<PAGE>   1

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

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   ----------

                                    FORM 10-Q

                                QUARTERLY REPORT

     PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 1999

                           Commission File No. 1-9158

                                   ----------

                             MAI SYSTEMS CORPORATION
--------------------------------------------------------------------------------
             (Exact name of Registrant as Specified in its Charter)


          Delaware                                         22-2554549
  ------------------------                           ----------------------
  (State of Incorporation)                              (I.R.S. Employer
                                                     Identification Number)


                               9601 Jeronimo Road
                            Irvine, California 92618
--------------------------------------------------------------------------------
                     (Address of Principal Executive Office)


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

                                   ----------

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 and (2) has been subject to such filing
requirements for the past 90 days.

Yes  X       No
    ---         ---

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 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
    ---         ---

As of August 13, 1999 , 10,906,658 shares of the registrant's Common Stock,
$0.01 par value, were outstanding.

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

<PAGE>   2

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

                             MAI Systems Corporation

                      Condensed Consolidated Balance Sheets
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                  December 31,      June 30,
                                                                                     1998             1999
                                                                                  ------------     ---------
                                                                                        (in thousands)
<S>                                                                                <C>             <C>
ASSETS

Current assets:
     Cash                                                                          $   2,029       $   2,053
     Receivables, less allowance for doubtful accounts of
       $3,323 in 1998 and $4,427 in 1999                                              14,492          15,735
     Inventories                                                                       1,390             911
     Prepaids and other assets                                                         2,919           3,004
                                                                                   ---------       ---------
              Total current assets                                                    20,830          21,703

Furniture, fixtures and equipment, net                                                 3,737           3,513
Intangibles, net                                                                      10,185           8,080
Notes receivable, less deferred gain of $1,227,000                                        --           3,055
Other assets                                                                           1,005             789
                                                                                   ---------       ---------
              Total assets                                                         $  35,757       $  37,140
                                                                                   =========       =========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current liabilities:
     Current portion of long-term debt                                             $     859       $     603
     Accounts payable                                                                  7,289           5,462
     Customer deposits                                                                 2,587           2,216
     Accrued liabilities                                                               7,504           7,875
     Income taxes payable                                                                587             579
     Unearned revenue                                                                 10,702          11,520
                                                                                   ---------       ---------
              Total current liabilities                                               29,528          28,255

Line of credit                                                                         3,277           3,454
Long-term debt                                                                         5,056           5,120
Other liabilities                                                                        262             262
                                                                                   ---------       ---------
              Total liabilities                                                       38,123          37,091
                                                                                   ---------       ---------

Stockholders' (deficiency) equity:
     Preferred Stock, par value $0.01 per share; 1,000,000 shares authorized,
         none issued and outstanding                                                      --              --
     Common Stock, par value $0.01 per share; authorized 24,000,000 shares;
         10,697,639 and 10,906,658 shares issued and issuable at December 31,
         1998 and June 30, 1999, respectively                                            110             112
     Additional paid-in capital                                                      219,780         220,287
     Accumulated other comprehensive income                                              713             605
     Accumulated deficit                                                            (222,969)       (220,955)
                                                                                   ---------       ---------
              Total stockholders' (deficiency) equity                                 (2,366)             49
                                                                                   ---------       ---------
              Total liabilities and stockholders' (deficiency) equity              $  35,757       $  37,140
                                                                                   =========       =========
</TABLE>

         The accompanying notes are an integral part of these condensed
                       consolidated financial statements.


                                      -2-
<PAGE>   3

                             MAI Systems Corporation

                 Condensed Consolidated Statements of Operations
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                         For the Three Months           For the Six Months
                                                            Ended June 30,                Ended June 30,
                                                         ---------------------         ---------------------
                                                           1998         1999             1998         1999
                                                         --------     --------         --------     --------
                                                         (dollars in thousands,        (dollars in thousands,
                                                         except per share data)        except per share data)
<S>                                                      <C>          <C>              <C>          <C>
Revenue
     Software, networks and professional services:
           Software sales                                $  1,336     $  3,448         $  3,442     $  8,293
           Network and computer equipment                   1,916        2,210            2,991        3,085
           Professional services                            6,328        8,010           13,493       15,197
                                                         --------     --------         --------     --------
                                                            9,580       13,668           19,926       26,575

     Legacy revenue                                         4,528        2,617            9,391        5,794
                                                         --------     --------         --------     --------
                    Total revenue                          14,108       16,285           29,317       32,369

Direct costs                                                8,849        7,212           16,883       14,228
                                                         --------     --------         --------     --------
                    Gross profit                            5,259        9,073           12,434       18,141

