on the date
of receipt based on the exchange rate on such date, without reduction for
Canadian withholding tax. You will generally be entitled to a foreign tax credit
or deduction for United States Federal income tax purposes, in an amount equal
to the Canadian tax withheld from such dividends. To the extent dividend
distributions paid by us with respect to your common shares exceed our current
and accumulated earnings and profits, they will be treated first as a return of
<PAGE>

                                    - 40 -


capital up to your adjusted tax basis in the common shares. Thereafter they
will be treated as a gain from the sale or exchange of the common shares.

If the Canadian dollars you receive as a dividend are not converted into United
States dollars on the date of receipt, you will have a basis in the Canadian
dollars equal to their United States dollar value on the date of receipt. Any
gain or loss realized on a subsequent conversion or other disposition of the
Canadian dollars will be treated as ordinary income or loss.

Dividends paid by us generally will constitute passive income or, for certain
holders, financial services income for purposes of the foreign tax credit. The
Code applies various limitations on the amount of foreign tax credit that may be
available to a United States taxpayer. Because of the complexity of these
limitations, you should consult your own tax advisor with respect to their
application.

Dividends paid by us on the common shares generally will not be eligible for the
deduction that generally applies to dividends received by a corporation from
another corporation.

SALE OR EXCHANGE OF COMMON SHARES

If you sell or exchange common shares, you generally will recognize gain or loss
in an amount equal to the difference, if any, between the amount realized on the
sale or exchange less your adjusted tax basis in the shares. Any gain or loss
you recognize upon the sale of common shares held as capital assets will be
long-term capital gain or loss if you have held the common shares for more than
one year. Long-term capital gain recognized by individuals generally is taxed at
reduced rates. The Code imposes limitations on the ability to deduct capital
losses. Any gain or loss recognized by you on the sale or exchange of common
shares generally will be treated as United States source gain or loss.

PASSIVE FOREIGN INVESTMENT COMPANY RULES

We believe, based on our current operations and assets, that we are not a
passive foreign investment company ("PFIC") for United States Federal income tax
purposes and do not expect to become one in the future. This conclusion is a
factual determination made annually and is thus subject to change. In reaching
our conclusion, we have valued our assets based on the price per share of the
common shares. Such a valuation method results in substantial value being
ascribed to intangible assets, including goodwill, that are considered neither
to produce nor to be held for the production of passive income for purposes of
the PFIC rules. Although we believe that this is a reasonable method of valuing
our assets, neither the Internal Revenue Service nor any United States court has
addressed whether its use is appropriate.

In general, we will be a PFIC for any taxable year if either:

     o    At least 75% of our gross income is passive income, or

     o    At least 50% of the value (determined on the basis of a quarterly
          average without reduction for liabilities) of our assets is
          attributable to assets that produce or are held for the production of
          passive income.

For purposes of applying these tests, passive income generally includes

     o    Dividends;

     o    Interest;
<PAGE>

                                    - 41 -


     o    Royalties, other than royalties derived in the active conduct of a
          trade or business and not derived from a related person;

     o    Rents, other than rents derived in the active conduct of a trade or
          business and not derived from a related person; and

     o    Annuities and gains from assets that produce passive income.

If a foreign corporation owns at least 25% by value of the stock of another
corporation, the foreign corporation is treated, for purposes of applying the
PFIC tests, as owning its proportionate share of the assets of the other
corporation, and as receiving directly its proportionate share of the other
corporation's income.

If we were a PFIC, you would be subject to special tax rules with respect to:

     o    Any "excess distribution" you receive from us. An excess distribution
          is generally any distribution received by you in a taxable year that
          is greater than 125% of the average annual distributions you received
          from us in the three preceding taxable years, or your holding period
          for the shares, if shorter.

     o    Any gain realized on the sale, exchange, gift, or other disposition of
          common shares. For purposes of this rule, a pledge of common shares
          will be treated as a disposition of such shares.

Under these special tax rules:

     o    The excess distribution or gain would be allocated ratably over your
          holding period for the shares;

     o    The amount allocated to the current taxable year would be treated as
          ordinary income;

     o    The amount allocated to each prior year would be subject to tax at the
          highest tax rate in effect for that year; and

     o    An interest charge at the rate applicable to underpayments of tax
          would be imposed with respect to the resulting tax attributable to
          each such prior year.

If we were a PFIC and you were to make a qualified electing fund election with
respect to us, you would not be subject to the special rules described above,
but, rather, you generally would be required to pay tax on your pro rata share
of our ordinary earnings and net capital gains for each year you hold common
shares, regardless of whether any such income or gain was actually distributed.
If we become a PFIC, we will provide you, at your request, with the information
needed to make a qualified electing fund election.

If we were a PFIC, alternatively you may be able to elect to apply a
"mark-to-market" tax regime under which you would be required to recognize as
ordinary income each year an amount equal to the excess of the fair market value
of your common shares over the adjusted basis of such shares, calculated as of
the close of such taxable year. If the adjusted basis of your shares were to
exceed their fair market value, and you were to elect to have this regime apply,
you would be entitled to deduct the amount of such excess, but only to the
extent of amounts included in ordinary income in prior taxable years pursuant to
the election.

If you own shares during any year that we are a passive foreign investment
company, you must file Internal Revenue Service Form 8621 for such year.
<PAGE>

                                    - 42 -


The tax consequences of holding stock in a PFIC and of the elections under the
rules described above are extremely complex and prospective investors are
strongly urged to consult their tax advisors with respect to such consequences
and the availability and effect of such elections in their particular
circumstances.

INFORMATION REPORTING AND BACKUP WITHHOLDING

Information reporting requirements will apply to dividends paid in respect of
the common shares or to the proceeds received on the sale, exchange, or
redemption of common shares paid to you within and, in certain cases, outside
the United States unless you are an exempt recipient, such as a corporation, or
an exemption otherwise applies. Backup withholding may apply to such amounts
unless you are an exempt recipient, such as a corporation, if you fail to
provide an accurate taxpayer identification number or to report interest and
dividends required to be shown on your United States Federal income tax returns.

You will be allowed a refund or a credit equal to any amounts withheld under the
U.S. backup withholding tax rules against your United States Federal income tax
liability, provided you furnish the required information to the Internal Revenue
Service.

STAMP TAXES

Purchasers of the common shares offered in this prospectus may be required to
pay stamp taxes and other charges under the laws and practices of the country of
purchase, in addition to the offering price listed on the cover page of this
prospectus.

CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

In this section, we summarize the material anticipated Canadian federal income
tax considerations relevant to your purchase of shares.

Under the Income Tax Act, as modified by the Canada-United States Income Tax
Convention, if you are an Unconnected U.S. Shareholder you will generally be
exempt from Canadian tax on a capital gain realized on an actual or deemed
disposition of the shares (including a deemed disposition on death).

Dividends paid, credited or deemed to have been paid or credited on the shares
to Unconnected U.S. Shareholders will be subject to a Canadian withholding tax.
Under the Canada-United States Income Tax Convention, the rate of withholding
tax generally applicable to Unconnected U.S. Shareholders who beneficially own
the dividends is reduced to 15%. In the case of Unconnected U.S. Shareholders
that are companies that beneficially own at least 10% of our voting shares, the
rate of withholding tax on dividends is reduced to 5%.

F.        DIVIDENDS AND PAYING AGENTS

Not applicable.

G.        STATEMENT OF EXPERTS

Not applicable.
<PAGE>

                                    - 43 -


H.        DOCUMENTS ON DISPLAY

All documents referred to in this Form 20-F are available for inspection on
EDGAR. Alternatively, the documents are available for inspection at the offices
of the Company at the following address:

Sierra Wireless, Inc.
13811 Wireless Way
Richmond, British Columbia
Canada  V6V 3A4

I.        SUBSIDIARY INFORMATION

Not applicable.

ITEM 11.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

During the year ended December 31, 2002, 78% of our revenue was earned from
United States-based customers compared to 92% in the year ended December 31,
2001. Our risk from currency fluctuations between the Canadian and U.S. dollar
is reduced by purchasing inventory, other costs of sales and many of our
services in U.S. dollars. We are exposed to foreign currency fluctuations since
the majority of our research and development, sales and marketing, and
administration costs are incurred in Canada. We monitor our exposure to
fluctuations between the Canadian and U.S. dollars. As a result of the adoption
of U.S. dollars as our currency of measurement in the year ended December 31,
1999, our foreign currency risk has changed from U.S. dollar denominated
monetary assets and liabilities to non-U.S. dollar denominated monetary assets
and liabilities and the risk of the impact of exchange rate changes relative to
the U.S. dollar. As we have available funds and very little debt, we have not
been adversely affected by significant interest rate fluctuations.

