U.S. SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 40-F

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ANNUAL REPORT PURSUANT TO
SECTION 13(a) OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2003
Commission File No.: 0-30718

SIERRA WIRELESS, INC.(Exact name of Registrant as specified in its charter)

Canada

(Jurisdiction of incorporation or organization)

13811 Wireless Way, Richmond
British Columbia, Canada V6V 3A4
(604) 231-1100(Address and telephone number of principal executive offices)

Davis Wright Tremaine LLP
1300 SW Fifth Avenue, 24th Floor
Portland, OR 97201(Agent for service in the United States)

Securities
registered or to be registered pursuant to Section 12(b) of the Act:None

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

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Common Shares(Title of Class)

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

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

Indicate
by check mark the information filed with this Form:

[X]Annual Information Form[X]Audited Annual Financial Statements

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

24,822,071 Common Shares without par value as at December 31, 2003

Indicate
by check mark whether the Registrant, by filing the information contained in this Form, is also thereby furnishing the information to the Commission pursuant to
Rule 12g3-2(b) under theSecurities Exchange Act of 1934, If "yes", is marked, indicate the filing number assigned to the Registrant
in connection with such Rule.[    ]Yes 82-[X]No

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

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INCORPORATION BY REFERENCE

The Registrant's Annual Information Form and the Registrant's financial statements for the year ended December 31, 2003 are attached hereto as
Appendix A and Appendix B, respectively, and are incorporated by reference herein.

UNDERTAKING

The Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish
promptly, when requested to do so by the Commission staff, 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-F arises; or transactions in said securities.

SIGNATURES

Pursuant to the requirements of theSecurities Exchange Act of 1934, as amended, the Registrant certifies that it
meets all of the requirements for filing on Form 40-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

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

Date:
May 14, 2004

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APPENDIX A    ANNUAL INFORMATION FORM

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LOGO

Annual Information Form
May 14, 2004

TABLE OF CONTENTS

|                                                                                |                                                | Page
|------------------------------------------------------------------------------- | ---------------------------------------------- | ----
|FORWARD-LOOKING STATEMENTS                                                      |                                                | 2   
|CORPORATE STRUCTURE                                                             |                                                | 2   
|GENERAL DEVELOPMENT OF THE BUSINESS                                             |                                                | 3   
|                                                                                | General                                        |     
|                                                                                | Significant Acquisitions and Dispositions      |     
|                                                                                | Industry Background and Future Trends          |     
|NARRATIVE DESCRIPTION OF THE BUSINESS                                           |                                                | 7   
|                                                                                | Our Solution                                   |     
|                                                                                | Our Products                                   |     
|                                                                                | Product Development                            |     
|                                                                                | Distribution                                   |     
|                                                                                | Marketing                                      |     
|                                                                                | Manufacturing                                  |     
|                                                                                | Employees                                      |     
|                                                                                | Competition                                    |     
|                                                                                | Intellectual Property                          |     
|                                                                                | Governmental Regulation                        |     
|                                                                                | Additional Information Concerning Our Business |     
|SELECTED CONSOLIDATED FINANCIAL INFORMATION                                     |                                                | 21  
|                                                                                | Selected Financial Data                        |     
|                                                                                | Dividend Policy                                |     
|MANAGEMENT'S DISCUSSION AND ANALYSIS                                            |                                                | 23  
|MARKET FOR SECURITIES                                                           |                                                | 23  
|DIRECTORS AND OFFICERS                                                          |                                                | 23  
|                                                                                | Directors                                      |     
|                                                                                | Executive Officers                             |     
|ADDITIONAL INFORMATION                                                          |                                                | 27  
|                                                                                | Documents Provided Upon Request                |     
|                                                                                | Documents Incorporated by Reference            |     
|CERTIFICATIONS                                                                  |                                                | 30  
|MANAGEMENT'S STATEMENT OF RESPONSIBILITIES AND AUDITORS' REPORT TO SHAREHOLDERS |                                                | 35  
|CONSOLIDATED FINANCIAL STATEMENTS                                               |                                                | 36  

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FORWARD-LOOKING STATEMENTS

Certain statements contained in this Annual Information Form, or incorporated by reference herein, that are not based on historical facts are "forward-looking
statements" and are prospective. These statements appear in a number of different places in this Annual Information Form and can be identified by words such as "estimates", "projects", "expects",
"intends", "believes", "plans", or their negatives or other comparable words. Forward-looking statements include statements regarding the outlook for our future operations, plans and timing for the
introduction or enhancement of our services and products, statements about future market conditions, supply and demand conditions, channel inventory and sell through, revenue, gross margin, operating
expenses, profits, forecasts of future costs and expenditures, the outcome of legal proceedings, and other expectations, intentions and plans that are not historical fact. Such forward-looking
statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Many
of these factors are beyond the control of the Company. Consequently, all forward-looking statements made in this Annual Information Form or the documents incorporated by reference herein are
qualified by this cautionary statement and there can be no assurance that actual results or developments anticipated by the Company will be realized.

CORPORATE STRUCTURE

Unless the context otherwise indicates, references to "we", "our", "us", "the Company" or "Sierra Wireless" in this Annual Information Form means Sierra
Wireless, Inc. and its subsidiaries.

Sierra
Wireless was incorporated under theCanada Business Corporations Acton May 31, 1993. The Articles of Sierra Wireless were
amended by a Certificate of Amendment issued March 29, 1999 to remove the private company provisions and restrictions on share transfer. The Articles of the Company were further amended by
Certificates of Amendment issued May 13, 1999 and May 14, 1999 to: (i) re-designate and change all existing common shares in the capital of the Company to new common
shares in the capital of the Company (the "Common Shares"); (ii) change the rights attached to all preference shares in the capital of the Company (the "Preference Shares") and to remove each
existing series of Preference Shares; and (iii) consolidate the Common Shares on the basis of one post-consolidation Common Share for 1.5 pre-consolidation Common
Shares.

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

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

|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                                    

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GENERAL DEVELOPMENT OF THE BUSINESS

General

We provide highly differentiated wireless solutions worldwide. We develop and market a broad range of products that include wireless data modems for portable
computers, embedded modules for original equipment manufacturers, or OEMs, rugged vehicle-mounted modems and mobile phones. Our products permit users to access wireless data and voice networks using
notebook computers, personal digital assistants, or PDAs, vehicle-based systems and mobile phones.

Wireless
data communications is an expanding market positioned at the convergence of wireless communications, portable computing and the Internet, each of which we believe represents a
growing market. Our products are based on open standards, including the Internet protocol, and operate on the networks of major wireless communications service providers.

Our
products are primarily used by businesses and government organizations to enable their employees to access a wide range of wireless data applications including the Internet,
e-mail, messaging, corporate intranet access, remote database inquiry and computer-aided dispatch. We sell our products primarily through indirect channels, including wireless operators,
resellers and OEMs.

We
sell our products worldwide, with emphasis on the North American, European and Asian markets.

Major Events in the Development of Business

Fiscal 2003



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Fiscal 2002



Fiscal 2001



Significant Acquisitions and Dispositions

On August 12, 2003, we acquired 100 percent of the outstanding securities of AirPrime, Inc., a privately-held supplier of
high-speed CDMA wireless products located in Carlsbad, California. The acquisition has enhanced our position as a market leader with a broad product line, innovative engineering, blue chip
customers, global channels and a strong balance sheet. We subsequently changed the name of AirPrime to Sierra Wireless America, Inc. The results of AirPrime's operations have been included in
our consolidated financial statements since that date.

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The
aggregate purchase price was $23,825,000, including common shares valued at $22,377,000 and costs related to the acquisition of $1,448,000. The fair value of the 3,708,521 Common
Shares issued was determined based on the average market price of Sierra Wireless's Common Shares over the two-day period before and after June 16, 2003, which was the date the
terms of the acquisition were agreed to and announced.

We
pursue acquisition opportunities based on a number of criteria. These include extending our product line, adding value by providing a more complete solution, acquiring emerging
wireless communications technologies, and accelerating our entry into targeted geographic markets or market segments. Any future acquisitions will likely expand our presence internationally or enhance
our ability to deliver products for the emerging wireless data technologies.

Industry Background and Future Trends

Wireless Data Growth

The wireless communications industry provides fixed and mobile voice and data communications. According to the Cellular Telecommunications Industry Association,
the wireless data market continues to experience rapid growth. Research firm Gartner forecasts that by 2007, mobile data connections in the US will reach an all time high of 129.6 million
connections from 40.2 million in 2003. Newer third generation, or 3G systems such as CDMA 1xEV-DO, Enhanced Data over GPRS Evolution (EDGE) and Universal Mobile
Telecommunications System (UMTS) will support much of this growth.

