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

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

                                    FORM 10-Q

(Mark One)

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

     For the quarterly period ended June 30, 1999

                                       OR

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

     For the transition period from ---------------- to ---------------------.

                         Commission file number 0-28968


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

            CANADA                                   NOT APPLICABLE
  (State or Other Jurisdiction              (I.R.S. Employer Identification No.)
of Incorporation or Organization)

                              10271 Shellbridge Way
                           Richmond, British Columbia,
                                 Canada V6X 2W8
                    (Address of Principal Executive Offices)


                                 (604) 207-6000
              (Registrant's Telephone Number, Including Area Code)

     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 common shares, no par value, of the Registrant
                         at June 30, 1999 was 7,317,197.


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


<PAGE>


                         MDSI MOBILE DATA SOLUTIONS INC.

                             INDEX TO THE FORM 10-Q
                  For the quarterly period ended June 30, 1999

<TABLE>
                                                                                                      Page

Part I -     FINANCIAL INFORMATION

<S>                                                                                                    <C>
  ITEM 1.    FINANCIAL STATEMENTS

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

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

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

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

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

  ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.................................18

Part II -    OTHER INFORMATION

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

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

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

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

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

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

SIGNATURES  ...........................................................................................21

</TABLE>








<PAGE>


Part I -  FINANCIAL INFORMATION

          ITEM 1.  FINANCIAL STATEMENTS

                         MDSI MOBILE DATA SOLUTIONS INC.

                           Consolidated Balance Sheets
                         (Expressed in Canadian dollars)
                                   (Unaudited)
<TABLE>

                                                                                           As at
                                                                         -------------------------------------------
                                                                                    June 30              December 31
                                                                                      1999                   1998
                                                                         ---------------------   -------------------
<S>                                                                            <C>                    <C>
Assets
Current assets
     Cash and cash equivalents........................................         $   20,685,754         $   6,136,711
     Accounts receivable, net
        Trade.........................................................             17,882,092            16,603,944
        Unbilled......................................................              7,229,948             7,789,586
     Prepaid expenses ................................................              1,587,569             3,458,348
     Deferred income taxes............................................                723,929             1,016,766
     Current portion of lease receivable..............................                554,049               560,478
                                                                         ---------------------   -------------------
                                                                                   48,663,341            35,565,833
Lease receivable....................................................                  485,478               845,889
Investments, at cost ...............................................                5,532,730                     -
Capital assets, net.................................................                7,593,845             5,137,296
Intangible assets, net..............................................                2,941,569             3,130,334
                                                                         ---------------------   -------------------
                                                                                   65,216,963            44,679,352
Assets of discontinued operations (note 4)..........................                1,112,296            11,889,004
                                                                         ---------------------   -------------------
Total assets.......................................................            $   66,329,259         $  56,568,356
                                                                         =====================   ===================
Liabilities and stockholders' equity
Current liabilities
     Accounts payable ................................................         $    3,260,517         $   7,140,470
     Accrued liabilities .............................................              2,929,050             3,320,436
     Income Taxes Payable ............................................              2,292,455             2,442,571
     Deferred revenue.................................................              6,571,405             7,317,895
     Current portion of long-term debt ...............................                      -               377,332
     Current obligations under capital leases ........................              1,256,671               872,917
                                                                         ---------------------   -------------------
                                                                                   16,310,098            21,471,621
Obligations under capital leases.....................................               2,815,154             1,907,037
Liabilities of discontinued operations (note 4) .....................               2,114,579             2,370,579
                                                                         ---------------------   -------------------
Total liabilities....................................................              21,239,831            25,749,237
                                                                         ---------------------   -------------------
Stockholders' equity
     Common stock.....................................................             62,006,315            44,637,778
     Treasury stock...................................................              (122,743)             (122,743)
     Deficit..........................................................           (16,794,144)          (13,695,916)
                                                                         ---------------------   -------------------
                                                                                   45,089,428            30,819,119
                                                                         ---------------------   -------------------
Total liabilities and stockholders' equity...........................          $   66,329,259         $  56,568,356
                                                                         =====================   ===================
</TABLE>


                 See notes to consolidated financial statements

                                      -3-
<PAGE>


                         MDSI MOBILE DATA SOLUTIONS INC.

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

                                                               Three months ended                      Six months ended
                                                                     June 30                                June 30
                                                      ---------------------------------------------------------------------------
                                                                1999                1998              1999               1998
                                                      -------------------  -----------------  ----------------   ----------------
Revenue
<S>                                                        <C>               <C>               <C>                 <C>
     Software and services..........................       $  15,390,918     $   9,905,559     $  28,612,285       $ 17,728,783

     Third-party products and services..............           2,458,525         2,936,238         6,544,546          3,804,084
     Maintenance and support........................           1,912,800         1,272,905         3,436,979          2,405,716
                                                      -------------------  -----------------  ----------------   ----------------
                                                              19,762,243        14,114,702        38,593,810         23,938,583