With our international expansion into Europe and the Asia-Pacific region, we are
transacting business in additional foreign currencies and the potential for
currency fluctuations is increasing. The risk associated with currency
fluctuations between the U.S. dollar and foreign currencies in Europe and the
Asia-Pacific region has been minimal as such transactions have not been material
to date. During 2002, we continued to enter into additional distribution
agreements in Europe and the Asia-Pacific region that are denominated primarily
in U.S. dollars. We expect that as our business expands in Europe we will also
continue to be exposed to Euro transactions. To date we have not entered into
any futures contracts. To manage our foreign currency risks, consideration will
be given to entering into such contracts should we consider it to be necessary
to reduce our exposure to future foreign exchange fluctuations.

Currently, we do not have any hedging activities or derivative instruments,
hence the impact of FAS No. 133 is not material to our financial results.

ITEM 12.  DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.
<PAGE>

                                    - 44 -


                                     PART II

ITEM 13.  DEFAULTS, DIVIDEND ARREARAGES AND DELINQUINCIES

There have been no material defaults, arrearages or delinquencies.

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

Not applicable

ITEM 15.  CONTROLS AND PROCEDURES

Within 90 days prior to the date of this Annual Report, we performed an
evaluation of the effectiveness of the design and operation of our disclosure
controls and procedures. The evaluation was performed with the participation of
our key corporate senior management. Our management concluded that our
disclosure controls and procedures were effective in alerting them to material
information, on a timely basis, required to be included in our periodic filings
with the U.S. Securities and Exchange Commission. There were no significant
changes in the Company's internal controls or in other factors that could
significantly affect these controls subsequent to the date of our evaluations.

ITEM 16.  [RESERVED]

Not applicable.

                                    PART III

ITEM 17.  FINANCIAL STATEMENTS

The following documents are set forth beginning at page F-1 of this Form 20-F:

     (a)  Management's Statement of Responsibilities

     (b)  Auditors' Report to the Shareholders

     (c)  Consolidated Statements of Operations for the years ended December 31,
          2002, 2001 and 2000

     (d)  Consolidated Balance Sheets as at December 31, 2002 and 2001

     (e)  Consolidated Statements of Shareholders' Equity as at December 31,
          2002, 2001 and 2000

     (f)  Consolidated Statements of Cash Flows for the years ended December 31,
          2002, 2001 and 2000

     (g)  Notes to the Consolidated Financial Statements for the years ended
          December 31, 2002, 2001 and 2000

ITEM 18.  FINANCIAL STATEMENTS

Not applicable.
<PAGE>

                                    - 45 -


ITEM 19.  EXHIBITS

See the index at the beginning of the financial statements appearing in Item 17
herein.

                                   SIGNATURES

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

Dated: May 20, 2003

                              SIERRA WIRELESS, INC.

                              /s/  DAVID B. SUTCLIFFE
                              --------------------------------
                              Name:  David B. Sutcliffe
                              Title: Chairman of the Board and
                                     Chief Executive Officer
<PAGE>

                                    - 46 -


                                  CERTIFICATION

I, David B. Sutcliffe, certify that:

1. I have reviewed this annual report on Form 20-F of Sierra Wireless, Inc.;

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

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

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

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

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and

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

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

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

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

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

Date: May 20, 2003

                                          /s/ DAVID B. SUTCLIFFE
                                          ------------------------------------
                                          David B. Sutcliffe
                                          Chairman and Chief Executive Officer
<PAGE>

                                    - 47 -


                  CERTIFICATION PURSUANT TO 18 U.S.C. SS.1350,

                             AS ADOPTED PURSUANT TO

                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Sierra Wireless, Inc. (the "Company") on
Form 20-F for the period ended December 31, 2002 as filed with the Securities
and Exchange Commission on the date hereof, I, David B. Sutcliffe, Chief
Executive Officer of the Company, certify pursuant to 18 U.S.C. ss.1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

     (1)  The Report fully complies with the requirements of Section 13(a) or
          15(d) of the Securities Exchange Act of 1934; and

     (2)  The information contained in this Report fairly presents, in all
          material respects, the financial condition and results of operations
          of the Company.

Date: May 20, 2003

                                          /s/ DAVID B. SUTCLIFFE
                                          ------------------------------------
                                          David B. Sutcliffe
                                          Chairman and Chief Executive Officer
<PAGE>

                                    - 48 -


                                  CERTIFICATION

I, Peter W. Roberts, certify that:

1. I have reviewed this annual report on Form 20-F of Sierra Wireless, Inc.;

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

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

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

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

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and

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

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

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

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

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

Date: May 20, 2003

                                            /s/ PETER W. ROBERTS
                                            -----------------------
                                            Peter W. Roberts
                                            Chief Financial Officer
<PAGE>

                                    - 49 -


                  CERTIFICATION PURSUANT TO 18 U.S.C. SS.1350,

                             AS ADOPTED PURSUANT TO

                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Sierra Wireless, Inc. (the "Company") on
Form 20-F for the period ended December 31, 2002 as filed with the Securities
and Exchange Commission on the date hereof, I, Peter W. Roberts, Chief Financial
Officer of the Company, certify pursuant to 18 U.S.C. ss.1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

     (1)  The Report fully complies with the requirements of Section 13(a) or
          15(d) of the Securities Exchange Act of 1934; and

     (2)  The information contained in this Report fairly presents, in all
          material respects, the financial condition and results of operations
          of the Company.

Date: May 20, 2003

                                            /s/ PETER W. ROBERTS
                                            -----------------------
                                            Peter W. Roberts
                                            Chief Financial Officer
<PAGE>

                                    - 50 -


                 INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                             PAGE
                                                                             ----
<S>                                                                          <C>
Management's Statement of Responsibilities..................................  F-1
Auditors' Report to the Shareholders........................................  F-1
Consolidated Statements of Operations.......................................  F-2
Consolidated Balance Sheets.................................................  F-3
Consolidated Statements of Shareholders' Equity.............................  F-4
Consolidated Statements of Cash Flows.......................................  F-5
Notes to the Consolidated Financial Statements..............................  F-6
</TABLE>
<PAGE>

                                      F-1


                   MANAGEMENT'S STATEMENT OF RESPONSIBILITIES

The management of Sierra Wireless, Inc. is responsible for the preparation of
the accompanying consolidated financial statements and the preparation and
presentation of information in the Annual Report. The consolidated financial
statements have been prepared in accordance with accounting principles generally
accepted in the United States and are considered by management to present fairly
the financial position and operating results of the Company.

The Company maintains various systems of internal control to provide reasonable
assurance that transactions are appropriately authorized and recorded, that
assets are safeguarded and that financial reports are properly maintained to
provide accurate and reliable financial statements.

The Company's audit committee is comprised entirely of non-management directors
and is appointed by the Board of Directors annually. The committee meets
periodically with the Company's management and independent auditors to review
the consolidated financial statements and the independent auditors' report. The
audit committee reported its findings to the Board of Directors who have
approved the consolidated financial statements.

The Company's independent auditors, KPMG LLP, have examined the consolidated
financial statements and their report follows.

/s/ DAVID B. SUTCLIFFE                               /s/ PETER W. ROBERTS
------------------------------------                 -----------------------
David B. Sutcliffe                                   Peter W. Roberts
Chairman and Chief Executive Officer                 Chief Financial Officer
January 22, 2003


AUDITORS' REPORT TO THE SHAREHOLDERS

We have audited the consolidated balance sheets of Sierra Wireless, Inc. as at
December 31, 2002 and 2001 and the consolidated statements of operations,
shareholders' equity and cash flows for each of the years in the three-year
period ended December 31, 2002. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Company as at
December 31, 2002 and 2001 and the results of its operations and its cash flows
for each of the years in the three-year period ended December 31, 2002 in
accordance with accounting principles generally accepted in the United States of
America.

On January 22, 2003, we reported separately to the shareholders of the Company
on the consolidated financial statements as at and for the periods presented
above, which consolidated financial statements were prepared in accordance with
Canadian generally accepted accounting principles.

