================================================================================
                       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 September 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 [X]   No [ ]

              The number of outstanding shares of the Registrant's
        common stock, no par value, at September 30, 2000 was 8,951,150.


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


<PAGE>



                         MDSI Mobile Data Solutions Inc.

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


<TABLE>

                                                                                                       Page
                                                                                                       ----
<S>                                                                                                    <C>
Part I -  FINANCIAL INFORMATION

     ITEM 1. FINANCIAL STATEMENTS

             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.................................18


Part II - OTHER INFORMATION

     ITEM 1. LEGAL PROCEEDINGS ........................................................................19

     ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.................................................19

     ITEM 3. DEFAULTS UPON SENIOR SECURITIES ..........................................................19

     ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.......................................19

     ITEM 5. OTHER INFORMATION.........................................................................19

     ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K..........................................................19

SIGNATURES.............................................................................................20

</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
                                                                             ----------------------------------------
                                                                                  September 30,         December 31,
                                                                                      2000                 1999
                                                                              ----------------       ----------------
<S>                                                                            <C>                    <C>
Assets
Current assets
     Cash and cash equivalents........................................         $    9,541,426         $  14,612,923
     Accounts receivable, net
        Trade.........................................................             15,890,797            14,147,011
        Unbilled......................................................             11,546,082             5,595,902
     Prepaid expenses ................................................              1,585,176             1,121,580
     Deferred income taxes............................................                577,427               577,427
     Current portion of lease receivable..............................                232,439               386,861
                                                                              ----------------       ----------------
                                                                                   39,373,347            36,441,704
Lease receivable......................................................                      -               133,723
Investments...........................................................              6,783,296             4,140,457
Capital assets, net...................................................              9,676,097             6,858,747
Intangible assets, net................................................              1,913,536             1,907,297
                                                                              ----------------       ----------------
                                                                                   57,746,276            49,481,928
Assets of discontinued operations (note 4)............................              1,103,167               960,610
                                                                              ----------------       ----------------
Total assets..........................................................           $ 58,849,443          $ 50,442,538
                                                                              ================       ================
Liabilities and stockholders' equity
Current liabilities
     Accounts payable ................................................            $ 2,764,622          $  1,760,644
     Accrued liabilities .............................................              4,239,439             2,655,522
     Income taxes payable ............................................                966,357             1,567,671
     Deferred revenue.................................................              7,880,885             4,742,038
     Current portion of long term debt................................                 39,041                52,153
     Current obligations under capital leases ........................              2,120,173             1,289,208
                                                                              ----------------       ----------------
                                                                                   18,010,517            12,067,236
Obligations under capital leases......................................              3,108,554             2,632,406
Long Term Debt .......................................................                      -                32,181
Liabilities of discontinued operations (note 4) ......................                331,020               173,424
                                                                              ----------------       ----------------
Total liabilities.....................................................             21,450,091            14,905,247
                                                                              ----------------       ----------------
Stockholders' equity
     Common stock.....................................................             48,407,174            44,961,759
     Additional paid-up capital ......................................                220,700               220,700
     Treasury stock...................................................                (85,043)              (85,043)
     Deficit..........................................................            (10,453,375)           (9,130,688)
     Accumulated comprehensive income (loss) (note 1b)................               (690,104)             (429,437)
                                                                              ----------------       ----------------
                                                                                   37,399,352            35,537,291
                                                                              ----------------       ----------------
Total liabilities and stockholders' equity............................           $ 58,849,443          $ 50,442,538
                                                                              ================       ================
</TABLE>


                 See notes to consolidated financial statements



                                      -1-
<PAGE>

                         MDSI MOBILE DATA SOLUTIONS INC.