To
date, demand for wireless data has come primarily from corporations, public organizations and individuals seeking to improve customer service and productivity. Increased coverage,
significant technological improvements to wireless data networks, devices and software, and price reductions for data communications have also contributed to growth in the wireless data communications
industry. The ability to meet the demand for anytime, anyplace communications is made possible by the convergence of trends in portable computing, the growth of the Internet, and wireless
communications. Gartner forecasts that by 2007, 65% of Fortune 2000 companies will support wireless wide-area wireless data access.

Portable Computing.Portable computers are now mainstream. In addition, handheld computers or PDAs are increasing in
popularity. These include devices based on the Palm and Microsoft Windows CE platforms. Mobile PCs and PDAs are forecast by Gartner Dataquest to be the leading devices accessing wireless data
in North America by 2007.

The Internet.The Internet has become an indispensable tool for many business professionals, and the volume of Internet
traffic has grown rapidly as new applications and e-commerce have become widely adopted. Wireline telecommunications carriers continue to make significant investments in Internet
protocol-based networks to handle the growing volume of data traffic.

Wireless Communications.While wireline communications networks were historically dominated by voice traffic, data now
comprises more than half of the traffic on these networks. A similar evolution is now occurring on wireless networks as wireless service providers address the growing demand for growing data
communications with additional technical and commercial offerings.

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Existing and Emerging Cellular and PCS Technology Standards

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

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

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

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

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

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

Third
generation, or 3G, systems, have been developed and begun to launch, to eventually replace second generation and 2.5G digital cellular systems. They combine the newer services of
2.5G with voice services, enabling future multimedia services. The public discussion on 2.5G and third generation systems and the announcements of technology trials and network launches have broadened
awareness of the possibilities of wireless data. In December 2003, AT&T Wireless launched its EDGE network. In January 2004, Verizon Wireless announced a $1.0 billion,
two-year national rollout of its CDMA 1xEV-DO service, which expands this service from the two trial cities of San Diego and Washington D.C. According to the CDMA
Development Group, this is part of a group of 10 CDMA 1xEV-DO commercial networks across Asia, the Americas and Europe, with at least three more scheduled to be deployed in 2004. We expect
that future deployment of commercial service will further increase this awareness and expand the market for wireless data products and services.

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NARRATIVE DESCRIPTION OF THE BUSINESS

Our Solution

We provide highly differentiated wireless solutions worldwide. We develop and market a broad range of products that include wireless data modems for portable
computers, embedded modules for wireless applications of OEMs, rugged vehicle-mounted modems and mobile phones. Our products permit users to access a wireless data communications network using
notebook computers, PDAs, vehicle-based systems or mobile phones.

Our Products

Our current product line of wireless solutions includes wide area wireless PC cards, embedded modules that are built into OEMs' computers and other devices,
vehicle-mounted modems and enabling software. In addition, we have a number of new products under development, including our recently announced Voq Smartphone product line.

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Wireless Network PC Cards and Embedded Modules

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

|Product Type           |  | Product Class                           |  | Description                                                                                                                                                                                                                                                                                                                     |  | Products            |  | Compatible Network/Territory                       
|---------------------- |  | --------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------- |  | ---------------------------------------------------
|Wireless Network Cards |  | AirCard 700 Series                      |  | Wide-area wireless network interface cards, or NICs, providing local area network, or LAN-like connectivity for computer users on the GSM/GPRS networks. Using these modems, mobile computer users have full access to e-mail,
 intranet, corporate applications and full Web browsing where GPRS network service is available. |  | AirCard 750         |  | Tri-band GSM/GPRS world-wide.                      
|                       |  |                                        
|                       |  | AirCard 500 Series                      |  | Wide-area wireless NICs, providing LAN-like connectivity for computer users on the CDMA2000 1X networks.                                                                                                                                                                                                                        |  | AirCard 550         |  | Single-band for Sprint PCS CDMA2000 1X network.    
|                       |  |                                         |  | Compatible with CDMA 1S95-A and CDMA 1S95-B networks.                                                                                                                                                                                                                                                                           |  | AirCard 555         |  | Dual-band North American cellular and PCS networks.
|                       |  |                                         |  |                                                                                                                                                                                                                                                                                                                                 |  |                     |  |                                                    
|                       |  |                                         |  |                                                                                                                                                                                                                                                                                                                                 |  | AirCard 580         |  | Dual-band CDMA2000 1X EV-DO networks.              
|                       |  |                                        
|                       |  | PC 3200 Series and
PC 3300 Series       |  | Wide-area wireless modem cards, providing LAN-like connectivity for computer users on the CDMA network.                                                                                                                                                                                                                         |  | PC 3200             |  | Single-band for Sprint PCS CDMA2000 1X network.    
|                       |  |                                         |  | Positioned as "value priced" alternatives to the AirCard 500 Series and sold under private and co-branded labels to channel or wireless operators.                                                                                                                                                                              |  | PC 3220             |  | Dual-band cellular and PCS in North America.       
|                       |  |                                         |  |                                                                                                                                                                                                                                                                                                                                 |  |                     |  |                                                    
|                       |  |                                         |  |                                                                                                                                                                                                                                                                                                                                 |  | PC 3300             |  | Single band for Sprint PCS CDMA2000 1X network.    
|                       |  |                                        
|                       |  | PC 5200 Series                          |  | Wide-area wireless modem card, providing users with access at broadband speeds from network computers to corporate applications, e-mail and the Internet.                                                                                                                                                                       |  | PC 5220             |  | Dual-band CDMA2000 1X EV-DO networks.              
|                       |  |                                        
|                       |  | AirCard 300 Series                      |  | First wireless NIC offering a true extension of the desktop or LAN work environment while on the road. Compatible with all major PC and handheld operating systems.                                                                                                                                                             |  | AirCard 300         |  | CDPD networks.                                     
|                      
|Embedded Modules       |  | SB Embedded Modules
EM Embedded Modules |  | Embedded modules deliver wireless data and voice connectivity that OEMs integrate into products ranging from handheld computers, PDAs, laptops, Smartphones and mobile terminals, to fixed terminals including
industrial meters, and monitoring equipment.                                                                     |  | SB555
EM3205
EM3420 |  | CDMA2000 1X.
CDMA2000 1X.
CDMA2000 1X.             
|                      

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Sierra Wireless MP Modem Product Line

The Sierra Wireless MP product line consists of a group of rugged, high powered, vehicle-mounted modems, including the MP200 GPS, MP750 GPS and MP555 GPS.
Generally, these products are mounted in a vehicle and are physically connected to a computer or data terminal. The Sierra Wireless MP product line is designed to operate in harsh conditions,
including extremes of temperature, humidity, vibration and vehicle ignition noise. All three of our MP products come with fully integrated global positioning system (or GPS) capability as a standard
feature. The Sierra Wireless MP555 GPS is our newest addition to the MP product line. The MP555 GPS operates on CDMA2000 1X networks and is designed to withstand the same harsh conditions as its MP
predecessors. The MP750 GPS was also recently added to the MP product line. The MP750 GPS has capabilities nearly identical to that of the MP555 GPS and is designed to operate on GSM/GPRS networks
worldwide. Both the MP555 GPS and MP750 GPS commenced commercial shipments in 2003. These two products are intended to provide our existing MP200 GPS customers with a migration path to the latest
wireless network technologies. The MP200 GPS commands a strong share of the market for rugged modems that support CDPD technology and is still offered as part of our MP product line. Common
applications for Sierra Wireless MP products include:



Enabling Software

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



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Product Revenue

Our revenue by product for the two year periods ended December 31, 2003 is as follows:

|                   |         | Years ended December 31, |   
|------------------ | ------- | ------------------------ | --
|
|Revenue by product |         |                          |   
|                   | PC Card |                          | 62
|                   | OEM     |                          | 15
|                   | Mobile  |                          | 13
|                   | Other   |                          | 10
|                   |         |                          |   
|                   |         | 100                      | % 
|                   |         |                          |   

Future Products

We continually test and develop new products and technologies that will allow us to take advantage of the expanding and changing wireless market.

Our
new Voq-branded Smartphones are based on the recently released 2003 edition of Microsoft Windows Mobile software for Smartphones and features both a familiar
phone keypad and a unique flip-open QWERTY thumbpad. The Voq product line also includes other hardware and software innovations for easy information navigation and retrieval, text entry
and e-mail that is automatically updated. The first Voq product lines operate on global GSM/GPRS mobile networks and we expect to begin commercial shipments in selected countries in the
second quarter of 2004. The Voq product line is entering the worldwide Smartphone market, forecasted by Gartner Dataquest and In-Stat/MDR to experience significant growth over the next few
years.

