================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                   ------------------------------------------

                                    FORM 10-Q

|X|  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

     For the quarterly period ended June 30, 2000

                                       OR

|_|  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934

     For the transition period from ____________ to ______________.

                         Commission file number 0-28968


                         MDSI MOBILE DATA SOLUTIONS INC.
             (Exact name of registrant as specified in its charter)

          CANADA                                      NOT APPLICABLE
(Jurisdiction of incorporation)             (I.R.S. Employer Identification No.)


                              10271 Shellbridge Way
                           Richmond, British Columbia,
                                 Canada V6X 2W8
                                 (604) 207-6000
   (Address and telephone number of registrant's principal executive offices)


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

              The number of outstanding shares of the Registrant's
           common stock, no par value, at June 30, 2000 was 8,557,299.


================================================================================

<PAGE>


                         MDSI MOBILE DATA SOLUTIONS INC.

                             INDEX TO THE FORM 10-Q
                  For the quarterly period ended June 30, 2000


<TABLE>
                                                                                                         Page
                                                                                                         ----
<S>                                                                                                        <C>
Part I - FINANCIAL INFORMATION..............................................................................1

         ITEM 1. FINANCIAL STATEMENTS.......................................................................1

                 Consolidated Balance Sheets................................................................1

                 Consolidated Statements of Operations and Deficit......................................... 2

                 Consolidated Statements of Cash Flows......................................................3

                 Notes to the Consolidated Financial Statements.............................................4

         ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS.......................................................10

         ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.................................17

Part II - OTHER INFORMATION

         ITEM 1. LEGAL PROCEEDINGS ........................................................................18

         ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.................................................18

         ITEM 3. DEFAULTS UPON SENIOR SECURITIES ..........................................................18

         ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.......................................18

         ITEM 5. OTHER INFORMATION.........................................................................20

         ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K..........................................................20


SIGNATURES.................................................................................................21
</TABLE>






<PAGE>

Part I -  FINANCIAL INFORMATION

     ITEM 1. FINANCIAL STATEMENTS



                                         MDSI MOBILE DATA SOLUTIONS INC.

                                           Consolidated Balance Sheets
                                 (Expressed in United States dollars (note 1b))
                                                   (Unaudited)

<TABLE>
                                                                                            As at
                                                                        ------------------------------------
                                                                           June 30,            December 31,
                                                                             2000                 1999
                                                                        --------------       ---------------
<S>                                                                        <C>                <C>
Assets
Current assets
     Cash and cash equivalents........................................     $9,570,196         $  14,612,923
     Accounts receivable, net
        Trade.........................................................     13,170,893            14,147,011
        Unbilled......................................................     12,449,274             5,595,902
     Prepaid expenses ................................................      1,869,983             1,121,580
     Deferred income taxes............................................        577,427               577,427
     Current portion of lease receivable..............................        329,808               386,861
                                                                        --------------       ---------------
                                                                           37,967,581            36,441,704
Lease receivable....................................................                -               133,723
Investments.........................................................        6,888,486             4,140,457
Capital assets, net.................................................        8,090,113             6,858,747
Intangible assets, net..............................................        1,981,015             1,907,297
                                                                        --------------       ---------------
                                                                           54,927,195            49,481,928
Assets of discontinued operations (note 4)..........................          837,959               960,610
                                                                        --------------       ---------------
Total assets.......................................................      $ 55,765,154          $ 50,442,538
                                                                        ==============       ===============
Liabilities and stockholders' equity
Current liabilities
     Accounts payable ................................................    $ 1,761,878          $  1,760,644
     Accrued liabilities .............................................      4,463,185             2,655,522
     Income taxes payable ............................................        898,012             1,567,671
     Deferred revenue.................................................      7,981,098             4,742,038
     Current portion of long term debt................................         47,831                52,153
     Current obligations under capital leases ........................      1,611,849             1,289,208
                                                                        --------------       ---------------
                                                                           16,763,853            12,067,236
Obligations under capital leases.....................................       2,116,396             2,632,406
Long Term Debt ......................................................           5,253                32,181
Liabilities of discontinued operations (note 4) .....................         106,267               173,424
                                                                        --------------       ---------------
Total liabilities....................................................      18,991,769            14,905,247
                                                                        --------------       ---------------

Stockholders' equity
     Common stock.....................................................     48,327,375            44,961,759
     Additional paid-up capital ......................................        220,700               220,700
     Treasury stock...................................................       (85,043)              (85,043)
     Deficit..........................................................   (10,999,543)           (9,130,688)
     Accumulated comprehensive income (loss) (note 1b)................      (690,104)             (429,437)
                                                                        --------------       ---------------
                                                                           36,773,385            35,537,291
                                                                        --------------       ---------------
Total liabilities and stockholders' equity...........................    $ 55,765,154          $ 50,442,538
                                                                        ==============       ===============
</TABLE>


                 See notes to consolidated financial statements


                                       1
<PAGE>

<TABLE>
                                                 MDSI MOBILE DATA SOLUTIONS INC.

                                        Consolidated Statements of Operations and Deficit
                                         (Expressed in United States Dollars (note 1b))
                                                           (Unaudited)

==================================================================================================================================
                                                                Three months ended                      Six months ended
                                                                      June 30                               June 30
                                                            --------------------------------      -------------------------------
                                                                  2000             1999                2000              1999
                                                            --------------    --------------      -------------     -------------
<S>                                                          <C>              <C>                  <C>              <C>
Revenue
     Software and services..............................     $  9,508,834     $   10,455,787       $ 19,178,024     $  19,204,128
     e-Business ........................................        1,551,212          1,325,351          3,040,179         2,430,818
     Third-party products and services..................          652,718          1,785,795          1,181,136         5,555,258
     Maintenance and support............................        1,973,092          1,299,457          3,997,438         2,307,979
                                                            --------------    --------------      -------------     -------------
                                                               13,685,856         14,866,390         27,396,777        29,498,183
Direct costs............................................        6,296,418          6,632,948         11,847,028        14,113,034
                                                            --------------    --------------      -------------     -------------
Gross profit............................................        7,389,438          8,233,442         15,549,749        15,385,149
                                                            --------------    --------------      -------------     -------------
Operating expenses
     Research and development.............................      2,275,316          1,739,079          4,314,222         3,360,283
     Sales and marketing .................................      3,365,434          2,545,928          6,190,898         5,141,706
     General and administrative...........................      2,079,216          1,662,836          4,192,777         3,309,387
     Costs of acquisition ................................      2,076,028                  -          2,076,028                 -
     Amortization of intangible assets....................         67,479             69,810            137,289           139,620
                                                            --------------    --------------      -------------     -------------
                                                                9,863,473          6,017,653         16,911,214        11,950,996
                                                            --------------    --------------      -------------     -------------
Operating income........................................       (2,474,035)         2,215,789         (1,361,465)        3,434,153

Other income (expense)....................................       (176,752)          (333,419)          (389,118)         (495,815)
                                                            --------------    --------------      -------------     -------------
Income before tax provision...............................     (2,650,787)         1,882,370         (1,750,583)        2,938,338
Provision for income taxes................................        172,428           (573,481)          (118,272)         (857,591)
                                                            --------------    --------------      -------------     -------------
Net income from continuing operations.....................     (2,478,359)         1,308,889         (1,868,855)        2,080,747
Loss from discontinued operations (note 4)................              -                  -                  -        (3,872,683)
                                                            --------------    --------------      -------------     -------------
Net income (loss).........................................     (2,478,359)         1,308,889         (1,868,855)       (1,791,936)

Deficit, Beginning of period..............................     (8,521,184)       (13,230,901)        (9,130,688)      (10,130,076)
                                                            --------------    --------------      -------------     -------------
                                                              (10,999,543)       (11,922,012)       (10,999,543)      (11,922,012)
Dividends ................................................              -           (147,000)                 -          (147,000)
                                                            --------------    --------------      -------------     -------------
Deficit, end of period.................................... $  (10,999,543)     $ (12,069,012)      $(10,999,543)    $ (12,069,012)
                                                            --------------    --------------      -------------     -------------
                                                            ==============    ==============      =============     =============
Earnings (loss) per common share
Earnings from continuing operations
     Basic ..............................................  $        (0.29)     $        0.16         $    (0.22)        $    0.26
                                                            ==============    ==============      =============     =============
     Diluted ............................................  $        (0.29)     $        0.14         $    (0.22)        $    0.23
                                                            ==============    ==============      =============     =============
Net earnings (loss)
     Basic ..............................................  $        (0.29)     $        0.16         $    (0.22)        $   (0.22)
                                                            ==============    ==============      =============     =============
     Diluted ............................................  $        (0.29)     $        0.14         $    (0.22)        $   (0.22)
                                                            ==============    ==============      =============     =============
Weighted average shares outstanding
     Basic...............................................       8,540,870          8,101,136          8,466,613         7,973,420
                                                            ==============    ==============      =============     =============
     Diluted.............................................       8,540,870          9,135,983          8,466,613         9,035,131
                                                            ==============    ==============      =============     =============
</TABLE>


                 See notes to consolidated financial statements

                                       2
<PAGE>


                                         MDSI MOBILE DATA SOLUTIONS INC.

