**U.S. SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

----

 

**FORM 40-F**

 

----

 

**o****REGISTRATION STATEMENT PURSUANT TO SECTION 12OF THE SECURITIES EXCHANGE ACT OF 1934**

** **

**OR**

** **

**x****ANNUAL REPORT PURSUANT TO SECTION 13(a) OR15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

 

**For the fiscal year ended December 31,2007**

**Commission File No.:  0-30718**

 

**SIERRA WIRELESS, INC.**

(Exact name of Registrant as specified in its charter)

 

**Canada**

(Jurisdiction of incorporation or organization)

 

Primary Standard Industrial Classification Doe (ifapplicable): **3663**

 

I.R.S. Employer Identification Number (if applicable):**94-3338019**

 

**13811 Wireless Way, Richmond**

**British Columbia, Canada  V6V 3A4**

**(604) 231-1100**

(Address and telephone number of principal executiveoffices)

 

**Davis Wright Tremaine LLP1300 SW Fifth Avenue, 24th FloorPortland, OR  97201**

(Agent for service in the United States)

 

Securities registered or to be registered pursuant to Section 12(b) ofthe Act:  **None**

 

Securities registered or to be registered pursuant to Section 12(g) ofthe Act:

 

**Common Shares**

(Title of Class)

 

Name of exchange on which securities are registered:**Toronto Stock Exchange, The Nasdaq Global Market**

 

Securities for which there is a reporting obligationpursuant to Section 15(d) of the Act: **None**

 

Indicate by check mark the information filed with this Form:

x   Annual Information Form     x   AuditedAnnual Financial Statements

 

Indicate the number of outstanding shares of each of the issuer’sclasses of capital common stock as of the close of the period covered by theannual report:  **31,334,617****Common Shares without parvalue as at December 31, 2007**

 

Indicate by check mark whether the Registrant, by filing theinformation contained in this Form, is also thereby furnishing the informationto the Commission pursuant to Rule 12g3-2(b) under the *Securities Exchange Act of 1934*, If “yes”, is marked,indicate the filing number assigned to the Registrant in connection with suchRule.  o   Yes       82-                       x   No

 

Indicate by check mark whether the Registrant:  (1) has filed all reports required to befiled by Section 13 or 15(d) of the *SecuritiesExchange Act of 1934* during the preceding 12 months (or for suchshorter period that the Registrant was required to file such reports), and (2) hasbeen subject to such filing requirements for the past 90 days.  Yes   x    No   o

 

 

----

 

**INCORPORATIONBY REFERENCE**

 

The Registrant’s Management’s Discussion and Analysisof Financial Condition and Results of Operation and the Registrant’s financialstatements for the year ended December 31, 2007 may be found on SEDAR atwww.sedar.com and on EDGAR at www.sec.gov and are incorporated by referenceherein.

 

**UNDERTAKING**

 

The Registrant undertakes to make available, in personor by telephone, representatives to respond to inquiries made by the Commissionstaff, and to furnish promptly, when requested to do so by the Commissionstaff, information relating to: the securities registered pursuant to Form 40-F;the securities in relation to which the obligation to file an annual report on Form 40-Farises; or transactions in said securities.

 

**SIGNATURES**

 

Pursuant to the requirements of the *Securities Exchange Act of 1934*, as amended, the Registrantcertifies that it meets all of the requirements for filing on Form 40-F andhas duly caused this annual report to be signed on its behalf by theundersigned, thereto duly authorized.

 

 
| ** ** | **SIERRA WIRELESS, INC.**             |
|------------|---------------------------------------|
|       | *(Registrant)*                        |
|       |                                  |
|       |                                  |
|       | /s/ DAVID G. MCLENNAN                 |
|       | David G. McLennan,                    |
|       | Chief Financial Officer and Secretary |

 

 

Date:March 26,2008

 

----

 

 

Annual Information Form****March 24, 2008

 

**TABLE OF CONTENTS**

 
| FORWARD-LOOKING STATEMENTS                         | 1      |
|----------------------------------------------------|--------|
|                                               |   |
| CURRENCY                                           | 1      |
|                                               |   |
| CORPORATE STRUCTURE                                | 1      |
|                                               |   |
| GENERAL DEVELOPMENT OF THE BUSINESS                | 2      |
|                                               |   |
| **General**                                        | 2      |
| **Industry Background and Future Trends**          | 3      |
|                                               |   |
| NARRATIVE DESCRIPTION OF THE BUSINESS              | 5      |
|                                               |   |
| **Our Solution**                                   | 5      |
| **Our Products**                                   | 5      |
| **Product  Development**                           | 9      |
| **Distribution**                                   | 10     |
| **Marketing**                                      | 11     |
| **Manufacturing**                                  | 11     |
| **Employees**                                      | 12     |
| **Competition**                                    | 12     |
| **Intellectual  Property**                         | 13     |
| **Governmental  Regulation**                       | 13     |
| **Additional Information Concerning Our Business** | 13     |
|                                               |   |
| DIVIDENDS                                          | 14     |
|                                               |   |
| DESCRIPTION OF CAPITAL STRUCTURE                   | 14     |
|                                               |   |
| MARKET FOR SECURITIES                              | 14     |
|                                               |   |
| DIRECTORS AND EXECUTIVE OFFICERS                   | 15     |
|                                               |   |
| **Directors**                                      | 15     |
| **Executive  Officers**                            | 17     |
|                                               |   |
| CODE OF BUSINESS CONDUCT AND ETHICS                | 17     |
|                                               |   |
| AUDIT  COMMITTEE                                   | 18     |
|                                               |   |
| **Mandate of the Audit Committee**                 | 18     |
| **Composition of the Audit Committee**             | 23     |
| **Relevant Education and Experience**              | 23     |
| **Reliance on Certain Exemptions**                 | 23     |
| **Audit Committee Oversight**                      | 23     |
| **Pre-approval Policies and Procedures**           | 23     |
| **Auditor Independence**                           | 24     |
| **Auditors’  Fees**                           | 24     |

 

----

 
| EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES | 24     |
|--------------------------------------------------|--------|
|                                             |   |
| **Disclosure Controls**                          | 24     |
| **Internal Control Over Financial Reporting**    | 25     |
|                                             |   |
| LEGAL  PROCEEDINGS                               | 26     |
|                                             |   |
| OFF-BALANCE SHEET ARRANGEMENTS                   | 26     |
|                                             |   |
| CONTRACTUAL OBLIGATIONS                          | 27     |
|                                             |   |
| QUORUM  EXEMPTION                                | 27     |
|                                             |   |
| REGISTRAR AND TRANSFER AGENT                     | 27     |
|                                             |   |
| MATERIAL  CONTRACTS                              | 27     |
|                                             |   |
| EXPERTS                                          | 28     |
|                                             |   |
| ADDITIONAL  INFORMATION                          | 28     |

 

ii

----

 

## ***FORWARD-LOOKING STATEMENTS***

## *** ***

Certainstatements in this Annual Information Form, or incorporated by referenceherein, that are not based on historical facts, constitute forward-lookingstatements or forward-looking information within the meaning of applicablesecurities laws (“forward-looking statements”). These forward-lookingstatements are not promises or guarantees of future performance but are onlypredictions that relate to future events, conditions or circumstances or ourfuture results, performance, achievements or developments and are subject tosubstantial known and unknown risks, assumptions, uncertainties and otherfactors that could cause our actual results, performance, achievements ordevelopments in our business or in our industry to differ materially from thoseexpressed, anticipated or implied by such forward-looking statements. Forward-lookingstatements include all disclosure regarding possible events, conditions,circumstances or results of operations that are based on assumptions aboutfuture economic conditions, courses of action and other future events. Wecaution you not to place undue reliance upon any such forward-lookingstatements, which speak only as of the date they are made. Theseforward-looking statements appear in a number of different places in thisAnnual Information Form and can be identified by words such as “may”, “estimates”,“projects”, “expects”, “intends”, “believes”, “plans”, “anticipates”, or theirnegatives or other comparable words. Forward-looking statements includestatements regarding the outlook for our future operations, plans and timingfor the introduction or enhancement of our services and products, statementsconcerning strategies, developments, statements about future market conditions,supply conditions, end customer demand conditions, channel inventory and sellthrough, revenue, gross margin, operating expenses, profits, forecasts offuture costs and expenditures, the outcome of legal proceedings, and otherexpectations, intentions and plans that are not historical fact. The riskfactors and uncertainties that may affect our actual results, performance,achievements or developments are many and include, amongst others, our abilityto develop, manufacture, supply and market new products that we do not producetoday that meet the needs of customers and gain commercial acceptance, ourreliance on the deployment of next generation networks by major wirelessoperators, the continuous commitment of our customers, increased competition andother risks detailed herein under the heading “*RiskFactors*”. Many of these factors and uncertainties are beyond thecontrol of the Company. Consequently, all forward-looking statements in thisAnnual Information Form, or the documents incorporated by reference herein, arequalified by this cautionary statement and there can be no assurance thatactual results, performance, achievements or developments anticipated by theCompany will be realized. Forward-looking statements are based on management’scurrent plans, estimates, projections, beliefs and opinions and the Companydoes not undertake any obligation to update forward-looking statements shouldthe assumptions related to these plans, estimates, projections, beliefs andopinions change, except as required by law.

 

## ***CURRENCY***

## *** ***

Unless otherwise indicated, all figures are stated inU.S. dollars.

## *** ***

## ***CORPORATE STRUCTURE***

## *** ***

Unless thecontext otherwise indicates, references to “we”, “our”, “us”, “the Company”, “theCorporation” or “Sierra Wireless” in this Annual Information Form meansSierra Wireless, Inc. and its subsidiaries.

 

SierraWireless was incorporated under the *Canada BusinessCorporations Act* on May 31, 1993. The Articles of SierraWireless were amended by a Certificate of Amendment issued March 29, 1999to remove the private company provisions and restrictions on share transfer. TheArticles of the Company were further amended by Certificates of Amendmentissued May 13, 1999 and May 14, 1999 to: (i) re-designate andchange all existing common shares in the capital of the Company to new commonshares in the capital of the Company (the “Common Shares”); (ii) changethe rights attached to all preference

 

----

 

sharesin the capital of the Company (the “Preference Shares”) and to remove eachexisting series of Preference Shares; and (iii) consolidate the CommonShares on the basis of one post-consolidation Common Share for 1.5pre-consolidation Common Shares.