The
following emerging wireless standards are areas of significant new product development interest for us:



Product Development

We have built a reputation in the wireless data industry for creating state-of-the-art, high-quality products
within aggressive time-frames. Our development team of approximately 140 staff, located in Richmond, BC and in Carlsbad, CA, are skilled in the areas of radio frequency, hardware, embedded
software, windows software and mechanical design. Combined, this team has several hundred years of experience in the design of small form factor wireless devices, particularly for data applications.
Our product development team combines leaders with extensive experience in their fields, with younger graduates from leading universities.

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

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

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

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

Distribution

Our products are used by a variety of end-users, ranging from sales people and mobile executives, to police officers and utility workers. We have
built a distribution channel that responds to the unique purchasing and usage requirements of our customer base. Historically, a substantial majority of our sales have come from North American
markets. As our wireless technology platforms have diversified, we have built sales and distribution teams to focus on developing our business outside of North America. Currently, we have dedicated
sales and distribution teams for the European, Asia-Pacific and North American regions. Our approach to distribution takes advantage of our existing relationships with wireless operators,
resellers and OEMs 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 often resellers for us, purchasing our products and then
reselling them to end-user customers. Second, the wireless operator sales team often works with our sales team to jointly sell wireless solutions and our equipment to the
end-user customer. The wireless operator channel provides us with extended customer reach, while the operators are able to leverage our wireless data expertise to help sell their products
and services. We have invested a great deal of time and resources in cultivating our relationships with wireless operators and view these relationships as a critical success factor and competitive
differentiator.

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Resellers

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

Resellers
generally combine our modems with other elements of an overall solution, such as computer hardware and application software, and deliver a complete solution to the
end-user customer. Resellers include computer resellers, wide area network resellers, application developers, system integrators, wireless Internet service providers, wireless application
service providers and big box retailers. This channel provides us with direct access to markets and users that are often not served by the large wireless operators.

Original Equipment Manufacturers

Original equipment manufacturers represent companies that integrate our modem technology into devices they manufacture and sell to end-user customers
through their own direct sales force and indirect distribution channels. Our modems are integrated into a range of devices, such as PDAs, Smartphones and notebook computers.

Direct Sales

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

Customer Support

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

Marketing

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

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Strategic Marketing/Marketing Communications

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



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

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

Manufacturing

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



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

Our
products are currently manufactured by Flextronics, Solectron and Creation Technologies. We use Flextronics as our primary contract manufacturer to provide an
end-to-end supply chain solution. This includes design support, procurement, low cost manufacturing and repair in China and global fulfillment services from Memphis, Tennessee.
By using its fully integrated supply chain services, we expect to reduce product costs, improve alignment with our increasingly international customer base and achieve increased operating efficiencies
and scalability. We expect to continue to have products from the AirPrime acquisition built at Solectron facilities in Mexico and to continue this relationship on selected other products. We expect
that Creation Technologies in Canada will continue to build our vehicle-mounted modems.

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Employees

As of December 31, 2003 we had a total of 227 full time employees, 148 of whom are at our head office in Richmond, B.C., with the balance being located
across the United States, Canada and the United Kingdom. Of the 227 employees, 126 are involved in product development, 21 are involved in manufacturing, 37 are sales personnel, 19 are
marketing personnel, and 24 are in finance and administration. Employees have access to corporate funded ongoing training and professional development opportunities, both
on-the-job and through outside educational programs. Cash compensation and our employee stock option plan are complemented by internal recognition programs and career
advancement opportunities. We believe our relationships with our employees are good.

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

Competition

Wireless
data technologies are converging toward standardizing on a few key cellular technologies. Cellular handsets are becoming 'smart' with increased data functionalities and PDAs are
becoming wireless through the integration of embedded wireless modules. With the advent of new cellular technologies such as CDMA 1xEV-DO, GSM/GPRS, EDGE and UMTS, several new competitors
are emerging.

CDPD:Sierra Wireless is the market leader in this space and has competition from companies, including Novatel Wireless and
Enfora. Products offered include PC cards, mobile in-vehicle solutions, handheld adapters, and embedded modules for consumer, enterprise/mobile executive, public safety, utility, and OEM
market segments. The CDPD market is a mature market space and the threat of new competitors entering is low.

CDMA:Sierra Wireless is a market leader in CDMA PC Cards, embedded modules and mobile in-vehicle solutions. CDMA
competition, both announced and actual, includes Novatel Wireless, Flextronics (formerly GTRAN), Motorola, Wavecom, Kyocera Wireless, AnyData, and BellWave. Sierra Wireless maintains its market
leadership position in mobile in-vehicle solutions against competitors such as Bluetree Wireless and Enfora.

GSM/GPRS:Sierra Wireless is a market leader in GSM/GPRS PC cards. In this technology, we face competition from Option
International, Novatel Wireless, Nokia and SonyEricsson. With the introduction of the Voq professional phone in the second quarter of 2004, Sierra Wireless expects to compete with Smartphone and
wireless PDA suppliers such as Motorola, Nokia, PalmOne, RIM, Samsung, Siemens and SonyEricsson, among others.

We
believe that by focusing on business and government customers and by providing products that are superior in quality, functionality, and value, together with excellent customer
service and superior distribution partner relationships and programs, we will be successful in the long term.

Intellectual Property

We protect our intellectual property through a combination of patent protection, copyright, trademarks, trade secrets, licenses, non-disclosure
agreements and contractual provisions. We generally enter into a non-disclosure and confidentiality agreement with our employees, consultants and third parties that have access to our
proprietary technology.

We
currently hold 32 United States patents and 34 international patents. Several more patent applications are pending. When we consider it to be advantageous, we utilize our
intellectual property portfolio and access the intellectual property of third parties by entering into commercial licenses and cross-licenses.

14

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Governmental Regulation

Our products are subject to certain mandatory regulatory approvals in the United States, Canada and other countries in which we operate. In the
United States, the Federal Communications Commission regulates many aspects of communications devices, including radiation of electromagnetic energy, biological safety and rules for devices to
be connected to the telephone network. In Canada, similar regulations are administered by the Ministry of Industry, through Industry Canada.

Modems
must be approved under these regulations by either the Federal Communications Commission or Industry Canada prior to these products being offered for sale. We have obtained all
necessary Federal Communications Commission, Industry Canada and other required regulatory approvals for the products we currently sell.

Additional Information Concerning Our Business

Sierra Wireless's business is not subject to significant seasonal fluctuations.

Sierra
Wireless's operations do not have a significant impact upon the environment. We have not made, and are not required to make, any significant capital expenditures to comply with
environmental regulations.

Risk Factors

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

We have incurred net losses in the past and may not sustain profitability.

While we had earnings from operations for the year ended December 31, 2003, we have incurred a loss from operations in each of the previous three fiscal
years. As of December 31, 2003, our accumulated deficit was approximately $71.3 million. While we had net earnings of $2.3 million for the year ended December 31, 2003, our
ability to achieve and maintain profitability will depend on, among other things, the continued sales of our products and the successful development and commercialization of new products. We cannot
predict if the current profitability will be sustainable on a quarterly or an annual basis. As a result, our share price may decline.

If
the current profitability does not continue, we may need to raise additional capital in the future. Additional financing may not be available, and even if available, may not be on
acceptable terms. We may seek to raise additional capital through an offering of common shares, preference shares or debt, which may result in dilution, and/or the issuance of securities with rights
senior to the rights, of the holders of common shares.

Our revenues will decrease if demand for our current products declines and we are unable to launch successful new products.

If the markets in which we compete fail to grow, or grow more slowly than we currently anticipate, or if we are unable to establish markets for our new products,
it would significantly harm our business, results of operations and financial condition. In addition, demand for one or all of our current products could decline as a result of competition,
technological change or other factors.

15

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If we are unable to design and develop new products that gain sufficient commercial acceptance, we may be unable to maintain our market share or to recover our
research and development expenses and our revenues could decline.

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



A
failure by us, or our suppliers, in any of these areas, or a failure of new products, such as Voq, to obtain commercial acceptance, could mean we receive less revenue than we
anticipate and we are unable to recover our research and development expenses, and could result in a decrease in the market price for our shares.

The loss of any of our material customers could adversely affect our revenue and profitability, and, therefore, shareholder value.

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

We may not be able to continue to design products that meet our customer needs and, as a result, our revenue and profitability may decrease.