/s/ KPMG LLP
---------------------
Chartered Accountants
Vancouver, Canada
January 22, 2003
<PAGE>

                                      F-2


                              SIERRA WIRELESS, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
   (Expressed in thousands of United States dollars, except per share amounts)
          (Prepared in accordance with United States generally accepted
                         accounting principles (GAAP))

<TABLE>
<CAPTION>
                                                                   YEARS ENDED DECEMBER 31,
                                                              ---------------------------------
                                                                 2000        2001         2002
                                                               --------    --------     --------
<S>                                                            <C>         <C>          <C>
Revenue....................................................    $ 53,801    $ 62,348     $ 77,130
Cost of goods sold.........................................      29,067      47,035       69,132
                                                               --------    --------     --------
Gross margin                                                     24,734      15,313        7,998
                                                               --------    --------     --------
Expenses:
  Sales and marketing......................................       9,907      12,726       11,564
  Research and development, net (note 13)..................      12,887      16,902       14,896
  Administration...........................................       5,915      10,460        4,708
  Restructuring and other charges (note 3).................          --          --       12,869
  Amortization.............................................       1,754       2,084        2,331
                                                               --------    --------     --------
                                                                 30,463      42,172       46,368
                                                               --------    --------     --------
Loss from operations.......................................      (5,729)    (26,859)     (38,370)
Other income...............................................       3,974       2,317          170
                                                              ---------   ---------    ---------
Loss before income taxes...................................      (1,755)    (24,542)     (38,200)
Income tax expense (recovery) (note 12)....................       1,363        (273)       3,463
                                                               --------    ---------    --------
Net loss...................................................    $ (3,118)   $(24,269)    $(41,663)
                                                               ========    =========    =========

Loss per share (note 14):
  Basic....................................................    $  (0.20)   $  (1.50)    $  (2.56)
  Diluted..................................................    $  (0.20)   $  (1.50)    $  (2.56)
                                                               =========   =========    =========
</TABLE>

          See accompanying notes to consolidated financial statements.
<PAGE>

                                      F-3


                              SIERRA WIRELESS, INC.

                           CONSOLIDATED BALANCE SHEETS
                (Expressed in thousands of United States dollars)
                (Prepared in accordance with United States GAAP)

<TABLE>
<CAPTION>
                                                                                        DECEMBER 31,
                                                                                  ----------------------
                                                                                     2001        2002
                                                                                  ---------   - --------
<S>                                                                               <C>          <C>
ASSETS
Current assets:
  Cash and cash equivalents.....................................................  $  12,085    $  34,841
  Short-term investments........................................................     31,879           --
  Accounts receivable, net of allowance for doubtful
     accounts of $3,068 (2001 -- $5,169)........................................     10,504       13,865
  Inventories (note 5)..........................................................     25,591        6,673
  Deferred income taxes (note 12)...............................................        224           --
  Prepaid expenses..............................................................      1,180          864
                                                                                  ---------    ---------
                                                                                     81,463       56,243
Fixed assets (note 6)...........................................................     14,694        7,198
Deferred income taxes (note 12).................................................      4,030          500
Intangible assets (note 7)......................................................     10,054        6,907
Other...........................................................................        483          241
                                                                                  ---------    ---------
                                                                                  $ 110,724    $  71,089
                                                                                  =========    =========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Accounts payable..............................................................  $   4,356    $   3,017
  Accrued liabilities...........................................................     12,555       12,431
  Deferred revenue and credits..................................................      1,050          297
  Current portion of long-term liabilities......................................        341        2,803
  Current portion of obligations under capital lease............................        947          831
                                                                                  ---------    ---------
                                                                                     19,249       19,379

Long-term liabilities (note 8)..................................................        671        2,896
Obligations under capital lease (note 9)........................................        761           60
Shareholders' equity:
  Share capital (note 10)
     Authorized
       Unlimited number of common and preference shares with no par value
     Common shares, 16,345,396 (2001 -- 16,185,770) issued and outstanding......    122,673      123,047
  Deficit.......................................................................    (31,901)     (73,564)
  Accumulated other comprehensive income
     Cumulative translation adjustments.........................................       (729)        (729)
                                                                                  ---------    ---------
                                                                                     90,043       48,754
                                                                                  ---------    ---------
                                                                                  $ 110,724    $  71,089
                                                                                  =========    =========
</TABLE>

     Commitments and contingencies (note 15)

          See accompanying notes to consolidated financial statements.


     /s/ DAVID B. SUTCLIFFE                      /s/ S. JANE ROWE
     ----------------------                      ----------------
     DAVID B. SUTCLIFFE                          S. JANE ROWE
     Director                                    Director
<PAGE>

                                      F-4


                              SIERRA WIRELESS, INC.

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
   (Expressed in thousands of United States dollars, except number of shares)
                (Prepared in accordance with United States GAAP)

<TABLE>
<CAPTION>
                                                                                    ACCUMULATED
                                               COMMON SHARES                           OTHER
                                          -------------------------               COMPREHENSIVE
                                            NUMBER         AMOUNT       DEFICIT    INCOME (LOSS)    TOTAL
                                          ----------     ----------  ----------   --------------  ---------
<S>                                       <C>            <C>         <C>          <C>             <C>
Balance December 31, 1999............     14,216,395     $  52,936   $  (4,514)   $    (729)      $ 47,693
Net and comprehensive loss...........            --             --      (3,118)          --         (3,118)
Issued for cash (note 10)............      1,461,106        65,634          --           --         65,634
Warrants exercised...................         55,555           259          --           --            259
Returned to treasury.................        (47,618)           --          --           --             --
Stock option exercises...............        324,137           664          --           --            664
Tax benefit of share issue costs.....             --         2,681          --           --          2,681
                                         -----------     ---------   ---------    ---------       --------
Balance December 31, 2000............     16,009,575       122,174      (7,632)        (729)       113,813
Net and comprehensive loss...........             --            --     (24,269)          --        (24,269)
Stock option exercises...............        176,195           499          --           --            499
                                         -----------     ---------   ---------    ---------       --------
Balance December 31, 2001............     16,185,770       122,673     (31,901)        (729)        90,043
Net and comprehensive loss...........             --            --     (41,663)          --        (41,663)
Stock option exercises...............        159,626           374          --           --            374
                                         -----------     ---------   ---------    ---------       --------
Balance December 31, 2002............     16,345,396     $ 123,047   $ (73,564)   $    (729)      $ 48,754
                                         ===========     =========   =========    =========       ========
</TABLE>


          See accompanying notes to consolidated financial statements.
<PAGE>

                                      F-5


                              SIERRA WIRELESS, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                (Expressed in thousands of United States dollars)
                (Prepared in accordance with United States GAAP)

<TABLE>
<CAPTION>
                                                                   YEARS ENDED DECEMBER 31,
                                                             ------------------------------------
                                                               2000         2001         2002
                                                             ---------    ---------    ----------
<S>                                                          <C>          <C>          <C>
Cash flows from operating activities:
  Net loss.................................................. $  (3,118)   $ (24,269)   $ (41,663)
  Adjustments to reconcile net loss to net
     cash provided by operating activities
     Amortization...........................................     3,068        6,661        6,788
     Non-cash restructuring and other charges...............        --           --       28,593
     Loss on disposal.......................................        --           --          597
     Expense in-process research and development costs......     1,000           --           --
     Deferred income taxes..................................       448          (15)       3,754
     Accrued warrants.......................................        --          671          481
  Changes in operating assets and liabilities
     Accounts receivable....................................   (17,646)      12,084       (3,361)
     Inventories............................................    (5,644)     (13,031)       2,517
     Prepaid expenses.......................................      (943)          59          159
     Accounts payable.......................................     7,237       (6,945)      (1,339)
     Accrued liabilities....................................     7,069        3,420         (463)
     Deferred revenue and credits...........................       559          300         (753)
                                                             ---------    ---------    ----------
  Net cash used in operating activities.....................    (7,970)     (21,065)      (4,690)

Cash flows from investing activities:
  Business acquisitions (note 4)............................    (7,250)          --           --
  Proceeds on disposal......................................        --           --          338
  Purchase of fixed assets..................................    (6,692)     (10,523)      (2,219)
  Increase in intangible assets.............................    (3,118)      (3,328)      (1,431)
  Increase in other assets..................................      (340)        (143)          --
  Purchase of short-term investments........................  (212,438)     (69,411)     (14,662)
  Proceeds on maturity of short-term investments............   140,294      109,676       46,541
                                                             ---------    ---------    ---------
  Net cash provided by (used in) investing activities.......   (89,544)      26,271       28,567

Cash flows from financing activities:
  Issue of common shares....................................    66,557          499          374
  Increase in long-term liabilities.........................        --          255           --
  Repayment of long-term liabilities........................      (744)        (766)      (1,495)
                                                             ---------    ---------    ---------
  Net cash provided by (used in) financing activities.......    65,813          (12)      (1,121)
                                                             ---------    ---------    ---------

Net increase (decrease) in cash and cash equivalents........   (31,701)       5,194       22,756
Cash and cash equivalents, beginning of year................    38,592        6,891       12,085
                                                             ---------    ---------    ---------
Cash and cash equivalents, end of year...................... $   6,891    $  12,085    $  34,841
                                                             =========    =========    =========
</TABLE>

See supplementary information (note 16)

          See accompanying notes to consolidated financial statements.
<PAGE>

                                      F-6


                              SIERRA WIRELESS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                  Years ended December 31, 2000, 2001 and 2002
            (Expressed in thousands of United States dollars, except
                     per share amounts and number of shares)
                (Prepared in accordance with United States GAAP)

1.   NATURE OF OPERATIONS

We were incorporated under the Canada Business Corporations Act on May 31, 1993.
Our principal business activities include developing, manufacturing, marketing,
selling and supporting a broad range of single and multi-mode wireless data
modems and enabling software for use with handheld computing devices, notebook
computers and vehicle-based or monitoring applications.

