<PAGE>
================================================================================


                       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 SEPTEMBER 30, 2001

                           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 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     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 October 31, 2001, 13,691,085 shares of the registrant's Common Stock,
$0.01 par value, were outstanding.

================================================================================
<PAGE>


PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                             MAI Systems Corporation
                      Condensed Consolidated Balance Sheets
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                     December 31,   September 30,
                                                                                        2000            2001
                                                                                        ----            ----
                                                                                        (dollars in thousands)
<S>                                                                                  <C>            <C>
ASSETS

Current assets:
   Cash                                                                               $   1,019       $     357
   Receivables, less allowance for doubtful accounts of $2,154 in 2000
     and $1,636 in 2001                                                                   4,338           3,892
   Inventories                                                                              325             212
   Notes receivable                                                                       2,700              --
   Investment in subsidiary held for sale                                                    --           1,700
   Prepaids and other assets                                                                807             823
                                                                                      ---------       ---------
         Total current assets                                                             9,189           6,984

Furniture, fixtures and equipment, net                                                    1,882           1,469
Intangibles, net                                                                          5,308           3,314
Other assets                                                                                 66              69
                                                                                      ---------       ---------
         Total assets                                                                 $  16,445       $  11,836
                                                                                      =========       =========

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current liabilities:
   Bridge loan                                                                        $     220       $      --
   Current portion of long-term debt                                                        274             138
   Accounts payable                                                                       7,395           3,331
   Customer deposits                                                                      2,234           1,340
   Accrued liabilities                                                                    4,182           3,532
   Income taxes payable                                                                     272             193
   Unearned revenue                                                                       5,423           3,841
                                                                                      ---------       ---------
         Total current liabilities                                                       20,000          12,375

Line of credit                                                                            2,579           2,597
Long-term debt                                                                            5,234           8,612
Other liabilities                                                                           742             768
                                                                                      ---------       ---------
         Total liabilities                                                               28,555          24,352

Stockholders' deficiency:
   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;
     11,006,658 and 13,691,085  shares issued and issuable at December 31, 2000
     and September 30, 2001, respectively                                                   113             140
   Additional paid-in capital                                                           220,622         218,034
   Accumulated other comprehensive income                                                    80             136
   Accumulated deficit                                                                 (232,925)       (230,826)
                                                                                      ---------       ---------
         Total stockholders' deficiency                                                 (12,110)        (12,516)
                                                                                      ---------       ---------
         Total liabilities and stockholders' deficiency                               $  16,445       $  11,836
                                                                                      =========       =========
</TABLE>


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


                                       -2-
<PAGE>

                             MAI Systems Corporation
                 Condensed Consolidated Statements of Operations
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                  For the Three Months Ended   For the Nine Months Ended
                                                        September 30,               September 30,
                                                  --------------------------   -------------------------
                                                      2000          2001          2000          2001
                                                      ----          ----          ----          ----
                                                    (in thousands, except       (in thousands, except
                                                        per share data)             per share data)
<S>                                                 <C>           <C>           <C>           <C>
Revenue
  Software, networks and professional services:
    Software sales                                  $  2,503      $  1,258      $  5,867      $  4,584
    Network and computer equipment                       435           375         1,353           821
    Professional services                              5,708         4,952        17,057        15,034
                                                    --------      --------      --------      --------
                                                       8,646         6,585        24,277        20,439

  Legacy revenue                                       1,148           860         4,406         2,885
                                                    --------      --------      --------      --------
        Total revenue                                  9,794         7,445        28,683        23,324

Direct costs                                           4,260         2,286        13,633         8,323
                                                    --------      --------      --------      --------
        Gross profit                                   5,534         5,159        15,050        15,001

Selling, general and administrative expenses           2,500         2,474         8,757         7,318
Research and development costs                           906         1,213         3,104         3,703
Amortization of intangibles                              649           664         1,946         1,993
Other operating (income) expense, net                     53           (10)          111        (1,406)
                                                    --------      --------      --------      --------
        Operating income                               1,426           818         1,132         3,393

Interest income                                          118             7           273            63
Interest expense                                        (377)         (413)       (1,125)       (1,278)
                                                    --------      --------      --------      --------
        Income before income taxes                     1,167           412           280         2,178

Provision for income taxes                                38             1            38            79
                                                    --------      --------      --------      --------
Net income                                          $  1,129      $    411      $    242      $  2,099
                                                    ========      ========      ========      ========

Income per share:

Basic income per share                              $   0.10      $   0.03      $   0.02      $   0.16
                                                    ========      ========      ========      ========

Diluted income per share                            $   0.10      $   0.03      $   0.02      $   0.16
                                                    ========      ========      ========      ========

Weighted average common shares used in
  determining income per share:

  Basic                                               10,907        13,691        10,907        12,922
                                                    ========      ========      ========      ========

  Diluted                                             10,907        13,928        10,907        13,113
                                                    ========      ========      ========      ========
</TABLE>


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


                                       -3-
<PAGE>

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

<TABLE>
<CAPTION>
                                                                  For the Nine Months Ended
                                                                        September 30,
                                                                  -------------------------
                                                                    2000           2001
                                                                    ----           ----
                                                                  (in thousands, except per
                                                                        share data)

