================================================================================
                                  UNITED STATES
                       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, 2001

                                       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 May 11, 2001 was 8,621,897.

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

<PAGE>


                         MDSI Mobile Data Solutions Inc.

                             INDEX TO THE FORM 10-Q
                  For the quarterly period ended March 31, 2001


                                                                            Page
                                                                            ----
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




                                       i

<PAGE>

PART I - FINANCIAL INFORMATION

     ITEM 1. FINANCIAL STATEMENTS


<TABLE>
                                                    MDSI MOBILE DATA SOLUTIONS INC.
                                                 Condensed Consolidated Balance Sheets
                                                 (Expressed in United States dollars)
                                                              (Unaudited)

                                                                                                 As at
                                                                                      March 31,        December 31,
                                                                                   --------------     --------------
                                                                                        2001               2000
<S>                                                                                  <C>                <C>
ASSETS
CURRENT ASSETS
   Cash and cash equivalents                                                         $11,529,157        $13,238,081
   Accounts receivable, net
      Trade (net of allowance for doubtful accounts;  2001 -
        $2,187,634; 2000 - $985,000)                                                  15,585,949         16,821,925
      Unbilled                                                                        11,344,216         12,184,446
   Prepaid expenses                                                                    1,687,626          1,411,200
   Current portion of lease receivable                                                    33,645            133,723
                                                                                   --------------     --------------
                                                                                      40,180,593         43,789,375
INVESTMENTS, at cost (net of valuation allowance; 2001 -
  $2,999,992; 2000 - $250,000 (note 7))                                                        -          3,081,447
CAPITAL ASSETS, NET                                                                   11,642,994         11,097,497
LONG TERM DEFERRED INCOME TAXES                                                          708,350            347,350
INTANGIBLE ASSETS, NET (note 5)                                                          187,000          1,824,057
                                                                                   --------------     --------------
                                                                                      52,718,937         60,139,726

Assets of discontinued operations (note 9)                                               467,678            641,405
                                                                                   --------------     --------------
TOTAL ASSETS                                                                         $53,186,615        $60,781,131
                                                                                   ==============     ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
   Accounts payable                                                                  $ 3,771,778        $ 3,444,457
   Accrued liabilities                                                                 3,755,838          3,625,591
   Income taxes payable                                                                   92,418          1,091,164
   Deferred revenue                                                                    7,365,585          7,901,837
   Current portion of long-term debt                                                      39,041             66,968
   Current obligations under capital lease                                             2,616,846          2,094,637
                                                                                   --------------     --------------
                                                                                      17,641,506         18,224,654

Obligations under capital leases                                                       3,257,066          4,156,502
Liabilities of discontinued operations (note 9)                                          168,129            223,024
                                                                                   --------------     --------------
Total Liabilities                                                                     21,066,701         22,604,164

STOCKHOLDERS' EQUITY
   Common stock                                                                       48,513,534         48,416,502
   Additional Paid-up capital                                                            220,700            220,700
   Treasury stock                                                                        (85,043)           (85,043)
   Deficit                                                                           (15,839,173)        (9,685,088)
   Accumulated comprehensive loss                                                       (690,104)          (690,104)
                                                                                   --------------     --------------
                                                                                      32,119,914         38,176,967
                                                                                   --------------     --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                           $53,186,615        $60,781,131
                                                                                   ==============     ==============
</TABLE>


Contingency (note 8)


                 See notes to consolidated financial statements



                                       1
<PAGE>

                         MDSI MOBILE DATA SOLUTIONS INC.
                 Condensed Consolidated Statements of Operations
                      (Expressed in United States dollars)
                                   (Unaudited)



<TABLE>
                                                                    Three months ended March 31,
                                                                       2001               2000
                                                                  --------------     --------------
<S>                                                                 <C>               <C>
REVENUE
    Software and services                                         $   9,403,484       $ 9,669,190
    e-Business                                                        4,503,596         1,488,967
    Third party products and services                                 1,147,417           528,418
    Maintenance and support                                           2,456,604         2,024,346
                                                                  --------------     --------------
                                                                     17,511,101        13,710,921

DIRECT COSTS                                                          9,797,234         5,550,610
                                                                  --------------     --------------
GROSS PROFIT                                                          7,713,867         8,160,311
                                                                  --------------     --------------
OPERATING EXPENSES
    Research and development                                          2,543,781         2,038,906
    Sales and marketing                                               3,464,637         2,825,464
    General and administrative                                        1,702,780         2,113,561
    Provision for doubtful accounts                                   1,202,634                 -
    Restructuring Charge (note 6)                                     1,200,000                 -
    Amortization and provision for valuation of
      intangible assets (note 5)                                      1,637,058            69,810
                                                                  --------------     --------------
                                                                     11,750,890         7,047,741
                                                                  --------------     --------------
OPERATING (LOSS) INCOME                                              (4,037,023)        1,112,570

VALUATION ALLOWANCE ON INVESTMENTS (note 7)                           2,749,992                 -
OTHER INCOME (EXPENSE)                                                  (60,234)         (212,366)
                                                                  --------------     --------------
INCOME  BEFORE TAX PROVISION                                         (6,847,249)          900,204

RECOVERY OF (PROVISION FOR) INCOME TAXES                                693,164          (290,700)
                                                                  --------------     --------------
NET (LOSS) EARNINGS                                                  (6,154,085)          609,504

(DEFICIT), BEGINNING OF PERIOD                                       (9,685,088)       (9,130,688)
                                                                  --------------   ---------------
 (DEFICIT), END OF PERIOD                                         $ (15,839,173)     $ (8,521,184)
                                                                  ==============   ===============
Earnings (loss) per common share
    Net earnings (loss)
    Basic                                                         $       (0.71)     $       0.07
                                                                  ==============   ===============
    Diluted                                                       $       (0.71)     $       0.06
                                                                  ==============   ===============
Weighted average shares outstanding
    Basic                                                             8,619,199         8,391,762
                                                                  ==============   ===============
    Diluted                                                           8,619,199        10,296,406
                                                                  ==============   ===============
</TABLE>

