<PAGE>   1

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

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                              ---------------------

                                    FORM 10-Q

             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000

                           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  X      No
    ---        ---

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.

Yes  X    No
    ---      ---

As of October 19, 2000, 10,842,071 shares of the registrant's Common Stock,
$0.01 par value, were outstanding.

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

<PAGE>   2

PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                             MAI Systems Corporation
                      Condensed Consolidated Balance Sheets
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                   December 31,    September 30,
                                                                                       1999            2000
                                                                                   ------------    -------------
                                                                                       (dollars in thousands)
<S>                                                                                <C>             <C>

ASSETS

Current assets:
     Cash                                                                           $   2,645        $     703
     Receivables, less allowance for doubtful accounts of $3,622 in 1999
           and $3,144 in 2000                                                           7,189            4,796
     Inventories                                                                          625              434
     Notes receivable, less deferred gain of $1,227                                     2,700            2,700
     Prepaids and other assets                                                            782            1,011
                                                                                    ---------        ---------

              Total current assets                                                     13,941            9,644

Furniture, fixtures and equipment, net                                                  2,609            2,173
Intangibles, net                                                                        7,974            6,028
Other assets                                                                              106              110
                                                                                    ---------        ---------

              Total assets                                                          $  24,630        $  17,955
                                                                                    =========        =========

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current liabilities:
     Bridge Loan                                                                    $   1,450        $     455
     Current portion of long-term debt                                                    447              215
     Accounts payable                                                                  10,705            7,381
     Customer deposits                                                                  2,236            1,469
     Accrued liabilities                                                                5,136            4,856
     Income taxes payable                                                                 575              384
     Unearned revenue                                                                   7,773            6,829
                                                                                    ---------        ---------

              Total current liabilities                                                28,322           21,589

Line of credit                                                                          2,892            2,687
Long-term debt                                                                          5,270            5,217
Other liabilities                                                                         715              749
                                                                                    ---------        ---------

              Total liabilities                                                        37,199           30,242
                                                                                    ---------        ---------

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;
         10,906,658 shares issued and issuable at December 31, 1999                       112              112
         and September 30, 2000
     Additional paid-in capital                                                       220,567          220,567
     Accumulated other comprehensive income                                               494              534
     Accumulated deficit                                                             (233,742)        (233,500)
                                                                                    ---------        ---------

              Total stockholders' deficiency                                          (12,569)         (12,287)
                                                                                    ---------        ---------


              Total liabilities and stockholders' deficiency                        $  24,630        $  17,955
                                                                                    =========        =========
</TABLE>


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


                                     - 2 -
<PAGE>   3

                             MAI Systems Corporation
                 Condensed Consolidated Statements of Operations
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                     For the Three Months    For the Nine Months
                                                            Ended                   Ended
                                                        September 30,            September 30,
                                                     --------------------    --------------------
                                                       1999        2000        1999        2000
                                                     --------    --------    --------    --------
                                                    (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                            $  1,740    $  2,503    $ 10,033    $  5,867
           Network and computer equipment                 608         435       3,693       1,353
           Professional  services                       6,669       5,708      21,866      17,057
                                                     --------    --------    --------    --------
                                                        9,017       8,646      35,592      24,277

     Legacy revenue                                     2,398       1,148       8,192       4,406
                                                     --------    --------    --------    --------

                    Total revenue                      11,415       9,794      43,784      28,683

Direct costs                                            8,875       4,260      23,103      13,633
                                                     --------    --------    --------    --------

                    Gross profit                        2,540       5,534      20,681      15,050

Selling, general and administrative expenses            6,765       2,500      18,826       8,757
Research and development costs                          1,712         906       4,119       3,104
Amortization and impairment of intangibles                529         649       1,738       1,946
Other operating (income) expense, net                      13          53         (97)        111
                                                     --------    --------    --------    --------

                    Operating income (loss)            (6,479)      1,426      (3,905)      1,132

Equity in net losses of unconsolidated
  subsidiaries                                            (56)         --         (28)         --
Write-off of deferred financing costs                    (574)         --        (574)         --
Interest income                                            87         118         150         273
Interest expense                                         (434)       (377)     (1,084)     (1,125)
                                                     --------    --------    --------    --------

                    Income (loss) before income
                      taxes                            (7,456)      1,167      (5,441)        280

Provision for income taxes                                 --          38          --          38
                                                     --------    --------    --------    --------

Net income (loss)                                      (7,456)   $  1,129    $ (5,441)   $    242
                                                     ========    ========    ========    ========

Income (loss) per share:


Basic income (loss) per share                        $  (0.68)   $   0.10    $  (0.50)   $   0.02
                                                     ========    ========    ========    ========


Diluted income (loss) per share                      $  (0.68)   $   0.10    $  (0.50)   $   0.02
                                                     ========    ========    ========    ========

Weighted average common shares used in
  determining income (loss) per share:

     Basic                                             10,907      10,907      10,883      10,907
                                                     ========    ========    ========    ========

     Diluted                                           10,907      10,907      10,883      10,907
                                                     ========    ========    ========    ========
</TABLE>


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


                                     - 3 -
<PAGE>   4

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

<TABLE>
<CAPTION>
                                                        For the Nine Months Ended
                                                              September 30,
                                                        (in thousands, except per
                                                               share data)
                                                        -------------------------
                                                            1999       2000
                                                           -------    -------
<S>                                                        <C>        <C>