                                      Consolidated Statements of Cash Flows
                                 (Expressed in United States dollars (note 1b))
                                                   (Unaudited)


<TABLE>
                                                                                     Six months ended June 30,
                                                                             ---------------------------------------
                                                                                    2000                   1999
                                                                             ----------------         --------------
<S>                                                                            <C>                     <C>
Cash flow from operating activities
     Net income (loss) from continuing operations.....................         $  (1,868,855)          $  2,080,747
     Items not affecting cash:
          Depreciation and amortization...............................             1,345,724                892,499
          Deferred income taxes.......................................                     -                171,310
          Changes in non-cash operating working capital items.........            (2,263,188)            (3,205,077)
                                                                             ----------------         --------------
     Net cash used in operating activities............................            (2,786,319)               (60,521)
                                                                             ----------------         --------------
Cash flows from financing activities
     Issuance of common stock.........................................             3,365,615             11,505,220
     Payment of dividends.............................................                     -               (147,000)
     Repayment of long-term debt......................................               (31,250)              (269,493)
     Proceeds from (repayments of) capital leases.....................              (193,368)             1,046,212
                                                                             ----------------         --------------
     Net cash provided by financing activities........................             3,140,997             12,134,939
                                                                             ----------------         --------------
Cash flows from investing activities
     Long term lease receivable.......................................               190,776                211,054
     Acquisition of investments.......................................            (2,748,029)                     -
     Acquisition of intangible assets ................................              (220,000)                     -
     Acquisition of capital assets ...................................            (2,414,980)            (2,524,068)
                                                                             ----------------         --------------
     Net cash used in investing activities............................            (5,192,233)            (2,313,014)
                                                                             ----------------         --------------
Cash provided by (used in) continuing operations.....................             (4,837,555)             9,761,404
Cash provided by (used for) discontinued operations (note 4).........                 55,494               (206,631)
                                                                             ----------------         --------------
Net cash inflow (outflow)............................................             (4,782,061)             9,554,773
Effects of foreign exchange fluctuations on cash.....................               (260,666)             1,010,010
Cash and cash equivalents, beginning of period......................              14,612,923              3,605,559
                                                                             ----------------         --------------
Cash and cash equivalents, end of period............................           $   9,570,196          $  14,170,342
                                                                             ================         ==============
</TABLE>



                 See notes to consolidated financial statements


                                       3
<PAGE>

                        MDSI MOBILE DATA SOLUTIONS INC.

                 Notes to the Consolidated Financial Statements
                    For the three months ended June 30, 2000
                 (Expressed in United States dollars (note 1b))
                                   (Unaudited)


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     (a)  Basis of presentation

          These  financial  statements  have been  prepared in  accordance  with
          accounting  principles  generally  accepted  in the United  States for
          interim  financial  reporting and pursuant to the  instructions of the
          United States Securities and Exchange Commission Form 10-Q and Article
          10 of Regulation  S-X. While these  financial  statements  reflect all
          normal recurring  adjustments which are, in the opinion of management,
          necessary for fair  presentation of the results of the interim period,
          they do not include all of the information  and footnotes  required by
          generally  accepted  accounting   principles  for  complete  financial
          statements. For further information, refer to the financial statements
          and footnotes thereto included in the Company's Annual Report filed on
          Form 10-K for the year ended December 31, 1999.

     (b)  Reporting and functional currency

          The  company  changed  its  reporting  currency  to  the  U.S.  dollar
          effective  January 1, 2000. The change in reporting  currency was made
          to improve  investors'  ability to compare the Company's  results with
          those of most other publicly traded businesses in the industry.  These
          consolidated   financial   statements  and  those  amounts  previously
          reported  in  Canadian  dollars  have been  translated  from  Canadian
          dollars to U.S.  dollars by translating  assets and liabilities at the
          rate in effect at the  respective  balance sheet date and revenues and
          expenses at the average rate for the reporting  period.  Any resulting
          foreign exchange gains and losses are recorded as a separate component
          of  shareholder  equity and  described  as  accumulated  comprehensive
          income (loss)

          Comprehensive Income for the period can be summarized as follows:

<TABLE>
                                              Three months ended June 30,             Six months ended June 30,
                                         --------------------------------------    ---------------------------------
                                               2000                  1999               2000                1999
                                         ----------------      ----------------    --------------      -------------
           <S>                             <C>                   <C>                <C>                  <C>
           Net income from continuing      $ (2,478,359)         $ 1,308,889        $(1,868,855)         $2,080,747
           operations

           Comprehensive items
               - Translation adjustment               -              660,363           (260,666)          1,010,010
                                         ------------------   -----------------    ----------------   --------------
           Comprehensive income for the    $ (2,478,359)          $1,969,252        $(2,129,521)         $3,090,757
           period                        ==================   =================    ================   ==============

</TABLE>





                                       4
<PAGE>

                         MDSI MOBILE DATA SOLUTIONS INC.

                 Notes to the Consolidated Financial Statements
                    For the three months ended June 30, 2000
                 (Expressed in United States dollars (note 1b))
                                   (Unaudited)



1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

          As at June 1, 2000 the Company and its  subsidiaries  adopted the U.S.
          dollar as their  primary  currency of  measurement.  The change in the
          Company's  currency  of  measurement  was  made  due to the  Company's
          purchase of Connectria  Corporation  ("Connectria")  and the resulting
          increase in the Company's sales and costs denominated in U.S. dollars.
          The  purchase  of  Connectria  as  well  as  U.S.  dollar  denominated
          expenditures as a percentage of overall  expenditures  increasing over
          time and an  increase  in the  generation  of cash flows from sales in
          U.S. dollars resulted in the Company's decision to change the currency
          of measurement to the U.S. dollar.

          The  company  translates  transactions  in foreign  currencies  at the
          exchange rate in effect on the transaction  date.  Monetary assets and
          liabilities  denominated  in a  currency  other  than the  measurement
          currency are translated at the exchange rates in effect at the balance
          sheet date. The resulting  exchange gains and losses are recognized in
          earnings.

          As a  result  of  the  change  in the  currency  of  measurement,  the
          company's   foreign   currency  risk  has  changed  from  U.S.  dollar
          denominated  monetary  assets  and  liabilities  to  non-U.S.   dollar
          denominated monetary assets and liabilities and the risk of the impact
          of exchange  rate changes  relative to the U.S.  dollar.  The ultimate
          effects  of the  change  on our  financial  position  and  results  of
          operations  will only be  determinable in the future based on exchange
          rate changes that occur in such periods.

     (c)  Use of estimates

          The preparation of financial  statements in conformity with accounting
          principles generally accepted in the United States requires management
          to make estimates and assumptions  that affect the reported amounts of
          assets and liabilities at the date of the financial statements and the
          reported  amounts  of  revenues  and  expenses  during  the  reporting
          periods. Actual results could differ from those estimates.




