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

                       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 March 31, 1999

                                       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 March 31, 1999 was 7,241,664.


================================================================================
                         MDSI MOBILE DATA SOLUTIONS INC.


<PAGE>

                             INDEX TO THE FORM 10-Q
                  For the quarterly period ended March 31, 1999

<TABLE>

                                                                                  Page

<S>                                                                               <C>
Part I -  FINANCIAL INFORMATION

          ITEM 1.   FINANCIAL STATEMENTS

                    Consolidated Balance Sheets ................................... 3

                    Consolidated Statements of Operations
                    and Deficit ................................................... 4

                    Consolidated Statements of Cash Flows ......................... 5

                    Notes to the Consolidated Financial Statements ................ 6

         ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                    CONDITION AND RESULTS OF OPERATIONS ........................... 9

         ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK .....16

Part II - OTHER INFORMATION

         ITEM 1.    LEGAL PROCEEDINGS .............................................17

         ITEM 2.    CHANGES IN SECURITIES AND USE OF PROCEEDS .....................17

         ITEM 3.    DEFAULTS UPON SENIOR SECURITIES ...............................17

         ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ...........17

         ITEM 5.    OTHER INFORMATION .............................................17

         ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K ..............................17

SIGNATURES ........................................................................18

</TABLE>



                                      -2-


<PAGE>

Part I -  Financial Information

          Item 1. Financial Statements

                         MDSI MOBILE DATA SOLUTIONS INC.

                           Consolidated Balance Sheets
                         (Expressed in Canadian dollars)
                                  (Unaudited)

<TABLE>


                                                                                          As at
                                                                         ----------------------------------------
                                                                              March 31,           December 31,
                                                                                1999                  1998
                                                                         ------------------    ------------------
                                                                                                     (Restated)
<S>                                                                            <C>                  <C>         
Assets
Current assets
     Cash and cash equivalents......................................           $23,260,398          $  6,136,711
     Accounts receivable, net
        Trade.......................................................            16,602,414            16,603,944
        Unbilled....................................................             8,106,288             7,789,586
     Prepaid expenses ..............................................             2,973,160             3,458,348
     Deferred income taxes..........................................               914,474             1,016,766
     Current portion of lease receivable............................               560,583               560,478
                                                                         ------------------    ------------------
                                                                                52,417,317            35,565,833
Lease receivable....................................................               642,424               845,889
Capital assets, net.................................................             5,734,395             5,137,296
Intangible assets, net..............................................             3,035,952             3,130,334
                                                                         ------------------    ------------------
                                                                                61,830,088            44,679,352
Assets of discontinued operations (note 4)..........................             6,935,990            11,889,004
                                                                         ------------------    ------------------
Total assets........................................................          $ 68,766,078          $ 56,568,356
                                                                         ==================    ==================

Liabilities and stockholders' equity
Current liabilities
     Accounts payable ..............................................           $ 3,947,957          $  7,140,470
     Accrued liabilities ...........................................             4,298,867             3,320,436
     Income Taxes Payable ..........................................             1,448,291             2,442,571
     Deferred revenue ..............................................             8,517,582             7,317,895
     Current portion of long-term debt .............................                72,800               377,332
     Current obligations under capital leases ......................             1,244,797               872,917
                                                                         ------------------    ------------------
                                                                                19,530,294            21,471,621
Obligations under capital leases....................................             2,526,105             1,907,037
Liabilities of discontinued operations (note 4).....................             4,627,341             2,370,579
                                                                         ------------------    ------------------
Total liabilities...................................................            26,683,740            25,749,237
                                                                         ------------------    ------------------
Stockholders' equity
     Common stock...................................................            60,846,289            44,637,778
     Treasury stock.................................................              (122,743)             (122,743)
     Deficit........................................................           (18,641,208)          (13,695,916)
                                                                         ------------------    ------------------
                                                                                42,082,338            30,819,119
                                                                         ------------------    ------------------
Total liabilities and stockholders' equity..........................          $ 68,766,078          $ 56,568,356
                                                                         ===================   ==================

</TABLE>

                 See notes to consolidated financial statements
                                       -3-


<PAGE>


                         MDSI MOBILE DATA SOLUTIONS INC.

