b r i d g i n g t h e f u t u r e

Wi-LAN Inc.
Annual Report
1 9 9 9
Corporate
Profile
Table of Contents
Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . 01
Letter to Shareholders . . . . . . . . . . . . . . . . . . . 03
Wi-LAN’s Successes in 1999 . . . . . . . . . . . . . . . 06
Network LivingTM Series . . . . . . . . . . . . . . . . . . 09
The Wireless Industry . . . . . . . . . . . . . . . . . . . 35
Wi-LAN’s Patented Technologies . . . . . . . . . . . . 37
Wi-LAN’s Products . . . . . . . . . . . . . . . . . . . . . 40
Management’s Discussion & Analysis . . . . . . . . . 42
Financial Statements . . . . . . . . . . . . . . . . . . . . 47
Corporate Information . . . . . . . . . . . . . . . . . . . 58
Biographies . . . . . . . . . . . . . . . Inside Back Cover
Corporate Profile
Wi-LAN is the future of high-speed wireless data/Internet
communications, and our focus in this area is two-fold. We
are a leading innovator in the field of high-speed wireless
communications products, offering our clients a unique, cost-
effective wireless solution to their data communications
challenges. As well, we are dedicated to advancing and
adding to our two patented wireless technologies, Wide-band
Orthogonal Frequency Division Multiplexing (W-OFDM) and
Multi-Code Direct Sequence Spread Spectrum (MC-DSSS).
These patented technologies are at the foundation of
proposed international standards, and the technology that
they protect is at the heart of our wireless products.
Wi-LAN specializes in high-speed Internet access, LAN/WAN
extension, and fixed wireless access. Wi-LAN has achieved a
significant position in the burgeoning wireless market, and
has earned a global reputation for providing leading edge
wireless communications technology and products that are
efficient and cost-effective.
We believe that our technology is fundamental to the future
of wireless communications. We envision a world of limitless
potential, full of exciting challenges and opportunities.
Wi-LAN believes that the future of communications is
wireless, enabling schools, hospitals, banks, corporations,
industries, and even entire countries to augment or bypass
costly wire-bound communication systems, and move into
the wireless world of 21st Century communications.
Shareholder’s Meeting
The Annual and Special Meeting of the shareholders of
Wi-LAN Inc. will be held in the Wildrose Ballroom of the
Sheraton Suites Eau Claire Hotel, 255 Barclay Parade S.W.,
Calgary, Alberta, on the 17th day of April, 2000. The meeting
will begin at 6:00 pm. We urge all shareholders to sign and
return the proxy form prior to the meeting.

Highlights
Highlights
In June, Wi-LAN broke industry barriers with its launch of the
TM
I.WiLL 300-24 Access Point, a high-speed 30 Mbps wireless
networking product. Targeting the demand for Fixed Wireless
Access products, the I.WiLL 300-24 Access Point uses
Wi-LAN’s patented W-OFDM technology to meet the
stringent demands of large telecommunications providers
including telcos, fibrecos, cablecos, major ISPs and
integrators. The I.WiLL 300-24 Access Point operates in the
2.4 GHz band to a peak data rate of 30 Mbps in 25 MHz of
bandwidth. This wireless product holds many advantages over
copper wire landlines, including low-cost, rapid installation
and scalability, which translates into rapid return on
investment. It is the first offering in a family of W-OFDM
based products.
In September, Wi-LAN and Philips Semiconductors Inc.
announced the signing of a definitive licensing agreement.
This agreement offers both companies many opportunities in
the booming high-speed wireless market, with Wi-LAN
presenting Philips Semiconductors with permission to
develop, modify, make, and sell W-OFDM application specific
integrated circuits for both the IEEE 802.11a standard and
for Wi-LAN’s use. Wi-LAN invented the technology; Philips
Semiconductors is making the technology smaller and more
cost-effective, allowing for faster deployment.
In October, Wi-LAN announced that it had filed an
intellectual property (IP) statement with the
International Telecommunications Union (ITU) offering to
make Wi-LAN’s Multicode Direct Sequence Spread Spectrum
(MC-DSSS) patented technology available for licensing on
fair, reasonable and non-discriminatory terms. The IP
statement targets the ITU’s International Mobile
Telecommunications (IMT-2000) standard, which is the
foundation for third generation (3G) mobile radio networks,
including cellular phones.
Annual Report 1999 Wi-LAN Inc. 01
Also in October, Wi-LAN announced that its common shares
had been approved for listing on The Toronto Stock
Exchange (TSE) under the stock symbol “WIN”. Moving to the
TSE will assist Wi-LAN with its international marketing reach
as the Company continues to design and develop products
and license its technology to a variety of interested parties,
including chipmakers and equipment manufacturers.
Forward Looking Information
Certain statements in this 1999 Annual Report, other than
statements of historical fact, are forward-looking information
that involves various risks and uncertainties. These can
include, without limitation, statements based on current
expectations involving a number of risks and uncertainties
related to all aspects of the wireless data communications
industry. These risks and uncertainties include, but are not
restricted to, continued increased demand for the Company’s
products, the Company’s ability to maintain its technological
leadership in the field of high speed data communications,
the Company’s ability to attract and maintain key employees,
the enforceability of the Company’s patents, the availability
of key components, and the additional risks and uncer-
tainties outlined in the “Risks and Uncertainties” section.
These uncertainties may cause actual results to differ from
information contained herein. There can be no assurance
that such statements will prove to be accurate. Actual results
and future events could differ materially from those
anticipated in such statements. These and all subsequent
written and oral forward-looking statements are based on the
estimates and opinions of management on the dates they are
made and expressly qualified in their entirety by this notice.
The Company assumes no obligation to update forward-
looking statements should circumstances or management’s
estimates or opinions change.
All financial information in this document is reported in
Canadian dollars, unless otherwise indicated.
02 Wi-LAN Inc. Annual Report 1999

Letter to
Shareholders
future
Bridging the .
Wi-LAN’s promise can be found at the core of
its successes in the past year.
Letter to Shareholders
We achieved many milestones over the past twelve months,
in both our product and our technology streams, and we have
shown leadership and vision in the wireless arena. Through
our developments in licensing to Philips Semiconductors,
furthering our product line, and hosting the OFDM Forum
meeting, we have delivered a successful year and laid the
foundation for the year 2000.
We have been successful in attracting many new shareholders
to the Company, and we would like to thank you for sharing
in Wi-LAN’s vision. Your financial commitment has enabled
Wi-LAN to make 1999 a strong success. Our achievements and
move to The Toronto Stock Exchange made us one of the most
successful Canadian stocks last year.
1999 Achievements
Our product lines grew in 1999 with the introduction of the
I.WiLLTM 300-24 Access Point, capable of unprecedented
wireless speeds of 30 megabits per second. This product
targets the demand for fixed wireless access products, and is
designed to meet the stringent industrial-strength demands
of large network operators. The I.WiLL 300-24 Access Point is
the first high-speed wireless networking product to make use
of the Company’s patented W-OFDM technology. Our
customers count on us to provide superior wireless data
communications products that help them work more effec-
tively, productively, creatively, and quickly. The I.WiLL
300-24 Access Point is Wi-LAN’s first in a suite of W-OFDM
based products that enable us to set the standard for
features, functionality, speed, simplicity and seamless
integration.
Wi-LAN has solidified many contracts and agreements over
the past year. We are delighted with our cornerstone
Annual Report 1999 Wi-LAN Inc. 03
licensing agreement with Philips Semiconductors, as it is the
first license agreement of W-OFDM technology for the
IEEE 802.11a standard. Under the terms of this agreement,
Wi-LAN has shared its W-OFDM technology and expertise with
Philips Semiconductors for a one-time licensing fee and
future royalty payments based upon the volume of integrated
circuits shipped. Additionally, Philips Semiconductors has
received access to Wi-LAN’s W-OFDM implementations for the
large volume consumer electronics market.
Wi-LAN invented the technology; Philips Semiconductors is
making the technology smaller and more cost-effective,
allowing for faster deployment.
Wi-LAN won two important awards in 1999. In June, Wi-LAN
was honoured for its pioneering work in wireless technology
at the Canadian Advanced Technology Association (CATA)
awards ceremony. The 1,000 member CATA Alliance, which
represents Canada’s advanced technology industry, created
the Awards of Distinction in 1984 to raise the profile of
Canadian achievement in science and technology. In July at
Comdex/Canada, Dr. Hatim Zaghloul was named Technically
Excellent Canadian for his pioneering work in wireless
technology. Canadian Computer Wholesaler (CCW) developed
the TEC awards to profile Canadians who deserve recognition
for their contributions to technological innovation and
excellence.
Bill Hews, our President and Chief Operating Officer, started
at Wi-LAN in September 1999, and has had the opportunity
to review the Company’s successes and challenges in fiscal
1999. Bill has a strong operations background in the commu-
nications industry, most recently as Vice President, Global
Supply Chain Operations, Enterprise Networks for Nortel
Networks Corporation, where he led the drive to improve the
group’s global supply chain processes. We have initiated a
04 Wi-LAN Inc. Annual Report 1999
We are currently reviewing
a number of other potential acquisitions. Our strategy is
to acquire or ally Wi-LAN with companies that increase the scope of
Wi-LAN’s offering, aid in increasing Wi-LAN’s presence in both
geographic and market terms, have key management teams,
and have proven engineering talent.
range of programs addressing new product introduction,
quality, supply chain, and sales/marketing aimed at
supporting our growth objectives.
The global marketplace is eager to implement the range of
leading solutions offered by Wi-LAN and our W-OFDM
technology. We have begun to evolve our business’ opera-
tions to deliver on the opportunities that are ahead of us.
Bridging the Future
Wi-LAN has been studying the potential of growing its
business through acquisitions and strategic partnerships, and
in late 1999 began to implement this strategy. In November,
Wi-LAN announced a strategic investment in Amplify.net Inc.
which helped Wi-LAN increase the scope of its offering to
network operators. We are currently reviewing a number of
other potential acquisitions. Our strategy is to acquire or ally
Wi-LAN with companies that increase the scope of Wi-LAN’s
offering, aid in increasing Wi-LAN’s presence in both
geographic and market terms, have key management teams,
and have proven engineering talent.
In December 1999, Wi-LAN and Philips Semiconductors
hosted over 100 representatives from 60 companies
worldwide to discuss the formation of an international
market development organization for OFDM. After a day long
discussion of requirements for mass market success,
including specific technical and marketing issues, the
meeting concluded with the task of assimilating proposals for
specific working groups to address these issues. This group is
tasked with fostering the harmonization of OFDM standards,
promoting the global harmonization of spectrum allocation,
and implementing a single compatible global OFDM standard
for delivering cost effective devices on all wireless networks
and in related industries. Wi-LAN is thrilled to see the global
community participating in the development of OFDM
technology.
Another important step forward was the formal launch by
Telia GlobalCast Internetworking AB (TGI) of their high-
speed wireless access network. The success of this service
resulted in driving sales volumes in Sweden and other
countries in Northern Europe. TGI is a provider of wireless
data communication services in Sweden, and a subsidiary of
Telia, a leading supplier of telecom-based information
services in the Nordic/Baltic region. TGI is using Wi-LAN’s
Hopper Plus wireless bridges and the I.WiLL family of
products to offer high-speed wireless Internet access to
small and medium-sized businesses and small office/home
office workers. We are well positioned with TGI to supply
their communications infrastructure according to their
phased rollout, and to meet their aggressive growth plans.
Northern Europe is leading the world in wireless access
adoption rates, and interest is soaring in the high-speed data
capabilities we offer. As we grow in this market, we expect
to evolve our distribution channels to address these
opportunities.
 Annual Report 1999 Wi-LAN Inc. 05

The experience gained through the TGI relationship and

others like it are vital elements of Wi-LAN’s growth. Among
other things, we have learned about IP traffic/usage
platforms, maintenance and security requirements, signal
reliability, and mobility. This is enabling us to ensure that we Dr. Hatim Zaghloul
match our leading technology to the tremendous business Chairman and Chief Executive Officer
opportunities and challenges faced by our customers.
Established service providers are looking to high-speed
wireless access to complement and extend their current
networks, and new service providers are springing up to
capitalize on the W-OFDM-enabled wireless access explosion. Mr. Bill Hews
Going forward, this experience will aid us in addressing the President and Chief Operating Officer
needs of many large service providers with our growing
portfolio of products across a wide range of applications.