Net cash provided by (used in) operating activities        $ 1,776    $  (293)
                                                           -------    -------

Cash flows from investing activities:

         Capital expenditures                               (1,296)      (216)
         Capitalized software costs                         (1,345)        --
                                                           -------    -------

Net cash used in investing activities                       (2,641)      (216)
                                                           -------    -------

Cash flows from financing activities:

         Short-term borrowings, net                            291       (205)
         Proceeds from issuance of common stock, net           500         --
         Repayments of long-term debt                         (185)      (285)
         Proceeds from Bridge Loan                           2,000         --
         Repayments of Bridge Loan                            (250)      (995)
         Proceeds from the exercise of stock options and
           warrants                                              9         --
                                                           -------    -------


Net cash provided by (used in) financing activities          2,365     (1,485)
                                                           -------    -------

Effect of exchange rate changes on cash and cash
  equivalents                                                 (287)        52
                                                           -------    -------

Net change in cash and cash equivalents                      1,213     (1,942)
                                                           -------    -------

Cash and cash equivalents at beginning of period             2,029      2,645
                                                           -------    -------

Cash and cash equivalents at end of period                 $ 3,242    $   703
                                                           =======    =======
</TABLE>


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


                                     - 4 -
<PAGE>   5

                            MAI Systems Corporation
              Notes to Condensed Consolidated Financial Statements
                      Nine Months ended September 30, 2000
                                  (Unaudited)

1.       BASIS OF PRESENTATION

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

         Although the Company believes that the disclosures in these financial
         statements are adequate to make the information presented not
         misleading, certain information and footnote disclosures normally
         included in financial statements prepared in accordance with generally
         accepted accounting principles have been condensed or omitted pursuant
         to the rules and regulations of the Securities and Exchange Commission
         (the "SEC"), and these financial statements should be read in
         conjunction with the financial statements included in the Company's
         Annual Report on Form 10-K for the year ended December 31, 1999, which
         is on file with the SEC.

2.       INVENTORIES

         Inventories are summarized as follows:

<TABLE>
<CAPTION>
                                            December 31,        September 30,
                                                1999                2000
                                            ------------        -------------
                                                 (dollars in thousands)
<S>                                         <C>                 <C>

               Finished goods                   $251                $182
               Replacement parts                 374                 252
                                                ----                ----
                                                $625                $434
                                                ====                ====
</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 19, 2000, 6,758,251 shares of Common Stock had
         been issued pursuant to the Plan and were outstanding. The Company
         estimates that approximately 6,820,338 shares will have been issued to
         creditors at completion of the Plan.

4.       BUSINESS ACQUISITIONS

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

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


                                     - 5 -
<PAGE>   6

         In November 1997, the purchase price for the acquisition of HIS was
         reduced by $931,000 pursuant to arbitration proceedings. As a result,
         goodwill was reduced $931,000 and approximately 100,650 price protected
         shares will be released from the escrow account and returned to the
         Company. In addition, further claims relating to legal costs and
         certain disbursements currently estimated at approximately $650,000 are
         presently pending. Resolution of such claims may result in release of
         additional escrow shares to the Company. The amount and number of
         shares will be determined based on the final resolution of such claims.
         Accordingly, as of September 30, 2000, the final purchase price has not
         been determined.

         The Company will, as needed, pursuant to the asset purchase agreement
         and related documents, issue additional shares of Common Stock in order
         that the recipients ultimately receive shares worth a fair value of
         $9.25 per share (subject to increase in such amount to approximately
         $12.87 per share). This adjustment applies to a maximum of 590,785
         shares of Common Stock (see Note 10).

5.       BUSINESS DIVESTITURE

         On June 19, 1999, the Company sold its wholly owned subsidiary Gaming
         Systems International ("GSI") for an amount in excess of its book
         value. 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 is paid monthly at the rate of 10% per annum on
         both the $1,100,000 and $1,500,000 notes, with the principal due and
         payable on June 19, 2001 and June 19, 2003, respectively. The
         $1,100,000 promissory note is guaranteed by a third party. Principal
         payments and interest, at prime plus 1%, 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 resulting in a
         combined carrying value of $4,282,000 for all three promissory notes.
         The Company is amortizing the imputed interest over the contractual
         life of the promissory notes using the interest method. The gain on
         sale of $1,227,000 has been deferred until collection of the proceeds
         representing the gain can be assured. The promissory notes are
         currently held for sale and the Company has executed a letter of intent
         with a third party to sell the notes at an amount approximately
         $355,000 less than the carrying value of such notes. Accordingly, the
         promissory notes have been written down to their estimated net
         realizable value of $2,700,000 and are classified as current in the
         accompanying consolidated balance sheets.