                Consolidated Statements of Operations and Deficit
                         (Expressed in Canadian dollars)
                                   (Unaudited)


<TABLE>

                                                                                   Three months ended March 31,
                                                                              ----------------------------------------
                                                                                     1999                  1998

                                                                              ------------------    ------------------
                                                                                                        (Restated)
<S>                                                                                <C>                   <C>         
Revenue                                                                                                    
   Software and services................................................           $ 13,221,367          $  7,823,224
   Third party products and services....................................              4,086,021               867,846
   Maintenance and support..............................................              1,524,179             1,132,811
                                                                              ------------------    ------------------
                                                                                     18,831,567             9,823,881  

Direct cost.............................................................              8,798,732             4,502,603
                                                                              ------------------   -------------------
Gross profit............................................................             10,032,835             5,321,278
                                                                              ------------------   -------------------
Operating expenses
   Research and development.............................................              2,439,547             1,653,078
   Sales and marketing..................................................              3,879,986             2,720,129
   General and administrative...........................................              2,036,620             1,122,727
   Amortization of intangible assets....................................                 94,383                94,383
                                                                              ------------------   -------------------
                                                                                      8,450,536             5,590,317
                                                                              ------------------   -------------------
Operating income (loss).................................................              1,582,299              (269,039)
Other income (expense)..................................................               (245,428)              177,441
                                                                              ------------------   -------------------
Income (loss) before tax provision......................................              1,336,871               (91,598)
Provision for income taxes..............................................               (429,376)               (1,341)
                                                                              ------------------   -------------------
Net income (loss) from continuing operations............................                907,495               (92,939)
Profit (loss) from discontinued operations (note 4).....................             (5,852,786)              169,201
                                                                              ------------------   -------------------
Net income (loss).......................................................             (4,945,291)               76,262
Deficit, beginning of period............................................            (13,695,916)          (19,194,860)
                                                                              ------------------   -------------------
Deficit, end of period..................................................          $ (18,641,207)         $(19,118,598)
                                                                              ==================   ===================
Earnings per Common Share
Earnings (loss) from continuing operations
  Basic.................................................................             $     0.13           $     (0.01)
                                                                              ==================   ===================
  Diluted...............................................................             $     0.12           $     (0.01)
                                                                              ==================   ===================
Net earnings (loss)
  Basic.................................................................             $    (0.70)           $     0.01
                                                                              ==================   ===================
  Diluted...............................................................             $    (0.70)           $     0.01
                                                                              ==================   ===================

Weighted average Common Shares outstanding
  Basic.................................................................              7,021,007             6,466,336
                                                                              ==================   ===================
  Diluted...............................................................              7,628,799             6,621,553
                                                                              ==================   ===================

</TABLE>


                 See notes to consolidated financial statements
                                       -4-


<PAGE>



                         MDSI MOBILE DATA SOLUTIONS INC.

                      Consolidated Statements of Cash Flows
                         (Expressed in Canadian dollars)
                                   (Unaudited)