Selling, general and administrative expenses                5,978        6,225           12,222       12,061
Research and development costs                              1,018        1,205            1,983        2,407
Amortization and impairment of intangibles                    700          599            1,315        1,209
Other operating (income) expense                              (68)         (69)             116         (110)
                                                         --------     --------         --------     --------
                    Operating income (loss)                (2,369)       1,113           (3,202)       2,574

Equity in net income (loss) of unconsolidated
  subsidiaries                                                 63           13               14           28
Interest income                                                73           33              103           63
Interest expense                                             (257)        (353)            (493)        (650)
                                                         --------     --------         --------     --------
                    Income (loss) before income taxes      (2,490)         806           (3,578)       2,015

Provision for income taxes                                     --           --               --           --
                                                         --------     --------         --------     --------
Net income (loss)                                        $ (2,490)    $    806         $ (3,578)    $  2,015
                                                         ========     ========         ========     ========
Income (loss) per share:

Basic income (loss) per share                            $  (0.24)    $   0.07         $  (0.35)    $   0.18
                                                         ========     ========         ========     ========

Diluted income (loss) per share                          $  (0.24)    $   0.07         $  (0.35)    $   0.18
                                                         ========     ========         ========     ========
Weighted average common shares used in determining
 income (loss) per share:

     Basic                                                 10,594       10,907           10,446       10,871
                                                         ========     ========         ========     ========
     Diluted                                               10,594       11,019           10,446       10,983
                                                         ========     ========         ========     ========
</TABLE>


         The accompanying notes are an integral part of these condensed
                       consolidated financial statements.


                                      -3-
<PAGE>   4
                             MAI Systems Corporation

                Condensed Consolidated Statements of Cash Flows
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                     For the Six Months Ended
                                                                             June 30,
                                                                     ------------------------
                                                                      1998            1999
                                                                     -------         -------
<S>                                                                  <C>             <C>
Net cash provided by operating activities                            $   999         $   726
                                                                     -------         -------

Cash flows from investing activities:
     Capital expenditures                                               (467)           (751)
     Capitalized software costs                                         (876)           (468)
                                                                     -------         -------

Net cash (used in) investing activities                               (1,343)         (1,219)
                                                                     -------         -------

Cash flows from financing activities:
     Short-term borrowings, net                                          280              31
     Proceeds from issuance of common stock, net                          --             500
     Repayments of term and other long-term debt                         (89)             --
     Proceeds from the exercise of stock options and warrants             54               9
                                                                     -------         -------

Net cash provided by financing activities                                245             540
                                                                     -------         -------

Effect of exchange rate changes on cash and cash equivalents             (13)            (23)
                                                                     -------         -------

Net change in cash and cash equivalents                                 (112)             24
                                                                     -------         -------

Cash and cash equivalents at beginning of period                       2,051           2,029
                                                                     -------         -------

Cash and cash equivalents at end of period                           $ 1,939         $ 2,053
                                                                     =======         =======
</TABLE>

Non-cash transactions:

1.  Three notes payable to the Company with a present value of $4,282,000 were
    accepted as consideration for the sale of the Company's wholly owned
    subsidiary Gaming Systems International, which had a net book value of
    $3,055,000 at the time of sale. The gain of $1,227,000 has been deferred.



         The accompanying notes are an integral part of these condensed
                       consolidated financial statements.


                                      -4-
<PAGE>   5

                             MAI Systems Corporation

              Notes to Condensed Consolidated Financial Statements
                         Six months ended June 30, 1999
                                  (Unaudited)

1.       Basis of Presentation

         Companies for which this report is filed are MAI Systems Corporation
         and its wholly-owned subsidiaries (the "Company"). The information
         contained herein is unaudited, but gives effect to all adjustments
         (which are normal recurring accruals) necessary, in the opinion of
         Company management, to present fairly the condensed consolidated
         financial statements for the interim period. All significant
         intercompany transactions and accounts have been eliminated in
         consolidation.

         Although the Company believes that the disclosures in these financial
         statements are adequate to make the information presented not
         misleading, certain information and footnote disclosures normally
         included in financial statements prepared in accordance with generally
         accepted accounting principles have been condensed or omitted pursuant
         to the rules and regulations of the Securities and Exchange Commission
         (the "SEC"), and these financial statements should be read in
         conjunction with the financial statements included in the Company's
         Annual Report on Form 10-K for the year ended December 31, 1998, which
         is on file with the SEC.