         Summarized below is historical financial information about GSI (in
         thousands):

<TABLE>
<CAPTION>
                                                   January 1, 1999 -
                                                     June 19, 1999
                                                   -----------------
<S>                                                <C>
               Revenue                                   $1,696
               Operating  income                             80
               Total assets at period end                 3,800
</TABLE>


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. The initial term of the Bridge Loan
         has been extended as described below. 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


                                     - 6 -
<PAGE>   7

         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, 2002. The facility was again
         amended on April 13, 2000. In accordance with the amendment, the Bridge
         Loan and the credit facility bear interest at prime plus 4.5% and
         require $35,000 weekly principal payments on the Bridge Loan until it
         is paid in full. As of September 30, 2000, the unpaid balance of the
         Bridge Loan was $455,000. 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, Coast waived all existing defaults. Additionally, the
         Company agreed to pay Coast a fee of $300,000 in weekly installments of
         $35,000 commencing after the Bridge Loan is paid in full. The Company
         is currently in discussions with Coast to restructure both the Bridge
         Loan and the credit facility. The facility contains various
         restrictions and convenants, 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,
         2000.

         At December 31, 1999 and September 30, 2000, approximately $2,892,000
         and $2,687,000, 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 indebtness 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. Accrued interest on the subordinated notes payable is
         $478,000 as of September 30, 2000.

         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 until the Coast Bridge Loan is paid in full. Upon
         repayment of the Bridge Loan, the Company will be required to pay
         Canyon weekly interest payments of $25,000 until all interest on the
         subordinated notes is paid in full. Thereafter, the Company will pay
         weekly interest payments of approximately $11,000.

7.       COMMON STOCK

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

8.       INCOME (LOSS) PER SHARE OF COMMON STOCK

         Effective December 31, 1997, the Company adopted SFAS No. 128,
         "Earnings Per Share". This statement replaces the previously reported
         primary and fully diluted earnings per share with basic and diluted
         earnings per share. Unlike primary earnings per share, basic earnings
         per share excludes any dilutive effects of options. Diluted earnings
         per share is very similar to the previously reported fully diluted
         earnings per share.

         Basic and diluted loss per share is computed using shares of common
         stock issued to date and expected to be issued in accordance with the
         Plan of Reorganization ("Common Stock") as discussed in Note 3. As of
         September 30, 2000, 6,758,251 shares had been issued pursuant to the
         Plan of Reorganization. All outstanding options and warrants have been
         excluded from diluted loss per share for loss periods presented as
         their effect would be anti-dilutive.


                                     - 7 -
<PAGE>   8

         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,
                                                ---------------------------        --------------------------
                                                   1999              2000             1999              2000
                                                ----------         --------        ----------         -------
                                                 (in thousands, except per         (in thousands, except per
                                                        share data)                        share data)
<S>                                             <C>                <C>             <C>                <C>
Numerator:

Numerator for basic and diluted earnings
   (loss) per share - net (loss) income         $   (7,456)        $  1,129        $   (5,441)        $   242
                                                ==========         ========        ==========         =======

Denominator:

Denominator for basic earnings (loss) per
   Share-weighted average number of
   Common shares outstanding during
   The period                                       10,907           10,907            10,883          10,907

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

Denominator for diluted earnings (loss)
   Per share                                        10,907           10,907            10,883          10,907
                                                ==========         ========        ==========         =======

Basic earnings (loss) per share                 $    (0.68)        $   0.10        $    (0.50)        $  0.02
                                                ==========         ========        ==========         =======

Diluted earnings (loss) per share               $    (0.68)        $   0.10        $    (0.50)        $  0.02
                                                ==========         ========        ==========         =======
</TABLE>


9.       ACCOUNTING PRONOUNCEMENTS

         In June 1998, the FASB issued SFAS No. 133 "Accounting for Derivative
         Instruments and Hedging Activities." SFAS No. 133, as amended, is
         effective for transactions entered into after January 1, 2001. This
         statement requires that all derivative instruments be recorded on the
         balance sheet at fair value. Changes in the fair value of derivatives
         are recorded each period in current earnings or other comprehensive
         income, depending on whether a derivative is designated as part of a
         hedge transaction and the type of hedge transaction. The ineffective
         portion of all hedges will be recognized in earnings. The Company is in
         the process of determining the impact that the adoption of SFAS No. 133
         will have on its results of operations and financial position.

         In December 1999, the SEC staff issued Staff Accounting Bulletin No.,
         101, "Revenue Recognition in Financial Statements" and in March 2000,
         the SEC staff issued Staff Accounting Bulletin No. 101A "Implementation
         Issues Related to SAB 101." In addition, in October 2000, the SEC staff
         issued a document containing answers to certain frequently asked
         questions ("FAQ") which further clarified certain accounting issues
         addressed in the bulletins relating to revenue recognition. These
         bulletins summarize certain of the staff's views about applying
         generally accepted accounting principles to revenue recognition in
         financial statements. The staff is providing this guidance due, in
         part, to the large number of revenue recognition issues that
         registrants encounter. The provisions of these pronouncements are
         effective for the Company commencing with the fourth quarter of 2000.
         Management is in the process of analyzing the implications of these
         bulletins and FAQ and is anticipating that further implementation
         guidance will be forthcoming from the SEC. Accordingly, there is
         uncertainty as to the ultimate impact to the Company in applying these
         bulletins.