                 See notes to consolidated financial statements



                                       2
<PAGE>

                         MDSI MOBILE DATA SOLUTIONS INC.
                 Condensed Consolidated Statements of Cash Flows
                      (Expressed in United States dollars)
                                   (Unaudited)


<TABLE>
                                                                                  Three months ended March 31,
                                                                                ---------------------------------
                                                                                     2001              2000
                                                                                ---------------   ---------------
<S>                                                                              <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES
    Net income (loss) from continuing operations                                 $ (6,154,085)      $   609,504
    Items not affecting cash:
        Valuation allowance on investments                                          2,749,992                 -
        Depreciation and amortization                                               2,500,921           517,832
        Deferred income taxes                                                        (361,000)                -
        Changes in non-cash operating working capital items                           722,347           545,899
                                                                                ---------------   ---------------
    Net cash provided by (used in) operating activities                              (541,825)        1,673,235
                                                                                ---------------   ---------------

CASH FLOWS FROM FINANCING ACTIVITIES
    Issuance of common shares                                                          97,032         3,034,919
    Repayment of long-term debt                                                       (27,927)          (17,294)
    Proceeds from capital leases, net of repayments                                  (377,211)         (376,548)
                                                                                ---------------   ---------------
    Net cash provided by financing activities                                        (308,106)        2,641,077
                                                                                ---------------   ---------------

CASH FLOWS FROM INVESTING ACTIVITIES
    Long term lease receivable repayment                                              100,078            94,733
    Acquisition of capital assets                                                  (1,409,361)       (1,251,568)
    Proceeds on settlement (Cost on acquisition) of investments                       331,458          (743,764)
                                                                                ---------------   ---------------
    Net cash used in investing activities                                            (977,825)       (1,900,599)
                                                                                ---------------   ---------------
    Net cash provided by continuing operations                                     (1,827,756)        2,413,713

    Net cash provided by (used in) discontinued operations                            118,832          (209,406)
                                                                                ---------------   ---------------

NET CASH (OUTFLOW) INFLOW                                                          (1,708,924)        2,204,307

EFFECTS OF FOREIGN EXCHANGE FLUCTUATIONS ON CASH                                            -          (260,666)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                     13,238,081        14,612,923
                                                                                ---------------   ---------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                         $ 11,529,157       $16,556,564
                                                                                ===============   ===============
</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 March 31, 2001
                      (Expressed in United States 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, 2000.

     (b)  Reporting 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:

                                                Three months ended March 31,
                                              --------------------------------
                                                  2001                2000
                                              ------------       -------------
      Net income from continuing operations   $(6,154,085)         $ 609,504
      Comprehensive items
           - Translation adjustment                     -           (260,667)
                                              ------------       -------------
      Comprehensive income for period         $(6,154,085)          $348,837
                                              ============       =============



                                       4
<PAGE>

                         MDSI MOBILE DATA SOLUTIONS INC.

                 Notes to the Consolidated Financial Statements
                    For the three months ended March 31, 2001
                      (Expressed in United States dollars)
                                   (Unaudited)



1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

     (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.


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. 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 4). 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 month period ending March
     31, 2001, as well as 2000.

     Business Segments


<TABLE>
                                       Three months ended March 31, 2001              Three months ended March 31, 2000
                                      Field                                          Field
                                     Service      e-Business(1)      Total           Service       e-Business(1)        Total
                                     -------      -------------      -----           -------       -------------        -----
<S>                               <C>              <C>            <C>             <C>               <C>             <C>
Revenue                           $12,976,663      $4,534,441     $17,511,104     $12,191,232       $1,519,689      $13,710,921
Operating earnings (loss)          (2,033,100)       (445,342)     (2,478,442)      1,628,830         (516,260)       1,112,570
Depreciation & Amortization         2,276,034         224,887       2,500,921         487,128           30,704          517,832

Long lived assets                   9,419,345       2,410,649      11,829,994      14,903,187        1,099,814       16,003,001

Capital Expenditures                  826,823         582,538       1,409,361       1,093,142          158,426        1,251,568
-------------------------
</TABLE>
(1)  The e-Business  operating  segment also includes  revenues from third-party
     products and services.




                                       5
<PAGE>

                         MDSI MOBILE DATA SOLUTIONS INC.

                 Notes to the Consolidated Financial Statements
                    For the three months ended March 31, 2001
                      (Expressed in United States dollars)
                                   (Unaudited)


2.   SEGMENTED INFORMATION (continued)

     Geographic information

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

                                                       Three months ended
                                                           March 31,
                                               -------------------------------
                                                    2001              2000
                                               -------------     -------------

       Canada................................  $    277,876      $    236,307
       United States.........................    13,355,578        12,082,976
       Europe................................     3,042,470         1,370,251
       Asia and Other........................       835,177            21,387
                                               -------------     -------------
                                               $ 17,511,101      $ 13,710,921
                                               =============     =============

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
                                                                     March 31,
                                                         -------------------------------
                                                              2001              2000
                                                         -------------     -------------
     <S>                                                 <C>                <C>
      Weighted average shares outstanding.........        8,619,199          8,391,762

      Common stock equivalents
      Stock options...............................                -          1,904,643
                                                         -------------     -------------
      Total shares for diluted earnings (loss) per
       common share..............................         8,619,199         10,296,405
                                                         =============      ============
</TABLE>



                                       6
<PAGE>

                         MDSI MOBILE DATA SOLUTIONS INC.

                 Notes to the Consolidated Financial Statements
                    For the three months ended March 31, 2001
                      (Expressed in United States dollars)
                                   (Unaudited)


4.   ACQUISITIONS

     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,  an  application  service  provider (ASP) and
     provider of online service management solutions for service companies.  The
     Company issued 845,316 common shares, and 583,037 employee stock options to
     acquire common shares of the Company in exchange for all of the outstanding
     stock and options of Connectria.  Merger related expenses of $1,691,028 are
     included in the Cost of merger for the year ended  December 31,  2000.  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 the  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.