2.       Inventories

         Inventories are summarized as follows:

<TABLE>
<CAPTION>
                                       December 31,   June 30,
                                          1998         1999
                                       ------------   --------
                                        (dollars in thousands)
<S>                                      <C>           <C>
                Finished goods           $  843        $470
                Replacement parts           547         441
                                         ------        ----
                                         $1,390        $911
                                         ======        ====
</TABLE>

3.       Plan of Reorganization

         In 1993, the Company emerged from a voluntary proceeding under the
         bankruptcy protection laws. Notwithstanding the confirmation and
         effectiveness of its Plan of Reorganization (the "Plan"), the
         Bankruptcy Court continues to have jurisdiction to resolve disputed
         pre-petition claims against the Company to resolve matters related to
         the assumptions, assignment or rejection of executory contracts
         pursuant to the Plan and to resolve other matters that may arise in
         connection with the implementation of the Plan.Shares of common stock
         may be distributed by the Company to its former creditors. As of August
         13, 1999, 6,758,251 shares of Common Stock had been issued pursuant to
         the Plan and were outstanding. The Company estimates that approximately
         6,820,338 shares will have been issued to creditors at completion of
         the Plan.

4.       Business Acquisitions

         HOTEL INFORMATION SYSTEMS, INC. ("HIS"):

         During 1996, the Company entered into arbitration proceedings regarding
         the purchase price of HIS. The Company placed approximately 1,100,000
         shares of Common Stock issued in connection with the acquisition of HIS
         in an escrow account to be released in whole, or in part, upon final
         resolution of post closing adjustments.


                                      -5-
<PAGE>   6
         In November 1997, the purchase price for the acquisition of HIS was
         reduced by $931,000 pursuant to arbitration proceedings. As a result,
         goodwill was reduced $931,000 and approximately 100,650 price protected
         shares will be released from the escrow account and returned to the
         Company. In addition, further claims relating to legal costs and
         certain disbursements currently estimated at approximately $650,000 are
         presently pending. Resolution of such claims may result in release of
         additional escrow shares to the Company. The amount and number of
         shares will be determined based on the final resolution of such claims.
         Accordingly, as of June 30, 1999, the final purchase price has not been
         determined.

         The Company will, as needed, pursuant to the asset purchase agreement
         and related documents, issue additional shares of Common Stock in order
         that the recipients ultimately receive shares worth a fair value of
         $9.25 per share (subject to increase in such amount to approximately
         $11.45 per share). This adjustment applies to a maximum of 590,785
         shares of Common Stock. In April 1998, in accordance with the purchase
         agreement and related documents pursuant to which the Company acquired
         HIS in August 1996, the Company issued 246,453 additional shares of
         Common Stock valued at par. At June 30, 1999, the fair market value of
         the Company's Common Stock was $3.25 share, which would result in
         approximately 1,490,596 additional shares being issued. See Part II
         "Other Information", Item 1.

5.       Business Divestiture

         The Company sold its wholly owned subsidiary Gaming Systems
         International ("GSI") on June 19, 1999 for an amount in excess of its
         book value. The total sales price was $4,925,000 payable to the Company
         in the form of three promissory notes of $1,100,000, $1,500,000 and
         $2,325,000, respectively. Interest is paid monthly at the rate of 10%
         per annum on both the $1,100,000 and $1,500,000 notes, with the
         principal due and payable on June 19, 2001 and June 19, 2003,
         respectively. The $1,100,000 note is guaranteed by a third party.
         Interest begins to accrue on the $2,325,000 note on October 1, 2002 at
         the annual rate of prime plus 1%. Beginning October 1, 2002, payments
         on the third note will be made in 48 monthly installments of
         approximately $48,000 as principal, plus accrued interest.

         Using a 10% discount rate, the present value of the $2,325,000 note is
         $1,682,000. The present value of all three notes is $4,282,000. The
         gain of $1,227,000 has been deferred until collection of the proceeds
         representing the gain can be assured.

         Summarized below is historical financial information about GSI:

<TABLE>
<CAPTION>
                                      From January 1, 1999
                                            through
                              1998       June 19, 1999
                             ------   --------------------
<S>                          <C>        <C>
         Revenues            $2,687          $1,696
         Operating loss       1,493              43
         Assets               4,028           3,800
</TABLE>

6.       Common Stock

         On February 3, 1999, the Company's Chairman purchased 201,106 shares of
         the Company's Common Stock valued at $500,000.

7.       Income (Loss) Per Share of Common Stock

         Effective December 31, 1997, the Company adopted SFAS No. 128,
         "Earnings Per Share". This statement replaces the previously reported
         primary and fully diluted earnings per share with basic and diluted
         earnings per share. Unlike primary earnings per share, basic earnings
         per share excludes any dilutive effects of options. Diluted earnings
         per share is very similar to the previously reported fully diluted
         earnings per share. All loss per share amounts for all periods have
         been presented and restated to conform to the SFAS No. 128
         requirements.