We develop products to meet our customers' requirements, but, particularly with original equipment manufacturers, current design wins do not guarantee future
design wins. If we are unable or choose not to meet our customers' future needs, we may not win their future business and our revenue and profitability may decrease.

We do not expect to have significant long term customer contracts and our revenues will be negatively impacted if customers do not continue to order our products
under purchase orders.

In late 1999 and 2000, we entered into significant supply contracts with AT&T Wireless, Sprint PCS and Verizon Wireless. We have substantially completed volume
shipments on all three contracts during the last quarter of 2003. We are now relying on purchase orders with these customers, and these customers, like our other customers, will be under no
contractual obligation to purchase our products. If they do not make such purchases, our revenue and share price may decline.

We may not be able to sustain our current gross margins and, as a result, our profitability may decrease.

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

16

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Our revenues and earnings may fluctuate from quarter to quarter, which could affect the market price of our common shares.

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



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

We depend on a few third parties to manufacture our products and supply key components. If they do not manufacture our products properly or cannot meet our needs
in a timely manner, we may be unable to fulfill our product delivery obligations, our costs may increase, and our revenue and margins could decrease.

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



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

We do not have fixed-term employment agreements with our key personnel and the loss of any key personnel may harm our ability to compete effectively.

None of our officers or other key employees has entered into a fixed-term employment agreement. Our success depends in large part on the abilities and
experience of our executive officers and other key employees. Competition for highly skilled management, technical, research and development and other key employees is intense in the wireless
communications industry. We may not be able to retain our current key employees or attract and retain additional key employees as needed. The loss of key employees could disrupt our operations and
impair our ability to compete effectively.

17

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We may have difficulty responding to changing technology, industry standards and customer preferences, which could cause us to be unable to recover our research
and development expenses and lose revenues.

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

Competition from bigger more established companies with greater resources may prevent us from increasing or maintaining our market share and could result in price
reductions and reduced revenues.

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

As the adoption of wireless data has continued to increase, we have experienced an increase in competition in our market. If wireless adoption continues to grow,
we may continue to experience increased competition from new entrants into the market, and from bigger and more established companies with greater resources, which could result in reduced revenues and
profits.

We depend on third parties to offer wireless data and voice communications services for our products to operate.

Our products can only be used over wireless data and voice networks operated by third parties. In addition, our future growth depends, in part, on the successful
deployment of next generation wireless data and voice networks by third parties for which we are developing products. If these network operators cease to offer effective and reliable service, or fail
to market their services effectively, sales of our products will decline and our revenues will decrease.

18

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Acquisitions of companies or technologies may result in disruptions to our business or may not achieve the anticipated benefits.

As part of our business strategy, we may acquire additional assets and businesses principally relating to or complementary to our current operations. Any other
acquisitions and/or mergers by us will be accompanied by the risks commonly encountered in acquisitions of companies. These risks include, among other things:



In
addition, geographic distances may make integration of businesses more difficult. We may not be successful in overcoming these risks or any other problems encountered in connection
with any acquisitions. If realized, these risks could reduce shareholder value.

Others could claim that we infringe on their intellectual property rights, which may result in substantial costs, diversion of resources and management attention
and harm to our reputation.

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



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

19

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If we are successful in the design and development of our new products, and there is commercial acceptance of our products, such as the Voq Smartphone, others may
claim that we infringe on their intellectual property rights, which may result in substantial costs, diversion of resources and management attention and harm our reputation.

Misappropriation of our intellectual property could place us at a competitive disadvantage.

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

Our
strategies to deter misappropriation could be inadequate due to the following risks:



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

As our business expands internationally we will be exposed to additional risks relating to international operations.

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



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

20

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Government regulation could result in increased costs and inability to sell our products.

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

Fluctuations in exchange rates between the United States dollar and the Canadian dollar may affect our operating results.

We are exposed to fluctuations in the exchange rate between the United States dollar and the Canadian dollar through our operations in Canada. To reduce
our risk because of currency fluctuations, we purchase inventory, other costs of sales items and many of our services in United States dollars. If the Canadian dollar rises relative to the
United States dollar, our operating results may be negatively impacted. To date, we have not entered into any foreign currency futures contracts as part of a hedging policy, but we have
purchased Canadian currency to cover our Canadian currency requirements for the next several fiscal quarters. We have entered into distribution agreements in Europe and the Asia-Pacific
region that are denominated primarily in United States dollars. We expect that as our business expands in Europe and the
Asia-Pacific region, we will also be exposed to additional foreign currency transactions and to the associated currency risk. To date, we have not entered into any futures contracts.

SELECTED CONSOLIDATED FINANCIAL INFORMATION

Selected Financial Data

We prepare our consolidated financial statements in United States dollars in accordance with both generally accepted accounting principles in the
United States (commonly called "U.S. GAAP") and generally accepted accounting principles in Canada (commonly called "Canadian GAAP"). The following selected financial information was
extracted from the more detailed consolidated financial statements and related notes prepared in accordance with U.S. GAAP in Sierra Wireless's 2003 Annual Report which is incorporated herein
by reference and should be read in conjunction with such financial statements. Unless otherwise specified, all monetary amounts are expressed in United States dollars.

21

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Results
of operations for the periods presented below are not necessarily indicative of results of our operations for future periods.

|                                                              |                                 | Years ended December 31,
|------------------------------------------------------------- | ------------------------------- | ------------------------
|
|
|Consolidated Statements of Operations:                        |                                 |                         
|Revenue                                                       |                                 | $                       
|Cost of goods sold                                            |                                 |                         
|                                                              |                                 |                         
|Gross margin                                                  |                                 |                         
|                                                              |                                 |                         
|Expenses:                                                     |                                 |                         
|                                                              | Sales and marketing             |                         
|                                                              | Research and development, net   |                         
|                                                              | Administration                  |                         
|                                                              | Restructuring and other charges |                         
|                                                              | Integration costs               |                         
|                                                              | Amortization                    |                         
|                                                              |                                 |                         
|                                                              |                                 |                         
|                                                              |                                 |                         
|Earnings (loss) from operations                               |                                 |                         
|Other income                                                  |                                 |                         
|                                                              |                                 |                         
|Earnings (loss) before income taxes                           |                                 |                         
|Income tax expense (recovery)                                 |                                 |                         
|                                                              |                                 |                         
|Net earnings (loss)                                           |                                 | $                       
|                                                              |                                 |                         
|Earnings (loss) per share:                                    |                                 |                         
|                                                              | Basic                           |                         
|                                                              |                                 |                         
|                                                              | Diluted                         |                         
|                                                              |                                 |                         
|Weighted average number of shares outstanding (in thousands): |                                 |                         
|                                                              | Basic                           |                         
|                                                              |                                 |                         
|                                                              | Diluted                         |                         
|                                                              |                                 |                         

|                                                         |  | December 31,
|-------------------------------------------------------- |  | ------------
|
|
|Consolidated Balance Sheet Data:                         |  |             
|Cash, including short and long-term investments          |  | $           
|Working capital                                          |  |             
|Total assets                                             |  |             
|Long-term debt including obligations under capital lease |  |             
|Total shareholders' equity                               |  |             

We
had no off-balance sheet items as of December 31, 2003 and December 31, 2002. Our contractual obligations are disclosed in our 2003 Annual Report on
pages 34 and 35 and in our Canadian GAAP Annual Report on pages 32 and 33.

22

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Dividend Policy

Since incorporation, we have not paid any dividends on our common shares. Our current intention is to reinvest earnings to finance the growth of our business. We
do not anticipate that we will pay any dividends on our common shares in the immediate or foreseeable future.

MANAGEMENT'S DISCUSSION AND ANALYSIS

Reference is made to Sierra Wireless's 2003 Annual Report at pages 4 to 17 and Sierra Wireless's 2003 Canadian GAAP Annual Report at pages 3
to 16 for Management's Discussion and Analysis of our financial condition and results of operations, and the financial statements set forth in our 2003 Annual Report and our 2003 Canadian GAAP
Annual Report, all of which are incorporated herein by reference.

MARKET FOR SECURITIES

Our common shares have been listed on The Toronto Stock Exchange in the Province of Ontario, Canada, since May 17, 1999, and currently trade under the
symbol "SW". Our common shares are co-listed on The Nasdaq National Market under the symbol "SWIR".

DIRECTORS AND OFFICERS

The tables set forth below list the directors and senior officers of the Company as at May 14, 2004, indicating their name, municipalities of residence,
their respective positions and offices held with the Company, the length of service and their principal occupations within the five preceding years.

