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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

            [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

                           COMMISSION FILE NO. 1-9158

                             MAI SYSTEMS CORPORATION
--------------------------------------------------------------------------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                DELAWARE                                        22-2554549
    ---------------------------------                       -------------------
      (State or other jurisdiction                           (I.R.S. Employer
    of incorporation or organization)                       Identification No.)

           9601 Jeronimo Road
           Irvine, California                                        92618
----------------------------------------                    -------------------
(Address of principal executive offices)                          (Zip Code)

       Registrant's telephone number, including area code: (949) 598-6000

                                   ----------

           Securities registered pursuant to Section 12(b) of the Act:
                      Common Stock $0.1 par value per share

                                   ----------

        Securities registered pursuant to Section 12(g) of the Act: None

Indicate by a 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 and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

The registrant's Certificate of Incorporation authorizes the issuance of
24,000,000 shares of $.01 par value Common Stock. As more fully described in
this report, shares of Common Stock were previously distributed by the
registrant to its former creditors pursuant to its Chapter 11 Plan of
Reorganization. At March 31, 2000, the number of issued and outstanding shares
of the Company's Common Stock was 10,842,071 shares. The aggregate market value
of all of the shares of Common Stock held by non-affiliates of the registrant as
of March 31, 2000 was approximately $6,727,498. Directors and officers and ten
percent or greater stockholders are considered affiliates for the purposes of
this calculation but should not necessarily be deemed affiliates for any other
purpose.

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [X] No [ ]

                                   ----------

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of registrant's 1993 Annual Report on Form 10-K are incorporated herein
by reference in Part I; portions of registrant's 1999 Annual Report are
incorporated herein by reference in Part II; and portions of registrant's
definitive Proxy Statement to be delivered to stockholders in connection with
the Annual Meeting of Stockholders to be held in 2000 are incorporated
herein by reference into Part III.

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                                     PART I

ITEM 1. BUSINESS

                                   THE COMPANY

MAI Systems Corporation provides total information technology solutions
primarily to the hospitality, resort and destination industry and to mid-sized
process manufacturers. The solutions provided by the Company typically include
applications software, computer hardware, peripherals and wide and local area
network design, implementation, installation and support. The software
applications are generally the Company's proprietary software, or software which
is licensed to the Company on an exclusive or non-exclusive basis. The hardware,
peripherals and networking systems are generally third-party products, which the
Company distributes. Directly and through its arrangement with third parties,
the Company provides on-site and off-site service and support to users of its
network and systems hardware.

The Company was incorporated under the laws of the State of Delaware on
September 6, 1984. The Company's name was changed from MAI Basic Four, Inc. to
MAI Systems Corporation on November 6, 1990. As used herein, the terms the
"Company" and "MAI" include MAI Systems Corporation and its subsidiaries unless
the context indicates otherwise. The Company commenced operations on January 29,
1985.

                           DESCRIPTION OF THE BUSINESS

MAI's mission is to put in place long-term information technology systems for
its customers by designing, installing and supporting customer-specific total
information management solutions. Focusing primarily on the hotel, motel and
resort destinations industry and solutions for mid-sized process manufacturers,
it designs, sells, installs and supports information management solutions
featuring complex wide area networks ("WANs") and local area networks ("LANs").
It provides a wide array of products and services to its installed base of
approximately 6,000 customers and continues to make direct sales of certain
products and services which enhance, upgrade and extend the useful life of the
Company's legacy systems.

MAI markets its products and services primarily through a team selling approach,
which utilizes the company's nationwide network of sales offices. The Company
also markets certain products and services through a limited number of
distributors, independent value-added resellers ("VARs"), authorized service
representatives and independent software vendors ("ISVs").

The Company's activities are conducted principally in the United States, Canada,
the United Kingdom, Hong Kong, Singapore and Mexico. The Company also operates
subsidiaries in Puerto Rico and Venezuela and operates offices in the People's
Republic of China and Malaysia. Additionally, the Company sells its products
through indirect channels in the United States and abroad. These independent
channels include VARs, distributors, ISVs and local sales agents.

The Company provides software support services (both procedural and technical
support) to its hospitality and process manufacturing customers from its offices
in the United States, the United Kingdom and Singapore. In some countries the
Company relies on certain foreign distributors of its products to provide
software support services to customers located within the distributors' regions.

The Company provides on-site service and help support desk services to its
legacy system customers in the United States, Canada, Puerto Rico and Venezuela.
In the United States and Canada, the Company and its third-party subcontractors
provide on-site services to the Company's new and legacy system customers.


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PRODUCTS AND SERVICES

In 1999, the Company's revenue was derived from the following product lines:

                                              Percentage of
                                              Total Revenue
                                              -------------

Hospitality                                        63.3%
Process Manufacturing                              14.6%
Gaming                                              3.0%
Legacy                                             19.1%
                                                  ------
             Total                                100.0%
                                                  ======


Products and Services

MAI designs, implements, maintains and supports total information system
solutions utilizing WANs and LANs. In conjunction with these solutions, the
Company's approach is to analyze a customer's information system requirements,
propose a solution and then design, integrate, install and maintain the system.
One of the principal objectives of the Company is to help its customers utilize
their data across their entire enterprise so that information that was once
limited to one area of a business can now be available to other areas where it
can be utilized for new purposes. Once a system is on-line, the Company
typically continues its relationship with the customer by providing
around-the-clock telephonic support and, through its contracts with Olivetti,
on-site field support. The systems designed by the Company utilize the Company's
property management system for hotels, resorts and destinations and enterprise
resource planning ("ERP") applications software for midsize process
manufacturers, which the Company markets with industry-standard hardware and
software products from leading technology vendors including Cisco Systems,
Compaq Computer, Hewlett Packard, IBM, Data General, Larscom, Microsoft and
Novell.

Hospitality - 63.3%

The Company markets three property management systems. Hotel CompuSystem II has
been marketed by the Company since 1990, when the Company acquired Computerized
Lodging Systems ("CLS"). In August 1996 the Company acquired Hotel Information
Systems, Inc. ("HIS") and began marketing its Paragon product line. In October
1996, the Company became the exclusive distributor of the Lodging Touch
International products from Enterprise Hospitality Solutions. Each of the
product lines has features, which make it particularly well suited to a
different segment of the hospitality marketplace.

Hotel CompuSystem II, which targets hotels and resorts in the 300 to 1,000 room
range, runs under UNIX. Hotel CompuSystem II is full-featured and provides
customers with front desk, night audit, housekeeping and numerous other
functions. Additionally, the CLS products interface to more than 250 other
hospitality-related information system products, such as point-of-sale systems,
telephone call monitoring systems and minibar maintenance systems. The ease of
connectivity with third-party products is one of the system's competitive
advantages. Hotel CompuSystem II is installed in over 1,500 sites worldwide.

The Paragon and Paragon Plus property management system, from HIS, is designed
to serve the needs of larger hotels and resorts. Running on IBM AS/400 or System
36 minicomputers, the Paragon product line provides the full range of features
and functionality required by premier properties, such as Disneyland Paris or
Renaissance Hotels International. Paragon is installed in more than 1,000 hotels
and resorts around the world, and is a major presence in the Pacific Rim.