                                       5
<PAGE>

                         MDSI MOBILE DATA SOLUTIONS INC.
                 Notes to the Consolidated Financial Statements
                    For the three months ended June 30, 2000
                 (Expressed in United States dollars (note 1b))
                                   (Unaudited)



2.   SEGMENTED INFORMATION

     Segmented information

     The Company  develops,  markets and supports  mobile work force  management
     systems serving the needs of industry and government.  Examples include the
     utility, telecommunications/cable and public safety industries. At December
     31, 1999, the Company  reported only one business  segment - Field Service.
     On  February 1, 2000,  the Company  announced  its  intentions  to sell its
     products  of  mobile   workforce   management  and  wireless   connectivity
     application   software   over  the  internet   from  a   wirelessly-enabled
     Applications  Service  Provider ("ASP") site. As a result of that decision,
     the Company now has two business segments.

     On June 1, 2000,  the  Company  completed  its  acquisition  of  Connectria
     Corporation  (note 5). As Connectria  is  considered  part of the Company's
     e-Business operating segment and the transaction has been treated using the
     pooling of interests  method,  the Company has reflected the acquisition by
     segregating  the  e-Business  segment  for the three and six month  periods
     ending June 1999.

     Business Segments

<TABLE>
                                             Three months ended June 30, 2000                Six months ended June 30, 2000
                                          Field                                          Field
                                         Service       e-Business(1)      Total            Service      e-Business(1)    Total
        -------------------------------------------------------------------------------------------------------------------------
        <S>                           <C>             <C>            <C>              <C>             <C>           <C>
        Revenue                       $ 12,110,566    $ 1,575,290    $ 13,685,856     $ 24,301,798    $ 3,094,979   $ 27,396,777
        Operating earnings              (1,732,076)      (741,959)     (2,474,035)        (103,246)    (1,258,219)    (1,361,465)
        Depreciation & Amortization        792,468         35,424         827,892        1,279,596         66,128      1,345,724

        Long lived assets               14,058,532      2,901,082      16,959,614       14,058,532      2,901,082     16,959,614
        Capital Expenditures             1,046,729        116,684       1,163,413        2,139,870        275,110      2,414,980




                                             Three months ended June 30, 1999                Six months ended June 30, 1999
                                          Field                                          Field
                                         Service       e-Business(1)     Total            Service      e-Business(1)     Total
        -------------------------------------------------------------------------------------------------------------------------

        Revenue                       $ 13,425,438    $ 1,440,952    $ 14,866,390     $ 25,885,948    $ 3,612,235   $ 29,498,183
        Operating earnings               2,161,716         54,073       2,215,789        3,208,678        225,475      3,434,153
        Depreciation & Amortization        488,390         15,402         503,792          851,292         41,207        892,499

        Long lived assets               12,567,531        338,970      12,906,501       12,567,531        338,970     12,906,501
        Capital Expenditures             1,629,767        125,072       1,754,839        2,384,840        139,228      2,524,068

</TABLE>

(1)  The e-Business  operating  segment also includes  revenues from third-party
     products and services.


                                       6
<PAGE>

                         MDSI MOBILE DATA SOLUTIONS INC.
                 Notes to the Consolidated Financial Statements
                    For the three months ended June 30, 2000
                 (Expressed in United States dollars (note 1b))
                                   (Unaudited)



2.   SEGMENTED INFORMATION (continued)

     Geographic information

     The  Company  earned  revenue  from  sales to  customers  in the  following
     geographic locations:

<TABLE>
                                    Three months ended June 30,       Six months ended June 30,
                                  --------------------------------------------------------------
                                       2000             1999            2000            1999
                                  --------------   -------------    -------------  -------------
     <S>                             <C>             <C>               <C>          <C>
     Canada....................       $  217,300      $  695,797        $ 453,607    $ 1,448,579
     United States.............       10,412,336      11,540,035       22,492,312     23,096,891
     Europe....................        2,690,226       2,125,164        4,060,477      4,023,803
     Other.....................          365,994         505,394          387,381        928,910
                                  --------------   -------------    -------------  -------------
                                    $ 13,685,856    $ 14,866,390     $ 27,396,777   $ 29,498,183
                                  ==============   =============    =============  ==============
</TABLE>


3.   EARNINGS (LOSS) PER COMMON SHARE

     Basic earnings (loss) per common share is calculated by dividing net income
     (loss) by the weighted average number of common shares  outstanding  during
     the period.  Diluted  earnings  (loss) per share was calculated by dividing
     net  income  (loss)  by the sum of the  weighted  average  number of common
     shares  outstanding plus all additional  common shares that would have been
     outstanding  if  potentially  dilutive  common  shares had been issued.  In
     periods  for  which  there is a  reported  net loss,  potentially  dilutive
     securities have been excluded from the calculation as their effect would be
     anti-dilutive.

     The  following  table  reconciles  the  number  of shares  utilized  in the
     earnings (loss) per common share calculations for the periods indicated:

<TABLE>
                                                             Three months ended                 Six months ended
                                                                  June 30,                           June 30,
                                                     --------------------------------  ---------------------------------
                                                           2000             1999             2000               1999
                                                     ---------------   --------------   --------------     -------------
    <S>                                                   <C>              <C>              <C>               <C>
     Weighted average shares outstanding.........         8,540,870        8,101,136        8,466,613         7,973,420

     Common stock equivalents

     Stock options...............................                 -        1,034,847                -         1,061,711
                                                     ---------------   --------------   --------------     -------------
     Total shares for diluted earnings (loss) per
     common share................................         8,540,870        9,135,983        8,466,613         9,035,131
                                                     ===============   ==============   ==============     =============
</TABLE>



                                       7
<PAGE>

                         MDSI MOBILE DATA SOLUTIONS INC.
                 Notes to the Consolidated Financial Statements
                    For the three months ended June 30, 2000
                 (Expressed in United States dollars (note 1b))
                                   (Unaudited)



4.   DISCONTINUED OPERATIONS

     As a result of the Company's  decision to dispose of its Delivery  segment,
     the Delivery  segment has been  classified as a discontinued  operation and
     the results of operation, financial position and cash flow for this segment
     have been segregated from those of continuing operations.

     Summarized  financial  information  of the  discontinued  operations  is as
     follows:

<TABLE>
       Results of discontinued operations
       ---------------------------------------------------------------------------------------------------------
                                                                      June 30, 2000            June 30, 1999
                                                                   ---------------------   ---------------------
          <S>                                                         <C>                   <C>
          Revenues                                                    $          -          $    1,912,378
                                                                   =====================   =====================
          Loss before income taxes                                               -              (1,572,278)
          Income tax                                                             -                       -
                                                                   ---------------------   ---------------------
                                                                                 -              (1,572,278)

          Estimated loss on future operations and disposal
             net of income taxes                                                 -              (2,300,405)
                                                                   ---------------------   ---------------------
          Income (loss) from discontinued operations                 $           -          $   (3,872,683)
                                                                   =====================   =====================


       Financial position of discontinued operations
       ---------------------------------------------------------------------------------------------------------

                                                                      June 30, 2000           December 31, 1999
                                                                   ---------------------   ---------------------
          Current assets                                             $     837,959          $      960,610
          Long term assets                                                       -                       -
                                                                   ---------------------   ---------------------
          Total assets of discontinued operations                    $     837,959          $      960,610
                                                                   =====================   =====================
          Current liabilities                                        $     106,267          $      173,424
          Long term liabilities                                                  -                       -
                                                                   ---------------------   ---------------------
          Total liabilities of discontinued operations               $     106,267          $      173,424
                                                                   =====================   =====================


       Changes in cash flow of discontinued operations
       ---------------------------------------------------------------------------------------------------------

                                                                      June 30, 2000            June 30, 1999
                                                                   ---------------------   ---------------------
          Operating activities                                       $      55,494          $     (119,633)
          Investing activities                                                   -                 (86,998)
          Financing activities                                                   -                       -
                                                                   ---------------------   ---------------------
          Cash provided by (used for) discontinued operations        $      55,494          $     (206,631)
                                                                   =====================   =====================
</TABLE>



                                       8
<PAGE>


                         MDSI MOBILE DATA SOLUTIONS INC.
                 Notes to the Consolidated Financial Statements
                    For the three months ended June 30, 2000
                 (Expressed in United States dollars (note 1b))
                                   (Unaudited)



5.   BUSINESS COMBINATION

     On June 1, 2000 the  Company  acquired  all of the issued  and  outstanding
     shares of Connectria Corporation  ("Connectria"),  a privately held company
     based in St. Louis, Missouri, that is an application service provider (ASP)
     and provider of online service management  solutions for service companies.
     The Company issued  approximately  845,000 common shares, and approximately
     584,000  employee  stock options to acquire common shares of the Company in
     exchange for all of the outstanding stock and options of Connectria.