Each
director is elected at our annual meeting of shareholders to serve until the next annual meeting or until a successor is elected or appointed, unless such director resigns or is
removed earlier. To the knowledge of Sierra Wireless, the directors and executive officers as a group, beneficially own, directly or indirectly, or exercise control or discretion over, 493,778 common
shares, (not including common shares issuable upon the exercise of stock options), representing as of May 14, 2004 approximately 2.0% of the issued and outstanding common shares.

Directors

|Name, Position and Municipality of Residence                                                       |  | Principal Occupation in the Preceding Five Years(1)                                                                                                                                |  | Director Since
|-------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------
|David B. SutcliffeChairman, Chief Executive Officer and Director
North Vancouver, British Columbia |  | Chairman and Chief Executive Officer of Sierra Wireless.                                                                                                                           |  | June 1995     
|Gregory D. Aasen(3)
Director
West Vancouver, British Columbia                                      |  | Chief Operating Officer of PMC-Sierra, Ltd., a wholly-owned subsidiary of PMC-Sierra, Inc.                                                                                         |  | December 1997 
|S. Jane Rowe(2)
Director
Toronto, Ontario                                                          |  | Senior Vice President, Global Risk Management Division of Scotiabank from 2002 to present; Managing Director and Co-Head of Scotia Merchant Capital Corporation from 1997 to 2002. |  | March 1998    

23

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|Name, Position and Municipality of Residence                         |  | Principal Occupation in the Preceding Five Years(1)                                                                                                                                                                                                                                                                                                                                                       |  | Director Since
|-------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------
|Paul G. Cataford(2)(4)
Director
Calgary, Alberta                     |  | President and Chief Executive
Officer of University Technologies International Inc. from April 2004 to present; Managing Partner of HorizonOne Asset Management from December 2002 to April 2004; Consultant from March 2002 to December 2002; Executive
Managing Director of BMO Nesbitt Burns Equity Partners from 2001 to 2002; Managing Director and President of BCE Capital Inc. from 1997 to 2001. |  | July 1998     
|Peter Ciceri(4)
Lead Independent Director
Whistler, British Columbia |  | Executive in residence at the Faculty of Commerce and Business Administration at the University of British Columbia from September 2001 to present; President of Rogers Telecom, Inc. from 2000 to May 2001; President and Managing
Director of Compaq Canada Ltd. and Vice-President Compaq Computer Corporation (US) from 1996 to 2000.                                                                 |  | February 2000 
|Nadir Mohamed(2)
Director
Toronto, Ontario                           |  | President, Chief Executive Officer and Director of Rogers Wireless Communications Inc. from 2001 to present; President and Chief Operating Officer of Rogers Wireless Communications Inc. from 2000 to 2001; Senior Vice-President, Marketing
and Sales of Telus Communications Inc. from 1999 to 2000; President and Chief Operating Officer of BC Tel Mobility from 1997 to 1999.                       |  | March 2003    
|Charles E. Levine(3)
Director
San Francisco, California              |  | Independent Outside Director of @Road, Somera Communications and Viisage Technology; President and Chief Operating Officer of Sprint PCS from 2000 to 2002; Chief Sales and Marketing Officer from 1997 to 2000.                                                                                                                                                                                          |  | May 2003      

---

Notes:

24

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Executive Officers

|Name, Position and Municipality of Residence                                                       |  | Principal Occupation in the Preceding Five Years(1)                                                                                                                                                                                                                                                                                                                                                                                                           |  | Length of Service
|-------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------
|                                                                                                   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |                  
|David B. SutcliffeChairman, Chief Executive Officer and Director
North Vancouver, British Columbia |  | Chairman and Chief Executive Officer of the Corporation since May 2001; President and Chief Executive Officer of the Corporation from May 1995 to May 2001.                                                                                                                                                                                                                                                                                                   |  | 9 years          
|David G. McLennanChief Financial Officer and Secretary
Vancouver, British Columbia                 |  | 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; Vice-President, Operations and Chief Financial Officer of Bell ExpressVu from February 1997 to November 1999.                                                                                                                |  |  (2)            
|Andrew S. G. HarriesSenior Vice-President, Marketing Vancouver, British Columbia                   |  | Senior Vice-President, Corporate Development of the Corporation from 2000 to 2003; Vice-President, Marketing of the Corporation from 1993 to February 2000.                                                                                                                                                                                                                                                                                                   |  | 11 years         
|Jason W. CohenourSenior Vice-President, Worldwide Sales
Semiahmoo, Washington                      |  | Senior Vice-President, Distribution of the Corporation from 2000 to 2003; Vice-President, Sales of the Corporation from 1996 to February 2000.                                                                                                                                                                                                                                                                                                                |  | 8 years          
|James B. KirkpatrickSenior Vice-President, Engineering
Carlsbad, California                        |  | 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; Vice-President of Wireless Technologies of
DENSO International America, Inc. from June 2000 to October 2000; various positions at DENSO International America, Inc. from 1997 to June 2000, including Senior Hardware Director, Hardware Director and Senior Hardware
Manager. |  | 1 year(3)        

25

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|Name, Position and Municipality of Residence                                            |  | Principal Occupation in the Preceding Five Years(1)                                                                                                        |  | Length of Service
|--------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------
|                                                                                        |  |                                                                                                                                                            |  |                  
|Bill G. DodsonVice-President, Manufacturing and Supply
West Vancouver, British Columbia |  | Vice-President, Global Operations of Gateway Computers from 2000 to 2002; Director of Operations of Toshiba America Information Systems from 1989 to 2000. |  | 2 years          

---

Notes:

Board Committees

Audit Committee

The Audit Committee is composed of Mr. Paul G. Cataford, Mr. Nadir Mohamed and Ms. S. Jane Rowe (Chair), all of whom are outside and
unrelated directors. The Board has determined that Mr. Nadir Mohamed meets the U.S. Securities and Exchange Commission criteria of an "audit committee financial expert".
Mr. Mohamed is a Chartered Accountant with extensive experience which includes serving as the President and Chief Executive Officer of Rogers Wireless Communications Inc. The Audit
Committee's responsibilities include the review and approval of the financial statements of the Corporation, the review of the overall scope and results of the audit and overseeing internal financial
controls of the Corporation. The Audit Committee approves, in advance, all auditing and non-audit services and fees to be provided by the independent auditors. The Audit Committee meets
with the Corporation's auditors without the presence of Management and discusses with the auditors all aspects of the Corporation's accounting policies and practices.

Human Resources Committee

The Human Resources Committee (formerly known as the Compensation Committee) is composed of Mr. Gregory D. Aasen and Mr. Charles E. Levine (Chair),
both of whom are outside and independent directors. In 2003, the Board of Directors approved a written charter for the Human Resources Committee which provides, among other things, that the Human
Resources Committee shall develop compensation policies to support the Corporation's growth and success, review and recommend annually to the Board of Directors compensation levels of all directors
and officers, including the Chief Executive Officer, and review and recommend annually to the Board of Directors performance objectives and goals for the Chief Executive Officer.

Governance and Nominating Committee

The Governance and Nominating Committee is composed of Mr. Paul G. Cataford and Mr. Peter Ciceri (Lead Independent Director), both of whom are
outside and unrelated directors. In 2003, the Board of Directors approved a written charter for the Governance and Nominating Committee which provides, among other things, that the Committee shall
ensure proper corporate governance in accordance with applicable guidelines and requirements. In addition, the Governance and Nominating Committee proposes nominees to the Board of Directors.

26

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Code of Conduct

We have adopted a Code of Conduct that formalizes and codifies existing policies and guidelines. The Code of Conduct applies to all of our directors, officers and
employees and is reviewed and approved by our Board of Directors annually. The Code of Conduct sets out our guiding principles and provides that we will act ethically and in compliance with legal
requirements in all jurisdictions where we operate. The Code of Conduct also incorporates our disclosure policy for communicating material information with the investment community and our
shareholders, and sets out our policies on conflicts of interest and insider trading or tipping, among other things.

Auditor Independence

Sierra Wireless's Audit Committee is satisfied with the independence of our auditor and that our independent auditor is free from conflicts of interest that could
impair its objectivity in conducting the audit of Sierra Wireless. The Audit Committee is required to approve all non-audit related services performed by our independent auditor, and our
auditor is not permitted to perform services for us prohibited for an independent auditor under applicable Canadian and United States regulations, including the Sarbanes-Oxley Act.