The Lodging Touch ("LTS") products comprise a state-of-the-art suite of products
designed to take full advantage of the versatility of Microsoft's Windows 2000
and Windows NT operating systems. They are the industry's first fully graphical
products to fully utilize the features of the Windows NT operating system and
Microsoft Sequel Server. With the LTS products, MAI has been named a Microsoft
Solutions Partner.

Process Manufacturing - 14.6%

MAI develops and markets CIMPRO and MANBASE, both of which are ERP applications,
used by midsize process manufacturers. The Company's typical customer generally
has annual revenues between $20 million and $500 million. These manufacturers
convert raw materials into finished goods or into products used to manufacture
other goods. Typical users of the Company's ERP product would be manufacturers
who convert raw milk into cheese and other dairy


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products, or pharmaceutical manufacturers who convert raw chemicals into
medicinal products. These process manufacturers have unique requirements in
quality control, regulatory compliance, inventory control and production
planning that require an integrated application and system solution.

CIMPRO, which the Company acquired from Datalogix International, Inc., a
subsidiary of Oracle Corporation, in March 1997, offers a fully integrated
modular system for complete support of process manufacturing planning and
tracking, including inventory, production, supply chain management, costing,
accounting, electronic data interchange ("EDI") and regulatory compliance.
CIMPRO's customer base is a primarily food, chemical and pharmaceutical
manufacturer.

MANBASE, the rights to which the Company reacquired in May 1996, also offers a
fully integrated ERP application for process manufacturers. MANBASE has been
sold primarily to food manufacturers and has many features, which are tailored
for the unique requirements of this industry.

The Company intends to provide continuing support for its MANBASE customers but
will concentrate its sales and development efforts on the CIMPRO product.

Gaming - 3.0%

The Company marketed software products for the gaming industry through its
Gaming Systems International ("GSI") subsidiary. GSI's products provided
management systems for on-line slot accounting, player tracking, cage/pit
administration, table games accounting, employee time and attendance and
numerous other functions. GSI was sold on June 19, 1999.

Legacy - 19.1%

The Company continues to provide principally maintenance services to its
installed base of customers. These products and services are designed to enable
customers to benefit from their investment in the Company's host-based
information systems. The Company's OpenBASIC application environment permits
customers using application software written in the Business BASIC programming
language to continue to use such application software on selected hardware
platforms designed for the UNIX, MS-DOS and Novell environments. Optional
OpenBASIC modules permit developers to enhance their Business BASIC applications
by integrating them with popular UNIX and MS-DOS/Microsoft Windows software.

With its own personnel and through an outsource agreement with Wang Global
Corporation in the United States and with Olivetti Canada Ltd. in Canada, and
directly in Venezuela and Puerto Rico, the Company offers on-site repair and
warranty service and around-the-clock telephonic support to its customers. The
Company also provides a range of customer education, training and consulting
services for its application software packages and hardware and horizontal
software products. These services are offered to the Company's customers as part
of the Company's strategy of supplying the total information solution to its
customers.

MARKETING AND SALES

MAI markets its products and services primarily through a team-selling approach,
which utilizes the Company's nationwide network of sales offices and its Irvine,
California-based account representatives. The Company also markets certain
products and services through limited numbers of VARs, authorized service
representatives and ISVs.

In the United States, the Company's systems are marketed by a direct sales and
marketing organization which included, as of February 29, 2000, 18 sales and
marketing personnel located in the corporate headquarters and five satellite
offices. In addition, the Company markets its systems internationally through
its subsidiaries which operate in Canada, the United Kingdom, Mexico, Hong Kong,
Singapore, Puerto Rico and Venezuela and through various distributors that are
exclusive in their jurisdictions. The Company's international subsidiaries
employed, as of February 29, 2000, 23 sales and marketing personnel who are
engaged in the marketing of MAI products from sales offices in Canada, Mexico,
the United Kingdom, Hong Kong, Singapore, Malaysia, the People's Republic of
China, Venezuela and Puerto Rico. Additionally, the Company also sells its
products through indirect channels both within and outside the United States.
These indirect channels include VARs, distributors, ISVs and local sales agents.


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During 1999, the Company's aggregate revenue was derived from geographic areas
as follows:

                                               Percentage of
                                               Total Revenue
                                               -------------

United States                                     77.6%
Asia                                               9.5%
Canada                                             6.6%
United Kingdom                                     4.6%
Other Areas                                        1.7%
                                                 -----
             Total                               100.0%
                                                 =====

The financial performance of the Company is affected by the fluctuation in value
of the US dollar in relation to the local currencies of the countries in which
the Company does business. In addition, the Company's foreign operations are
subject to the usual risks that may affect such operations, including possible
expropriation or other governmental actions, taxes and political changes.
However, as only 22.4% of the Company's 1999 revenue was generated outside the
United States, even though most of this activity is in Asia which has recently
incurred significant economic and currency disruptions, the risk associated with
these foreign operations in relation to the Company's overall financial
performance is limited.

SUPPORT AND MAINTENANCE

The provision of around-the-clock customer service is a cornerstone of the
Company's business. As of February 29, 2000, the Company had software support
agreements with approximately 1,500 customers. Additionally, it had hardware
maintenance agreements with approximately 1,300 other customers. The Company
employs approximately 38 technicians to provide support for the Company's
applications software products.

Telephonic support, which is primarily to assist licensees of the Company's
applications products, is provided from the Company's response centers located
in Irvine, California, Concord, California, Tarrytown, New York, Singapore and
the United Kingdom. The Company utilizes the latest developments in telephony
and artificial intelligence-enhanced technology to enable its support
technicians to quickly identify and resolve customers' software related
computing problems.

The Company's maintenance services are generally provided pursuant to individual
maintenance contracts with customers, although time and material services are
provided in some areas. Such support and maintenance are of varying duration,
provide prospective cancellation rights and require advance payment of fees to
the Company. Substantially all of the revenue earned by maintenance operations
is invoiced to customers in advance.

PRODUCTION AND PROCUREMENT

In response to market demand for standardized hardware and software products,
all of the Company's current systems offerings utilize open systems
architecture, which means that they will operate on a wide variety of
third-party hardware equipment. At present, the Company has relationships with a
number of suppliers including Microsoft, Cisco Systems, Compaq Computer, Data
General, Hewlett Packard, Seagull Software and IBM and distributors such as
MicroAge and Ingram Micro. Management believes that these relationships have
enabled the Company to reduce product costs, permit earlier availability of new
technology and offer customers products with superior performance at competitive
prices. The Company no longer manufactures proprietary hardware products.

Delay or failure in the delivery of products or components purchased from third
parties could adversely affect shipments by the Company and its ability to
conclude sales. The Company has purchased many products and components from
single sources of supply. Because the Company's current products are industry
standard, or are comprised of industry-standard components, management believes
that alternative sources of supply of similar products would be available to


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the Company in the event of any interruption of delivery of a single source
supplier.

ORDER, SHIPMENT AND BACKLOG

The Company records and enters into backlog a purchase order for equipment and
software when it receives a customer's written order requesting delivery within
six months, and systems configuration and contract provisions are verified.
Orders that are canceled by the customer and orders that are not shipped within
one year are removed from backlog. Orders that are removed from backlog for
non-shipment are restored if they are reinstated by the customer.