2.   SIGNIFICANT ACCOUNTING POLICIES

Management has prepared these consolidated financial statements in accordance
with accounting principles generally accepted in the United States.

(a)  PRINCIPLES OF CONSOLIDATION

Our consolidated financial statements include the accounts of Sierra Wireless,
Inc. and its wholly-owned subsidiaries Sierra Wireless Data, Inc., Sierra
Wireless SRL, Sierra Wireless (UK) Limited and Sierra Wireless ULC from their
respective dates of formation. We have eliminated all significant intercompany
balances and transactions.

(b)  USE OF ESTIMATES

In preparing the financial statements in conformity with generally accepted
accounting principles, management makes estimates and assumptions that affect
the reported amounts of assets, particularly the recoverability of fixed assets,
deferred income taxes and intangible assets, and warranty accruals and other
liabilities, and disclosures of contingent liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from the estimates.

(c)  CASH EQUIVALENTS

Cash equivalents include short-term deposits, which are all highly liquid
marketable securities having a term to maturity of three months or less when
acquired. We value our short-term deposits at cost.

(d)  SHORT-TERM INVESTMENTS

Short-term investments, all of which we categorize as available-for-sale, are
carried at quoted market value. We reflect unrealized holding gains (losses)
related to available-for-sale investments, after deducting amounts allocable to
income taxes, as a separate component of shareholders' equity. There were no
significant unrealized holding gains or losses on available-for-sale securities
during the three-year period ending December 31, 2002.

(e)  INVENTORIES

Inventories consist of electronic components and finished goods and are valued
at the lower of cost, determined on a first-in-first-out basis, and estimated
net realizable value.
<PAGE>

                                      F-7


(f)  RESEARCH AND DEVELOPMENT

We expense research and development costs as they are incurred. To date we have
had no significant software development costs that would be required to be
capitalized pursuant to Financial Accounting Standards ("FAS") No. 86,
"Accounting for the Costs of Computer Software to Be Sold, Leased or Otherwise
Marketed".

We follow the cost reduction method of accounting for government research and
development funding, whereby the benefit of the funding is recognized as a
reduction in the cost of the related expenditure when certain criteria
stipulated under the terms of those funding agreements have been met, and there
is reasonable assurance the research and development funding will be received.
Certain research and development funding is repayable only on the occurrence of
specified future events. If such events do not occur, no repayment is required.
We recognize the liability to repay research and development funding in the
period in which conditions arise that will cause research and development
funding to be repayable.

(g)  FIXED ASSETS

We initially record fixed assets at cost. We subsequently provide amortization
on a straight-line basis over the following periods:

<TABLE>
<S>                                                                 <C>
     Furniture and fixtures.......................................    5 years
     Research and development equipment...........................    3 years
     Tooling......................................................    3 years
     Software.....................................................  3-5 years
     Office equipment.............................................    5 years
</TABLE>

We amortize leasehold improvements on a straight-line basis over the lesser of
their useful lives or lease terms.

(h)  INTANGIBLE ASSETS

PATENTS

Consideration paid for the patents is amortized on a straight-line basis over
three to five years commencing with the date the patents are granted.

LICENSE FEES

Consideration paid for license fees is amortized on a straight-line basis over
the shorter of the term of the license or five years.

INTELLECTUAL PROPERTY

Consideration paid for intellectual property is amortized on a straight-line
basis over three years.

(i)  INCOME TAXES

We account for income taxes in accordance with FAS No. 109, "Accounting for
Income Taxes", which requires the use of the asset and liability method. Under
this method, deferred income taxes are recognized for the future income tax
consequences attributable to differences between the financial statement
carrying values and their respective income tax bases (temporary differences).
Changes in the net deferred tax asset or liability are generally included in
earnings. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which temporary
differences are expected to be recovered or settled. The effect on deferred
income tax assets and liabilities of a change in tax rates is included in income
in the period that includes the enactment date. Deferred income tax assets are
evaluated and if their realization is not considered "more likely than not", a
valuation allowance is provided.
<PAGE>

                                      F-8


(j)   STOCK-BASED COMPENSATION

We have elected under FAS No. 123, "Accounting for Stock-based Compensation", to
account for employee stock options using the intrinsic value method. This method
is described in Accounting Principles Board ("APB") Opinion No. 25, "Accounting
for Stock Issued to Employees", and related interpretations. As we grant all
stock options with an exercise price equal to the market value of the underlying
common shares on the date of the grant, no compensation expense is required to
be recognized under APB 25. FAS No. 123 uses a fair value method of calculating
the cost of stock option grants. Had compensation cost for our employee stock
option plan been determined by this method, our net loss and loss per share
would have been as follows:

<TABLE>
<CAPTION>
                                                                          YEARS ENDED DECEMBER 31,
                                                                      ---------------------------------
                                                                        2000        2001         2002
                                                                      -------     --------    ---------
<S>                                                                   <C>         <C>         <C>
Net loss:

  As reported........................................................ $(3,118)    $(24,269)   $(41,663)
  Less:  Total stock-based employee compensation expense
       determined under fair value based method for all awards.......  (5,575)     (10,426)     (7,817)
                                                                      -------     --------    --------
  Pro forma.......................................................... $(8,693)    $(34,695)   $(49,480)
                                                                      =======     ========    ========

Basic and diluted loss per share:
  As reported.......................................................  $ (0.20)    $  (1.50)   $  (2.56)
  Pro-forma..........................................................   (0.57)       (2.15)      (3.03)
</TABLE>

We recognize the calculated benefit at the date of granting the stock options on
a straight-line basis over the shorter of the expected service period and the
vesting period.

We have estimated the fair value of each option on the date of the grant using
the Black-Scholes option-pricing model with the following assumptions:

<TABLE>
<CAPTION>
                                                                          YEARS ENDED DECEMBER 31,
                                                                     ----------------------------------
                                                                        2000        2001         2002
                                                                      -------     --------    ---------
<S>                                                                   <C>         <C>         <C>
Expected dividend yield......................................               0           0           0
Expected stock price volatility..............................             106%        107%        107%
Risk-free interest rate......................................            5.67%       4.88%       4.48%
Expected life of options.....................................         4 years     4 years     4 years
</TABLE>

The fair value of stock options granted during the year was $4.58 (2001 -
$15.04, 2000 - $38.85).

(k) REVENUE RECOGNITION

We recognize revenue from sales of products and services upon the later of
transfer of title or upon shipment of the product to the customer or rendering
of the service, so long as collectibility is reasonably assured. Customers
include resellers, original equipment manufacturers, wireless service providers
and end-users. We record deferred revenue when we receive cash in advance of the
revenue recognition criteria being met.

We recognize revenue on the portion of sales to certain resellers that are
subject to provisions allowing various rights of return and stock rotation when
the rights have expired or the products have been reported as sold by the
resellers.

Funding from research and development agreements, other than government
assistance, is recognized as revenue when certain criteria stipulated under the
terms of those funding agreements have been met, and when there is reasonable
assurance the funding will be received. Certain research and development funding
will be repayable only on the occurrence of specified future events. If such
events do not occur, no repayment would be required. We will recognize the
liability to repay research and development funding in the period in which
conditions arise that would cause research and development funding to be
repayable.

(l)  WARRANTY COSTS

We accrue warranty costs upon the recognition of related revenue, based on our
best estimates, with reference to past experience.
<PAGE>

                                      F-9


(m)  MARKET DEVELOPMENT COSTS

We accrue for co-op advertising costs upon the later of the recognition date of
the related revenue or date at which the co-op advertising is available. Market
development costs are recorded as marketing expense in accordance with the
criteria in Emerging Issues Task Force 01-9, "Accounting for Consideration Given
by a Vendor to a Customer (Including a Reseller of Vendor's Products)".