Fees

In the 2003 and 2002 fiscal years, the fees paid to the auditor were as follows:

|                   |  | 2003 |         | 2002
|------------------ |  | ---- | ------- | ----
|Audit Fees         |  | $    | 175,000 |     
|Audit-Related Fees |  |      | 287,000 |     
|Tax Fees           |  |      | 222,000 |     
|All Other Fees     |  |      | nil     |     

Audit-Related Fees

Audit-related fees for 2003 include fees related to our secondary public offering of 4,600,000 common shares completed in November 2003, our acquisition of
AirPrime completed in August 2003 and review of our quarterly financial statements. Audit-related fees in 2002 related primarily to fees for review of our quarterly financial statements.

ADDITIONAL INFORMATION

Documents Provided Upon Request

Sierra Wireless will provide to any person or company, upon request to the Secretary of the Company:



27

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Additional
information including directors' and officers' remuneration and indebtedness, options to purchase securities and interests of insiders in material transactions, if applicable,
is contained in Sierra Wireless's Information Circular dated March 24, 2004. Additional financial information is provided in Sierra Wireless's comparative financial statements for its most
recently completed financial year. A copy of such documents may be obtained upon request to the Secretary of the Company.

Documents Incorporated by Reference

The following documents of Sierra Wireless or excerpts therefrom, filed with various securities commissions or similar authorities in each of the provinces of
Canada, are specifically incorporated herein by reference and form an integral part of this Annual Information Form:



28

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29

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CERTIFICATION

I,
David B. Sutcliffe, certify that:

Date:
May 14, 2004

|/s/DAVID B. SUTCLIFFEDavid B. Sutcliffe
Chairman and Chief Executive Officer |  | 
|---------------------------------------------------------------------------- |  | 

30

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CERTIFICATION PURSUANT TO 18 U.S.C. §1350,  AS ADOPTED PURSUANT TO  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Sierra Wireless, Inc. (the "Company") on Form 40-F for the period ended
December 31, 2003 as filed with the Securities and Exchange Commission on the date hereof, I, David B. Sutcliffe, Chief Executive Officer of the Company, certify pursuant to 18 U.S.C.
§1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

Date:
May 14, 2004

|/s/DAVID B. SUTCLIFFEDavid B. Sutcliffe
Chairman and Chief Executive Officer |  | 
|---------------------------------------------------------------------------- |  | 

31

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CERTIFICATION

I,
David G. McLennan, certify that:

Date:
May 14, 2004

|/s/DAVID G. MCLENNANDavid G. McLennan
Chief Financial Officer |  | 
|------------------------------------------------------------- |  | 

32

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CERTIFICATION PURSUANT TO 18 U.S.C. §1350,  AS ADOPTED PURSUANT TO  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Sierra Wireless, Inc. (the "Company") on Form 40-F for the period ended
December 31, 2003 as filed with the Securities and Exchange Commission on the date hereof, I, David G. McLennan, Chief Financial Officer of the Company, certify pursuant to 18 U.S.C.
§1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

Date:
May 14, 2004

|/s/DAVID G. MCLENNANDavid G. McLennan
Chief Financial Officer |  | 
|------------------------------------------------------------- |  | 

33

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APPENDIX B        AUDITED ANNUAL FINANCIAL STATEMENTS

34

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|GRAPHIC |  |                                                                                        |  |                                                                 
|------- |  | -------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------
|        |  | KPMGLLPChartered AccountantsBox 10426, 777 Dunsmuir Street
Vancouver BC V7Y 1K3
Canada |  | Telephone (604) 691-3000
Telefax      (604) 691-3031
www.kpmg.ca

Consent of Independent Accountants

The
Board of Directors
Sierra Wireless, Inc.

We
consent to the use of our reports, both dated January 21, 2004, included in this Annual Report on Form 40-F.

/s/
KPMG LLP

Chartered
Accountants

Vancouver,
Canada
January 21, 2004

GRAPHIC

35

---



MANAGEMENT'S STATEMENT OF RESPONSIBILITIES

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

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

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

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

|/s/DAVID B. SUTCLIFFE                                                    |  | /s/PETER W. ROBERTS                     
|------------------------------------------------------------------------ |  | ----------------------------------------
|David B. Sutcliffe
Chairman and Chief Executive Officer
January 21, 2004 |  | Peter W. Roberts
Chief Financial Officer

AUDITORS' REPORT TO THE SHAREHOLDERS

We have audited the consolidated balance sheets of Sierra Wireless, Inc. as at December 31, 2003 and 2002 and the consolidated statements of
operations, shareholders' equity and cash flows for each of the years in the three-year period ended December 31, 2003. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

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

In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as at December 31, 2003 and
2002 and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2003 in accordance with accounting principles generally
accepted in the United States of America.

On
January 21, 2004, we reported separately to the shareholders of the Company on the consolidated financial statements as at and for the periods presented above, which
consolidated financial statements were prepared in accordance with Canadian generally accepted accounting principles.

|/s/KPMG LLP                                              |  | 
|-------------------------------------------------------- |  | 
|Chartered Accountants
Vancouver, Canada
January 21, 2004 |  | 

36

---



SIERRA WIRELESS, INC.        Consolidated Statements of Operations        (Expressed in thousands of United States dollars, except per share amounts)  (Prepared in accordance with
United States generally accepted accounting principles (GAAP))

|                                        |                                          | Years ended December 31,
|--------------------------------------- | ---------------------------------------- | ------------------------
|
|Revenue                                 |                                          | $                       
|Cost of goods sold                      |                                          |                         
|                                        |                                          |                         
|Gross margin                            |                                          |                         
|                                        |                                          |                         
|Expenses:                               |                                          |                         
|                                        | Sales and marketing                      |                         
|                                        | Research and development, net (note 15)  |                         
|                                        | Administration                           |                         
|                                        | Restructuring and other charges (note 4) |                         
|                                        | Integration costs (note 5)               |                         
|                                        | Amortization                             |                         
|                                        |                                          |                         
|                                        |                                          |                         
|                                        |                                          |                         
|Earnings (loss) from operations         |                                          |                         
|Other income                            |                                          |                         
|                                        |                                          |                         
|Earnings (loss) before income taxes     |                                          |                         
|Income tax expense (recovery) (note 14) |                                          |                         
|                                        |                                          |                         
|Net earnings (loss)                     |                                          | $                       
|                                        |                                          |                         
|Earnings (loss) per share (note 16):    |                                          |                         
|                                        | Basic                                    |                         
|                                        | Diluted                                  |                         
|                                        |                                          |                         

See
accompanying notes to consolidated financial statements.

37

---



SIERRA WIRELESS, INC.        Consolidated Balance Sheets        (Expressed in thousands of United States dollars)  (Prepared in accordance with United States GAAP)

|                                          |                                                                                       | December 31,                                                         |                                                                   
|----------------------------------------- | ------------------------------------------------------------------------------------- | -------------------------------------------------------------------- | ------------------------------------------------------------------
|
|Assets                                    |                                                                                       |                                                                      |                                                                   
|Current assets:                           |                                                                                       |                                                                      |                                                                   
|                                          | Cash and cash equivalents                                                             |                                                                      | $                                                                 
|                                          | Short-term investments (note 6)                                                       |                                                                      |                                                                   
|                                          | Accounts receivable, net of allowance for doubtful accounts of $2,230 (2002  $3,068) |                                                                      |                                                                   
|                                          | Inventories (note 7)                                                                  |                                                                      |                                                                   
|                                          | Prepaid expenses                                                                      |                                                                      |                                                                   
|                                          |                                                                                       |                                                                      |                                                                   
|                                          |                                                                                       |                                                                      | 56,243                                                            
|Long-term investments (note 6)            |                                                                                       |                                                                      |                                                                  
|Fixed assets (note 8)                     |                                                                                       |                                                                      | 7,198                                                             
|Intangible assets (note 9)                |                                                                                       |                                                                      | 6,907                                                             
|Goodwill (note 9)                         |                                                                                       |                                                                      |                                                                  
|Deferred income taxes (note 14)           |                                                                                       |                                                                      | 500                                                               
|Other                                     |                                                                                       |                                                                      | 241                                                               
|                                          |                                                                                       |                                                                      |                                                                   
|                                          |                                                                                       | $                                                                    | 71,089                                                            
|                                          |                                                                                       |                                                                      |                                                                   
|Liabilities and Shareholders' Equity      |                                                                                       |                                                                      |                                                                   
|Current liabilities:                      |                                                                                       |                                                                      |                                                                   
|                                          | Accounts payable                                                                      |                                                                      | $                                                                 
|                                          | Accrued liabilities                                                                   |                                                                      |                                                                   
|                                          | Deferred revenue and credits                                                          |                                                                      |                                                                   
|                                          | Current portion of long-term liabilities (note 10)                                    |                                                                      |                                                                   
|                                          | Current portion of obligations under capital lease (note 11)                          |                                                                      |                                                                   
|                                          |                                                                                       |                                                                      |                                                                   
|                                          |                                                                                       |                                                                      | 19,379                                                            
|Long-term liabilities (note 10)           |                                                                                       |                                                                      | 2,896                                                             
|Obligations under capital lease (note 11) |                                                                                       |                                                                      | 60                                                                
|Shareholders' equity:                     |                                                                                       |                                                                      |                                                                   
|                                          | Share capital (note 12)                                                               |                                                                      |                                                                   
|                                          |                                                                                       | Authorized                                                           |                                                                   
|                                          |                                                                                       |                                                                      | Unlimited number of common and preference shares with no par value
|                                          |                                                                                       | Common shares, 24,822,071 (2002  16,345,396) issued and outstanding |                                                                   
|                                          | Warrants                                                                              |                                                                      |                                                                   
|                                          | Deficit                                                                               |                                                                      |                                                                   
|                                          | Accumulated other comprehensive income                                                |                                                                      |                                                                   
|                                          |                                                                                       | Cumulative translation adjustments                                   |                                                                   
|                                          |                                                                                       |                                                                      |                                                                   
|                                          |                                                                                       |                                                                      | 48,754                                                            
|                                          |                                                                                       |                                                                      |                                                                   
|                                          |                                                                                       | $                                                                    | 71,089                                                            
|                                          |                                                                                       |                                                                      |                                                                   