Set forth below is certain information concerning orders, shipments and backlog
for 1998 and 1999:

                                                (dollars in millions)
                                                 1998           1999
                                                 ----           ----

Orders received (net of cancellations)           $38.3          $15.5
Shipments (net of equipment returns)              24.6           23.3
Backlog (at period end)                           21.8           14.0

The Company's backlog is not necessarily indicative of future revenues.

RESEARCH AND DEVELOPMENT

The Company's research and development activities are focused on the development
of products for the hospitality, resort and destination industry and for
products for midsize process manufacturers. The Company also maintains and
expands OpenBASIC, an operating system that enables users of the Company's
proprietary environment, BusinessBASIC, to run their applications under UNIX.
The Company's use of the OpenBASIC application environment and its system
integration capability permits it to have substantial independence from
individual hardware manufacturers and minimizes the need for hardware research
and development.


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As of February 29, 2000, the Company employed 26 engineers, programmers and
other technical personnel in research and development activities. During 1997,
1998 and 1999, the Company incurred $5,583,000, $4,058,000, and $5,114,000,
respectively, for research and development activities. The Company's research
and development expenditures related primarily to support and enhancement of
existing software products.

CUSTOMERS

The Company's customers in hospitality are generally hotels and resorts with
fifty or more rooms, in gaming were casinos with electronic gaming equipment
such as slot machines, and in process manufacturing are generally midsize
process manufacturers. Legacy comprises a highly diversified group of customers
in various industries who use hardware sold by MAI over the years. During 1998
and 1999, no single customer accounted for ten percent or more of the Company's
revenues.

COMPETITION

Competition is vigorous in all sectors of the worldwide market for
computer-based applications systems, networked solutions and the maintenance and
support of the software and hardware, which comprise those systems. The Company
has numerous competitors (and potential competitors, including the manufacturers
of products which the Company distributes) varying widely in their size,
capabilities, market segment and geographic area, many of which are larger and
have financial resources far greater than the Company.

Within its targeted application markets, the Company has positioned itself to
sell complete solutions featuring WANs and LANs to its customers. Within this
marketplace, competition comes primarily from vendors of competing information
technology in the markets in which the Company competes. There are several
providers of information technology to the hotel, resort and destination
industry against which the Company regularly competes. The primary competitors
are of similar size to the Company, and provide technology that is also similar
to the Company. They also cover essentially the same territory, which is
anywhere in the developed world.

The competition in the enterprise resource planning ("ERP") market is diffuse
and new or different competitors often appear with each sales opportunity. In
the lower end of the market, the Company competes with local VARs and ISVs who
usually resell hardware or networking products of larger equipment
manufacturers. These VARs and ISVs usually sell one or two specialized software
application products targeted for specific industry market segments. Within the
mid-range market, the Company competes with several companies of similar size
and technology. On the high end of the market, the Company competes with
companies that are much larger and have financial resources far greater than the
Company.

Within the gaming industry, the Company competed with manufacturers of gaming
equipment. Some of those competitors were substantially larger than the Company.

In the legacy arena, there is some third-party maintenance organizations
("TPMS") that provide service to users of the Company's hardware products. The
competition is minimal, as outside companies cannot provide complete solutions
to the Company's existing proprietary customer base.

TRADEMARKS, COPYRIGHTS AND LICENSES

The Company is the owner or licensee of certain trademarks, copyrights and other
property rights associated with its businesses, including rights associated with
its proprietary application software. The Company owns or has licensing rights,
generally with terms of three years (although the term of the license to the LTI
software is perpetual), to the principal application software products marketed
by the Company. Such licensing rights are generally renewable. Although there is
some risk that independent vendors who own such products may elect not to renew
their licensing agreements with the Company and enter into exclusive
arrangements with, or elect to install their software on systems sold by
competitors of the Company, such vendors generally tend to continue to support
the Company's marketing efforts so long as the Company's systems provide a good
opportunity for them to market their products.

The Company is party to license agreements with IBM relating to a variety of
patents, with Novell, Inc. relating to UNIX and with a number of other suppliers
of software products. These licenses are terminable at the Company's option and
certain of the licenses require the Company to make royalty payments.


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OpenBASIC and certain other intellectual property formerly owned by the Company
is currently owned by Triple P Management BV ("Triple P"), a corporation
organized under the laws of the Netherlands. MAI holds an exclusive license to
use OpenBASIC and other intellectual property in the western hemisphere and has
a nonexclusive license to use it in certain other parts of the world. The
license is perpetual and royalty-free, but subject to termination under certain
conditions.

EMPLOYEES

As of February 29, 2000, the Company had 310 employees, of whom 192 were
employed in the United States, 13 in Canada, 8 in Mexico, 5 in Puerto Rico, 9 in
the United Kingdom, 58 in Asia (Hong Kong, Singapore and the People's Republic
of China) and 25 in Venezuela. The Company has not experienced any work
stoppages and considers its relationship with its employees to be good.

                        CHAPTER 11 BANKRUPTCY PROCEEDINGS

The Company filed for Chapter 11 bankruptcy protection on April 12, 1993,
shortly after the Company's banks foreclosed on all of the outstanding capital
stock of certain of the Company's former European subsidiaries in satisfaction
of all amounts due under certain loan agreements. On January 27, 1994, the
Company's Plan of Reorganization became effective. The summary of the material
features of the Plan of Reorganization, contained in the Company's Annual Report
on Form 10-K for the year ended December 31, 1993 under the heading "CHAPTER 11
BANKRUPTCY PROCEEDINGS", is included herein by this reference.

Under the Plan of Reorganization, there was no recovery for holders of the
Company's $0.01 par value old Common Stock, and all classes of Preferred Stock
outstanding prior to the Effective Date. The interests evidenced by these
securities were extinguished by operation of the Plan of Reorganization. The
Company commenced distribution of Common Stock to holders of unsecured claims on
April 14, 1994. Through December 31, 1999, the Company had distributed 6,758,251
shares of Common Stock to its former creditors in settlement of all outstanding
claims, except for tax claims, and the Company does not anticipate that any
further shares will be issued in this matter. The Plan of Reorganization
provided holders of unsecured claims the right to elect a limited cash recovery,
and through December 31, 1999, $74,570 in cash had been distributed pursuant to
such provision.

At December 31, 1999, there is only one material claim to be settled before the
Chapter 11 proceedings can be formally closed, a tax claim with the United
States Internal Revenue Service (the "Service"). The amount of this claim is in
dispute. The Company has reserved $712,000 for settlement of this claim, which
it is anticipated would be payable to the Service in equal monthly installments
over a period of six (6) years from the settlement date.


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                                  RISK FACTORS

The following discussion should be read in conjunction with the audited
consolidated financial statements contained herein. In addition to the factors
set forth herein, there may be other factors, or factors that arise in the
future which may affect the future performance of the Company.

LIMITED HISTORY OF PROFITABILITY

Prior to its bankruptcy filing in 1993, the Company incurred significant
operating losses. The Company was profitable in 1994 and 1995, but then incurred
losses in 1996, 1997, 1998 and 1999. There can be no assurance that the Company
will be able to achieve or maintain profitability or avoid losses on a quarterly
or annual basis in the future.