This year will be a time of major growth for Wi-LAN, in terms

of both opportunities and corporate expansion. Our focus will
remain on leading the industry in delivering high-speed
wireless data communications products and entering new
The ideal complement
licensing agreements for our patented technologies. In order
to capitalize on these opportunities, Wi-LAN will have to
grow in size, which is why Wi-LAN is moving aggressively in
hiring, expanding our headquarters and examining possible
acquisitions.

We thank all of Wi-LAN’s employees for their incredible

creativity, ingenuity, and innovation. As we grow, we will
continue to build on Wi-LAN’s culture and enthusiasm by
adding employees with strengths and determination that will
take Wi-LAN to the next level. Wi-LAN’s management and
staff are committed to excellence. Wi-LAN’s goal remains to
be the uncontested leader in providing high-speed wireless
data/Internet communications solutions around the world,
and our team moves us closer to that goal everyday.
Hatim Zaghloul Bill Hews
The new opportunities in the high-speed wireless industry
are incredible. We are confident that Wi-LAN will play Visionary Strategist
a leading role in those opportunities, and we appreciate the Inventor Implementer
unwavering support and trust of our shareholders Engineer/Ph.D. Engineer/MBA
and customers. Entrepreneur Corporate Leader
06 Wi-LAN Inc. Annual Report 1999
Successes
Wirelessly Breaking Industry
Barriers
Wi-LAN’s Successes in 1999
The past year has been energizing for Wi-LAN. Over the past
twelve months, the Company has made a number of
significant strides in the field of wireless data
communications. We are proud of our people and our
products, and want to share some of our biggest successes
of 1999 with you.
Licensing Agreement with Philips
Semiconductors Inc.
On September 22, 1999, Wi-LAN and Philips Semiconductors
announced the signing of a definitive licensing agreement
(the Philips agreement). This agreement offers both
companies many opportunities in the booming high-speed
wireless market, with Wi-LAN providing Philips
Semiconductors with permission to develop, modify, make,
and sell W-OFDM application specific integrated circuits for
the IEEE 802.11a standard.
In July 1998, the Institute of Electrical and Electronics
Engineering (IEEE) selected OFDM technology as the standard
802.11a for Local Area Network applications. This standard
was passed in September 1999. In response to this standard,
Wi-LAN agreed to license its patented W-OFDM technology to
a variety of interested parties, including chipmakers and
equipment manufacturers. W-OFDM is Wi-LAN’s variation on
OFDM that further improves its characteristics, including
allowing greater transmission speeds. The Philips agreement
marked the first license agreement of W-OFDM technology for
the 802.11a standard, and is the first step towards the
manufacturing of low cost W-OFDM products.
Philips Semiconductors, a subsidiary of Royal Philips
Electronics, is one of the world’s largest semiconductor
suppliers. Philips Semiconductors’ innovations in digital
audio, video, and mobile technology position the company as
Set Top Box
a leader in the consumer, multimedia, and wireless commu-
nications markets. The Philips agreement will ensure a supply
of integrated circuits for Wi-LAN’s use in consumer
electronics products. These chips will reduce manufacturing
costs for new products, and will significantly decrease the
size of the equipment.
Under terms of the agreement, Wi-LAN licenses its W-OFDM
technology to Philips Semiconductors for manufacturing
integrated circuits based on our proprietary system. In
return, Philips Semiconductors paid a one-time licensing fee
and will make royalty payments to Wi-LAN based on the
volume of integrated circuits it ships.
The Philips agreement will enable production of a new gener-
ation of set-top boxes that use Wi-LAN’s W-OFDM technology
to simultaneously deliver multiple broadcast streams over a
single wireless transmission path. This agreement promises
to lower the cost of wireless LAN and WAN customer premise
equipment, making Wi-LAN’s high-speed wireless products
more attractive to ISPs and other service providers across
North America.
The evolution of a set-top box capable of streaming several
signals simultaneously is an important development for
wireless cable and wireless Internet service providers.
Currently, equipment for those markets is only capable of a
single stream, making second and third boxes necessary to
watch different channels on different television sets or to
make two-way fast streaming Internet possible. Wi-LAN and
Philips are currently working on a version of the box that
would stream four signals at once.

Wi-LAN and Philips Semiconductors are looking to bridge to
the future by kick-starting the home networking movement.
Wi-LAN is exploring what we call Network LivingTM; it enables
you to control many aspects of your everyday environment
with the use of a personal digital assistant, anytime,
anywhere, to anyone. From browsing the web in a park, to
turning on the VCR while you’re still downtown in a meeting,
Network Living will use W-OFDM technology to facilitate and
simplify our daily routines. The Philips Agreement allows Wi-
LAN to find inexpensive ways of creating consumer
electronics products based on Network Living concepts.
Launching the I.WiLLTM 300-24 Access Point
In June, Wi-LAN broke industry barriers with its launch of the
I.WiLL 300-24 Access Point, a high-speed 30 Mbps wireless
networking product.
Targeting the pent-up demand for Internet Wireless Local
Loop products, the I.WiLL 300-24 Access Point is designed to
meet the stringent, industrial-strength demands of large
telecommunications providers including telcos, fibrecos,
cablecos, major ISPs and integrators. The I.WiLL 300-24
Access Point holds many advantages over copper wire
landlines, including low-cost, rapid installation and scala-
bility.
Annual Report 1999 Wi-LAN Inc. 07
The I.WiLL 300-24 Access Point operates in the 2.4-2.4835
GHz license-exempt industrial, scientific and medical (ISM)
band allowing telecom suppliers to provide wireless
networking connectivity at a fraction of wire, cable or fibre
networking costs. Network operators can also use the I.WiLL
300-24 Access Point to extend high-speed wireless internet-
working data services to business parks and small
office/home offices not served by landlines.
The I.WiLL 300-24 Access Point uses Wi-LAN’s patented
W-OFDM technology to transmit data quickly and securely.
This product enables Wi-LAN to push forward its development
of the world’s first channel estimator for W-OFDM that can
mitigate multi-path effects, while introducing an innovative
new error-correction technology. With aggressive devel-
opment plans, Wi-LAN expects to produce similar units in
excess of 100 Mbps powered by its ongoing W-OFDM research.
Moving to The Toronto Stock Exchange
In late October, Wi-LAN announced that its common shares
had been approved for listing on the TSE under the stock
symbol “WIN”. The common shares were listed and posted for
trading on the TSE upon the opening of trading on Thursday,
October 28, 1999. At that time, Wi-LAN had 20,882,476
common shares issued and outstanding.
Moving to the TSE provides Wi-LAN with international
recognition as the Company continues to design and
develop products and license its technology to a variety of
interested parties, including chipmakers and equipment
manufacturers.
Wi-LAN’s stock soared in its first week on the TSE. Wi-LAN
went public in March 1998, at $2.50 per share on The Alberta
Stock Exchange.
08 Wi-LAN Inc. Annual Report 1999
MC-DSSS and 3G
In October, Wi-LAN announced that it had filed an intel-
lectual property (IP) statement with the International
Telecommunications Union (ITU) offering to make Wi-LAN’s
Multicode Direct Sequence Spread Spectrum (MC-DSSS)
patented technology available for licensing on fair,
reasonable and non-discriminatory terms. The IP statement
targets the ITU’s International Mobile Telecommunications
(IMT-2000) standard, which is the foundation for third gener-
ation (3G) mobile radio networks, including cellular phones.
The ITU, headquartered in Geneva, Switzerland, is an inter-
national organization that sets global telecom network and
service standards, and acts as the “one stop shop” for 3G
global standards to ensure that the radio recommendations
for IMT-2000 meet industry needs worldwide.
The ITU met in Helsinki starting October 25 for final consid-
eration of worldwide 3G standardization. IMT-2000 will
enable a global platform of services in the cellular industry,
including multimedia and high-bit-rate packet data
communications.
Wi-LAN’s IP statement is based on the Company’s belief that
the IMT-2000 proposals, under consideration for 3G standard-
ization, utilize Wi-LAN’s MC-DSSS technology. Whereas
current cellular telephony technology applies a single code
to each user in the network, Wi-LAN’s MC-DSSS enables
multiple codes to be assigned to a single user, thus
increasing the throughput of the transmissions. Wi-LAN
expects to license its MC-DSSS technology to a variety of
interested parties who are using or plan to use MC-DSSS in
their products. These parties may include cellular equipment
and component manufacturers, as well as cellular service
providers.
Agreement with Telia GlobalCast
Internetworking AB (TGI)
Another important step forward was the formal launch by
Telia GlobalCast Internetworking AB (TGI) of their high-speed
wireless access network. The success of this service resulted
in a reprofiling of an earlier contract with TGI, driving
increased multiyear sales volumes in Sweden and other
countries in Northern Europe. TGI is a provider of wireless
data communication services in Sweden, and a subsidiary of
Telia, a leading supplier of telecom-based information
services in the Nordic/Baltic region.
The city of Stockholm is at the cutting edge of communica-
tions technology. Europe’s most frequent Internet users are
found in Sweden, and the country has the highest overall
Internet penetration in Europe. Wi-LAN’s technology is being
used to create a wireless backbone for CityNet, TGI’s
Stockholm-wide high-speed wireless Internet service.
TGI chose Wi-LAN technology for its proven performance,
flexibility, technological innovation and affordability.
Wi-LAN’s Hopper Plus wireless bridges allowed the network to
go where wire could not go, and enabled TGI to meet future
growth requirements for Internet services. Wi-LAN’s wireless
products have allowed TGI to offer high-speed wireless
Internet access to small and medium-sized businesses and
small office/home office workers. These extended services
include Internet access, GSM telephony, radio LAN’s, and
high-speed data networks.
CityNet’s rapidly growing customer-base includes graphic
design firms, Web industries, data-distribution companies,
online services including insurance brokers, and schools.
Some innovative landlords are equipping their buildings with
antennas to offer instant high-speed Internet access, using
CityNet’s new services to attract potential tenants.
Users of the new system have reported that the CityNet
service is very easy to use, allows fast data download speeds,
and is extremely reliable.
Network
Living
The Future of Wireless
Network LivingTM—
Data Communications
For years, people have been wondering what the world would

look like at the turn of the millennium. Imagine being able to

browse the web from a park, or being able to turn on the VCR or

watch a news clip while you’re stuck in traffic. What about the

possibility of setting up a home office that operates without wires

or monthly line charges? And how about the idea that, even when

you’re not at home, you can still control all of the environmental

settings there, from lights to air-conditioning?