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

<TABLE>
                                                                     Three months ended                   Nine months ended
                                                                        September 30,                       September 30,
                                                            ---------------------------------     -------------------------------
                                                                 2000               1999               2000             1999
                                                            --------------     --------------     --------------   --------------
<S>                                                         <C>                <C>                <C>              <C>
Revenue
     Software and services..............................    $  10,430,718      $ 10,542,682       $ 29,608,742     $ 29,746,810
     e-Business.........................................        1,848,989         1,246,794          4,889,168        3,677,612
     Third-party products and services..................          963,729         1,609,186          2,144,865        7,164,444
     Maintenance and support............................        2,295,522         1,685,980          6,292,960        3,993,959
                                                            --------------     --------------     --------------   --------------
                                                               15,538,958        15,084,642         42,935,735       44,582,825

Direct costs............................................        7,631,556         7,024,666         19,478,584       21,137,700
                                                            --------------     --------------     --------------   --------------
Gross profit............................................        7,907,402         8,059,976         23,457,151       23,445,125
                                                            --------------     --------------     --------------   --------------
Operating expenses
     Research and development...........................        2,254,015         1,835,799          6,568,237        5,196,082
     Sales and marketing ...............................        3,059,276         2,017,497          9,250,174        7,159,203
     General and administrative.........................        1,806,270         1,529,723          5,999,047        4,839,110
     Costs of merger ...................................                -                 -          2,076,028                -
     Amortization of intangible assets..................           67,479            69,810            204,768          209,430
                                                            --------------     --------------     --------------   --------------
                                                                7,187,040         5,452,829         24,098,254       17,403,825
                                                            --------------     --------------     --------------   --------------
Operating income........................................          720,362         2,607,147           (641,103)       6,041,300

Other income (expense)..................................           88,797            44,357           (300,321)        (451,458)
                                                            --------------     --------------     --------------   --------------
Income before tax provision.............................          809,159         2,651,504           (941,424)       5,589,842
Provision for income taxes..............................         (262,991)         (811,512)          (381,263)      (1,669,103)
                                                            --------------     --------------     --------------   --------------
Net income from continuing operations...................          546,168         1,839,992         (1,322,687)       3,920,739
Loss from discontinued operations (note 4)..............                -                 -                  -       (3,872,683)
                                                            --------------     --------------     --------------   --------------
Net income (loss).......................................          546,168         1,839,992         (1,322,687)          48,056

Deficit, Beginning of period............................      (10,999,543)      (12,069,012)        (9,130,688)     (10,130,076)
                                                            --------------     --------------     --------------   --------------
                                                              (10,453,375)      (10,229,020)       (10,453,375)     (10,082,020)

Dividends ..............................................                -                 -                  -         (147,000)
                                                            --------------     --------------     --------------   --------------
Deficit, end of period..................................    $ (10,453,375)     $(10,229,020)      $(10,453,375)    $(10,229,020)
                                                            ==============     ==============     ==============   ==============
Earnings (loss) per common share
Earnings from continuing operations
     Basic ..............................................   $        0.06      $       0.23       $      (0.16)    $       0.49
                                                            ==============     ==============     ==============   ==============
     Diluted ............................................   $        0.06      $       0.20       $      (0.16)    $       0.43
                                                            ==============     ==============     ==============   ==============
Net earnings (loss)
     Basic ..............................................   $        0.06      $       0.23       $      (0.16)    $       0.01
                                                            ==============     ==============     ==============   ==============
     Diluted ............................................   $        0.06      $       0.20       $      (0.16)    $       0.01
                                                            ==============     ==============     ==============   ==============
Weighted average shares outstanding
     Basic...............................................       8,570,378         8,172,032          8,501,004        8,039,624
                                                            ==============     ==============     ==============   ==============
     Diluted.............................................       9,486,467         9,011,036          8,501,004        9,027,099
                                                            ==============     ==============     ==============   ==============
</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>
                                                                                  Nine months ended September 30,
                                                                             --------------------------------------
                                                                                    2000                  1999
                                                                             ----------------      ----------------
<S>                                                                           <C>                   <C>
Cash flow from operating activities
     Net income (loss) from continuing operations.....................        $  (1,322,687)        $  3,920,739
     Items not affecting cash:
          Depreciation and amortization...............................            2,163,121            1,280,029
          Deferred income taxes.......................................                    -              132,710
          Changes in non-cash operating working capital items.........           (3,047,961)          (4,853,456)
                                                                             ----------------      ----------------
     Net cash used in operating activities............................           (2,207,527)             480,022
                                                                             ----------------      ----------------
Cash flows from financing activities
     Issuance of common stock.........................................            3,445,415           11,783,530
     Payment of dividends.............................................                    -             (147,000)
     Repayment of long-term debt......................................              (45,293)            (281,060)
     Proceeds from capital leases.....................................            1,307,113            1,730,923
                                                                             ----------------      ----------------
     Net cash provided by financing activities........................            4,707,235           13,086,393
                                                                             ----------------      ----------------
Cash flows from investing activities
     Long term lease receivable.......................................              288,145              300,513
     Acquisition of investments.......................................           (2,642,839)                   -
     Acquisition of intangible assets ................................             (220,000)                   -
     Acquisition of capital assets ...................................           (4,750,883)          (3,399,704)
                                                                             ----------------      ----------------
     Net cash used in investing activities............................           (7,325,577)          (3,099,191)
                                                                             ----------------      ----------------
Cash provided by (used in) continuing operations......................           (4,825,869)          10,467,224
Cash provided by (used for) discontinued operations (note 4)..........               15,039             (625,677)
                                                                             ----------------      ----------------

