MAI SYSTEMS CORP, S-3, 1997-03-24

MAI SYSTEMS CORP
S-3, 1997-03-24
COMPUTER INTEGRATED SYSTEMS DESIGN

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As filed with the Securities and Exchange Commission on March 24, 1997
Registration No.333-_________

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------

MAI SYSTEMS CORPORATION
(Exact name of registrant as specified in its charter)

----------------------
Delaware 22-2554549
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) 9600 Jeronimo Road Identification Number)
Irvine, California 92718
(714) 580-0700
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
----------------------

Stanley P. Witkow
Vice President, Corporate and Legal Affairs
9600 Jeronimo Road
Irvine, California 92718
(714) 580-0700
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
----------------------

Copies to:

Frank H. Golay, Jr.
Sullivan & Cromwell
444 South Flower Street
Los Angeles, California 90071
(213) 955-8000
----------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: After the
effective date of this Registration Statement, as determined by market
conditions.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. |X|
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_| __________________
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_| ____________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
----------------------

CALCULATION OF REGISTRATION FEE
TITLE OF EACH CLASS AMOUNT OF
OF SECURITIES TO BE PROPOSED MAXIMUM REGISTRATION
REGISTERED AGGREGATE OFFERING PRICE(1) FEE
- -------------------- --------------------------- -------------
Common Stock $1,064,500 $323
==================== =========================== =============
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o).
----------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE OR UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

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<PAGE>

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BY ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED MARCH 24, 1997

MAI SYSTEMS CORPORATION

COMMON STOCK
------------

This Prospectus relates to up to 113,392 shares of Common Stock being
offered by the Selling Stockholders (as defined herein). Of the 113,392 shares
being offered hereby, 14,930 of such shares are being offered by two of the
Selling Stockholders (the "Individual Selling Stockholders") who acquired such
shares pursuant to an agreement to cancel options (the "Option Cancellation
Agreement") held by such Selling Stockholders to purchase common stock of Gaming
Systems International ("GSI"), a subsidiary of MAI Systems Corporation ("MAI" or
the "Company"). The remaining 98,462 shares being offered hereby are being
offered by VSOP Computer, Inc. (the "VSOP Selling Stockholder"), who acquired
such shares pursuant to a stock purchase agreement (the "Stock Purchase
Agreement") pursuant to which GSI purchased 30% of its outstanding common stock
from the VSOP Selling Stockholder. The Company will, as needed, pursuant to the
Option Cancellation Agreement, issue additional shares to the Individual Selling
Stockholders in order that they each receive shares with a total fair market
value of $52,250 (up to a maximum of 832 additional shares each), all of which
shares, if any, shall be included in this offering. Also, the Company will, as
needed, pursuant to the Stock Purchase Agreement, issue additional shares in
order that the VSOP Selling Stockholder receive shares with a total fair market
value of $960,000 (up to a maximum of 43,760 additional shares), all of which
shares shall be included in this offering. It is currently estimated that up to
43,760 additional shares will be offered by the VSOP Selling Stockholder as a
result of such adjustment requirement and that up to 574 additional shares will
be offered by each of the Individual Selling Stockholders as a result of their
adjustment requirement, resulting in an estimated total offering of up to
158,300 shares. See "Prospectus Summary -- The Offering" and "Principal and
Selling Stockholders." The Company will not receive any of the proceeds from the
sale of shares of Common Stock by the Selling Stockholders.

The sale or distribution of the offered shares may be effected directly
to purchasers by the Selling Stockholders as principal or through one or more
underwriters, brokers, dealers or agents from time to time in one or more
transactions. See "Plan of Distribution."

To the extent required, the number and the offering price of the shares
in respect of which this Prospectus is being delivered ("Offered Shares") are
set forth in an accompanying Prospectus Supplement ("Prospectus Supplement"). To
the extent required, the Prospectus Supplement also sets forth the names of any
agents, dealers or underwriters acting in connection with the sale of the
Offered Shares, the compensation of such agents, dealers and underwriters and
the other terms of offering of the Offered Shares. One or more Prospectus
Supplements may be utilized from time to time to effect the full offering
contemplated hereby. The Company estimates that the expenses of the offering to
be borne by it will be approximately $20,000.