 

The Company’sregistered and records office is located at Suite 2600, Three BentallCentre, 595 Burrard Street, Vancouver, British Columbia, Canada, V7X 1L3 andits head office and principal place of business is located at 13811 WirelessWay, Richmond, British Columbia, Canada, V6V 3A4.

 

The followingtable lists subsidiaries of Sierra Wireless and their jurisdictions ofincorporation or organization. All such entities are 100% owned, directly orindirectly, by Sierra Wireless.

 

 
| **Name**                               | ** ** | **Jurisdiction of  Incorporation or Organization** |
|----------------------------------------|------------|----------------------------------------------------|
|                                   |       |                                               |
| Sierra Wireless America, Inc.     |       | Delaware, U.S.A.                                   |
|                                   |       |                                               |
| Sierra Wireless (UK) Limited           |       | United Kingdom                                     |
|                                   |       |                                               |
| Sierra Wireless (Asia-Pacific) Limited |       | Hong Kong                                          |

 

## ***GENERALDEVELOPMENT OF THE BUSINESS***

## *** ***

### **General**

###  

We provideleading edge wireless wide area modem solutions for the mobile computing,rugged mobile and machine-to-machine (“M2M”) markets. We develop and market arange of products that include wireless modems for mobile computers, embeddedmodules for original equipment manufacturers, or OEMs, and high value fixed andmobile wireless data solutions for industrial, commercial and public safetyapplications. We also offer professional services to OEM customers during theirproduct development, leveraging our expertise in wireless design andintegration to provide built-in wireless connectivity for notebook computersand other mobile computing devices. Our products and solutions connect people,their mobile computers and fixed terminals to wireless voice and mobilebroadband networks around the world.

 

We believe that wide area wireless for mobile computing and wireless M2Mare both rapidly growing markets. We believe that the key growth enablers forthese markets include the continued deployment of mobile broadband networksaround the world, aggressive promotion of mobile broadband services by wirelessoperators, attractive mobile broadband rate plans, growing customer awarenessof mobile broadband and compelling return on investment rationale for users.

 

Our mobile computing products are used by businesses, consumers andgovernment organizations to enable high speed wireless access to a wide rangeof applications, including the Internet, e-mail, corporate intranet, remotedatabases and corporate applications. Our rugged mobile and M2M products areprimarily used in the public safety, oil & gas, utility, mobile data,transportation and transaction processing markets. We sell our productsprimarily through indirect channels, including wireless operators, value addedresellers and OEMs.

 

Throughout2004 we experienced stronger than expected demand primarily as a result of ourstrong market position in CDMA EV-DO Release 0 PC cards and our CDMA 1Xembedded module sales to palmOne. Customer concentration increased our revenuebase during 2004. Following our considerable 

 

2

----

 

revenueand earnings growth in 2004, we experienced a significant reduction in ourbusiness in 2005 relative to 2004 due to, among other things, increasedcompetition for certain of our PC card products, a reduction in embedded modulebusiness volumes as a result of the completion of shipments to a key customerat the end of 2004 and some weakness in our product portfolio.

 

In order toaddress this change in our business, we restructured our operations in June 2005,which included exiting our Voq professional phone initiative. Since themid-2005 restructuring, we have re-focused our business on our core PC card andembedded module segments, including the development of new products and theexpansion of markets for these products. Our launch of several new UMTS/HSDPA andCDMA EV-DO Revision A products resulted in strong revenue growth during 2006.We also expanded our global channels of distribution, adding important wirelessoperator channels like Orange, O2, Telefonica and Telstra, while solidifyingour position with key existing customers such as AT&T, Sprint and Verizon. Wealso expanded our OEM channels and by the end of 2006 had design wins withtwelve PC OEM customers across multiple airlinks.

 

In 2007, weachieved record annual revenue of $439.9 million driven by the launch of ninenew products for both UMTS/HSPA and CDMA EV-DO Rev A networks across all of ourproduct lines. We expanded our product footprint with key existing customerssuch as AT&T, Sprint and Verizon and significantly grew our European andAsia Pacific business, while maintaining profitability. In May 2007, wecompleted the acquisition of AirLink Communications, Inc. (“AirLink”), aprivately held developer and supplier of high value fixed and mobile wirelessdata solutions. In October 2007, we closed our bought deal common shareoffering (the “Offering”) of 3,500,000 common shares at a price of US$22.40 pershare. Under the Offering, which included 300,000 shares issuable upon theexercise by the underwriters of the over-allotment option, we sold 3,800,000 commonshares from treasury. Gross proceeds of this Offering were $85.1 million andnet proceeds were $80.9 million.

 

See “NarrativeDescription of Business - Our Products” for discussion of specific productdevelopment initiatives.

 

**Significant Acquisitions**

 

On May 25, 2007, we completed theacquisition of AirLink, a privately held developer and supplier of high valuefixed and mobile wireless data solutions. The acquisition of AirLink isconsistent with our strategy of renewing and strengthening our emphasis onhigher gross margin products and solutions. The acquisition of AirLink alsostrengthens our position in the rugged mobile and M2M segments, both of whichrepresent potentially high growth opportunities. We paid cash consideration of$12.0 million and issued approximately 1.3 million common shares of SierraWireless to the shareholders of AirLink. A business acquisition report on Form 52-102F4was filed on July 30, 2007.

 

### **Industry Background and Future Trends**

###  

***Wireless Data Growth***

 

We provide abroad range of products, including wireless modems for mobile computers,embedded modules for laptop and vertical OEM wireless applications and highvalue fixed and mobile wireless data solutions for industrial, commercial andpublic safety applications. We believe that wide area wireless for mobilecomputing and wireless M2M are both rapidly growing markets. We believe thatthe key growth enablers for these markets include the continued deployment ofmobile broadband networks around the world, aggressive promotion of mobilebroadband services by wireless operators, attractive mobile broadband rateplans, growing customer awareness of mobile broadband and compelling return oninvestment rationale for users. Cellular network technologies such as CDMAEV-DO Revision A and 

 

3

----

 

UniversalMobile Telecommunications System (“UMTS”)/High Speed Downlink Packet Access (“HSDPA”)/HighSpeed Uplink Packet Access (“HSUPA”) are expected to support much of thisgrowth.

 

Market segmentsfor wireless data consist of corporations, public organizations and individualsseeking to improve customer service and productivity. Increased cellularnetwork coverage and speeds, significant technological improvements to wirelessdata networks, devices and software, and price reductions for datacommunications services have also contributed to growth in the wireless datacommunications industry. The ability to meet the demand for anytime, anyplacecommunications is made possible by the convergence of trends in mobilecomputing, the growth of the Internet, and wireless communications.

 

*MobileComputing.*Many business professionals and individuals utilize laptops as theirprimary computing device. Smaller handheld computers or PDAs continue to bepopular, as are newer mobile phones that offer more advanced capabilities, suchas access to personal information, Internet, multi-media and email.

 

*TheInternet.*The Internet has become an indispensable tool for many businessprofessionals and individuals, and the volume of Internet traffic continues togrow rapidly. Telecommunications carriers continue to make significantinvestments in Internet protocol-based networks to handle the expected growthin the volume of data traffic.

 

*WirelessCommunications.*While wireline communications networks werehistorically dominated by voice traffic, data now comprises more than half ofthe traffic on these networks. A similar evolution is now occurring on wirelessnetworks as wireless service providers address the growing demand for datacommunications with additional technical and commercial offerings.

 

***Existing Digital Technologies***

 

Datacommunications over cellular networks is currently supported by various digitaltechnologies. Newer, high-speed technologies include CDMA EV-DO Revision A andGSM-based HSDPA and HSUPA.

 

CDMA is adigital technology that significantly improves the capacity and quality of bothvoice and data communications and supports a broader range of applications,including voice, wireless Internet and multimedia. The deployment of CDMA EV-DORevision A commercial service, the next generation of EV-DO, continues toexpand the market for wireless data products and services. CDMA EV-DO RevisionA offers theoretical downlink speeds of 3.1 Mbps, and theoretical uplink speedsof 1.8 Mbps. In North America, Sprint and Verizon are widely deploying CDMAEV-DO Revision A.

 

Leading GSMcarriers in North America, Europe and Asia are deploying third generation (“3G”)networks to offer advanced services, including high-speed data, to theircustomers. 3G systems have been developed and launched to replace and/orcomplement second generation and 2.5G digital cellular systems.

 

In late 2005,the first network to upgrade to HSDPA, was AT&T (formerly CingularWireless) in North America demonstrating speeds between 500-700 kbps withmaximum speeds up to 1.8 Mbps. In 2007, AT&T in North America, Telstra inAustralia and Bouygues Telecom in France also announced their new high-speed 3Gnetworks that offer uplink data speeds that are significantly faster thanearlier network technologies.

 

4

----

 

## ***NARRATIVEDESCRIPTION OF THE BUSINESS***

## *** ***

### **Our Solution**

###  

We provideleading edge wireless wide area modem solutions for the mobile computing, ruggedmobile and M2M markets. We develop and market a range of products that includewireless modems for mobile computers, embedded modules for original equipmentmanufacturers, or OEMs, and high value fixed and mobile wireless data solutionsfor industrial, commercial, public safety and M2M applications. We also offerprofessional services to OEM customers during their product development,leveraging our expertise in wireless design and integration to provide built-inwireless connectivity for notebook computers and other mobile computingdevices. Our products and solutions connect people, their mobile computers andfixed terminals to wireless voice and mobile broadband networks around theworld.

 

### **Our Products**

###  

Our currentproduct line of wireless modem solutions includes wide-area wireless AirCardproducts, embedded modules for notebook computers and other electronic devices,vehicle-mounted modems, M2M modems and enabling software. We have a number ofnew products under development within these product lines.

 

Ourprofessional services team provides OEM customers with wireless productdevelopment support to integrate our wireless wide-area products into theirproducts.

 

***Sierra Wireless AirCard Products***

 

**PC and Express Card Modems**: In NorthAmerica, we continued to have a strong position with AT&T with shipments ofour UMTS/HSDPA and HSUPA AirCards. HSUPA AirCards offersignificant speed advantages over our HSDPA AirCards with a maximum theoreticaldownlink speed of up to 7.2 Mbps and uplink speed of up to 2 Mbps. During 2007,we maintained a solid position at Sprint with sales of our CDMA EV-DO Rev AAirCard and also shipped this product to Verizon and Telus. Our new CDMA EV-DO Rev AExpressCards, built for notebook computers with ExpressCard expansion slotsalso began shipping to Sprint and Telus during 2007.