This is no longer a remote possibility—the technology needed to

make this a reality is available. Wi-LAN has named this concept of

being able to control your environment wirelessly as Network

Living. It is not so much of a change in terms of using computers

more closely; Network Living is more about a lifestyle change, to

one where we all live with the ease of wireless communication in

our every day tasks; anytime, anywhere, to anyone. And it is our

W-OFDM technology that will fuel this new way of life.

Let us show you six examples of how Wi-LAN’s

Network Living can work.
 a leading
EarthTel,
telecommunications
company, offers their clients
Internet access that is high-speed and low
maintenance using fixed wireless
access.
Their clients have
raved about the
benefits of this
dedicated
access, from
the
download
speeds to
the easy
instal-
lation.
Since
many of
the small
offices and
corporations
that EarthTel
services are located in
older, established commu-
nities, one of the selling features
for EarthTel is that their wireless service
allows for simple installations that do not
require damaging or renovating these
premises. In short, they can go where the
wired providers cannot.
 Annual Report 1999 Wi-LAN Inc. 13

Fixed
Wireless
Access—
Public Wireless
Data Network

Using Wi-LAN’s current products and

technology, you are able to connect your home
office, small office, or corporation to the Internet quickly and
wirelessly. Your premises will have a wireless connection that
bounces through a wireless hub to the service provider. From
the provider’s standpoint, this wireless connection offers an
alternative to expensive wired installations, and can be
deployed in a considerably faster timeframe. A real-world
example of this technology is seen in Wi-LAN’s work with TGI
(see page 8).
 of the
Jennifer is a huge fan,
band “Substance”.
So when she heard that they
were performing live over the Internet, she
had to be the first one logged in.
Her new wireless Internet
access meant that
she could watch
the streaming
video of the
webcast,
while
simulta-
neously
chatting
online
with other
Substance
fans around the
world. She realizes
that her plan to post
her favorite songs from the
broadcast on her website will probably be
easier to accomplish than her plan to marry
that dreamy lead singer
of the band.
 Annual Report 1999 Wi-LAN Inc. 17

Internet Fixed
Wireless Access to
Your Home
With Network Living, you will be able to connect to the
Internet wirelessly. This means the end to having a second
phone line, a cable modem, or other forms of dedicated
connections. But more importantly, it means the end of high
monthly charges for accessing the Internet. Once your
equipment is in place, you can use the system as much as
you want without incurring any monthly charges. The future
of the Internet is that simple.
 web
Larry’s successful
design business
started out as a one-man
operation in his spare bedroom, and has
grown to become a small company
with national clients.
They’ve recently
moved into an
office
building,
and with
the
number
of new
employees
starting
every
month, Larry
needed to
maximize his
workspace. Even with
no experience in setting up
a network, Larry is able to connect all
the computers in his office together, without
having to run any wires through the walls
or ceilings. Best of all, he can change the
layout of his office as the business expands.
 Annual Report 1999 Wi-LAN Inc. 21

Small Office/Home Office

Network Living allows you to connect all of the computers in

your small office or home office without wires. This means
that setting up new devices, such as workstations or printers,
will be done simply and effectively. And, since there are no
wires to impede you, your office layout can change easily.
.George
traffic.
is caught in
He is having some
of his old high school friends
over for dinner tonight, and had just gone
to the grocery store for some last
minute items when traffic
began to back up.
Having placed the
meal in the oven
before leaving
to run
errands,
George can
use his
Personal
Digital
Assistant
(PDA) to
turn on the
oven,
getting dinner
started. He then
sends a quick
message to his dinner
guests, telling them not to
arrive until 6:30. Finally, he opens
up an online map of the city, to see if
there is a shortcut past the traffic jam. If
only he could control the other cars on the
road with this much ease.
 Annual Report 1999 Wi-LAN Inc. 25

Network Living
in the Home
Network Living, using W-OFDM technology, will
allow you to interact with your home environment when you
are not there. Using a palm-top computer, you will be able to
set kitchen appliances, turn on lights or televisions, tape
your favorite programs, and even start your car. Network
Living offers convenience, comfort, and efficiency, giving
you more flexibility with your schedule. Our licensing
agreement with Philips Semiconductors is geared towards
making significant advances in this area.
 salesperson,
Carmen is a leading
having achieved 160%
of her sales target in the first
half of the year. Her company has clients
all over the world, and Carmen is
often in different cities
making sales calls.
She needs to
connect with
her office
frequently
to send
email,
browse
the web,
or down-
load video
presenta-
tions. With her
new laptop, she
doesn’t need to find a
phone jack to dial in. Carmen
grabs a coffee, finds a quiet space
in the park, and is instantly online with
her office, half a world away.
 Annual Report 1999 Wi-LAN Inc. 29

Anywhere, Anytime,
to Anyone
The future of Network Living will see a network of wireless
antennas set up for public use. This network will allow you
to do your work remotely, no longer worrying about
telephone jacks or cable outlets. The signal from your laptop
computer will be transmitted by a nearby wireless hub to its
destination. You’re connected to an invisible data network
anywhere, anytime and to anyone. Just imagine the freedom
Network Living will permit.
 in his
Doug’s been doing well
baseball pool for
the past year, and it’s all
come down to this. The big game is on, and
Doug’s tied with his best friend
in the standings. While
in the park, Doug’s
Personal Digital
Assistant, or
PDA, signals
him to let
him know
that one
of his
players
had just
scored
another
home run in a
game, and, after a
quick calculation, the
PDA announces that Doug is
resting comfortably on top of the pool. Doug
takes his shoes off, enjoying the sun, and
thinks about what players he’s
going to choose next year.
 Annual Report 1999 Wi-LAN Inc. 33

True Personal Communications

Network Living provides you with more freedom in your

personal communications. Imagine surfing for a company’s
address while you’re in the car, or uploading digital pictures
to your office while on the bus. The possibilities are endless
with this wireless technology. You can go anywhere, and still
have truly personal communications at your fingertips.

Wireless
Industry
The Wireless Industry
The wireless industry is entering a stage of increased
competition, new service capabilities, and greater end-user
awareness. Faced with these new opportunities, the wireless
industry must now deliver on the long-promised capability to
provide cost-effective, reliable wireless communications to
the marketplace. The industry is gearing up for the advent of
third-generation technologies in the near future. A
revolution is currently taking place—a revolution that
marries wireless technology and the Internet.
Wireless data network markets are migrating from the
conventional “wired” configurations in many market
segments. Although some segments are still apprehensive,
the market is well aware of the new wireless revolution and
its benefits to the networking industry.
Wireless technology is maturing progressively and finding its
way into new applications within the following industry
segments: Wireless Wide Area Networks, Private Wireless
Local Area Networks, and Home Multimedia.
Frost & Sullivan, an international marketing, consulting, and
training company, have predicted substantial growth for the
three main segments of this industry.
Wireless Wide Area Networks
A wireless WAN is fixed terrestrial, broadband equipment that
delivers high-speed digital communication between two
separate sites using wireless media. Wireless is emerging as
a strong network access alternative for the delivery of data,
Internet, voice, video and multimedia applications to
business and residential customers. Operating in both
licensed and unlicensed frequency bands, wireless WANs are
gaining popularity for their ease of deployment, minimal
disruption to community and environment, and lower
infrastructure costs.
Annual Report 1999 Wi-LAN Inc. 35
Growth Potential
According to a Frost & Sullivan study conducted in 1999,
revenues for the total wireless wide area network equipment
market are expected to exceed $15.19 billion by 2005 with
compounded average growth of 20.5% per annum. Frost &
Sullivan attributes this increase to more robust modulation
schemes for wireless operations and the need for higher
capacity access.
Growth in the Wireless WAN Market:
16 1,200
14
12
1,000
800
10
8 600
6 400
4
200
2
0 0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Revenue Revenue ($billion) Units (000's) Number of Units
* Frost & Sullivan, 1999
Industry Challenges
Providers are looking to establish their technologies for
competitive advantage, but geographic market expansion is
being delayed by international regulatory “red tape”. Speed,
distance and capacity limitations in existing technologies
are also hampering the standardization of technologies.
Wi-LAN’s Potential
Wi-LAN has established its expertise in the wireless WAN
segment by building flagship WAN’s with Tele2 UK Limited
and TGI. Wi-LAN has entered international markets through
the development of licensing agreements that act as founda-
tions to lever off of for future market penetration and
growth. Further growth in existing and new geographical
markets is expected through market awareness of Wi-LAN’s
advanced technology. In addition, product enhancements
employing Wi-LAN’s patented W-OFDM technology will also
facilitate growth.
36 Wi-LAN Inc. Annual Report 1999

Wireless Local Area Networks (WLANs) Wi-LAN’s Potential

The world wide wireless LAN market is experiencing robust Wi-LAN’s patented MC-DSSS and W-OFDM technologies
expansion and growth is expected to continue through for provide the platform for OEM’s to build products for this
next five years. The primary advantage of wireless LANs is the industry segment. As part of Wi-LAN’s growth strategy,
lack of wiring. In older buildings where wiring is difficult and Wi-LAN has offered to license both of these technologies to
can result in expensive infrastructure costs, wireless LANs all interested parties. Wi-LAN signed its first licensing
offer a low cost alternative to hard wiring a facility. The agreement with Philips Semiconductors in 1999, and is
benefits of mobility and seamless network connections allow currently seeking more licensing partners. Wi-LAN is also
for ad-hoc networks to be setup anywhere. Increasing seeking a strategic marketing partner in the wireless LAN
speeds, and more compatible products from different market to co-develop products with.
vendors, further enhance these benefits.
Wireless Home Multimedia
Growth Potential
The growing popularity of inexpensive and powerful laptops,
According to a Frost & Sullivan study from 1999, the total sub-notebooks, and personal digital assistants has
revenues for the world wide wireless local area network catapulted the need to link devices amongst consumers. The
equipment market is estimated to exceed U.S. $1.63 billion ability to access files, e-mails, the Internet, schedules, and
by 2005 with a compounded average growth rate of 27.1% contacts from different devices is driving the need for home
per annum. Frost & Sullivan attributes this increase to the networking. The home multimedia market has now developed
availability of throughput beyond 10Mbps, IEEE 802.11 into a lucrative and expanding market, promising aggressive
standard products and the emergence of mobile computing in growth well beyond 2005. The benefits of mobility and
the workforce. seamless network connection allow for ad-hoc networks to be
setup anywhere simply through the wireless medium. Growth
Growth in the Wireless LAN Market in this segment has also been facilitated by the IEEE 802.11a
standard and the availability of standardized products. As
business professionals realize the benefits of mobility and
1,800 12,000
1,600
cordless access, the adoption of wireless home multimedia
10,000
1,400 products should strengthen even further.
1,200 8,000
1,000
6,000
800
4,000
Growth Potential
600
400 2,000
200
0 0 The products targeting this market segment operate in the
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
ISM band recognized by the Federal Communications
Revenue Revenue ($million) Units (000's)
* Frost & Sullivan, 1999
Number of Units Commission. According to a Frost & Sullivan study in 1999,
the total US home networking market size for these products
is expected to exceed $2.03 billion by 2005 with a
Industry Challenges compounded average growth of 79% per annum.