         Basic and diluted loss per share is computed using shares of common
         stock issued to date and expected to be issued in accordance with the
         Plan of Reorganization ("Common Stock") as discussed in Note 3, and the
         weighted average shares of Common Stock issued outside the Plan of
         Reorganization. As of June 30, 1999, 6,758,251 shares had been issued
         pursuant to the Plan of Reorganization. All outstanding options and
         warrants have been excluded from diluted loss per share for loss
         periods presented as their effect would be anti-dilutive.


                                      -6-
<PAGE>   7

         The following table illustrates the computation of basic and diluted
         earnings (loss) per share under the provisions of SFAS 128:

<TABLE>
<CAPTION>
                                               For The Three Months          For The Six Months
                                                  Ended June 30,               Ended June 30,
                                              ---------------------       ------------------------
                                                1998         1999            1998           1999
                                              --------      -------       -----------      -------
                                              (dollars in thousands,       (dollars in thousands,
                                              except per share data)       except per share data)
<S>                                           <C>           <C>           <C>              <C>
Numerator:

Numerator for basic and diluted earnings
   (loss) per share - net (loss) income       $ (2,490)     $   806       $    (3,578)     $ 2,015
                                              ========      =======       ===========      =======

Denominator:

Denominator for basic earnings (loss) per
   share-weighted average number of
   common shares outstanding during
   the period                                   10,594       10,907            10,446       10,871

Incremental common shares attributable
   to exercise of outstanding options                           112                            112
                                              --------      -------       -----------      -------

Denominator for diluted earnings (loss)
   per share                                    10,594       11,019            10,446       10,983
                                              ========      =======       ===========      =======

Basic earnings (loss) per share               $  (0.24)     $  0.07       $     (0.35)     $  0.18
                                              ========      =======       ===========      =======

Diluted earnings (loss) per share             $  (0.24)     $  0.07       $     (0.35)     $  0.18
                                              ========      =======       ===========      =======
</TABLE>

8.       New Accounting Pronouncements

         In June 1998, the FASB issued SFAS No. 133 "Accounting for Derivative
         Instruments and Hedging Activities." SFAS No. 133 is effective for
         transactions entered into after January 1, 2000. This statement
         requires that all derivative instruments be recorded on the balance
         sheet at fair value. Changes in the fair value of derivatives are
         recorded each period in current earnings or other comprehensive income,
         depending on whether a derivative is designated as part of a hedge
         transaction and the type of hedge transaction. The ineffective portion
         of all hedges will be recognized in earnings. The Company is in the
         process of determining the impact that the adoption of SFAS No. 133
         will have on its results of operations and financial position.

         In October 1997, the American Institute of Certified Public Accountants
         ("AICPA") released Statement of Position 97-2, "Software Revenue
         Recognition" ("SOP 97-2"). Among other things, SOP 97-2 eliminates the
         distinction between significant and insignificant vendor obligations
         promulgated by SOP 91-1 and requires each element of a software
         arrangement to meet certain criteria in order to recognize revenue
         allocated to that element. Additionally, SOP 97-2 requires that total
         fees under an arrangement be allocated to each element in the
         arrangement based upon vendor specific objective evidence, as defined.
         SOP 97-2 is effective for software transactions entered into by the
         Company in fiscal 1998 and subsequent periods. The adoption in 1998 did
         not have a significant effect on the Company's results of operations.


                                      -7-
<PAGE>   8

         On December 22, 1998, the AICPA issued Statement of Position 98-9
         "Software Revenue Recognition With Respect to Certain Transactions"
         ("SOP 98-9"). SOP 98-9 amends certain paragraphs of SOP 97-2 to require
         recognition of revenue using the "residual method" with respect to
         certain transactions. The "residual method" established by SOP 98-9 is
         effective for fiscal years beginning after March 15, 1999. The Company
         does not anticipate the adoption of this SOP will have a significant
         effect on its operations.

9.       Deferred Financing Costs

         During 1998, the Company commenced efforts to raise additional capital.
         As of June 30, 1999, the Company has incurred costs of approximately
         $572,000 which were capitalized in 1998 and are included in prepaids
         and other assets.