The Company's Common Stock is traded on the American Stock Exchange
under the symbol "NOW."

THE COMMON STOCK OFFERED HEREBY INVOLVES A
HIGH DEGREE OF RISK. SEE "RISK FACTORS"
BEGINNING ON PAGE 5.
---------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The date of this Prospectus is _______ __, 1997

<PAGE>

AVAILABLE INFORMATION

The Company is subject to the informational reporting requirement of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information may be inspected and copied at the Public
Reference Room of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549; and at the Commission's regional offices in Chicago (Citicorp Center,
Suite 1400, 500 West Madison Street, Chicago, Illinois 60661), and in New York
(7 World Trade Center, 13th Floor, New York, New York 10048). Copies of such
material may be obtained from the Public Reference Section of the Commission,
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
Securities and Exchange Commission maintains a website that contains reports,
proxy and information statements and other information regarding registrants
that file electronically. The address of the website is http:\\www.sec.gov.

The Company has filed with the Commission a Registration Statement (as
amended, the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"). This Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission. For
further information, reference is hereby made to the Registration Statement. The
Common Stock of the Company is traded on the American Stock Exchange. Reports,
proxy statements and other information concerning the Company may be inspected
at the American Stock Exchange, 86 Trinity Place, New York, New York 10006-1881.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The Company's Annual Report on Form 10-K for the year ended December
31, 1995, an amendment thereto on Form 10-K/A dated December 3, 1996, Quarterly
Reports on Form 10-Q for the quarters ended March 31, 1996, June 30, 1996 (as
amended by Form 10-Q/A dated October 23, 1996) and September 30, 1996, and its
Current Reports on Form 8-K filed July 24, 1996 and January 2, 1997 which are on
file with the Commission, are incorporated in this Prospectus by reference and
made a part hereof. All documents filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Common Stock to
which this Prospectus relates shall be deemed to be incorporated by reference
into this Prospectus. Any statements contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
replaced for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or replaces such
statement. Any such statement so modified or replaced shall not be deemed,
except as so modified or replaced, to constitute a part of this Prospectus.

The Company will provide without charge to each person, including any
beneficial owner, to whom a Prospectus is delivered, upon written or oral
request of such person, a copy of the documents incorporated by reference
herein, other than exhibits to such documents not specifically incorporated by
reference. Such requests should be directed to MAI Systems Corporation, 9600
Jeronimo Road, Irvine, California 92718, (714) 580-0700, Attention: Mr. Stanley
P. Witkow.

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PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements, including the notes thereto,
appearing elsewhere or incorporated by reference in this Prospectus. All share
information in this Prospectus has been restated to reflect a stock split
effected by means of a 25% stock dividend paid to holders of the Company's
common stock, $0.01 par value per share (the "Common Stock"), on August 24,
1995. References to MAI or the Company include its consolidated subsidiaries
unless the context otherwise requires. Share information herein pertaining to
the Selling Stockholders including information regarding the additional shares
to be issued by the Company for sale by the VSOP Selling Stockholder, represent
estimates based on certain assumptions.

THE COMPANY

MAI's Hotel CompuSystem II and Paragon products, the Lodging Touch
International ("LTI") products and the Gaming Systems International ("GSI")
products for the hospitality and gaming industry and the Company's CIMPRO and
MANBASE products for the mid-sized process manufacturers enable MAI's customers
more efficiently to operate their businesses. More hotel and resort rooms are
managed by MAI's hospitality products, installed at more than 3,500 hotels and
resorts worldwide, than any other front desk and back office software product in
the hospitality and resort industry. The GSI suite of products provide complete
slot accounting and player tracking functionality and are installed in
approximately 10,000 slot machines around the world. The CIMPRO and MANBASE
products are a suite of robust, full-featured products for process
manufacturers. In addition, MAI is a reseller of third-party networking and
applications products, including Microsoft Windows 95/NT, Novell Netware, the
Solomon suite of financial management products, Optika imaging systems and
Visual HR for human resource management. The Company also sells various
UNIX-based operating systems in conjunction with its computer equipment sales.

