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 MARCH, 31, 1997

                          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: (714) 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   No
/X/  / /

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   No
/X/  / /

As of May 12, 1997, 8,689,686 shares of the registrant's Common Stock, $0.01 par
value, were outstanding.



<PAGE>

<TABLE>
<CAPTION>

PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                           MAI Systems Corporation
                    Condensed Consolidated Balance Sheets
                                 (Unaudited)

                                                       December 31,  March 31,
                                                             1996        1997
                                                                        
                                                        (dollars in thousands)
ASSETS
<S>                                                        <C>         <C>    
Current assets:
   Cash and cash equivalents                                 $3,857      $ 4,086

   Receivables, less allowance for doubtful
   accounts of $2,578 in 1996 and $4,311 in 1997             11,407       21,581
                                                 
   Inventories                                                3,321        3,856
   Prepaids and other current assets                          1,938        2,304
                                                            --------    --------
                   Total current assets                      20,523       31,827
                                                                         

Furniture, fixtures and equipment,net                         4,065        4,304
Intangibles                                                   6,804       13,738
Other assets                                                  1,461        1,468
                                                           --------     --------
                   Total assets                             $32,853      $51,337
                                                           ========     ========
                                                                          

LIABILITIES AND STOCKHOLDERS' EQUITY

   Current liabilities:
         Current portion of long-term debt                  $1,394        $1,143
         Accounts payable                                    6,852         6,995
         Customer deposits                                   1,763         1,895
         Accrued liabilities                                 7,312         8,148
         Income taxes payable                                  462           462
         Unearned revenue                                   11,010        19,802
                                                          --------      --------
         Total current liabilities                          28,793        38,445
        
         
         Long-term debt                                       485          6,691
         Other liabilities                                  1,517          1,490
                                                          --------      --------
                         Total liabilities                  30,795        46,626

Stockholders' equity:
   Common stock, par value $0.01 per share, authorized
     25,000,000 shares, 8,292,935 and 8,747,861 shares        
     issuable                                                   88            91
   Additional paid-in capital                              212,351       215,931
   Cumulative translation adjustment                           100           375
   Accumulated deficit                                    (210,481)    (211,686)
                                                           --------     --------
                                                            
                         Total stockholders' equity           2,058        4,711
                                                            --------    --------
Commitments and contingencies

   
    Total liabilities and                                   $32,853      $51,337
    Stockholders' equity                                   ========     ========
                                                  
</TABLE>




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


                                      -2-




<PAGE>

<TABLE>
<CAPTION>

                           MAI Systems Corporation
               Condensed Consolidated Statements of Operations
                                 (Unaudited)



                                                   For the Three Months Ended
                                                           March 31,
                                                   (dollars in thousands,
                                                    except per share data)
                                                            
                                                               1996     1997
Revenue:
<S>                                                            <C>       <C> 

   Software, networks and  professional services:
        Software sales                                              740    1,580
        Network and computer equipment                            3,357    2,940
        Professional services                                     2,370    7,124
                                                               -------- --------
                                                                  6,467   11,644

        Legacy revenue                                            8,264    5,180
                                                               -------- --------
               Total revenue                                     14,731   16,824
                                                            

         Direct costs                                             9,644   10,781
                                                               -------- --------
               Gross profit                                       5,087    6,043
                                                                

Selling, general and administrative expenses                     2,763     5,546
Research and development costs                                     687     1,206
Amortization and impairment of intangibles                           -       316
Other operating expense (income)                                     -        65

                                                              --------  --------
          Operating income (loss)                                1,637   (1,090)
                                                     

Minority interest in consolidated subsidiary                       165        - 
Interest income                                                      -        21
Interest expense                                                  (42)     (136)

                                                              --------  --------
Income(loss)before income taxes                                  1,760   (1,205)
                                                              --------  --------

Provision for income taxes                                          -         -
                                                              --------  --------
                             
          Net income (loss)                                    $1,760   $(1,205)
                                                              ========  ========
                  
Primary and fully diluted income
(loss) per share of common stock                              $   0.26  $ (0.14)
                                                              ========  ========
</TABLE>




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


                                      -3-


<PAGE>

<TABLE>
<CAPTION>



                           MAI Systems Corporation
               Condensed Consolidated Statements of Cash Flows
                                 (Unaudited)

                                                    For the Three Months Eded
                                                              March 31,

                                                            1996        1997
                                                         (dollars in thousands)
<S>                                                   <C>             <C>

Net cash provided by (used in) operating activities           $406      $(2,543)
                                                          --------      --------
 