     The  transaction  is accounted for under the pooling of interest  method of
     accounting and all historical  financial  information  contained herein has
     been restated to include combined results of operations, financial position
     and cash flows of Connectria.

     Separate results of the operations for the periods prior to the acquisition
     with Connectria are outlined below.

                       Three months ended Six months ended
                               March 31, June 30,

<TABLE>
                                                ------------------------------------------------------
                                                      2000              1999                  1999
                                                ---------------    --------------       --------------
        <S>                                      <C>               <C>                  <C>
         Revenue:
         MDSI Mobile Data Solutions Inc........    $12,191,232       $12,460,510          $25,885,948
         Connectria Corporation                      1,519,689         2,171,283            3,612,235
                                                ---------------    --------------       --------------
         Combined                                  $13,710,921       $14,631,793          $29,498,183
                                                ===============    ==============       ==============

         Net Income:
         MDSI Mobile Data Solutions Inc........       $612,495       $(3,272,225)         $(2,017,411)
         Connectria Corporation................         (2,991)          171,402              225,475
                                                ---------------    --------------       --------------
         Combined                                     $609,504       $(3,100,823)          $1,791,936
                                                ===============    ==============       ==============

         Other changes in stockholders' equity:
         MDSI Mobile Data Solutions Inc........      $(260,666)         $349,647           $1,010,010
         Connectria Corporation................              -                 -                    -
                                                ---------------    --------------       --------------
         Combined                                    $(260,666)         $349,647           $1,010,010
                                                ===============    ==============       ==============
</TABLE>


6.   COMPARITIVE AMOUNTS

     Certain  comparative amounts have been reclassified to conform with current
     years presentation.





                                       9
<PAGE>

ITEM 2:  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS

     Certain  statements  and  information  contained  in this  Form  constitute
forward-looking  statements  within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended. Such forward-looking  statements involve known
and unknown  risks,  uncertainties  and other  factors that may cause the actual
results,  performance  or  achievement of the Company,  or  developments  in the
Company's  industry,   to  differ  materially  from  the  anticipated   results,
performance  or  achievements  expressed  or  implied  by  such  forward-looking
statements.  Such factors include, but are not limited to: the Company's limited
operating  history,  history of losses,  lengthy  sales  cycles,  the  Company's
dependence upon large contracts and relative  concentration of customers,  risks
involving  the  management  of growth and  integration  of  acquisitions,  risks
associated   with   performance  of  pre-existing   contracts   assumed  through
acquisitions, e-Business development, competition, product development risks and
risks of  technological  change,  dependence  on selected  vertical  markets and
third-party  marketing  relationships  and  suppliers,   risks  associated  with
international  operations,  the  Company's  ability to protect its  intellectual
property rights and the other risks and uncertainties  detailed in the Company's
Securities  and Exchange  Commission  filings,  including the  Company's  Annual
Report on Form 10-K for the year ended December 31, 1999.

     All  financial  information  in this Form is  expressed  in  United  States
dollars unless otherwise noted.

Overview

     MDSI develops, markets, implements and supports mobile workforce management
and wireless  connectivity  software for use by a wide variety of companies that
have  substantial  mobile  workforces,  such  as  utilities,  telecommunications
companies, cable companies and insurance companies.  MDSI's products are used by
such   companies  in   conjunction   with  public  and  private   wireless  data
communications networks to provide comprehensive solutions for the automation of
business processes associated with the scheduling, dispatching and management of
a mobile workforce.  The Company's products provide a cost-effective  method for
companies with mobile workers to utilize data communications to communicate with
such workers,  and for such workers to interface on a real-time basis with their
corporate information systems.

     The Company's revenue is derived from (i) software and services, consisting
of the  licensing  of software  and  provision  of related  services,  including
project management, installation,  integration, customization and training; (ii)
e-Business  services  such as the  provision of  application  services and other
online service  management  solutions,  (iii) third party products and services,
consisting  of the  provision  of non-MDSI  products and services as part of the
total contract, and (iv) maintenance and support, consisting of the provision of
after-sale  support services as well as hourly,  annual or extended  maintenance
contracts.

Field Service Business

     The  implementation  of a complete mobile data solution requires a wireless
data communications  network, a land-based data communications  network,  mobile
computing  devices  integrated  with wireless data  communication  modems,  host
computer equipment, industry specific application software like MDSI's, wireless
connectivity  software  and a variety of services  to manage and  install  these
components,  integrate them with an organization's existing computer systems and
configure or customize the software to meet customer  requirements.  Frequently,
in the Company's  larger contracts only a limited number of the mobile computing
devices and  in-vehicle  equipment  are  installed  initially,  with the balance
implemented  over a rollout period that may extend up to one year or more. Where
increases in mobile work forces  require,  or where  additional  departments  of
mobile workers are added, additional mobile computing devices may be installed.

     Revenue  for  software  and  services  has  historically  accounted  for  a
substantial portion of the Company's revenue. Typically, the Company enters into
a fixed price  contract with a customer for the  licensing of selected  software
products and the provision of specific  services  that are  generally  performed
within six to twelve months.  Pricing for these contracts  includes license fees
as well as a fee for professional  services.  The Company  generally  recognizes
total  revenue for  software  and services  associated  with a contract  using a
percentage of completion method based on the total costs incurred over the total
estimated costs to complete the contract.



                                       10
<PAGE>

Overview (Continued)

     The Company's customers typically enter into ongoing maintenance agreements
that  provide  for  maintenance  and  technical  support  services  for a period
commencing  after  expiration  of  the  initial  warranty  period.   Maintenance
agreements  typically  have a term of  twelve  months  and are  invoiced  either
annually or monthly.  Revenue for these services is recognized  ratably over the
term of the contract.

     Prior to 1996,  MDSI  typically  supplied  only  the MDSI  application  and
wireless connectivity software and related services as part of its contract with
a  customer.  The  portion of  contracts  requiring  the  supply of third  party
products  and  services  was not  material  and was not  separated  for  revenue
purposes.  Beginning in 1996, however,  the Company was called on to provide, in
addition to MDSI products and services,  certain third party  products,  such as
host computer hardware and operating system software, and mobile computing.  The
Company  recognizes  revenue of the supply of third party hardware upon transfer
of title to the customer.  The Company recognizes revenue of the supply of third
party  services  using a  percentage  of  completion  method  based on the costs
incurred  over the total  estimated  cost to complete  the third party  services
contract.

     The Company  believes that it will often supply some portion of third party
products  and services to customers  where it is  successful  in selling its own
products and services.  There can be no assurance,  however,  that any contracts
entered into by the Company to supply  third party  software and products in the
future will  represent a  substantial  portion of revenue in any future  period.
Since the revenue generated from the supply of third party products and services
may represent a significant  portion of certain  contracts and the  installation
and  rollout of third party  products  is  generally  at the  discretion  of the
customer,  the Company may,  depending on the level of third party  products and
services  provided during a period,  experience large quarterly  fluctuations in
revenue.

     The Company's revenue is dependent, in large part, on significant contracts
from a limited number of customers.  As a result,  any substantial  delay in the
Company's  completion of a contract,  the inability of the Company to obtain new
contracts or the cancellation of an existing contract by a customer could have a
material  adverse  effect on the Company's  results of  operations.  Some of the
Company's  contracts are  cancelable  upon notice by the  customer.  The loss of
certain  contracts  could  have a  material  adverse  effect  on  the  Company's
business, financial condition,  operating results and cash flows. As a result of
these and other factors,  the Company's results of operations have fluctuated in
the past and may continue to fluctuate from period-to-period.

e-Business

     The Company  launched its  e-Business  division in February 2000 to develop
internet-based  business  solutions  for  companies of any size,  in any service
market.   Like  the  Company's  other  Advantex  mobile   workforce   management
applications, the Company's e-Business solutions will allow companies to empower
mobile workers by providing a reliable,  wireless link to enterprise or Internet
applications. Service providers that use the Company's e-Business solutions will
also be able to allow customers to purchase, schedule, confirm and track service
appointments  online  without  human  intervention,  providing  convenience  and
flexibility 24 hours a day, 7 days a week.