 

In Europe, we continued to supply ourUMTS/HSPA PC cards to several wireless operators in the UK, France,Switzerland, Spain and to several other operators in the EMEA region. Welaunched our HSUPA ExpressCards with Bouygues Telecom in France in the fourthquarter of 2007.

 

In the Asia-Pacific region, we began shipmentsof our CDMA EV-DO Rev A ExpressCards to Telecom New Zealand in the secondquarter of 2007 and began shipments of our HSUPA ExpressCards to Telstra in thethird quarter of 2007.

 

**USB Wireless Modems**:  Our USB wireless modems plug into the USBports of both notebook and desktop computers. During 2007, we began commercialshipments of our HSDPA USB modem to AT&T in the U.S. and O2 in the UK and shippedour EV-DO Rev A USB modem to Sprint, Verizon, Telecom New Zealand and Telus. Wealso introduced our USB modems for HSUPA networks and commenced commercialshipments to AT&T and Telstra in 2007. Our new HSUPA USB modem, the Apex880, which is smaller than previous models, has an innovative new design andadditional features, and is expected to be available for shipping in the secondquarter of 2008. We believe that form factor and industrial design areimportant differentiators among USB products.

 

5

----

 

In 2007, sales of our AirCard products increased 102% to $315.9million, compared to $156.5 million in 2006. The majority of this growth camefrom the sale of USB wireless modems, which generated $141.0 million of revenuein 2007. Continued success with our AirCard products will depend in part on ourability to develop AirCard products that meet our customers’ evolving design,schedule and price requirements.

 

***Sierra Wireless Embedded Module Products***

 

We have two categories of embedded module customers: notebook computermanufacturers (“PC OEM”) and vertical OEM customers who provide solutions for avariety of applications, including rugged handheld devices, fixed in-vehiclesolutions and fixed wireless terminal solutions (“vertical OEM”).

 

We currently have embedded module design wins with several PC OEMcustomers, including HP, Fujitsu and NEC, across multiple generations of bothCDMA EV-DO and HSDPA/HSUPA technologies. PC OEM customers award design wins forthe integration of wide area wireless embedded modules on a platform byplatform basis. While we have been successful securing many design wins, we arenot guaranteed future design wins. We expect that the PC OEM market will becomemore competitive in 2008 with the entrance of both Ericsson and Qualcomm Gobisolutions for PC OEMs.  We believe that the Gobi solution could lower thebarriers to market entry for new competitors, including potential price leaders.Our ability to secure new design wins will depend on being successful indeveloping products and offering services that meet our customers’ design,schedule and price requirements.

 

We began commercial shipments of our embedded modules for HSUPAnetworks during the third quarter of 2007. During the fourth quarter of 2007,Fujitsu launched notebook platforms incorporating our new HSUPA modules in HongKong on SmarTone-Vodafone and in Japan on the NTT DoCoMo network. Our launchwith Fujitsu on NTT DoCoMo marks our initial commercial entry into the Japanesemarket.

 

We continue to have a solid position with our vertical OEM customers. Inthe first quarter of 2007, we announced that Cisco Systems selected ourembedded modules for its Integrated Service Routers for enterprise disasterrecovery and rapid deployment applications. We also have design wins withEricsson, Digi and others for fixed wireless terminal and router solutions. Webelieve that there are good growth opportunities in the vertical OEM market andare investing to expand our position.

 

In 2007, salesof our embedded module products increased 76% to $91.2 million, compared to$51.9 million in 2006.

 

The following table outlines our current product offerings for wirelesswide-area network PC cards and embedded modules:

 

6

----

 
| **Product  Type**          | ** **                                 | **Product Class**                     | ** **                                                                                                                                                                                                                                                | **Description**                                                                                                                                                                                                                           | ** **                | **Products**                                      | ** ** |
|----------------------------|--------------------------------------------|--------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------|---------------------------------------------------|------------|
| **Wireless Network Cards** | ** **                                 | AirCard® 800 Series                   |                                                                                                                                                                                                                                                      | Wide-area wireless modems  providing wireless broadband connectivity for computer users on  HSUPA/HSDPA/UMTS/EDGE/GPRS networks.                                                                                                          |                      | AirCard 880/881  AirCard 880E/881E    AirCard 875 |       |
| ** **                 |                                       |                                       |                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                      |                      |                                              |
|                       | AirCard® 500 Series                   |                                       | Wide-area wireless modems  providing wireless broadband connectivity for computer users on CDMA EV-DO  Revision A networks.                                                                                                                               |                                                                                                                                                                                                                                      | AirCard 595  AirCard 597E |                                              |
| ** **                 |                                       |                                       |                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                      |                      |                                              |       |
| **USB Modems**             | ** **                                 | AirCard® USB 800 Series               |                                                                                                                                                                                                                                                      | USB wireless modems providing  wireless broadband connectivity for users on HSUPA/HSDPA/UMTS/EDGE/GPRS  networks. The USB wireless modem plugs directly into any USB port on a laptop  or desktop PC, or via the included docking cradle. |                      | AirCard 880U/881U  Air Card 875U                  |       |
| ** **                 |                                       |                                       |                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                      |                      |                                              |
|                       | AirCard® USB 500 Series               |                                       | USB wireless modems providing  wireless broadband connectivity for users on EV-DO Revision A networks. The  USB wireless modem plugs directly into any USB port on a laptop or desktop  PC, or via the included docking cradle.                           |                                                                                                                                                                                                                                      | Air Card 595U             |                                              |
|                       |                                       |                                       |                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                      |                      |                                              |       |
| **Embedded Modules**       |                                       | MC8700 Series PCI Express  Mini Cards |                                                                                                                                                                                                                                                      | Embedded 3G wireless modules based on the PCI  Express Mini Card form factor and interface specification. The MC87XX series  delivers HSDPA/UMTS/EDGE/GPRS wireless voice and data capability to laptop  OEMs and other manufacturers.    |                      | MC8780/MC8781  MC8775/MC8775V                     |       |
|                       |                                       |                                       |                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                      |                      |                                              |
|                       | MC5700 Series PCI Express  Mini Cards |                                       | Embedded 3G wireless modules based on the PCI  Express Mini Card form factor and interface specification. The MC5700 series  delivers CDMA EV-DO Revision A and CDMA 1X EV-DO wireless voice and data  capability to laptop OEMs and other manufacturers. |                                                                                                                                                                                                                                      | MC5725/MC5725V            |                                              |

 

***Sierra Wireless Rugged Mobile and M2MProduct Line***

 

The Sierra Wireless rugged mobile and M2M product line consists ofintelligent modems that are sold into a variety of markets and applicationsincluding law enforcement, emergency services, field service, financial, energyand industrial controls.

 

Our rugged mobile products are typically mounted in a vehicle and arephysically connected to a computer or data terminal. The rugged mobile productline is designed to operate in harsh conditions, including extremes oftemperature, humidity, vibration and vehicle ignition noise. Our MP products comewith fully integrated GPS capability as a standard feature. During 2007, webegan commercial shipments of two next generation versions of our MP product, the MP 595 for EV-DO Revision A andthe MP 875 for UMTS/HSDPA 3.6 Mbps networks. The MP 595 is certified for use onthe Sprint Mobile Broadband Network and Verizon Network and the MP 875 iscertified for use on AT&T’s BroadbandConnect network.

 

7

----

 

With the acquisition of AirLink, we have also expanded our product lineto include M2M solutions and fixed wireless terminals. We introduced thePinPoint X and Raven X, a new line of intelligent modems that have beencertified and are commercially available for use on the Verizon Wireless andBell Mobility EV-DO Rev A networks. We also introduced the Raven XT, a morecompact model with increased processing power that is expected to begincommercial shipments in the first quarter of 2008.

 

***Enabling Software***

 

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

 

·                  *Sierra Wireless WatcherTM**Software*is a graphical user interface designed for everyday use with our modems. Whilethe modem is in use, the Watcher program provides ongoing information onregistration status and signal strength and allows the user to switch operatingmodes where applicable. Sierra Wireless Watcher supports all major PC andhandheld Windows-based  operating systems.In addition, for certain products, Sierra Wireless Watcher supports Macoperating systems.

 

·                  *ALEOS*provides reliable andfeature-rich embedded intelligence. With extensive capabilities like remotemonitoring and configuration, packet-level diagnostics and over-the-airfirmware updates, ALEOS simplifies integration, installation, operation andmaintenance of any AirLink wireless data solution.

 

·                  *Wireless Ace*is adevice configuration and monitoring tool included with every Sierra WirelessAirLink modem that enables customers to control their AirLink modems fromanywhere.

 

·                  *AceNet*is anenterprise-grade device management tool that allows customers to monitor andmanage their fleet of AirLink modems from a central location. Coupled withALEOSTM, AceNet enables customers to perform full deviceintegration, poll modems and chart performance statistics.

 

·                  *AceView* is alow-profile dashboard that monitors local connectivity with AirLink in-vehiclemodems, displaying RF and GPS signal strength andlocation.

 

·                  *MP Modem Manager* is afeature-rich, web based diagnostic software management tool allowing networkadministrators access to remote monitoring and configuration of a fleet of MPmodems.

 

***Professional Services***

 

Ourprofessional services team offers a variety of product development andintegration support services including the following:

 

·                  Software and hardware integration

 

·                  Platform RF testing and optimization

 

·                  Regulatory approvals services

 

·                  Mobile operator certification services

 

·                  Project management

 

·                  Sales and technical support training

 

8

----

 

***Customer Support***

 

We provide customers, wireless operators and other channel partners withproduct and technical support in several languages using telephone, e-mail andour Web site. Online resources include product documentation, technicalspecifications, frequently asked questions, application notes, troubleshootingnotes, troubleshooting tools, and software downloads.

 

***Product Revenue***

 

Our revenue by product for the years ended December 31, 2007 and2006 is as follows:

 
| ** **       | ** ** | **2007** | ** ** | **2006** | ** ** |
|------------------|------------|----------|------------|----------|------------|
| AirCards         |       | 71       | %          | 71       | %          |
| Embedded modules |       | 21       |       | 24       |       |
| Mobile and M2M   |       | 6        |       | 3        |       |
| Other            |       | 2        |       | 2        |       |
|             |       | 100      | %          | 100      | %          |

 

***Future Products***

 

We continually evaluate and develop new products and technologies thatwill allow us to take advantage of the ever expanding and dynamic wirelessmarket. Emerging wireless standards that are areas of significant new productdevelopment interest for us include:

 

·                  HSUPA:HSUPA offers theoretical speeds of up to 7.2 Mbps downlink and increased uplink speeds of up to 2 Mbps. Our plan is to introduce new products during 2008that incorporate HSUPA technology. We expect the new ApexTM 880 USBmodem, the CompassTM 885 USB modem and the AirCard 885E ExpressCardto begin commercially shipping in 2008. These products offer tri-bandUMTS/HSDPA and quad-band GPRS/EDGE network access for roaming on high-speednetworks worldwide.