10.      Comprehensive (Loss) Income

         In June 1997, the Financial Accounting Standards Board (FASB) issued
         SFAS No. 130, "Reporting Comprehensive Income," which establishes
         standards for reporting and disclosure of comprehensive income and its
         components (revenue, expenses, gains and losses) in a full set of
         general purpose financial statements. SFAS No. 130 is effective for
         fiscal years beginning after December 15, 1997 and requires
         reclassification of financial statements for earlier periods to be
         provided for comparative purposes. The Company has presented the
         information required by SFAS No. 130 as follows:

<TABLE>
<CAPTION>
                                    For The Three Months          For The Six Months
                                       Ended June 30,               Ended June 30,
                                    --------------------         --------------------
                                      1998        1999            1998         1999
                                     -------      -----          -------      -------
<S>                                  <C>          <C>            <C>          <C>
Net (loss) income                    $(2,490)     $ 806          $(3,578)     $ 2,015

Change in cumulative translation
  adjustments                           (158)      (117)            (108)        (108)
                                     -------      -----          -------      -------

Comprehensive (loss) income          $(2,648)     $ 689          $(3,686)     $ 1,907
                                     =======      =====          =======      =======
</TABLE>

         Accumulated other comprehensive (loss) income in the accompanying
         consolidated balance sheets consists of cumulative translation
         adjustments.

11.      Reclassifications

         Certain reclassifications have been made to the 1998 condensed
         consolidated financial statements to conform to the 1999 presentation.


                                      -8-
<PAGE>   9

Item 2. Management's Discussion And Analysis Of Financial Condition And Results
        Of Operations

Liquidity and Capital Resources

At June 30, 1999, working capital improved from a negative working capital of
$8,698,000 at December 31, 1998 to a negative working capital of $6,552,000.
Excluding unearned revenue of $11,520,000, the Company's working capital at June
30, 1999 would be $4,968,000 or a ratio of current assets to current liabilities
of 1.30 to 1.0. Excluding unearned revenue, working capital at December 31, 1998
was $2,004,000, with a current ratio of 1.11 to 1.0. Excluding unearned revenue,
the increase of $2,964,000 was primarily attributable to an increase in
receivables of $1,243,000 and a decrease in accounts payable of $1,827,000.

Cash was $2,053,000 at June 30, 1999, as compared to $2,029,000 at December 31,
1998. The Company continues to have a $5,000,000 secured revolving credit
facility. The computation of the availability of this line of credit is based on
a calculation using a rolling average of certain cash collections. At June 30,
1999, approximately $3,454,000 was available and drawn down under this facility.

Net cash used in investing activities in the six months ended June 30, 1999,
totaled $1,219,000. Capitalized software costs comprised $468,000.

Stockholders' equity improved by $2,415,000 at June 30, 1999, as compared to
December 31, 1998, due principally to the net income of $2,015,000 for the
period and the issuance of common shares. At June 30, 1999, there was
stockholders' equity of $49,000.

As described in note 9 to the condensed consolidated financial statements, the
Company commenced an effort to raise additional capital during 1998. The Company
incurred $572,000 in incremental costs directly attributable to that effort.
Those costs have been deferred pending the completion of that effort. This
specific effort to raise capital is on-going at this time. If the effort is
successful, the deferred costs will be treated as a cost of the additional
capital and netted against the proceeds. If the effort is unsuccessful, the
deferred costs would be charged to expense at the time this specific effort to
raise capital is aborted. The outcome of this effort is expected to be known
before the filing of the Company's quarterly report for the third quarter of
1999.

The Company believes it will continue to have sufficient cash available to fund
its operating and capital requirements for the next twelve months.

Results of Operations

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

<TABLE>
<CAPTION>
                            Three Months Ended   Percentage   Three Months Ended   Percentage
                              June 30, 1998      of Revenue     June 30, 1999      of Revenue
                            ------------------   ----------   ------------------   ----------
<S>                         <C>                  <C>          <C>                  <C>
Revenues:
    Hospitality                 $  7,127            50.5%         $ 10,016            61.5%
    Process Manufacturing          1,663            11.8%            2,176            13.4%
    Gaming                           485             3.4%            1,337             8.2%
    Legacy                         4,528            32.1%            2,617            16.1%
    Other                            305             2.2%              139             0.8%
Total revenue                     14,108           100.0%           16,285           100.0%
Gross profit                       5,259            37.3%            9,073            55.7%
Selling, general &
   administrative expenses         5,978            42.4%            6,225            38.2%
Research and development costs     1,018             7.2%            1,205             7.4%
Amortization of intangibles          700             5.0%              599             3.7%
Other operating (income)             (68)           (0.5%)             (69)           (0.4%)
</TABLE>

The quarter-to-quarter increase in overall revenue of 15.4% was due primarily to
an increase in sales of hospitality enterprise solutions and sales of gaming
solutions. Hospitality revenue increased 40.5% from $7,127,000 in 1998 to
$10,016,000 in 1999, largely due to increased software sales. As the Company's
gaming subsidiary was sold in June 1999, there will be no further gaming revenue
in the future.

Consistent with the Company's strategy to focus on providing software and
services to its vertical markets, the Company's legacy revenue (traditional
hardware contract service revenues and proprietary add-on sales) declined 42.2%
quarter over quarter, largely due to the expected decrease in volume.