The main challenge for the wireless LAN market is the rise in
intensity of competition due to standards based products.
The market is also apprehensive about the security provided
by these networks.

Growth in the Wireless Home Multimedia Market
2,500
2,000
1,500
1,000
500
0
1998 1999 2000 2001 2002
Revenue Revenue ($million)
* Frost & Sullivan, 1999
A Frost & Sullivan study revealed that sales of wireless data
products for home networking reached approximately $14
million in revenue in 1999. The market also realized an
increase in participants and an expansion of distribution
channels. The revenue increase was calculated at 108% over
1998 and is estimated to increase 152% for 2000 and reach
$282.6 million in 2005.
Industry Challenges
The comparatively new nature of this segment poses
additional challenge for its growth. The market is still
apprehensive about the power of the technology in this
segment and establishing channels to move products in this
market will take some time. There is a need to standardize
the technology to develop truly user friendly and “plug and
play” capabilities, which will be the basis for building strong
relationships with OEM’s who build personal computers.
Wi-LAN’s Potential
In 1999, Wi-LAN established a licensing agreement with
Philips Semiconductors that will enhance its market profile in
terms of technology partnership and the application
development of Wi-LAN’s technology. This licensing
agreement also increases Wi-LAN’s market reach in the global
market place. This effort has generated tremendous interest
within the industry. Wi-LAN believes that its W-OFDM
technology will be the platform for future product
development.
Annual Report 1999 Wi-LAN Inc. 37
Technologies
Wi-LAN’s Patented Technologies
80,000
Wi-LAN’s competitive edge in wireless data communications
70,000 is based on its control of two patented developments in radio
60,000
50,000
technology: Wide-band Orthogonal Frequency Division
40,000 Multiplexing (W-OFDM) and Multi-Code Direct Sequence
30,000
20,000
Spread Spectrum (MC-DSSS).
10,000
2003 2004 2005
0 Wide-band Orthogonal Frequency Division
Units (000's) Number of Units Multiplexing
Orthogonal Frequency Division Multiplexing (OFDM) is a
modulation scheme that, like all other modulation schemes,
encodes data inside a radio frequency (RF) signal. But while
conventional AM/FM (amplitude or frequency modulation)
sends only one signal at a time over one radio frequency,
OFDM is able to send a high-speed signal concurrently on
different frequencies. This allows for very efficient use of
bandwidth and provides for robust communications in the
face of occurring noise, stray signals, or reflected signals
that encumber radio communications.
The virtues of OFDM can best be understood by examining the
operation of any modem. A conventional telephone modem
tries to transmit as much data as possible given the following
characteristics of a phone connection.
1. A point is reached where the data rate is limited by the
noise level (commonly known as static) on the
connecting line.
2. The bandwidth is limited to frequencies less than
3400 Hz—this is why telephone conversations sound
“tinny”. RF communication is limited by these same
factors, random noises, the naturally present RF
phenomenon, and a limited bandwidth due to operating
in an allocated frequency range
The Challenge
The on-going challenge for the industry is to increase the
speeds of wireless data/Internet networking. There are
basically three RF technology options for approaching this
38 Wi-LAN Inc. Annual Report 1999
challenge: narrow band microwave, spread spectrum, and
OFDM. In narrow band, the power to transmit the data is
increased to overcome the noise. This improves the
performance of the transmissions, but interferes with other
signals that are being sent by other users of the band,
causing data errors for others. Narrow band systems are also
sensitive to multipath interference, in which your own signal
is reflected off another object and arrives late at the desti-
nation, scrambling the original signal. This requires on-going
tuning and adjustment using specific hardware which results
in increased system maintenance costs.
With processor power increasing as a function of time, OFDM
returns better performance than narrow band systems. What
was not practical in the early 1990’s became practical, and is
now superior as time progresses.
Spread spectrum technology “spreads” the signal over a wider
bandwidth. This improves noise and multipath performance,
but reduces the “spectral efficiency” or bit rate per Hz of
bandwidth. The current benchmark is 0.3 bits per Hz and we
expect spread spectrum technology to max out at 0.7 bits per
Hz. Therefore, high bit rates use up high areas of spectrum.
100
80
60
40
20
0 Mbps wireless LAN standard, IEEE 802.11a. The IEEE 802.11a
1991 1993 1995 1997
Performance (Mbps) OFDM Performance Narrowband Equilizer Performance
OFDM technology breaks one high-speed data signal into tens
or hundreds of lower speed signals, which are all transmitted
in parallel. This creates a system highly tolerant to noise and
multipath, and, at the same time, is very efficient in its use
of bandwidth. Noise and multipath immunity allow for wide-
area, multipoint coverage, and the efficient use of bandwidth
allows for many more high-speed channels within a frequency
band. Therefore, the three difficulties in narrow band and
spread spectrum are overcome by OFDM.
8
3
Bit Rate/MHz
2
1
0
DSSS MC-DSSS W-OFDM W-OFDM W-OFDM
NCW Q2/2000 2001 Target
Spectral Efficiency
Wi-LAN’s systems are capable of the data rates indicated in
the chart above. Our current 30 Mbps product provides over
4 times the spectral efficiency of the DSSS system. Our future
156 Mpbs W-OFDM products will provide better than 25 times
the spectral efficiency of the DSSS system.
The Solution is W-OFDM
Wi-LAN’s patented W-OFDM is a variation of OFDM that further
improves its characteristics. The signal reception is corrected
for distortions, allowing greater transmission speeds, and W-
OFDM also further processes the signal to maximize the range.
While OFDM has long been acknowledged as a very efficient
technology, it has proven difficult to implement until now.
Recent advances in digital signal processors now permit
OFDM systems to be cost-effectively constructed, creating
renewed interest in OFDM. European terrestrial digital video
broadcasting uses OFDM and the IEEE (Institute of Electrical
and Electronics Engineers) elected to use OFDM in its 6 to 54
1999 2001
standard was passed in September 1999. The IEEE is the
global standards body for the development and dissemination
of voluntary, consensus-based industry standards involving
leading-edge electrotechnology. This standard is evidence
that the patented technology Wi-LAN has been developing
for seven years is the direction of high-speed wireless data
communications. The European Telecommunications
Standards Institute (ETSI) is considering W-OFDM for the ETSI
BRAN standard. With the RF spectrum becoming increasingly
crowded, OFDM is becoming the generally accepted solution,
allowing more efficient use of radio frequency.