(n)  SHARE ISSUE COSTS

We reduce the value of consideration assigned to shares issued by the direct
costs, net of income tax recoveries, of issuing the shares.

(o)  IMPAIRMENT OF LONG-LIVED ASSETS

We monitor the recoverability of long-lived assets, which includes fixed assets
and intangible assets, based on factors such as future asset utilization and the
future undiscounted cash flows expected to result from the use of the related
assets. Our policy is to record an impairment loss in the period when we
determine that the carrying amount of the asset will not be recoverable. At that
time the carrying amount is written down to fair value.

(p)  EARNINGS (LOSS) PER COMMON SHARE

We calculate basic earnings (loss) per share based on the weighted-average
number of common shares outstanding for the year. If, in a reporting period, we
have had outstanding dilutive stock options and warrants, we calculate diluted
earnings (loss) per share using the treasury stock method.

(q)  COMPREHENSIVE INCOME

Under FAS No. 130, "Reporting Comprehensive Income", we are required to report
comprehensive income (loss), which includes our net earnings (loss) as well as
changes in equity from other non-owner sources. In our case, the other changes
in equity included in comprehensive income (loss) comprise the foreign currency
cumulative translation adjustments. Comprehensive income (loss) is presented in
the consolidated statements of shareholders' equity.

(r)  INVESTMENT TAX CREDITS

Investment tax credits are accounted for using the cost reduction method whereby
such credits are deducted from the expenses or assets to which they relate in
the period in which their recoverability is reasonably assured.

(s)  COMPARATIVE FIGURES

We have reclassified certain of the figures presented for comparative purposes
to conform to the financial statement presentation we adopted for the current
year.

(t)  RECENT ACCOUNTING PRONOUNCEMENTS

In December 2002, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("FAS") No. 148, "Accounting for
Stock-Based Compensation-Transition and Disclosure" ("FAS No. 148"), which
provides alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee compensation. In
addition, FAS No. 148 amends the disclosure requirements of FAS No. 123 to
require prominent disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee compensation and the
effect of the method used on reported results. FAS No. 148 is effective for
fiscal years ending after December 15, 2002 with earlier application permitted.
We have adopted the disclosure provisions of FAS No. 148 in our consolidated
financial statements.

In November 2002, FASB issued Emerging Issues Task Force 00-21, "Revenue
Arrangements with Multiple Deliverables" ("EITF 00-21"). EITF 00-21 addresses
certain aspects of the accounting by a vendor for arrangements under which it
will perform multiple revenue-generating activities. In some arrangements, the
different revenue-generating activities are sufficiently separable, and there
may be sufficient evidence of their fair values to separately account for some
or all of the deliverables. In other arrangements, some or all of the
deliverables are not independently functional, or there is not sufficient
evidence of their fair values to account for them separately. EITF 00-21 is
effective
<PAGE>

                                      F-10


for revenue arrangements entered into in fiscal periods beginning after June 15,
2003. We are currently evaluating the impact of this accounting pronouncement on
our financial results.

In July 2002, the FASB issued FAS No. 146, "Accounting for Costs Associated with
Exit or Disposal Activities" ("FAS No. 146"), which addresses accounting and
reporting for costs associated with exit or disposal activities. FAS No. 146
relates to the recognition of a liability for a cost associated with an exit or
disposal activity and requires that a liability be recognized for those costs
only when the liability is incurred, that is, when it meets the definition of a
liability under the FASB's conceptual framework. FAS No. 146 also established
fair value as the objective for initial measurement of liabilities related to
exit or disposal activities. As a result, FAS 146 significantly reduces an
entity's ability to recognize a liability for future expenses related to a
restructuring. FAS No.146 is effective for exit or disposal activities that are
initiated after December 31, 2002.

In October 2001, the FASB issued FAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" ("FAS No. 144"), that replaces FAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of". FAS No. 144 applies to the assessment of the impairment in the
carrying value of long-lived assets, excluding goodwill and certain other
specified items, including those to be disposed of by sale, including
discontinued operations. FAS No. 144 requires that those long-lived assets be
measured at the lower of carrying amount and fair value less costs to sell.
Therefore, discontinued operations will no longer be measured at net realizable
value or include amounts for operating losses that have not yet occurred. FAS
No. 144 is effective for fiscal years beginning after December 15, 2001. The
Company has adopted FAS No. 144 which had no material effect on the Company's
financial results.

In August 2001, the FASB issued FAS No. 143, "Accounting for Asset Retirement
Obligations" ("FAS No. 143"), which requires entities to record the fair value
of a liability for an asset retirement obligation in the period in which it is
incurred and a corresponding increase in the carrying amount of the related
long-lived asset. FAS No. 143 is effective for fiscal years beginning after June
15, 2002. Currently, we do not believe that the adoption of this accounting
pronouncement will impact our financial results.

In August 2001, the FASB issued FAS No. 141, "Business Combinations" and FAS No.
142, "Goodwill and Other Intangible Assets". Use of the pooling-of-interests
method is prohibited. FAS No. 142 changes the accounting for goodwill from an
amortization method to an annual impairment test and is required to be applied
prospectively effective January 1, 2002. Under this standard, we will be
required to perform an initial benchmark test of impairment within six months of
adoption and subsequent annual tests of impairment will be at the reporting unit
level. If the carrying value of goodwill of a reporting unit exceeds the fair
value of the reporting unit's goodwill, the carrying value must be written down
to fair value. FAS No. 141 is effective for all business combinations initiated
after June 30, 2001. The Company has adopted FAS No. 141 and FAS No. 142 which
had no material effect on the Company's financial results.

3.  RESTRUCTURING AND OTHER CHARGES

During 2002, we announced and implemented a business restructuring program. We
reduced operating expenses and asset levels as a result of our assessment of
current and visible future demand. This restructuring program included a
writedown of inventory, fixed and intangible asset impairment charges, workforce
reductions, charges related to facilities and other assets, and an increase in
our deferred tax asset valuation allowance. We have substantially completed
implementation of our restructuring program at December 31, 2002.

During 2002, we recorded restructuring and other charges of $37,707, a net
increase of $1,576 from our original estimate. The details of the restructuring
and other charges at June 30, 2002 and changes from that date follow.
<PAGE>

                                      F-11


During the second quarter of 2002, we recorded restructuring and other charges
of $36,131 as follows:

<TABLE>
<S>                                                                             <C>
Inventory writedown...........................................................  $ 16,705
Fixed assets writedown........................................................     4,824
Intangible assets writedown...................................................     3,064
Facilities restructuring......................................................     4,696
Deferred tax asset reduction..................................................     3,754
Workforce reduction...........................................................     1,616
Other.........................................................................     1,472
                                                                                --------
Total restructuring and other charges                                           $ 36,131

Applied:
     Inventory writedown, included in cost of sales..........................    (16,705)
     Portion of fixed assets writedown, included in cost of sales............     (1,784)
     Portion of workforce reduction and other, included in cost of sales.....       (517)
     Deferred tax asset and other, included in tax expense...................     (4,032)
                                                                                --------
Restructuring and other charges..............................................   $ 13,093
                                                                                ========
</TABLE>

The total restructuring and other charges for 2002, including the net reversal
indicated below of $224, was $12,869. The following table summarizes the
activity related to the provision for restructuring and other charges for fiscal
2002, the components of the net charge since the second quarter, and the balance
of the provision at December 31, 2002.

<TABLE>
<CAPTION>
                                                                           Revisions to Provision
                                                                          -------------------------
                                   June 30,                                                                        Dec. 31,
                                     2002       Net Cash      Non-Cash    Additional                Net Charge/         2002
                                    Charge      Payments      Charges      Charges    Reduction      (Reversal)    Provision
                                  ------------------------------------------------------------------------------------------
<S>                                <C>          <C>           <C>         <C>         <C>           <C>            <C>
Restructuring charges:
  Facilities
     restructuring (note 8)....       $ 4,696     $  (471)          --        $346         $ (24)        $ 322      $4,547
  Workforce reduction..........         1,512      (1,282)          --          --          (176)         (176)         54
  Other........................           781        (259)        (404)         46            --            46         164
                                      -------     -------        -----        ----         -----         -----      ------
                                        6,989      (2,012)        (404)        392          (200)          192      $4,765
                                                                                                                    ======

Asset writedowns:
  Fixed assets writedown                3,040                    3,040          --          (416)         (416)
  Intangible assets writedown..         3,064                    3,064          --            --            --
                                        -----                    -----        ----         -----         -----
                                        6,104                    6,104          --          (416)         (416)

Total restructuring and               -------                                -----         -----         -----
   other charges...............       $13,093                                $ 392         $(616)        $(224)
                                      =======                                =====         =====         =====
</TABLE>

The excess inventory charge is related primarily to CDPD and 2G CDMA products.
In the fourth quarter of 2002, we recorded an additional net writedown of
inventory of $1,862 which was a result of faster than expected decline in sales
of CDPD products.