                                                                     March 31,
                                                                       2000
                                                                  -------------
     REVENUE:
     MDSI Mobile Data Solutions Inc. through March 31, 2000        $ 12,191,232
      Connectria Corporation through March 31, 2000                   1,519,689
                                                                  -------------
     Combined Revenue                                              $ 13,710,921
                                                                  =============

     NET INCOME:
     MDSI Mobile Data Solutions Inc. through March 31, 2000        $    612,495
     Connectria Corporation through March 31, 2000                       (2,991)
                                                                  -------------
     Combined Net Income                                           $    609,504
                                                                  =============

     OTHER CHANGES IN STOCKHOLDERS' EQUITY:
     MDSI Mobile Data Solutions Inc. through March 31, 2000        $   (260,666)
     Connectria Corporation through March 31, 2000                            -
                                                                  -------------
     Combined changes in Stockholders' Equity                      $   (260,666)
                                                                  =============


5.   INTANGIBLE ASSETS

<TABLE>
                                                                  March 31,           March 31,
                                                                    2001                2000
                                                                -------------      -------------
<S>                                                              <C>                <C>
Goodwill                                                         $ 2,615,751        $ 2,615,751
Commerical web site domain name                                      220,000                  -
Less:  accumulated amortization and impairment provision          (2,648,751)          (786,960)
                                                                -------------      -------------
                                                                 $   187,000        $ 1,828,791
                                                                =============      =============
</TABLE>


     During  the three  months  ended  March  31,  2001 in  connection  with the
     Company's announced  restructuring (note 6), the Company determined that an
     impairment in the value of Goodwill that arose on  acquisition  of Alliance
     Systems Inc., had occurred.  As a result of this impairment the Company has
     taken a  valuation  allowance  in its field  service  business  segment  of
     $1,558,578  which was equal to the remaining net book value of the Goodwill
     as at March 31, 2001.



                                       7
<PAGE>

                         MDSI MOBILE DATA SOLUTIONS INC.

                 Notes to the Consolidated Financial Statements
                    For the three months ended March 31, 2001
                      (Expressed in United States dollars)
                                   (Unaudited)


6.   RESTRUCTURING CHARGE

     During the three  months  ended  March 31, 2001 the  Company  announced  an
     approved  restructuring  plan  designed  to  reduce  operating  costs  that
     resulted in the  elimination of 34 full time and contractor  positions.  As
     part of this  restructuring  the  Company  recorded a charge to earnings of
     $1.2  million  in the three  months  ended  March 31,  2001.  The charge is
     comprised of expected  severance costs of  approximately  $300,000 and of a
     provision for leasing of excess office space of $900,000.

     Subsequent to March 31, 2001 the Company  announced a  continuation  of the
     restructuring  initiated  prior to March 31, 2001.  The Company  expects to
     take an additional  charge in the second  quarter of 2001 of  approximately
     $4.9 million in order to reduce future expenditures.  The charge is related
     to further staff reductions and the leasing of additional excess space. The
     continuation  of the  restructuring  announced in the first quarter was not
     accrued at the end of the first  quarter as it had not been approved by the
     Board of Directors and the specific  employee  groups affected had not been
     determined.


7.   INVESTMENTS AND ADVANCES

<TABLE>
                                                       March 31,            December 31,
                                                          2001                  2000
                                                     ---------------       --------------
<S>                                                     <C>                    <C>
Investment in private companies, at cost                2,499,992              2,499,992
Promissory note                                                 -                331,455
Other advances                                            500,000                500,000
Valuation Allowance                                    (2,999,992)              (250,000)
                                                     ---------------       --------------
Total Investments                                      $        -             $3,081,447
                                                     ===============       ==============
</TABLE>

     During the year ended December 31, 2000 the Company made equity investments
     of $2,499,992 and provided advances of $500,000 to three private companies.
     These investments do not represent  significant  influence in the companies
     and are recorded at cost.

     As a result of significant  uncertainty over the future  realization of any
     return on  investment  or capital,  the  Company  has  recorded a valuation
     allowance equal to the full cost of the investments during the three months
     ended March 31, 2001.


8.   CONTINGENCY

     The  Company is  involved  in legal  proceeding  with a  customer  over the
     payment for the license and implementation of a system in accordance with a
     binding contract.  The Company believes that its' position in the matter is
     strong and intends to vigorously pursue  collection.  The Company has filed
     an action seeking  payment of the full contract amount and the customer has
     filed an answer and counterclaim. The Companies have conducted mediation of
     the dispute however no settlement has been reached to date. The Company has
     included in its  operating  results for the year ended  December 31, 2000 a
     provision for $985,000 with respect to uncertainty  over  collection of the
     account.



                                       8
<PAGE>

                         MDSI MOBILE DATA SOLUTIONS INC.

                 Notes to the Consolidated Financial Statements
                    For the three months ended March 31, 2001
                      (Expressed in United States dollars)
                                   (Unaudited)


9.   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
       --------------------------------------------------------------------------------------------------------
                                                                   March 31, 2001         March 31, 2000
                                                                   --------------         --------------
          <S>                                                      <C>                    <C>
          Revenues                                                  $         -            $         -
                                                                   ==============         ==============
          Loss before income taxes                                            -                      -
          Income tax                                                          -                      -
                                                                   --------------         --------------
                                                                              -                      -
          Estimated loss on future operations and disposal
             net of income taxes                                              -                      -
                                                                   --------------         --------------
          Income (loss) from discontinued operations                $         -            $         -
                                                                   ==============         ==============
</TABLE>