Net cash inflow (outflow).............................................           (4,810,830)           9,841,547
Effects of foreign exchange fluctuations on cash......................             (260,667)           1,202,765
Cash and cash equivalents, beginning of period........................           14,612,923            3,605,559
                                                                             ----------------      ----------------
Cash and cash equivalents, end of period..............................        $   9,541,426         $ 14,649,871
                                                                             ================      ================
</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 September 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 September 30,         Nine months ended September 30,
                                           ---------------------------------       ---------------------------------
                                                 2000              1999                  2000                1999
                                           ---------------   ---------------       ---------------   ---------------
          <S>                                <C>               <C>                 <C>                  <C>
           Net income from continuing        $ 546,168         $ 1,839,992         $ (1,322,687)        $ 3,920,739
           operations

           Comprehensive items
               - Translation adjustment              -             192,755             (260,667)          1,202,765
                                           ---------------   ---------------       ---------------   ---------------
           Comprehensive income for the      $ 546,168          $2,032,747         $ (1,583,354)        $ 5,123,504
           period
                                           ===============   ===============       ===============   ===============
</TABLE>




                                      -4-
<PAGE>

                         MDSI MOBILE DATA SOLUTIONS INC.

                 Notes to the Consolidated Financial Statements
                  For the three months ended September 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 September 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  it's  merger  with  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 merger by
     segregating  the  e-Business  segment for the three and nine month  periods
     ending September 1999, as well as 2000.

     Business Segments
<TABLE>
                                         Three months ended September 30, 2000           Three months ended September 30, 1999
                                     -------------------------------------------    ---------------------------------------------
                                         Field                                          Field
                                        Service     e-Business(1)      Total           Service       e-Business(1)       Total
                                    ---------------------------------------------------------------------------------------------
<S>                                 <C>             <C>            <C>              <C>              <C>             <C>
  Revenue                           $ 12,978,269    $ 2,560,689    $ 15,538,958     $ 13,569,589     $ 1,515,053     $ 15,084,642
  Operating earnings (loss)            1,969,490     (1,249,128)        720,362        2,615,996          (8,849)       2,607,147
  Depreciation & Amortization            720,710         96,688         817,398          360,352          27,178          387,530

  Long lived assets                   14,492,237      3,880,692      18,372,929       11,664,148         350,023       12,014,171
  Capital Expenditures                 1,861,409        474,494       2,335,903          850,942          24,694          875,636

</TABLE>

<TABLE>
                                         Nine months ended September 30, 2000           Nine months ended September 30, 1999
                                     -------------------------------------------    ---------------------------------------------
                                         Field                                          Field
                                        Service     e-Business(1)      Total           Service       e-Business(1)       Total
                                    ---------------------------------------------------------------------------------------------
<S>                                 <C>             <C>            <C>              <C>              <C>             <C>
  Revenue                           $ 37,280,067    $ 5,655,668    $ 42,935,735     $ 37,916,421    $ 6,666,404      $ 44,582,825
  Operating earnings (loss)            1,866,244     (2,507,347)       (641,103)       5,810,910        230,390         6,041,300
  Depreciation & Amortization          2,000,305        162,816       2,163,121        1,211,644         68,385         1,280,029