MAI's professional services include state-of-the-art software
applications support for all the applications it offers to its customers,
software training, custom programming, project management, information systems
and telecommunications consulting, network design, remote network management and
various outsourcing offerings.

The Company has improved and intends to improve its strategic
positioning through acquisitions and product licensing. The Company recently
acquired Hotel Information Systems and the LTI products to complete its
offerings to the hospitality industry. It reacquired the distribution rights to
the advanced MANBASE products and it acquired the CIMPRO division of Datalogix
International, Inc., a wholly-owned subsidiary of Oracle Corporation.

MAI also sells, configures and installs for its customers a broad array
of network and other client/server equipment produced by industry leaders such
as IBM, Cisco Systems, Compaq Computer and Bay Networks.

In addition to offering total information system solutions for the
hotel, resort and gaming industries and mid-sized process manufacturers, MAI
offers products and services to maintain, upgrade and otherwise extend the
useful life of the mid-range MAI-Basic Four computer systems that were
manufactured by the Company and its predecessors in the 1970's and 1980's.

On August 9, 1996, MAI acquired (the "HIS Acquisition") substantially
all the assets and certain of the liabilities of Hotel Information Systems, Inc.
("HIS"). The assets acquired from HIS are used in the business of software
design, engineering and service relating to hotel information systems and
included the subsidiaries of HIS in Singapore, Hong Kong and Australia. In
connection with the HIS Acquisition, MAI

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<PAGE>

issued 1,307,302 shares of its Common Stock, and may be required to issue
additional shares as part of such acquisition. See additional information under
"The Offering" in this Prospectus Summary.

THE OFFERING

Common Stock offered by
the Selling Stockholders................... 113,392 shares(1)

Common Stock issued and
issuable after the offering................ 8,849,151 shares(2)

Use of Proceeds.............................. The Company will not receive
any proceeds from the sale of
shares of Common Stock by the
Selling Stockholders.

AMEX symbol.................................. NOW

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

(1) The number of shares to be received by each of the Individual
Selling Stockholders pursuant to the Option Cancellation Agreement is that
number of shares with a total fair market value of $52,250 as of the date of
effectiveness of the registration statement of which this Prospectus forms a
part. Such number is estimated to include up to an additional 574 shares for
each of the Individual Selling Stockholders, based on an assumed fair market
value of $6.50 per share. The number of shares to be received by the VSOP
Selling Stockholder pursuant to the Stock Purchase Agreement is that number of
shares with a total fair market value of $960,000 as of the date of
effectiveness of the registration statement of which this Prospectus forms a
part. Such number is estimated to include up to an additional 43,760 shares,
based on an assumed fair market value of $6.50 per share. See "Principal and
Selling Stockholders."

(2) Information as to issued and issuable shares is as of February 28,
1997. The Company has issued and outstanding 8,615,851 shares of Common Stock
and has estimated that an additional 75,000 shares are issuable pursuant to the
Plan of Reorganization in settlement of creditor claims. Therefore, the Company
has 8,690,851 shares of Common Stock issued and issuable before the offering.
This total does not include 993,793 shares issuable upon the exercise of
outstanding options under the Company's stock option plans, 699,750 shares
issuable upon the exercise of outstanding warrants, up to 216,255 shares that
the Company expects to issue pursuant to the agreements relating to the
acquisition of HIS and up to 750,000 shares issuable upon the exercise of
outstanding warrants issued on March 3, 1997. In connection with this offering,
the Company expects that it will issue up to 43,760 additional shares for
offering by the VSOP Selling Stockholder and up to 574 shares for each of the
Individual Selling Stockholders as a result of adjustments required pursuant to
the Stock Purchase Agreement and the Option Cancellation Agreement. See
"Principal and Selling Stockholders." Such additional shares are not included in
share numbers before the offering but are included in share numbers after giving
effect to the offering.