<TABLE>

       Financial position of discontinued operations
       --------------------------------------------------------------------------------------------------------
                                                                   March 31, 2001         March 31, 2000
                                                                   --------------         --------------
          <S>                                                      <C>                    <C>
          Current assets                                            $   467,678            $ 1,436,819
          Long term assets                                                    -                      -
                                                                   --------------         --------------
          Total assets of discontinued operations                   $   467,678            $ 1,436,819
                                                                   ==============         ==============
          Current liabilities                                       $   168,129            $   440,226
          Long term liabilities                                               -                      -
                                                                   --------------         --------------
          Total liabilities of discontinued operations              $   168,129            $   440,226
                                                                   ==============         ==============
</TABLE>

<TABLE>
       Changes in cash flow of discontinued operations
       --------------------------------------------------------------------------------------------------------
                                                                   March 31, 2001         March 31, 2000
                                                                   --------------         --------------
          <S>                                                      <C>                    <C>
          Operating activities                                      $   118,832            $  (209,407)
          Investing activities                                                -                      -
          Financing activities                                                -                      -
                                                                   --------------         --------------
          Cash provided by (used for) discontinued operations       $   118,832            $  (209,407)
                                                                   ==============         ==============
</TABLE>



                                       9
<PAGE>

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

     Forward-Looking Statements

     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,  economic  conditions and regulatory  developments in the Company's
vertical  markets,   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, 2000.

     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  are  designed  to  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.  MDSI
also provides hosting and related professional services.

     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 consulting  and hosting  services,
the  provision  of  application  services,   and  provision  of  online  service
management solutions; (iii) third party products and services, consisting of the
provision of non-MDSI  products  and services as part of the total  contract and
(iv) maintenance and support,  consisting of the provision of after-sale support
services as well as hourly, annual or extended maintenance contracts.

Restructuring

     The Company  believes  that recent  economic  developments  and trends have
adversely  affected  and may  continue to affect  levels of capital  spending by
companies  in a variety  of  industries,  including  companies  in the  vertical
markets that the Company serves.  In addition,  current economic  conditions and
developments  in the energy  markets have had an adverse affect on the financial
condition of energy and utility  companies in certain  geographic areas of North
America.  The  Company  believes  that these and other  factors  have  adversely
affected  demand for products and  services  offered by the Company,  as certain
prospective  and  existing   customers  have  delayed  or  deferred   purchasing
decisions.  The Company  believes  that these  factors  will  continue to affect
demand for the Company's  products and services in 2001,  particularly  software
and services.



                                       10
<PAGE>

     In order to address the uncertainties caused by these economic trends, MDSI
announced  its  intention to reduce its  operating  expenses  through  workforce
reductions  and other  measures.  These  measures are expected to be implemented
over the next four quarters,  with incremental reductions in costs each quarter,
resulting in an estimated  $2.9  million in cost  reductions  per quarter by the
first quarter of 2002.

     In connection with this  restructuring,  on March 30, 2001, MDSI terminated
34 employee and contractor positions in Canada and the United States. On May 11,
2001 the Company continued the restructuring by announcing the elimination of an
additional 115 positions,  which in combination with the workforce reductions of
March 30, 2001  amounted to  approximately  25% of MDSI's  staff as of March 30,
2001.  The Company has  recorded a one-time  charge of $1.2 million in the first
quarter of 2001  relating  to the  workforce  reductions,  and leasing of excess
office space that occurred on March 30, 2001, and expects to incur an additional
charge of  approximately  $4.9 million in the second quarter of 2001 relating to
elimination  of 115 positions  announced on May 11, 2001.  See  "Forward-looking
Statements."

     The  Company  also  announced  on  May  11,  2001  significant  changes  in
management of its sales, product development,  project implementation,  customer
support and sales organizations.  The changes continue initiatives by MDSI's new
management team to strengthen product development and delivery and improve sales
efforts.


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 customer 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'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.

     The  Company is  periodically  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  systems.  The
Company  recognizes  revenue of the supply on third party hardware upon transfer
of title to the customer.  The Company recognizes revenue on the supply on 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.



                                       11
<PAGE>

     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  announced version r7 of its
Advantex product,  and it is currently in the implementation  phase of its first
contracts  using  version  r7.  The  Company  experienced  delays  and  incurred
additional costs in connection with the initial implementation and field testing
of the Advantex r7 product and has also  experienced  delays in  commencement of
additional  installations of the Advantex r7 product. Such delays have increased
the Company's costs of completing  Advantex r7  installations  and have affected
the timing of the  Company's  recognition  of revenue from such  contracts.  The
Company  believes  that it will  continue  to  expend  additional  resources  in
connection with r7 installations for the remainder of 2001. See "Forward-looking
Statements."

e-Business

     The Company  launched its  e-Business  division in February 2000 to develop
Internet-based business solutions for companies of varying sizes, in the general
services 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:  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.  The  Company  has  announced  several
alliances  that are  expected to further its  e-Business  strategy.  The Company
launched its  scheduling  and dispatch  application,  eServiceManager  (formerly
ServeClick), on an ASP basis to service providers in the fourth quarter of 2000.

     The Company's  e-Business  model is expected to 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 is an attractive
solution  for small or  medium-sized  companies  that can  benefit  from  MDSI's
workforce  management  and  scheduling  applications,  without the  financial or
information  technology  investment  required  to license and  implement  MDSI's
on-site solutions.  Currently,  the Company's e-Business revenue is derived from
providing managed services, which include managed application services,  managed
network  services,  managed data center services,  and managed hosting services.
The Company also earns revenues by providing eBusiness consulting services.



                                       12
<PAGE>

     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,  the Company's ability to enter into contracts with
service  providers,  online 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 primarily from
transaction  and monthly  subscription  fees  generated  by customer and service
provider  use of the  e-Business  scheduling  solutions.  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 from these solutions in future periods.

Effects of Acquisitions

     On June 1, 2000,  the Company  acquired  all of the issued and  outstanding
shares of Connectria, an ASP and provider of online service management solutions
for service  companies.  The Company  issued  845,316  common shares and assumed
583,037 employee stock options in exchange for all of the outstanding  stock and
options of Connectria. Merger related expenses of $1,691,028 are included in the
cost of merger for fiscal  2000.  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.