<S>                                                                <C>            <C>
Net cash used in operating activities                              $  (293)       $  (946)
                                                                   -------        -------

Cash flows from investing activities -
    capital expenditures                                              (216)          (282)
                                                                   -------        -------

Cash flows from financing activities:

    Net increase (decrease) in line of credit                         (205)            18
    Proceeds received from sale of subsidiary                           --          1,000
    Repayments of long-term debt                                      (285)          (240)
    Repayments of bridge loan                                         (995)          (220)
                                                                   -------        -------
Net cash provided by (used in) financing activities                 (1,485)           558
                                                                   -------        -------

Effect of exchange rate changes on cash and cash equivalents            52              8
                                                                   -------        -------
Net change in cash and cash equivalents                             (1,942)          (662)
                                                                   -------        -------
Cash and cash equivalents at beginning of period                     2,645          1,019
                                                                   -------        -------
Cash and cash equivalents at end of period                         $   703        $   357
                                                                   =======        =======
</TABLE>


Supplemental disclosure of non-cash investing and financing activities (See
Notes 6 and 7)



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


                                       -4-
<PAGE>

                             MAI Systems Corporation
              Notes to Condensed Consolidated Financial Statements
                      Nine Months ended September 30, 2001
                                   (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 as amended for the year ended December 31,
        2000, which is on file with the SEC.

2.      INVENTORIES

        Inventories are summarized as follows:

<TABLE>
<CAPTION>
                                           December 31,    September 30,
                                               2000            2001
                                               ----            ----
                                              (dollars in thousands)
<S>                                            <C>             <C>
        Finished goods                         $124            $145
        Replacement parts                       201              67
                                               ----            ----
                                               $325            $212
                                               ====            ====
</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 October 31, 2001, 6,758,251 shares of Common Stock had
        been issued pursuant to the Plan and were outstanding.

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.

        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 by $931,000 and approximately 100,650 shares will
        be released from the escrow account and returned to the Company. In
        addition, further claims by the Company against HIS relating to legal
        costs and certain disbursements currently estimated at $650,000 are
        presently pending. Resolution of such claims


                                      -5-
<PAGE>

        may result in release of additional escrow shares to the Company. Upon
        settlement, the Company may, 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. This adjustment applies to a maximum of 73,466
        shares of Common Stock. As of September 30, 2001, the fair market value
        of the Company's common stock was $0.35 per share, which would result in
        approximately 2,370,000 additional shares being issued. Also, included
        in the escrow account at September 30, 2001 is 200,000 shares of Common
        Stock which do not have a guarantee of value. The amount and number of
        shares will be determined based on the final resolution of such claims.
        Accordingly, as of September 30, 2001, the final purchase price has not
        been determined.

5.      BUSINESS DIVESTITURES

        On June 19, 1999, the Company sold GSI for an amount in excess of the
        book value of net assets sold. Assets sold of approximately $3,749,000
        consisted of accounts receivable of $1,514,000, inventories of $364,000,
        furniture, fixtures and equipment of $218,000, intangible assets of
        $1,573,000 and prepaid expenses of $80,000. Liabilities assumed by the
        buyer consisted of accounts payable and accrued liabilities of $197,000,
        deposits of $100,000, unearned revenue of $351,000 and long-term debt of
        446,000. The Company received three promissory notes totaling $4,925,000
        with face values of $1,100,000, $1,500,000 and $2,325,000, respectively.
        Interest was 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 promissory
        note was guaranteed by a third party. Principal payments and interest,
        at prime plus 1%, was to commence for the $2,325,000 promissory note on
        October 1, 2002 in 48 monthly installments of approximately $48,000 of
        principal, plus accrued interest.

        Imputing interest at a rate of 10%, the present value of the $2,325,000
        promissory note at the date of sale was $1,682,000 which resulted in a
        combined carrying value of $4,282,000 for all three promissory notes.
        The gain on sale of $1,227,000 had been deferred until collection of the
        proceeds representing the gain can be assured. As of December 31, 2000,
        the Notes were held for sale and were written down to an amount which
        approximated their estimated net realizable value of $2,700,000.

        On April 6, 2001 the Company entered into an agreement with the maker of
        the Notes whereby the maker reconveyed 100% of the common stock of GSI
        to the Company for the purpose of selling GSI to a third party. In
        connection with the agreement, the Company canceled the Notes and
        entered into a new $1.1 million secured promissory note with the same
        party. The maker will be paid a commission of 30% of the future sale
        price, which will be first applied to the $1.1 million note and paid in
        cash to the maker thereafter. On July 27, 2001, the Company entered into
        an Asset Purchase Agreement ("Agreement") with the third party for
        approximately $3.2 million whereby all of the assets of GSI were
        acquired and all of the liabilities assumed, except for approximately
        $300,000 of obligations, which will remain with GSI. The payment terms
        under the Agreement require a $1 million non-refundable cash payment to
        the Company, which was received on July 27, 2001, and a $1.5 million
        payment to be paid the earlier of 120 days from the Agreement date or
        the date the buyer receives the requisite licenses and approvals in all
        gaming jurisdictions. Upon receipt of the $1.5 million payment, the
        third party will also be required to pay $500,000 in April 2002 and the
        remaining $500,000 in January 2003 subject to a maximum of $250,000
        reduction pursuant to the resolution of certain uncertainties as of the
        date of the Agreement. As of July 27, 2001, current assets and current
        liabilities of GSI were approximately $1.9 million and $2.7 million,
        respectively. In the event that the buyer does not receive certain
        licenses or approvals from the respective gaming authorities, the buyer
        shall have the right to cancel the Agreement and return the GSI business
        to the Company, including its assets and employees to the Company with
        no further obligation. The Company has deferred any gain due to the
        contingent nature of this sales transaction. The Company believes that
        the $1.7 million carrying value is recoverable and, accordingly, is
        classified as current in the accompanying consolidated balance sheets.