FLUCTUATIONS IN OPERATING RESULTS

A variety of factors may cause period-to-period fluctuations in the Company's
operating results, including the timing of significant orders, the timing of
product enhancements and new product introductions by the Company, its
technology vendors and its competitors, the pricing of the Company's products
and services, competitive conditions and general economic conditions. Many of
the Company's systems sales involve lengthy sales cycles and installations.
Consequently, it is not possible to predict with any reliability the periods
within which a sale may close or revenue will be recognized. As a result, the
operating results of the Company may be materially skewed if a single
transaction is completed earlier or later than expected. The Company has
experienced fluctuations in its operating results and expects to continue to
experience such fluctuations. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations." Fluctuations in operating
results may also result in volatility in the market price of the Common Stock.

COMPETITION

Competition is vigorous in all sectors of the market for computer-based
solutions and support and maintenance services, which the Company offers. The
Company has numerous competitors in each of its business lines, which vary
widely in their size, capabilities, market segments and geographic areas, many
of which are larger and have financial resources far greater than the Company.
Within its markets, competition comes primarily from vendors of competing
information technology in the markets in which it competes. There are several
providers of information technology to the hotel, resort and destination
industry against which the Company regularly competes. The competition in the
ERP market is diffuse and new or different competitors often appear with each
sales opportunity. The Company also competes against local value added resellers
("VARs") and independent software vendors ("ISVs"), who usually resell hardware
or networking products of larger original equipment manufacturers, which provide
service to users of the Company's hardware products. Many of the Company's
services are also provided by in-house MIS departments.

There can be no assurance that the Company can effectively compete with any or
all of its competitors in any of its business lines.

PRODUCTION AND PROCUREMENT

The networking products and services implemented, maintained and supported by
the Company utilize hardware and software products from technology vendors.
Accordingly, the Company is and will remain dependent on the demand for products
from such vendors. In addition, delay or failure in the delivery of products or
components purchased from third parties could adversely affect shipments by the
Company and its ability to conclude sales. The Company has purchased many
products and components from single sources of supply. Because the Company's
current products are industry standard, management believes that alternative
sources of supply of similar products would be available to the Company in the
event of any interruption of delivery from a single source supplier. However,
there can be no assurances that any such products will be available or be
accepted by the Company's customers.

LIQUIDITY: VOLATILITY OF STOCK PRICE

Historically, trading volume of the Company's Common Stock has been small, and
the market for the Common Stock has been less liquid than that of many other
publicly traded companies. There can be no assurance that a stockholder who
desires to sell shares of Common Stock can sell all of the shares that the
stockholder desires to sell, either at all or at the desired times or prices.
Like the stock of other technology companies, the market price of the Common
Stock has


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been and may continue to be volatile. Factors such as quarterly fluctuations in
the Company's results of operations, trading volume, the announcement of
technological innovations or new products by the Company or its competitors,
general conditions in the computer hardware and software industries, economic
conditions generally, variances between actual results of operations and the
results expected by securities analysts, and the factors mentioned under
"Fluctuations in Operation Results", among other factors, may have significant
impact on the market price of the Common Stock.

RISKS OF CONTRACT SERVICES BUSINESS

The Company is subject to the risks associated with a contract services
business, including dependence on reputation with existing customers, volatility
of workload and dependence on ability to retain qualified technical personnel.
The Company is party to an agreement with Olivetti pursuant to which Olivetti
performs certain field engineering services for the Company. If the quality of
services provided by Olivetti is not perceived as comparable to that previously
provided by the Company, there is a probability that some of the Company's field
service customers will terminate their service agreements.

RAPID TECHNOLOGICAL CHANGE; DEPENDENCE ON NEW PRODUCTS AND MARKETS

The Company expects that the market for hospitality, resort and destination
information management systems and information systems for midsize process
manufacturers will continue to be subject to frequent and rapid changes in
technology and customer preferences. Customers may delay purchases in
anticipation of technological changes. In addition, the Company's ability to
develop and market information management and network systems and other new
products is dependent upon its ability to attract and retain qualified
employees. Any failure by the Company to anticipate or respond adequately to the
changes in technology and customer preferences, or to develop and introduce new
products in a timely fashion, could materially adversely affect the Company's
business and operating results.

DEPENDENCE ON PROPRIETARY TECHNOLOGY

The Company's success is dependent upon its proprietary application software and
its licensing rights to the principal application software products marketed by
it. The Company relies on a combination of contractual rights, copyrights,
trademarks and other property rights to establish or protect its proprietary
rights in its products. There can be no assurance that the steps taken by the
Company in this regard will be adequate to deter misappropriation of its
proprietary rights or independent third party development of functionally
equivalent technology. Although the Company does not believe that it is
infringing on the intellectual property rights of others, there can be no
assurance that such a claim will not be asserted against the Company in the
future or that any attempt to protect its technology will not be challenged.

DEPENDENCE ON KEY PERSONNEL

Competition for qualified personnel in the software industry is intense and
there can be no assurance that the Company will be able to attract and retain a
sufficient number of qualified employees. As the business of the Company grows,
it may become increasingly difficult for it to hire, train and assimilate the
new employees needed. The Company's success depends to a significant degree upon
the continued contributions of its key management, marketing, product
development and operational personnel.

The services of Richard S. Ressler, Chairman of the Board and Director of the
Company, are provided on a non-exclusive basis pursuant to an agreement, which
expires in August 2000. There can be no assurances that Mr. Ressler will
continue with the Company after such date or that the Company will be able to
find a replacement in the event that either the Company or Mr. Ressler
determines not to continue their relationship.

RISK OF FOREIGN OPERATIONS

The financial performance of the Company is affected by the fluctuation in the
value of the US dollar in relation to the local currencies of the countries in
which the Company does business. In addition, the Company's foreign operations
are subject to the usual risks that may affect such operations, including import
and export restrictions, possible expropriation or other governmental actions,
taxes and political changes.

YEAR 2000 COMPLIANCE RISKS

This section is a Year 2000 Readiness Disclosure Statement pursuant to the Year
2000 Information and Readiness Disclosure Act of 1998.


                                     - 10 -
<PAGE>   11

During 1999, the Company successfully completed its program to achieve Year 2000
Readiness. Before June 30, 1999 the Company completed an evaluation of both its
information technology systems and its non-technology systems, such as equipment
containing microprocessors. At that time the Company determined that all
information technology and non-technology systems in its corporate home office
in Irvine, California and in its branch or subsidiary offices in the United

States and internationally had been modified to address Year 2000 issues. "Year
2000 Ready" meant that the performance or functionality of the Company's
internal systems would not be significantly affected by the dates prior to,
during, and after the Year 2000, to include leap year calculations and specific
day-of-the-week calculations.

The Company established a Year 2000 "task force" which prepared and released its
Year 2000 products readiness report on the Company's "Web Pages"
(www.maisystems.com and www.hotelinfosys.com) and made available to clients a
copy of this report on a per request basis. The Company launched a direct
mail/fax campaign in February 1999 to all of its current maintenance agreement
clients as well as to all identifiable clients that may be utilizing the
Company's products, informing clients that the "Year 2000 Readiness Program" was
available to be viewed at the indicated websites. The mailing also provided
clients the opportunity to request information regarding the "Year 2000
Readiness Program" if they so desired. This mailing was executed using the most
current client database available. This notification went to approximately
18,000 domestic customers as well as being faxed to approximately 4,000
international customers from the Company's international offices.