The Advantages of W-OFDM
Wi-LAN holds a fundamental patent on W-OFDM (U.S. Patent
number 5,282,222) and is pioneering the development of
large-scale, high data rate W-OFDM systems. The efficiency
and noise tolerance of W-OFDM allow the best of both
spread-spectrum and narrow band systems to be united. This,
combined with our established data networking protocols,
further extends the capabilities of W-OFDM into the realm of
practical multipoint networks.
W-OFDM allows low power, multipoint RF networks to be
implemented that minimize their interference with adjacent
networks. W-OFDM is also insensitive to noise and multipath
interference, so ongoing tuning adjustments and
maintenance are reduced. W-OFDM effectively permits several
independent channels to operate within the same band
allowing mulitpoint networks and point-to-point backbone
systems to be overlaid on one another in the same
frequency band.
Less disruption of adjacent users and insensitivity to external
noise means that high-speed multipoint data networks can
be simply and rapidly deployed. Once installed, these systems
are tolerant to changes in the RF environment, limiting
maintenance requirements, and the systems can be easily
expanded to meet the users changing needs. Operation in an
unlicensed band also avoids costly licensing procedures and
also allows the use of widely available equipment, further
improving the lifetime economics of a project.
Multi-code Direct Sequence Spread Spectrum
(MC-DSSS)
Wi-LAN’s patented MC-DSSS (U.S. Patent number 5,555,268)
is the most spectrally efficient spread spectrum technology.
It makes it possible to increase the carrying capacity of
traditional spread spectrum systems by as much as ten times.
The technology has significant application potential in the
growing wireless high-speed Asynchronous Transfer Mode
(ATM) and Local Multi-point Communications System
(LMCS) markets.
Annual Report 1999 Wi-LAN Inc. 39
Spread Spectrum
Wi-LAN agreed to acquire the original patent rights for spread
spectrum technology from Hollywood legend Hedy Lamarr in
June, 1997. Under the terms of the deal, Wi-LAN received a 49%
claim (and right of first refusal on the remaining 51%) to U.S.
Patent 2,292,387 for the wartime “Secret Communication
System” that was granted in 1942. As well, Ms. Lamarr agreed to
allow Wi-LAN to promote her role as a wireless pioneer in
exchange for an undisclosed number of Company shares.
While the patent expired in 1959, the original concept for a
varied-frequency radio system that could guide torpedoes to
targets without enemy detection is the keystone for hundreds of
patents on spread spectrum technology in existence today. Lamarr
and co-inventor George Antheil never received any monetary
gain from the invention, known as “frequency hopping”,
which today is used in a wide range of applications from
military systems and cellular phones to extending “last mile”
Internet connections in rural communities around the world.
A long-time favorite of the military because it resists jamming
and is difficult to intercept, spread spectrum communications is
growing in popularity in commercial applications, especially in
the license-exempt frequency bands allocated for ISM applica-
tions. Some of the typical applications include digital cellular
telephone, personal communications system (PCS), alarm
systems, police radar and radios, and data networking.
Spread spectrum is a technique that spreads a transmitted
signal over a frequency band greater than the minimum
bandwidth required for information transmission. This
improves communications by reducing bit error rates in the
presence of noise or interference.
Spread spectrum technology’s key benefit is its license-
exempt operation. The regulatory bodies in the United States,
Canada, most European countries and Japan allow low power
spread spectrum systems to be used in the ISM bands without
license. This means users do not have to pay licensing fees or
monthly line charges common to telephone or cable systems.
It is also possible to move all or part of a system from one
location to another without notifying a regulatory body.
40 Wi-LAN Inc. Annual Report 1999
Products
Wi-LAN’s Products
Wi-LAN is a proven leader in high-speed wireless data/
Internet communications. Our product lines put the power
and flexibility of wireless data communications within
your reach.
The I.WiLL 300-24 Access Point is Wi-LAN’s 30 Mbps wireless
Access Point. Using Wi-LAN’s patented W-OFDM technology
to achieve a peak data rate of 30 Mbps in 25 MHz of
bandwidth, the I.WiLL 300-24 Access Point demonstrates the
industry’s most efficient use of bandwidth. The I.WiLL
300-24 Access Point enables companies to avoid the high
costs of installing wire, and paying licensing fees or on-going
monthly line charges. It is the ideal solution for multiple-site
information networks, high-speed Internet access and
wireless communications infrastructures.
Hopper Plus is a wireless Ethernet bridge, which provides
high security network connectivity with high data rates at a
much lower cost than wire, cable, or fibre-optic lines. The
Hopper Plus wireless data rates range from 2.2 to 4.5 Mbps,
depending on the model, and operates using Direct Sequence
Spread Spectrum (DSSS) technology. They are the perfect
solution for building multiple-site information networks or
for extending communication infrastructures. Our convenient
“plug and play” technology and low-overhead point-to-
multipoint capabilities make it easy to connect any number
of stations to a network, while our highly efficient use of the
radio spectrum means our bridges deliver the best continuous
throughput on the market.
I.WiLL 300-24 Access Point
The I.WiLL 300-24 Access Point enables companies to avoid
the high costs of installing wire and paying licensing fees or
on-going monthly line charges. Users can quickly recoup
their entire network set up costs through rapid savings on
installation charges and line fees.
The I.WiLL 300-24 Access Point is the ideal solution for
moderate distance point-to-point information networks,
high-speed Internet access, and wireless communications
I.WiLL 300-24 Access Point
infrastructures. Many networks are difficult to build out
quickly due to high infrastructure costs of cable, copper and
fiber networks. With the I.WiLL 300-24 Access Point, cost-
effectiveness begins with the first system user. As the system
scales up, the payback period shrinks. Enhanced scalability
allows new users to be added to these wireless networks
daily. If a user changes locations, the I.WiLL 300-24
Access Point can be moved easily to the new location for
reinstallation.
The I.WiLL 300-24 Access Point has global application in a
wide variety of corporate, industrial, educational, and
government networking applications. It can be used in line-
of-sight environments to replace, extend or connect wired
Ethernet networks, and is especially effective where wires are
unavailable, impractical or too costly to install
or maintain.
The I.WiLL 300-24 Access Point operates in the 2.4GHz
license-exempt ISM bands using W-OFDM radio technology.
Wide-band Orthogonal Frequency Division Multiplexing
technology is inherently more secure than narrow band radio
or wired networking technologies. Wi-LAN has added many
features that make it virtually impossible to intercept and
decipher transmissions from its I.WiLL 300-24 Access Point,
including pseudo-random spreading codes, irregular trans-
mission patterns, proprietary data formatting and specialized
filters. The I.WiLL 300-24 Access Point contains 160-bit
access and 16-bit scrambling codes that can be layered on
customer configurable access codes for additional security.
For a final layer of security, IP address filtering can be done.
 Annual Report 1999 Wi-LAN Inc. 41

With a peak data rate

of 30 Mbps in 25 MHz of bandwidth, the I.WiLL
300-24 Access Point demonstrates the industry’s most efficient
use of bandwidth.

The end user can configure the units for ultimate

performance.

The I.WiLL 300-24 Access Point uses a polling protocol to

eliminate the inefficient data collisions that plague more
commonplace CSMA-based systems. The combined benefits of
Dynamic Time Allocation (DTA) and polling make the I.WiLL
300-24 Access Point the standard for efficient, cost-effective
multipoint wireless networking.

Wi-LAN’s continuing research efforts are on target to produce

speeds in excess of 100 Mbps in similar products in the near
future.
Hopper Plus Ethernet Bridge
Hopper Plus Wireless Ethernet Bridge

The Hopper Plus family of wireless Ethernet bridges offers
speeds of 2.2, 3.0 or 4.5 Mbps, operating in the
2.4 GHz band and the 915 MHz band. The Hopper Plus is used
to provide wireless LAN-to-LAN connectivity at speeds up to
three times faster than regular T1 lines. The latest generation
of Hopper Plus products includes SNMP management features,
Dynamic Time Allocation, and Wi-LAN’s unique polling
technique.
Wi-LAN’s wireless bridges are in use around the world, in a
variety of corporate, industrial, educational, and government
networking applications. They can be used in almost any
line-of-sight environment to replace, extend, or connect
wired Ethernet networks, and they are the ideal solution for
multiple-site information networks, high-speed Internet
access, and wireless communications infrastructures.

In 1999, Wi-LAN developed a universal platform on our

Hopper Plus product line. The platform creates many benefits
for the user. First, Wi-LAN was able to lower the product cost.
Second, the universal platform allows Wi-LAN to customize
the units easier to create products whose speeds and
functionality match the customer’s needs more closely. Third,
the universal platform enables Wi-LAN to easily make
changes or upgrades to the units.
42 Wi-LAN Inc. Annual Report 1999
Management’s
Discussion &
Analysis
Management’s Discussion and Analysis
The following discussion and analysis should be read in
conjunction with the financial statements and accompanying
notes (see page 47). All financial amounts are expressed
in thousands of Canadian dollars, with the exception of
per share amounts, which are expressed in Canadian
dollars.
Overview
Wi-LAN Inc. (Wi-LAN or the Company) is a leading innovator
in the field of high-speed wireless data/Internet
communications. Wi-LAN uses a multi-channel distribution
strategy to market and sell its products to wireless service
providers, original equipment manufacturers (OEM’s), systems
integrators, and end-user customers.
Wi-LAN believes its potential for increasing market share
hinges on its patented technologies. Wide-band Orthogonal
Frequency Division Multiplexing (W-OFDM) is currently being
applied in Wi-LAN’s line of I.WiLL products. W-OFDM is also
being embedded in semiconductor “chips” through a
licensing agreement with Philips Semiconductors Inc. for
future use in many different products, including those for the
consumer electronics market. Wi-LAN is currently seeking
other licensing agreements for its W-OFDM technology.
To date, financing for the Company’s operations has been by
equity offerings and, to a lesser extent, research and
development funding from government agencies, loans from
shareholders, and an operating line of credit. The Company
intends to continue to finance growth and operations
primarily through cash from operations, equity offerings, and
sale of selected investments, supplemented if required by
short-term borrowings.
Results of Operations
Sales
Wi-LAN’s product sales increased 9.4% to $5,923 in fiscal
1999, up from $5,414 in fiscal 1998. The increase was
primarily due to increased sales volumes of the Hopper Plus
line of products.
North American sales increased in fiscal 1999, primarily as a
result of a Memorandum of Understanding with a wholly
owned subsidiary of RSL Communications, Ltd.
(Nasdaq:RSLC), a global provider of telecommunications
network services. The Memorandum of Understanding was
announced in February 1999. RSL Communications is using
Wi-LAN’s wireless technology to extend high-speed Internet
services to small and medium-sized businesses, schools,
libraries, and municipalities.
International sales are expected to increase in fiscal 2000,
largely as a result of a contract with Telia GlobalCast
Internetworking AB (TGI), and a contract with Tele2 U.K.
Ltd., which was announced in April 1998. The TGI contract,
originally announced in February 1998, is to supply Wi-LAN
products to a national high-speed wireless network in
Sweden and several other European countries. Under the
terms of the contract, TGI will use Wi-LAN’s Hopper Plus and
I.WiLL products to offer high-speed Internet services to small
and medium-sized businesses, and to small office/home
office workers throughout Sweden.
Based on existing contracts, Memorandums of Under-
standing, and planned expansion in the large North American
market, the growth rate of product sales in fiscal 2000 is
expected to significantly exceed the industry average.