     The Company has a limited  history of operations  on a combined  basis with
Connectria.  In addition,  since the acquisition of Connectria,  the Company has
restructured  certain  aspects of this  operation.  As a result,  the historical
financial  information  presented in this Quarterly  Report is not indicative of
the results that would have been obtained had the acquisitions occurred prior to
the commencement of the periods covered herein,  and such information should not
be relied upon as an indication of future performance.

Disposition of Transportation Business Unit

     In February  1999,  the  Company's  Board of  Directors  approved a plan to
dispose  of the  delivery  segment  of its  business  ("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 $3,805,746.  The
proceeds comprised of common shares of DDS, representing an 11% interest in DDS,
and a promissory note in the principal amount of $331,455,  due January 1, 2001,
bearing interest at 8% per annum (this note was repaid in the current  quarter).
During the year ended December 31, 2000, DDS exercised its option to buyback the
DDS shares that MDSI received as compensation on the sale of the  Transportation
Business Unit. Proceeds on sale of the DDS shares were $3,273,392.

     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   substantially   liquidate  these  assets  and
liabilities by the second quarter of 2001. As a result of the Company's decision
to dispose of its Transportation Business Unit, the Transportation Business Unit
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.  The following  discussion  and analysis of the
Company's results of operations  excludes the  Transportation  Business Unit for
the current and corresponding prior period.



                                       13
<PAGE>

Results of Operations

     The  Company's  net loss was $6.2  million for the three months ended March
31, 2001. This compares to a net earnings of $610,000 for the three months ended
March 31, 2000. The change in income for the period is due primarily to a number
of one time  charges  incurred  during the three  months  ended  March 31,  2001
relating  to  the  provision  for  doubtful  accounts,   restructuring  charges,
impairment of goodwill and valuation allowance on investments.

     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,
                                                                           ----------------------------
                                                                               2001            2000
                                                                           ----------       -----------
     <S>                                                                   <C>              <C>
     REVENUE
        Software and services                                                 53.7%            70.5%
        e-Business                                                            25.7%            10.8%
        Third party products and services                                      6.6%             3.9%
        Maintenance and support                                               14.0%            14.8%
                                                                           ----------       -----------
                                                                             100.0%           100.0%

     DIRECT COSTS                                                             55.9%            40.5%
                                                                           ----------       -----------
     GROSS PROFIT                                                             44.1%            59.5%
                                                                           ----------       -----------
    OPERATING EXPENSES
        Research and development                                              14.5%            14.9%
        Sales and marketing                                                   19.8%            20.6%
        General and administrative                                             9.7%            15.4%
        Provision for doubtful accounts                                        6.9%               -
        Restructuring Charge                                                   6.9%               -
        Amortization and provision for valuation of intangible assets          9.4%             0.5%
                                                                           ----------       -----------
                                                                              67.2%            51.4%
                                                                           ----------       -----------
     OPERATING (LOSS) INCOME                                                 (23.1)%            8.1%

     VALUATION ALLOWANCE ON INVESTMENTS                                      (15.7%)              -
     OTHER EXPENSE                                                            (0.3%)           (1.5%)
                                                                           ----------       -----------
     (LOSS) INCOME BEFORE TAX PROVISION                                      (39.1)%            6.6%


     (RECOVERY OF) PROVISION FOR INCOME TAXES                                 (4.0)%            2.1%
                                                                           ----------       -----------
     NET EARNINGS (LOSS)                                                     (35.1)%            4.4%
</TABLE>



                                       14
<PAGE>

Three Months  Ended March 31, 2001  Compared to the Three Months Ended March 31,
2000

     Revenue.  Revenue  increased by $3.8  million  (27.7%) for the three months
ended March 31,  2001,  as compared to $13.7  million for the three months ended
March 31, 2000.  This  increase was  primarily  due to increases in revenue from
e-Business and third party products during the first quarter of 2001 relative to
the same period in 2000.

     Software  and  services  revenue  decreased  by  $(266,000)  (2.7%) to $9.4
million  for the three  months  ended  March 31,  2001 as  compared to the three
months  ended March 31, 2000.  The  Company's  software and service  revenue was
impacted by decisions of certain  customers to defer purchasing  decisions.  The
Company    anticipates    that   continued    economic    uncertainty   in   the
telecommunications  and utility  markets will continue to have an adverse impact
on software  and  services  revenues in future  periods.  See  "forward  looking
statements".

     Third  party  products  and  services  revenue  increased  by $0.6  million
(117.1%) to $1.1  million for the three  months ended March 31, 2001 as compared
to the three months ended March 31, 2000.  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 $2.5 million for the three months ended
March 31, 2001 as compared to $2.0  million for the three months ended March 31,
2000.  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  materially  consist of sales by the  Company's  newly
acquired  subsidiary,  Connectria.  Revenue for the three months ended March 31,
2001 was $4.5  million as compared to $1.5  million for the three  months  ended
March 31, 2000.  Connectria's  revenues in both periods  consisted  primarily of
revenues from  consulting and hosting  services.  There can be no assurance that
the Company  will  realize  material  revenues  from its new  eBusiness  product
offering. The increase of period-to-period revenues is a result of the increased
business  growth and  expansion  within the  hosting and  professional  services
market segment, and is not attributable to one particular contract.

     Direct Costs. Direct costs were 55.9% of revenue for the three months ended
March 31, 2001 as compared to 40.5% for the three  months  ended March 31, 2000.
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 its first Advantex r7  installations,  and as a result of a
change in the mix of  revenues.  As a result,  the  percentage  of direct  costs
compared to revenues  for the three  months  ended March 31, 2001  increased  as
compared to the three months ended March 31, 2000.

     Gross  Margins.  Gross  margins  were 44.1% of revenue for the three months
ended March 31, 2001 as compared to 59.5% for the three  months  ended March 31,
2000. The decrease in gross margin as a percentage of revenue relates  primarily
to the  change  in the  mix of  revenues  and to  higher  costs  for  the  first
installations of Advantex r7. During the three months ended March 31, 2001 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 an increase in
third party product and e-Business revenues,  which typically have lower margins
than  software and services  revenue.  These  factors  resulted in a decrease in
gross  margin for the three  months  ended March 31, 2001  compared to the three
months ended March 31, 2000.