 

### **Product Development**

###  

We have builta reputation in the wireless data industry for creating state-of-the-art,high-quality products within aggressive timeframes. Our development team ofapproximately 193 full time employees, located in Richmond, BC, Carlsbad, CAand Newark, CA, are skilled in the areas of radio frequency, hardware, embeddedsoftware, host software and mechanical design. Combined, this team has severalthousand person years of experience in the design of small form factor wirelessdata and voice devices. Our product development team combines leaders withextensive experience in their fields, with younger graduates from leadinguniversities.

 

We take a “core team” approach to product development. Our goal isdevelop a “whole” product and to ensure products are managed closely throughouttheir entire life cycle. As part of this approach, individuals from our productdevelopment group form product-specific teams with staff from other functionalareas, 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 andproduct cost. Concepts and prototypes are validated by working with leadcustomers, channel partners and industry consultants. From time to time,projects are outsourced to third parties, which provides product developmentleverage for our core teams.

 

9

----

 

Products that result from this process are designed and tested tocellular industry standards and introduced to our high-volume contractmanufacturing partners for production and delivery to our customers. Includedin the development effort is the certification of our products with industryand regulatory standards bodies and wireless operators.

 

A group of senior engineers develops and monitors our developmentprocesses. These processes are applied across all development projects toensure uniformity. For example, we have adopted a core-wireless engine designapproach to leverage development efforts across multiple different products.This is also intended to help our customers to utilize our different productswith moderate additional integration effort on their part.

 

Our product development staff stays current in technology byparticipating in industry groups such as the Personal Computer CommunicationsAssociation (“PCCA”), the Cellular Telecommunications Industry Association (“CTIA”),the Mobile Advisory Council (“MAC”), the USB Forum, the PCI Special InterestGroup (“PCI-SIG”), the European Telecommunications Standards Institute (“ETSI”),the PCS Type Certification Review Board (“PTCRB”), the Third GenerationPartnership Project (“3GPP”), the Third Generation Partnership Project 2 (“3GPP2”)and the International Wireless Packaging Consortium, and through ongoingtechnical education. We maintain close relationships with local universities byhiring co-op students, giving lectures, supporting visiting professorships andparticipating in regular informal meetings with faculty members.

 

### **Distribution**

###  

Our products are used by a variety of end-users, ranging from salespeople and mobile executives, to police officers and utility workers. We havebuilt a distribution channel that responds to the unique purchasing and usagerequirements of our customer base. Historically, a substantial majority of oursales have come from North American markets. As our wireless technologyplatforms have diversified, we have built sales and distribution teams to focuson developing our business outside of North America. Currently, we havededicated sales and distribution teams for the Europe, Middle East and Africa (“EMEA”),Asia-Pacific and North American regions. Our approach to distribution takesadvantage of our existing relationships with wireless operators, resellers andOEMs in order to maximize the productivity of our sales team.

 

***Wireless Operators***

 

Wireless operators play two key roles in our distribution strategy. First,wireless operators are resellers for us, purchasing our products and thenreselling them to end-user customers through their business and retail channels.Second, the wireless operator sales team often works with our sales team tojointly sell wireless solutions and our equipment to corporate and governmentend-user customers. The wireless operator channel provides us with extendedcustomer reach, while the operators are able to leverage our wireless dataexpertise to help sell their products and services. We have invested a greatdeal of time and resources in cultivating our relationships with wirelessoperators and view these relationships as a critical success factor.

 

***Resellers***

 

Resellers purchase our products either directly from us or from adistributor and resell them to carriers and end-user customers. In order tosupport resellers who prefer to purchase through a distributor, we haveselectively formed distribution relationships. Distributors ensure that ourproducts are available to a large number of resellers.

 

10

----

 

Resellers generally combine our products with other elements of anoverall solution, such as computer hardware, application software and bundledcommunication services and deliver a complete solution to the end-usercustomer. Resellers include computer resellers, wide-area network resellers,application developers and system integrators.

 

***Original Equipment Manufacturers***

 

Original equipment manufacturers are companies that integrate our embeddedmodules into devices they manufacture and sell to end-user customers throughtheir own direct sales force and indirect distribution channels. Our embeddedmodules have been integrated into a range of devices, such as laptops,industrial handheld computers, wireless routers, PDAs and Smartphones.

 

### **Marketing**

###  

Our marketing team is responsible for providing product management,strategic marketing and marketing communications for our products on a globalbasis. Members of the product management team play an active role in our coreteam approach to developing and managing individual products through theirentire product life cycle. Emphasis is placed on understanding customer needs,developing the business case, determining competitive positioning and pricing, andensuring product completeness, which includes documentation, packaging,collateral, promotional material and marketing programs.

 

***Marketing Communications***

 

We communicate our corporate and product positioning to channels andcustomers in our global markets in several ways, including:

 

·            Actively seeking editorialcoverage and placing advertisements in industry, business and tradepublications;

 

·            Activelyparticipating in industry associations;

 

·            Meetingwith opinion leaders and industry analysts; and

 

·            Participating in targeted conferences andtrade shows.

 

We work with our channel partners to develop programs toencourage customer adoption and promotion of our brand. Through marketingstrategies including market analysis, branding, design, packaging andpromotions, we launch products into the marketplace that complement customerlaunch timelines.

 

### **Manufacturing**

###  

We outsource most of our manufacturing services, including partsprocurement, kitting, logistics, assembly and repair. We believe that outsourcingallows us to:

 

·            Focus onour core competencies, including research and development, sales and marketing;

 

·            Participatein contract manufacturer economies of scale;

 

·            Accesshigh quality, lower cost manufacturing resources;

 

·            Achieverapid production scalability; and

 

·            Reduce equipment capital costs andequipment obsolescence risk.

 

11

----

 

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

 

We use Flextronics, a large global electronics manufacturing services (“EMS”)provider, as our primary contract manufacturer and logistics partner to providean end-to-end supply chain solution. This includes design support, procurement,low cost manufacturing and repair in China and fulfillment services fromZalaegerszeg, Hungary. By using its fully integrated supply chain services, weexpect to optimize product costs, improve alignment with our increasinglyinternational customer base and achieve increased operating efficiencies andscalability. Our more complex, lower volume products are manufactured by otherEMS partners.

 

### **Employees**

###  

As of December 31, 2007 we had a total of 376 full time employees,186 of whom are at our head office in Richmond, B.C., with the balance beinglocated across the United States, Canada, Europe and Asia. Of the 376employees, 193 are involved in product development, 68 are involved in manufacturing,44 are sales and support personnel, 29 are marketing personnel and 42 are infinance and administration. Employees have access to corporate-funded ongoingtraining and professional development opportunities, both on-the-job andthrough outside educational programs. Cash compensation, our employee stockoption plan, our employee restricted share unit plan, our employee stockpurchase plan and our retirement plan contribution program are complemented byinternal recognition programs and career advancement opportunities. We believeour relationships with our employees are positive.

 

We have entered into non-disclosure agreements and confidentialityagreements with key management personnel and with substantially all of ouremployees.

 

### **Competition**

###  

Mobile broadband technology is penetrating the mainstream population. Mobilebroadband advertisements are appearing on television, in magazines, newspapers,train stations and airports around the world. Adoption is reaching a level thatmore competitors are entering the market and some of these competitors arelarge corporations with strong manufacturing scale and financial resources attheir disposal. The technology is still evolving with faster and more efficientairlink technologies being released by chipset and infrastructure manufacturers.This evolution creates an opportunity for us to differentiate ourselves bybeing early to market with quality implementations of these new airlinks.

 

*PC Cards*:  We have established a technology leadershipposition by being early to market with our HSPA PC cards in North America andEurope. In North America, we sell both EV-DO and HSPA PC cards and ourcompetitors include Kyocera Wireless Corp., Novatel Wireless, Inc., OptionN.V., Pantech and Sony Ericsson. In Europe, we sell HSPA PC cards and our maincompetitors include Huawei, Novatel Wireless, Inc., Option N.V. and SonyEricsson. In Asia, we sell EV-DO and HSPA PC cards and our main competitorsinclude Huawei, Option N.V. and ZTE.

 

*Embedded Modules:*  We expect that competition in the PC OEMmarket will continue to intensify in 2008 with the entrance of Ericsson andQualcomm’s Gobi solution for PC OEMs.  We believe that the Gobi solutioncould lower the barriers to market entry for new competitors, includingpotential price leaders. Our ability to secure new design wins will depend onbeing successful in developing products and offering services that meet ourcustomers’ design, schedule and price requirements. We continue to have a solidposition with our vertical OEM customers.

 

12

----

 

*Mobile and M2M:*  We have bolstered our presence in this spacewith the acquisition of AirLink Communications in May 2007. Our installed base includes all primary M2Mvertical market segments, but we have a stronger presence within energy, publicsafety and transportation. We are focusing our effortson expanding our presence in North America and entering Europe. Our competitors include Digi InternationalInc., BlueTree Wireless Data Inc., Enfora, Multi-Tech Systems, Inc.,Sarian Systems, Top Global USA, Inc. and various embedded applications. Wecontinue to differentiate ourselves through superior design, embeddedintelligence, elegant management tools and customer support.

 

### **Intellectual Property**

###  

We protect ourintellectual property through a combination of patent protection, copyright,trademarks, trade secrets, licenses, non-disclosure agreements and contractualprovisions. We enter into a non-disclosure and confidentiality agreement witheach of our employees, consultants and third parties that have access to ourproprietary technology. Pursuant to assignment of inventions agreements, all ofour employees and consultants assign all intellectual property rights in theinventions created during such person’s employment or contract with SierraWireless to Sierra Wireless.

 

We currentlyhold 61 United States patents and 106 international patents. Additional patentapplications are pending. When we consider it to be advantageous, we utilizeour intellectual property portfolio and access the intellectual property ofthird parties by entering into commercial licenses and cross-licenses.

 

### **Governmental Regulation**

###  

Our productsare subject to certain mandatory regulatory approvals in the United States,Canada, the European Union (“EU”) and other regions in which we operate. In theUnited States, the Federal Communications Commission regulates many aspects ofcommunications devices, including radiation of electromagnetic energy,biological safety and rules for devices to be connected to the telephonenetwork. In Canada, similar regulations are administered by the Ministry ofIndustry, through Industry Canada. European Union directives provide thecomparable regulatory guidance in Europe.