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RISK FACTORS

An investment in the shares of Common Stock offered hereby involves a
high degree of risk. Prospective investors should carefully consider the
following risk factors, in addition to other information contained in or
incorporated by reference in this Prospectus.

COMPETITION

Competition is vigorous in all sectors of the market for computer-based
solutions and support and maintenance services which the Company offers. The
Company has numerous competitors in each of its business lines, which vary
widely in their size, capabilities, market segments and geographical areas, many
of which are larger and have financial resources far greater than the Company.
Within its markets, competition comes primarily from competing software
applications vendors, principally with regard to the Company's hospitality,
gaming and process manufacturing products, and from local VARs and ISVs, who
usually resell hardware or networking products of larger original equipment
manufacturers. There is also competition, to a lesser extent, from independent
service organizations ("ISOs"), which provide service to end users of the
Company's software products, and third-party maintenance organizations, which
provide service to users of the Company's hardware products. Many of the
Company's services are also provided by in-house MIS departments. There can be
no assurance that the Company can effectively compete with any or all of its
competitors in any of its business lines. See "Business--Competition."

PRODUCTION AND PROCUREMENT

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

EMERGENCE FROM CHAPTER 11 BANKRUPTCY PROCEEDINGS

On November 18, 1993, the United States Bankruptcy Court for the
District of Delaware (the "Bankruptcy Court") entered an order confirming the
Plan of Reorganization of the Company, Brooke Acquisition Corp. ("BAC") and CLS
Software, Inc. ("CSI") (collectively, the "Debtors"). The Company had been
operating under the protection of Chapter 11 of the United States Bankruptcy
Code (the "Bankruptcy Code") since April 12, 1993. On January 27, 1994, the
Bankruptcy Court entered an order which among other things fixed January 27,
1994 as the effective date of the Plan of Reorganization (the "Effective Date").
The following summary of some of the features of the Plan of Reorganization is
qualified in its entirety by reference to the Plan of Reorganization, which is
an exhibit to the Company's Annual Report on Form 10-K for the year ended
December 31, 1993, and by the more detailed description of the Plan of
Reorganization that is contained in the 1995 Form 10-K.

The Plan of Reorganization provides for, among other things, (i) the
satisfaction of substantially all of the Debtors' unsecured (non-priority)
indebtedness through the issuance of Common Stock, and (ii) the cancellation of
existing equity interests in the Debtors. The Plan of Reorganization also
provides for the substantive consolidation and merger of the Debtors and the
corresponding extinguishment of intercompany liabilities and intercompany
contracts among the Debtors.

Under the Plan of Reorganization, (i) holders of approximately
$1,300,000 aggregate amount of administrative claims and approximately $100,000
aggregate amount of priority claims received cash distributions and (ii) holders
of approximately $3,019,000 aggregate amount of tax claims receive deferred

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cash payments over periods up to six years. At December 31, 1996, the aggregate
amount of tax claims had been reduced to $711,697 and the Company continues to
dispute certain tax claims.

The Company commenced distribution of Common Stock to holders of
unsecured claims on April 14, 1994. The settlement of certain claims is subject
to approval by the Bankruptcy Court. The Common Stock is being issued pursuant
to Section 1145 of the Bankruptcy Code, which contains an exemption from
registration under the Securities Act. Through December 31, 1996, the Company
had distributed 6,728,256 shares of Common Stock to its former creditors. The
Plan of Reorganization provided holders of unsecured claims the right to elect a
limited cash recovery, and through December 31, 1996, $74,570 in cash had been
distributed pursuant to such provision.

Under the Plan of Reorganization, there is no recovery for holders of
the Company's $0.01 par value Common Stock and all classes of Preferred Stock
outstanding prior to the Effective Date. See "Chapter 11 Bankruptcy
Proceedings."