  Long lived assets                   14,492,237      3,880,692      18,372,929       11,664,148        350,023        12,014,171
  Capital Expenditures                 4,001,279        749,604       4,750,883        3,235,782        163,922         3,399,704

</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 September 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 September 30,      Nine months ended September 30,
                                   ----------------------------------    ---------------------------------
                                        2000                1999              2000                1999
                                   --------------     --------------     --------------     --------------
    <S>                             <C>                <C>                <C>                <C>
     Canada.................        $    749,955       $    300,627       $  1,203,562       $  1,751,092
     United States..........          10,806,024          9,802,332         33,301,336         32,900,846
     Europe.................           2,458,178          4,650,522          6,518,655          8,669,954
     Other..................           1,524,801            331,161          1,912,182          1,260,933
                                   --------------     --------------     --------------     --------------
                                    $ 15,538,958       $ 15,084,642       $ 42,935,735       $ 44,582,825
                                   ==============     ==============     ==============     ==============
</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                 Nine months ended
                                                              September 30,                     September 30,
                                                     --------------------------------  ---------------------------------
                                                          2000             1999             2000              1999
                                                     ---------------   --------------  ---------------   ---------------
    <S>                                                 <C>              <C>              <C>               <C>
     Weighted average shares outstanding.........       8,570,378        8,172,032        8,501,004         8,039,624
     Common stock equivalents
     Stock options...............................         916,089          839,004                -           987,475
                                                     ---------------   --------------  ---------------   ---------------
     Total shares for diluted earnings (loss) per
     common share................................       9,486,467        9,011,036        8,501,004         9,027,099
                                                     ===============   ==============  ===============   ===============
</TABLE>



                                      -7-
<PAGE>

                         MDSI MOBILE DATA SOLUTIONS INC.

                 Notes to the Consolidated Financial Statements
                  For the three months ended September 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
     --------------------------------------------------------------------------------------------------------------------
                                                                       September 30, 2000             September 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
       --------------------------------------------------------------------------------------------------------------------
                                                                       September 30, 2000            December 31, 1999
                                                                     ------------------------    --------------------------

          Current assets                                                  $    1,103,167              $       960,610
          Long term assets                                                             -                            -
                                                                     ------------------------    --------------------------
          Total assets of discontinued operations                         $    1,103,167              $       960,010
                                                                     ========================    ==========================
          Current liabilities                                             $      331,020              $       173,424
          Long term liabilities                                                        -                            -
                                                                     ------------------------    --------------------------
          Total liabilities of discontinued operations                    $      331,020              $       173,424
                                                                     ========================    ==========================


       Changes in cash flow of discontinued operations
       --------------------------------------------------------------------------------------------------------------------
                                                                       September 30, 2000           September 30, 1999
                                                                     ------------------------    --------------------------

          Operating activities                                            $       15,039              $      (538,679)
          Investing activities                                                         -                      (86,998)
          Financing activities                                                         -                            -
                                                                     ------------------------    --------------------------
          Cash provided by (used for) discontinued operations             $       15,039              $      (625,677)
                                                                     ========================    ==========================
</TABLE>




                                      -8-
<PAGE>

                         MDSI MOBILE DATA SOLUTIONS INC.

                 Notes to the Consolidated Financial Statements
                  For the three months ended September 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 merger with
     Connectria are outlined below.

<TABLE>
                                                       Three months ended             Six months ended
                                                            March 31,                     June 30,
                                                ----------------------------------    -------------------
                                                       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. 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,  other online
service management solutions,  and the provision of hosting services (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  such as  MDSI's
Advantex products,  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>


Field Service Business (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.