 

Wirelessmodems must be approved under these regulations by the relevant governmentauthority prior to these products being offered for sale. We have obtained allnecessary Federal Communications Commission, Industry Canada, European Unionand other required regulatory approvals for the products we currently sell.

 

### **Additional Information Concerning OurBusiness**

###  

Our operationsdo not have a significant impact upon the environment. We have not made, andare not required to make, any significant capital expenditures to comply withenvironmental regulations. Working with the contract manufacturers who buildour products and relevant component suppliers, we intend to ensure that ourproducts that are sold in the EU comply with the EU directives that restrictthe use of certain hazardous substances in electronic equipment sold in the EUafter July 1, 2006. Sierra Wireless is in compliance with all EUenvironmental directives.

 

***RISK FACTORS***

 

Our business is subject to significant risksand uncertainties and past performance is no guarantee of future performance.These risks and uncertainties are described in our 2007 Management Discussionand Analysis which can be found on our website at www.sierrawireless.com or atwww.sedar.com and are incorporated herein by reference.

 

13

----

 

## ***DIVIDENDS***

## *** ***

Sinceincorporation, we have not paid any dividends on our common shares. Our currentintention is to reinvest earnings to finance the growth of our business. We donot anticipate that we will pay any dividends on our common shares in theimmediate or foreseeable future.

 

## ***DESCRIPTIONOF CAPITAL STRUCTURE***

## *** ***

Our authorizedcapital consists of an unlimited number of common shares, of which, at March 24,2008, 31,347,563 are issued and outstanding, and an unlimited number ofpreference shares, issuable in series, of which none are issued and outstanding.Our board of directors is authorized to determine the designation, rights andrestrictions to be attached to the preference shares upon issuance.

 

Holders ofcommon shares are entitled to receive notice of any meeting of shareholders andto attend and vote at those meetings, except those meetings at which only theholders of shares of another class or of a particular series are entitled tovote. Each common share entitles its holder to one vote. Subject to the rightsof the holders of preference shares, the holders of common shares are entitledto receive on a proportionate basis such dividends as our board of directorsmay declare out of funds legally available therefor. In the event of thedissolution, liquidation, winding up or other distribution of our assets, theholders of the common shares are entitled to receive on a proportionate basisall of our assets remaining after payment of all of our liabilities, subject tothe rights of holders of preference shares.

 

The commonshares carry no pre-emptive or conversion rights other than rights granted toholders of common shares under the Shareholders Rights Plan implemented andratified by our shareholders on April 27, 2000 and re-adopted by ourshareholders on April 28, 2003 and April 25, 2006. The ShareholderRights Plan is designed to encourage the fair treatment of our shareholders inconnection with any take-over offer for our outstanding common shares. TheShareholder Rights Plan provides our board of directors and shareholders with45 days, which is longer than provided by applicable laws, to fully considerany unsolicited take-over bid without undue pressure, to allow our board ofdirectors, if appropriate, to consider other alternatives to maximizeshareholder value and to allow additional time for competing bids to emerge. Ifa bid is made to all shareholders, is held open for at least 45 days and isaccepted by shareholders holding more than 50% of the outstanding commonshares, or is otherwise approved by our board of directors, then theShareholder Rights Plan will not affect the rights of shareholders. Otherwise,all shareholders, except the parties making a take-over bid, will be able toacquire a number of additional common shares equal to 100% of their existingoutstanding holdings at half the market price. Thus, any party making atake-over bid not permitted by the Shareholder Rights Plan could suffersignificant dilution.

 

## ***MARKET FORSECURITIES***

## *** ***

Our common shares have been listed on The Toronto Stock Exchange since May 17,1999, and currently trade under the symbol “SW”. Our common shares areco-listed on The Nasdaq National Market under the symbol “SWIR”.

 

Set out below are the price ranges and volume of common shares of SierraWireless, Inc. that traded on the Toronto Stock Exchange for the yearended December 31, 2007.

 

14

----

 
| **2007**   | ** ** | **Low****Cdn $** | ** ** | **High****Cdn $** | ** ** | **Total Monthly  Volume** | ** ** |
|------------|------------|-----------------------|------------|------------------------|------------|--------------------------------|------------|
| ** ** | ** ** | ** **            | ** ** | ** **             | ** ** | ** **                     | ** ** |
| January    |       | 15.40                 |       | 17.85                  |       | 3,998,100                      |       |
| February   |       | 15.74                 |       | 19.20                  |       | 4,762,200                      |       |
| March      |       | 15.02                 |       | 18.50                  |       | 2,692,200                      |       |
| April      |       | 17.80                 |       | 20.97                  |       | 3,369,800                      |       |
| May        |       | 19.24                 |       | 23.67                  |       | 3,835,400                      |       |
| June       |       | 23.18                 |       | 28.15                  |       | 5,344,200                      |       |
| July       |       | 23.83                 |       | 29.37                  |       | 5,653,100                      |       |
| August     |       | 18.85                 |       | 24.22                  |       | 7,176,300                      |       |
| September  |       | 20.75                 |       | 24.79                  |       | 3,332,400                      |       |
| October    |       | 17.61                 |       | 23.10                  |       | 10,950,300                     |       |
| November   |       | 15.53                 |       | 22.83                  |       | 9,127,300                      |       |
| December   |       | 14.61                 |       | 17.75                  |       | 4,210,200                      |       |

## *** ***

## ***DIRECTORS AND EXECUTIVE OFFICERS***

## *** ***

The tables set forth below list the directors and executive officers ofthe Company as at March 24, 2008, indicating their name, municipalities ofresidence, their respective positions and offices held with the Company, thelength of service and their principal occupations within the five precedingyears.

 

Each director is elected at our annualmeeting of shareholders to serve until the next annual meeting or until asuccessor is elected or appointed, unless such director resigns or is removedearlier. To the knowledge of Sierra Wireless, the directors and executiveofficers as a group, beneficially own, directly or indirectly, or exercisecontrol or discretion over, 269,543 common shares, (not including common sharesissuable upon the exercise of stock options), representing as of March 24, 2008approximately 0.9% of the issued and outstanding common shares.

 

### **Directors**

 
| **Name, Position and  Residence**                          | ** ** | **Principal Occupation or Employment(1)**                                                                                                                                                                                                                                                                                                                                                                                       | ** ** | **Director  Since** | ** ** |
|----------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------------|------------|
| **Jason W. Cohenour**President, CEO and Director Washington,  U.S.A. |       | President and Chief Executive Officer of the Company  from October 2005 to present; Chief Operating Officer of the Company  from August 2004 to October 2005; Senior Vice President, Worldwide  Sales of the Company from 2000 to August 2004                                                                                                                                                                              |       | October 2005        |       |
| ** **                                                           |       |                                                                                                                                                                                                                                                                                                                                                                                                                                           |       |                |       |
| **Gregory D. Aasen (3)**Director   British Columbia, Canada          |       | Independent Outside Director; Chief Strategy Officer  of PMC-Sierra, Inc. (a broadband communications company) from  September 2005 to June 2007; Vice-President and General Manager,  Communication Products Division of PMC-Sierra, Inc. from 2004 to  September 2005; Chief Operating Officer of PMC-Sierra, Inc. from  1997 to 2004 and Chief Technology Officer of PMC-Sierra, Inc. from 2003  to 2004 |       | December 1997  |       |

 

15

----

 
| **Name, Position and  Residence**                                            | ** ** | **Principal Occupation or Employment(1)**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | ** ** | **Director  Since** | ** ** |
|------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------------|------------|
| **Paul G. Cataford (2) (4)**Director   Alberta, Canada                  |       | President and Chief Executive Officer of University  Technologies International Inc. (a technology transfer and commercialization  company) from 2004 to present; Managing Partner of HorizonOne Asset  Management from December 2002 to 2004; Consultant from March 2002  to December 2002; Executive Managing Director of BMO Nesbitt Burns  Equity Partners Inc. from 2001 to 2002                                                                                                                                                                                                                                               |       | July 1998      |       |
| ** **                                                                   |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |       |                |       |
| **Peter Ciceri (2) (3)**Director   British Columbia, Canada             |       | President of Custom House Global Foreign Exchange  from January 2007 to present; Corporate Director and principal of Peter  Ciceri & Associates Executive Coaching and Business Counselling  Services from 2001 to present                                                                                                                                                                                                                                                                                                                                                                                                           |       | February 2000  |       |
| ** **                                                                   |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |       |                |       |
| **Charles E. Levine (3) (4)**Chairman and Director   California, U.S.A. |       | Independent Outside Director; President and Chief  Operating Officer of Sprint PCS from 2000 to 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |       | May 2003       |       |
| ** **                                                                   |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |       |                |       |
| **S. Jane Rowe (2)**Director   Ontario, Canada                               |       | Independent Outside Director; An Officer of  Scotiabank, most recently serving as Executive Vice-President, Domestic  Personal Lending and Insurance and President and CEO of Scotia Mortgage  Corporation and Vice Chairman of Maple Trust Company from May 2006 to  July 2007; Vice Chairman of Travelers Leasing Corporation from  February 2007 to July 2007; President and Chief Executive Officer  of Roynat Capital from 2004 to 2006; Senior Vice President, Global Risk  Management Division of Scotiabank from 2002 to 2004; Managing Director and  Co-Head of Scotia Merchant Capital Corporation from 1997 to 2002 |       | March 1998     |       |
| ** **                                                                   |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |       |                |       |
| **David B. Sutcliffe (4)**Director   British Columbia, Canada                |       | Corporate Director from October 2005 to  present; Chief Executive Officer of the Company from May 1995 through  October 2005                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |       | June 1995      |       |
| ** **                                                                   |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |       |                |       |
| **Kent Thexton (3)**Director   British Columbia, Canada                      |       | Managing Partner, i-wireless LLC (a US based MVNO)  from November 2006 to present; Chairman of Redknee (a billing software  company) from 2004 to present; Executive Chairman of SEVEN  Networks, Inc. (an application software company) from November 2006  to present; President and Chief Executive Officer of SEVEN  Networks, Inc. from April 2004 to October 2006; Chief Data and  Marketing Officer of O2 PLC and President of O2 Online from 2001 to 2004                                                                                                                                                    |       | March 2005     |       |

 

----

Notes:

(1)   The information as to “principal occupation”has been furnished by the respective directors