<TABLE>

                                                                                Three months ended March 31,
                                                                         ----------------------------------------
                                                                                 1999                 1998
                                                                         -------------------   ------------------
                                                                                                     (Restated)
<S>                                                                             <C>                  <C>
Cash flow from operating activities
     Net income (loss)for the period.................................           $   907,495          $   (92,939)
     Items not affecting cash:
          Depreciation and amortization..............................               564,176              422,593
          Deferred income taxes......................................               102,292              819,056
          Changes in non-cash operating working capital items........            (1,838,764)           1,361,534
                                                                         -------------------   ------------------
     Net cash provided by (used in) operating activities.............              (264,801)           2,510,244
                                                                         -------------------   ----
--------------
Cash flows from financing activities
     Issuance of common stock........................................            16,208,511              285,420
     Repayment of long-term debt.....................................              (304,532)                   -
     Proceeds from capital leases....................................               990,947              990,767
                                                                         -------------------   ------------------
     Net cash provided by financing activities.......................            16,894,926            1,276,187
                                                                         -------------------   ------------------
Cash flows from investing activities
     Long term lease receivable......................................               203,465                    -
     Acquisition of capital assets...................................            (1,066,893)            (520,009)
                                                                         -------------------   ------------------
     Net cash used in investing activities...........................              (863,428)            (520,009)
                                                                         -------------------   ------------------
Cash provided by continuing operations...............................            15,766,697            3,266,422
Cash provided by (used for) discontinued operations (note 4).........             1,356,990           (1,229,592)
                                                                         -------------------   ------------------
Net cash inflow......................................................            17,123,687            2,036,830
Cash and cash equivalents, beginning of period.......................             6,136,711              110,117
                                                                         -------------------   ------------------
Cash and cash equivalents, end of period.............................         $  23,260,398          $ 2,146,947
                                                                         ===================   ==================

</TABLE>



                 See notes to consolidated financial statements
                                       -5-





<PAGE>


                         MDSI MOBILE DATA SOLUTIONS INC.

                 Notes to the Consolidated Financial Statements
                    For the three months ended March 31, 1999
                         (Expressed in Canadian dollars)
                                   (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, 1998.

     (b)  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.


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, 1998,  the Company  reported two business  segments - Field Service and
     Delivery.  In February 1999, the Company decided to dispose of its Delivery
     segment  (Transportation  Business  Unit - note 4). As a result the Company
     now has only one business segment.

     Geographic information

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

                                                 Three months ended March 31,
                                             -----------------------------------
                                                   1999                1998
                                             ----------------    ---------------
          Canada                              $  1,136,586        $    152,145
          United States                         14,179,353           9,209,930
          Europe                                 2,873,941             217,086
          Asia                                     641,687                   -
          South America                                  -             244,720
                                             ----------------    ---------------
                                              $ 18,831,567        $  9,823,881
                                             ================    ===============


                                      -6-


<PAGE>


                         MDSI MOBILE DATA SOLUTIONS INC.

                 Notes to the Consolidated Financial Statements
                    For the three months ended March 31, 1999
                         (Expressed in Canadian dollars)
                                   (Unaudited)


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:

                                                       Three months ended
                                                           March 31,
                                               ---------------------------------
                                                    1999               1998
                                               ----------------   --------------

Weighted average shares outstanding .........     7,021,007          6,466,336
Common stock equivalents
     Stock options...........................       607,792            143,040
     Share purchase warrants ................                           12,177
                                               ----------------   --------------
Total shares for diluted earnings (loss)          7,628,799          6,621,553
                                               ================   ==============


4.   DISCONTINUED OPERATIONS

In February 1999, the Company adopted a plan for the sale of the  Transportation
Business Unit which develops mobile workforce software for the taxi, courier and
roadside recovery market. The transaction is expected to be completed in 1999.

This  business is accounted  for as a  discontinued  operation and for reporting
purposes,  the  results  of  operations,  financial  position  and cash flow are
segregated  from  those of  continuing  operations  for the  current  and  prior
periods. The Company has included in the results of the discontinued  operation,
an estimate of sale  proceeds,  costs of  disposition  and  expected  results of
operations from the measurement date to the expected disposal date.

The  Company is in the  preliminary  stages of the  selling  process,  and it is
possible that the actual  selling price or costs or results of operations  could
differ from the  Company's  current  estimates  which  could  result in material
differences from the results presented here.

Summarized financial information of the discontinued operations is as follows:



                                      -7-
<PAGE>


                         MDSI MOBILE DATA SOLUTIONS INC.