The Company currently knows of no significant year 2000-related failures
occurring in either its products or its internal systems as a result of the date
change from December 31, 1999 to January 1, 2000. As expected, the Company has
not experienced a material adverse impact on its business, products, results of
operations, or financial condition as a result of the Year 2000 issue. Costs
associated with implementing its Year 2000 compliance plan for its corporate
offices were approximately $300,000. These costs were expensed as incurred and
were comprised primarily of the personnel costs required to review all software
for Year 2000 compliance, the informational mailing and website costs and
outside consulting fees.

The Company will continue to monitor its critical processes, and those of
significant third parties that are critical to the company's operations, for
potential Year 2000-related problems. The Company's present "reasonably likely
worst case scenario" for Year 2000 problems involves potential product liability
claims by substantial customers involving collateral (business interruption)
damages. Although the Company has not experienced any product liability claims
to date regarding Year 2000 compliance, there can be no assurance that errors or
defects, whether associated with Year 2000 functions or otherwise, will not
result in product liability claims against the Company in the future. The
Company's license agreements with customers typically contain provisions
designed to limit the Company's exposure to potential product liability claims;
however, it is possible that such limitation of liability provisions may not be
effective under the laws of certain jurisdictions. Defective products or
releases could result in loss of revenues, increased service and warranty costs
and product liability claims, and could adversely affect the Company's market
penetration and reputation, any of which could have a material adverse effect on
the Company's business, financial condition and results of operations.


                                     - 11 -
<PAGE>   12

ITEM 2.  PROPERTIES

As of February 29, 2000, the principal properties utilized by the Company were
as follows:

<TABLE>
<CAPTION>
                                                                     Approximate Total
                     Type of Facility                                  Square Footage         Location
                     ----------------                                -----------------        --------
<S>                                                                  <C>                     <C>
Corporate and Hospitality Headquarters, warehousing,
  administration, marketing, sales, development and support                50,210           Irvine, California
Product development, sales and support                                      8,911           Concord, California
Process Manufacturing headquarters, marketing, sales,
  development, and support                                                 16,370           Tarrytown, New York
MAI Canada Ltd. Administration, sales, education,
  warehousing, test and repair                                              6,710           Ontario, Canada
Hotel Information Systems (Ltd) Hong Kong headquarters,
  marketing, sales, and support                                             3,638           Hong Kong
Hotel Information Systems (Ltd) Singapore sales and support                 4,527           Singapore
MAI Information Solutions Limited, European Headquarters,
  marketing, sales and support                                              2,201           London
</TABLE>

All of the properties noted above were occupied by the Company pursuant to
leases with various expiration dates. In addition to the premises identified
above, the Company leases offices in three additional locations in the United
States, one additional location in Canada and seven other locations around the
world. Generally such leases are for terms of five years or less, although
several of the leases in the United States are for terms of one year or less.

ITEM 3.  LEGAL PROCEEDINGS

Chapter 11 Bankruptcy Proceedings

At December 31, 1999, there was only one material claim to be settled before the
Company's Chapter 11 proceeding could be formally closed, a tax claim with the
United States Internal Revenue Service (the "Service"). The amount of this claim
is in dispute. The Company has reserved $712,000 for settlement of this claim,
which it is anticipated would be payable to the Service in equal monthly
installments over a period of six (6) years from the settlement date at an
interest rate of 6%.

CSA Private Limited v. MAI Systems Corporation

CSA is an MAI shareholder. On August 9, 1996, MAI acquired from Hotel
Information Systems, Inc. ("HIS") substantially all their assets and certain of
their liabilities (the "HIS Acquisition"). At the time of MAI's acquisition of
HIS in 1996, CSA was a shareholder of HIS and, in connection with the purchase,
MAI agreed to issue to CSA shares of our common stock worth approximately $4.8
million in August 1996, which amount has increased to approximately $6,342,000
as of March 31, 2000, pursuant to the agreement. MAI also granted CSA demand
registration rights with respect to such stock. CSA requested registration of
their shares, but MAI delayed registration based upon its good faith exercise of
its rights under its agreement with CSA. On October 5, 1998, CSA Private Limited
("CSA") filed a lawsuit against MAI in the U.S. District Court for the Central
District of California. Pursuant to a settlement agreement entered into as of
May 13, 1999 MAI agreed by November 1, 1999 to file, or at a minimum to commence
the process to file, a registration statement with the Securities and Exchange
Commission ("SEC") for the purpose of registering CSA's shares. The number of
shares which may be sold by CSA includes: (i) CSA's current ownership of 590,785
shares, and (ii) 6,658,000 additional shares, assuming a stock price of $0.875
per share, which MAI will issue to CSA in order for them to receive net proceeds
of approximately $6,342,000 after deducting any discounts or commissions. MAI
may be required under the settlement agreement to issue and register additional
shares for sale by CSA, in order that they receive net proceeds in the amount
called for by the settlement agreement. MAI has not yet filed the registration
statement called for by the settlement agreement. CSA initiated another lawsuit
in December 1999 in the above-referenced court (a) seeking damages in excess of
$5 million; (b) enforcement of the settlement agreement; and (c) and injunctive
relief through court order to cause MAI to file the S-1 registration statement.
MAI answered the complaint in March 2000 and intends to proceed as expeditiously
as possible to file the required S-1 registration statement utilizing year-end
information contained in this Annual Report on Form 10-K.


                                     - 12 -
<PAGE>   13

Enterprise Hospitality Solutions, Inc. v. MAI Systems Corporation

On November, 30, 1999, Enterprise Hospitality Solutions, Inc. ("EHS") and
Christian Rivadella commenced an action against MAI in the United States
District Court for the Central District of California, alleging that MAI had
failed to pay certain royalties to EHS under the parties' exclusive license
agreement. The Complaint asserts claims for breach of contract, unjust
enrichment, accounting and unfair competition. The Complaint seeks damages,
preliminary and permanent injunctive relief, imposition of a constructive trust,
an order canceling MAI's exclusive right to license the software at issue under
the parties' agreement, and the appointment of a receiver to conduct an audit.
On February 1, 2000, MAI answered the Complaint by denying its material
allegations and asserted a Counterclaim against the plaintiffs. The Counterclaim
asserts claims for breach of the parties exclusive license agreement, breach of
the covenant of good faith and fair dealing, unfair business practices,
interference with contractual relations and declaratory relief, and a
declaration that MAI is not in breach of the parties' license agreement. No
trial date has been set.

Wang Global Corporation v. MAI

On November 25, 1996 MAI executed an outsource agreement with Wang Global
Corporation in the United States and with Olivetti Canada Ltd. in Canada, for
on-site repair and warranty service and telephonic support for the Company's
Legacy customers. On July 26, 1999 Wang filed for arbitration in this matter
involving alleged breach of contract for payments due for maintenance services
provided by Wang. The amounts claimed as due by Wang exceed $3.7 million. MAI's
position is that no additional amounts are due Wang. Settlement of the dispute
is currently being discussed. Absent a settlement, the arbitration will commence
on June 7, 2000.

Other Litigation

The Company is also involved in various other legal proceedings that are
incident to its business.

Management believes the ultimate outcome of these matters will not have a
material adverse effect on the consolidated financial position, results of
operations or liquidity of the Company.

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

None.