        On October 9, 2001, the Company sold certain rights under customer
        contracts together with the related assets and liabilities of its
        domestic Legacy hardware maintenance division to the third party which
        currently provides the on-site repair and warranty service to the
        Company's Legacy hardware maintenance customers. Pursuant to the
        agreement, the Company retained the software maintenance component of
        the customer contracts and will continue to provide the software support
        services directly to the domestic Legacy customer base. Additionally,
        the third party will be required to pay the Company approximately 15% of
        the third party's hardware maintenance revenue stream relating to the
        hardware maintenance customer contracts subsequent to October 31, 2003.
        In connection with the sale, the Company received $328,000 in cash and
        sold approximately $119,000 of assets consisting of inventory, spare
        parts, fixed assets and certain accounts receivable. The third party
        also assumed approximately $978,000 of liabilities consisting of


                                      -6-
<PAGE>

        accrued liabilities of approximately $366,000 and deferred revenue of
        approximately $612,000. The sale resulted in a gain of approximately
        $1,187,000 in October 2001.

6.      LINE OF CREDIT, BRIDGE LOAN AND LONG-TERM DEBT

        On July 28, 1999, the Company obtained a Bridge Loan from Coast Business
        Credit ("Coast") in the amount of $2,000,000. The Bridge Loan originally
        bore interest at prime plus 5% (prime plus 8% when default interest
        rates apply) and was payable interest only on a monthly basis with all
        accrued and unpaid principal and interest due on the earlier of June 30,
        2000 or the date the Company receives a debt or equity infusion of at
        least $10,000,000. Loan origination fees of $75,000 paid to Coast in
        connection with the Bridge Loan are included in prepaids and other
        assets and are being amortized to interest expense over the term of the
        loan. Due to a temporary event of default on the Bridge Loan and the
        secured revolving credit facility and pursuant to a forbearance
        agreement with Coast, the Company began making weekly principal payments
        of $25,000 on the Bridge Loan commencing in September 1999. During the
        default period, the Company also paid $40,000 in default fees to Coast
        in 1999 and $30,000 in 2000.

        In April 1998, the Company negotiated a $5,000,000 secured revolving
        credit facility with Coast. The availability of this facility is based
        on a calculation using a rolling average of certain cash collections.
        The facility was amended on July 28, 1999 to allow for aggregate
        borrowings on an interest only basis under the credit facility and
        Bridge Loan not to exceed $6,000,000. The facility is secured by all
        assets, including intellectual property of the Company, and bears
        interest at prime plus 2.25% (prime plus 5.25% when default interest
        rates apply) and expires on April 30, 2003. The facility was again
        amended on April 13, 2000 and September 12, 2000. In accordance with the
        amendments, the Bridge Loan and the credit facility bear interest at
        prime plus 4.5% and required $35,000 weekly principal payments on the
        Bridge Loan, except for the period from September 12, 2000 through
        December 8, 2000, which required monthly payments of $35,000, until it
        was paid in full. During the first quarter of 2001, the remaining
        balance of the Bridge Loan was repaid in full. Additionally, the credit
        facility was amended to allow for aggregate borrowings on an interest
        only basis under the credit facility not to exceed $3,360,000. In
        connection with the amendment on April 13, 2000, Coast waived all
        existing defaults. Additionally, the Company agreed to pay Coast a fee
        of $300,000 ("Loan Fee") in weekly installments of $35,000 commencing
        after the Bridge Loan is paid in full. The Loan Fee was fully paid by
        April 23, 2001. The facility contains various restrictions and
        covenants, including a minimum consolidated net worth, debt coverage
        ratio and minimum quarterly profitability. The Company was in compliance
        with these covenants as of September 30, 2001.

        At December 31, 2000 and September 30, 2001, approximately $2,579,000
        and $2,597,000, respectively, was available and drawn down under the
        credit facility.

        Loan restructuring fees of $300,000 were incurred in connection with the
        line of credit and Bridge Loan, are classified in prepaids and other
        current assets and are being amortized to interest expense over the term
        of the facility.

        In March 1997 the Company issued $6,000,000 of 11% subordinated notes
        payable due in 2004 to an investment fund managed by Canyon Capital
        Management LP ("Canyon"). In September 1997 this indebtedness was
        reduced to $5,250,000 through application of a portion of the proceeds
        realized from the exercise of warrants by Canyon. The notes call for
        semi-annual interest payments. On September 3, 1999, the Company failed
        to make the semi-annual interest payment due on that date in the amount
        of $288,750.

        The Company and Canyon subsequently entered into a forbearance agreement
        which provided that the Company pay Canyon weekly interest payments of
        $12,500 effective January 1, 2000. In addition, the Company executed a
        security agreement, which provided Canyon with a lien on all of the
        Company's tangible and intangible property, which lien is junior to the
        lien granted to Coast.