Direct costs........................................           8,246,780         6,038,465        17,045,512         10,541,068
                                                      -------------------  -----------------  ----------------   ----------------
Gross profit........................................          11,515,463         8,076,237        21,548,298         13,397,515
                                                      -------------------  -----------------  ----------------   ----------------
Operating expenses
     Research and development.......................           2,514,881         1,788,046         4,954,428          3,441,124
     Sales and marketing ...........................           3,696,827         2,874,546         7,576,813          5,594,675
     General and administrative.....................           2,027,329         1,181,529         4,063,949          2,304,256
     Amortization of intangible assets..............              94,383            94,383           188,766            188,766
                                                      -------------------  -----------------  ----------------   ----------------
                                                               8,333,420         5,938,504        16,783,956         11,528,821
                                                      -------------------  -----------------  ----------------   ----------------
Operating income....................................           3,182,043         2,137,733         4,764,342          1,868,694

Other income (expense)..............................            (490,816)          122,849          (736,244)           300,290
                                                      -------------------  -----------------  ----------------   ----------------
Income before tax provision.........................           2,691,227         2,260,582         4,028,098          2,168,984
Provision for income taxes..........................            (844,164)         (710,844)       (1,273,540)          (712,185)
                                                      -------------------  -----------------  ----------------   ----------------
Net income from continuing operations...............           1,847,063         1,549,738         2,754,558          1,456,799
Loss from discontinued operations (note 4)..........                   -          (413,363)       (5,852,786)          (244,162)
                                                      -------------------  -----------------  ----------------   ----------------
Net income (loss)...................................           1,847,063         1,136,375        (3,098,228)         1,212,637

Deficit, Beginning of period........................         (18,641,207)      (19,118,598)      (13,695,916)       (19,194,860)
                                                      -------------------  -----------------  ----------------   ----------------
Deficit, end of period..............................       $ (16,794,144)    $ (17,982,223)    $ (16,794,144)      $(17,982,223)
                                                      ===================  =================  ================   ================
Earnings (loss) per common share
Earnings from continuing operations
     Basic .........................................       $        0.25     $        0.24     $        0.39       $       0.23
                                                      ===================  =================  ================   ================
     Diluted .......................................       $        0.24     $        0.23     $        0.36       $       0.22
                                                      ===================  =================  ================   ================
Net earnings (loss)
     Basic .........................................       $        0.25     $        0.18     $       (0.43)      $       0.19
                                                       ===================  =================  ================   ================
     Diluted .......................................       $        0.24     $        0.17     $       (0.43)      $       0.18
                                                       ===================  =================  ================   ================
Weighted average shares outstanding
     Basic..........................................           7,276,439         6,479,089         7,148,723          6,472,712
                                                       ===================  =================  ================   ================
     Diluted........................................           7,824,402         6,635,811         7,726,600          6,628,682
                                                       ===================  =================  ================   ================
</TABLE>


                 See notes to consolidated financial statements

                                      -4-

<PAGE>


                         MDSI MOBILE DATA SOLUTIONS INC.

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

                                                                                        Six months ended June 30
                                                                         --------------------------------------------
                                                                                1999                     1998
                                                                         --------------------   ---------------------
<S>                                                                          <C>                     <C>
Cash flow from operating activities
     Net income (loss) for the period.................................       $     2,754,558         $     1,456,799
     Items not affecting cash:
          Depreciation and amortization...............................             1,250,331                 982,611
          Deferred income taxes.......................................               292,837                 735,042
          Changes in non-cash operating working capital items.........            (4,015,676)              1,572,514
                                                                         --------------------   ---------------------
     Net cash provided by (used in) operating activities..............               282,050               4,746,966
                                                                         --------------------   ---------------------
Cash flows from financing activities
     Issuance of common stock.........................................            17,368,537                 639,765
     Repayment of long-term debt......................................              (377,332)               (124,454)
     Proceeds from capital leases.....................................             1,291,871               1,367,156
                                                                         --------------------   ---------------------
     Net cash provided by financing activities........................            18,283,076               1,882,467
                                                                         --------------------   ---------------------
Cash flows from investing activities
     Long term lease receivable.......................................               366,840                       -
     Acquisition of capital assets....................................            (3,518,116)             (1,237,696)
                                                                         --------------------   ---------------------
     Net cash used in investing activities............................            (3,151,276)             (1,237,696)
                                                                         --------------------   ---------------------
Cash provided by continuing operations...............................             15,413,850               5,391,737
Cash provided by (used for) discontinued operations (note 4).........               (864,807)             (2,248,603)
                                                                         --------------------   ---------------------
Net cash inflow......................................................             14,549,043               3,143,134
Cash and cash equivalents, beginning of period......................               6,136,711                 110,117
                                                                         --------------------   ---------------------
Cash and cash equivalents, end of period............................         $    20,685,754         $     3,253,251
                                                                         ====================   =====================
</TABLE>




                 See notes to consolidated financial statements

                                      -5-


<PAGE>


                        MDSI MOBILE DATA SOLUTIONS INC.