                                     - 13 -
<PAGE>   14

PART II

ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

The Company's shares are traded on the American Stock Exchange, Inc. under the
AMEX symbol "NOW". Prior to listing on the AMEX, which occurred August 29, 1995,
the Company's shares were traded over-the-counter by various market makers under
the ticker symbol "MAIS". The following table sets forth the high and low sales
prices for the Company's common stock for the indicated periods during 1998 and
1999, as reported by the AMEX. On March 31, 2000, the closing price of our
common stock as reported by the AMEX was $0.875. At March 31, 2000, there were
557 stockholders of record.

We have never paid any dividends and do not anticipate declaring or paying cash
dividends in the foreseeable future. We intend to retain future earnings, if
any, to reinvest in our business. The covenants in our current or future
financing agreements may prohibit or limit our ability to declare or pay cash
dividends.

<TABLE>
<CAPTION>
   Period                                              High        Low
   ------                                              ----        ---
<S>                                                    <C>        <C>
   Fiscal 1998:
              First Quarter                            $5.13      $1.44
              Second Quarter                            5.38       3.25
              Third Quarter                             3.75       1.25
              Fourth Quarter                            3.75       1.13

   Fiscal 1999:
              First Quarter                            $3.25      $2.13
              Second Quarter                            4.00       1.88
              Third Quarter                             3.31       1.06
              Fourth Quarter                            1.25       0.44

   Fiscal 2000:
             First Quarter Through March 31, 2000      $1.94      $0.75
</TABLE>


On February 3, 1999 the Company issued 201,106 shares of the Company's Common
Stock to its Chairman for cash consideration of $500,000. Such shares were
issued at 90% of the average of the last sales price for Common Stock for the
ten trading days immediately prior to the date of the transaction. The shares
issued are entitled to certain registration rights as provided in a Registration
Rights Agreement between the Company and its Chairman dated September 8, 1997.

ITEM 6.  SELECTED FINANCIAL INFORMATION

The information required by this item is incorporated by reference to the
Company's Annual Report under the heading, "Selected Financial Information".

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

The information required by this item is incorporated by reference to the
Company's Annual Report under the heading, "Management's Discussion and Analysis
of Financial Condition and Results of Operations".

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURS ABOUT MARKET RISK

MARKET RISK DISCLOSURES

The following discussion about the Company's market risk disclosures contains
forward-looking statements. Forward-looking statements are subject to risks and
uncertainties. Actual results could differ materially from those discussed in
the forward-looking statements. The Company is exposed to market risk related to
changes in interest rates and foreign currency exchange rates. The Company does
not have derivative financial instruments for hedging, speculative, or trading
purposes.


                                     - 14 -
<PAGE>   15

INTEREST RATE SENSITIVITY

Of the Company's $10.59 million principal amount of indebtedness at December 31,
1999, $4.34 million bears interest at a rate that fluctuates based on changes in
prime rate. A 1% change in the underlying prime rate would result in a $43,000
change in the annual amount of interest payable on such debt. Of the remaining
amount of $6.25 million, $5.25 million bears interest at a fixed rate of 11% and
$1.0 million bears fixed interest rates ranging from 6% to 17.5%

The face amount of the Company's notes receivable totals $4,925,000. Of that
amount, $2.6 million bears interest at a fixed rate of 10%. The remaining
balance consisting of a $2,325,000 note (which has been discounted at the rate
of 10% for financial reporting) is non-interest bearing until October 2002, at
which time interest is payable at the rate of prime plus 1%. A one-percentage
point change in the interest rate of this note would result in a $23,250 annual
change in interest income beginning in October 2002. The impact reduces as the
principal is paid down over the following four years.

FOREIGN CURRENCY RISK

The Company believes that its exposure to currency exchange fluctuation risk is
insignificant because the Company's transactions with international vendors are
generally denominated in US dollars, which is considered to be the functional
currency of the Company and its subsidiary. The currency exchange impact on
intercompany transactions was immaterial in 1999.

ITEM 8.   CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by this item is incorporated by reference to the
Company's Annual Report under the headings, "Consolidated Balance Sheets",
"Consolidated Statements of Operations", "Consolidated Statement of
Stockholders' Equity (Deficiency) and Comprehensive Income (Loss)",
"Consolidated Statements of Cash Flows", "Notes to Consolidated Financial
Statements" and "Independent Auditors' Report".

Schedule II Valuation and Qualifying Accounts is set forth in this Annual Report
on Form 10-K.

All other schedules and financial statements are omitted because they are not
applicable or the required information is shown in the consolidated financial
statements or notes thereto.

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE

None.


                                     - 15 -
<PAGE>   16

                                    PART III


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information required by this Item with respect to Directors may be found in the
section captioned "Election of Directors" appearing in the definitive Proxy
Statement to be delivered to stockholders in connection with the Annual Meeting
of Stockholders to be held in 2000. Information required by this Item with
respect to executive officers may be found in the section captioned "Proposal 1
- Election of Directors, Executive Officers" appearing in the definitive Proxy
Statement to be delivered to stockholders in connection with the Annual Meeting
of Stockholders to be held in 2000. Such information is incorporated herein
by reference.

ITEM 11.  EXECUTIVE COMPENSATION

Information required by this Item may be found in the section captioned
"Executive Compensation" appearing in the definitive Proxy Statement to be
delivered to stockholders in connection with the Annual Meeting of Stockholders
to be held in 2000. Such information is incorporated herein by reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information with respect to this Item may be found in the section captioned
"Security Ownership of Management" appearing in the definitive Proxy Statement
to be delivered to stockholders in connection with the Annual Meeting of
Stockholders to be held in 2000. Such information is incorporated herein by
reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information with respect to this Item may be found in the section captioned
"Executive Compensation - Employment Contracts and Change of Control
Arrangements; Certain Transactions with Management" appearing in the definitive
Proxy Statement to be delivered to stockholders in connection with the Annual
Meeting of Stockholders to be held in 2000. Such information is
incorporated herein by reference.


                                     - 16 -
<PAGE>   17

                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULE AND REPORTS ON FORM 8-K

(a)       1. Financial Statements

             Independent Auditors' Report
             Consolidated Balance Sheets
             Consolidated Statements of Operations
             Consolidated Statements of Stockholders' Equity (Deficiency) and
               Comprehensive Income (Loss)
             Consolidated Statements of Cash Flows
             Notes to Consolidated Financial Statements

          2. Financial Statement Schedule

             The consolidated financial statements of the Company, the notes
             thereto and the Independent Auditors' Report are incorporated
             herein by reference to the Company's 1999 Annual Report.

             Schedule II -- Valuation and Qualifying Accounts

          3. Exhibits:

<TABLE>
<CAPTION>
Number                                   Exhibit
------                                   -------
<C>         <S>
2.1         First Amended Joint Chapter II Plan of Reorganization of MAI Systems
            Corporation, Brooke Acquisition Corp. and CLS Software, Inc., as
            confirmed by the United States Bankruptcy Court for the District of
            Delaware, on November 13, 1993, filed as Exhibit 2.1 to the
            Registrant's Current Report on Form 8-K dated January 15, 1994.

2.2         Consent Order Modifying Confirmed Plan of Reorganization and Fixing
            Effective Date, as entered by the United States Bankruptcy Court for
            the district of Delaware on January 27, 1994, as filed as Exhibit
            2.2 to the Registrant's Current Report on form 8-K dated February 9,
            1994.

3.1         Amended and Restated Certificate of Incorporation of MAI Systems
            Corporation, filed as Exhibit 3.1 to the Company's 1996 Annual
            Report on Form 10-K.