                                       15
<PAGE>

     Research and Development.  Research and development  expenses were 14.5% of
revenue for the three  months  ended March 31, 2001 and 14.9% of revenue for the
three months ended March 31, 2000.  Total research and development  expenditures
for the three months ended March 31, 2001 of $2.5 million represents an increase
of $505,000  (24.8%) as compared  to the same  period in 2000.  The  increase in
research and  development  expenses in 2001 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.

     Sales and Marketing. Sales and marketing expenses were 19.8% of revenue for
the three  months ended March 31, 2001 and 20.6% of revenue for the three months
ended March 31,  2000.  This  represents  an  increase  of  $639,000  (22.6%) as
compared  to the same  period in 2000.  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 be significant 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 9.7%
of revenue  for the three  months  ended March 31, 2001 and 15.4% of revenue for
the three months ended March 31, 2000. Total general and administrative expenses
of $1.7 million represents a decrease of $(411,000) (19.4%) for the three months
ended March 31, 2001 as compared to the same period in 2000. The decrease is the
result of a cost control effort initiated by the Company in the first quarter of
2001 that was designed to control discretionary spending.

     Provision  for  doubtful  accounts  During the three months ended March 31,
2001 the  Company  recorded  a charge of $1.2  million  as a  provision  against
several trade  accounts  receivable  balances.  Due to  significant  uncertainty
surrounding  collection  of several  specific  accounts  the Company has taken a
charge to value the  accounts at the most likely  amount to be  collected.  This
provision  arose  due to the  increased  economic  uncertainty  in the  vertical
industries the Company services.

     Restructuring  Charge  During the three  months  ended  March 31,  2001 the
Company announced a restructuring, designed to increase operational efficiencies
and reduce costs. As part of the restructuring, the Company recorded a provision
of $1.2 million for the three months ended March 31, 2001  relating to severance
and the  subleasing of excess office  space.  Subsequent to March 31, 2001,  the
Company  announced  it  intended  to  take a  further  restructuring  charge  of
approximately  $4.9 million in the second quarter  relating to staff  reductions
and leasing of excess space that were not included in the initial  restructuring
announcement prior to March 31, 2001.

     Amortization of Intangible Assets  Amortization and impairment  charges for
Intangible  Assets for the three  months  ended  March 31, 2001  increased  $1.6
million over the  Amortization  of  Intagible  Assets for the three months ended
March 31, 2000. The increase in amortization  is a result of a determination  by
the Company  that an  impairment  in the value of the  Goodwill  acquired on the
acquisition of Alliance  Systems Inc. had occurred during the three months ended
March 31, 2001.  The Company  determined an impairment  had occurred due to poor
historical and forecasted performance in the in the acquired Company's business.
As a result of this  impairment the Company wrote off the remaining  Goodwill of
$1.6 million relating to the acquisition of Alliance Systems Inc.

     Valuation  Allowance on Investments As part of its e-Business  strategy the
Company invested in or advanced funds to three priviate  companies in 2000. As a
result of significant  uncertainty over the future  realization of any return on
investment or capital, during the three months ended March 31, 2001, the Company
has recorded a valuation allowance equal to the full cost of the investments.



                                       16
<PAGE>

     Other Income (Expense).  Other income (expense) was $(60,000) for the three
months ended March 31, 2001 as compared to $(212,000) for the three months ended
March 31, 2000. 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 March 31, 2001 at the rate of 28.2%,  after adjusting for
the amortization and impairment of intangible  assets.  The Company's  effective
tax rate  reflects  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,  lines of credit,  capital leases,  private
placements  and public  offerings  of its  securities.  At March 31,  2001,  the
Company had cash and cash  equivalents  of $11.5 million and working  capital of
$22.5 million.

     Cash provided by (used in) operating  activities was ($0.5) million for the
three months ended March 31, 2001  compared to $1.7 million for the three months
ended March 31, 2000. The net outflow of cash from operating  activities,  after
adding back  depreciation  and  amortization  of $2.5 million and the  valuation
allowance on investments  of $2.8, is due to a net decrease in non-cash  working
capital  items of $0.7  million  and a net loss of ($6.2)  for the three  months
ending March 31, 2001. The net decrease in non-cash  operating  working  capital
items is due  primarily to a net decrease in unbilled  trade  receivables  and a
decrease in trade receivables. The decrease in unbilled trade receivables is due
to timing differences arising between revenue recognition and billing milestones
in certain multiphase implementations, as well as the Company having met certain
milestones  on  Advantex  version  r7  implementations.  The  decrease  in trade
receivables is a result of increased  collections  during the three months ended
March 31, 2001.

     Cash used by financing activities of $308,000 during the three months ended
March 31, 2001  primarily  relates to $377,000 in repayments  of capital  leases
made  during the  quarter,  partially  offset by  proceeds  of $97,000  from the
exercise of employee stock  options.  The capital leases are to be repaid evenly
over a 36 month period ending December 22, 2003, bear interest at 7.675% and are
secured by certain computer hardware and software assets of the Company.

     Cash used in  investing  activities  was $1.0  million for the three months
ended  March 31, 2001 as compared  to $1.9  million for the three  months  ended
March 31, 2000. Total investing activity during the three months ended March 31,
2001  consisted  of, $1.4  million in  purchases  of capital  assets,  offset by
proceeds on  settlement  of a note  receivable  of $331,000,  and a $100,000 net
decrease in lease  receivable.  Purchases  of capital  assets  include  computer
hardware and software for use in  implementation  activities  and to support the
growth of the  e-Business  operations.  The proceeds on  settlement  of the note
receivable related to a note the Company received as payment on sale of its land
transport  division  in 1999,  the note was due and paid in full on  January  1,
2001.  Investing  activities  in 2000 related  primarily to purchases of capital
assets, and the investment in preferred stock of an internet focused Company.