Gross profit increased to 55.7% from 37.3% due to higher gross margins from an
increase in software sales. Revenue on lower margin functions such as hardware
and legacy declined.


                                      -9-
<PAGE>   10

Selling, general and administrative expenses ("SG&A") increased 4.1% to
$6,225,000. The increase was primarily related to the Company expanding its
hospitality sales and marketing efforts in the second quarter of 1999 with
increased advertising and promotion expense in pursuit of hospitality bookings.

Research and development costs increased 18.4% over the comparable period in
1998. This is primarily as a result of new development efforts relating to
several new projects.

The 14.4% decrease in amortization of intangibles versus the comparable period
of 1998 is related to a write down of intangibles which occurred in the fourth
quarter of 1998.

Other operating income for the three months ended June 30, 1999 was principally
from foreign exchange gains.

Six Months Ended June 30, 1998 Compared to Six Months Ended June 30, 1999

<TABLE>
<CAPTION>
                                        Six Months Ended       Percentage      Six Months Ended        Percentage
                                         June 30, 1998         of Revenue       June 30, 1999          of Revenue
                                        ----------------       ----------      ----------------        ----------
<S>                                     <C>                    <C>             <C>                     <C>
Revenues:
    Hospitality                             $14,938               51.0%           $ 20,296                62.7%
    Process Manufacturing                     3,823               13.0%              4,444                13.7%
    Gaming                                      851                2.9%              1,696                 5.2%
    Legacy                                    9,391               32.0%              5,794                17.9%
    Other                                       314                1.1%                139                 0.5%
Total revenue                                29,317              100.0%             32,369               100.0%
Gross profit                                 12,434               42.4%             18,141                56.0%
Selling, general &
   administrative expenses                   12,222               41.7%             12,061                37.3%
Research and development costs                1,983                6.8%              2,407                 7.4%
Amortization of intangibles                   1,315                4.5%              1,209                 3.7%
Other operating (income) expense                116               (0.4%)              (110)               (0.3%)
</TABLE>

The year-to-year increase in revenue of 10.4% for the six months ended June 30,
1999 over the comparable period was due primarily to increases in sales of
hospitality enterprise solutions and gaming solutions. Hospitality revenue
increased 35.9% from $14,983,000 in 1998 to $20,296,000 in 1999, largely due to
increased software sales. Gaming revenue increased 99.3% from $851,000 in 1998
to $1,696,000 in 1999, largely due to increased hardware sales.

Consistent with the Company's strategy to focus on providing software and
services to its vertical markets, the Company's legacy revenue (traditional
hardware contract service revenues and proprietary add-on sales) declined 38.3%
year over year, largely due to the expected decrease in volume.

Gross profit increased to 56.0% from 42.4% due to higher gross margins from
increased software sales. Revenue on lower margin sales such as legacy
declined.

Selling, general and administrative expenses ("SG&A") decreased slightly by 1.3%
to $12,061,000. This slight decrease is related to the implementation of several
cost reduction measures.

Research and development costs increased 21.4% over the comparable period of
1998. This is primarily as a result of new development efforts relating to
several new projects.

The 8.1% decrease in amortization of intangibles versus the comparable period of
1998 is related to a write down of intangibles which occurred in the fourth
quarter of 1998.

Other operating income for the six months ended June 30, 1999 was principally
from foreign exchange gains.


                                      -10-
<PAGE>   11

New Accounting Standards

In June 1998, the FASB issued SFAS No. 133 "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 is effective for transactions
entered into after January 1, 2000. This statement requires that all derivative
instruments be recorded on the balance sheet at fair value. Changes in the fair
value of derivatives are recorded each period in current earnings or other
comprehensive income, depending on whether a derivative is designated as part of
a hedge transaction and the type of hedge transaction. The ineffective portion
of all hedges will be recognized in earnings. The Company is in the process of
determining the impact that the adoption of SFAS No. 133 will have on its
results of operations and financial position.

On December 22, 1998, the AICPA issued Statement of Position 98-9 "Software
Revenue Recognition With Respect to Certain Transactions" ("SOP 98-9"). SOP 98-9
amends certain paragraphs of SOP 97-2 to require recognition of revenue using
the "residual method" with respect to certain transactions. The "residual
method" established by SOP 98-9 is effective for fiscal years beginning after
March 15, 1999. The Company is in the process of determining the impact that
the adoption of SOP 98-9 will have on its results of operations and financial
position.