Gross Margin
Gross margin in fiscal 1999 was 46%, up from 39% in fiscal
1998, due to better production efficiencies on the Hopper
Plus product line, and better inventory management. Gross
margin is expected to remain in the 40% range during fiscal
2000. Higher margins and increased use of ASIC components
are expected to be offset by selective price management to
improve market position.
Research and Development Expenses
Research and development expenses increased 19.2% to
$2,664 in fiscal 1999, up from $2,235 in fiscal 1998. The
increase was primarily due to increased W-OFDM product
development costs that resulted in the I.WiLL product launch
in June 1999 and expanded market applications of the
technology. Research and development expense is expected
to increase in fiscal 2000 due to expenditures associated
with the roll-out of new and faster products.
General and Administrative Expenses
General and administrative expenses were $1,810 in fiscal
1999, versus $2,006 expensed in fiscal 1998. The 9.8%
decrease was due to a variety of reasons, including a
decrease in bad debt expense. Wi-LAN follows the practice of
allocating all office, occupancy, and communications
expenses to the general and administrative expense category.
Sales and Marketing Expenses
Sales and marketing expenses were reduced by 27.2% to
$1,592 in fiscal 1999 from $2,188 in fiscal 1998 due to a
change in approach. The company’s marketing function has
since been split into a product management group and a
marketing group. The later focuses on communications,
market research and channel management. These two groups
enable the company to maintain a focus on managing
products from concept through to production and then
driving the new products through sales, distribution and
promotional channels.
Annual Report 1999 Wi-LAN Inc. 43
Product and Customer Services Expenses
Product and customer services expenses were reduced 11.9%
in fiscal 1999 to $691 from $784 in fiscal 1998. The decrease
was due to the fact that some service functions were
outsourced in fiscal 1999, and staff was reallocated in order
to improve quality assurance and quality control, and to
handle increased purchasing requirements. The customer
support group, which provides technical and engineering
support, narrowed its focus to providing technical planning
and analysis on large projects such as TGI and Tele2 U.K.
Depreciation Expenses
Depreciation expenses increased from $168 in fiscal 1998 to
$220 in fiscal 1999, representing a 31% increase. The
increase was due to capital expenditures during fiscal 1999
and 1998.
Restatement of Fiscal 1998 Expenses
Certain accrued fiscal 1998 expenses were overstated by an
amount aggregating $416 and have been restated in the
accompanying financial statements. The restatement results
in the following: cost of product sales in fiscal 1998 was
reduced by $200, research and development expenses in
fiscal 1998 were reduced by $150, and general and
administrative expenses in fiscal 1998 were reduced by $66.
All of these reductions are reflected in the forgoing analysis.
Liquidity and Capital Resources
Cash outflow from operations was reduced by $4,038 or
60.5% in fiscal 1999 compared to fiscal 1998. The reduction
was due to a $1,371 reduction in net loss and a $3,161
improvement in non-cash working capital, partly offset by a
$494 reduction in items not involving cash. During fiscal
2000, the Company expects funds flow from operations to
continue to improve as sales volumes increase and greater
production efficiencies are achieved.
44 Wi-LAN Inc. Annual Report 1999
Total accounts receivable at October 31, 1999 were up by $1,225,
compared to October 31, 1998. Trade receivables were $2,862,
net of a doubtful accounts allowance, compared to $1,379 at
October 31, 1998. As sales increase, trade receivables will
continue to increase proportionately. The largest non-trade
receivable at October 31, 1999 was $152 in GST refunds.
Inventories at October 31, 1999 were up by $143, compared
to October 31, 1998. This increase was primarily due to
increased amounts of long lead-time components for existing
and new products. During fiscal 2000, inventories will
continue to grow as product sales increase.
Cash flow from financing activities was $15,522 in fiscal
1999. This was primarily due to an offering of 1,960,785
special warrants converted to common shares at $7.65 per
share which Wi-LAN completed in October 1999. Net
proceeds of the offering, after deducting issue costs and
commissions, were $13,906. The proceeds were allocated to
research and development, expansion of marketing programs
including market and sales channel development, and general
corporate purposes including strategic acquisitions and
working capital requirements. The balance of the increase in
cash flow from financing activities is mainly due to the
exercise of stock options. Cash flow from financing activities
is expected to continue to be sourced primarily through
equity offerings.
Capital purchases totaled $97 in fiscal 1999, primarily for
computer equipment and software. The Company had a
non-cash write-off in other assets of $301 in the fourth
quarter of fiscal 1999 relating to its investment in a small,
non-core company, after increasing its investment by $178
during fiscal 1999. Capital purchases are expected to
increase in fiscal 2000 due to growth in the Company’s
business operations.
The Company intends to continue to finance growth and
operations primarily through cash from operations and equity
offerings, supplemented as required by short-term
borrowings. Depending on market conditions, the Company
may reduce or entirely divest of its investments in
non-controlled companies.
Risks and Uncertainties
In addition to risks described elsewhere in this annual
report, the Company is subject to each of, and the
cumulative effect of all of, the following risk factors:
• Competition in the wireless industry and competition
from wired telecommunications;
• Technological change, new products and standards
and dependence on proprietary technology;
• Risk of third party claims for infringement;
• Management of future growth and expansion;
• Dependence on key personnel, products and
customers;
• Industry growth rate;
• Limited financial resources and the need for future
financing;
• Dependence on third party manufacturers, suppliers
and licensees;
• Risks related to acquisitions;
• Reliance on international sales; and
• Changes in the regulatory environment.
For a more complete discussion of risk factors, please refer to
the Company’s most recent prospectus dated October 6,
1999. Copies of this document are available on the
Company’s website at www.wi-lan.com, or by calling the
Company’s investor relations department at (403) 273-9133,
fax (403) 273-5100.
 Annual Report 1999 Wi-LAN Inc. 45

Management’s Statement of Responsibility

The financial statements of Wi-LAN and the other financial information included in this annual report are the responsibility of
the Company’s management and have been examined and approved by its Board of Directors. These financial statements have
been prepared by management in accordance with generally accepted accounting principles and include some amounts that
are based on management’s best estimates using careful judgment. The selection of accounting principles and methods is
management’s responsibility.

The Company maintains internal control systems designed to ensure that financial information is relevant and accurate and
that assets are safeguarded. Management recognizes its responsibility for conducting the Company’s affairs to comply with the
requirements of applicable laws and established financial standards and principles, and for maintaining proper standards of
conduct in its activities.

The Board of Directors supervises the financial statements and other financial information through its Audit Committee, which
consists solely of outside directors.

This committee’s role is to examine the financial statements and recommend that the Board of Directors approve them, to
examine the internal control and information protection systems and all other matters relating to the company’s accounting
and finances. In order to do so, the Audit Committee meets periodically with the external auditors, with and without the
company’s management, to review their audit plan and discuss the results of their examinations.

KPMG LLP has audited the financial statements in accordance with generally accepted auditing standards. KPMG LLP are the
external auditors who were appointed by the shareholders. KPMG LLP have full and unrestricted access to the Audit Committee
to discuss their audit and related findings as to the integrity of the Company’s financial reporting.

Chairman and Chief Executive Officer Chief Financial Officer

46 Wi-LAN Inc. Annual Report 1999

Auditors’ Report to the Shareholders

We have audited the consolidated balance sheets of Wi-LAN Inc. as at October 31, 1999 and 1998 and the statements of
operations and deficit and cash flows for the years then ended. These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we
plan and perform an audit to obtain reasonable assurance whether the financial statements are free of 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.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the
Company as at October 31, 1999 and 1998 and the results of its operations and its cash flows for the years then ended in
accordance with Canadian generally accepted accounting principles.

Chartered Accountants

Calgary, Canada
January 7, 2000 (except Note 15(c) which is as of March 3, 2000)
 Annual Report 1999 Wi-LAN Inc. 47

Consolidated Balance Sheets

October 31,1999 and 1998

(in thousands of dollars) 1999 1998

(note 14)
Assets

Current assets:
Cash $ 14,993 $ 2,379
Accounts receivable —product 1,844 1,800
—technology license 1,181 —
Investment tax credits receivable — 425
Inventories (note 3) 2,376 2,233
Prepaid expenses 51 54
20,445 6,891

Capital assets (note 4) 457 580

Long-term investments (note 5) 428 428

Other — 123

$ 21,330 $ 8,022

Liabilities and Shareholders’ Equity

Current liabilities:
Accounts payable and accrued liabilities $ 1,847 $ 800
Deferred technology license revenue 1,181 —
Redeemable preferred shares (note 6) 252 196
Due to related parties (note 7) 23 37
3,303 1,033

Long-term debt (note 8) 262 241

Shareholders’ equity:
Share capital (note 9) 32,459 16,937
Contributed surplus (note 5) 400 400
Deficit (15,094) (10,589)
17,765 6,748

Commitments (note 10)

Subsequent events (note 15)

$ 21,330 $ 8,022

See accompanying notes to consolidated financial statements.

On behalf of the Board:

Director Director
48 Wi-LAN Inc. Annual Report 1999

Consolidated Statements of Operations and Deficit

Years ended October 31,1999 and 1998

(in thousands of dollars, except per share amounts) 1999 1998

(note 14)

Revenue:
Product $ 5,923 $ 5,414
Gain on foreign exchange, interest and other income 139 354
6,062 5,768

Cost of product sales 3,197 3,316

2,865 2,452

Expenses:
Research and development 2,664 2,235
General and administrative 1,810 2,006
Sales and marketing 1,592 2,188
Product and customer services 691 784
Interest, bank charges and preferred share premium accretion 92 99
Depreciation 220 168
7,069 7,480

Operating loss (4,204) (5,028)

Equity in losses of investments (note 5) — (1,148)

Gain on reduction of ownership in investment (note 5) — 300
Write-off of investment in other assets (301) —
Net loss (4,505) (5,876)

Deficit, beginning of year (note 14) (10,589) (4,713)

Deficit, end of year $ (15,094) $ (10,589)

Loss per share $ (0.24) $ (0.36)

See accompanying notes to consolidated financial statements.

 Annual Report 1999 Wi-LAN Inc. 49

Consolidated Statements of Cash Flows

Years ended October 31,1999 and 1998

(in thousands of dollars) 1999 1998

(note 14)

Cash provided by (used in):

Operations:
Net loss $ (4,505) $ (5,876)
Items not involving cash:
Loss from equity investments — 1,148
Write-off of investment in other assets 301 —
Gain on reduction of ownership in equity investments — (300)
Depreciation and amortization 220 168
Accretion of preferred share premium 56 56
Accrued interest on long-term debt 21 20
Change in non-cash operating working capital balances:
Accounts receivable (1,225) (518)
Investment tax credits receivable 425 371
Inventories (143) (524)
Prepaid expenses 3 (44)
Accounts payable and accrued liabilities 1,047 (1,050)
Deferred technology license revenue 1,181 —
Due to related parties (14) (122)
(2,633) (6,671)

Financing:
Share capital, net 15,522 9,560

Investments:
Acquisition of capital assets (97) (441)
Other assets (178) 7
(275) (434)

Change in cash 12,614 2,455

Cash (bank overdraft), beginning of year 2,379 (76)

Cash, end of year $ 14,993 $ 2,379

Cash consists of cash on hand and balances with banks.

See accompanying notes to consolidated financial statements.

50 Wi-LAN Inc. Annual Report 1999

Notes to Consolidated Financial Statements

Years ended October 31,1999 and 1998
(tabular amounts in thousands of dollars)

1. Nature of operations:
Wi-LAN Inc., (the “Company”) is incorporated under the Business Corporations Act of Alberta, Canada. Its principal
business activities include the research and development, manufacturing, marketing and selling of wireless data
communications products and intellectual property.

2. Significant accounting policies:

The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and
expenses during the reported period. Actual results could differ from these estimates.
(a) Consolidation and long-term investments:
The consolidated financial statements include the accounts of Wi-LAN Inc. and its wholly owned subsidiaries.
Investments subject to significant influence are accounted for by the equity method. Investments in companies
which are not subject to significant influence or control are accounted for by the cost method.
(b) Revenue recognition:
The Company recognizes revenue when it is earned and realized or realizable in a manner consistent with
interpretations included in Staff Accounting Bulletin No. 101 of the US Securities and Exchange Commission.
For product sales, these conditions normally are achieved when products are shipped. Revenue from licensing of
technology is recognized when the Company has completed or fulfilled the terms of the licensing agreement including
delivery, acceptance and any elements that are essential to the functionality of the technology.
(c) Foreign currency translation:
All monetary assets and liabilities denominated in U.S. currency are translated into Canadian dollars at the rate of
exchange in effect at the balance sheet date. Revenue and expense items are translated at the average rate of
exchange for the year. Resulting gains or losses are included in income.
(d) Inventories:
Parts and sub-assembly inventory is stated at the lower of cost, on a first-in, first-out basis and replacement cost.
Inventories of finished goods and work-in-progress are stated at the lower of average cost and net realizable value.
(e) Capital assets:
Capital assets are stated at cost. Depreciation and amortization is provided using the following methods and rates:

Basis Rate
Computer software and equipment Straight-line 33%
Patents and licenses Straight-line 5.9%
Furniture Straight-line 20%
Leasehold improvements Straight-line 20%

(f) Research and development costs:

Research and development costs are expensed as incurred except if the development costs are recoverable and directly
related to the development of new products, processes or systems. The Company strictly interprets the assessment
of whether development costs should be capitalized. To date no development costs have been capitalized.
 Annual Report 1999 Wi-LAN Inc. 51

Notes to Consolidated Financial Statements

Years ended October 31,1999 and 1998
(tabular amounts in thousands of dollars)

(g) Overhead allocations:

Overhead expenses such as occupancy and communication costs are not allocated to individual departments, and are
instead reported as part of general and administrative expenses in the consolidated financial statements.