Cash flows from investing activities:
    Capital expenditures                                      (215)        (521)
    Purchase of businesses                                       -       (6,102)
                                                           --------     --------

Net cash used in investing activities
                                                              (215)      (6,623)
                                                           --------     --------

Cash flows from financing activities:
        Short-term borrowings, net                                -        1,079
        Payments received on notes receivable                     -           79
        Proceeds from issuance of common stock, net               -        2,300
        Proceeds from issuance of subordinated notes payable      -        6,000
        Increase in notes receivables                             -         (25)
        Repayments of term and other long-term debt            (308)        (85)
        Proceeds from the exercise of stock options              47           71
                                                           --------     --------
                                                                         

Net cash (used in) provided by financing activities           (261)        9,419
                                                           --------     --------

Effect of exchange rate changes on cash and cash equivalents     39         (24)
                                                           --------     --------
                                                      
Net change in cash and cash equivalents                        (31)          229
                                                           --------     --------

Cash and cash equivalents at beginning of period              4,086        3,857
                                                           --------     --------
Cash and cash equivalents at end of period                   $4,055       $4,086
                                                           ========     ========
                                                          
</TABLE>



















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


                                      -4-

<PAGE>


                           MAI Systems Corporation
             Notes to Condensed Consolidated Financial Statements
                      Three months ended March 31, 1997
                                 (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.

(2)   INVENTORIES
<TABLE>
<CAPTION>

      Inventories are summarized as follows:        December 31,     March 31,
                                                       1996             1997
                                                       (dollars in thousands)
<S>                                                <C>            <C>    

                        Finished goods                 $2,277         $2,868
                        Replacement parts               1,044            988
                                                     ---------        ---------
                                                       $3,321         $3,856
</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 are currently  being  distributed by the Company to
its former creditors.  As of May 13, 1997,  6,728,256 shares of Common Stock had
been issued  pursuant to the Plan and were  outstanding.  The Company  estimates
that approximately 6,820,338 shares will be issued to creditors.

(4)   BUSINESS ACQUISITIONS

      CIMPRO:

      On March 6, 1997, the Company  acquired  substantially  all the assets and
assumed  certain  liabilities  of CIMPRO,  which  develops  and markets  process
manufacturing  software,  for $5,900,000 in cash. To finance the  acquisition of
CIMPRO,  the  Company  sold  400,000  shares  of its  Common  Stock in a private
placement for $6.50 per share and issued  $6,000,000 of 11%  subordinated  notes
payable due in 2004 to an investment  fund managed by Canyon Capital  Management
LP  ("Canyon").  Interest  on the  subordinated  notes is payable  semi-annually
commencing September 3, 1997.

      Associated  with the stock  issuance,  the  Company  incurred  $300,000 of
issuance  costs  which  are  included  in  additional  paid-in  capital  in  the
accompanying condensed consolidated balance sheet as of March 31, 1997.


                                      -5-




<PAGE>

<TABLE>
<CAPTION>

      The acquisition of CIMPRO has been accounted for using the purchase method
of accounting. A preliminary allocation of the purchase price is as follows:

                                                   Allocation of
                                                   Purchase Price
                                                   (in thousands)
<S>                                                   <C>    
            Current assets                               $2,011
            Property, plant and equipment                   400
            Intangibles                                   6,338
            Current liabilities                         (2,263)
            Long-term liabilities                         (586)
                                                      ---------
                                                        $ 5,900


</TABLE>

      Intangible  assets are being amortized on a  straight-line  basis over the
expected periods to be benefited of five to seven years.

      GAMING SYSTEMS INTERNATIONAL:

      In March 1997,  the Company  acquired  options to purchase  3.5% of Gaming
Systems  International ("GSI") Common Stock from two individuals in exchange for
14,930 shares of the Company's Common Stock valued at $104,500 and notes payable
of $104,500. The transaction resulted in an increase in goodwill of $209,000.

(5)   STOCK WARRANTS

      Warrants to purchase  750,000  shares of the Company's  Common Stock at $8
per share were issued in  connection  with the issuance of the 11%  subordinated
debt. These warrants are exercisable and callable (by the Company) under certain
circumstances at any time within seven years and the 11% subordinated  notes may
be used to  exercise  the  warrants.  The Company  recorded  an  original  issue
discount of $1,027,000  which  represents  the fair value of the warrants at the
time of issuance. The fair value of the warrants was recorded in connection with
the  issuance of the  warrants and is reflected as a reduction in the face value
of the subordinated notes.