                 Notes to the Consolidated Financial Statements
                     For the six months ended June 30, 1999
                         (Expressed in Canadian dollars)
                                   (Unaudited)

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     (a)  Basis of presentation

          These  financial  statements  have been  prepared in  accordance  with
          accounting  principles  generally  accepted  in the United  States for
          interim  financial  reporting and pursuant to the  instructions of the
          United States Securities and Exchange Commission Form 10-Q and Article
          10 of Regulation  S-X. While these  financial  statements  reflect all
          normal recurring  adjustments which are, in the opinion of management,
          necessary for fair  presentation of the results of the interim period,
          they do not include all of the information  and footnotes  required by
          generally  accepted  accounting   principles  for  complete  financial
          statements. For further information, refer to the financial statements
          and footnotes thereto included in the Company's Annual Report filed on
          Form 10-K for the year ended December 31, 1998.

     (b)  Use of estimates

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


2.   SEGMENTED INFORMATION

     Segmented information

     The Company  develops,  markets and supports  mobile work force  management
     systems serving the needs of industry and government.  Examples include the
     utility, telecommunications/cable and public safety industries. At December
     31, 1998,  the Company  reported two business  segments - Field Service and
     Delivery.  In February  1999, the Company's  Board of Directors  approved a
     plan to dispose of its Delivery  segment  (Transportation  Business  Unit -
     note 4). As a result, the Company now has only one business segment.

     Geographic information

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

<TABLE>

                                                  Three months ended                       Six months ended
                                                       June 30                                 June 30
                                      ------------------------------------------------------------------------------
                                                 1999               1998                 1999               1998
                                      ------------------------------------------------------------------------------
<S>                                       <C>                  <C>                 <C>                 <C>
Canada............................        $    1,024,214       $    307,200        $   2,160,800       $    459,345
United States.....................            14,865,848         12,620,997           29,045,201         21,830,927
Europe............................             3,128,241            931,580            6,002,182          1,148,666
Asia..............................               743,940                  0            1,385,627            244,720
South America.....................                     0            254,925                    0            254,925
                                    --------------------------------------------------------------------------------
                                          $   19,762,243       $ 14,114,702        $  38,593,810       $  23,938583
                                      ==============================================================================
</TABLE>





                                      -6-


<PAGE>


                         MDSI MOBILE DATA SOLUTIONS INC.

                 Notes to the Consolidated Financial Statements
                     For the six months ended June 30, 1999
                         (Expressed in Canadian dollars)
                                   (Unaudited)



3.   EARNINGS (LOSS) PER COMMON SHARE

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

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

<TABLE>

                                                       Three months ended                  Six months ended
                                                             June 30                           June 30
                                                 --------------------------------  ---------------------------------
                                                        1999             1998             1999             1998
                                                 ---------------  ---------------  ---------------  ----------------

<S>                                                   <C>              <C>              <C>               <C>
Weighted average shares outstanding.........          7,276,439        6,479,089        7,148,723         6,472,712
Common stock equivalents
Stock options...............................            547,963          148,282          577,877           145,662
Share purchase warrants ....................                  -            8,440                -            10,308
                                                 ---------------  ---------------  ---------------  ----------------
Total shares for diluted earnings (loss) per
common share................................          7,824,402        6,635,811        7,726,600         6,628,682
                                                 ===============  ===============  ===============  ================
</TABLE>


4.   DISCONTINUED OPERATIONS

In February 1999, the Company's Board of Directors  approved a plan for the sale
of the  Transportation  Business Unit which develops  mobile work force software
for the  taxi,  courier  and  roadside  recovery  market.  The  disposition  was
completed  June 24,  effective  June 1, 1999,  for proceeds of  $5,532,730.  The
proceeds comprise common shares representing an 11% interest in Digital Dispatch
Systems  Inc.,  a supplier of dispatch  systems to the taxi  market,  and an 8%,
$500,000 promissory note due January 1, 2001.

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




                                      -7-
<PAGE>


                         MDSI MOBILE DATA SOLUTIONS INC.

                 Notes to the Consolidated Financial Statements
                     For the six months ended June 30, 1999
                         (Expressed in Canadian dollars)
                                   (Unaudited)



4.   DISCONTINUED OPERATIONS (continued)

Summarized financial information of the discontinued operations is as follows:


<TABLE>

Results of discontinued operations
--------------------------------------------------------------------------------------------------------------
                                                                     June 30, 1999             June 30, 1998
                                                              ---------------------     ----------------------
<S>                                                            <C>                       <C>
   Revenues                                                    $        4,008,198        $         8,084,819
                                                              =====================     ======================
   Loss before income taxes                                            (2,375,492)                  (244,462)
   Income tax                                                                   -                        300
                                                              ---------------------     ----------------------
   Operating loss to measurement date                                  (2,375,492)                  (244,162)
   Estimated loss on disposal
      (net of nil income taxes)                                        (3,477,294)                         -
                                                              =====================     ======================
   Income (loss) from discontinued operations                  $       (5,852,786)       $          (244,162)
                                                              =====================     ======================

Financial position of discontinued operations
--------------------------------------------------------------------------------------------------------------
                                                                   June 30, 1999            December 31, 1998
                                                              ---------------------     ----------------------
   Current assets                                              $        1,112,296        $         9,147,621
   Long term assets                                                             -                  2,741,383
                                                              ---------------------     ----------------------
   Total assets of discontinued operations                     $        1,112,296        $        11,889,004
                                                              =====================     ======================
   Current liabilities                                         $        2,114,579        $         2,370,579
   Long term liabilities                                                        -                          -
                                                              ---------------------     ----------------------
   Total liabilities of discontinued operations                $        2,114,579        $         2,370,579
                                                              =====================     ======================