LIMITED HISTORY OF PROFITABILITY

Prior to the bankruptcy, the Company incurred significant operating
losses. While the Company has generally experienced positive operating income
since emerging from bankruptcy, there can be no assurance that the Company will
be able to achieve or maintain profitability or avoid losses on a quarterly or
annual basis in the future.

FLUCTUATIONS IN OPERATING RESULTS

A variety of factors may cause period-to-period fluctuations in the
Company's operating results, including the timing of significant orders, the
timing of product enhancements and new product introductions by the Company, its
technology vendors and its competitors, the pricing of the Company's products
and services, competitive conditions and general economic conditions. Typically,
orders received in one quarter are delivered and installed by the following
quarter. However, many of the Company's systems sales involve lengthy sales
cycles and installations. Consequently, it is not possible to predict with any
reliability the periods within which a sale may close or revenue will be
recognized. As a result, the operating results of the Company may be materially
skewed if a single transaction is completed earlier or later than expected. The
Company has experienced fluctuations in its operating results and expects to
continue to experience such fluctuations. Additionally, as the Company's network
systems business has increased, it is increasingly finding that it must order
and pay for equipment utilized in a network installation in advance of the date
it is able to invoice or collect from its customer for the equipment. See
"Business--Order, Shipment and Backlog." Fluctuations in operating results may
also result in volatility in the market price of the Common Stock.

VOLATILITY IN CERTAIN MARKETS

Certain of the markets in which the Company competes are cyclical and
are subject to volatility. The Company believes that the decline in its gaming
solutions business during 1996 was attributable to the decline in the number of
new gaming facilities outside of established gaming jurisdictions, such as
Nevada and Atlantic City, which the Company believes is directly attributable to
increased opposition to gaming in certain jurisdictions and the negative impact
the failure of certain gaming operations in Louisiana has had on the entire
industry. The Company cannot predict the duration of this negative environment
for new gaming installations. Conversely, the Company believes that the growth
of its hospitality information systems business is attributable in part to the
current health of the hospitality industry, compared to the condition of that
industry in the early 1990's. The Company cannot predict the duration of the
current favorable climate in the hospitality industry.

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LIQUIDITY; VOLATILITY OF STOCK PRICE

Since its emergence from bankruptcy, trading volume of the Common Stock
has been small, and the market for the Company's Common Stock has been less
liquid than that of many other publicly traded companies. In August 1995,
however, the Company's Common Stock became listed on the AMEX under the symbol
"NOW." During the fiscal year ended December 31, 1996, the average daily trading
volume has been approximately 25,000 shares. There can be no assurance that a
stockholder who desires to sell shares of Common Stock can sell all of the
shares that the stockholder desires to sell, either at all or at the desired
times or prices. In addition, sales of shares of Common Stock after this
offering could reduce the market price of the Common Stock to a greater extent
than shares of other companies with higher trading volumes. Like the stock of
other technology companies, the market price of the Common Stock has been and
may continue to be volatile. Factors such as quarterly fluctuations in the
Company's results of operations, trading volume, the announcement of
technological innovations or new products by the Company or its competitors,
general conditions in the computer hardware and software industries, economic
conditions generally, the Company's ability successfully to increase its market
share with its existing products while expanding its product base into other
markets, the strength of the Company's distribution channels, variances between
actual results of operations and the results expected by securities analysts and
the factors mentioned under "--Fluctuations in Operating Results," among other
factors, may have a significant impact on the market price of the Common Stock.

RISKS OF CONTRACT SERVICES BUSINESS

The Company is subject to the risks associated with a contract services
business, including dependence on reputation with existing customers, volatility
of workload and dependence on ability to retain qualified technical personnel.
Also, a substantial portion of the Company's contract services revenue may be
derived from the performance of services under fixed-price contracts. There can
be no assurance that the Company can consistently perform in a profitable manner
under these contracts, especially in the field of software development, where
cost overruns are common-place. See "Business--Products and Services."