                                      -6-


<PAGE>


(6)   INCOME (LOSS) PER SHARE

      In  February  1997,  the  Financial   Accounting  Standards  Board  issued
Statement of Financial  Accounting  Standard  ("SFAS")  No. 128,  "Earnings  Per
Share".  SFAS No. 128 specifies  new standards  designed to improve the earnings
per share ("EPS")  information  provided in financial  statements by simplifying
the existing computational guidelines,  revising the disclosure requirements and
increasing the comparability of EPS data on an international  basis. Some of the
changes made to simplify  the EPS  computations  include:  (a)  eliminating  the
presentation  of primary EPS and replacing it with basic EPS, with the principal
difference  being  that the  common  stock  equivalents  are not  considered  in
computing basic EPS, (b) eliminating the modified  treasury stock method and the
three  percent  materiality  provision  and (c)  revising the  contingent  share
provisions and the supplemental EPS data requirements. SFAS No. 128 also makes a
number of changes to existing disclosure requirements. SFAS No. 128 is effective
for  financial  statements  issued for periods  ending after  December 15, 1997,
including  interim  periods.  Accordingly,  the  financial  statements  for  the
Company's fourth quarter ending December 31, 1997, will include a restatement of
historical  income (loss) per share to conform to the  requirements  of SFAS No.
128. The Company has not yet determined the impact of the implementation of SFAS
No. 128.

     Primary  and fully  diluted  income  (loss) per share for 1996 and 1997 are
computed  using  6,834,921 and 8,595,408  shares of common stock,  respectively.
These share  amounts  represent  the shares of common stock  (adjusted for stock
split in August  1995)  expected  to be issued  in  accordance  with the Plan of
Reorganization  and the weighted average number of shares and equivalent  shares
of common stock outstanding during the period.  Common stock equivalents consist
of dilutive  outstanding stock options and warrants and are calculated using the
treasury  stock method.  Common Stock  equivalents  are not included in the 1997
calculation as they would be anti-dilutive.



                                      -7-

<PAGE>


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

LIQUIDITY AND CAPITAL RESOURCES

      At March 31, 1997,  working capital increased from a deficit of $8,270,000
at December  31, 1996 to a deficit of  $6,618,000.  Excluding  unearned  revenue
(which will not give rise to cash  disbursements) of $19,802,000,  the Company's
working  capital  is  $13,184,000  or a  ratio  of  current  assets  to  current
liabilities of 1.71 to 1.0. The  comparable  ratio at December 31, 1996 was 1.15
to 1.0. The improvement in the Company's  working capital position is attributed
to greater sales of software, networking, and computer equipment.

      Cash and cash  equivalents  were $4,086,000 at March 31, 1997, as compared
to $3,857,000 as of December 31, 1996. The Company continues to have available a
$4,000,000  secured revolving credit facility.  The availability of this line of
credit  is based on a  calculation  reflecting  the age and  nature  of  certain
accounts receivable. At March 31, 1997, the available balance was $4,000,000, of
which approximately $1,079,000 was drawn down under this facility.

      Net cash used for investing activities in the three months ended March 31,
1997,  totaled  $6,623,000.  Capital  expenditures  comprised $521,000 while the
acquisition  of CIMPRO and the  acquisition  of options to purchase  3.5% of GSI
accounted for $6,102,000.

      Net cash provided by financing  activities  included  $6,000,000  from the
issuance of the 11%  subordinated  notes payable due in 2004 in connection  with
the CIMPRO  acquisition.  The  Company's  working  capital was  increased by the
issuance of 400,000  shares of $0.01 par value  common  stock  ("Common  Stock")
totaling  $2,300,000,  net of  issuance  costs of  $300,000,  and the  increased
utilization of the revolving credit facility of $1,079,000.

      Stockholders'   equity  increased   $2,653,000  at  March  31,  1997,  due
principally  to the issuance of the Common  Stock  totaling  $2,300,000,  net of
issuance costs.

      The Company believes it will continue to have sufficient cash available to
fund its operating and capital requirements through 1997.