        On April 13, 2000, the Company entered into an agreement with Canyon
        which waived all existing events of default, accelerated the maturity
        date to March 3, 2003 and provided for continued weekly interest
        payments of $12,500. On January 31, 2001, the Company entered into an
        agreement with Canyon whereby the specified accrued interest of $431,000
        was added to the principal balance of the subordinated notes payable. As
        part of this agreement, the Company also agreed to pay Canyon an
        additional $79,000 loan fee, of which $29,000 was added to principal.

7.      COMMON STOCK


                                      -7-
<PAGE>

        In January and February of 2001, the Company entered into agreements
        with several creditors to retire approximately $2.1 million of
        obligations outstanding as of December 31, 2000 in exchange for 798,000
        shares of Common Stock and $470,000 of cash. This resulted in a gain of
        $1,377,000 in the first quarter of 2001. To fulfill its performance
        under the agreement, the Company issued the 798,000 shares of its Common
        Stock and filed an S-3 Registration statement in March 2001 to cause
        them to become tradable with the effectiveness of the Registration
        Statement. The S-3 Registration Statement was declared effective by the
        Securities Exchange Commission on October 30, 2001. As of October 31,
        2001 the Company has paid approximately $362,000 pursuant to these
        agreements with the remainder to be paid over the next thirteen months.

        In May 2001, the Company issued 35,000 shares of its Common Stock valued
        at $12,000, its fair market value at the date of issuance, to a creditor
        to satisfy certain of its obligations.

8.      INCOME (LOSS) PER SHARE OF COMMON STOCK

        Basic and diluted income or loss per share is computed using the
        weighted average shares of common stock outstanding during the period.
        Consideration is also given in the diluted income per share calculation
        for the dilutive effect of stock options and warrants.

        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 Ended     For The Nine Months Ended
                                                     September 30,                 September 30,
                                              --------------------------     -------------------------
                                                  2000           2001           2000           2001
                                                  ----           ----           ----           ----
                                               (in thousands, except per      (in thousands, except per
                                                      share data)                    share data)
<S>                                            <C>              <C>           <C>             <C>
Numerator:

Numerator for basic and diluted earnings
  per share - net income                       $    1,129       $   411       $     242       $ 2,099
                                               ==========       =======       =========       =======

Denominator:

Denominator for basic earnings per
  Share-weighted average number of
  Common shares outstanding during
  the period                                       10,907        13,691          10,907        12,922

Incremental common shares attributable
  To exercise of outstanding options                   --           237              --           191
                                               ----------       -------       ---------       -------

Denominator for diluted earnings
  Per share                                        10,907        13,928          10,907        13,113
                                               ==========       =======       =========       =======

Basic earnings per share                       $     0.10       $  0.03       $    0.02       $  0.16
                                               ==========       =======       =========       =======

Diluted earnings per share                     $     0.10       $  0.03       $    0.02       $  0.16
                                               ==========       =======       =========       =======
</TABLE>

9.      ACCOUNTING PRONOUNCEMENTS


                                      -8-
<PAGE>

        In July 2001, the FASB issued SFAS No. 141 "Business Combinations". This
        statement requires that all business initiated after June 30,2001 be
        accounted for by a single method - the purchase method. It also sets
        forth criteria for the identification of intangible assets apart from
        goodwill. At the same time, the FASB also issued SFAS No. 142 "Goodwill
        and Other Intangible Assets". This statement addresses how goodwill and
        other intangible assets should be accounted for after they have been
        initially recognized in financial statements. Specifically, SFAS No. 142
        requires that goodwill be tested for impairment annually and that
        amortization of goodwill cease. SFAS No. 142 is required to be
        implemented by the Company commencing on January 1, 2002. The Company is
        currently assessing the impact these new standards will have on the
        Company's results. Goodwill amortization was $413,000 and $142,000 for
        the three months ended September 30, 2001 and 2000 respectively, and
        $1,240,000 and $1,282,000 for the nine months ended September 30, 2001
        and 2000 respectively.

        On October 3, 2001, the Financial Accounting Standards Board issued FASB
        Statement No. 144, Accounting for the Impairment or Disposal of Long
        -Lived Assets, which addresses financial accounting and reporting for
        the impairment or disposal of long-lived assets. While Statement No. 144
        supersedes FASB Statement No. 121, Accounting for the Impairment of Long
        -Lived Assets and for Long-Lived Assets for Be Disposed Of, it retains
        many of the fundamental provisions of that Statement.

        Statement No. 144 also supersedes the accounting and reporting
        provisions of APB Opinion No. 30, Reporting the Results of
        Operations-Reporting the Effects of Disposal of a Segment of a Business,
        and Extraodinary, Unusual and Infrequently Occurring Events and
        Transactions, for the disposal of a segment of a business. However, it
        retains the requirement in Opinion 30 to report separately discounted
        operations and extends that reporting to a component of an entity that
        either has been disposed of (by sale, abandonment, or in a distribution
        to owners) or is classified as held for sale. By broadening the
        presentation of discounted operations to include more disposal
        transactions, the FASB has enhanced managements ability to provide
        information that helps financial statement users to assess the effects
        of a disposal transaction on the ongoing operations of an entity.