     Existing  sources of liquidity at March 31, 2001 includes  $11.5 million of
cash and  cash  equivalents  and up to CDN  $8.0  million  available  under  the
Company's  operating line of credit. At March 31, 2001, the Company had provided
a performance  bond an irrevocable  revolving  letter of credit expiring May 28,
2001 for  Belgian  Franc  60,640,800  ($1.5  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, 2001, the Company had no borrowings under the
line of credit.



                                       17
<PAGE>

     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.


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 Canada,  Great  Britain  and the  Netherlands  in addition to its
operations  in the United  States  and did not hedge  these  exposures  in 2001.
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 March 31, 2001,  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 $3.6
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.


PART II -  OTHER INFORMATION

     ITEM 1. LEGAL PROCEEDINGS

     MDSI Mobile Data Solutions Inc. v. Citizens  Telecom  Services Co. L.L.C. -
U.S. District Court,  Texas District Court Collin County - 366 Judicial District
(Docket No. 366-01914-00)

     On November 22, 2000, MDSI filed suit in Texas District Court Collin County
against Citizens Telecom Services Co. L.L.C.,  generally  alleging that Citizens
breached a series of contracts  dated  October 15,  1998.  The suit alleges that
Citizens has wrongfully terminated the contracts and failed to pay sums due. The
suit seeks  damages,  interest  and  attorneys'  fees.  In late  February  2001,
Citizens  filed an answer and counter  claim  alleging  that MDSI  breached  the
contracts,  justifying  Citizens'  termination  of the  contracts  and entitling
Citizens to  repayment  of all sums paid to MDSI in  addition  to  interest  and
attorneys'  fees.  Citizens  requested  and MDSI agreed to mediate the  dispute.
Mediation took place on April 3, 2001,  with no settlement  being reached.  MDSI
disputes Citizens' claims and intends to pursue the lawsuit vigorously.



                                       18
<PAGE>

     From time to time, the Company is a party to litigation and claims incident
to the ordinary  course of its  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, operating results 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
 ------       -----------
 2.1(3)       Agreement  and Plan of Merger dated April 17, 1997 among the
              Company, MDSI Acquisition Corp., Alliance, Geoffrey Engerman
              and Doug Engerman (previously filed as Exhibit 2.2)

 3.1(1)       Articles of Incorporation of the Company

 3.2(1)       Articles of Amendments of the Company

 3.3(1)       By-laws of the Company

 4.1(1)       Form of Common Share Certificate 1996 Stock Option Plan

10.1(1)(2)    1997 Stock Option Plan

10.2(2)(4)    1998 Stock Option Plan

10.3(2)(4)    Stock Purchase Plan

10.4(2)(6)    Stock Purchase Plan

10.5(2)(6)    1999 Stock Option Plan

10.6(2)(7)    1998 Stock Option Plan for Connectria Corporation (formerly,
              Catalyst Solutions Group, Inc.)

10.7(2)(8)    2000 Stock Option Plan

10.8(1)       Form of  Indemnification  Agreement  between the Company and
              certain officers of the Company (previously filed as Exhibit
              10.4)

10.9(1)       Promissory Note dated January 2, 1996 granted by the Company
              and TelSoft in favor of Killean Consulting Inc.  (previously
              filed as Exhibit 10.8)

10.10(1)      Promissory Note dated January 2, 1996 granted by the Company
              and TelSoft in favor of 382904 B.C. Ltd.  (previously  filed
              as Exhibit 10.8)

10.11(1)      Employment Agreement dated April 1, 1996 between the Company
              and Erik Dysthe (previously filed as Exhibit 10.18)



<PAGE>

 Exhibit
 Number       Description
 ------       -----------
10.12(1)      Lease dated  September  25, 1997 between Sun Life  Assurance
              Company  of  Canada  and the  Company  (previously  filed as
              Exhibit 10.20)

10.13(1)      Lease dated June 2, 1989 between  Corporate Woods Associates
              and Service  Systems  International  Limited and  subsequent
              amendments (previously filed as Exhibit 10.23)

10.14(1)      Lease dated April 8, 1993 between Cambridge Scanning Company
              Limited and Spectronics  Micro Systems  Limited  (previously
              filed as Exhibit 10.25)

10.15(3)(2)   Employment  Agreement  dated  February  1, 1999  between the
              Company and Robert G. Cruickshank

10.16(3)(2)   Employment  Agreement  dated  February  1, 1999  between the
              Company and Kenneth R. Miller


10.17(6)      Master  Purchase  and  Sale  Agreement  dated  June 1,  1999
              between  Digital  Dispatch  Systems  Inc.  and  the  Company
              (without schedules or exhibits)*

10.18(9)      Agreement  and  Plan of  Reorganization,  dated as of May 9,
              2000, among MDSI, MDSI Acquisition  Corporation,  Connectria
              and Certain Principal Shareholders.*

10.19(9)      Form of Voting,  Lockup and  Registration  Rights  Agreement
              among MDSI,  MDSI  Acquisition  Corporation,  Connectria and
              Certain Principal Shareholders.

21.1(10)      List of the Company's Subsidiaries.

23.1(10)      Consent of Deloitte & Touche LLP.