     During the second quarter of 2000, the Company  launched  version r7 of its
Advantex product,  and it is currently in the implementation  phase of its first
contract  using  version  r7.  The  increased  time  required  for  the  initial
implementation  and field  testing of a new version of software  has resulted in
anticipated  delays in commencement of additional  installations of the Advantex
r7  product.  The  Company  anticipates  that  it will  complete  its  first  r7
installation,  and commence additional installations of the Advantex r7 product,
by the first quarter of 2001.


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.  Customers of service providers that use the Company's  e-Business
solutions  will  be  able 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.  On June 1, 2000 the Company acquired Connectria Corporation,
based in St. Louis,  Missouri,  which currently provides consulting and Internet
hosting services for third-party applications.  During the third quarter of 2000
the  Company  announced  several  alliances  that will  further  its  e-Business
strategy.  The  Company  anticipates  that it will  commence  the  launch of its
scheduling and dispatch  applications,  Advantex and  eServiceManager  (formerly
ServeClick), on an ASP basis to service providers in the fourth quarter of 2000.



                                      -11-
<PAGE>

e-Business (continued)

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

     A significant portion of the Company's  e-Business revenue to date has been
generated by the provision of hosting and consulting  services to third parties.
The  Company  anticipates,  however,  that the future  success of the  Company's
e-Business  development strategy will depend on the Company's ability to develop
and implement the technology related to its e-Business solutions, as well as 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.  Growth in the  Company's  e-Business
revenue is anticipated to be derived from transaction fees generated by customer
and service provider use of the Company's  e-Business  scheduling solutions that
include the ASP version of Advantex and e-Service  Manager.  The Company has not
generated material revenues from fees associated with its e-Business  scheduling
solutions and there can be no assurance that the Company's  e-Business  division
will generate material revenues in future periods.


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 June 30,
2001. 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.


Results of Operations

     The Company's net loss was $1.3 million for the nine months ended September
30, 2000.  This  compares to a net earnings of $48,000 for the nine months ended
September 30, 1999, comprised of an after-tax profit from continuing  operations
of  approximately  $3.9 million and an after-tax loss of slightly less than $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 on 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.




                                      -12-
<PAGE>

Results of Operations (continued)

     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                 Nine months ended
                                                          September 30,                      September 30,
                                                   --------------------------       ----------------------------
                                                       2000           1999             2000             1999
                                                   -----------     -----------      -----------      -----------
                                                   (Unaudited)     (Unaudited)      (Unaudited)     (Unaudited)
<S>                                                 <C>             <C>              <C>             <C>
Revenue
   Software and services.......................        67.1%          69.8%            68.9%           66.7%
   e-business..................................        11.9            8.3             11.4             8.2
   Third-party products and services...........         6.2           10.7              5.0            16.1
   Maintenance and support.....................        14.8           11.2             14.7             9.0
                                                   -----------     -----------      -----------      -----------
                                                      100.0          100.0            100.0           100.0

Direct costs...................................        49.1           46.6             45.4            47.4
                                                   -----------     -----------      -----------      -----------
Gross profit...................................        50.9           53.4             54.6            52.6
                                                   -----------     -----------      -----------      -----------
Operating expenses
   Research and development....................        14.5           12.2             15.3            11.7
   Sales and marketing ........................        19.7           13.4             21.5            16.1
   General and administrative..................        11.6           10.1             14.0            10.9
   Costs of merger.............................           -              -              4.8               -
   Amortization of intangible assets...........         0.4            0.5              0.5             0.5
                                                   -----------     -----------      -----------      -----------
                                                       46.2           36.2             56.1            39.2
                                                   -----------     -----------      -----------      -----------
Operating income (loss)........................         4.7           17.2             (1.5)           13.4

Other income ..................................         0.6            0.3             (0.7)           (1.1)
                                                   -----------     -----------      -----------      -----------
Income (loss) before tax provision.............         5.3           17.5             (2.2)           12.3
Provision for income taxes.....................        (1.7)          (5.4)            (0.9)           (3.7)
                                                   -----------     -----------      -----------      -----------
Net income (loss) from continuing operations...         3.6           12.1             (3.1)            8.6

Income (loss) from discontinued operations.....        (0.0)          (0.0)            (0.0)           (8.6)
                                                   -----------     -----------      -----------      -----------
Net income (loss)..............................         3.6%          12.1%            (3.1)%           0.0%
                                                   ===========     ===========      ===========      ===========
</TABLE>



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

     Revenue.  Revenue  increased  slightly by $0.5 million (3.0%) for the three
months ended  September 30, 2000 as compared to the three months ended September
30,  1999.  This  increase  was  primarily  due to  increases  in  revenue  from
maintenance  and support,  and e-Business  revenues  during the third quarter of
2000 relative to the same period in 1999. This increase was partially  offset by
the decrease in third party products and services revenues.