10.      LEGAL PROCEEDINGS

         Chapter 11 Bankruptcy Proceedings

         At September 30, 2000, 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


                                     - 8 -
<PAGE>   9

         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")

         CSA is a Company shareholder. On August 9, 1996, the Company acquired
         from Hotel Information Systems, Inc. ("HIS") substantially all their
         assets and certain of their liabilities (the "HIS Acquisition"). At the
         time of the Company's acquisition of HIS in 1996, CSA was a shareholder
         of HIS and, in connection with the purchase, the Company agreed to
         issue to CSA shares of our common stock worth approximately $4.8
         million in August 1996, which amount has increased to approximately
         $6,657,000 as of September 30, 2000, pursuant to the agreement. The
         Company also granted CSA demand registration rights with respect to
         such stock. CSA requested registration of their shares, but the Company
         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 the Company in the U.S. District Court for the Central District
         of California. Pursuant to a settlement agreement entered into as of
         May 13, 1999 the Company agreed by November 1, 1999 to file, or at a
         minimum to commence the process to file, a registration statement with
         the Securities and Exchange Commission ("SEC") for the purpose of
         registering CSA's shares. The number of shares which may be sold by CSA
         includes: (i) CSA's current ownership of 590,785 shares, and (ii)
         17,162,000 additional shares, assuming a stock price of $0.375 per
         share, which the Company would issue to CSA in order for them to
         receive net proceeds of approximately $6,657,000 after deducting any
         discounts or commissions. The Company has not yet filed the
         registration statement called for by the settlement agreement. CSA
         initiated another lawsuit in December 1999 in the above-referenced
         court (a) seeking damages in excess of $5 million; (b) enforcement of
         the settlement agreement; and (c) injunctive relief through court order
         to cause the Company to file the S-1 registration statement. On March
         6, 2000, the Company answered the complaint. A trial date has been set
         for December 18, 2000. The Company is currently in discussions with CSA
         attempting to settle this matter.

         Enterprise Hospitality Solutions, Inc.

         On November, 30, 1999, Enterprise Hospitality Solutions, Inc. ("EHS")
         and Christian Rivadella commenced an action against the Company in the
         United States District Court for the Central District of California,
         alleging that the Company had failed to pay certain royalties to EHS
         under the parties' exclusive license agreement. The complaint asserted
         claims for breach of contract, unjust enrichment, accounting and unfair
         competition. The complaint sought damages, preliminary and permanent
         injunctive relief, imposition of a constructive trust, an order
         canceling the Company's exclusive right to license the software at
         issue under the parties' agreement, and the appointment of a receiver
         to conduct an audit. On February 1, 2000, the Company answered the
         complaint by denying its material allegations and asserted a
         counterclaim against the plaintiffs. The counterclaim asserted claims
         for breach of the parties exclusive license agreement, breach of the
         covenant of good faith and fair dealing, unfair business practices,
         interference with contractual relations and declaratory relief, and a
         declaration that the Company was not in breach of the parties' license
         agreement.

         Effective June 30, 2000, the parties entered into an agreement pursuant
         to which the Company acquired from EHS the exclusive worldwide
         marketing rights to the Lodging Touch products and the royalty free use
         of the Lodging Touch name and trademark. As part of that agreement, all
         prior agreements between the Company and EHS were terminated. The
         parties executed mutual general releases, and the litigation was
         dismissed with prejudice.

         Wang Global Corporation

         On December 2, 1996 the Company executed outsource agreements with
         Olivetti North America, Inc. ("ONA") in the United States and with
         Olivetti Canada Ltd. in Canada, for on-site repair and warranty service
         and telephonic support for the Company's Legacy customers. On July 26,
         1999, Wang Global Corporation ("Wang"), asserting that it was the
         parent of ONA, filed for arbitration in this matter, alleging breach of
         contract for payments due for maintenance services provided by Wang.
         Wang claims that the amounts due from the Company exceed $3.7 million.

         The Company filed a counterclaim for breach of contract and unfair
         business practices. The Company believes that to the extent any amounts
         are outstanding under the parties' agreement, the amount outstanding is
         significantly less than $3.7 million. Getronics Corporation
         ("Getronics") answered the Counterclaim in the arbitration, asserting
         that it was the successor-in-interest to ONA and Wang.


                                     - 9 -
<PAGE>   10

         On June 9, 2000, the Company filed a compliant in California Superior
         Court against Getronics seeking to enjoin it from proceeding with the
         arbitration on the grounds that the Company had not agreed to arbitrate
         with Getronics (the "Court Action"). On June 22, 2000, the arbitration
         was stayed pending the resolution of the Court Action.

         In September, the parties settled all of their disputes. Pursuant to
         that settlement,the parties dismissed the arbitration proceeding and
         terminated their outsourcing agreements. MAI agreed to pay Getronics a
         total of $1,124,000 payable as follows: (a) $134,000 on or before
         September 15, 2000, which has been paid; (b) $150,000 on or before June
         30, 2001; and (c) $35,000 on the first day of each month from October
         2000 through September 2002. Additionally, (a) MAI executed a security
         agreement in Getronics's favor in the amount of $2,000,000 on all of
         MAI's assets; (b) the parties mutually released all claims against each
         other, other than as stated in the Stipulation; and (c) Getronics
         agreed to provide services through September 15, 2000 at which time MAI
         assumed the responsibility of servicing its customers under hardware
         support service agreements.