Fixed assets impairment charges consisted of writedowns primarily for research
and development equipment, test equipment, and corporate assets. The fixed
assets were written down to the current fair value for this type of equipment.
The net reversal of $416 to the second quarter impairment charge related
primarily to adjusting our estimate of equipment to be disposed of.

Intangible assets impairment charges consisted of writedowns primarily for
research and development licenses. The research and development licenses, which
are no longer required, have been written down to nil.

Our deferred tax asset valuation allowance has been increased to record the
reduction in the portion of our deferred tax assets that we believe is more
likely than not to be realized.
<PAGE>
                                      F-12


Workforce reduction charges of $1,616, of which $104 was included in cost of
sales, were related to the cost of severance and benefits associated with 95
employees and contractors notified of termination. Of the 95 employees and
contractors, 63 were involved in product development, seven were involved in
manufacturing, 18 were sales and marketing personnel, and seven were in
administration. Actual severance costs were lower than the original estimates
therefore the excess provision of $176 was reversed subsequent to the second
quarter. We expect the remaining provision to be substantially drawn down by
April 30, 2003.

As a result of the above noted workforce reduction and our assessment of current
and visible demand, there are leased facilities that are excess to our current
requirements. We have recorded a provision that represents the estimated net
present value of future contractual obligations that are in excess of our
estimated future requirements. During the second half of 2002, we made very
little progress on our facilities restructuring and have estimated that an
additional $346 is required. The facilities restructuring provision will be paid
in Canadian dollars.

Other charges include provisions for purchase commitments, writedown of
investments, and professional fees in connection with the restructuring
activities. The additional charges of $46 relate to revised estimates of
professional fees. The remaining provision is expected to be substantially drawn
down by March 31, 2003.

4.  ACQUISITIONS

On June 22, 2000, we acquired the Code Division Multiple Access (CDMA) module
business, including the module inventory, manufacturing and customer
commitments, from Qualcomm Incorporated ("QUALCOMM"). In addition, we signed a
supply agreement for CDMA modules and extended our existing license agreement
with QUALCOMM. The purchase price of $9,500 was settled by cash payment of
$7,250 and a payable of $2,250, which was paid during 2001. The acquisition was
accounted for by the purchase method of accounting and the results of operations
have been consolidated since the date of acquisition. Our interest in the net
assets acquired at fair values are as follows:

<TABLE>
<S>                                                         <C>
      License fees........................................  $  4,500
      Inventory...........................................     3,813
      In-process research and development.................     1,000
      Goodwill............................................       277
                                                            --------
                                                               9,590
      Warranty reserve....................................       (90)
                                                            --------
                                                            $  9,500
                                                            ========
</TABLE>

The amount allocated to in-process research and development ("in-process R&D")
was determined by management in light of guidance provided by the United States
Securities and Exchange Commission regarding valuation methodology. For purposes
of reporting under United States GAAP, companies are required to immediately
expense purchased in-process R&D and, accordingly, the purchased in-process R&D
acquired from QUALCOMM was expensed at the time of acquisition. In-process R&D
of $1,000 has been included in research and development expense in the
consolidated statements of operations for the year ended December 31, 2000.

If the acquisition of QUALCOMM's CDMA module business had occurred as of January
1, 2000, the pro forma results of operations would not be significantly
different than that reported.

5.   INVENTORIES

<TABLE>
<CAPTION>
                                                        2001     2002
                                                      -------   ------
<S>                                                   <C>       <C>
Electronic components............................     $12,754   $1,430
Finished goods...................................      12,837    5,243
                                                       ------   ------
                                                      $25,591   $6,673
                                                      =======   ======
</TABLE>
<PAGE>

                                      F-13


6.   FIXED ASSETS

<TABLE>
               <CAPTION>
                                                                       2002
                                                     -----------------------------------------
                                                                   ACCUMULATED
                                                                 AMORTIZATION AND    NET BOOK
                                                        COST        WRITEDOWN         VALUE
                                                     ----------  -----------------  ----------
<S>                                                   <C>        <C>                <C>
Furniture and fixtures..............................  $   2,262     $     995        $   1,267
Research and development equipment..................      7,791         5,672            2,119
Tooling.............................................      6,453         4,952            1,501
Software............................................      4,406         2,694            1,712
Leasehold improvements..............................      1,738         1,257              481
Office equipment....................................        337           219              118
                                                      ---------     ---------        ---------
                                                      $  22,987     $  15,789        $   7,198
                                                      =========     =========        =========
</TABLE>

<TABLE>
<CAPTION>
                                                                       2001
                                                     -----------------------------------------
                                                                    ACCUMULATED      NET BOOK
                                                        COST       AMORTIZATION        VALUE
                                                     ----------    ------------     ----------
<S>                                                   <C>          <C>              <C>
Furniture and fixtures..............................  $   2,062     $     438       $   1,624
Research and development equipment..................      9,665         4,255           5,410
Tooling.............................................      5,639         1,903           3,736
Software............................................      3,173           514           2,659
Leasehold improvements..............................      1,608           520           1,088
Office equipment....................................        322           145             177
                                                      ---------     ---------       ---------
                                                      $  22,469     $   7,775       $  14,694
                                                      =========     =========       =========
</TABLE>

As at December 31, 2002, assets under a capital lease with a cost of $1,764
(2001 -- $1,584) and accumulated amortization of $781 (2001 -- $204) are
included in fixed assets.

7.   INTANGIBLE ASSETS

<TABLE>
<CAPTION>
                                                                       2002
                                                     -----------------------------------------
                                                                   ACCUMULATED
                                                                 AMORTIZATION AND    NET BOOK
                                                        COST        WRITEDOWN         VALUE
                                                     ----------  -----------------  ----------
<S>                                                   <C>        <C>                <C>
Patents............................................  $    1,846       $     414      $  1,432
License fees.......................................      12,978           7,503         5,475
Intellectual property..............................         434             434            --
                                                     ----------       ---------      --------
                                                     $   15,258       $   8,351      $  6,907
                                                     ==========       =========      ========
</TABLE>

<TABLE>
<CAPTION>
                                                                       2001
                                                     -----------------------------------------
                                                                    ACCUMULATED      NET BOOK
                                                        COST       AMORTIZATION        VALUE
                                                     ----------    ------------     ----------
<S>                                                   <C>          <C>              <C>
Patents...........................................   $      888       $     104      $     784
License fees......................................       12,505           3,235          9,270
Intellectual property.............................          434             434             --
                                                     ----------       ---------      ---------
                                                     $   13,827    $      3,773      $  10,054
                                                     ==========    ============      =========
</Table>

The estimated aggregate amortization expense for each of 2003, 2004, 2005, 2006
and 2007 is expected to be $2,302, $2,302, $2,302, nil and nil, respectively.
<PAGE>

                                      F-14


8.   LONG-TERM LIABILITIES

<TABLE>
<CAPTION>
                                                               2001       2002
                                                             --------   --------
<S>                                                          <C>        <C>
Facilities (note 3)........................................  $     --   $  4,547
TPC warrants (note 15(b))..................................       671      1,152
Other......................................................       341         --
                                                             --------   --------
                                                                1,012      5,699
Less current portion.......................................       341      2,803
                                                             --------   --------
                                                             $    671   $  2,896
                                                             ========   ========
</TABLE>

9.   OBLIGATIONS UNDER CAPITAL LEASE

We lease research and development equipment, computer equipment and office
furniture under capital leases, denominated in Cdn. dollars, and expiring at
various dates to 2004. As at December 31, 2002 our future minimum lease payments
under capital leases were as follows:

<TABLE>
<CAPTION>
                                                                          CDN.$    U.S.$
                                                                         -------  -------
<S>                                                                      <C>      <C>
2003...................................................................  $ 1,405  $   889
2004...................................................................       85       54
                                                                         -------  -------
                                                                           1,490      943
Less amount representing interest at approximately 8.4%................       82       52
                                                                         -------  -------
                                                                           1,408      891
Less current portion...................................................    1,313      831
                                                                         -------  -------
                                                                         $    95  $    60
                                                                         =======  =======
</TABLE>

Interest expense on capital lease obligations for the year ended December 31,
2002 is $149 (2001 -- $51).