     The  Company  intends  to  offer  its  e-Business  solutions  through  four
channels:  Internet sites that aggregate service  providers,  wireless carriers,
major  vertical-focused  ASPs (Application  Service Providers),  and directly to
service providers.  During the quarter ended June 30, 2000, the Company acquired
Connectria Corporation,  based in St. Louis, Missouri,  which currently provides
Internet hosting services for third-party applications.  The Company anticipates
that it will commence the launch of its  scheduling  and dispatch  applications,
Advantex and ServeClick,  on an ASP basis to service providers  beginning in the
fourth quarter of 2000.

     The Company  anticipates  that its e-Business model will allow companies to
use MDSI  products  and services on a  subscription  or  transaction  fee basis,
rather than purchase  traditional  licensed products or on-site  solutions.  The
Company believes that its e-Business solutions  subscription and transaction fee
programs  will  be  a  particularly   attractive   alternative  for  medium-  or
small-sized  companies  who can benefit  from MDSI's  workforce  management  and
scheduling applications, but do not have the financial or information technology
resources to implement MDSI's on-site solutions.

     The Company's  e-Business division has not generated material revenues from
the  provision  of its  e-Business  solutions.  The  success  of  the  Company's
e-Business  development strategy will depend on the Company's ability to develop



                                       11
<PAGE>

Overview (Continued)

and implement the  technology  related to its  e-Business  solutions in a timely
manner,  the Company's  ability to enter into contracts with service  providers,
service  portals  and  ASP's,  and  the  adoption  of the  Company's  e-Business
solutions by service  providers and their  customers.  The Company's  e-Business
revenue is  anticipated  to be  dependent,  in large part, on  transaction  fees
generated  by customer  and service  provider  use of the  Company's  e-Business
scheduling  solutions.  The  Company's  ability  to  generate  revenue  from its
e-Business  solutions  will  depend  on the  Company's  ability  to  provide  an
e-Business solution that is convenient,  easy to use and functional. As a result
of these and other  factors,  the Company's  results of operations may fluctuate
from period-to-period.

Disposition of Transportation Business Unit

     In February  1999,  the  Company's  Board of  Directors  approved a plan to
dispose of its Delivery segment  (Transportation  Business Unit). Effective June
1, 1999, the Company completed the sale of the  transportation  business unit to
Digital Dispatch Systems,  Inc.  ("DDS"),  a supplier of dispatch systems to the
taxi market for proceeds of $3,805,476.  The proceeds comprised of common shares
of DDS,  representing  an 11%  interest  in DDS,  and a  promissory  note in the
principal  amount of $343,905,  due January 1, 2001,  bearing interest at 8% per
annum.

     Under the terms of the  agreement  between the Company and DDS, the Company
has retained certain assets and liabilities of the discontinued operations.  The
Company expects that it will liquidate these assets and liabilities by September
30, 2000. In addition,  the Company has agreed to complete the implementation of
a large  contract  with a taxi  customer.  The Company has  experienced,  and is
continuing to experience delays in the  implementation of this contract.  If the
Company is unable to complete  the  implementation  of the  contract on a timely
basis,  the  taxi  customer  has the  right to  cancel  the  contract.  Any such
cancellation  may require the Company to  reimburse  the  customer  for payments
received to date. The Company  believes that it has adequately  provided for the
costs to complete this contract.

     As a result of the Company's  decision to dispose of its Delivery  segment,
the Delivery  segment has been  classified as a  discontinued  operation and the
results of the operation, financial position and cash flow for this segment have
been segregated from those of continuing  operations.  The following  discussion
and  analysis of the  Company's  results of  operations  excludes  the  Delivery
segment for the current and corresponding prior period.







                                       12

<PAGE>

Results of Operations

     The  Company's  net loss was $1.9 million for the six months ended June 30,
2000.  This compares to a net loss of $1.8 million for the six months ended June
30, 1999,  comprised of an after-tax  profit from continuing  operations of $2.1
million and an after-tax loss of $3.9 million on  discontinued  operations.  The
loss on  discontinued  operations  is  comprised  of a loss on operation of $1.6
million and a loss of disposal of $2.3 million.  There is no tax effect on these
losses.  The  discontinued  operating  loss  includes  not only the  results  of
operations but also foreign exchange losses and provisions  against contracts to
the  measurement  date of February 25, 1999.  The loss on disposal  includes the
operating  results from the measurement date to the effective date, the costs of
disposal,  severance  costs,  and the estimated  costs to complete the remaining
taxi contract.

     The  following  table  sets  forth,  for  the  periods  indicated,  certain
components  of the selected  financial  data of the Company as a  percentage  of
total revenue:

<TABLE>
                                                        Three months ended                 Six months ended
                                                              June 30,                           June 30,
                                                  --------------------------------  --------------------------------
                                                       2000             1999            2000             1999
                                                  ---------------  ---------------  --------------  ----------------
                                                   (Unaudited)      (Unaudited)      (Unaudited)      (Unaudited)
<S>                                                   <C>            <C>              <C>              <C>
Revenue
   Software and services.......................          69.5%          70.3%            70.0%           65.1%
   e-business..................................          11.3            8.9             11.1             8.2
   Third-party products and services...........           4.8           12.0              4.3            18.8
   Maintenance and support.....................          14.4            8.7             14.6             7.8
                                                  ---------------  ---------------  --------------  ----------------
                                                        100.0          100.0            100.0           100.0

Direct costs.................................            46.0           44.6             43.2            47.8
                                                  ---------------  ---------------  --------------  ----------------
Gross profit.................................            54.0           55.4             56.8            52.2
                                                  ---------------  ---------------  --------------  ----------------
Operating expenses

   Research and development....................          16.6           11.7             15.7            11.4
   Sales and marketing ........................          24.6           17.1             22.6            17.4
   General and administrative..................          15.2           11.2             15.3            11.2
   Costs of acquisition........................          15.2            -                7.6             -
   Amortization of intangible assets...........           0.5            0.5              0.5             0.5
                                                  ---------------  ---------------  --------------  ----------------
                                                         72.1           40.5             61.7            40.5
                                                  ---------------  ---------------  --------------  ----------------
Operating income (loss)......................           (18.1)          14.9             (5.0)           11.6

Other income ................................            (1.3)          (2.2)            (1.4)           (1.7)
                                                  ---------------  ---------------  --------------  ----------------
Income (loss) before tax provision...........           (19.4)          12.7             (6.4)           10.0
Provision for income taxes...................             1.3           (3.9)            (0.4)           (2.9)
                                                  ---------------  ---------------  --------------  ----------------
Net income (loss) from continuing operations.           (18.1)           8.8             (6.8)            7.1

Income (loss) from discontinued operations...            (0.0)          (0.0)            (0.0)          (13.1)
                                                  ---------------  ---------------  --------------  ----------------
Net income (loss)..............................         (18.1)%          8.8%            (6.8)%          (6.1)%
                                                  ---------------  ---------------  --------------  ----------------
</TABLE>

Three  Months  Ended June 30, 2000  Compared to the Three  Months Ended June 30,
1999

     Revenue.  Revenue  decreased by $(1.2)  million (7.9%) for the three months
ended June 30, 2000 as compared to the three months  ended June 30,  1999.  This
decrease was primarily due to decreases in revenue from third party products and
services,  and software and services delivered during the second quarter of 2000
relative to the same  period in 1999.  This  decrease  was  partially  offset by
increases in e-business and maintenance and support revenues.



                                       13
<PAGE>

Three  Months  Ended June 30, 2000  Compared to the Three  Months Ended June 30,
1999 (continued)

     Software and services revenue  decreased by $(947,000) (9.1%) for the three
months  ended June 30, 2000 as compared to the three months ended June 30, 1999.
This  decrease  was  due  to a  reduction  in  revenue  from  telecommunications
customers,  as certain  major  telecommunications  industry  prospects  deferred
purchasing decisions.