        Statement No. 144 is effective for fiscal years beginning after December
        15, 2001 and interim periods within those fiscal years. Early
        application is encouraged.

10.     LEGAL PROCEEDINGS

        Chapter 11 Bankruptcy Proceedings

        At September 30, 2001, 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

        CSA is a 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 its
        common stock worth approximately $4.8 million in August 1996, which
        amount had increased to approximately $6.8 million as of December 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 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. 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 with
        the SEC. On March 6, 2000, the Company answered the complaint. Because
        the Company did not conclude the registration statement filing by
        November 1, 1999, CSA initiated a second lawsuit in January 2000 to
        enforce the settlement agreement and secure injunctive relief through
        court order to cause the Company to file a registration statement.


                                      -9-
<PAGE>

        The Company entered into a second settlement agreement with CSA in
        February 2001, whereby it agreed to take the following steps on or
        before March 1, 2001: (i) issue CSA additional shares of its Common
        Stock to bring CSA's total share ownership to 2,433,333 shares; (ii)
        immediately file a registration statement for all of CSA's shares of our
        common stock; and (iii) execute a secured debt instrument in favor of
        CSA in the principal sum of $2,800,000 which is subordinate only to our
        present group of three (3) senior secured leaders and requires cash
        installment payments to commence June 1, 2002. The number of shares
        which may be sold by the selling shareholder includes: (i) CSA's current
        ownership of 517,319 shares, and (ii) 1,916,014 additional shares which
        were issued to CSA pursuant to the settlement agreement. On October 30,
        2001 the Securities and Exchange Commission declared the registration
        statement effective and as of that date CSA's shares freely tradable.

        In connection with the second settlement agreement with CSA, the Company
        recorded the $2.8 million debt issuance as a reduction in paid in
        capital and the 1,916,014 additional shares at par as an addition to
        common stock and a reduction to additional paid in capital. The $2.8
        million of debt accrues interest at 10% per annum and requires payments
        of $37,500 commencing on March 1, 2002 through September 1, 2002 and
        monthly payments of $107,500 commencing on October 1, 2002 until all
        outstanding principal and accrued interest is paid in full. In any
        event, payment of any unpaid principal and accrued interest is due by
        October 1, 2003.

        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.

11.     COMPREHENSIVE 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 (in thousands):

<TABLE>
<CAPTION>
                                         For The Three Months Ended    For The Nine Months Ended
                                                  September 30,             September 30,
                                         --------------------------    -------------------------
                                            2000              2001      2000            2001
                                            ----              ----      ----            ----
<S>                                        <C>                <C>       <C>            <C>
Net income                                 $ 1,129            $411      $242           $2,099

Change in cumulative translation
adjustments                                   (194)             46        40               56
                                           -------            ----      ----           ------

Comprehensive income                       $   935            $457      $282           $2,155
                                           =======            ====      ====           ======
</TABLE>

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


                                      -10-
<PAGE>

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

LIQUIDITY AND CAPITAL RESOURCES

At September 30, 2001, working capital improved from a working capital
deficiency of $10,811,000 at December 31, 2000 to a working capital deficiency
of $5,391,000. Excluding unearned revenue of $3,841,000, the Company's working
capital deficiency at September 30, 2001 would be $1,550,000 or a ratio of
current assets to current liabilities of 0.82 to 1.0. Excluding unearned
revenue, working capital deficiency at December 31, 2000 was $5,388,000, with a
current ratio of 0.63 to 1.0. Excluding unearned revenue, the decrease in the
working capital deficiency of $3,838,000 was primarily attributable to decreases
in the Coast Bridge Loan of $220,000, accounts payable of $4,064,000 (mainly due
to vendor settlements described in Note 7 to the consolidated financials
statements), deposits of $894,000, accrued liabilities of $650,000 and unearned
revenue of $1,582,000 offset by decreases in cash of $662,000, receivables of
$964,000 and notes receivable/investment in subsidiary held for sale of
$1,000,000 (which represents a non refundable deposit received from the sale of
GSI on July 27, 2001).

Cash was $357,000 at September 30, 2001, as compared to $1,019,000 at December
31, 2000. Availability under the Company's secured revolving credit facility is
based on a calculation using a rolling average of certain cash collections. At
September 30, 2001, approximately $2,597,000 was available and drawn down under
this facility. The facility expires on April 30, 2003.

Net cash used in investing activities for the nine months ended September 30,
2001, totaled $282,000, which represented capital expenditures.

Net cash provided by financing activities for the nine months ended September
30, 2001 totaled $558,000, which is comprised of a $1 million non-refundable
cash deposit received in connection with the sale of GSI on July 27, 2001 and an
$18,000 increase in the secured revolving credit facility offset by $240,000 and
$220,000 in repayments of long-term debt and Bridge Loan, respectively. The
revolving credit facility requires monthly interest only payments on the average
outstanding balance for the period. The Company is required to make weekly
payments of $12,500 on the subordinated debt. The facility, and subordinated
debt pursuant to an intercreditor agreement between Canyon Capital and Coast
Business Credit, contains various restrictions and convenants, including an
adjusted minimum consolidated net worth of ($4,466,000) as of September 30,
2001, minimum quarterly debt coverage ratio of 1.1:1 and minimum quarterly
profitability of $250,000. We were in compliance with these covenants as of
September 30, 2001. In the event that we are not in compliance with the various
restrictions and covenants and were unable to receive waivers for
non-compliance, the facility and subordinated debt would become immediately due
and payable. The restrictions and covenants are assessed quarterly.