3.2         Amendment No. 1 to the Amended and Restated Certificate of
            Incorporation of MAI Systems Corporation, filed as Exhibit 3.2 to
            the Company's 1996 Annual Report on Form 10-K.

3.3         By-laws of MAI Systems Corporation, filed as Exhibit 2(b) to the
            Registrant's Registration Statement on Form 8-A/A filed with the
            Securities and Exchange Commission on February 24, 1994.

3.4         Amendment No. 2 to the Amended and Restated Certificate of
            Incorporation of MAI Systems Corporation, filed as Exhibit 3.4 to
            the Company's 1998 Annual Report on Form 10-K.

10.1        Coast Business Credit Loan and Security Agreement, dated April 23,
            1998, filed as Exhibit 10.2 to the Company's 1998 Annual Report on
            Form 10-K.

10.2        Amendment Number One dated September 30, 1998 to the Loan and
            Security Agreement between Coast Business Credit and the Company
            dated April 23, 1998.

10.3        Amendment Number Two dated March 2, 1999 to the Loan and Security
            Agreement between Coast Business Credit and the Company dated April
            23, 1998.

10.4        Amendment Number Three dated June 16, 1999 to the Loan and Security
            Agreement between Coast Business Credit and the Company dated April
            23, 1998.

10.5        Amendment Number Four dated July 28, 1999 to the Loan and Security
            Agreement between Coast Business Credit and the Company dated April
            23, 1998, filed as Exhibit 10.3 to the Company's Quarterly Report on
            Form 10-Q for the period ending September 30, 1999.
</TABLE>


                                     - 17 -
<PAGE>   18

<TABLE>
<CAPTION>
Number                                   Exhibit
------                                   -------
<C>         <S>
10.6        Letter Agreement Amendment dated October 1, 1999 to the Loan and
            Security Agreement between Coast Business Credit and the Company
            dated April 23, 1998.

10.7        Consulting Agreement dated as of August 15, 1994, as amended as of
            October 17, 1994, August 16, 1996, August 31, 1997, August 31, 1998
            and August 31, 1999 by and between the Company and Orchard Capital
            Corporation, relating to the services of Richard S. Ressler,
            Chairman of the Board. The original agreement and the October 17,
            1994 amendment are incorporated herein by reference to the Company's
            1994 Annual Report on Form 10-K. The August 16, 1996 amendment is
            incorporated herein by reference to the Company's 1996 Annual Report
            on Form 10-K. The August 31,1997 amendment is incorporated herein by
            reference to the Company's 1997 Annual Report on Form 10-K. The
            August 31, 1998 amendment is incorporated herein by reference to the
            Company's 1998 Annual Report on Form 10-K.

10.8        Richard S. Ressler Stock Purchase Letter, dated February 3, 1999,
            filed as Exhibit 10.4 to the Company's 1998 Annual Report on Form
            10-K.

10.9        Stock Option Agreement between Luke Brown and the Company dated
            November 2, 1999.

10.10       Stock Option Agreement between James Dolan and the Company dated
            November 2, 1999.

10.11       Stock Option Agreement between W. Brian Kretzmer and the Company
            dated August 2, 1999.

10.12       Stock Option Agreement between Sasun Musilyan and the Company
            dated August 2, 1999.

10.13       1996 Non-Employee Directors Stock Option Plan, filed as Exhibit 10.5
            to the Company's 1998 Annual Report on Form 10-K.

10.14       MAI Systems Corporation Amended 1993 Stock Option Plan, filed as
            Exhibit 10.6 to the Company's 1998 Annual Report on Form 10-K.

10.15       Termination/Transition Agreement between Christian Rivadalla d/b/a
            Enterprise Hospitality Solutions and Enterprise Hospitality
            Solutions, Inc., and the Company dated August 2, 1999, filed as
            Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the
            period ending September 30, 1999.

10.16       Exclusive Worldwide Software License Agreement between Christian
            Rivadalla d/b/a Enterprise Hospitality Solutions and Enterprise
            Hospitality Solutions, Inc., and the Company dated August 20, 1999.
            filed as Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q
            for the period ending September 30, 1999.

10.17       Forebearance Agreement between MAI Systems Corporation and CPI
            Securities LP, The Value Realization Fund, L.P., The Canyon Value
            Realization Fund and GRS Partners II dated October 28, 1999, filed
            as Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q for
            the period ending September 30, 1999.

10.18       Amendment No. 1 dated February 14, 2000 to Forebearance Agreement
            between MAI Systems Corporation and CPI Securities LP, The Value
            Realization Fund, L.P., The Canyon Value Realization Fund and GRS
            Partners II dated October 28, 1999.

10.19       Amendment No. 2 dated April 13, 2000 to Forebearance Agreement
            between MAI Systems Corporation and CPI Securities LP, The Value
            Realization Fund, L.P., The Canyon Value Realization Fund and GRS
            Partners II dated October 28, 1999.

10.20       Amendment Number Five dated April 13, 2000, to the Loan and Security
            Agreement between Coast Business Credit and the Company dated April
            23, 1998.

10.21       Stock option agreement between Sasun Musliyan and the Company
            dated January 20, 1999.

13.1        Portions of the Company's Annual Report to Stockholders for the year
            ended December 31, 1999, but only to the extent such report is
            expressly incorporated by reference into Items 6, 7, 8 and 14(a)(1)
            of this report and such report is not otherwise deemed to be filed
            as part of this Annual Report on Form 10-K.

21.1        Subsidiaries of MAI Systems Corporation

23.1        Consent of KPMG LLP

27.1        Financial Data Schedule Year Ended 1999
</TABLE>

(b)      Reports on Form 8-K during the fourth quarter of 1999

           None.


                                     - 18 -
<PAGE>   19

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                         MAI SYSTEMS CORPORATION



                                         By: /s/ Richard S. Ressler
                                             -----------------------------------
                                             Richard S. Ressler
                                             Chairman

Dated:  April 14, 2000

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated on April 14, 2000.


<TABLE>
<CAPTION>
          Signatures                Title
          ----------                -----
<S>                                 <C>


/s/ Richard S. Ressler              Chairman, Director
--------------------------------
Richard S. Ressler


/s/ William B. Kretzmer             Chief Executive Officer
--------------------------------    (Principal Executive Officer)
William B. Kretzmer


/s/ James W. Dolan                  Chief Financial Officer
--------------------------------    (Principal Financial and Accounting Officer)
James W. Dolan


/s/ Zohar Loshitzer                 Director
--------------------------------
Zohar Loshitzer


/s/ Morton O. Schapiro              Director
--------------------------------
Morton O. Schapiro
</TABLE>


                                     - 19 -
<PAGE>   20

                                   SCHEDULE II

                        VALUATION AND QUALIFYING ACCOUNTS

                  Years Ended December 31, 1997, 1998 and 1999
                             (dollars in thousands)

<TABLE>
<CAPTION>
                                            Balance     Charged to      Reductions      Additions                   Balances
                                           Beginning    Costs and      Due to Sale         from                      End of
                                            of Year      Expenses     of Subsidiary    Acquisitions   Write-offs      Year
                                           ---------    ----------    -------------    ------------   ----------    --------
<S>                                        <C>          <C>           <C>              <C>            <C>           <C>
Year ended December 31, 1997:
Allowance for doubtful accounts             $2,578        $    6          $   --          $ 646        $(1,247)      $1,983