     Third party  products and  services  revenue  decreased  by $(1.1)  million
(63.4%) for the three months ended June 30, 2000 as compared to the three months
ended June 30, 1999. These third party products  typically include host computer
equipment and mobile computing devices, delivered as part of the installation of
software  and  provision of services.  Revenue  from  deliveries  of third party
products and services will  fluctuate from period to period given the timing and
nature of certain  contracts  and the rollout  schedules  which are  established
primarily  by the  customers.  In addition,  not all  customers  under  contract
require the provision of third party products and services.  Accordingly,  there
may be large  fluctuations  in revenue,  direct costs,  gross profits and income
from operations from one period to another.

     Maintenance and support revenue was $2.0 million for the three months ended
June 30, 2000 as compared to $1.3  million for the three  months  ended June 30,
1999.  Maintenance  and  support  revenue  has  increased  primarily  due to the
increased  growth in the  Company's  installed  customer  base.  Such revenue is
expected to fluctuate as it generally  corresponds  to the level of software and
services   revenue  the  Company  is  engaged  to  provide  in  support  of  its
installations.

     E-Business  revenues  consist  of sales  by the  Company's  newly  acquired
subsidiary, Connectria. Revenue for the thee months ended June 30, 2000 was $1.6
million as compared to $1.3  million for the three  months  ended June 30, 1999.
Connectria's  revenues in both  periods  consisted  primarily  of revenues  from
consulting  services.  The  increase  of  period-to-period  is a  result  of the
increased business growth and expansion a within the e-Business market segment.

     Direct Costs. Direct costs were 46.0% of revenue for the three months ended
June 30,  2000 as compared to 44.6% for the three  months  ended June 30,  1999.
Direct  costs  include  labor and other  costs  directly  related  to a project,
including the provision of services and support, production and costs related to
host equipment and mobile devices on behalf of third party product sales.  Labor
costs included direct payroll,  benefits and overhead  charges.  The increase in
direct costs as a percentage of revenue  resulted  from the Company's  increased
staffing  levels in  anticipation of the signing of contracts with certain major
telecommunications  industry  prospects.  Certain  of these  prospects  deferred
purchase  decisions in the second  quarter of 2000,  resulting in higher  direct
costs and reduced software and services revenue.  As a result, the percentage of
direct  costs  compared to  revenues  for the three  months  ended June 30, 2000
increased as compared to the three months ended June 30, 1999.

     Gross  Margins.  Gross  margins  were 54.0% of revenue for the three months
ended June 30,  2000 as compared  to 55.4% for the three  months  ended June 30,
1999. The decrease in gross margin as a percentage of revenue relates  primarily
to the change in the mix of revenues during the period.  During the three months
ended June 30,  2000,  there was a decrease in software  and  services  revenue,
which  typically has a higher gross margin than the  Company's  other sources of
revenue and the Company  increased  staffing levels in anticipation of increased
activity,  resulting  in a decrease in gross  margin for the three  months ended
June 30, 2000 compared to the three months ended June 30, 1999.

     Research and Development.  Research and development  expenses were 16.6% of
revenue  for the three  months  ended June 30, 2000 and 11.7% of revenue for the
three months ended June 30, 1999.  Total research and  development  expenditures
for the three months ended June 30, 2000 of $2.3 million  represents an increase
of $536,000  (30.8%) as compared  to the same  period in 1999.  The  increase in
research  and  development  expenses  in  2000  is a  result  of  the  continued
development  and  enhancement  of the  Company's  Advantex  products  as well as
development in the Company's new e-Business  strategy.  The Company  anticipates
continuing  to  commit  a  significant   portion  of  its  product  revenues  to
enhancement of existing products and the development of new products,  resulting
in an  anticipated  increase in the dollar  amounts of research and  development
expenses.

     Sales and Marketing. Sales and marketing expenses were 24.6% of revenue for
the three  months  ended June 30, 2000 and 17.1% of revenue for the three months
ended June 30, 1999. This represents an increase of $820,000 (32.2%) as compared
to the same period in 1999.  The  increase was  primarily  due to an increase in
marketing,  sales and  technical  support  personnel  supporting  the  Company's
increased  marketing  activities  worldwide.  The Company  anticipates  that the
dollar amounts of its sales and marketing  expenses will continue to increase as
a result of the Company's commitment to its international marketing efforts.



                                       14
<PAGE>

Three  Months  Ended June 30, 2000  Compared to the Three  Months Ended June 30,
1999 (continued)

     General and Administrative.  General and administrative expenses were 15.2%
of revenue for the three months ended June 30, 2000 and 11.2% of revenue for the
three months ended June 30, 1999. Total general and  administrative  expenses of
$2.1  million  represents  an increase of $416,000  (25.0%) for the three months
ended  June 30,  2000 as  compared  to the same  period  in 1999.  The  increase
represents expanded administrative activity to support the Company's growth. The
Company expects that the dollar amounts will continue to increase as the Company
expands its staffing,  information systems and other administrative requirements
necessary to support this growth.

     Costs of  acquisitions.  During the three  months  ended June 30,  2000 the
Company  completed its  acquisition of  Connectria.  This  transaction  has been
accounted  for under the pooling of  interests  method.  During the period,  the
Company incurred one-time acquisitions costs of approximately $2.1 million.

     Other Income (Expense). Other income (expense) was $(177,000) for the three
months ended June 30, 2000 as compared to $(333,000)  for the three months ended
June  30,  1999.   Substantially  all  of  other  income  (expense)  relates  to
fluctuations in the currencies of the Company's foreign operations,  interest on
cash and short term deposits, short-term borrowings under the line of credit and
capital lease obligations.

     Income Taxes.  The Company provided for income tax recoveries on losses for
the three months ended June 30, 2000 at the rate of 34.8%,  after  adjusting for
the  amortization of intangible  assets,  and acquisition  costs.  The Company's
effective  tax rate  reflects  the  blended  effect of  Canadian,  US, and other
foreign jurisdictions' tax rates.

Six months ended June 30, 2000 Compared to the Six months ended June 30, 1999

     Revenue.  Revenue decreased by $2.1 million (7.1%) for the six months ended
June 30, 2000 as compared to the six months ended June 30, 1999.  This  decrease
relates  primarily to a reduction in third party products and services  revenue,
partially  offset by an increase in maintenance  and support revenue for the six
months ended June 30, 2000 relative to the same period in 1999.

     Software  and  services  revenue  decreased  by $26,000  (0.1%) for the six
months  ended June 30, 2000 as compared to the six months  ended June 30,  1999.
This  decrease  was  due  to a  reduction  in  revenue  from  telecommunications
customers,  as certain  major  telecommunications  industry  prospects  deferred
purchasing decisions.

     E-Business  revenue  relates  to  sales  of the  Company's  newly  acquired
subsidiary,  Connectria.  E-Business  revenue for the six months  ended June 30,
2000 was $3.0 million compared to $2.4 million for the six months ended June 30,
1999. Connectria's revenues in both periods consisted primarily of revenues from
consulting services. The increase  period-to-period is a result of the increased
business growth and expansion within the e-Business market segment.

     Third-party products and services revenue decreased by $4.4 million (78.7%)
for the six months ended June 30, 2000 compared to the six months ended June 30,
1999.  Revenue  from  deliveries  of  third-party  products  and  services  will
fluctuate  from period to period given the timing of certain  contracts  and the
rollout schedules which are established primarily by the customers. Accordingly,
this will result in large  fluctuations in revenue,  direct costs, gross profits
and income from operations from one period to another.

     Maintenance  and support  revenue was $4.0 million for the six months ended
June 30,  2000 as compared  to $2.3  million  for the six months  ended June 30,
1999.  Maintenance and support  revenue  increased as a result of an increase in
the level of the Company's installed customer base.