         Other Litigation

         The Company is also involved in various other legal proceedings that
         are incidental 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 (LOSS) INCOME

         Net (loss) income reconciles to comprehensive (loss) income as follows:

<TABLE>
<CAPTION>
                                               For The Three Months Ended     For The Nine Months Ended
                                                      September 30,                   September 30,
                                               --------------------------     -------------------------
                                                  1999            2000            1999         2000
                                                 -------         -------         -------         ----
<S>                                              <C>             <C>             <C>             <C>

         Net (loss) income                       $(7,456)        $ 1,129         $(5,441)        $242

         Change in cumulative translation
         adjustments                                (179)           (194)           (287)          40
                                                 -------         -------         -------         ----


         Comprehensive (loss) income             $(7,653)        $   935         $(5,278)        $282
                                                 =======         =======         =======         ====
</TABLE>


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


                                     - 10 -
<PAGE>   11

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

LIQUIDITY AND CAPITAL RESOURCES

At September 30, 2000, working capital improved from a working capital
deficiency of $14,381,000 at December 31, 1999 to a working capital deficiency
of $11,945.000. Excluding unearned revenue of $6,829,000, the Company's working
capital deficiency at September 30, 2000 would be $5,116,000 or a ratio of
current assets to current liabilities of 0.65 to 1.0. Excluding unearned
revenue, working capital deficiency at December 31, 1999 was $6,608,000, with a
current ratio of 0.68 to 1.0. Excluding unearned revenue, the decrease in the
working capital deficiency of $1,492,000 was primarily attributable to an
increase in prepaids and other current assets of $229,000 and decreases in the
Coast Bridge Loan of $995,000, accounts payable of $3,324,000, deposits of
$767,000 and accrued liabilities of $280,000 offset by decreases in cash of
$1,942,000 and receivables of $2,393,000.

Cash was $703,000 at September 30, 2000, as compared to $2,645,000 at December
31, 1999. 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, 2000, approximately $2,687,000 was available and drawn down under
this facility. The facility expires on April 30, 2002.

Net cash used for investing activities for the nine months ended September 30,
2000, totaled $216,000, which represented capital expenditures.

Net cash used by financing activities for the nine months ended September 30,
2000 totaled $1,485,000, which is comprised of $285,000, $205,000 and $995,000
in repayments of long-term debt, secured credit facility and Bridge Loan,
respectively. The Company was temporarily in default on its revolving credit
facility, Bridge Loan and subordinated debt. On April 13, 2000, the Company
amended the respective loan agreements to waive all previous defaults and to
require weekly principal payments of $35,000 on the Bridge Loan and weekly
interest payments of $12,500 on the subordinated debt until the Bridge Loan is
paid in full, then interest payments of $25,000 per week on the subordinated
debt until all accrued and unpaid interest on the subordinated debt is paid in
full, then $11,000 per week in interest on the subordinated debt thereafter. The
facility contains various restrictions and convenants, 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, 2000.
Additionally, the Company will be required to pay Coast a fee of $300,000. The
Company is currently in discussions with Coast Business Credit to restructure
the Bridge Loan together with the secured revolving credit facility.

Stockholders' deficiency decreased from $12,569,000 at December 31, 1999 to
$12,287,000 at September 30, 2000, as a result of a net income for the period of
$242,000 and by an increase in accumulated comprehensive income of $40,000. The
Company has commitments in connection with lease commitments, which require
payments of approximately $1.6 million through 2001.

Net cash used in operating activities for the nine months ended September 30,
2000 totaled $293,000 and mainly related to the decreases in accounts payable
and customer deposits of $4,091,000, income taxes payable of $191,000, accrued
liabilities of $580,000 and unearned revenue of $944,000 offset by non-cash
charges for depreciation and amortization of tangible and intangible assets of
$2,598,000, provision for doubtful accounts receivable of $770,000, a decrease
in receivables of $1,623,000 and inventories of $191,000. The Company expects
that it will generate cash from its operating activities for the 12 month ending
September 30, 2001.

Although the Company has a net stockholders' deficiency of $12,287,000 at
September 30, 2000, the Company believes it will generate sufficient funds from
operations and obtain additional financing, as needed, in 2000 and 2001 to meet
its operating and capital requirements. The Company's belief is based on the
Company significantly reducing its cost structure through a restructuring
effected in 1999 which included reductions in employee headcount and the use of
outside consultants, the closure and reduction of certain facilities, and the
renegotiation, termination or replacement of certain contracts with service
providers. Additionally, the Company has a $12.7 million backlog as of September
30, 2000. The Company expects to generate positive cashflow during 2000 and 2001
from shipping out products and services from this backlog as well as new orders.
Also, the Company is currently holding its notes receivable for sale and has a
letter of intent for the sale of the notes. If consummated, the amount expected
to be realized upon the sale of these notes is approximately $2,700,000. The
Company expects to sell these notes within the next six months and use the funds
to reduce certain current obligations and other operational purposes.