3. Inventories:

1999 1998
Parts and sub-assemblies $ 1,051 $ 716
Work-in-progress 667 554
Finished goods 658 963

$ 2,376 $ 2,233

4. Capital assets:

Accumulated
depreciation and Net book
October 31, 1999 Cost amortization value

Computer software and equipment $ 756 $ 460 $ 296

Patents and licenses 94 23 71
Furniture 61 44 17
Leasehold improvements 140 67 73

$ 1,051 $ 594 $ 457

Accumulated
depreciation and Net book
October 31, 1998 Cost amortization value

Computer software and equipment $ 678 $ 282 $ 396

Patents and licenses 80 17 63
Furniture 59 34 25
Leasehold improvements 137 41 96

$ 954 $ 374 $ 580

52 Wi-LAN Inc. Annual Report 1999

Notes to Consolidated Financial Statements

Years ended October 31,1999 and 1998
(tabular amounts in thousands of dollars)

5. Long-term investments:

Cell-Loc, Wireless,
Inc. Inc. Total

Balance October 31, 1997 $ 428 $ 1,148 $ 1,576

Equity in losses of investments — (1,148) (1,148)

Balance October 31, 1998 and 1999 $ 428 $ — $ 428

Market value, October 31, 1999 $ 21,000 N/A N/A

Market value, October 31, 1998 $ 3,000 N/A N/A

Market value of the investment in Cell-Loc is based on trading activity. The shares are held in escrow and time released
to the year 2001. The market value of this investment may differ from the realizable value due to the liquidity of such
shares. Wireless Inc. is a private company and the fair value of the Company’s investment has not been determined for
financial statement purposes.

On November 30, 1995, the Company granted Cell-Loc, Inc. (“Cell-Loc”), an exclusive license to use Wi-LAN Inc. Hopper
Plus technology for cellular tracking. Cell-Loc has agreed to purchase Hopper Plus units and any subsequent modifications
from the Company. The Company received 1,800,000 common shares of Cell-Loc at an agreed upon aggregate value of
$400,000 which approximates the costs incurred by the Company for developing the technology.

In April 1997, Cell-Loc issued 2,500,000 common shares through a public offering. Through the resulting dilution of
ownership the Company realized a gain on its investment, and Cell-Loc is no longer subject to significant influence. The
equity method of accounting, whereby the Company’s proportionate share of Cell-Loc’s losses is recognized, has been used
to the date of dilution and the cost method of accounting is used thereafter.

On May 14, 1997, the Company entered into a series of agreements with Wireless, Inc. (“Wireless”) including a license
and technology transfer and manufacturing agreement that granted Wireless a non-assignable, non-sublicensable, royalty
free, worldwide, perpetual right to develop, produce and market the Company’s technology in the wireless telephony
market in exchange for preferred shares of Wireless. Also on May 14, 1997, Wireless issued the same number of preferred
shares as issued to the Company for cash to another company in which a then director and shareholder of the Company
was an officer and shareholder. The preferred shares issued pursuant to these arrangements represented substantially all
of Wireless’ outstanding share capital at May 14, 1997. The Company has recorded revenue of $1,042,500 on these
transactions representing the Company’s share of cash paid for the Wireless preferred shares by the other company on
May 14, 1997.

In September 1997, Wireless issued 750,000 preferred shares through a private placement resulting in a dilution of
ownership and the realization of a gain on investment by the Company.
 Annual Report 1999 Wi-LAN Inc. 53

Notes to Consolidated Financial Statements

Years ended October 31,1999 and 1998
(tabular amounts in thousands of dollars)

In June 1998, the Company entered into an ownership restructuring arrangement with Wireless and the other shareholders
of Wireless. This restructuring included modifications to the license and technology transfer, and manufacturing
agreements, and the cancellation of a loan of $300,000 due to Wireless in exchange for a return of shares. Also in June
1998, Wireless merged with Multipoint Networks Inc. As a result of this restructuring and merger, the Company’s ownership
was diluted, and Wireless is no longer subject to significant influence. The equity method of accounting, whereby the
Company’s proportionate share of Wireless’ losses is recognized, has been used to the date of dilution and the cost method
of accounting is used thereafter.

6. Redeemable preferred shares

In April 1995, the Company issued 5,600.09 preferred shares to the common shareholders of the Company at March 1,
1995 who paid more than $0.48 per common share. The nominal value assigned to each preferred share is $0.01/share.
These preferred shares are redeemable at the option of the Company on or before April 28, 2000 and retractable
thereafter at the option of the holder at $50 per share. The Company intends to redeem the shares for cash on April 28,
2000 and the difference between the redemption amount and the nominal amount assigned to the shares is expensed over
the five year expected life of the shares.

7. Due to related parties and related party transactions:

1999 1998
Due to affiliated companies $ 23 $ 37

Amounts due to shareholders and affiliated companies, advanced for operating expenses, are interest free and due on
demand. Revenue for the year ended October 31, 1999 includes equipment sales to Wireless of $13,000 (1998—$322,000)
(note 5). Accounts receivable at October 31, 1999 includes $181,000 from Wireless (1998—$490,000) (note 5).

8. Long-term debt and credit facility:

1999 1998
Alberta Economic Development and Tourism Inc. $ 209 $ 209
Other 53 32
$ 262 $ 241

Alberta Economic Development and Tourism made advances to the Company pursuant to the provisions of the Department
of Technology, Research and Telecommunication Act. The loan is repayable at the rate of 4% of total gross revenue from
sales of specific product technology calculated on six month periods, commencing April 1, 1995. To October 31, 1999 the
Company believes that no amounts are due under this repayment provision. Interest at 9% annually up to a maximum of
$57,425 began accruing on the outstanding balance of the loan on March 31, 1997.

Credit facility:
The Company has a credit facility with a commercial bank that permits the Company to borrow up to $1,500,000. As at
October 31, 1999, the Company has not drawn against the facility (1998—$nil). The loan is payable on demand and bears
interest at the bank’s prime rate plus 1.5%. The facility is secured by a general assignment of all personal property of the
Company and a life insurance policy on the Chief Executive Officer of the Company.
54 Wi-LAN Inc. Annual Report 1999

Notes to Consolidated Financial Statements

Years ended October 31,1999 and 1998
(tabular amounts in thousands of dollars)

9. Share capital:
(a) Authorized:
Unlimited number of voting common shares.
6,350.9 of special preferred, redeemable, retractable, non-voting shares.
(b) Issued and outstanding:

Common Shares
Number Amount

Balance, October 31, 1997 14,427,286 $ 6,757

For cash (c) 4,200,000 9,539

For employment services 385,400 —
Payments under share repurchase agreement
(note 10(c)) (728,000) (26)
Conversion of convertible debentures (h) 258,080 645
Cancellation of shares (246,137) (18)
18,296,629 16,897
Decrease in notes receivable, net — 40
Balance, October 31, 1998 18,296,629 16,937

Special warrants (d) — 13,906

Exercise of stock options 631,675 1,426
Cancellation of shares (10,400) (25)
Conversion of special warrants (d) 1,960,785 —
20,878,689 32,244
Decrease in notes receivable, net — 215

Balance, October 31, 1999 20,878,689 $ 32,459

The Company recognizes a nominal value in its accounts for employment services provided in exchange for the issuance
of shares.

In February 1998, the Company’s shareholders approved the redesignation of Class A voting common shares as common
shares, Class D preferred shares as special preferred shares, the removal of Class B non-voting common shares and Class C
preferred shares as no such shares have ever been issued and outstanding, and the authorization of a new class of shares
issuable in series and designated as preferred shares.

Also in February 1998, the Company’s shareholders approved, on a 1 for 10,400 basis, the split of the Class A voting
common shares. All references in these financial statements to the number of Class A voting shares outstanding give effect
to this stock split.
 Annual Report 1999 Wi-LAN Inc. 55

Notes to Consolidated Financial Statements

Years ended October 31,1999 and 1998
(tabular amounts in thousands of dollars)

(c) Initial public offering:

On March 25, 1998, the Company completed an initial public offering of 4,200,000 common shares. The Company’s
arrangement with the underwriter included the granting of an option to the agent to purchase up to 420,000 common
shares at $2.50 per share, expiring March 25, 2000. As at October 31, 1999, 190,800 common shares were available
for purchase under the option.
(d) Warrants:
In October, 1999, the Company issued 1,960,785 common shares in exchange for 1,960,785 special warrants which
were previously issued on an underwritten basis in a private placement. The Company’s arrangement with the
underwriter included the granting of an option to the agent to purchase up to 196,079 common shares at $7.65 per
share, expiring July 21, 2000. As at October 31, 1999, no common shares were issued pursuant to this option.
(e) Employment Services:
In February 1998, the Company issued 385,400 common shares of the Company to employees for employment services
previously rendered. The Company recognized a nominal value in its accounts for employment services provided in
exchange for the issuance of shares.
(f) Stock options:
The Company has a stock option plan for directors, officers, employees and consultants. The Company is authorized
to issue options under the plan to acquire up to 10% of the common shares of the Company outstanding from time
to time.

The options are non-assignable and are exercisable for a period of five years from the date they are granted. At
October 31, 1999, options to acquire 1,598,159 (October 31, 1998—1,835,581) common shares were outstanding at
prices ranging from $1.50 to $10.87 per share with expiry dates ranging from March 2003 to October 2004.
(g) Shareholder Rights Protection Plan:
A Shareholder Rights Protection Plan (the “Rights Plan”) was adopted in March 1999 and was approved at the Annual
Shareholders Meeting on April 19, 1999. The Rights Plan utilizes the mechanism of a Permitted Bid (a bid which
provides that shares tendered to the bid will not be taken up prior to 60 days following the date of the bid) to ensure
that a person, company or association seeking control of the Company (an “Acquiring Person”) cannot proceed
without allowing the shareholders and the Board of Directors sufficient time to evaluate the bid. The purpose of the
Permitted Bid is to encourage a potential Acquiring Person to avoid the dilutive features of the Rights Plan by making
a Permitted Bid or by negotiating with the Board of Directors the terms of an offer which is fair to all shareholders.