Provision for inventory obsolescence        $3,193        $1,174          $   --          $  --        $(2,197)      $2,170
                                            ======        ======          ======          =====        =======       ======

Year ended December 31, 1998:
Allowance for doubtful accounts             $1,983        $1,340          $   --          $  --        $    --       $3,323

Provision for inventory obsolescence        $2,170        $  346          $   --          $  --        $    --       $2,516
                                            ======        ======          ======          =====        =======       ======

Year ended December 31, 1999:
Allowance for doubtful accounts             $3,323        $2,151          $  (75)         $  --        $(1,777)      $3,622

Provision for inventory obsolescence        $2,516        $  413          $ (470)         $  --        $   (86)      $2,373
                                            ======        ======          ======          =====        =======       ======
</TABLE>


                                     - 20 -

<PAGE>   21

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
Number                                   Exhibit
------                                   -------
<C>         <S>
2.1         First Amended Joint Chapter II Plan of Reorganization of MAI Systems
            Corporation, Brooke Acquisition Corp. and CLS Software, Inc., as
            confirmed by the United States Bankruptcy Court for the District of
            Delaware, on November 13, 1993, filed as Exhibit 2.1 to the
            Registrant's Current Report on Form 8-K dated January 15, 1994.

2.2         Consent Order Modifying Confirmed Plan of Reorganization and Fixing
            Effective Date, as entered by the United States Bankruptcy Court for
            the district of Delaware on January 27, 1994, as filed as Exhibit
            2.2 to the Registrant's Current Report on form 8-K dated February 9,
            1994.

3.1         Amended and Restated Certificate of Incorporation of MAI Systems
            Corporation, filed as Exhibit 3.1 to the Company's 1996 Annual
            Report on Form 10-K.

3.2         Amendment No. 1 to the Amended and Restated Certificate of
            Incorporation of MAI Systems Corporation, filed as Exhibit 3.2 to
            the Company's 1996 Annual Report on Form 10-K.

3.3         By-laws of MAI Systems Corporation, filed as Exhibit 2(b) to the
            Registrant's Registration Statement on Form 8-A/A filed with the
            Securities and Exchange Commission on February 24, 1994.

3.4         Amendment No. 2 to the Amended and Restated Certificate of
            Incorporation of MAI Systems Corporation, filed as Exhibit 3.4 to
            the Company's 1998 Annual Report on Form 10-K.

10.1        Coast Business Credit Loan and Security Agreement, dated April 23,
            1998, filed as Exhibit 10.2 to the Company's 1998 Annual Report on
            Form 10-K.

10.2        Amendment Number One dated September 30, 1998 to the Loan and
            Security Agreement between Coast Business Credit and the Company
            dated April 23, 1998.

10.3        Amendment Number Two dated March 2, 1999 to the Loan and Security
            Agreement between Coast Business Credit and the Company dated April
            23, 1998.

10.4        Amendment Number Three dated June 16, 1999 to the Loan and Security
            Agreement between Coast Business Credit and the Company dated April
            23, 1998.

10.5        Amendment Number Four dated July 28, 1999 to the Loan and Security
            Agreement between Coast Business Credit and the Company dated April
            23, 1998, filed as Exhibit 10.3 to the Company's Quarterly Report on
            Form 10-Q for the period ending September 30, 1999.
</TABLE>

<PAGE>   22

                           EXHIBIT INDEX (Continued)

<TABLE>
<CAPTION>
Number                                   Exhibit
------                                   -------
<C>         <S>
10.6        Letter Agreement Amendment dated October 1, 1999 to the Loan and
            Security Agreement between Coast Business Credit and the Company
            dated April 23, 1998.

10.7        Consulting Agreement dated as of August 15, 1994, as amended as of
            October 17, 1994, August 16, 1996, August 31, 1997, August 31, 1998
            and August 31, 1999 by and between the Company and Orchard Capital
            Corporation, relating to the services of Richard S. Ressler,
            Chairman of the Board. The original agreement and the October 17,
            1994 amendment are incorporated herein by reference to the Company's
            1994 Annual Report on Form 10-K. The August 16, 1996 amendment is
            incorporated herein by reference to the Company's 1996 Annual Report
            on Form 10-K. The August 31,1997 amendment is incorporated herein by
            reference to the Company's 1997 Annual Report on Form 10-K. The
            August 31, 1998 amendment is incorporated herein by reference to the
            Company's 1998 Annual Report on Form 10-K.

10.8        Richard S. Ressler Stock Purchase Letter, dated February 3, 1999,
            filed as Exhibit 10.4 to the Company's 1998 Annual Report on Form
            10-K.

10.9        Stock Option Agreement between Luke Brown and the Company dated
            November 2, 1999.

10.10       Stock Option Agreement between James Dolan and the Company dated
            November 2, 1999.

10.11       Stock Option Agreement between W. Brian Kretzmer and the Company
            dated August 2, 1999.

10.12       Stock Option Agreement between Sasun Musliyan and the Company
            dated August 2, 1999.


10.13       1996 Non-Employee Directors Stock Option Plan, filed as Exhibit 10.5
            to the Company's 1998 Annual Report on Form 10-K.

10.14       MAI Systems Corporation Amended 1993 Stock Option Plan, filed as
            Exhibit 10.6 to the Company's 1998 Annual Report on Form 10-K.

10.15       Termination/Transition Agreement between Christian Rivadalla d/b/a
            Enterprise Hospitality Solutions and Enterprise Hospitality
            Solutions, Inc., and the Company dated August 2, 1999, filed as
            Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the
            period ending September 30, 1999.

10.16       Exclusive Worldwide Software License Agreement between Christian
            Rivadalla d/b/a Enterprise Hospitality Solutions and Enterprise
            Hospitality Solutions, Inc., and the Company dated August 20, 1999.
            filed as Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q
            for the period ending September 30, 1999.

10.17       Forebearance Agreement between MAI Systems Corporation and CPI
            Securities LP, The Value Realization Fund, L.P., The Canyon Value
            Realization Fund and GRS Partners II dated October 28, 1999, filed
            as Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q for
            the period ending September 30, 1999.

10.18       Amendment No. 1 dated February 14, 2000 to Forebearance Agreement
            between MAI Systems Corporation and CPI Securities LP, The Value
            Realization Fund, L.P., The Canyon Value Realization Fund and GRS
            Partners II dated October 28, 1999.

10.19       Amendment No. 2 dated April 13, 2000 to Forebearance Agreement
            between MAI Systems Corporation and CPI Securities LP, The Value
            Realization Fund, L.P., The Canyon Value Realization Fund and GRS
            Partners II dated October 28, 1999.

10.20       Amendment Number Five dated April 13, 2000, to the Loan and Security
            Agreement between Coast Business Credit and the Company dated April
            23, 1998.

10.21       Stock option agreement between Sasun Musliyan and the Company
            dated January 20, 1999.

13.1        Portions of the Company's Annual Report to Stockholders for the year
            ended December 31, 1999, but only to the extent such report is
            expressly incorporated by reference into Items 6, 7, 8 and 14(a)(1)
            of this report and such report is not otherwise deemed to be filed
            as part of this Annual Report on Form 10-K.

21.1        Subsidiaries of MAI Systems Corporation

23.1        Consent of KPMG LLP

27.1        Financial Data Schedule Year Ended 1999
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