(2)   Member of the Audit Committee

(3)   Member of the Human Resources Committee

(4)   Member of the Governance and NominatingCommittee

 

16

----

### ** **

### **Executive Officers**

 
| **Name, Position and  Province or State and  Country of Residence**      | ** ** | **Principal Occupation in the Preceding  Five Years(1)**                                                                                                                                                                                                                                                                                                                     | ** ** | **Length of Service** | ** ** |
|-------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------------------------|------------|
| ** **                                                                                                  |       |                                                                                                                                                                                                                                                                                                                                                                                                  |       |                            |       |
| **Jason W. Cohenour**President  and Chief Executive Officer   Washington, U.S.A.                            |       | President and Chief Executive Officer of the Company  since October 2005; Chief Operating Officer of the Company from  August 2004 to October 2005; Senior Vice President, Worldwide Sales  of the Company from 2000 to August 2004                                                                                                                                               |       | 12 years                        |       |
| ** **                                                                                                  |       |                                                                                                                                                                                                                                                                                                                                                                                                  |       |                            |       |
| **David G. McLennan**Chief  Financial Officer and   Secretary   British Columbia, Canada                    |       | Chief Financial Officer of the Company from  March 2004 to present; Consultant to BCE Emergis from  September 2002 to January 2003; Chief Financial Officer of Bell  Canada from June 2002 to September 2002; President and Chief  Operating Officer of Bell ExpressVu from November 1999 to June 2002                                                             |       | 4 years                         |       |
| ** **                                                                                                  |       |                                                                                                                                                                                                                                                                                                                                                                                                  |       |                            |       |
| **James B. Kirkpatrick**Chief  Technical Officer  California, U.S.A.                                        |       | Chief Technical Officer of the Company from  September 2004 to present; Senior Vice-President, Engineering of the  Company from August 2003 to August 2004; President and Chief  Executive Officer of AirPrime, Inc. from July 2002 to  August 2003; Senior Vice-President, Engineering of AirPrime, Inc.  from September 2000 to March 2003             |       | 5 years                         |       |
| ** **                                                                                                  |       |                                                                                                                                                                                                                                                                                                                                                                                                  |       |                            |       |
| **Trent H. Punnett**Senior  Vice President, Marketing   and Corporate Development  British Columbia, Canada |       | Senior Vice-President, Marketing and Corporate  Development from February 2006 to present; Vice-President, Marketing of  the Company from January 2005 to January 2006; Vice-President,  Marketing and Product Line Management of Motorola from July 2003 to  December 2004; Senior Director, Marketing and Product Line Management of  Motorola from 2000 to June 2003 |       | 3 years                         |       |

 

----

Notes:

(1)          The information as to “principal occupation” has beenfurnished by the respective executive officers.

 

## ***CODE OF BUSINESS CONDUCTAND ETHICS***

## *** ***

In 2003, the Board of Directors adopted aCode of Business Conduct and Ethics applying to all directors, officers andemployees of the Company to ensure that the Company conducts its business inaccordance with the highest standards of business conduct and ethics.  The Board of Directors approved an updatedversion of the Code of Business Conduct and Ethics in December 2005.  There have been no waivers granted from theCode of Business Conduct and Ethics since its adoption.  The Code of Business Conduct and Ethics isavailable on the Company’s website at www.sierrawireless.com.

 

17

----

 

## ***AUDIT COMMITTEE***

## *** ***

### **Mandate of the Audit Committee**

###  

The full text of the Mandate of the AuditCommittee is set out below.

 

**“1.  Purpose and Scope**

 

Theaudit committee **(the “AC”)** was established by theBoard of Directors **(“Board”)** ofSierra Wireless Inc. **(“Company”)** toassist the Board in all issues relating to the oversight of the following:

 

·                  the Company’s systems of internal anddisclosure controls regarding finance, accounting and legal compliance;

 

·                  the Company’s auditing, accounting andfinancial reporting processes, including adherence to US generally acceptedaccounting principles;

 

·                  the Company’s financial statements and otherfinancial information provided by the Company to its shareholders, the publicand others;

 

·                  the Company’s compliance with legal andregulatory requirements;

 

·                  the appointment, compensation, independence,oversight, communication with, performance and change of the Company’s externaland independent auditors (the “Auditors”);

 

·                  the Company’s whistleblower process; and

 

·                  the fulfillment of the other responsibilitiesset forth in this Mandate.

 

**2.**              Organization, Membership and Meetings

** **

·                  Committee members shall meet the requirementsof the Toronto Stock Exchange, the NASDAQ Exchange, the Securities and ExchangeCommission, the securities commissions of each of the Provinces of Canada inwhich the Company is a reporting issuer and any other regulatory agency thatmay have jurisdiction over the operations of the Company from time to time.

 

·                  The Committee shall consist of three or moredirectors who are “independent” as defined by applicable law, regulations,guidelines and policies, and as determined by the Governance and NominatingCommittee (“GNC”) of the Board.

 

·                  All members of the Committee shall be “financiallyliterate”, and at least one member of the Committee shall be a “financialexpert”.  “Financially literate” and “financialexpert” will have the respective meanings set out in applicable law,regulations, guidelines and policies.

 

·                  Members of the Committee shall be appointedannually by the Board on the recommendation of the GNC.  Members may be replaced by the Board at anytime, but shall otherwise serve until a successor has been named.

 

·                  No director shall serve on the compensationcommittee of another company that employs such directors.

 

·                  No member shall be affiliated with theCompany or any subsidiary.

 

·                  The Committee shall meet from time to time,as it deems necessary, but at least four times per year.

 

18

----

 

·                  The Committee may include management at itsmeetings, but shall also hold an executive session at each meeting at whichonly independent directors are present.

 

·                  The Committee shall maintain written minutesof its meetings, which minutes will be filed in the corporate minute book.

 

**3.**              Authority and Responsibilities

** **

**3.1.**         With respect to the Auditors:

** **

·                  Be directly responsible for recommending tothe Board the appointment and compensation of the Auditor.  Oversee the work of the Auditors (includingresolution of disagreements between Management and the Auditors regardingfinancial reporting) for the purpose of preparing or issuing an audit report orperforming other audit, review or attest services for the Company.

 

·                  Have the sole authority to review in advanceand pre-approve all non-audit services to be provided to the Company or itssubsidiaries by the Auditors, as permitted by applicable governance rules andin particular Section 10A of the Securities Exchange Act of 1934 and, inconnection therewith, to approve all fees and other terms of engagement. TheCommittee shall also review and pre-approve all disclosures required to beincluded in any public filings with respect to non-audit services.  The Committee may delegate to one or moremembers the authority to pre-approve non-audit services, provided a report ismade to the Committee at its next scheduled meeting.  The Committee may consult with Management butshall not delegate these responsibilities to Management.

 

·                  Have the authority to communicate directlywith the Auditors.

 

·                  Review the performance of the Auditors on atleast an annual basis.

 

·                  On an annual basis, review and discuss withthe Auditors all relationships the Auditors have with the Company in order toevaluate the Auditors’ continued independence. The Committee: (i) shallensure that the Auditors submit to the Committee on an annual basis a writtenstatement delineating all relationships and services that may impact theobjectivity and independence of the Auditors; (ii) shall discuss with theAuditors any disclosed relationship or services that may impact the objectivityand independence of the Auditors; and (iii) shall satisfy itself as to theAuditors’ independence.

 

·                  At least annually, obtain and review anannual report from the Auditors describing (i) the Auditors’ internalquality control procedures and (ii) any material issues raised by the mostrecent internal quality control review, or peer review, of the Auditors, or byany inquiry or investigation by governmental or professional authorities,within the preceding five years, respecting one or more independent auditscarried out by the Auditors, and any steps taken to deal with any such issues.

 

·                  Confirm that the rotation of the lead auditpartner, or the lead audit partner responsible for reviewing the audit, for theCompany’s Auditors complies with the requirements of the Canadian and USregulatory authorities.

 

·                  Review all reports required to be submittedby the Auditors to the Committee particularly including those required by Section 10Aof the Securities Exchange Act of 1934.

 

·                  Review, based upon the recommendation of theAuditors and Management, the scope and plan of the work to be done by theAuditors for each fiscal year.

 

19

----

 

**3.2.**         With respect to financial statements:

** **

·                  Review and discuss with Management and theAuditors the Company’s quarterly financial statements (including disclosuresmade in Management’s Discussion and Analysis, as defined in MultilateralInstrument 51-102, and interim earnings press releases) prior to submission toshareholders, any governmental body, any stock exchange or disclosure to thepublic.  Subject to delegation from theBoard, approve the interim financial statements and footnotes, MD&A andinterim earnings press release.

 

·                  Review and discuss with Management and theAuditors the Company’s annual audited financial statements (includingdisclosures made in Management’s Discussion and Analysis and annual earningspress releases) prior to submission to shareholders, any governmental body, anystock exchange or disclosure to the public. Recommend to the Board approval of the annual audited financialstatements and footnotes, MD&A and annual earnings press release.

 

·                  Recommend to the Board, if appropriate, thatthe Company’s annual audited financial statements be included in the Company’sannual report for filing with appropriate securities regulatory agencies.

 

·                  Prepare any reports required to be includedin the Company’s annual meeting materials and any other Committee reportsrequired by applicable securities laws or stock exchange listing requirementsor rules.

 

**3.3.**         With respect to periodic and annualreviews:

** **

·                  Periodically review separately with each ofManagement and the Auditors (i) any significant disagreement between Managementand the Auditors in connection with the preparation of the financialstatements, (ii) any difficulties encountered during the course of theaudit or review (including any restrictions on the scope of work or access torequired information), and (iii) Management’s response to each.

 

·                  Periodically discuss with the Auditors,without Management being present (i) their judgments about the quality,appropriateness, and acceptability of the Company’s accounting principles andfinancial disclosure practices, as applied in its financial reporting, and (ii) thecompleteness and accuracy of the Company’s financial statements.

 

·                  Consider and approve, if appropriate,significant changes to the Company’s accounting principles and financialdisclosure practices as suggested by the Auditors or Management.  Review with the Auditors and Management, atappropriate intervals, the extent to which any changes or improvements inaccounting or financial practices, as approved by the Committee, have beenimplemented.

 

·                  Review with Management, the Auditors and theCompany’s counsel, as appropriate, any legal, regulatory or compliance mattersthat could have a significant impact on the Company’s financial statements,including significant changes in accounting standards or rules aspromulgated by the Canadian Institute of Chartered Accountants, the securitiesregulators having jurisdiction over the Company or other regulatory authoritieswith relevant jurisdiction.