     Direct  Costs.  Direct costs were 43.2% of revenue for the six months ended
June 30, 2000 as compared to 47.8% for the six months ended June 30,  1999.  The
decrease  in direct  costs as a  percentage  of  revenue  is  reflective  of the
relative  increase  for the six months  ended June 30, 2000 in the  software and
services  component  of revenue and a relative  decrease in lower  margin  third
party products and services component of revenue.



                                       15
<PAGE>

Six months ended June 30, 2000 Compared to the Six months ended June 30, 1999
(Continued)

     Gross Margins. Gross margins were 56.8% of revenue for the six months ended
June 30, 2000 as compared to 52.2% for the six months ended June 30,  1999.  The
increase in gross margin as a  percentage  of revenue  relates  primarily to the
increase in the higher  margin  software and services  component of revenue as a
percentage of total revenue and the relative  decrease in the lower margin third
party  products  and service  component of revenue for the six months ended June
30, 2000 compared to the six months ended June 30, 1999.

     Research and Development.  Research and development  expenses were 15.7% of
revenue for the six months  ended June 30, 2000 and 11.4% of revenue for the six
months ended June 30, 1999. Total research and development  expenditures for the
six months  ended June 30,  2000 of $4.3  million  represents  an  increase of $
954,000  (28.4%) as  compared to the same  period in 1999.  The  increase in the
dollar  amount of research and  development  expenses in 2000 is a result of the
continued  development and enhancement of the Company's  Advantex  products,  as
well as  development  in the  Company's  new  e-Business  strategy.  The Company
intends to continue  committing a significant portion of its product revenues to
enhance existing products and develop new products,  resulting in an anticipated
increase in the dollar amounts of research and development expenses.

     Sales and Marketing. Sales and marketing expenses were 22.6% of revenue for
the six months ended June 30, 2000 and 17.4% of revenue for the six months ended
June 30, 1999.  This  represents an increase of $1.0 million (20.4%) as compared
to the same period in 1999.  The  increase was  primarily  due to an increase in
marketing,  sales and  technical  support  personnel  supporting  the  Company's
increased  marketing  activities  worldwide.  The Company  anticipates  that the
dollar amounts of its sales and marketing  expenses will continue to increase as
a result of the Company's commitment to its international marketing effort.

     General and Administrative.  General and administrative expenses were 15.3%
of revenue  for the six months  ended June 30, 2000 and 11.2% of revenue for the
six months ended June 30, 1999.  Total  general and  administrative  expenses of
$4.2 million represents an increase of $883,000 (26.7%) for the six months ended
June 30, 2000, as compared to the same period in 1999. The Company  expects that
its  general  and  administrative  expenses  will  increase in the future as the
Company expands its staffing, information systems and other administrative costs
to support its expanding operations.

     Costs of acquisition. During the six months ended June 30, 2000 the Company
completed its acquisition of Connectria. This transaction has been accounted for
under the pooling of interests method.  During the period,  the Company incurred
one time acquisition costs of approximately $2.1 million.

     Other Income  (Expense).  Other income (expense) was ($389,000) for the six
months  ended June 30, 2000 as compared to  ($496,000)  for the six months ended
June 30, 1999.  Substantially all of other income relates to fluctuations in the
currencies  of the  Company's  foreign  operations,  interest  income  on  cash,
short-term deposits,  short-term borrowings under the line of credit and capital
lease obligations.

     Income Taxes. The Company provided for income taxes on earnings for the six
months  ended  June  30,  2000 at the rate of  25.6%,  after  adjusting  for the
amortization  of  intangible   assets,  and  acquisition  costs.  The  Company's
effective tax rate reflects the blended effect of Canadian, US and other foreign
jurisdictions' tax rates.





                                       16
<PAGE>

Liquidity and Capital Resources

     The Company finances its operations,  acquisitions and capital expenditures
with cash generated from operations,  loans, capital leases,  private placements
and public  offerings of its securities.  At June 30, 2000, the Company had cash
and cash equivalents of $9.6 million and working capital of $21.2 million.

     Cash provided by (used in) operating  activities was ($2.8) million for the
six months ended June 30, 2000  compared to  $(61,000)  for the six months ended
June 30, 1999. The net outflow of cash from operating  activities,  after adding
back depreciation and amortization of $1.3 million,  is due to a net increase in
non-cash  working  capital items of $2.3  million.  The net increase in non-cash
operating  working  capital items is due primarily to a net increase in unbilled
trade  receivables of $6.9 million offset by an increase in accrued  liabilities
of $1.8 million and an increase in deferred revenue of $3.2 million.

     Cash provided by financing activities of $3.1 million during the six months
ended June 30, 2000 primarily  relates to proceeds from common shares issued for
$3.4  million  pursuant  to the  exercise  of stock  options  and the  Company's
Employee Share Purchase Plan. The Company repaid $193,000 from its capital lease
program.  The  capital  leases are to be repaid  evenly  over a 36 month  period
ending July 30, 2002, bear interest at 8.03% and are secured by certain computer
hardware and software assets of the Company.

     Cash used in investing activities was $5.2 million for the six months ended
June 30, 2000 as compared to $2.3 for the six months ended June 30, 1999.  Total
investing  activity  during the six months ended June 30, 2000 consisted of $2.7
million in investments,  $2.4 million in purchases of capital  assets,  $220,000
acquisition  of  intangible   assets  and  a  $191,000  net  decrease  in  lease
receivable.  The  increase in  investments  is comprised  principally  of a $2.0
million purchase of convertible  preferred stock of eFrenzy Inc., and a $500,000
purchase of preferred stock of OurHouse Inc. Purchases of capital assets include
computer  hardware and software for use in research and  development  activities
and to support the growth of the  Company's  corporate  information  systems and
acquisition of investments.  Investing  activities in 1999 related  primarily to
purchases of capital assets.

     Existing sources of liquidity at June 30, 2000 include $9.6 million of cash
and cash  equivalents  and up to $8.0  million  available  under  the  Company's
operating  line of  credit.  At June  30,  2000,  the  Company  had  provided  a
performance bond an irrevocable revolving letter of credit expiring May 28, 2001
for Belgian Franc 101,068,000 ($4.2 million).  Under the terms of the agreement,
borrowings  and  letters of credit  under the line are  limited to 60% to 90% of
eligible  accounts  receivable.  Borrowings  accrue interest at the bank's prime
rate plus 0.5%. At June 30, 2000,  the Company had no borrowings  under the line
of credit.

     The Company  believes that future cash flows,  in addition to funds on hand
and its borrowing  capacity  under the line of credit,  will provide  sufficient
funds  to  meet  cash   requirements  for  at  least  the  next  twelve  months.
Commensurate with its past and expected future growth, the Company may increase,
from time to time, its borrowing  facility under its operating line of credit to
support its operations.  The Company may use cash to fund other  acquisitions of
businesses  or products  complementary  to the Company's  business  although the
Company  has  no  plans  to do  so.  The  Company  has  no  material  additional
commitments  other than  operating and capital  leases.  The Company may look to
obtain  additional  equity  or debt  financing  to fund  future  growth or other
investing activities,  which may or may not be available on attractive terms, or
at all, and may be dilutive to current or future shareholders.



                                       17
<PAGE>

ITEM 3:  QUANTITIATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

     The Company's  primary market risk is foreign currency  exchange rates. The
Company's foreign currency exposure is primarily with Canada and Western Europe.
Foreign  exchange  risk  arises  when  the  Company  enters  into   transactions
denominated in local currencies and not the functional currency.

     The Company has  established  procedures to manage  sensitivity  to foreign
currency  exchange rate market risk. These procedures  include the monitoring of
the  Company's  net  exposure to each  foreign  currency  and the use of foreign
currency forward  contracts to hedge firm exposures to currencies other than the
Canadian and United States dollars and the Great Britain pound.  The Company has
operations in the United States,  Great Britain and the  Netherlands in addition
to its Canadian  operations and did not hedge these exposures in 1999.  However,
the Company may from time-to-time hedge any net exposure to the Canadian dollar,
the Great Britain pound, and the Euro.