 Cash flow of discontinued operations
--------------------------------------------------------------------------------------------------------------
                                                                     June 30, 1999             June 30, 1998
                                                              ---------------------     ----------------------
   Operating activities                                        $         (733,327)       $        (2,248,027)
   Investing activities                                                  (131,480)                      (576)
   Financing activities                                                         -                          -
                                                              ---------------------     ----------------------
   Cash provided by (used for) discontinued operations         $         (864,807)       $        (2,248,603)
                                                              =====================     ======================
</TABLE>




                                      -8-
<PAGE>


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

     Certain  statements  and  information  contained in this Report  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  achievements of the Company,  or  developments  in the Company's
industry,  to differ  materially  from the anticipated  results,  performance or
achievements  expressed  or implied  by such  forward-looking  statements.  Such
factors  include,  but are not  limited  to:  the  Company's  limited  operating
history,  history of losses, lengthy sales cycles, the Company's dependence upon
large  contracts and relative  concentration  of customers,  risks involving the
management of growth and  integration of  acquisitions,  risks  associated  with
performance of pre-existing contracts assumed through acquisitions, competition,
product  development  risks and risks of  technological  change,  dependence  on
selected vertical markets and third-party marketing relationships and suppliers,
the Company's ability to protect its intellectual  property rights and the other
risks and  uncertainties  detailed  in the  Company's  Securities  and  Exchange
Commission  filings,  including the Company's Annual Report on Form 10-K for the
year ended December 31, 1998.

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

Overview

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

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

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

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



                                      -9-
<PAGE>


Overview (Continued)

     The Company is also called on to provide,  in addition to MDSI products and
services,  certain  third-party  products,  such as host  computer  hardware and
operating  system  software,  mobile  computing  devices and radio data  network
infrastructure  equipment,  or sub-contract services,  such as radio data system
design and  implementation.  The  Company  recognizes  revenue for the supply of
third-party  hardware  upon  transfer  of title  to the  customer.  The  Company
recognizes revenue for the supply of third-party  services using a percentage of
completion  method based on the costs incurred over the total  estimated cost to
complete the third-party services contract.

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

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

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

Disposition of Transportation Business Unit

     In February  1999,  the  Company's  Board of  Directors  approved a plan to
dispose of its Delivery segment  (Transportation  Business Unit). Effective June
1, 1999, the Company  completed the sale of the  transporation  business unit to
Digital Dispatch Systems,  Inc.  ("DDS"),  a supplier of dispatch systems to the
taxi market for proceeds of  $5,532,730.  The proceeds were  comprised of common
shares of DDS, representing an 11% interest in DDS, and a promissory note in the
initial principal amount of $500,000,  due January 1, 2001,  bearing interest at
8% per annum.

     Under the terms of the  agreement  between the Company and DDS, the Company
has retained certain assets and liabilities of the discontinued  operations.  It
is expected  that the Company will  liquidate  these assets and  liabilities  by
December  31,  1999.  In  addition,  the  Company  has agreed to  complete.  The
implementation  of a large contract with a taxi customer.  The Company  believes
that it has  adequately  provided for the costs to complete this  contract.  The
Company  has  experienced,  and  is  continuing  to  experience  delays  in  the
implementation  of this  contract.  If the  Company  is unable to  complete  the
implementation  of the  contract on a timely  basis,  the taxi  customer has the
right to cancel the contract.  Any such  cancellation may require the Company to
reimburse the customer for payments received to date.

     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.  The following  discussion
and  analysis of the  Company's  results of  operations  excludes  the  Delivery
segment for the current and corresponding prior period.

     The  Company's  year-to-date  loss of $3.1  million was  comprised  of $2.8
million  after-tax  profit from  continuing  operations and an after-tax loss of
$5.9 million on discontinued operations.  The loss on discontinued operations is
comprised  of loss on  operations  of $2.4  million and loss on disposal of $3.5
million. There is no tax effect on these losses. The discontinued operating loss
includes not only the results of operations but also foreign exchange losses and
provisions  against  contracts to the measurement date of February 25, 1999. The
estimated loss on disposal  includes the operating results from measurement date
to the effective date, the costs of disposal, severance costs, and the estimated
costs to complete the remaining taxi contract.