 

·                  Obtain and review an annual report fromManagement relating to the accounting principles used in preparation of theCompany’s financial statements (including those policies for which Managementis required to exercise discretion or judgments regarding the implementationthereof).

 

20

----

 

**3.4.**         Discussions with Management:

** **

·                  Review and discuss with Management theCompany’s annual and interim earnings press releases (including the use of “proforma” or “adjusted” non-GAAP information), financial information and earningsguidance provided to analysts and rating agencies as well as all other materialpublic disclosure documents such as the Company’s AIF, management informationcircular and any prospectuses.

 

·                  Review and discuss with Management allmaterial off-balance sheet transactions, arrangements, obligations (includingcontingent obligations) and other relationships of the Company withunconsolidated entities or other persons, that may have a material current orfuture effect on financial condition, changes in financial condition, resultsof operations, liquidity, capital resources, capital reserves or significantcomponents of revenues or expenses.

 

·                  Inquire about the application of the Company’saccounting policies and its consistency from period to period, and thecompatibility of these accounting policies with generally accepted accountingprinciples, and (where appropriate) the Company’s provisions for futureoccurrences that may have a material impact on the financial statements of theCompany.

 

·                  Review and discuss with Management theCompany’s major financial risk exposures and the steps Management has taken tomonitor and control such exposures (including Management’s risk assessment andrisk management policies).

 

·                  Review and discuss with Management alldisclosures made by the Company concerning any material changes in thefinancial condition or operations of the Company.

 

·                  The Committee will meet periodically andseparately with the Company’s counsel to review material legal affairs of theCompany and the Company’s compliance with applicable law and listing standards.

 

·                  Obtain explanations from Management forunusual variances in the Company’s annual financial statements from year toyear, and review annually the Auditors’ letter of the recommendations toManagement and Management’s response.

 

**3.5.**         With respect to internal controls anddisclosure:

** **

·                  In consultation with the Auditors and Management:(a) review the adequacy of the Company’s internal control structure andsystem, and the procedures designed to ensure compliance with laws andregulations, (b) discuss the responsibilities, budget and staffing needsof the Company’s internal accounting department, and (c) review andconsider whether there is any need for the Company to establish an internalaudit department.

 

·                  Establish whistleblowing procedures for (i) thereceipt, retention and treatment of complaints received by the Companyregarding accounting, internal accounting controls or auditing matters, (ii) theconfidential, anonymous submission by employees of the Company of concernsregarding questionable accounting or auditing matters, and (iii) referringany whistleblower matters that fall outside of the scope of the Committee tothe Chair of the appropriate Committee or to the Chair of the Board.

 

·                  Be satisfied that adequate procedures are inplace for the review of the Company’s public disclosure of financialinformation extracted or derived from the Company’s financial statements andperiodically assess the adequacy of those procedures.

 

21

----

 

**3.6.**         With respect to reporting obligations:

** **

·                  Ensure that all reporting obligations relatedto the AIF (Form 40-F for US purposes) and management information circularunder Part 5 of Multilateral Instrument 52-110 are fully compliedwith.

 

**3.7.**         Other:

** **

·                  Review and approve all related-party transactions.

 

·                  Review and approve the Company’s hiringpolicies regarding partners, employees, and former partners and employees ofthe present and former external auditor of the Company.

 

·                  Review any Management decision to seek asecond opinion from Auditors other than the Company’s regular Auditors withrespect to any significant accounting issue.

 

·                  Review with Management and the Auditors thesufficiency and quality of the financial and accounting personnel of theCompany.

 

·                  Monitor and ensure compliance with legal andregulatory requirements and corporate policy relating to audit, internalcontrols, financial matters and any other matters within the scope of thismandate.

 

·                  Review and reassess the adequacy of thisMandate not less than annually, and recommend any proposed changes to the Boardfor approval.  The Committee will alsoreview its own performance, at least annually, for purposes of self-evaluationand to encourage the continuing improvement of the Committee in the executionof its responsibilities.

 

·                  The Committee may delegate its authoritywhere permitted and appropriate.

 

·                  As necessary to carry out its duties, toretain and release independent legal, accounting or other advisors to advisethe Committee and set and cause the Company to pay the compensation for anysuch advisors employed by the Committee.

 

·                  Perform any other activities consistent withthis Mandate, the Company’s By-laws and governing law as the Committee or theBoard deems necessary or appropriate.

 

·                  The Committee will have full access to allbooks, records, facilities and personnel of the Company.

 

·                  To honour the spirit and intent of applicablelaw as it evolves, authority to make minor technical amendments to thisMandate, on request of the Chair of the Committee , is delegated to the Chairof the Governance and Nominating Committee, who will report any amendments tothe Board at its next meeting.

 

**4.**              External and Internal Linkages

** **

·                  The Board

 

·                  The CEO and Senior Management

 

·                  Outside Consultants and Advisors

 

·                  The Corporate Governance and NominatingCommittee”

 

22

----

 

### **Composition of the Audit Committee**

###  

S. Jane Rowe (Chair), Paul G. Cataford andPeter Ciceri are the current members of the Audit Committee.  Each of them is an Independent Director andis financially literate.  The Board ofDirectors has determined that Ms. S. Jane Rowe is the Audit Committee’sfinancial expert.

 

### **Relevant Education and Experience**

###  

S. Jane Rowe is currently an IndependentDirector.  Ms. Rowe is an Officer ofScotiabank, most recently serving as the Executive Vice-President, DomesticPersonal Lending and Insurance, and President and CEO of Scotia MortgageCorporation, the mortgage subsidiary of Scotiabank from May 2006 until July 2007.  Ms. Rowe was also Vice Chairman of MapleTrust Company and Travelers Leasing Corporation, both of which are wholly-ownedsubsidiaries of Scotiabank.  Prior to hermost recent appointment in May 2006, Ms. Rowe was the President andChief Executive Officer of Roynat Capital. Ms. Rowe has an extensive background in the financial services andbanking industry with over 20 years of experience with the ScotiabankGroup.  Ms. Rowe holds a Bachelor ofCommerce degree with honours from Memorial University of Newfoundland and anMBA from York University.

 

Paul G. Cataford is the President and ChiefExecutive Officer of University Technologies Inc., a wholly-owned subsidiary ofthe University of Calgary that is responsible for the university’s technologycommercialization.  Mr. Cataford’sother experience includes consulting, Managing Director of BMO Nesbitt BurnsEquity Partners Inc. from 2001 to 2002 and Managing Director and President ofBCE Capital Inc. from 1997 to 2001.  Mr. Catafordhas extensive knowledge of venture capital investing and technology.  Mr. Cataford completed a MechanicalEngineering Degree at Queen’s University and an MBA at York University.

 

Peter Ciceri is the President of CustomHouse Global Foreign Exchange, the largest non-bank foreign exchange company inNorth America.  He is also the principalof Peter Ciceri & Associates Executive Coaching and BusinessCounselling Service offering mentoring and counselling services to seniorexecutives.  Mr. Ciceri’s otherexperience includes CEO of Compaq Canada Inc., and he has held other seniorpositions with Tandem Asia Pacific Ltd., Hewlett Packard Asia Pacific Ltd., andJapan Unisys.  Mr. Ciceri is anauthority in international business (emphasis on Asia Pacific) and in 1999 hewas named one of Canada’s top 10 “IT Influencers” and one of the country’s top100 business executives.  Mr. Ciceriholds an Economics Degree at University of Victoria, and a MA in counsellingpsychology from the University of British Columbia.

 

### **Reliance on Certain Exemptions**

###  

At no time since the commencementof the Company’s most recently completed financial year has the Company reliedupon any exemption from MI 52-110 provided therein.

 

### **Audit Committee Oversight**

###  

At no time since thecommencement of the Company’s most recently completed financial year was arecommendation of the Committee to nominate or compensate an external auditornot adopted by the board of directors of the Company.

 

### **Pre-approval Policies and Procedures**

###  

The Committee has the sole authority toreview in advance and pre-approve all non-audit services to be provided to theCompany or its subsidiaries by the Auditor, as well as all fees and other termsof 

 

23

----

 

engagement.  The Committee may delegate to one or moremembers the authority to pre-approve non-audit services, provided a report ismade to the Committee at its next scheduled meeting.  All of the audit-related, tax and all otherfees below were pre-approved by the Committee.

 

### **Auditor Independence**

###  

SierraWireless’sAuditCommitteehasconcludedthattheAuditorsareindependentunderapplicablerulesandguidelinesand,inparticular,thattheAuditorsarefreefromconflictsofinterestthatcouldimpairtheirobjectivityinconductingtheauditoftheCompany’sfinancialstatements.  TheAuditCommitteeisrequiredtoapproveallnon-auditrelatedservicesperformedbyourAuditors,andourAuditorsarenotpermittedtoperformservicesforusprohibitedforanindependentauditorunderapplicableCanadianandUnitedStatesregulations,includingtheSarbanes-OxleyAct.

 

### **Auditors’ Fees**

###  

In the 2007 and 2006fiscal years, the fees paid to the Auditors were as follows:

 
| ** **         | ** ** | **2007** | ** ** | **2006** | ** ** |
|--------------------|------------|----------|------------|----------|------------|
| Audit Fees         |       | $        | 792,000    |     | $          | 357,000 |   |
| Audit-Related Fees |       | 41,000   |       | 51,000   |       |
| Tax Fees           |       | 226,000  |       | 203,000  |       |
| All Other Fees     |       | Nil      |       | Nil      |       |
|                    |            |          |            |          |            |  |  |

 

***Audit Fees***

 

Audit fees for 2007 include fees related to the audit of our year-endfinancial statements, audit of our internal controls over financial reporting,review of our quarterly financial statements, review of the AirLink BusinessAcquisition Report and review of our short-form prospectus.  Audit fees for 2006 include fees related tothe audit of our year-end financial statements and review of our quarterlyfinancial statements.

 

***Audit-RelatedFees***

 

Audit-related feesfor 2007 include fees related to due diligence services relating to the AirLinkacquisition.  Audit-related fees for 2006are for fees related to our Sarbanes-Oxley 404 documentation.

 

***Tax Fees***

 

Tax fees for 2007 and2006 are primarily for the preparation of our Canadian and U.S. tax returns,assistance with tax planning and completion of transfer pricing studies.