     Software and services revenue  decreased by $(112,000) (1.1%) for the three
months ended  September 30, 2000 as compared to the three months ended September
30, 1999. The Company  believes that its software and service revenue during the
most recent  period was  impacted by  decisions  of certain  customers  to defer
purchasing  decisions and to delays  associated with the  implementation  of the
Company's first installation of the Advantex r7 product.



                                      -13-
<PAGE>

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

     Third party  products and  services  revenue  decreased  by $(0.6)  million
(40.1%) for the three months ended  September  30, 2000 as compared to the three
months ended September 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 $2.3 million for the three months ended
September  30,  2000 as  compared to $1.7  million  for the three  months  ended
September 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 corresponds to the level of software and services
revenue the Company is engaged to provide in support of its installations.

     e-Business  revenues  primarily  consist  of sales by the  Company's  newly
acquired  subsidiary,  Connectria.  Revenue for the three months ended September
30, 2000 was $1.8 million as compared to $1.2 million for the three months ended
September 30, 1999. Connectria's revenues in both periods consisted primarily of
revenues from  consulting and hosting  services.  The Company does not expect to
generate  revenue from its new  e-Business  product  offering prior to the first
quarter of 2001.  The increase of  period-to-period  revenues is a result of the
increased  business growth and expansion  within the e-Business  market segment,
and is not attributable to one particular contract.

     Direct Costs. Direct costs were 49.1% of revenue for the three months ended
September 30, 2000 as compared to 46.6% for the three months ended September 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  incurring
additional  costs for embedded  software  included in the Company's  products as
compared to prior year. As a result,  the percentage of direct costs compared to
revenues for the three months ended  September 30, 2000 increased as compared to
the three months ended September 30, 1999.

     Gross  Margins.  Gross  margins  were 50.9% of revenue for the three months
ended  September  30,  2000 as  compared  to 53.4%  for the three  months  ended
September  30, 1999.  The  decrease in gross  margin as a percentage  of revenue
relates  primarily to the change in the mix of revenues and to additional  costs
for embedded software licenses. During the three months ended September 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
incurred  increased  costs  for  embedded  software  included  in the  Company's
products.  These  factors  resulted in a decrease in gross  margin for the three
months ended September 30, 2000 compared to the three months ended September 30,
1999.

     Research and Development.  Research and development  expenses were 14.5% of
revenue for the three months ended  September  30, 2000 and 12.2% of revenue for
the three  months  ended  September  30, 1999.  Total  research and  development
expenditures  for the three  months  ended  September  30, 2000 of $2.3  million
represents  an increase  of  $418,000  (22.8%) as compared to the same period in
1999. The increase in research and  development  expenses in 2000 is a result of
the development and enhancement of the Company's  Advantex products (version r7,
wireless and ASP  versions) as well as  development  of the  Company's  eService
offering.  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.




                                      -14-
<PAGE>

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

     Sales and Marketing. Sales and marketing expenses were 19.7% of revenue for
the three  months  ended  September  30, 2000 and 13.4% of revenue for the three
months ended  September  30, 1999.  This  represents  an increase of  $1,041,000
(51.6%) 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 product offerings,  including Advantex r7 and e-Business
initiatives.  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 and  attempt to  penetrate
additional markets for existing and new products.

     General and Administrative.  General and administrative expenses were 11.6%
of revenue for the three  months ended  September  30, 2000 and 10.1% of revenue
for the three months ended September 30, 1999. Total general and  administrative
expenses of $1.8  million  represents  an  increase of $277,000  (18.1%) for the
three  months ended  September  30, 2000 as compared to the same period in 1999.
The  increase  represents  expanded   administrative  activity  to  support  the
Company's  current and  expected  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.