                                      -10-
<PAGE>


Results of Operations

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

<TABLE>

                                                        Three months ended                 Six months ended
                                                              June 30                           June 30
                                                  --------------------------------  --------------------------------
                                                        1999             1998            1999             1998
                                                  ---------------  ---------------  --------------  ----------------
                                                     (Unaudited)     (Unaudited)     (Unaudited)       (Unaudited)
<S>                                                      <C>            <C>              <C>             <C>
Revenue
   Software and services.......................          77.9           70.2%            74.1%           74.1%
   Third-party products and services...........          12.4           20.8             17.0            15.9
   Maintenance and support.....................           9.7            9.0              8.9            10.0
                                                  ---------------  ---------------  --------------  ----------------
                                                        100.0          100.0            100.0           100.0

Direct costs.................................            41.7           42.8             44.2            44.0
                                                  ---------------  ---------------  --------------  ----------------
Gross profit.................................            58.3           57.2             55.8            56.0
                                                  ---------------  ---------------  --------------  ----------------
Operating expenses
   Research and development....................          12.7           12.7             12.8            14.4
   Sales and marketing ........................          18.7           20.4             19.6            23.4
   General and administrative..................          10.3            8.4             10.6             9.6
   Amortization of intangible assets...........           0.5            0.6              0.5             0.8
                                                  ---------------  ---------------  --------------  ----------------
                                                         42.2           42.1             43.5            48.2
                                                  ---------------  ---------------  --------------  ----------------
Operating income (loss)......................            16.1           15.1             12.3             7.8

Other income ................................            (2.5)           0.9             (1.9)            1.3
                                                  ---------------  ---------------  --------------  ----------------
Income (loss) before tax provision...........            13.6           16.0             10.4             9.1
Provision for income taxes...................            (4.3)          (5.0)            (3.3)           (3.0)
                                                  ---------------  ---------------  --------------  ----------------
Net income (loss) from continuing operations.             9.3           11.0              7.1             6.1

                                                  ---------------  ---------------  --------------  ----------------
Income (loss) from discontinued operations...            (0.0)          (2.9)           (15.1)           (1.0)
                                                  ---------------  ---------------  --------------  ----------------

Net income (loss)..............................           9.3%           8.1%            (8.0)%           5.1%
                                                  ===============  ===============  ==============  ================
</TABLE>





                                      -11-

<PAGE>


Three  Months  Ended June 30, 1999  Compared to the Three  Months Ended June 30,
1998

     Revenue.  Revenue  increased by $5.6  million  (40.0%) for the three months
ended June 30, 1999 as compared to the three months  ended June 30,  1998.  This
increase was due  primarily to the increase in revenue for software and services
delivered in the second quarter of 1999 relative to the same period in 1998.

     Software and  services  revenue  increased by $5.5 million  (55.3%) for the
three  months ended June 30, 1999 as compared to the three months ended June 30,
1998.  This  increase is due to  increased  revenue  from  customers in both the
telecommunications and utility markets.

     Third-party products and services revenue decreased by $477,713 (16.3%) for
the three  months ended June 30, 1999 as compared to the three months ended June
30, 1998. These third-party  products  typically include host computer equipment
and mobile  computing  devices,  as part of the  installation  of  software  and
provision  of services.  Revenue from  deliveries  of  third-party  products and
services  will  fluctuate  from period to period  given the timing and nature of
certain contracts and the rollout  schedules which are established  primarily by
the  customers.  In  addition,  not all  customers  under  contract  require the
provision of third-party products and services.  Accordingly, there may be large
fluctuations in revenue,  direct costs, gross profits and income from operations
from one period to another.

     Maintenance and support revenue was $1.9 million for the three months ended
June 30, 1999 as compared to $1.3  million for the three  months  ended June 30,
1998.  Maintenance  and  support  revenue  has  increased  primarily  due to the
increased  growth in the  Company's  installed  customer  base.  Such revenue is
expected to fluctuate as it generally  corresponds  to the level of software and
services   revenue  the  Company  is  engaged  to  provide  in  support  of  its
installations.

     Direct Costs. Direct costs were 41.7% of revenue for the three months ended
June 30,  1999 as compared to 42.8% for the three  months  ended June 30,  1998.
Direct  costs  include  labor and other  costs  directly  related  to a project,
including the provision of services and support, production and costs related to
host equipment and mobile devices on behalf of third-party product sales.  Labor
costs included direct payroll, benefits and overhead charges.

     Gross  Margins.  Gross  margins  were 58.3% of revenue for the three months
ended June 30,  1999 as compared  to 57.2% for the three  months  ended June 30,
1998. The increase in gross margin as a percentage of revenue relates  primarily
to the change in the mix of  revenues  and the  increase  in the  proportion  of
higher  margined  software and services.  During the three months ended June 30,
1999 there was an increase in software and services revenue, which typically has
a higher gross margin than  third-party  products and services,  which typically
has a lower gross margin, relative to the same period in 1998.

     Research and Development.  Research and development  expenses were 12.7% of
revenue for both the three months  periods  ended June 30, 1999 and 1998.  Total
research and development  expenditures  for the three months ended June 30, 1999
of $2.5 million  represents  an increase of $727,000  (40.6%) as compared to the
same period in 1998. The increase in research and  development  expenses in 1999
is a result  of the  continued  development  and  enhancement  of the  Company's
Advantex  products.  The Company  intends to continue  committing a  significant
portion of its product  revenues to enhance  existing  products  and develop new
products, resulting in an anticipated increase in the dollar amounts of research
and development expenses.