Stockholders' deficiency increased from $12,110,000 at December 31, 2000 to
$12,516,000 at September 30, 2001, mainly as a result of a reduction to
additional paid in capital relating to final resolution of the settlement with
CSA. Principal and interest payments on $2.8 million of CSA debt commence on
March 1, 2002. The decrease was offset by net income for the period of
$2,099,000 and approximately $240,000 of common stock issued during the first
six months of 2001.

Net cash used in operating activities for the nine months ended September 30,
2001 totaled $946,000 and mainly related to decreases in accounts payable and
customer deposits of $3,392,000, accrued liabilities of $125,000, income taxes
payable of $79,000, unearned revenue of $1,582,000 and a gain recorded in the
first half of 2001 on the issuance of common stock for settlement of vendor
obligations of $1,377,000 offset by net income for the period of $2,099,000,
non-cash charges for depreciation and amortization of tangible and intangible
assets, of $2,817,000 and a provision for doubtful accounts receivable of
$411,000. The Company expects that it will generate cash from its operating
activities during the next twelve months.

Although the Company has a net stockholders' deficiency of $12,516,000 at
September 30, 2001, the Company believes it will generate sufficient funds from
operations and obtain additional financing, as needed, in 2001 to meet its
operating and capital requirements. The Company expects to generate positive
cashflow during 2001 from shipping out products and services from its $15
million backlog as of September 30, 2001 as well as new orders. Also, the
Company entered into an agreement for the sale of its investment in GSI for
approximately $3.2 million, subject to adjustment, and has received a $1 million
non-refundable cash deposit on July 27, 2001. Subject to certain contingencies
being resolved, the Company will receive $1,500,000 by December 2001, $500,000
in April 2002 and the balance in January 2003.

Lastly, the Company has historically been successful in securing additional
capital, when needed, to meet operating and capital requirements.


                                      -11-
<PAGE>

                              RESULTS OF OPERATIONS

                     Three Months Ended September 30, 2000
                Compared to Three Months Ended September 30, 2001

<TABLE>
<CAPTION>
                                     Three Months Ended    Percentage   Three Months Ended    Percentage
                                     September 30, 2000    of Revenue   September 30, 2001    of Revenue
                                     ------------------    ----------   ------------------    ----------
                                       (in thousands)                     (in thousands)
<S>                                  <C>                   <C>          <C>                   <C>
Revenues:
  Hospitality                              $7,750              79.1%         $ 6,103             82.0%
  Process Manufacturing                       849               8.7%             482              6.5%
  Legacy                                    1,195              12.2%             860             11.5%
  Total revenue                             9,794             100.0%           7,445            100.0%
Gross profit                                5,534              56.5%           5,159             69.3%
Selling, general &
  Administrative expenses                   2,500              25.5%           2,474             33.2%
Research and development
  costs                                       906               9.3%           1,213             16.3%
Amortization of intangibles                   649               6.6%             664              8.9%
Other operating (income)/expense               53               0.5%             (10)            (0.1)%
</TABLE>

Revenue for the quarter ended September 30, 2001 was $7,445,000 compared to
$9,794,000 in 2000, a decrease of $2,349,000 or a 24.0% decrease. We continue to
transition from our legacy business to the sale of enterprise solutions as 88.4%
of our 2001 revenue resulted from our enterprise solutions business as compared
to 87.8% in 2000. Our revenue from our sales of enterprise solutions in
industries in which we compete (hospitality and process manufacturing),
decreased 23.4% compared to the prior quarter of 2000. Hospitality revenue
decreased 21.3% from $7,750,000 in 2000 to $6,103,000 in 2001, as a result of
decreased software sales and professional services mainly due to decreased
market spending on information technology in 2001 due to economic uncertainties
in the industry. Process Manufacturing decreased from $849,000 in 2000 to
$482,000 in 2001,a decrease of $367,000 or a 43.2% decrease, as the process
business unit transitioned from a direct selling model to a reseller model and
completed development of new products. During 2000, we focused on developing
enhancements to our CIMPRO V and CIMPRO classic process manufacturing products
which were released in the first quarter of 2001. Consistent with our strategy
to focus on providing software and services to our vertical markets, our legacy
revenue (traditional hardware contract service revenues and proprietary add-on
sales) declined 28.0% quarter over quarter, largely due to expected decreased
volume and customers replacing their legacy systems due to Year 2000 compliance.

The decrease in revenue for our hospitality, process manufacturing and legacy
business units from 2000 to 2001 were mainly attributable to a decrease in the
volume of sales. Our respective business units continue to generate sufficient
cash from operations to adequately fund the respective ongoing operating
activities.

Revenue in our Asian hospitality operations decreased from $1,402,000 in 2000 to
$835,000 in 2001. The deterioration of revenue from 2000 to 2001 is mainly due
to the continued generally depressed condition of the Asian economies resulting
in a decrease in sales in the region.