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


                                     - 11 -
<PAGE>   12

                              RESULTS OF OPERATIONS

                     Three Months Ended September 30, 1999
                Compared to Three Months Ended September 30, 2000

<TABLE>
<CAPTION>
                              Three Months Ended   Percentage   Three Months Ended   Percentage
                              September 30, 1999   of Revenue   September 30, 2000   of Revenue
                              ------------------   ----------   ------------------   ----------
                                (in thousands)                    (in thousands)
<S>                           <C>                  <C>          <C>                  <C>
Revenues:
    Hospitality                    $ 6,985            61.2%          $7,750             79.1%
    Process Manufacturing            1,898            16.6%             849              8.7%
    Legacy                           2,398            21.0%           1,195             12.2%
    Other                              134             1.2%              --               --
Total revenue                       11,415           100.0%           9,794            100.0%
Gross profit                         2,540            22.3%           5,534             56.5%
Selling, general &
   administrative expenses           6,765            59.3%           2,500             25.5%
Research and development
   costs                             1,712            15.0%             906              9.3%
Amortization of intangibles            529             4.6%             649              6.6%
Other operating (expense)               13             0.1%              53              0.5%
</TABLE>


The quarter-to-quarter decrease in overall revenue of 14.2% was primarily due to
decreases in sales of process manufacturing solutions and Legacy, offset by an
increase in sales of hospitality enterprise solutions. Hospitality revenue
increased 11.0% from $6,985,000 in 1999 to $7,750,000 in 2000, largely due to
increased sales of software and professional services. Process manufacturing
revenue decreased 55.3% from $1,898,000 in 1999 to $849,000 in 2000 due to
product transition.

Consistent with the Company's strategy to focus on providing software and
services to its vertical markets, the Company's legacy revenue (traditional
hardware contract service revenues and proprietary add-on sales) declined 50.2%
quarter over quarter, largely due to the expected decrease in volume and
customers replacing their legacy systems due to Year 2000 compliance.

Gross profit increased to 56.5% in 2000 from 22.3% in 1999 primarily due to
delays in certain shipments and installations of its Lodging Touch product
during 1999 combined with higher levels of fixed costs in 1999 associated with
professional services and support which was expected to be absorbed by an
increased hospitality revenue stream.

Selling, general and administrative expenses ("SG&A") decreased 63.1% from
$6,765,000 in 1999 to $2,500,000 in 2000. The decrease is related to the
implementation of several cost reduction measures, including the Company's
restructuring effected in the fourth quarter of 1999.

Research and development costs decreased 47.1% over the comparable period in
1999. This is primarily as a result of a reduction in the use of contracted
research and development in 2000.

The 22.7% increase in amortization of intangibles versus the comparable period
of 1999 is due to the increased amortization expense associated with capitalized
software development costs at the Company's Process Manufacturing division.

Included in non-operating costs for the three months ended September 30, 1999 is
the write off of approximately $574,000 of financing costs previously
capitalized in 1998.


                                     - 12 -
<PAGE>   13

Nine Months Ended September 30, 1999 Compared to Nine Months Ended
September 30, 2000

<TABLE>
<CAPTION>
                                      Nine Months Ended      Percentage      Nine Months Ended     Percentage
                                      September 30, 1999     of Revenue      September 30, 2000    of Revenue
                                      ------------------     ----------      ------------------    ----------
                                        (in thousands)                         (in thousands)
<S>                                   <C>                    <C>             <C>                   <C>

Revenues:
    Hospitality                           $ 27,281              62.3%             $20,403             71.1%
    Process Manufacturing                    6,342              14.5%               3,382             11.8%
    Legacy                                   8,192              18.7%               4,898             17.1%
    Gaming                                   1,696               3.9%                  --             --
    Other                                      273               0.6%                  --             --
Total revenue                               43,784             100.0%              28,683            100.0%
Gross profit                                20,681              47.2%              15,050             52.5%
Selling, general &
   Administrative expenses                  18,826              43.0%               8,757             30.5%
Research and development
   Costs                                     4,119               9.4%               3,104             10.8%
Amortization of intangibles                  1,738               4.0%               1,946              6.8%
Other operating (income) expense               (97)             (0.1%)                111              0.4%
</TABLE>

The year-to-year decrease in revenue of 34.5% for the nine months ended
September 30, 2000 over the comparable period was primarily due to decreases in
sales of hospitality enterprise solutions. Hospitality revenue decreased 25.2%
from $27,281,000 in 1999 to $20,403,000 in 2000, largely due to decreased
software sales and professional services. Process Manufacturing revenue
decreased 46.7% from $6,342,000 in 1999 to $3,382,000 in 2000 due to product
transition. Gaming revenue decreased $1,696,000 due to the sale of its gaming
subsidiary in June 1999.

Consistent with the Company's strategy to focus on providing software and
services to its vertical markets, the Company's legacy revenue (traditional
hardware contract service revenues and proprietary add-on sales) declined 40.2%
year over year, largely due to the expected decrease in volume and customers
replacing their legacy systems due to Year 2000 compliance.

Gross profit increased to 52.5% from 47.2% primarily due to the implementation
of several cost reduction measures including the Company's restructuring
effected in the fourth quarter of 1999.

Selling, general and administrative expenses ("SG&A") decreased 53.5% to
$8,757,000. The decrease is related to the implementation of several cost
reduction measures, including the Company's restructuring effected in the fourth
quarter of 1999.

Research and development costs decreased 24.6% over the comparable period of
1999. This is primarily as a result of a reduction in the use of contracted
research and development in 2000.

The 12.0% increase in amortization of intangibles versus the comparable period
of 1999 is due to the increased amortization expense associated with capitalized
software development costs of the Company's Process Manufacturing division.