                 Notes to the Consolidated Financial Statements
                    For the three months ended March 31, 1999
                         (Expressed in Canadian dollars)
                                   (Unaudited)


4.   DISCONTINUED OPERATIONS (continued)

<TABLE>

Results of Discontinued Operations
-------------------------------------------------------------------------------------------
                                                        March 31, 1999      March 31, 1998
                                                      ------------------ ------------------

<S>                                                     <C>                <C>         
  Revenues                                             $ 2,890,177         $  4,256,483
                                                      ================== ==================
  Loss before income taxes                              (2,375,492)             293,886
  Income tax                                                     -             (124,685)
                                                      ------------------ ------------------
                                                        (2,375,492)             169,201
  Estimated loss on future operations and disposal      
     net of income taxes                                (3,477,294)                   -
                                                      ================== ==================
  Income (Loss) from discontinued operations           $(5,852,786)        $    169,201
                                                      ================== ==================

Financial position of discontinued operations
-------------------------------------------------------------------------------------------
                                                      March 31, 1999     December 31, 1998
                                                      ------------------ ------------------

   Current assets                                      $ 6,442,979         $  9,147,621
   Long term assets                                        493,011            2,741,383
                                                      ================== ==================
   Total assets of discontinued operations             $ 6,935,990         $ 11,889,004
                                                      ================== ==================
   Current liabilities                                 $ 4,627,341         $  2,370,579
   Long term liabilities                                         -                    -
                                                      ================== ==================
   Total liabilities of discontinued operations        $ 4,627,341         $  2,370,579
                                                      ================== ==================

Changes in cash flow of discontinued operations
------------------------------------------------------------------------------------------
                                                      March 31, 1999     March 31, 1998
                                                      ------------------ -----------------

   Operating activities                                $ 1,451,829         $ (1,134,806)
   Investing activities                                    (94,839)             (94,786)
   Financing activities                                          -                    -
                                                      ================== =================
   Cash provided by (used for) discontinued            
     operations                                        $ 1,356,990         $ (1,229,592)
                                                      ================== =================

</TABLE>


                                      -8-


<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, competition,
product  development  risks and risks of  technological  change,  dependence  on
selected vertical markets and third-party marketing relationships and suppliers,
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, 1998.

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

Overview

     The Company  develops,  markets,  implements and supports mobile  workforce
management  and wireless  connectivity  software and related  network and mobile
computing equipment for use by a wide variety of companies that have substantial
mobile workforces,  such as utility,  telecommunications and cable companies and
public safety  organizations.  The Company'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)
third party  products  and  services,  consisting  of the  provision of non-MDSI
products and services as part of the total contract;  and (iii)  maintenance and
support,  consisting of the provision of after-sale  support services as well as
hourly, annual or extended maintenance contracts.

     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,   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.

     The Company is also called on to provide,  in addition to MDSI products and
services,  certain  third party  products,  such as host  computer  hardware and
operating  system  software,  mobile  computing  devices and radio data  network
infrastructure  equipment,  or sub-contract services,  such as radio data system
design and  implementation.  The  Company  recognizes  revenue for the supply of
third  party  hardware  upon  transfer  of title to the  customer.  The  



                                      -9-


<PAGE>


Company  recognizes  revenue  for 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 customers typically enter into ongoing maintenance agreements
that provide for maintenance, product enhancement 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.

     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 or the  introduction  of new  products,  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,  cash  flows and  financial  condition.   The
Company's  contracts are generally  cancelable upon notice by the customer.  The
loss of certain  contracts could have a material adverse effect on the Company's
business,  operating results, cash flows and financial condition. 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.





                                      -10-
<PAGE>


Results of Operations

     In February  1999, the Company  decided to dispose of its Delivery  segment
(Transportation  Business  Unit).  As a result of this  decision,  the  Delivery
segment  has been  classified  as a  discontinued  operation  and the results of
operation,  financial  position  and changes in cash flow for this  segment have
been segregated from those of continuing  operations.  The following  discussion
and analysis  excludes the  Delivery  segment for the current and  corresponding
prior period.