If a Take-Over Bid does not qualify as a Permitted Bid, the Rights Plan provides that shareholders other than the
Acquiring Person may purchase shares at a reduced price, thereby diluting the value of the Acquiring Person’s shares.
(h) Conversion of debentures:
Pursuant to the terms and conditions of a trust indenture dated August 1997, the Company has authorized the issue
of convertible debentures to a maximum amount of $1,500,000. As at October 31, 1997 a total of $620,200 of
convertible debentures had been issued and an additional $25,000 was issued in December, 1997. On March 25, 1998,
the Company completed an Initial Public Offering of common shares and subsequently exercised its right to convert
the debentures to common shares at the initial public offering price of $2.50 per share resulting in the issue of
258,080 common shares.
56 Wi-LAN Inc. Annual Report 1999

Notes to Consolidated Financial Statements

Years ended October 31,1999 and 1998
(tabular amounts in thousands of dollars)

10. Commitments:
(a) Telus Communications Inc.:
Telus Communications Inc. funded a portion of the Company’s initial development expenses and has licensed a
technology to the Company. The licensing fee of $1,150,000 for the technology includes payments at (i) a rate of
1.4% of gross revenue generated from licensed products, (ii) 25% of gross revenue generated by sub licensing to third
parties (iii) both (i) and (ii) to a minimum of $68,000 on or before September 20, 1999 being the fifth anniversary
of the effective date of the agreement. Interest on overdue royalties is payable at 10% per annum
calculated on a simple interest basis.

A payment satisfying the minimum licensing fee was paid on September 20, 1999.
(b) Premises and equipment:
The Company is committed to annual payments under operating leases for premises and equipment through 2001.
Annual payments required subsequent to October 31, 1999 are as follows:

2000 $ 237
2001 98

(c) Repurchase of common shares:

The Company was committed to repurchasing 728,000 common shares from an existing shareholder, for aggregate
consideration of $650,000 payable in monthly installments of $50,000. At October 31, 1997, $50,000 of this amount
was outstanding. This amount was paid in full on November 7, 1997 and all amounts paid were allocated to share
capital and deficit and the 728,000 common shares were cancelled.

In June, 1997 the Company entered into an agreement to acquire certain patent and promotion rights. As part of the
consideration for these rights, the Company was to issue 109,200 common shares and agreed to repurchase these
shares over a period of three years at U.S. $2.40 per share. In March, 1998 the rights were acquired by the Company
and the agreement was amended whereby instead of issuing and repurchasing the related shares, the Company agreed
to pay U.S. $25,000 each quarter representing the equivalent of the repurchase of 10,400 common shares at a price
of U.S. $2.40 per share. The seller of the rights retained the right to require the issuance and repurchase of the
balance of the common shares at any time. As at October 31, 1999, the balance of the Company’s commitment under
this agreement was U.S. $87,500 (October 31, 1998—U.S. $162,500).

11. Income taxes:

At October 31, 1999 the Company had losses for income tax purposes and available tax deductions in excess of book assets
aggregating approximately $8,700,000. Under current tax legislation tax losses of approximately $7,000,000 do not expire
prior to 2000. Tax losses of $300,000 will expire in 2001. Unutilized research and development tax deductions of
approximately $4,900,000 million have an unlimited carryforward period. No recognition for the benefit of the tax loss
carryforward or the research and development tax deductions has been made in the financial statements.

12. Segmented information and export sales:

The Company operates in one operating segment being, the development, manufacture and sale, and licensing of wireless
data communication products and technology.
Substantially all of the Company’s assets, operations and employees are located in Canada.
 Annual Report 1999 Wi-LAN Inc. 57

Notes to Consolidated Financial Statements

Years ended October 31,1999 and 1998
(tabular amounts in thousands of dollars)

Product sales from operations in Canada were as follows:

North America $ 3,407
Europe 1,937
Other 579
$ 5,923

During the year ended October 31, 1999, the Company had one customer with product revenue of $846,000. No other
customers had revenue which exceeded ten percent of total product revenue.

13. Financial instruments:

The carrying values of accounts receivable, investment tax credits receivable and accounts payable and accrued
liabilities approximate their fair value due to the relatively short periods to maturity of these instruments.
The fair value of the Company’s long-term debt and investment in shares of Wireless could not be determined because
no market exists for these instruments.

14. Restatement of 1998 figures:

The 1998 figures have been restated to correct a $416,000 ($0.01 per share) overstatement of expenses in that year.

As a result of the correction, 1998 cost of product sales has decreased by $200,000 research and development expenses
have decreased by $150,000 and general and administrative expenses have decreased $66,000. Net loss for the year ended
October 31, 1998, accounts payable and the deficit at October 31, 1998 have all decreased by $416,000.

15. Subsequent events:

(a) Amplify.net
On November 22, 1999, the Company acquired a 2.27% interest in preferred shares of Amplify.net Inc. for consider-
ation of $1,470,000 cash. Amplify.net Inc. is a company specializing in broadband communication enabling solutions.
(b) Digital Transmission Systems Inc.
On January 7, 2000, the Company acquired a 51% common share equity interest, a U.S. $700,000 convertible
debenture and instruments to acquire a further approximate 12% interest in Digital Transmission Systems Inc. (“DTS”)
an Atlanta, Georgia based company for consideration of U.S. $520,000 cash and 115,660 of the Company’s common
shares. In addition the Company agreed to acquire U.S. $1,500,000 of a new convertible debenture to be issued by
DTS by April 1, 2000. The purchase price is expected to be primarily allocated to intellectual property and goodwill.
(c) Special Warrants
On March 3, 2000, the Company issued special warrants convertible into 600,000 common shares for gross proceeds
of $31,350,000 before the underwriters’ commission of 6.5% and expenses of the issue.

16. Uncertainty due to the Year 2000 Issue:

The Year 2000 Issue arises because many computerized systems use two digits rather than four to identify a year.
Date-sensitive systems may recognize the year 2000 as 1900 or some other date, resulting in errors when information using year 2000
dates is processed. In addition, similar problems may arise in some systems which use certain dates in 1999 to represent something
other than a date. Although the change in date has occurred, it is not possible to conclude that all aspects of the Year 2000 Issue
that may affect the Company, including those related to customers, suppliers, or other third parties, have been fully resolved.
58 Wi-LAN Inc. Annual Report 1999

Corporate Information

Officers Bankers
Scott Campbell Canadian Imperial Bank of Commerce
Vice President, Product Management Calgary, Canada
Bill Hews
President and Chief Operating Officer Legal Counsel
Peter Kinash Burnet, Duckworth, and Palmer
Chief Financial Officer First Canadian Place
Wanda Posehn 1400, 350 – 7th Ave. S.W.
Vice President, Marketing Calgary, Albera T2P 3N9
Nico Roelofsen
Vice President, Sales Transfer Agent
Ramesh Uppal Montreal Trust Company of Canada
Vice President, Technology Calgary, Canada
Dr. Hatim Zaghloul
Chairman & Chief Executive Officer Stock Exchange Listing
The Toronto Stock Exchange
Directors Trading Symbol: WIN
Dan L. Baxter
William A. Dunbar Investor Relations
Charles N.D. Hotzel Ken Wetherell
Frank King Telephone: (403) 207-6329
Dr. Robert Schulz Fax: (403) 273-5100
Dr. Hatim Zaghloul E-mail: kenw@wi-lan.com

Audit Committee Head Office

Charles N. D. Hotzel Wi-LAN Inc.
Frank King 300, 801 Manning Road NE
Dr. Robert Schulz Calgary, Alberta, Canada
T2E 8J5
Compensation Committee Telephone: 403-273-9133
Dan L. Baxter Toll Free (North America):
William A. Dunbar 1-800-258-6876
Charles N.D. Hotzel Fax: 403-273-5100
E-mail: info@wi-lan.com
Governance Committee URL: http://www.wi-lan.com
Dan L. Baxter
Frank King

Auditors www
.wi-lan.com
KPMG LLP
Calgary, Canada
 Biographies

Dr. Hatim Zaghloul,

Chairman and Chief Executive Officer

Dr. Hatim Zaghloul is the co-founder of Wi-LAN Inc., and is

recognized internationally as a leading innovator in the field
Hatim Zaghloul Bill Hews Peter Kinash
of OFDM radio technology. Dr. Zaghloul holds a B.Sc. in
Electrical Engineering from Cairo University, Egypt, and both
a M.Sc. and a Ph.D. in Physics from the University of Calgary.
Dr. Zaghloul is the co-inventor of two new wireless
technologies: Wide-band Orthogonal Frequency Division
Multiplexing (W-OFDM) and Multi-code Direct Sequence Peter Kinash,
Spread Spectrum (MC-DSSS). He has been published Chief Financial Officer
extensively in technical journals, and holds nine Canadian
and American patents, including five pending patents— Mr. Peter Kinash is a chartered accountant who joined
several in partnership with Dr. Michel Fattouche of the Wi-LAN in January 2000, bringing 20 years of experience in
University of Calgary. Dr. Zaghloul is the inventor of “Network advising growing high-tech companies to maturity. Most
LivingTM”, allowing seamless communication through current recently, he led KPMG’s Information, Communication and
and future technologies. Entertainment practice in Calgary since 1990. The practice
assists a wide range of technology companies with issues
related to strategy, alliance partners, financing, people,
Printed in Canada on recycled and recyclable papers by Ronalds Printing—Designed by x-Height design, Calgary

Bill Hews, securities, and accounting and tax in Canada and the US. He
President and Chief Operating Officer has direct experience with debt and equity financings in
Canada and the US totaling approximately $5 billion within
Mr. Hews joined Wi-LAN in September 1999. Prior to joining the last 4 years. His success has been evident in his ability
Wi-LAN, Mr. Hews spent more than 20 years at Nortel to help move technology across borders, and in completing
Networks Corporation where he developed a strong IPO’s, and corporate and intellectual property purchases, and
operations background in the communications industry. From divestitures. Mr. Kinash has lectured and written about his
November 1998 until joining Wi-LAN, Mr. Hews served as Vice experience with corporate financing, securities filings, and
President—Supply Chain Operations, Enterprise Networks, mergers and acquisitions to educational facilities and
where he led the drive to improve the group’s global supply high-tech companies.
chain processes. From March 1995 until November 1998,
Mr. Hews served as Vice President—Global Operations,
Enterprise Networks, where he led a large multi-national
multi-plant organization. From January 1991 until March
1995, Mr. Hews served as Assistant Vice President, Key
Systems/Terminals, where he was in charge of a manufac-
turing group making leading residential telephones and small
business systems. Mr. Hews obtained his B.A.Sc. in Industrial
Engineering from the University of Toronto and holds a MBA
from the University of Western Ontario.
Wi-LAN Inc.
300, 801 Manning Road NE
Calgary, Alberta, Canada T2E 8J5
Telephone: 403-273-9133
Toll Free (North America): 1-800-258-6876
Fax: 403-273-5100
E-mail: info@wi-lan.com
URL: http://www.wi-lan.com