     Sales and Marketing. Sales and marketing expenses were 18.7% of revenue for
the three  months  ended June 30, 1999 and 20.4% of revenue for the three months
ended June 30, 1998. This represents an increase of $822,000 (28.6%) as compared
to the same period in 1998.  The  increase was  primarily  due to an increase in
marketing,  sales and  technical  support  personnel  supporting  the  Company's
increased  marketing  activities  worldwide.  The Company  anticipates  that the
dollar amounts of its sales and marketing  expenses will continue to increase as
a result of the Company's commitment to its international marketing efforts.

     General and Administrative.  General and administrative expenses were 10.3%
of revenue for the three  months ended June 30, 1999 and 8.4% of revenue for the
three months ended June 30, 1998. Total general and  administrative  expenses of
$2.0  million  represents  an increase of $846,000  (71.6%) for the three months
ended  June 30,  1999 as  compared  to the same  period  in 1998.  The  increase
represents expanded administrative activity to support the Company's growth. The
Company expects that the dollar amounts will continue to increase as the Company
expands its staffing,  information systems and other administrative requirements
necessary to support this growth.



                                      -12

<PAGE>



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

     Other Income (Expense). Other income (expense) was $(491,000) for the three
months  ended June 30, 1999 as compared to $123,000  for the three  months ended
June  30,  1998.   Substantially  all  of  other  income  (expense)  relates  to
fluctuations in the currencies of the Company's foreign operations,  interest on
cash and short term deposits, short-term borrowings under the line of credit and
capital lease obligations.

     Income  Taxes.  The Company  provided  for income taxes on earnings for the
three months ended June 30, 1999 at the rate of 30.0%,  after  adjusting for the
amortization of intangible assets. The Company's effective tax rate reflects the
application of certain  operating loss carry forwards against taxable income and
the blended effect of Canadian, US, and other foreign jurisdictions' tax rates.

Six months ended June 30, 1999 Compared to the Six months ended June 30, 1998

     Revenue.  Revenue  increased  by $14.7  million  (61.2%) for the six months
ended June 30,  1999 as  compared to the six months  ended June 30,  1998.  This
represents an increase in all revenue  components  for the six months ended June
30, 1999 relative to the same period in 1998.

     Software and services  revenue  increased by $10.9 million  (61.4%) for the
six months  ended June 30,  1999 as  compared  to the six months  ended June 30,
1998.

     Third-party products and services revenue increased by $2.7 million (72.0%)
for the six months ended June 30, 1999 compared to the six months ended June 30,
1998.  Revenue  from  deliveries  of  third-party  products  and  services  will
fluctuate  from period to period given the timing of certain  contracts  and the
rollout schedules which are established primarily by the customers. Accordingly,
this will result in large  fluctuations in revenue,  direct costs, gross profits
and income from operations from one period to another.

     Maintenance  and support  revenue was $3.4 million for the six months ended
June 30,  1999 as compared  to $2.4  million  for the six months  ended June 30,
1998.  Maintenance and support  revenue  increased as a result of an increase in
the level of the Company's installed customer base.

     Direct  Costs.  Direct costs were 44.2% of revenue for the six months ended
June 30, 1999 as compared to 44.0% for the six months ended June 30,  1998.  The
change  in  direct  costs  as a  percentage  of  revenue  is  reflective  of the
proportional increases in the individual revenue components.

     Gross Margins. Gross margins were 55.8% of revenue for the six months ended
June 30, 1999 as compared to 56.0% for the six months ended June 30,  1998.  The
decrease in gross margin as a  percentage  of revenue  relates  primarily to the
change in the mix of revenues during the six months ended June 30, 1999 relative
to the same period in 1998

     Research and Development.  Research and development  expenses were 12.8% of
revenue for the six months  ended June 30, 1999 and 14.4% of revenue for the six
months ended June 30, 1998. Total research and development  expenditures for the
six months  ended June 30, 1999 of $5.0 million  represents  an increase of $1.5
million  (44.0%) as  compared to the same  period in 1998.  The  increase in the
dollar  amount of research and  development  expenses in 1998 is a result of the
continued  development and enhancement of the Company's Advantex  products.  The
Company  intends to continue  committing  a  significant  portion of its product
revenues to enhance existing products and develop new products,  resulting in an
anticipated increase in the dollar amounts of research and development expenses.


                                      -13-
<PAGE>


Six months  ended June 30, 1999  Compared to the Six months  ended June 30, 1998
(Continued)

     Sales and Marketing. Sales and marketing expenses were 19.6% of revenue for
the six months ended June 30, 1999 and 23.4% of revenue for the six months ended
June 30, 1998.  This  represents an increase of $2.0 million (35.4%) as compared
to the same period in 1998.  The  increase was  primarily  due to an increase in
marketing,  sales and  technical  support  personnel  supporting  the  Company's
increased  marketing  activities  worldwide.  The Company  anticipates  that the
dollar amounts of its sales and marketing  expenses will continue to increase as
the result of the Company's commitment to its international marketing effort.

     General and Administrative.  General and administrative expenses were 10.6%
of revenue  for the six months  ended June 30,  1999 and 9.6% of revenue for the
six months ended June 30, 1998.  Total  general and  administrative  expenses of
$4.1 million  represents an increase of $1.8 million  (76.4%) for the six months
ended June 30, 1999, as compared to the same period in 1998. The Company expects
that its general and administrative  expenses will increase in the future as the
Company expands its staffing, information systems and other administrative costs
to support its expanding operations.