     As of June 30, 2000,  the  potential  reduction in future  earnings  from a
hypothetical  instantaneous 10% change in quoted foreign currency exchange rates
applied to the foreign currency sensitive  contracts would be approximately $2.9
million.  The  majority of the  Company's  foreign  exchange  exposure is to the
Canadian  dollar.  The  foreign  currency  sensitivity  model is  limited by the
assumption that all foreign currencies,  to which the Company is exposed,  would
simultaneously  change by 10%. Such synchronized  changes are unlikely to occur.
The  sensitivity  model does not  include the  inherent  risks  associated  with
anticipated  future  transactions  denominated  in foreign  currencies or future
forward contracts entered into for hedging purposes.

     The Company has entered into foreign currency forward  contracts in respect
of net exposures under customer contracts to the Belgian Franc and Great Britain
Pound. Effective January 1, 1999, the Belgian Franc is tied to the Euro, the new
European  Union  common  currency.  The effect of the these  transactions  is to
reduce  the  potential   reduction  in  future   earnings  from  a  hypothetical
instantaneous  10%  change in quoted  foreign  currency  exchange  rates to $2.7
million.

     The  Company  believes  that it does  not  have any  material  exposure  to
interest or commodity  risks.  The Company is exposed to economic and  political
changes in  international  markets where the Company  competes such as inflation
rates, recession, foreign ownership restrictions and other external factors over
which the Company  has no control;  domestic  and foreign  government  spending,
budgetary and trade policies.





                                       18
<PAGE>

Part II -  OTHER INFORMATION

     ITEM 1. LEGAL PROCEEDINGS

     As of the date hereof,  there is no material litigation pending against the
Company.  From time to time,  the  Company is a party to  litigation  and claims
incident to the ordinary course of business. While the results of litigation and
claims cannot be predicted with certainty,  the Company  believes that the final
outcome of such matters will not have a material adverse effect on the Company's
business, financial condition, results of operations and cash flows.

     ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

          (a)  Sales of Unregistered Securities

     On June 1, 2000,  the Company  issued a total of 845,316 MDSI common shares
to the  shareholders  of into  Connectria  Corporation,  a Missouri  Corporation
("Connectria"), in connection with the merger of MDSI Acquisition Corporation, a
Delaware  corporation  and a  wholly-owned  subsidiary  of  MDSI,  with and into
Connectria.  Connectria  became a  wholly-owned  subsidiary of MDSI.  The common
shares were issued pursuant to an exemption from registration  under Rule 506 of
Regulation D of the Securities Act of 1933, as amended. The Company filed a Form
D with the Securities and Exchange Commission in connection with the issuance of
the shares.

          (b)  Use of Proceeds from Sales of Registered Securities

               None.

     ITEM 3. DEFAULTS UPON SENIOR SECURITIES

               None.

     ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     The Company's 2000 Annual General Meeting of Shareholders  was held on June
21, 2000. A total of 4,177,189  common shares of the Company were represented in
person or by proxy at the Meeting,  consisting  of 54.26% of the total number of
common shares of the Company  outstanding  on May 17, 2000,  the record date for
the Meeting.

     At  the  Meeting,  all of  the  current  Directors  of  the  Company,  were
re-elected to serve as Directors  until the 2000 Annual General Meeting or until
their earlier  retirement,  resignation,  or removal.  The following  table sets
forth the voting in the election for Directors:

<TABLE>
                            Votes Cast      Votes Cast         Votes
  Nominee                  For Nominee        Against        Withheld       Abstentions     Not Voted
  -----------------------  --------------- --------------  --------------  -------------- ---------------
<S>                             <C>                    <C>        <C>              <C>                 <C>
  Erik Dysthe                   4,173,290              0              35           2,350               0
  Kenneth R. Miller             4,104,638              0          68,687           2,350               0
  Robert Cruickshank            4,104,618              0          68,707           2,350               0
  John T. McLennan              4,173,105              0             220           2,350               0
  Terrence P. McGarty           4,173,325              0               0           2,350               0
  Robert C. Harris, Jr.         4,171,088              0           2,237           2,350               0
</TABLE>



                                       19
<PAGE>

<TABLE>
                            Votes Cast      Votes Cast         Votes
  Nominee                  For Nominee        Against        Withheld       Abstentions     Not Voted
  -----------------------  --------------- --------------  --------------  -------------- ---------------
<S>                             <C>                    <C>        <C>              <C>                 <C>

  Gerald F. Chew                4,171,188              0           2,137           2,350               0
  Bruno Ducharme                4,173,105              0             220           2,350               0
  Marc Rochefort                4,173,225              0             100           2,350               0
  Richard Waidman               4,173,305              0              20           2,350               0
</TABLE>



     The  shareholders  approved  the  proposed  2000  Stock  Option  Plan.  The
following table sets forth the information regarding the voting on the proposal:

   Votes Cast For      Votes Cast      Votes Withheld   Abstentions    Not Voted
                         Against
   --------------     --------------   --------------   -----------   ----------
     2,378,985           889,443            0              1,075       906,272


     The  shareholders  approved  the proposed  2000 Stock  Purchase  Plan.  The
following table sets forth the information regarding the voting on the proposal:

     Votes Cast        Votes Cast      Votes Withheld
        For              Against                        Abstentions    Not Voted
   --------------     --------------   --------------   -----------   ----------
     3,256,621            12,282            0                500       906,272


     The  shareholders  ratified the appointment of Deloitte & Touche LLP as the
Company's   Auditors   for  the  fiscal  year  ending   December  31,  2000  and
authorization  for the directors to fix the  remuneration  of the auditors.  The
following table sets forth the information regarding the voting on the proposal:

     Votes Cast        Votes Cast      Votes Withheld
        For              Against                        Abstentions    Not Voted
   --------------     --------------   --------------   -----------   ----------
     4,167,887             5,935            820            1,033             0


     The shareholders  ratified the proposal to increase the number of directors
to ten. The following table sets forth the  information  regarding the voting on
the proposal:

   Votes Cast For      Votes Cast      Votes Withheld
                         Against                        Abstentions    Not Voted
   --------------     --------------   --------------   -----------   ----------
     4,171,225             3,200              0            1,250             0


     The  shareholders  confirmed  certain  amendments of the Company's  By-Laws
regarding Canadian residency requirements of its directors.  The following table
sets forth the information regarding the voting on the proposal:

   Votes Cast For      Votes Cast      Votes Withheld
                         Against                        Abstentions    Not Voted
   --------------     --------------   --------------   -----------   ----------
     3,266,083             2,370              0              950       906,272





                                       20

<PAGE>

     Item 5. OTHER INFORMATION

          None.

     Item 6. EXHIBITS AND REPORTS ON FORM 8-K

          (a)  Exhibits

         Exhibit
         Number      Description
         ------      -----------
         99.1        Discussion of risk factors.

          (b)  Reports on Form 8-K

     During the three month period ended June 30, 2000 the Registrant  filed the
following reports on Form 8-K;

          1.   On May 18, 2000,  the  Registrant  reported  that it had issued a
               press release on May 9, 2000 to announce that the  Registrant had
               entered  into  an  agreement  and  plan  of  reorganization  with
               Connectria  Corporation,  a Missouri corporation  ("Connectria"),
               pursuant to which MDSI will acquire Connectria.

          2.   On June 15, 2000, the Registrant reported it consummated a merger
               of MDSI  Acquisition  Corporation,  a wholly owned  subsidiary of
               MDSI,   with  and  into   Connectria   Corporation,   a  Missouri
               Corporation,  pursuant to which Connectria  became a wholly-owned
               subsidiary of the Registrant.








                                       21
<PAGE>

                                   SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                  MDSI MOBILE DATA SOLUTIONS INC.

Date: August 14, 2000             By:    /s/ Kenneth R. Miller
                                         --------------------------------------
                                  Name:  Kenneth R. Miller
                                  Title: Chief Executive Officer

Date: August 14, 2000             By:    /s/ Verne D. Pecho
                                  Name:  Verne D. Pecho
                                         --------------------------------------
                                  Title: Vice President Finance & Administration
                                         and Chief Financial Officer
                                         (Principal Financial and Accounting
                                         Officer)



















                                       22
<PAGE>

                                 EXHIBIT INDEX


  Exhibit
  Number      Description
  ------      -----------

         99.1        Discussion of risk factors.