Commitments
and contingencies (note 17)
See accompanying notes to consolidated financial statements.

|/s/DAVID B. SUTCLIFFE       |  | /s/S. JANE ROWE      
|--------------------------- |  | ---------------------
|David B. Sutcliffe
Director |  | S. Jane Rowe
Director

38

---





SIERRA WIRELESS, INC.        Consolidated Statements of Shareholders' Equity        (Expressed in thousands of United States dollars, except number of shares)  (Prepared in accordance with United
States GAAP)

|                                 |  | Common Shares |  | Warrants |         |   |         |  |   |       | 
|-------------------------------- |  | ------------- |  | -------- | ------- | - | ------- |  | - | ----- | 
|
|
|Balance December 31, 2000        |  | 16,009,575    |  | $        | 122,174 |   |        |  | $ |      | 
|Net and comprehensive loss       |  |              |  |          |        |   |        |  |   |      | 
|Stock option exercises           |  | 176,195       |  |          | 499     |   |        |  |   |      | 
|                                 |  |               |  |          |         |   |         |  |   |       | 
|Balance December 31, 2001        |  | 16,185,770    |  |          | 122,673 |   |        |  |   |      | 
|Net and comprehensive loss       |  |              |  |          |        |   |        |  |   |      | 
|Stock option exercises           |  | 159,626       |  |          | 374     |   |        |  |   |      | 
|                                 |  |               |  |          |         |   |         |  |   |       | 
|Balance December 31, 2002        |  | 16,345,396    |  |          | 123,047 |   |        |  |   |      | 
|Net and comprehensive earnings   |  |              |  |          |        |   |        |  |   |      | 
|Issued for acquisitions (note 3) |  | 3,708,521     |  |          | 22,377  |   |        |  |   |      | 
|Issued for cash (note 12)        |  | 4,442,222     |  |          | 72,186  |   |        |  |   |      | 
|Share issue costs                |  |              |  |          | (4,761  | ) |        |  |   |      | 
|Stock option exercises           |  | 325,932       |  |          | 1,198   |   |        |  |   |      | 
|Warrants issued                  |  |              |  |          |        |   | 138,696 |  |   | 1,538 | 
|                                 |  |               |  |          |         |   |         |  |   |       | 
|Balance December 31, 2003        |  | 24,822,071    |  | $        | 214,047 |   | 138,696 |  | $ | 1,538 | 
|                                 |  |               |  |          |         |   |         |  |   |       | 

See
accompanying notes to consolidated financial statements.

39

---



SIERRA WIRELESS, INC.        Consolidated Statements of Cash Flows        (Expressed in thousands of United States dollars)  (Prepared in accordance with United States GAAP)

|                                             |                                                                                           | Years ended December 31,                 |       
|-------------------------------------------- | ----------------------------------------------------------------------------------------- | ---------------------------------------- | ------
|
|Cash flows from operating activities:        |                                                                                           |                                          |       
|                                             | Net earnings (loss)                                                                       |                                          | $     
|                                             | Adjustments to reconcile net earnings (loss) to net cash provided by operating activities |                                          |       
|                                             |                                                                                           | Amortization                             |       
|                                             |                                                                                           | Non-cash restructuring and other charges |       
|                                             |                                                                                           | Loss on disposal                         |       
|                                             |                                                                                           | Deferred income taxes                    |       
|                                             |                                                                                           | Accrued warrants                         |       
|                                             | Changes in operating assets and liabilities                                               |                                          |       
|                                             |                                                                                           | Accounts receivable                      |       
|                                             |                                                                                           | Inventories                              |       
|                                             |                                                                                           | Prepaid expenses                         |       
|                                             |                                                                                           | Accounts payable                         |       
|                                             |                                                                                           | Accrued liabilities                      |       
|                                             |                                                                                           | Deferred revenue and credits             |       
|                                             |                                                                                           |                                          |       
|                                             | Net cash provided by (used in) operating activities                                       |                                          |       
|Cash flows from investing activities:        |                                                                                           |                                          |       
|                                             | Business acquisitions (note 3)                                                            |                                          |       
|                                             | Proceeds on disposal                                                                      |                                          |       
|                                             | Purchase of fixed assets                                                                  |                                          |       
|                                             | Increase in intangible assets                                                             |                                          |       
|                                             | Increase in other assets                                                                  |                                          |       
|                                             | Purchase of long-term investments                                                         |                                          |       
|                                             | Purchase of short-term investments                                                        |                                          |       
|                                             | Proceeds on maturity of short-term investments                                            |                                          |       
|                                             |                                                                                           |                                          |       
|                                             | Net cash provided by (used in) investing activities                                       |                                          |       
|Cash flows from financing activities:        |                                                                                           |                                          |       
|                                             | Issue of common shares, net of share issue costs                                          |                                          |       
|                                             | Increase in long-term liabilities                                                         |                                          |       
|                                             | Repayment of long-term liabilities                                                        |                                          |       
|                                             |                                                                                           |                                          |       
|                                             | Net cash provided by (used in) financing activities                                       |                                          |       
|                                             |                                                                                           |                                          |       
|Net increase in cash and cash equivalents    |                                                                                           |                                          | 5,194 
|Cash and cash equivalents, beginning of year |                                                                                           |                                          | 6,891 
|                                             |                                                                                           |                                          |       
|Cash and cash equivalents, end of year       |                                                                                           | $                                        | 12,085
|                                             |                                                                                           |                                          |       

See
supplementary cash flow information (note 18)

See
accompanying notes to consolidated financial statements.

40

---





SIERRA WIRELESS, INC.        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS        Years ended December 31, 2001, 2002 and 2003  (Expressed in thousands of United States dollars, except per share
amounts and number of shares)  (Prepared in accordance with United States GAAP)

1.     Nature of Operations



2.     Significant accounting policies



41

---





Furniture and fixtures

5 yearsResearch and development equipment

3 yearsTooling

3 yearsSoftware

3-5 yearsOffice equipment

5 years




42

---





43

---





Years ended December 31,2001

2002

2003Net earnings (loss):As reported

$
(24,269
)
$
(41,663
)
$
2,255Less: Total stock-based employee compensation expense determined under fair value based method for all awards


(10,426
)

(7,817
)

(14,775
)Pro forma

$
(34,695
)
$
(49,480
)
$
(12,520
)Basic and diluted earnings (loss) per share:As reported

$
(1.50
)
$
(2.56
)
$
0.12Pro-forma


(2.15
)

(3.03
)

(0.68
)




Years ended December 31,2001

2002

2003Expected dividend yield

0

0

0Expected stock price volatility

107%

107%

102%Risk-free interest rate

4.88%

4.48%

3.83%Expected life of options

4 years

4 years

4 years




44

---





45

---





3.     Acquisition of AirPrime, Inc.



46

---





Current assets

$
4,716Property and equipment


1,352Intangible assets


5,270Goodwill


19,706Total assets acquired


31,044Current liabilities


7,219Net assets acquired

$
23,825




Estimated Useful Life
(in years)

AmountIntellectual property

5

$
3,780Customer relationships

5


940Licenses

5


400Databases

5


150Total purchased intangible assets



$
5,270




2002

2003Revenue

$
96,282

$
118,514Net loss


(58,775
)