     Other Income  (Expense).  Other income  (expense) was $89,000 for the three
months  ended  September  30, 2000 as  compared to $44,000 for the three  months
ended  September  30,  1999.  Substantially  all  of  other  income  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 September 30, 2000 at the rate of 30.0%,  after adjusting
for the  amortization  of intangible  assets.  The Company's  effective tax rate
reflects the blended  effect of Canadian,  US, and other foreign  jurisdictions'
tax rates.


Nine months ended September 30, 2000 Compared to the Nine months ended September
30, 1999

     Revenue. Revenue decreased by $1.6 million (3.7%) for the nine months ended
September 30, 2000 as compared to the nine months ended September 30, 1999. This
decrease mainly relates to third party products and services revenue,  partially
offset by an increase in maintenance and support revenue, and e-Business revenue
for the nine months  ended  September  30,  2000  relative to the same period in
1999.

     Software and services revenue  decreased by ($138,000)  (0.5%) for the nine
months ended  September 30, 2000 as compared to the nine months ended  September
30, 1999. The Company  believes that its software and service revenue during the
nine months  ended  September  30, 2000 was  impacted  by  decisions  of certain
customers  to defer  purchasing  decisions  and to  delays  associated  with the
implementation of the Company's first installation of the Advantex r7 product.

     e-Business  revenues  materially  consist of sales by the  Company's  newly
acquired  subsidiary,  Connectria.  e-Business revenue for the nine months ended
September 30, 2000 was $4.9 million compared to $3.7 million for the nine months
ended  September  30,  1999.  Connectria's  revenues in both  periods  consisted
primarily of revenues from consulting and hosting services. The Company does not
expect to generate  revenue from its new e-Business  product  offerings prior to
the first quarter of 2001. The increase in period-to-period revenues is a result
of the increased  business  growth and expansion  within the  e-Business  market
segment, and is not attributable to one particular contract.

     Third-party products and services revenue decreased by $5.0 million (70.1%)
for the nine months ended  September  30, 2000 compared to the nine months ended
September 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 may result in large  fluctuations  in revenue,  direct costs,
gross profits and income from operations from one period to another.



                                      -15-
<PAGE>

Nine Months Ended September 30, 2000 Compared to the Nine Months Ended September
30, 1999 (Continued)

     Maintenance  and support revenue was $6.3 million for the nine months ended
September  30,  2000 as  compared  to $4.0  million  for the nine  months  ended
September 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 45.4% of revenue for the nine months ended
September 30, 2000 as compared to 47.4% for the nine months ended  September 30,
1999. The change in direct costs as a percentage of revenue is reflective of the
relative  increase for the nine months ended  September 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.

     Gross  Margins.  Gross  margins  were 54.6% of revenue  for the nine months
ended  September  30,  2000 as  compared  to  52.6%  for the nine  months  ended
September  30, 1999.  The  increase in gross  margin as a percentage  of revenue
relates  primarily  to the  increase  in 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 nine  months  ended  September  30, 2000  compared to the nine months  ended
September 30, 1999.

     Research and Development.  Research and development  expenses were 15.3% of
revenue for the nine months  ended  September  30, 2000 and 11.7% of revenue for
the nine months  ended  September  30,  1999.  Total  research  and  development
expenditures  for the nine  months  ended  September  30,  2000 of $6.6  million
represents  an increase of $ 1.4 million  (26.4%) 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 (version r7, wireless, and ASP versions), as well as
development of the Company's eService offering.  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 21.5% of revenue for
the nine  months  ended  September  30,  2000 and 16.1% of revenue  for the nine
months ended  September  30, 1999.  This  represents an increase of $2.1 million
(29.2%) 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 product offerings  including Advantex r7 and e-Business
initiatives.  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,  and attempt to  penetrate
additional markets for existing and new products.