<TABLE>
<CAPTION>

RESULTS OF OPERATIONS

Three-Months Ended March 31, 1996 Compared to Three-Months Ended March 31, 1997



                 Three months ended   Percentage  Three months ended  Percentage
                   March 31, 1996     of Revenue   March 31, 1997     of Revenue

                                        (dollars in thousands)
<S>                     <C>              <C>          <C>           <C>   

Revenue                   $14,731          100.0%       $16,824        100.0%
Gross profit                5,087           34.5%         6,043         35.9%
Selling, general &
  administrative expenses   2,763           18.8%         5,546         33.0%
Research and development
  costs                       687            4.7%         1,206          7.2%
Amortization of intangibles    -               -            316          1.9%
Minority Interest             165            1.1%             -             -

</TABLE>


      Revenue for the first  quarter of 1997  benefited  from  December 31, 1996
backlog  of  approximately  $15,700,000,  a  significant  portion  of which  was
converted into revenue during the quarter. The year-to-year  increase in revenue
of 14% was  composed  of an 80%  increase  in sales of  software,  networks  and
professional  services  offset  by a 37%  decline  in  legacy  revenue.  This is
consistent  with the  Company's  strategy  to focus on  providing  software  and
services to its vertical markets.

                                      -8-



<PAGE>


      Gross profit increased to 35.9% from 34.5% due to a higher gross margin in
professional  services  (39% in 1997 as  compared  to 22% for the same period in
1996).  Gross margin on software  increased as well due to a shift in the mix of
software product sales to higher-margin company-owned products from lower-margin
third-party  products.  The overall  gross margin was affected by a reduction in
the margin from legacy  revenues.  For strategic  reasons,  legacy services were
outsourced  to Olivetti  North America and Olivetti  Canada,  Ltd., in December,
1996.

      Selling,  general and administrative expenses ("SG&A") increased 100.7% to
$5,546,000 compared to the first quarter of 1996. The major items affecting this
increase are additional expenses for salaries,  professional fees, travel costs,
advertising,  and sales  commissions,  totaling  $1,700,000.  These expenses are
related  to a more  aggressive  sales  strategy  aimed  at  winning  integration
services  contracts with large multi-site  customers,  and residual  integration
costs associated with the August 1996, acquisition of Hotel Information Systems.
In addition,  for the first quarter of 1997,  the Company did not experience the
benefit of the  reversal  of certain  excess  costs as was the case in the first
quarter of 1996.  Higher  facilities costs in connection with the combination of
Irvine,  California,  operations into a single building (which will lower future
costs) and higher  telecommunications  costs, due to increased traffic from HIS,
also contributed to increased SG&A expenses.

      Research  and  development  costs  increased  75.5% or  $519,000  over the
comparable  period  in  1996  due  to a  significantly  larger  set  of  product
development and sustaining  engineering  activities.  The acquisition of HIS and
the  March  1997,  acquisition  of the  CIMPRO  product  line have  resulted  in
increased expense in the development and sustaining of these products.

      Amortization of intangibles of $316,000 is related to the  acquisitions of
HIS, CIMPRO, and the minority ownership of Gaming Systems  International.  There
was no comparable  amortization  expense during the first quarter of 1996. There
was income  recognized of $165,000  during the first quarter of 1996  reflecting
the 30% minority interest in the earnings of Gaming Systems International.


                                      -9-



<PAGE>


                         PART II - OTHER INFORMATION



ITEM 1. LEGAL PROCEEDINGS

      As  a  consequence  of  the  commencement  of  the  Company's   bankruptcy
proceedings,  the Company has filed  objections  to a large  number of proofs of
claim.  Sums  determined  to be due to  claimants,  as a result of settlement or
judicial  determinations,  will be treated under the Plan of  Reorganization  as
claims and  claimants  will  receive  either  cash or shares of common  stock in
exchange  for their  claims.  The Company  does not believe the outcome of these
objections to be material.

      Further, the Company instituted several adversary proceedings prior to the
effective date of the Plan of Reorganization.  None of those proceedings involve
allegations of material claims against the Company.

Item 2.  Changes in Securities

               None.

Item 3.  Defaults Upon Senior Securities

               None.

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

               None

Item 5. Other Information

               None.

Item 6.  Exhibits and Reports on Form 8-K

      (a)     Exhibits.

               None

      (b)    Reports on Form 8-K.

          On March 6, 1997, the registrant  filed a report on Form 8-K , without
financial  statements,  reporting that the Company had completed the acquisition
of the CIMPRO division of Oracle Corporation's wholly-owned subsidiary Datalogix
International, Inc..


                                      -10-

<PAGE>



                                  SIGNATURES


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

                                          MAI  SYSTEMS CORPORATION
                                          (Registrant)




Date: May 15, 1997                         /s/ Lewis H. Stanton
                                          ----------------------
                                          Lewis H. Stanton
                                          Executive Vice President and
                                          Chief Operating and Financial Officer 
                                          (Chief Accounting Officer)