                                      -11-
<PAGE>   12

Year 2000 Compliance Risks

The Year 2000 compliance issue arises from the fact that a significant
percentage of the software utilized by United States businesses relies on
two-digit date codes to perform computations and decision-making functions.
Commencing on January 1, 2000, these computer programs may fail from an
inability to interpret date codes properly, misinterpreting "00" as the year
1900 rather than 2000. The Company has completed an evaluation of both its
information technology systems and its non-technology systems, such as equipment
containing microprocessors. The Company believes 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
have been, or by September 30, 1999 will have been, modified to address Year
2000 issues. The Company estimates that the costs associated with implementing
its Year 2000 compliance plan for its corporate offices to be approximately
$50,000.

The Company has designed and tested the most current versions of its products to
be Year 2000 ready. The Company has 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 plans to make
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 report breaks down the Company's products into four categories: "product is
ready," "product is scheduled to be tested," "product is not ready (but has some
Year 2000 functionality)," and "product will not be tested (and is not ready)."
At the present time, of the eighty-nine products listed in the Company's Year
2000 readiness report, seventeen remain to be tested, and twenty fall in the
final category of products that will not be tested and are not ready. Of those
products in the latter category, many of these are older products that have been
replaced by newer versions of software. Although the Company has been
encouraging its customers to upgrade to current product versions, no assurance
can be given that all of them will do so in a timely manner, if at all.

The costs incurred by the Company to date to implement its Year 2000 readiness
plan for its products have not been material to the Company's financial
condition or operations.

The Company also relies on certain software that it licenses from third parties,
including software that is integrated with internally developed software and is
used in the Company's products to perform key functions. The Company has
undertaken joint compliance review of such software in certain cases where the
product is believed to be material to the Company's financial performance, such
as its "Lodging Touch" product that is licensed from Enterprise Hospitality
Solutions. The Company believes that in such selective cases the licensed
software and any related integrated software product is Year 2000 ready. There
can be no assurance, however, that all third party software presently utilized
by the Company will be free of errors and defects or be Year 2000 compliant.

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.


                                      -12-
<PAGE>   13

Since the Company spent a significant amount of time developing its Year 2000
readiness plan and evaluating its products for readiness, it does not believe
that an elaborate Year 2000 contingency plan is necessary. However, it is
reasonable to assume that some problems may be discovered in products the
Company currently believes to be Year 2000 ready. In this case, the Company has
the necessary resources available to address these unexpected problems and
provide the appropriate customers with updated software.

The Company is in the process of compiling information concerning the Year 2000
compliance of its key suppliers through the process of issuing questionnaires
and monitoring responses. In the event that any of the Company's key suppliers
do not successfully and timely achieve Year 2000 compliance, the Company's
business or operations could be adversely affected. The Company's Year 2000
compliance plan includes encouraging and/or requiring Year 2000 compliance by
all key suppliers.

Despite the Company's efforts to become Year 2000 compliant, there is no
assurance that the Year 2000 issue will not pose significant problems. There may
be delays in the Company's remediation efforts, a failure to fully identify all
Year 2000 problems in the systems, equipment or processes of the Company or its
vendors or customers, or unanticipated remediation expenses, all of which could
have material adverse consequences on the Company's financial position and
results of operations.


                                      -13-
<PAGE>   14
Item 3. Quantitative And Qualitative Disclosures 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.

         Interest Rate Sensitivity

         Of the Company's $8.6 million principal amount of indebtedness at June
         30, 1999, $3.5 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 an approximate $35,000 change in the annual amount of
         interest payable on such debt. The remaining amount of $5.1 million
         bears interest at a fixed rate of 11%.

         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 $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
         percent change in the interest rate of this note would result in a
         $23,250 annual change in interest income beginning in October 2002.
         This impact reduces as the principal is paid down over the following
         four years.

         Foreign Currency Risk

         The Company believes that its exposure on 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 for the quarter ended June 30, 1999.


                                      -14-
<PAGE>   15

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

         On October 5, 1998, CSA Private Limited ("CSA") filed a lawsuit against
         the Company in the U.S. District Court for the Central District of
         California. CSA is a shareholder of the Company. At the time of the
         Company's purchase of Hotel Information Systems, Inc. ("HIS") in 1996,
         CSA was a shareholder of HIS and, in connection with the purchase, the
         Company agreed to issue to CSA shares of the Company's common stock
         worth approximately $4.8 million (plus accrued interest until such time
         as the shares are issued and registered), and also granted CSA certain
         demand registration rights with respect to such stock. CSA subsequently
         requested registration of its shares and, in October, 1996, the Company
         filed an S-3 registration statement with the Securities and Exchange
         Commission ("SEC") for the purpose of registering these shares. The
         SEC, however, required an auditor's consent to the use of the HIS
         financial statements in the S-3, which consent HIS's auditors were
         unwilling to provide. When this impediment to registration was removed
         in April, 1998, CSA again demanded registration of its shares. The
         Company delayed registration based upon a provision in its agreements
         with CSA allowing the Company to defer such registration under certain
         circumstances provided that, during the period of such delay, an
         increased interest rate is applied in calculating the dollar value of
         shares of the Company's common stock to which CSA is ultimately
         entitled. In its lawsuit, CSA alleged that the Company's failure to
         register its shares deprived it of its ability to realize approximately
         $5,000,000 from sale of the shares to which it was entitled and
         requested (a) money damages in an amount not less than $5,000,000, (b)
         injunctive relief directing the Company to register CSA's shares, and
         (c) specific performance of its agreements with the Company.