     The first  quarter  1999 loss of $4.9  million  was  comprised  of $907,000
after-tax profit from continuing  operations offset by an after-tax loss of $5.9
million on discontinued operations. The loss on discontinued operations resulted
from an after-tax  loss on operations  of $2.4 million and an after-tax  loss on
future  operations  prior to disposal and loss on disposal of $3.5 million.  The
operating  loss  includes  not only the results of  operations  but also foreign
exchange losses and provision  against current contracts to the measurement date
of February 25, 1999.  The  provision for  estimated  loss on future  operations
includes the operating  results from  measurement date forward and the estimated
costs of disposal, severance costs and loss on disposal.

     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 March 31,
                                                                             ------------------------------------
                                                                                    1999                1998
                                                                             -----------------    ---------------
                                                                               (Unaudited)          (Unaudited)
Revenue
<S>                                                                                   <C>                  <C>  
   Software and services................................................              70.2%                79.7%
   Third party products and services....................................              21.7                  8.8
   Maintenance and support..............................................               8.1                 11.5
                                                                             -----------------    ---------------
                                                                                     100.0                100.0
Direct costs............................................................              46.7                 45.8
                                                                             -----------------    ---------------
Gross profit............................................................              53.3                 54.2
                                                                             -----------------    ---------------
Operating expenses
   Research and development.............................................              13.0                 16.8
   Sales and marketing..................................................              20.6                 27.7
   General and administrative...........................................              10.8                 11.4
   Amortization of intangible assets....................................               0.5                  1.0
                                                                             -----------------    ---------------
                                                                                      44.9                 56.9
                                                                             -----------------    ---------------
Operating income........................................................               8.4                 (2.7)

Other income (expense)..................................................              (1.3)                 1.8
                                                                             -----------------    ---------------
Income before tax provision.............................................               7.1                 (0.9)

Provision for income taxes..............................................              (2.3)                (0.0)
                                                                             -----------------    ---------------
Net income (loss)from continuing operations.............................               4.8                 (0.9)

Income (loss) from discontinued operations..............................             (31.1)                 1.7
                                                                             -----------------    ---------------
Net income (loss).......................................................             (26.3)%                0.8%
                                                                             =================    ===============

</TABLE>


                                      -11-

<PAGE>


Three Months Ended March 31, 1999 Compared to the Three Months Ended March 31,
1998

     Revenue.  Revenue  increased by $9.0  million  (91.7%) for the three months
ended March 31, 1999 as compared to the three months ended March 31, 1998.  This
increase was due to the  increase in revenue for both  software and services and
third party  products and services  delivered  during the first  quarter of 1999
relative to the same period in 1998.

     Software and  services  revenue  increased by $5.4 million  (69.0%) for the
three  months  ended March 31, 1999 as compared to the three  months ended March
31, 1998. This increase is due to additional  revenue from customers in both the
telecommunications and utility markets.

     Third  party  products  and  services  revenue  increased  by $3.2  million
(370.8%)  for the three  months  ended  March 31,  1999 as compared to the three
months ended March 31, 1998.  The increase in third party  products and services
revenue is due  primarily  to revenue  earned in the first  quarter of 1999 from
certain third party  deliveries to customers in the utility market.  These third
party products  typically  include host computer  equipment and mobile computing
devices,  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 $1.5 million for the three months ended
March 31, 1999 as compared to $1.1  million for the three months ended March 31,
1998.  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.

     Direct Costs. Direct costs were 46.7% of revenue for the three months ended
March 31, 1999 as compared to 45.8% for the three  months  ended March 31, 1998.
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.

     Gross  Margins.  Gross  margins  were 53.3% of revenue for the three months
ended March 31, 1999 as compared to 54.2% for the three  months  ended March 31,
1998. 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 March 31, 1999 there was an increase in third party  products and services
revenue which  typically  has a lower gross  margin,  than software and services
revenue , which typically has a higher gross margin, relative to the same period
in 1998.