     Other  Income.  Other income  (expense) was  ($736,244)  for the six months
ended June 30, 1999 as compared  to $300,000  for the six months  ended June 30,
1998.  Substantially  all  of  other  income  relates  to  fluctuations  in  the
currencies of the Company's  foreign  operations and interest income on cash and
short-term deposits.

     Income Taxes. The Company provided for income taxes on earnings for the six
months  ended  June  30,  1999 at the rate of  30.0%,  after  adjusting  for the
amortization of intangible assets. The Company's effective tax rate reflects the
blended effect of Canadian, US and other foreign jurisdictions' tax rates.








                                      -14-

<PAGE>


Liquidity and Capital Resources

     The Company finances its operations,  acquisitions and capital expenditures
with cash generated from operations,  loans, capital leases,  private placements
and public  offerings of its securities.  At June 30, 1999, the Company had cash
and cash equivalents of $20.7 million and working capital of $32.4 million.

     Cash  provided by (used in) operating  activities  was $282,000 for the six
months  ended June 30, 1999  compared to $4.7  million for the six months  ended
June 30, 1998. The inflow of cash from operating  activities,  during the period
is generated from the $4.3 million net income after  adjusting for  depreciation
and  amortization and deferred taxes offset by $4.0 million increase in non-cash
working capital.

     Cash  provided by  financing  activities  of $18.3  million  during the six
months  ended June 30, 1999  primarily  relates to proceeds  from common  shares
issued for $17.4 million  pursuant to the exercise of stock  options,  purchases
pursuant to the Company's Employee Share Purchase Plan and net proceeds of $14.7
million from a public share issue of 575,000 shares completed  January 29, 1999.
The Company also had proceeds of $1.2  million from its capital  lease  program.
The  capital  leases  are to be  repaid  evenly  over a 36 month  period  ending
September 30, 2002,  bear interest at 7.23% and are secured by certain  computer
hardware and software assets of the Company.

     Cash used in investing activities was $3.2 million for the six months ended
June 30,  1999 as compared  to $1.2  million  for the six months  ended June 30,
1998.  Total  investing  activity  during the six months ended June 30, 1999 and
1998 consisted of purchases of capital assets  including  computer  hardware and
software  for use in  research  and  development  activities  and to support the
growth of the Company's corporate information systems.

     Existing  sources of liquidity at June 30, 1999  include  $20.7  million of
cash and cash  equivalents and up to $8.0 million  available under the Company's
operating line of credit.  The Company also had provided as performance bonds an
irrevocable  revolving  letter of credit expiring May 28, 2001 for Belgian Franc
101,068,000 ($4.2 million) and a bank guarantee expiring February 2, 2000 in the
amount  of  Danish  Kroner  9,740,000  ($2.2  million).  Under  the terms of the
agreement, borrowings and letters of credit under the line are limited to 60% to
90% of eligible  accounts  receivable.  Borrowings accrue interest at the bank's
prime rate plus 0.5%. At June 30, 1999, the Company had no borrowings  under the
line of credit.

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

Year 2000

General

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

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



                                      -15-
<PAGE>


Year 2000 (Continued)

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

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

Projects

Internal systems

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

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

Third-party considerations

Customers

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

Suppliers

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



                                      -16-
<PAGE>


Year 2000 (Continued)

Costs

     The total cost of the Company's Year 2000 Plan is not  considered  material
to the Company's  financial  condition.  The estimated total cost of the Plan is
expected to be  approximately  $400,000,  and is being funded through  operating
cash flow. To June 30, 1999, the Company has incurred  approximately $325,000 in
costs  related  to its Year 2000  identification,  assessment,  remediation  and
testing efforts. At June 30, 1999 the major portion of the of the Company's Year
2000  compliance  efforts  have been  completed  with the balance to be expended
thereafter  monitoring  the  compliance  process.  None of the  Company's  other
projects have been delayed or deferred as a result of the  implementation of the
Year 2000 Compliance Plan.

Risks

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

Contingency Plans

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

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





                                      -17-
<PAGE>



ITEM 3:   QUANTITIATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

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

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

     As of June 30, 1999,  the  potential  reduction in future  earnings  from a
hypothetical  instantaneous 10% change in quoted foreign currency exchange rates
applied to the foreign currency sensitive  contracts would be approximately $3.5
million.  The majority of the Company's  foreign exchange  exposure is to United
States  dollar.  The  foreign  currency  sensitivity  model  is  limited  by the
assumption  that all foreign  currencies to which the Company is exposed,  would
simultaneously  change  by 10%.  The  sensitivity  model  does not  include  the
inherent risks associated with anticipated  future  transactions  denominated in
foreign  currencies  or  future  forward  contracts  entered  into  for  hedging
purposes.