     General and Administrative.  General and administrative expenses were 14.0%
of revenue for the nine months ended September 30, 2000 and 10.9% of revenue for
the nine months ended  September  30,  1999.  Total  general and  administrative
expenses of $6.0 million  represents an increase of $1.2 million (24.0%) for the
nine months ended  September  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 merger.  During  the nine  months  ended  September  30,  2000 the
Company  completed its  acquisition of  Connectria.  This  transaction  has been
accounted  for under the  pooling of  interests  method.  During the nine months
ended  September  30, 2000 the Company  incurred one time  acquisition  costs of
approximately $2.1 million.

     Other Income (Expense).  Other income (expense) was ($300,000) for the nine
months ended  September 30, 2000 as compared to  ($451,000)  for the nine months
ended  September  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
nine months ended  September 30, 2000 at the rate of 28.4%,  after adjusting for
the amortization of intangible  assets,  and the costs of merger.  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,  lines of credit,  capital leases,  private
placements and public  offerings of its  securities.  At September 30, 2000, the
Company had cash and cash  equivalents  of $9.5  million and working  capital of
$21.4 million.

     Cash provided by (used in) operating  activities was ($2.2) million for the
nine months ended  September  30, 2000  compared to $480,000 for the nine months
ended  September 30, 1999.  The net outflow of cash from  operating  activities,
after adding back depreciation and amortization of $2.2 million, is due to a net
increase in non-cash  working  capital  items of $3.0  million and a net loss of
($1.3) for the nine  months  ending  September  30,  2000.  The net  increase in
non-cash  operating  working capital items is due primarily to a net increase in
unbilled trade receivables of $6.0 million, and an increase in trade receivables
of $1.7 million.  The increase in unbilled  trade  receivables  is due to timing
differences  arising  between  revenue  recognition  and billing  milestones  in
certain  multiphase  implementations,  as well as extended  Advantex  version r7
implementations.  This  increase is partially  offset by an increase in deferred
revenue of $3.1 million and an increase in accrued liabilities of $1.6 million.

     Cash  provided by  financing  activities  of $4.7  million  during the nine
months ended September 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 also received $1.3 million
from its capital lease  program for the nine months  ending  September 30, 2000.
The  capital  leases  are to be  repaid  evenly  over a 36 month  period  ending
September 27, 2003,  bear interest at 7.89% and are secured by certain  computer
hardware and software assets of the Company.

     Cash used in  investing  activities  was $7.3  million  for the nine months
ended  September  30, 2000 as compared to $3.1 million for the nine months ended
September  30,  1999.  Total  investing  activity  during the nine months  ended
September  30, 2000  consisted of $2.6 million in  investments,  $4.8 million in
purchases of capital  assets,  $220,000  acquisition of intangible  assets and a
$288,000  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 September 30, 2000 include $9.5 million of
cash and cash  equivalents and up to $8.0 million  available under the Company's
operating  line of credit.  At September  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 September 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 Company's functional  currency,  the
U.S. dollar.

     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 dollar, the Euro and the Great Britain pound sterling.  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 2000.  However,
the Company may from time-to-time hedge any net exposure to the Canadian dollar,
the Great Britain pound sterling, and the Euro.

     As of September 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 $3.3
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  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

               None.

          (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

               None

     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  September  30,  2000 the
          Registrant filed the following reports on Form 8-K;

                    On August 14, 2000,  the  Registrant  amended the previously
               filed 8K report dated June 15, 2000 that reported the  Registrant
               had consummated  the 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.  The document
               was  amended to  include  the  audited  financial  statements  of
               Connectria  Corporation,  as of December 31, 1999,  the unaudited
               financial  statements as of June 30, 2000,  and the unaudited Pro
               Forma  Consolidated  Financial  Statements  of MDSI  Mobile  Data
               Solutions Inc. dated December 31, 1997,  1998,  1999 and June 30,
               2000,  reflecting  the results of the  acquisition  of Connectria
               Corporation.



                                      -19-
<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: November 14, 2000           By:    /s/ Kenneth R. Miller
                                         --------------------------------------
                                  Name:  Kenneth R. Miller
                                  Title: Chief Executive Officer

Date: November 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)












                                      -20-
<PAGE>


                                 EXHIBIT INDEX


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