     Research and Development.  Research and development  expenses were 13.0% of
revenue for the three  months  ended March 31, 1999 and 16.8% of revenue for the
three months ended March 31, 1998.  Total research and development  expenditures
for the three months ended March 31, 1999 of $2.4 million represents an increase
of $786,000  (47.6%) as compared  to the same  period in 1998.  The  increase in
research  and  development  expenses  in  1999  is a  result  of  the  continued
development  and  enhancement of the Company's  Advantex  products.  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 20.6% of revenue for
the three  months ended March 31, 1999 and 27.7% of revenue for the three months
ended March 31, 1998.  This  represents  an increase of $1.2 million  (42.6%) as
compared  to the same  period in 1998.  The  increase  was  primarily  due to an
increase in  marketing,  sales and  technical  support  personnel to support the
Company's increased marketing activities worldwide. The Company



                                      -12-


<PAGE>

Three Months  Ended March 31, 1999  Compared to the Three Months Ended March 31,
1998 (Continued)

anticipates  that the dollar  amounts of its sales and  marketing  expenses will
continue  to  increase  as  the  result  of  the  Company's  commitment  to  its
international marketing efforts.

     General and Administrative.  General and administrative expenses were 10.8%
of revenue  for the three  months  ended March 31, 1999 and 11.4% of revenue for
the three months ended March 31, 1998. Total general and administrative expenses
of $2.0 million  represents an increase of $914,000 (81.4%) for the three months
ended  March 31,  1999 as  compared  to the same  period in 1998.  The  increase
represents expanded  administrative activity to support the Company's growth and
the Company  expects that the dollar  amounts  will  continue to increase as the
Company  continues  to  expand  its  staffing,  information  systems  and  other
administrative requirements necessary to support this growth.

     Other Income (Expense). Other income (expense) was $(245,000) for the three
months  ended March 31, 1999 as compared to $177,000  for the three months ended
March  31,  1998.  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 taxes on earnings for the
three months ended March 31, 1999 at the rate of 30.0%,  after adjusting for the
amortization of intangible assets. The Company's effective tax rate reflects the
application of certain  operating loss carry forwards against taxable income and
the blended effect of Canadian, US, and other foreign jurisdictions' tax rates.

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 March 31, 1999, the Company had cash
and cash equivalents of $23.3 million and working capital of $32.9 million.

     Cash  provided by (used in) operating  activities  was  $(265,000)  for the
three months ended March 31, 1999  compared to $2.5 million for the three months
ended March 31,  1998.  The  outflow of cash from  operating  activities,  after
adding back depreciation and amortization of $564,000,  is due to a net decrease
in non-cash working capital items of $1.8 million.  The net decrease in non-cash
operating  working  capital  items of $1.8  million  is due  primarily  to a net
decrease in trade  payables of $3.1  million  which was offset by an increase in
deferred revenue of $1.2 million.

     Cash provided by financing  activities  of $16.9  million  during the three
months ended March 31, 1999  primarily  relates to proceeds  from common  shares
issued for $16.2  million  pursuant  to the  exercise  of stock  options and the
Company's  Employee Share Purchase Plan and net proceeds of $14.7 million from a
public  share issue of 575,000  shares.  The Company  also had  proceeds of $1.0
million  from its capital  lease  program.  The capital  leases are to be repaid
evenly over a 36 month period ending April 30, 2002,  bear interest at 7.23% and
are secured by certain computer hardware and software assets of the Company.

     Cash used in investing  activities  was $863,000 for the three months ended
March 31,  1999 as compared to  $520,000  for the three  months  ended March 31,
1998. Total investing  activity during the three months ended March 31, 1999 and
1998 consisted of purchases of capital assets  including  computer  hardware and
software  for use in  research  and  development  activities  and to support the
growth of the Company's corporate information systems.

     Existing  sources of liquidity at March 31, 1999 include  $23.3  million of
cash and cash  equivalents and up to $8.0 million  available under the Company's
operating line of credit.  At March 31, 1999,  (pound)200,000 of such amount was
committed to securing any overdraft  position which may arise in the accounts of
MDSI UK. The Company also had provided as two  performance  bonds an irrevocable
revolving  letter of credit expiring May 28, 2001 for Belgian Franc  101,068,000
($4.2 million) and a bank guarantee  expiring  February 2, 2000 in the amount of
Danish  Kroner  9,740,000  ($2.2  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 March 31, 1999, the Company had no borrowings  under the line
of credit.