99.1          Risk Factors
----------

(1)  Previously  filed as exhibits with the same  corresponding  number with the
     Registrants' Registration Statement on Form F-1 (Registration No. J33-5872)
     and  amendments  numbers 1 and 2  thereto,  filed with the  Securities  and
     Exchange Commission on October 28, 1996, November 13, 1996 and November 25,
     1996, respectively.
(2)  This document has been identified as a management  contract or compensatory
     plan or arrangement.
(3)  Previously  filed as an exhibit to Registrant's  Registration  Statement on
     Form F-4.
(4)  Previously  filed as exhibits with the same  corresponding  number with the
     Registrant's Form 10-K for the year ended December 31, 1998.
(5)  Previously  filed as exhibits with the same  corresponding  number with the
     Registrant's Form 10-Q for the quarterly period ended September 30, 1999.
(6)  Previously  filed as exhibits with the same  corresponding  number with the
     Registrant's Form 10-K for the year ended December 31, 1999.
(7)  Previously filed as exhibits with the Registrant's  Registration  Statement
     on Form S-8 filed on July 12, 2000.
(8)  Previously filed as exhibits with the Registrant's  Registration  Statement
     on Form S-8 filed on November 22, 2000.
(9)  Previously filed as exhibits with the  Registrant's  Current Report on Form
     8-K filed on June 15, 2000.
(10) Previously  filed as exhibits with the  Registrant's  Annual Report on Form
     10-K on April 2, 2001.

*    The Company agrees to supplementally furnish a copy of any omitted schedule
     or exhibit to the Securities and Exchange Commission upon request.


     (b)  Reports on Form 8-K

          None.




                                       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:  May 15, 2001               By:    /s/ Erik Dysthe
                                         ---------------------------------------
                                  Name:  Erik Dysthe
                                  Title: Chief Executive Officer




Date:  May 15, 2001               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 INDEX
                                 -------------


 Exhibit
 Number       Description
 ------       -----------
 2.1(3)       Agreement  and Plan of Merger dated April 17, 1997 among the
              Company, MDSI Acquisition Corp., Alliance, Geoffrey Engerman
              and Doug Engerman (previously filed as Exhibit 2.2)

 3.1(1)       Articles of Incorporation of the Company

 3.2(1)       Articles of Amendments of the Company

 3.3(1)       By-laws of the Company

 4.1(1)       Form of Common Share Certificate 1996 Stock Option Plan

10.1(1)(2)    1997 Stock Option Plan

10.2(2)(4)    1998 Stock Option Plan

10.3(2)(4)    Stock Purchase Plan

10.4(2)(6)    Stock Purchase Plan

10.5(2)(6)    1999 Stock Option Plan

10.6(2)(7)    1998 Stock Option Plan for Connectria Corporation (formerly,
              Catalyst Solutions Group, Inc.)

10.7(2)(8)    2000 Stock Option Plan

10.8(1)       Form of  Indemnification  Agreement  between the Company and
              certain officers of the Company (previously filed as Exhibit
              10.4)

10.9(1)       Promissory Note dated January 2, 1996 granted by the Company
              and TelSoft in favor of Killean Consulting Inc.  (previously
              filed as Exhibit 10.8)

10.10(1)      Promissory Note dated January 2, 1996 granted by the Company
              and TelSoft in favor of 382904 B.C. Ltd.  (previously  filed
              as Exhibit 10.8)

10.11(1)      Employment Agreement dated April 1, 1996 between the Company
              and Erik Dysthe (previously filed as Exhibit 10.18)

10.12(1)      Lease dated  September  25, 1997 between Sun Life  Assurance
              Company  of  Canada  and the  Company  (previously  filed as
              Exhibit 10.20)

10.13(1)      Lease dated June 2, 1989 between  Corporate Woods Associates
              and Service  Systems  International  Limited and  subsequent
              amendments (previously filed as Exhibit 10.23)

10.14(1)      Lease dated April 8, 1993 between Cambridge Scanning Company
              Limited and Spectronics  Micro Systems  Limited  (previously
              filed as Exhibit 10.25)

10.15(3)(2)   Employment  Agreement  dated  February  1, 1999  between the
              Company and Robert G. Cruickshank


<PAGE>

 Exhibit
 Number       Description
 ------       -----------
10.16(3)(2)   Employment  Agreement  dated  February  1, 1999  between the
              Company and Kenneth R. Miller


10.17(6)      Master  Purchase  and  Sale  Agreement  dated  June 1,  1999
              between  Digital  Dispatch  Systems  Inc.  and  the  Company
              (without schedules or exhibits)*

10.18(9)      Agreement  and  Plan of  Reorganization,  dated as of May 9,
              2000, among MDSI, MDSI Acquisition  Corporation,  Connectria
              and Certain Principal Shareholders.*

10.19(9)      Form of Voting,  Lockup and  Registration  Rights  Agreement
              among MDSI,  MDSI  Acquisition  Corporation,  Connectria and
              Certain Principal Shareholders.

21.1(10)      List of the Company's Subsidiaries.

23.1(10)      Consent of Deloitte & Touche LLP.

99.1          Risk Factors
----------

(1)  Previously  filed as exhibits with the same  corresponding  number with the
     Registrants' Registration Statement on Form F-1 (Registration No. J33-5872)
     and  amendments  numbers 1 and 2  thereto,  filed with the  Securities  and
     Exchange Commission on October 28, 1996, November 13, 1996 and November 25,
     1996, respectively.
(2)  This document has been identified as a management  contract or compensatory
     plan or arrangement.
(3)  Previously  filed as an exhibit to Registrant's  Registration  Statement on
     Form F-4.
(4)  Previously  filed as exhibits with the same  corresponding  number with the
     Registrant's Form 10-K for the year ended December 31, 1998.
(5)  Previously  filed as exhibits with the same  corresponding  number with the
     Registrant's Form 10-Q for the quarterly period ended September 30, 1999.
(6)  Previously  filed as exhibits with the same  corresponding  number with the
     Registrant's Form 10-K for the year ended December 31, 1999.
(7)  Previously filed as exhibits with the Registrant's  Registration  Statement
     on Form S-8 filed on July 12, 2000.
(8)  Previously filed as exhibits with the Registrant's  Registration  Statement
     on Form S-8 filed on November 22, 2000.
(9)  Previously filed as exhibits with the  Registrant's  Current Report on Form
     8-K filed on June 15, 2000.
(10) Previously  filed as exhibits with the  Registrant's  Annual Report on Form
     10-K on April 2, 2001.

*    The Company agrees to supplementally furnish a copy of any omitted schedule
     or exhibit to the Securities and Exchange Commission upon request.