10.   SHARE CAPITAL

FOLLOW-ON OFFERING

On May 10, 2000, we completed a new issue and secondary public offering of
2,221,139 common shares in the United States and Canada at a price of $48.63
(Cdn. $72.75) per common share. In addition, our shares were co-listed for
trading on The Nasdaq National Market under the trading symbol "SWIR". Of the
2,221,139 common shares, 1,461,106 common shares were offered by the Company and
760,033 common shares were offered by certain shareholders of the Company.

STOCK OPTION PLAN

Under the terms of our employee stock option plan, our board of directors may
grant options to employees, officers and directors. The plan provides for the
granting of options at the fair market value of our stock at the grant date.
Options generally vest over four years, with the first 25% vesting at the first
anniversary date of the grant and the balance vesting in equal amounts at the
end of each month thereafter. We determine the term of each option at the time
it is granted, with options having a five year or a ten year term. Since
February 1999, options have been granted with a five year term. We have reserved
3,882,233 options for issuance under our employee stock option plan. Stock
options have been granted in Canadian and U.S. dollars.
<PAGE>

                                      F-15


Stock option activity since December 31, 1999 is presented below:

<TABLE>
<CAPTION>
                                               NUMBER OF          WEIGHTED AVERAGE
                                                SHARES             EXERCISE PRICE
                                               ----------       ---------------------
                                                                  CDN.$         U.S.$
<S>                                            <C>              <C>           <C>
Outstanding, December 31, 1999..............    1,583,240       $   8.44      $   5.84
Granted.....................................      918,642          78.52         52.35
Exercised...................................     (318,055           3.10          2.07
Forfeited...................................      (62,693)         24.62         16.41
                                                ---------
Outstanding, December 31, 2000..............    2,121,134          39.10         26.07
Granted.....................................      594,628          32.37         20.27
Exercised...................................     (175,571)          4.30          2.69
Forfeited...................................      (96,742)         48.99         30.68
                                                ---------
Outstanding, December 31, 2001..............    2,443,449          39.57         24.78
Granted.....................................      732,250           9.79          6.20
Exercised...................................     (159,626)          3.73          2.36
Forfeited...................................     (465,509)         50.22         31.78
                                                ---------
Outstanding, December 31, 2002..............    2,550,564          19.83         12.55
                                                =========
</TABLE>

<TABLE>
<CAPTION>
                                                              EXERCISABLE,
DECEMBER 31,                                                  END OF YEAR
------------                                                  ------------
<C>                                                           <C>
2000.....................................................         543,657
2001.....................................................       1,035,002
2002.....................................................       1,378,101
</TABLE>

The following table summarizes the stock options outstanding at December 31,
2002:

<TABLE>
<CAPTION>
                                                              OPTIONS OUTSTANDING                     OPTIONS EXERCISABLE
                                               ----------------------------------------------  -------------------------------
                                                              WEIGHTED
                                                               AVERAGE            WEIGHTED                        WEIGHTED
              RANGE OF                          NUMBER        REMAINING            AVERAGE        NUMBER           AVERAGE
           EXERCISE PRICES                     OF SHARES  CONTRACTUAL LIFE     EXERCISE PRICE   EXERCISABLE     EXERCISE PRICE
---------------------------------------------  ---------  ----------------   ----------------   -----------    ----------------
                                                              IN YEARS        CDN.$    U.S.$                   CDN.$    U.S.$
<S>                                            <C>        <C>                <C>      <C>       <C>            <C>      <C>
$0.57 - $0.95 (Cdn.$0.90 - Cdn.$1.50)........    114,239         4.6         $  1.11  $  0.70      114,239     $  1.11  $  0.70
$0.96 - $3.56 (Cdn.$1.51 - Cdn.$5.63)........    787,701         5.0            3.89     2.46      291,393        4.50     2.85
$3.57 - $11.58 (Cdn.$5.64 - Cdn.$18.30)......    390,377         2.1           15.11     9.56      287,380       15.03     9.51
$11.59 - $39.08 (Cdn.$18.31 - Cdn.$61.75)....    748,310         3.2           37.61    23.80      361,112       44.96    28.46
$39.09 - $60.51 (Cdn.$61.76 - Cdn.$95.60)....    402,395         2.6           70.28    44.48      255,175       70.81    44.82
$60.52 - $134.18 (Cdn.$95.61 - Cdn.$212.00)..    107,542         2.4          133.92    84.76       68,802      136.33    86.28
                                               ---------                                         ---------
                                               2,550,564         3.5           19.83    12.55    1,378,101       35.88    22.71
                                               =========                                         =========
</Table>

The options outstanding at December 31, 2002 expire between March 29, 2004 and
January 29, 2009.

11.   FINANCIAL INSTRUMENTS

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of certain of our financial instruments, including cash and
cash equivalents, short-term investments, accounts receivable, accounts payable,
accrued liabilities and current portions of long-term liabilities, approximate
their fair value due to their short maturities. Based on borrowing rates
currently available to us for loans with similar terms, the carrying value of
our obligations under capital lease and long-term liabilities approximates their
fair value.
<PAGE>

                                      F-16


CONCENTRATIONS OF BUSINESS RISK

We maintain substantially all of our cash and cash equivalents and short-term
investments with major financial institutions or government instruments.
Corporate paper is uninsured. Deposits we hold with banks may exceed the amount
of insurance provided on such deposits.

We outsource our manufacturing of our products to third parties. We are
dependent upon the development and deployment by third parties of their
manufacturing abilities. The inability of any supplier or manufacturer to
fulfill our supply requirements could impact future results. We have supply
commitments to our outsource manufacturers based on our estimates of customer
and market demand. Where actual results vary from our estimates, whether due to
execution on our part or market conditions, we are at risk.

We have a customer concentration risk as a few customers represent a significant
portion of our revenue for the year and also our future revenue, see note 17.

Financial instruments that potentially subject us to concentrations of credit
risk are primarily accounts receivable. We perform on-going credit evaluations
of our customers' financial condition and require letters of credit or other
guarantees whenever deemed appropriate.

Although substantially all of our revenues are received in U.S. dollars, we
incur operating costs and have obligations under capital lease that are
denominated in Cdn. dollars. Fluctuations in the exchange rates between these
currencies could have a material effect on our business, financial condition and
results of operations. We mitigate this risk by denominating many of our payment
obligations in U.S. dollars.

LINE OF CREDIT

During 2002, we expanded our operating line of credit from $949 (Cdn.$1,500) to
$10,000, which bears interest at prime plus 1.25% per annum. This line of credit
is secured by a general security agreement providing a first charge against all
assets. The balance at December 31, 2002, was nil (2001 -- nil).

12.   INCOME TAXES

The composition of our deferred tax assets at December 31 is as follows:

<Table>
<Caption>
                                                          2001       2002
                                                        -------    -------
<S>                                                     <C>        <C>
Deferred tax assets
  Fixed assets......................................    $(1,235)   $(1,837)
  Loss carryforwards................................        775      3,002
  Scientific research and development expenses......      3,724      7,521
  Share issue costs.................................      1,465        897
  Reserves and other................................      1,792      5,218
                                                        -------    -------
Total gross deferred tax assets.....................      6,521     14,801
Less valuation allowance............................      2,267     14,301
                                                        -------    -------
Net deferred tax assets.............................    $ 4,254    $   500
                                                        =======    =======
</Table>

We believe that realization of our net deferred tax assets is more likely than
not. In assessing the realizability of our deferred tax assets, we considered
whether it is more likely than not that some portion or all of our deferred tax
assets will not be realized. The ultimate realization of our deferred tax assets
is dependent upon the generation of future taxable income during the periods in
which temporary differences become deductible. We considered projected future
taxable income and tax planning strategies in making our assessment.