                                      -13-

<PAGE>


Liquidity and Capital Resources (continued)

     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.

Year 2000

General

     The Year 2000 issue is the result of computer  programs being written using
two digits  rather  than four  digits to define the  applicable  year.  Computer
equipment,  software  and  other  devices  with  embedded  technology  that  are
time-sensitive  may recognize a date using "00" as the year 1900 rather than the
Year 2000.  This could  result in system  failures  or  miscalculations  causing
disruption of operations,  including,  among other things, a temporary inability
to manufacture products,  acquire or ship products,  process transactions,  send
invoices,  or engage in other  normal  business  activities.  The  inability  of
business  processes to function  correctly  in 2000 could have  serious  adverse
effects on companies and entities throughout the world.

     In 1997 the Company established a team of professionals  within the company
to plan and implement its Year 2000 compliance initiative.

     The Company has developed and is implementing a Company-wide Year 2000 Plan
to ensure that its computer  equipment and software with date sensitive embedded
technology  will be able to distinguish  between the year 1900 and the Year 2000
and will function  properly with respect to all dates (referred to as "Year 2000
Compliant").  The Company presently  believes that its planned  modifications or
replacements  of  certain  existing  computer  equipment  and  software  will be
completed  on a  timely  basis  so  as  to  avoid  any  of  the  potential  Year
2000-related disruptions of malfunctions of its computer equipment and software.

     The Company's Plan consists of two major focus areas:  1) internal  systems
including personal computing, facilities and business systems and 2) third-party
considerations  including  products and  suppliers.  The tasks common to each of
these areas are: 1) the  identification  and  assessment  of Year 2000 issues 2)
assessment  of  remediation   required  to  meet   compliance   requirements  3)
prioritization of risk 4) remediation and testing and 5) contingency planning.

Projects

Internal systems

     The Company's  compliance  team has  identified  all  significant  internal
personal  computing  and  business  systems  that are  critical  to the  ongoing
operation  of the Company and has  identified  computer  software  and  hardware
upgrades and  replacements  necessary to make such systems Year 2000  Compliant.
Also, all  remediation  requirements  related to the replacement and upgrades to
specific computer hardware and software have been determined and are expected to
be completed by the end of the second quarter of 1999.

     The  assessment  of the Company's  facilities  identified  certain  upgrade
requirements  which are also  expected to be  completed by the end of the second
quarter of 1999. The Company is reviewing its present  financial systems and its
long-term requirements.  Any decision to purchase and implement new systems will
include the requirement that such systems be Year 2000 Compliant.



                                      -14-
<PAGE>


Year 2000 (continued)

Third-party considerations

Customers

     The  Company is a software  developer  and has been  testing  its  software
internally  and in  conjunction  with  customers  for Year 2000  readiness.  The
Company has ensured that all its current  products are Year 2000  Compliant  and
believes that it has identified and informed all its customers of the steps that
are  required  to make  existing  software in the hands of  customers  Year 2000
Compliant.  The Company's  software runs on a variety of computers and operating
systems  which  are not the  responsibility  of the  Company  but for  which the
company has suggested to customers to apply  available Year 2000  remedies.  The
Company is  tracking  progress  on all  customer  Year 2000  validation  efforts
including  synchronization  of Year  2000  upgrades  and  testing  to  eliminate
implementation of non-compatible solutions by customers.

Suppliers

     The Company has identified all its third party software and, in conjunction
with its vendors, has considered aspects of possible  remediation  requirements.
After review and  consultation,  the Company has determined that no updates were
required to make existing software Year 2000 Compliant. Business operations will
also be dependent on the Year 2000 readiness of infrastructure suppliers such as
banking, communications, transportation and other services. In this environment,
there will  likely be  instances  of failure  that could  cause  disruptions  in
business   processes.   The   likelihood   and  effects  of  such   failures  in
infrastructure systems and the supply chain cannot be estimated.