Included in non-operating costs for the nine months ended September 30, 1999 is
the write off of approximately $574,000 of financing costs previously
capitalized in 1998.

ACCOUNTING PRONOUNCEMENTS

In June 1998, the FASB issued SFAS No. 133 "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133, as amended, is effective for
transactions entered into after January 1, 2001. This statement requires that
all derivative instruments be recorded on the balance sheet at fair value.
Changes in the fair value of derivatives are recorded each period in current
earnings or other comprehensive income, depending on whether a derivative is
designated as part of a hedge transaction and the type of hedge transaction. The
ineffective portion of all hedges will be recognized in earnings. The Company is
in the process of determining the impact that the adoption of SFAS No. 133 will
have on its results of operations and financial position.


                                     - 13 -
<PAGE>   14

In December 1999, the SEC staff issued Staff Accounting Bulletin No., 101,
"Revenue Recognition in Financial Statements" and in March 2000, the SEC staff
issued Staff Accounting Bulletin No. 101A "Implementation Issues Related to SAB
101." In addition, in October 2000, the SEC staff issued a document containing
answers to certain frequently asked questions ("FAQ") which further clarified
certain accounting issues addressed in the bulletins relating to revenue
recognition. These bulletins summarize certain of the staff's views about
applying generally accepted accounting principles to revenue recognition in
financial statements. The staff is providing this guidance due, in part, to the
large number of revenue recognition issues that registrants encounter. The
provisions of these pronouncements are effective for the Company commencing with
the fourth quarter of 2000. Management is in the process of analyzing the
implications of these bulletins and FAQ and is anticipating that further
implementation guidance will be forthcoming from the SEC. Accordingly, there is
uncertainty as to the ultimate impact to the Company in applying these
bulletins.

YEAR 2000 COMPLIANCE RISKS

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

During 1999, the Company successfully completed its program to achieve Year 2000
Readiness. Before June 30, 1999 the Company completed an evaluation of both its
information technology systems and its non-technology systems, such as equipment
containing microprocessors. At that time the Company determined that all
information technology and non-technology systems in its corporate home office
in Irvine, California and in its branch or subsidiary offices in the United
States and internationally had been modified to address Year 2000 issues. "Year
2000 Ready" meant that the performance or functionality of the Company's
internal systems would not be significantly affected by the dates prior to,
during, and after the Year 2000, to include leap year calculations and specific
day-of-the-week calculations.

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

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

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


                                     - 14 -
<PAGE>   15

AMERICAN STOCK EXCHANGE MARKET LISTING

The Company has been notified by The American Stock Exchange that it no longer
complies with the requirements for continued listing and has requested a hearing
with the Company to review such requirements. The American Stock Exchange could
render a decision to delist the Company in the near future and the Company is
cooperating with The American Stock Exchange in its decision making process. The
Company has requested to remain listed on The American Stock Exchange market.
The Company cannot provide any assurance that its request to remaing listed on
The American Stock Exchange market will be successful and, if successful, that
the Company will not be delisted at some later time. In the event of a
delisting, the Company will attempt to have its Common Stock listed on the
Nasdaq SmallCap Market or the over-the-counter electronic bulletin board
sponsored by Nasdaq. In such event, investors may find it more difficult to
trade in the Company's Common Stock or to obtain accurate, current information
concerning market prices.


                                     - 15 -
<PAGE>   16

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 $9.0 million principal amount of indebtedness at
         September 30, 2000, $3.1 million bears interest at a rate that
         fluctuates based on changes in prime rate. A 1% change in the
         underlying prime rate would result in a $31,000 change in the annual
         amount of interest payable on such debt. Of the remaining amount of
         $5.9 million, $5.25 million bears interest at a fixed rate of 11% and
         $614,000 bears fixed interest rates ranging from 6% to 17.5%.

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

         FOREIGN CURRENCY RISK

         The Company believes that its exposure to currency exchange fluctuation
         risk is insignificant because the Company's transactions with
         international vendors are generally denominated in US dollars. The
         currency exchange impact on intercompany transactions was immaterial
         for the quarter ended September 30, 2000.


                                     - 16 -
<PAGE>   17

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         Chapter 11 Bankruptcy Proceedings

         At September 30, 2000, 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")

         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 has increased to approximately $6,657,000 as of September 30,
         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. The number of
         shares which may be sold by CSA includes: (i) CSA's current ownership
         of 590,785 shares, and (ii) 17,162,000 additional shares, assuming a
         stock price of $0.0.375 per share, which MAI would issue to CSA in
         order for them to receive net proceeds of approximately $6,657,000
         after deducting any discounts or commissions. MAI has not yet filed the
         registration statement called for by the settlement agreement. CSA
         initiated another lawsuit in December 1999 in the above-referenced
         court (a) seeking damages in excess of $5 million; (b) enforcement of
         the settlement agreement; and (c) and injunctive relief through court
         order to cause MAI to file the S-1 registration statement. On March 6,
         2000, the Company answered the complaint. A trial date has been set for
         December 18, 2000. MAI is currently in discussions with CSA attempting
         to settle this matter.

         Enterprise Hospitality Solutions, Inc.