Gross profit increased to 69.3% in 2001 from 56.5% in 2000 due to a decrease of
professional and software support costs which generated gross margins of 42% and
93% respectively in 2001 and 25% and 68% respectively in 2000.

Selling, general and administrative expenses ("SG&A") decreased 1.04% from
$2,500,000 in 2000 to $2,474,000 in 2001. The decrease is mainly due to
decreased payroll and facilities costs and the reduction in the use of third
party service providers for the Company's hospitality division. As a result,
SG&A for the Company's hospitality division decreased from $1,937,000 in 2000 to
$1,817,000 in 2001.

Research and development costs increased 34% over the comparable period in 2000.
This is primarily a result of increased headcount in the Company's hospitality
division and an increase in the use of contracted research and development
personnel in 2001. Research and development costs for the hospitality division
increased from $653,000 in 2000 to $1,114,000 in 2001 as a result of the
Company's efforts and focus on new product development as well as enhancements
to its current products.


                                      -12-
<PAGE>

The 2.3% increase in amortization of intangibles versus the comparable period of
2000 is due to the increased amortization expense associated with capitalized
software development costs at the Company's Process Manufacturing division.

                      Nine Months Ended September 30, 2000
                Compared to Nine Months Ended September 30, 2001

<TABLE>
<CAPTION>
                                     Nine Months Ended    Percentage   Nine Months Ended    Percentage
                                     September 30, 2000   of Revenue   September 30, 2001   of Revenue
                                     ------------------   ----------   ------------------   ----------
                                       (in thousands)                    (in thousands)
<S>                                  <C>                  <C>          <C>                  <C>
Revenues:
  Hospitality                              $20,403           71.1%          $ 18,873            80.9%
  Process Manufacturing                      3,382           11.8%             1,566             6.7%
  Legacy                                     4,898           17.1%             2,885            12.4%
  Total revenue                             28,683          100.0%            23,324           100.0%
Gross profit                                15,050           52.5%            15,001            64.3%
Selling, general &
  Administrative expenses                    8,757           30.5%             7,318            31.4%
Research and development
  Costs                                      3,104           10.8%             3,703            15.9%
Amortization of intangibles                  1,946            6.8%             1,993             8.5%
Other operating (income) expense               111            0.4%            (1,406)           (6.02%)
</TABLE>

Revenue for 2000 was $28,683,000 compared to $23,324,000 in 2001 or a 18.7%
decrease. We continue to transition from our legacy business to the sale of
enterprise solutions as 87.6% of our 2001 revenue resulted from our enterprise
solutions business as compared to 82.9% in 2000. Process Manufacturing decreased
from $3,382,000 in 2000 to $1,566,000 in 2001 as the process business unit
transitioned from a direct selling model to a reseller model and completed
development of new products. During 2000, we focused on developing enhancements
to our CIMPRO V and CIMPRO classic process manufacturing products which were
released in the first quarter of 2001. Consistent with our strategy to focus on
providing software and services to our vertical markets, our legacy revenue
(traditional hardware contract service revenues and proprietary add-on sales)
declined 41.1% year over year, largely due to expected decreased volume and
customers replacing their legacy systems due to Year 2000 compliance.

The decrease in revenue for our process manufacturing and legacy business units
from 2000 to 2001 were mainly attributable to a decrease in the volume of sales.
Our respective business units continue to generate sufficient cash from
operations to adequately fund the respective ongoing operating activities.

Revenue in our Asian hospitality operations decreased from $3,077,000 in 2000 to
$1,907,000 in 2001. The deterioration of revenue from 2000 to 2001 is mainly due
to the continued generally depressed condition of the Asian economies resulting
in a decrease in sales in the region.

Gross profit increased to 64.3% in 2001 from 52.5% in 2000 due to a decrease of
professional and software support services costs which generated gross margins
of 33% and 91% respectively in 2001 and 19% and 70% respectively in 2000.

Selling, general and administrative expenses ("SG&A") decreased 16.4% from
$8,757,000 in 2000 to $7,318,000 in 2001. The decrease is mainly due to
decreased payroll and facilities costs and the reduction in the use of third
party service providers for the Company's hospitality division. As a result,
SG&A for the Company's hospitality division decreased from $6,726,000 in 2000 to
$5,308,000 in 2001.

Research and development costs increased 19.3% over the comparable period in
2000. This is primarily a result of increased headcount in the Company's
hospitality division and an increase in the use of contracted research and
development personnel in 2001. Research and development costs for the
hospitality division increased from $2,345,000 in 2000 to $3,289,000 in 2001 as
a result of the Company's efforts and focus on new product development as well
as enhancements to its current products.

The 2.5% increase in amortization of intangibles versus the comparable period of
2000 is due to the increased amortization expense associated with capitalized
software development costs at the Company's Process Manufacturing division.


                                      -13-
<PAGE>

Other operating income was $1,406,000 in 2001 mainly as a result of the Company
issuing common stock to certain creditors to satisfy its obligations which
resulted in a gain of $1,377,000 in the first quarter of 2001. There were no
such transactions in 2000.