Costs

     The total cost of the Company's Year 2000 Plan is not  considered  material
to the Company's  financial  condition.  The estimated total cost of the Plan is
expected to be  approximately  $400,000,  and is being funded through  operating
cash flow. As at March 31, 1999, the Company had incurred approximately $235,000
in costs related to its Year 2000  identification,  assessment,  remediation and
testing  efforts.  The major portion of the remaining  amount of the estimate is
expected to have been incurred by the end of the second quarter of 1999 when the
Company's  Year 2000  compliance  efforts are expected to be completed  with the
balance  expended  thereafter  monitoring  the compliance  process.  None of the
Company's  other  projects  have been  delayed  or  deferred  as a result of the
implementation of the Year 2000 Plan.

Risks

     To date,  the  Company  has not  incurred,  and does not  expect  to incur,
material costs to review and remedy Year 2000 compliance problems.  Although the
Company  believes that its products are Year 2000 Compliant,  failure to provide
Year 2000  Compliant  solutions to its  customers  or to receive  such  business
solutions  from its  suppliers  could  have a  material  adverse  effect  on the
Company's  business,  financial  condition,  operating  results  and cash flows.
Furthermore,  the Company may incur additional  expense if its products are used
by customers on  third-party  hardware and  operating  systems that are not Year
2000 Compliant, which could result in a material adverse effect on the Company's
business,  operating results,  financial condition, and cash flows. There can be
no  assurance  that the  systems or products of other  entities,  including  the
Company's  suppliers  on which the Company  relies,  disruptions  in the economy
generally  resulting from Year 2000, issues, and disruptions caused by customers
deferring  their  purchase  decisions or  implementation  plans due to their own
internal  Year 2000  remediation  activities,  will not have a material  adverse
effect on the Company.

     The  preceding  "Year 2000"  discussion  contains  various  forward-looking
statements  which  represent the  Company's  beliefs or  expectations  regarding
future  events.   These   forward-looking   statements   include  the  Company's
expectations  and beliefs as to the most likely  scenarios or  occurrences.  All
forward-looking  statements,  however,  involve  a  number  of risks  which  and
uncertainties that could cause actual results to differ from projected results.



                                      -15-

<PAGE>


Year 2000 (continued)

Contingency Plans

     As  part  of  its  continuing   assessment  of  its  Year  2000  compliance
requirements,  the Company has developed  contingency plans to deal with what it
feels is its worst case scenario.  This contingency plan revolves around a staff
team of information  technology  professionals that will be available during the
Year 2000 date change period and the facilities to support that staff.


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 the United  States 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 and Great  Britain 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 United  States  dollar and the
Great Britain pound.

     As of March 31, 1999,  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 $3.7
million.  The majority of the Company's  foreign exchange  exposure is to United
States  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 Danish
Kroner.  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 $2.8
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.



                                      -16-

<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 January 29, 1999,  the Company sold  575,000  common  shares in a public
offering  outside the United  States  pursuant  to the terms of an  Underwriting
Agreement  among the  Company,  Sprott  Securities  Limited,  Dundee  Securities
Corporation,   First  Associates  Investments  Inc.  and  Pacific  International
Securities Inc. The aggregate offering price was $15,956,250 or 27.75 per common
share. The aggregate underwriting discounts and commissions paid in the offering
were  $797,812.50 or 5% of the aggregate  offering price.  The offering was made
outside the United States  pursuant to the  provisions  applicable to Category 1
issuers under Regulation S of the Securities Act of 1933, as amended.

               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

                    None.



                                      -17-


<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:    May 14, 1999             By:  /s/ KENNETH R. MILLER              
                                       -----------------------------------
                                       Name:   Kenneth R. Miller
                                       Title:  Chief Executive Officer




Date:    May 14, 1999             By:  /s/ VERNE D. PECHO                 
                                       -----------------------------------
                                       Name:   Verne D. Pecho
                                       Title:  Vice President Finance &
                                               Administration and Chief 
                                               Financial Officer (Principal 
                                               Financial and Accounting Officer)










                                      -18-