         The initial delay in registration of CSA's shares was the result of the
         refusal on the part of HIS's auditors to consent to the inclusion of
         HIS's financial statements in the S-3, a factor beyond the Company's
         control, and the subsequent delay was the result of the Company's
         good-faith exercise of its rights under its agreements with CSA to
         defer registration. Accordingly, the Company believed that it was in
         full compliance with all of its obligations under its agreements with
         CSA, and contested the lawsuit.

         On June 4, 1999, the court entered a stipulation and order of
         dismissal, dismissing the lawsuit with prejudice. The order was entered
         as part of a settlement.

Item 2.  Changes in Securities and Use of Proceeds

         (a)      None.

         (b)      None.

         (c)      None.

         (d)      None.


                                      -15-
<PAGE>   16

Item 3.  Defaults Upon Senior Securities

         None.

Item 4.  Submission of Matters to a Vote of Security Holders

         (a)      Annual Meeting of Stockholders.

                  The Company held its Annual Meeting of Stockholders on May 21,
                  1999, at 10:00 a.m. at the Holiday Inn Brentwood/Bel Air, 170
                  North Church Lane, Los Angeles, California.

         (b)      Elected Directors of Registrant.

                  The following persons were elected to serve as directors of
                  the Company:

                  George G. Bayz
                  Richard S. Ressler
                  Morton O. Schapiro
                  Zohar Loshitzer

         (c)      Items Voted Upon By Stockholders of the Registrant.

                  The following matters were voted upon by the stockholders of
                  the Company. The number of votes cast for and against are set
                  forth below (as well as the applicable number of abstentions
                  and broker non-votes):

<TABLE>
<CAPTION>
                                                            VOTES AGAINST                   BROKER
                    SUBJECT                   VOTES FOR      OR WITHHELD    ABSTENTIONS    NON-VOTES
                    -------                   ---------     -------------   -----------    ---------
<S>                                           <C>           <C>             <C>            <C>
         Election of Directors:

         George G. Bayz                       8,690,932        112,745              0              0
         Zohar Loshitzer                      8,682,233        121,444              0              0
         Richard S. Ressler                   8,685,506        118,171              0              0
         Morton O. Schapiro                   8,685,627        118,050              0              0

         Amendment to the Company's 1993
         Employee Stock Option Plan (the
         "1993 Option Plan") in order to
         (i) increase the number of
         shares of Common Stock reserved
         for issuance thereunder by
         750,000 shares to an aggregate
         of 2,000,000 shares and (ii)
         include consultants of the
         Company and members of the
         Compensation Committee of the
         Company among the persons
         eligible to participate in the
         1993 Option Plan.                    5,188,637        402,879        127,871      3,084,290

         Amendment to the Company's
         Non-Employee Directors' Option
         Plan (the "Directors' Plan") in
         order to (i) increase the
         number of shares of Common
         Stock reserved for issuance
         thereunder by 125,000 shares to
         an aggregate of 250,000 shares
         and (ii) eliminate the
         prohibition against
         participation in the Directors'
         Plan by owners of 5% or more of
         the outstanding Common Stock.        4,901,226        690,683        127,478      3,084,290

         Ratification of the Company's
         selection of KPMG Peat Marwick
         LLP to act as the independent
         auditors for the Company             8,642,372         40,047        121,258              0
</TABLE>

Item 5.  Other Information

         None.

Item 6.  Exhibits and Reports on Form 8-K

         (a)      Exhibits.

                  27 -- Financial Data Schedule.

         (b)      Reports on Form 8-K.

                  None.

                                       16

<PAGE>   17

                                   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.

                                    MAI SYSTEMS CORPORATION
                                    (Registrant)




Date: August 13, 1999               /s/ Lewis H. Stanton
                                    --------------------------------------------
                                    Lewis H. Stanton
                                    Executive Vice President and
                                    Chief Operating and Financial Officer
                                    (Chief Accounting Officer)


                                      -17-

<PAGE>   18


                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit
Number          Description
------          -----------
<C>             <S>
  27            Financial Data Schedule
</TABLE>