 

## ***EVALUATION OF DISCLOSURECONTROLS AND PROCEDURES***

## *** ***

### **Disclosure Controls**

###  

The Company’s management is responsible forestablishing and maintaining adequate disclosure controls and procedures forthe Company.  Our disclosure controls andprocedures are designed to ensure that information required to be disclosed inour reports filed with securities regulatory authorities is recorded,processed, summarized and reported within prescribed time periods and isaccumulated and communicated to our management, including our Chief ExecutiveOfficer and our Chief Financial Officer, as appropriate, to allow timelydecisions regarding required disclosure.

 

24

----

 

An evaluation was carried out under the supervision of, and with theparticipation of, our management, including our Chief Executive Officer and ourChief Financial Officer, of the effectiveness of our disclosure controls andprocedures as of December 31, 2007. Based on that evaluation, our Chief Executive Officer and our ChiefFinancial Officer have concluded that our disclosure controls and procedureswere effective to ensure that information required to be disclosed by theCompany in the reports it files or submits under applicable securities laws andregulations is recorded, processed, summarized, and reported within the timeperiods specified thereby.

 

The Company does notexpect that its disclosure controls and procedures will prevent all error andall fraud, if any. A control procedure, no matter how well conceived andoperated, can provide only reasonable, not absolute, assurance that theobjectives of the control procedure are met. Because of the inherentlimitations in all control procedures, no evaluation of controls can provideabsolute assurance that all control issues and instances of fraud, if any,within the Company have been detected. These inherent limitations include therealities that judgments in decision-making can be faulty, and that breakdownscan occur because of simple errors or mistakes. Additionally, controls can becircumvented by the individual acts of some persons, by collusion of two ormore people, or by management override of the control. The Company consideredthese limitations during the development of its disclosure controls andprocedures and will continually re-evaluate them to ensure they providereasonable assurance that such controls and procedures are effective.

 

### **Internal Control Over FinancialReporting**

###  

***Management’sAnnual Report on Internal Control Over Financial Reporting***

 

Our management is responsible for establishing and maintaining adequateinternal control over financial reporting, as such term is defined in Rules 13a-15(f) and15d-15(f) under the U.S. Securities Exchange Act of 1934.

 

Our internal controlover financial reporting includes those policies and procedures that: (1) pertainto the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of our assets; (2) providereasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally acceptedaccounting principles, and that our receipts and expenditures are being madeonly in accordance with authorizations of our management and directors; and (3) providereasonable assurance regarding prevention or timely detection of unauthorizedacquisition, use or disposition of our assets that could have a material effecton the financial statements.

 

Because of its inherent limitations, internal control over financialreporting may not prevent or detect misstatements. Also, projections of anyevaluation of effectiveness to future periods are subject to the risk thatcontrols may become inadequate because of changes in conditions, or that thedegree of compliance with the policies or procedures may deteriorate.

 

Under the supervision and with the participation of our Chief ExecutiveOfficer and our Chief Financial Officer, management conducted an evaluation ofthe effectiveness of our internal control over financial reporting, as of December 31,2007, based on the framework set forth in Internal Control-Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission(“COSO”). Based on its evaluation under this framework, management concludedthat our internal control over financial reporting was effective as of thatdate.

 

25

----

 

KPMG LLP (“KPMG”), an independent registered public accounting firm, whoaudited and reported on our financial statements has issued an attestationreport on the effectiveness of our internal control over financial reporting asof December 31, 2007.  Theattestation report is included in our audited financial statements that arefiled on www.sedar.com and on www.sec.gov and are incorporated herein byreference.

 

***Changes in Internal Controls OverFinancial Reporting***

 

There have been no changes in our internal controls over financialreporting during 2007 that have materially affected, or are reasonably likelyto materially affect, our internal controls over financial reporting.  The design of any system of controls andprocedures is based in part upon certain assumptions about the likelihood ofcertain events. There can be no assurance that any design will succeed inachieving its stated goals under all potential future conditions, regardless ofhow remote.

 

## ***LEGAL PROCEEDINGS***

## *** ***

Sierra Wireless America, Inc., as successor to AirPrime, Inc.,was named as a defendant in a class action complaint, filed in the U.S.District Court for the Central District of California, for alleged violationsof federal and state securities laws allegedly occurring prior to the timeAirPrime, Inc. was acquired by the Company. The settlement of thislitigation was approved by the court in February 2007 and the appealperiod, in respect of such decision, has expired.  The settlement was recorded in the first quarterof 2007 and had no net effect on our income statement.

 

The Companyand certain of its current and former officers were named as defendants inseveral class action complaints for alleged violations of federal securitieslaws which were consolidated for pre-trial purposes in the U.S. District Courtfor the Southern District of New York. The defendants filed a motion to dismiss on April 7, 2006 and on May 15,2007 the court dismissed the complaints in their entirety.  The appeal period, in respect of suchdecision, has expired.  This litigationis concluded. During 2005, we determined that it wasprobable that the legal costs related to these complaints might exceed ourpolicy retention amount of $1.0 million. Accordingly, we expensed $1.0 million in 2005.  Our legal costs totalled approximately $0.4million, therefore we recorded $0.6 million as a recovery of administrationcosts in the second quarter of 2007.

 

We are engagedin other legal actions in the ordinary course of business and believe that theultimate outcome of these actions will not have a material adverse effect onour operating results, liquidity or financial position.

 

## *** OFF-BALANCE SHEET ARRANGEMENTS***

## *** ***

During 2007, we had obtained letters ofcredit to ensure the performance of a third party in accordance with specifiedterms and conditions. At December 31, 2007, we had $6.2 millionoutstanding under these letters of credit. Our obligations under these financial instruments expired in February 2008and have been replaced by a standby irrevocable letter of credit.

 

As of December 31, 2007, we did nothave any off-balance sheet finance or special purpose entities.

 

26

----

 

## ***CONTRACTUAL OBLIGATIONS***

## *** ***

The followingtable specifies our known contractual obligations as of December 31, 2007:

 
| ** **                                             | ** ** | **Payments due by period** | ** ** |
|--------------------------------------------------------|------------|-------------------------------------------|------------|
| **Contractual Obligations **                 | ** ** | **Total**                                 | ** ** | **Less than  1 year** | ** ** | **1-3 years** | ** ** | **3-5 years** | ** ** | **More  than 5  years** | ** ** |
| **(in thousands of U.S. dollars)** |       |                                      |       |   |   |   |   |   |   |   |   |
|                                                   |       |                                      |       |   |   |   |   |   |   |   |   |
| Operating  lease obligations                           |       | $                                         | 11,089     |   | 3,639 |   | 5,842 |   | 1,608 |   | — |   |
| Purchase  commitments(1)                               |       | 166,067                                   |       | 166,067 |   | — |   | — |   | — |   |
| Long-term  liabilities(2)                              |       | 858                                       |       | 277 |   | 407 |   | 174 |   | — |   |
| Total                                                  |       | $                                         | 178,014    |   | $ | 169,983 |   | $ | 6,249 |   | $ | 1,782 |   | $ | — |   |
|                                                        |            |                                           |            |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

----

Notes

(1)          Purchase commitments represent obligationswith certain contract manufacturers to buy a minimum amount of designatedproducts between January 2008 and March 2008.  In certain of these arrangements, we may berequired to acquire and pay for such products up to the prescribed minimum orforecasted purchases.

(2)          Long-term liabilities relate torestructurings from prior years.

 

## ***QUORUM EXEMPTION***

## *** ***

The rules andregulations of the Nasdaq Global Market applicable to the Company require eachlisted issuer to provide that a quorum for its shareholders’ meetings be atleast 33 1/3 percent of the issuer’s outstanding shares.  The Company has been granted an exemptionfrom this requirement because it is contrary to generally accepted businesspractices in Canada, the Company’s country of domicile.  The Company has had the benefit of thisexemption in the current and prior year.

 

In determiningwhether a requirement is contrary to generally accepted business practices, theNasdaq rules generally look to the requirements of the primary market inthe issuer’s country of domicile.  The rules andpolicies of the Toronto Stock Exchange, the primary market in Canada, do notcontain quorum requirements, and the *Canada BusinessCorporations Act*, the Corporation’s governing statute, defers to thequorum requirements contained in an issuer’s By-laws.  Under the Company’s By-laws, a quorum for ameeting of the Company’s shareholders is two persons present in person, eachbeing a shareholder entitled to vote thereat or a duly appointed proxyholder orrepresentative for a shareholder so entitled.

 

## ***REGISTRAR AND TRANSFERAGENT***

## *** ***

The Registrar andTransfer Agent for the common shares in Canada is Computershare InvestorServices Inc., 510 Burrard Street, Vancouver, British Columbia, and in theUnited States is Computershare Trust Company, N.A., 350 Indiana Street, Suite 800,Golden, Colorado.  These offices and theprincipal offices of Computershare Investor Services Inc. in the City ofToronto maintain the register of common shares and can effect transfers andmake deliveries of certificates for common shares.

 

## ***MATERIAL CONTRACTS***

## *** ***

On March 6,2007, we announced a definitive agreement to acquire 100 percent of theoutstanding securities of AirLink Communications, Inc. (“AirLink”), aprivately held supplier of high value fixed, portable and mobile wireless datasolutions for industrial and public safety applications located in Hayward,California. The acquisition was completed on May 25, 2007 for a purchaseprice of $31.0 million, including $12.0 million of cash consideration, subjectto customary closing adjustments, and approximately 1.3 million shares ofSierra Wireless issued to the shareholders of AirLink.

 

27

----

 

There are no othermaterial contracts entered into outside of the Company’s ordinary course ofbusiness.

 

## ***EXPERTS***

## *** ***

KPMG LLP, independentchartered accountants, have audited our consolidated financial statements as atDecember 31, 2007 and 2006, and for each of the years in the three yearperiod ended December 31, 2007 as set forth in their reports.  KPMG LLP has advised the Company that theyare independent with respect to the Company within the meaning of the Rules ofProfessional Conduct of the Institute of Chartered Accountants of BritishColumbia.

 

## ***ADDITIONAL INFORMATION***

## *** ***

Additional information relating to theCompany:

 

(a)                                  may be found on SEDAR atwww.sedar.com and on EDGAR at ww.sec.gov;

 

(b)                                 including directors’ andofficers’ remuneration and indebtedness, principal holders of the Company’ssecurities and securities authorized for issuance under equity compensationplans, is contained in the Company’s Information Circular for its most recentannual meeting of shareholders; and

 

(c)                                  is provided in the Company’saudited financial statements and management discussion and analysis for theyears ended December 31, 2007 and 2006 and is incorporated herein byreference and form an integral part of this Annual Information Form.

 

28

----