         On November, 30, 1999, Enterprise Hospitality Solutions, Inc. ("EHS")
         and Christian Rivadella commenced an action against MAI in the United
         States District Court for the Central District of California, alleging
         that MAI had failed to pay certain royalties to EHS under the parties'
         exclusive license agreement. The complaint asserted claims for breach
         of contract, unjust enrichment, accounting and unfair competition. The
         complaint sought damages, preliminary and permanent injunctive relief,
         imposition of a constructive trust, an order canceling MAI's exclusive
         right to license the software at issue under the parties' agreement,
         and the appointment of a receiver to conduct an audit. On February 1,
         2000, MAI answered the complaint by denying its material allegations
         and asserted a counterclaim against the plaintiffs. The counterclaim
         asserted claims for breach of the parties exclusive license agreement,
         breach of the covenant of good faith and fair dealing, unfair business
         practices, interference with contractual relations and declaratory
         relief, and a declaration that MAI was not in breach of the parties'
         license agreement.

         Effective June 30, 2000, the parties entered into an agreement pursuant
         to which MAI acquired from EHS the exclusive worldwide marketing rights
         to the Lodging Touch products and the royalty free use of the Lodging
         Touch name and trademark. As part of that agreement, all prior
         agreements between MAI and EHS were terminated. The parties executed
         mutual general releases, and the litigation was dismissed with
         prejudice.


                                     - 17 -
<PAGE>   18

         Wang Global Corporation

         On December 2, 1996 MAI executed outsource agreements with Olivetti
         North America, Inc. ("ONA") in the United States and with Olivetti
         Canada Ltd. in Canada, for on-site repair and warranty service and
         telephonic support for the it's Legacy customers. On July 26, 1999,
         Wang Global Corporation ("Wang"), asserting that it was the parent of
         ONA, filed for arbitration in this matter, alleging breach of contract
         for payments due for maintenance services provided by Wang. Wang claims
         that the amounts due from MAI exceed $3.7 million.

         MAI filed a counterclaim for breach of contract and unfair business
         practices. MAI believed that to the extent any amounts are outstanding
         under the parties' agreement, the amount outstanding is significantly
         less than $3.7 million. Getronics Corporation answered the Counterclaim
         in the arbitration, asserting that it was the successor-in-interest to
         ONA and Wang.

         On June 9, 2000, MAI filed a compliant in California Superior Court
         against Getronics Corporation ("Getronics") seeking to enjoin it from
         proceeding with the arbitration on the grounds that the Company had not
         agreed to arbitrate with Getronics (the "Court Action"). On June 22,
         2000, the arbitration was stayed pending the resolution of the Court
         Action.

         In September, the parties settled all of their disputes. Pursuant to
         that settlement,the parties dismissed the arbitration proceeding and
         terminated their outsourcing agreements. MAI agreed to pay Getronics a
         total of $1,124,000 payable as follows: (a) $134,000 on or before
         September 15, 2000, which has been paid; (b) $150,000 on or before June
         30, 2001; and (c) $35,000 on the first day of each month from October
         2000 through September 2002. Additionally, (a) MAI executed a security
         agreement in Getronics's favor in the amount of $2,000,000 on all of
         MAI's assets; (b) the parties mutually released all claims against each
         other, other than as stated in the Stipulation; and (c) Getronics
         agreed to provide services through September 15, 2000 at which time MAI
         assumed the responsibility of servicing its customers under hardware
         support service agreements.

         Other Litigation

         The Company is also involved in various other legal proceedings that
         are incidental 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

         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 by $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.


                                     - 18 -
<PAGE>   19

         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 until the Coast Bridge Loan is paid in full. Upon
         repayment of the Bridge Loan, the Company will be required to pay
         Canyon weekly interest payments of $25,000 until all interest on the
         subordinated notes is paid in full. Thereafter, the Company will pay
         weekly interest payments of approximately $11,000.

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)    Exhibits.

         10.1     Settlement Agreement and Mutual Release and Purchase Agreement
                  dated June 30, 2000 between MAI Systems Corporation and
                  Enterprise Hospitality Solutions, Inc.

         10.2     Settlement Agreement dated September 2000 by and between
                  GetronicsWang Co. LLC, Olsy North America, Inc. and MAI
                  Systems Corporation.

         10.3     Security Agreement dated September 2000 between GetronicsWang
                  Co. LLC and MAI Systems Corporation

         27.      Financial Data Schedule.

         (b)      Reports on Form 8-K.

                  None.


                                     - 19 -
<PAGE>   20

                                   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: October 20, 2000                 /s/ James W. Dolan
                                       -----------------------------------------
                                       James W. Dolan
                                       Chief Financial Officer
                                       (Chief Financial and Accounting Officer)


                                     - 20 -

<PAGE>   21

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit
Number                             Description
------                             -----------
<C>      <S>

 10.1    Settlement Agreement and Mutual Release and Purchase Agreement dated
         June 30, 2000 between MAI Systems Corporation and Enterprise
         Hospitality Solutions, Inc.

 10.2    Settlement Agreement dated September 2000 by and between GetronicsWang
         Co. LLC, Olsy North America, Inc. and MAI Systems Corporation.

 10.3    Security Agreement dated September 2000 between GetronicsWang Co. LLC
         and MAI Systems Corporation

 27.     Financial Data Schedule.

</TABLE>