     The Company has entered into foreign currency forward  contracts in respect
of net exposures under customer contracts to the Belgian Franc 134,000,000 ($5.6
million) and 104,000,000 ($4.3 million),  Danish Kroner 5,000,000 ($1.1 million)
and Great Britain Pounds 150,000,  350,000 and 180,000  ($349,110,  $814,660 and
$418,860, respectively). Effective January 1, 1999, the Belgian Franc is tied to
the Euro,  the new  European  Union  common  currency.  The  effect of the these
transactions  is to reduce the  potential  reduction in future  earnings  from a
hypothetical  instantaneous 10% change in quoted foreign currency exchange rates
to $2.7 million.

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

Part II -  OTHER INFORMATION

     ITEM 1. LEGAL PROCEEDINGS

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

     ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

     None.

     ITEM 3. DEFAULTS UPON SENIOR SECURITIES

     None.




                                      -18-
<PAGE>


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

     The Company's 1999 Annual General Meeting of  Shareholders  was held on May
6, 1999. A total of 3,692,158  shares of the Company were  represented in person
or by proxy at the Meeting,  consisting  of 50.98% of the total number of common
shares of the Company  outstanding  on March 31,  1999,  the record date for the
Meeting.

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

<TABLE>

                               Votes Cast       Votes Cast        Votes
  Nominee                     For Nominee         Against       Withheld     Abstentions      Not Voted
-------------------------  --------------- --------------  --------------  -------------- ---------------

 <S>                          <C>                  <C>               <C>           <C>           <C>
  Erik Dysthe                   3,689,939            500               0             580           1,139
  Kenneth R. Miller             3,689,639            500               0             880           1,139
  John T. McLennan              3,689,239            900               0             880           1,139
  Terrence P. McGarty           3,630,629         29,500          30,010             880           1,139
  Robert C. Harris, Jr.         3,688,789          1,350               0             880           1,139
  Gerald F. Chew                3,630,229         29,900          30,010             880           1,139
  Bruno Ducharme                3,630,329         29,800          30,010             880           1,139
  Marc Rochefort                3,630,629         29,500          30,010             880           1,139
</TABLE>

     The  shareholders  approved  the  proposed  1999  Stock  Option  Plan.  The
following table sets forth the information regarding the voting on the proposal:

<TABLE>

    Votes Cast For          Votes Cast Against      Votes Withheld       Abstentions           Not Voted
-----------------------    -------------------   -------------------  ------------------  --------------------
 <S>                         <C>                    <C>                 <C>                  <C>
       1,862,838                  949,231                 0                 2,057               878,031
</TABLE>


     The  shareholders  approved  the proposed  1999 Stock  Purchase  Plan.  The
following table sets forth the information regarding the voting on the proposal:

<TABLE>

    Votes Cast For          Votes Cast Against      Votes Withheld       Abstentions           Not Voted
-----------------------    -------------------   -------------------  ------------------  --------------------
 <S>                         <C>                    <C>                 <C>                  <C>
       2,809,081                    3,988                 0                 1,057               878,031
</TABLE>


     The  shareholders  ratified the appointment of Deloitte & Touche LLP as the
Company's   Auditors   for  the  fiscal  year  ending   December  31,  1999  and
authorization  for the directors to fix the  remuneration  of the auditors.  The
following table sets forth the information regarding the voting on the proposal:

<TABLE>

    Votes Cast For          Votes Cast Against      Votes Withheld       Abstentions           Not Voted
-----------------------    -------------------   -------------------  ------------------  --------------------
 <S>                         <C>                    <C>                 <C>                  <C>
       3,679,841                      380                 0                10,798                 1,139
</TABLE>


     The  shareholders  ratified the adoption of a Shareholder  Rights Plan. The
following table sets forth the information regarding the voting on the proposal:


<TABLE>

   Votes Cast For          Votes Cast Against      Votes Withheld       Abstentions           Not Voted
----------------------    -------------------   -------------------  ------------------  --------------------
<S>                         <C>                    <C>                 <C>                  <C>
      1,838,199                  944,680                 0                31,248               878,031
</TABLE>



                                      -19-
<PAGE>



     ITEM 5. OTHER INFORMATION

     None.

     ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     a)   Exhibits.

          None.

     b)   Reports on Form 8-K

     During the three month period ended June 30, 1999, the Registrant filed the
following reports on Form 8-K:

     1.   On May 19, 1999, the Registrant reported that it had mailed its Notice
          of Annual and Special Meeting of Shareholders, with accompanying proxy
          materials, to its shareholders on March 25, 1999.

     2.   On May 20, 1999, the  Registrant  reported that, on April 27, 1999, it
          had filed a Material  Change  Report  with the  Provincial  Securities
          Commissions  in Canada  announcing  that the  Registrant had chosen to
          sell its transportation business unit.




                                      -20-

<PAGE>



                                   Signatures


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



                                        MDSI MOBILE DATA SOLUTIONS INC.


Date:    August 13, 1999                By:  /s/ KENNETH R. MILLER
                                             -----------------------------------
                                             Name:    Kenneth R. Miller
                                             Title:   Chief Executive Officer


Date:    August 13, 1999                By:  /s/ VERNE D. PECHO
                                             -----------------------------------
                                             Name:    Verne D. Pecho
                                             Title:   Vice President Finance &
                                                      Administration and Chief
                                                      Financial Officer
                                                      (Principal Financial and
                                                       Accounting Officer)






                                      -21-