ACCOUNTING PRONOUNCEMENTS

In July 2001, the FASB issued SFAS No. 141 "Business Combinations". This
statement requires that all business initiated after June 30,2001 be accounted
for by a single method - the purchase method. It also sets forth criteria for
the identification of intangible assets apart from goodwill. At the same time,
the FASB also issued SFAS No. 142 "Goodwill and Other Intangible Assets". This
statement addresses how goodwill and other intangible assets should be accounted
for after they have been initially recognized in financial statements.
Specifically, SFAS No. 142 requires that goodwill be tested for impairment
annually and that amortization of goodwill cease. SFAS No. 142 is required to be
implemented by the Company commencing on January 1, 2002. The Company is
currently assessing the impact these new standards will have on the Company's
results. Goodwill amortization was $413,000 and $142,000 for the three months
ended September 30, 2001 and 2000 respectively, and $1,240,000 and $1,282,000
for the nine months ended September 30, 2001 and 2000 respectively.

On October 3, 2001, the Financial Accounting Standards Board issued FASB
Statement No. 144, Accounting for the Impairment or Disposal of Long -Lived
Assets, which addresses financial accounting and reporting for the impairment or
disposal of long-lived assets. While Statement No. 144 supersedes FASB Statement
No. 121, Accounting for the Impairment of Long -Lived Assets and for Long-Lived
Assets for Be Disposed Of, it retains many of the fundamental provisions of that
Statement.

Statement No. 144 also supersedes the accounting and reporting provisions of APB
Opinion No. 30, Reporting the Results of Operations-Reporting the Effects of
Disposal of a Segment of a Business, and Extraodinary, Unusual and Infrequently
Occurring Events and Transactions, for the disposal of a segment of a business.
However, it retains the requirement in Opinion 30 to report separately
discounted operations and extends that reporting to a component of an entity
that either has been disposed of (by sale, abandonment, or in a distribution to
owners) or is classified as held for sale. By broadening the presentation of
discounted operations to include more disposal transactions, the FASB has
enhanced managements ability to provide information that helps financial
statement users to assess the effects of a disposal transaction on the ongoing
operations of an entity.

Statement No. 144 is effective for fiscal years beginning after December 15,
2001 and interim periods within those fiscal years. Early application is
encouraged.


                                      -14-
<PAGE>

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 $11.6 million principal amount of indebtedness at
        September 30, 2001, $2.6 million bears interest at a rate that
        fluctuates based on changes in prime rate. A one percentage point change
        in the underlying prime rate would result in a $26,000 change in the
        annual amount of interest payable on such debt. Of the remaining amount
        of $9.0 million, $5.7 million bears interest at a fixed rate of 11%,
        $2.9 million bears interest at a fixed rate of 10% and $436,000 bears
        fixed interest rates ranging from 6% to 17.5%.

        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. The
        currency exchange impact on intercompany transactions was immaterial for
        the quarter ended September 30, 2001.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

        Chapter 11 Bankruptcy Proceedings

        At September 30, 2001, 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

        CSA is a 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 its
        common stock worth approximately $4.8 million in August 1996, which
        amount had increased to approximately $6.8 million as of December 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 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. 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 with
        the SEC. On March 6, 2000, the Company answered the complaint. Because
        the Company did not conclude the registration statement filing by
        November 1, 1999, CSA initiated a second lawsuit in January 2000 to
        enforce the settlement agreement and secure injunctive relief through
        court order to cause us to file a registration statement.

        The Company entered into a second settlement agreement with CSA in
        February, 2001 whereby we agreed to take the


                                      -15-
<PAGE>

        following steps on or before March 1, 2001: (i) issue CSA additional
        shares of our common stock to bring CSA's total share ownership to
        2,433,333 shares; (ii) immediately file a registration statement for all
        of CSA's shares of our common stock; and (iii) execute a secured debt
        instrument in favor of CSA in the principal sum of $2,800,000 which is
        subordinate only to our present group of three (3) senior secured
        leaders and requires cash installment payments to commence June 1, 2002.
        The number of shares which may be sold by the selling shareholder
        includes: (i) CSA's current ownership of 517,319 shares, and (ii)
        1,916,014 additional shares which were issued to CSA pursuant to the
        settlement agreement. On October 30, 2001 the Securities and Exchange
        Commission declared the registration statement effective and as of that
        date CSA's shares freely tradable.

        In connection with the second settlement agreement with CSA, the Company
        recorded the $2.8 million debt issuance as a reduction in paid in
        capital and the 1,916,014 additional shares at par as an addition to
        common stock and a reduction to additional paid in capital. The $2.8
        million of debt accrues interest at 10% per annum and requires payments
        of $37,500 commencing on March 1, 2002 through September 1, 2002 and
        monthly payments of $107,500 commencing on October 1, 2002 until all
        outstanding principal and accrued interest is paid in full. In any
        event, payment of any unpaid principal and accrued interest is due by
        October 1, 2003.

        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 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

        (a)    None.

        (b)    None.

        (c)    None

        (d)    None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

        None

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

        (a)    None

        (b)    None

        (c)    None

        (d)    None

ITEM 5. OTHER INFORMATION

        None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

        (a)    None


                                      -16-
<PAGE>

        (b)    Reports on Form 8-K.

               None.

                                   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: November 13, 2001                 /s/James W. Dolan
                                        ----------------------------------------
                                        James W. Dolan
                                        Chief Financial and Operating Officer
                                        (Chief Financial and Accounting Officer)





                                      -17-