(1,166
)Loss per share

$
(2.94
)
$
(0.06
)


4.     Restructuring and other charges



Fixed and intangible asset writedowns

$
605Workforce reductions


325Facilities restructuring


290Total restructuring and other charges

$
1,220




47

---





Facilities Restructuring

Workforce Reduction

Other

TotalBalance at December 31, 2002

$
4,547

$
54

$
164

$
4,765Additional charges


290








290Cash payments


(1,243
)

(54
)

(87
)

(1,384
)Balance at December 31, 2003

$
3,594

$


$
77

$
3,671


5.     Integration costs



6.     Investments



Short-term

Long-term2002

2003

2002

2003Government treasury bills

$


$
11,827

$


$
Bankers acceptances





1,937





Commercial paper





996





Government bonds











24,639$


$
14,760

$


$
24,639




7.     Inventories

2002

2003Electronic components

$
1,430

$
782Finished goods


5,243


729$
6,673

$
1,511


48

---



8.     Fixed assets

2003Cost

Accumulated
Amortization
and Writedown

Net Book
ValueFurniture and fixtures

$
2,478

$
1,361

$
1,117Research and development equipment


9,047


7,622


1,425Tooling


7,280


6,024


1,256Software


5,450


3,452


1,998Leasehold improvements


1,742


1,624


118Office equipment


340


269


71$
26,337

$
20,352

$
5,985


2002Cost

Accumulated
Amortization
and Writedown

Net Book
ValueFurniture and fixtures

$
2,262

$
995

$
1,267Research and development equipment


7,791


5,672


2,119Tooling


6,453


4,952


1,501Software


4,406


2,694


1,712Leasehold improvements


1,738


1,257


481Office equipment


337


219


118$
22,987

$
15,789

$
7,198




9.     Goodwill and intangible assets



49

---





2003Cost

Accumulated
Amortization
and Writedown

Net Book
ValuePatents and trademarks

$
2,604

$
241

$
2,363License fees


15,156


7,404


7,752Intellectual property


4,214


718


3,496Customer relationships


940


70


870Databases


150


11


139$
23,064

$
8,444

$
14,620


2002Cost

Accumulated
Amortization
and Writedown

Net Book
ValuePatents and trademarks

$
1,569

$
137

$
1,432License fees


11,744


6,269


5,475Intellectual property


434


434


$
13,747

$
6,840

$
6,907




10.   Long-term liabilities

2002

2003Facilities (note 4)

$
4,547

$
3,594TPC warrants (note 17(b))


1,152


5,699


3,594Less current portion


2,803


1,328$
2,896

$
2,266


11.   Obligations under capital lease



Cdn.$

U.S.$2004

$
190

$
147Less amount representing interest at approximately 10.8%


8


6$
182

$
141




50

---



12.   Share capital



Weighted Average
Exercise PriceNumber of
SharesCdn.$

U.S.$Outstanding, December 31, 2000

2,121,134

39.10

26.07Granted

594,628

32.37

20.27Exercised

(175,571
)
4.30

2.69Forfeited

(96,742
)
48.99

30.68Outstanding, December 31, 2001

2,443,449

39.57

24.78Granted

732,250

9.79

6.20Exercised

(159,626
)
3.73

2.36Forfeited

(465,509
)
50.22

31.78Outstanding, December 31, 2002

2,550,564

19.83

12.55Granted

609,300

14.79

11.46Exercised

(325,932
)
4.90

3.80Forfeited

(1,107,572
)
54.86

42.53Outstanding, December 31, 2003

1,726,360

11.58

8.98


51

---



December 31,

Exercisable, end of year2001

1,035,0022002

1,378,1012003

714,345




Options OutstandingOptions ExercisableWeighted Average Remaining Contractual LifeRange of
Exercise Prices

Number of Shares

Weighted Average Exercise Price

Number Exercisable

Weighted Average Exercise PriceIn years

Cdn.$

U.S.$



Cdn.$

U.S.$$0.70  $1.16 (Cdn.$0.90  Cdn.$1.50)

55,288

3.6

$
1.14

$
0.88

55,288

$
1.14

$
0.88$1.17  $2.71 (Cdn.$1.51  Cdn.$3.50)

476,473

3.7


3.35


2.59

193,782


3.28


2.54$2.72  $9.30 (Cdn.$3.51  Cdn.$12.00)

306,209

4.6


9.61


7.45

13,636


5.17


4.00$9.31  $15.50 (Cdn.$12.01  Cdn.$20.00)

371,691

1.3


15.09


11.70

296,448


15.14


11.73$15.51  $23.26 (Cdn.$20.01  Cdn.$30.00)

440,640

4.2


21.30


16.51

86,719


22.96


17.80$23.27  $136.47 (Cdn.$30.01  Cdn.$176.05)

76,059

1.4


81.53


63.20

68,472


81.76


63.381,726,360

3.4


11.58


7.25

714,345


17.98


13.94




13.   Financial Instruments



52

---





14.   Income taxes



2002

2003Deferred tax assetsFixed assets

$
(1,837
)
$
(350
)Loss carryforwards


3,002


11,995Scientific research and development expenses


7,521


10,538Share issue costs


897


1,812Reserves and other


5,218


3,708Total gross deferred tax assets


14,801


27,703Less valuation allowance


14,301


27,203Net deferred tax assets

$
500

$
500




53

---





2001

2002

2003Combined Canadian federal and provincial income taxes at expected rate of 37.6% (2002  39.6%, 2001  44.6%)

$
(10,946
)
$
(15,127
)
$
923Permanent and other differences


1,076


1,381


(9
)Unrecognized tax assets


2,267


8,826


(635
)Change in enacted tax rates


712





Loss subject to tax at rates lower than statutory rate


6,618


4,629


(81
)Writedown of deferred tax asset





3,754


$
(273
)
$
3,463

$
198




2001

2002

2003CurrentCanadian

$
95

$
94

$
198Foreign


(353
)

(385
)

Total current


(258
)

(291
)

198DeferredCanadian


(15
)

3,754


Foreign








Total deferred


(15
)

3,754


Income tax expense (recovery)

$
(273
)
$
3,463

$
198


15.   Research and development

2001

2002

2003Research and development

$
19,429

$
16,795

$
16,471Less government research and development funding and investment tax credits


2,527


1,899


477$
16,902

$
14,896

$
15,994


16.   Earnings (loss) per share



2001

2002

2003Weighted-average shares used in computation of basic earnings (loss) per share

16,129

16,304

18,442Weighted-average shares from assumed conversion of dilutive options





547Weighted-average shares used in computation of diluted earnings (loss) per share

16,129

16,304

18,989


54

---



17.   Commitments and contingencies



Cdn.$

U.S.$2004

$
3,711

$
2,8772005


3,291


2,5512006


3,340


2,5892007


3,431


2,6602008


3,449


2,674Thereafter


6,739


5,224$
23,961

$
18,575




Balance, January 1, 2002

$
1,251Provisions


819Expenditures


(907
)Balance, December 31, 2002


1,163Provisions


1,939Increase due to acquisition (note 3)


418Expenditures


(1,179
)Balance, December 31, 2003

$
2,341


55

---





56

---





18.   Supplementary information

2001

2002

2003(a) Cash flow information:Cash receivedInterest

$
2,782

$
912

$
500Income taxes





905


24Cash paid forInterest


48


323


62Income taxes


958


57


62Non-cash financing activitiesPurchase of fixed assets funded by obligations under capital lease


1,759


328


113Issuance of common shares on acquisition (note 3)








22,377(b) Allowance for doubtful accounts:Opening balance

$
1,320

$
5,169

$
3,068Acquisitions








62Bad debt expense


4,040


623


375Write offs and settlements


(191
)

(2,724
)

(1,275
)Closing balance

$
5,169

$
3,068

$
2,230(c) Other:Rent expense

$
1,334

$
1,599

$
1,603Foreign exchange loss (gain)


(187
)

(77
)

439


19.   Segmented information



2001

2002

2003MP modems

$
8,039

$
7,781

$
6,183AirCard modems


38,627


44,616


71,060OEM modems


9,319


19,025


20,961Other


3,718


2,113


2,845Research and development funding


2,645


3,724


660$
62,348

$
77,259

$
101,709




57

---





2001

2002

2003Reseller A


less than 10%

$
17,808

$
18,044Reseller B


less than 10%

$
15,605


less than 10%Reseller C

$
8,228


less than 10%


less than 10%Reseller D

$
6,098


less than 10%


less than 10%


58

---



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