The scientific research and development expenses are available to be carried
forward indefinitely and deducted against future taxable income otherwise
calculated. We also have investment tax credits of approximately $10,700
available to offset future Canadian federal income taxes payable. The investment
tax credits expire commencing in 2004 and to 2012.
<PAGE>

                                      F-17


EFFECTIVE TAX RATE

Our income tax expense for the year ended December 31 differs from that
calculated by applying statutory rates for the following reasons:

<Table>
<Caption>
                                                                    2000       2001       2002
                                                                   -------   --------   --------
<S>                                                                <C>       <C>        <C>
Combined Canadian federal and provincial income taxes at
  expected rate of 39.6% (2001 - 44.6%, 2000 - 45.6%)..........    $  (800)  $(10,946)  $(15,127)
Permanent and other differences................................      1,480      1,076      1,381
Unrecognized tax assets........................................     (1,165)     2,267      8,826
Change in enacted tax rates....................................         --        712         --
Loss subject to tax at rates lower than statutory rate.........      1,848      6,618      4,629
Write-down of deferred tax asset...............................         --         --      3,754
                                                                   -------   --------   --------
                                                                   $ 1,363   $   (273)  $  3,463
                                                                   =======   ========   ========
</Table>

Our provisions for income taxes consist of the following:

<Table>
<Caption>
                                                                    2000       2001      2002
                                                                   ------     ------    -------
<S>                                                                <C>       <C>        <C>
Current
  Canadian....................................................     $  124     $  95     $   94
  Foreign.....................................................        791      (353)      (385)
                                                                   ------     ------    ------
Total current.................................................        915      (258)      (291)
Deferred
  Canadian....................................................        264       (15)     3,754
  Foreign.....................................................        184        --         --
                                                                   ------     ------    ------
Total deferred                                                        448       (15)     3,754
                                                                   ------     ------    ------
Income tax expense (recovery).................................     $1,363     $(273)    $3,463
                                                                   ======     ======    ======
</Table>

13.   RESEARCH AND DEVELOPMENT, NET

<Table>
<Caption>
                                                                    2000       2001      2002
                                                                   -------   -------    -------
<S>                                                                <C>       <C>        <C>
Research and development......................................     $13,590   $19,429    $16,795
Less government research and development funding
  and investment tax credits..................................         703     2,527      1,899
                                                                   ------    -------    -------
                                                                   $12,887   $16,902    $14,896
                                                                   =======   =======    =======
</Table>

14.   LOSS PER SHARE

The weighted-average number of shares outstanding we used in the computation of
loss per share were as follows:

<Table>
<Caption>
                                                                    2000      2001      2002
                                                                   ------    ------    ------
<S>                                                                <C>       <C>       <C>
Weighted-average shares used in computation of loss
  per share..................................................      15,318    16,129    16,304
                                                                   ======    ======    ======
</Table>

All stock options outstanding are anti-dilutive for all periods presented.

15.   COMMITMENTS AND CONTINGENCIES

(a)  OPERATING LEASES

We lease equipment and premises with minimum future lease payments denominated
in Cdn. dollars at December 31, 2002 as follows:
<PAGE>

                                      F-18


<Table>
<Caption>
                                                           CDN.$     U.S.$
                                                          -------   -------
<S>                                                       <C>       <C>
2003..................................................    $ 2,654   $ 1,680
2004..................................................      2,482     1,571
2005..................................................      2,454     1,553
2006..................................................      2,512     1,590
2007..................................................      2,586     1,637
Thereafter............................................      9,325     5,902
                                                          -------   -------
                                                          $22,013   $13,933
                                                          =======   =======
</Table>

(b)  CONTINGENT LIABILITY ON SALE OF PRODUCTS

    (i)  Under license agreements, we are committed to royalty payments based on
         the sales of products using certain technologies. We recognize royalty
         obligations as determinable in accordance with agreement terms. Where
         agreements are not finalized, we have recognized our current best
         estimate of the obligation. When the agreements are finalized, the
         estimate will be revised accordingly.

   (ii)  Under certain research and development funding agreements, we are
         contingently liable to repay up to $3,153. As at December 31, 2002,
         $304 has been paid to date against sales amounting to $7,709, that are
         subject to royalties.

  (iii)  Under an agreement with the Government of Canada's Technology
         Partnerships Canada ("TPC") program, we are eligible to receive
         conditionally repayable research and development funding amounting
         to Cdn. $9,999 to support the development of a range of third
         generation wireless technologies. During the year, we have claimed
         $2,265 that has been recorded as a reduction of research and
         development expense. Under the terms of the agreement, an amount up
         to a maximum of Cdn. $13,000 is to be repaid based on annual sales,
         in excess of certain minimum amounts, of specified products
         commencing in the year 2004. In addition, the TPC may receive
         warrants no later than December 31, 2003, valued at up to Cdn.
         $2,000 based on the Black-Scholes pricing model.

(c)  LEGAL PROCEEDINGS

    (i)  In July 2001, we learned that Metricom, Inc. ("Metricom"), one of
         our customers, had filed a Chapter 11 reorganization under the U.S.
         bankruptcy laws. We filed a proof of claim for amounts due to us
         totaling $13,745. Metricom objected to that claim asserting that all
         but $2,254 should be disallowed. Metricom also filed an adversary
         complaint against us in the U.S. bankruptcy court seeking return of
         payments totaling $1,900 made to us within 90 days of the bankruptcy
         filing, alleging that the payments are avoidable as "preferences".
         We contended that the payments were in the ordinary course of
         business and that we supplied additional product to Metricom after
         receiving the payments, which would offset any preference liability.
         During 2002, we executed a global settlement with the reorganized
         debtor under which we agreed to reduce our general unsecured claim
         to $10,250, and Metricom agreed to dismiss the preference claims. We
         will receive a settlement of $1.8 million that has been included in
         the determination of our net loss for 2002.

   (ii)  In November 2002, Sierra Wireless, Inc., along with several other
         defendants, was served with the second amended complaint of MLR, LLC
         filed in the U.S. District Court for the Northern District of
         Illinois Eastern Division for alleged patent infringement. We have
         assessed the complaint and have determined that there has been no
         infringement of the patents referred to in this claim and that the
         claim is invalid. We have filed our response to the complaint.
         Although there can be no assurance that an unfavourable outcome of
         the dispute would not have a material adverse effect on our
         operating results, liquidity or financial position, we believe the
         claims are without merit and will vigorously defend the action.

  (iii)  We are engaged in other legal actions arising in the ordinary course of
         business and believe that the ultimate outcome of these actions will
         not have a material adverse effect on our operating results, liquidity
         or financial position.
<PAGE>

                                      F-19


16.   SUPPLEMENTARY INFORMATION

<Table>
<Caption>
                                                                    2000      2001      2002
                                                                   ------    ------    -------
<S>                                                                <C>       <C>       <C>
  (a)  CASH FLOW INFORMATION:
Cash received
   Interest..................................................      $3,331    $2,782    $   912
   Income taxes..............................................          --        --        905
Cash paid for
   Interest..................................................         128        48        323
   Income taxes..............................................          39       958         57
Non-cash financing activities
   Purchase of fixed assets funded by obligations
      under capital lease....................................         419     1,759        328

  (b)  ALLOWANCE FOR DOUBTFUL ACCOUNTS:
Opening balance..............................................      $  108    $1,320    $ 5,169
Bad debt expense.............................................       1,254     4,040        623
Write offs and settlements...................................         (42)     (191)    (2,724)
                                                                   ------    ------    -------
Closing balance..............................................      $1,320    $5,169    $ 3,068
                                                                   ======    ======    =======

  (c)  OTHER:
Rent expense.................................................      $  711    $1,334    $ 1,599
Foreign exchange gain........................................         177       187         77
</Table>

17.   SEGMENTED INFORMATION

We operate in the wireless data modem technology industry and all sales of our
products and services are made in this segment. Management makes decisions about
allocating resources based on the one operating segment.

Revenues by product were as follows:

<Table>
<Caption>
                                                                    2000       2001       2002
                                                                   -------    -------    -------
<S>                                                                <C>        <C>        <C>
MP modems....................................................      $ 9,815    $ 8,039    $ 7,781
AirCard modems...............................................       25,271     38,627     44,616
OEM modems...................................................       16,227      9,319     19,025
Other........................................................        2,163      3,718      1,984
Research and development funding.............................          325      2,645      3,724
                                                                   -------    -------    -------
                                                                   $53,801    $62,348    $77,130
                                                                   =======    =======    =======
</Table>

85% (2001 -- 75%) of our fixed assets are in Canada. Product sales in North
America were 87% (2001 -- 97%; 2000 -- 82%).

We sell certain products through resellers, original equipment manufacturers,
and wireless service providers who sell these products to end-users. The
approximate sales to the significant resellers are as follows:

<Table>
<Caption>
                                                 2000               2001              2002
                                             -------------     -------------      ------------
<S>                                          <C>               <C>                <C>
Reseller A..............................     less than 10%     less than 10%      $     17,808
Reseller B..............................     less than 10%     less than 10%      $     15,605
Reseller C..............................     $      6,230      $      8,228       less than 10%
Reseller D..............................     less than 10%     $      6,098       less than 10%
Reseller E..............................     $      8,750      less than 10%      less than 10%
</Table>