RAPID TECHNOLOGICAL CHANGE; DEPENDENCE ON NEW PRODUCTS AND MARKETS

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

DEPENDENCE ON PROPRIETARY TECHNOLOGY

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

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DEPENDENCE ON KEY PERSONNEL

Competition for qualified personnel in the software industry is intense
and there can be no assurance that the Company will be able to attract and
retain a sufficient number of qualified employees. As the business of the
Company grows, it may become increasingly difficult for it to hire, train and
assimilate the new employees needed. The Company's success depends to a
significant degree upon the continued contributions of its key management,
marketing, product development and operational personnel, including Richard S.
Ressler and George G. Bayz. The Company does not maintain key man insurance for
any of such officers.

The services of Richard S. Ressler, Chairman of the Board and Director
of the Company, are provided on a non-exclusive basis pursuant to an agreement
which expires in August 1997. There can be no assurance that Mr. Ressler will
continue with the Company after such date or that the Company will be able to
find a replacement in the event that either the Company or Mr. Ressler
determines not to continue their relationship. See "Principal and Selling
Stockholders."

RISK OF FOREIGN OPERATIONS

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

SHARES AVAILABLE FOR FUTURE SALE

Sales of substantial amounts of Common Stock after this offering could
have a material adverse effect on the Common Stock. Upon completion of this
offering, the Company will have outstanding and issuable 8,849,151 shares of
Common Stock, as of February 28, 1997. All of the outstanding shares (other than
approximately 671,400 shares that are subject to an escrow agreement) are, and
all of the issuable shares will be, freely tradeable; provided that shares held
by affiliates of the Company may be subject to limitations on disposition
pursuant to Rule 144 under the Securities Act of 1933.

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<PAGE>

THE COMPANY

MAI's Hotel CompuSystem II and Paragon products, the Lodging Touch
International ("LTI") products and the Gaming Systems International ("GSI")
products for the hospitality and gaming industry and the Company's CIMPRO and
MANBASE products for mid-sized process manufacturers enable MAI's customers to
operate more efficiently their businesses. More hotel and resort rooms are
managed by MAI's hospitality products, installed at more than 3,500 hotels and
resorts worldwide, than any other front desk and back office software product in
the hospitality and resort industry. The GSI suite of products provide complete
slot accounting and player tracking functionality and are installed in
approximately 10,000 slot machines around the world. The CIMPRO and MANBASE
products are a suite of robust, full-featured products for process
manufacturers. In addition, MAI is a reseller of third-party networking and
applications products, including Microsoft Windows 95/NT, Novell Netware, the
Solomon suite of financial management products, Optika imaging systems and
Visual HR for human resource management. The Company also sells various
UNIX-based operating systems in conjunction with its computer equipment sales.

In addition to offering total information systems solutions for the
hotel, resort and gaming industries and mid-sized process manufacturers, MAI
offers products and services to maintain, upgrade and otherwise extend the
useful life of the mid-range MAI-Basic Four computer systems that were
manufactured by the Company and its predecessors in the 1970's and 1980's.

The Company operated under the protection of Chapter 11 of the
Bankruptcy Code from April 12, 1993 to January 27, 1994. See "Risk
Factors--Emergence from Chapter 11 Bankruptcy Proceedings" and "Chapter 11
Bankruptcy Proceedings."

MAI Systems Corporation was incorporated under the laws of the State of
Delaware on September 6, 1984. The Company commenced operations on January 29,
1985. The Company's name was changed from MAI Basic Four, Inc. to MAI Systems
Corporation on November 6, 1990. The Company's principal executive offices are
presently located at 9600 Jeronimo Road, Irvine, California 92718, (714)
580-0700.

On August 9, 1996, MAI acquired substantially all the assets and
assumed certain of the liabilities of HIS. The assets acquired from HIS are used
in the business of software design, engineering and service relating to hotel
information systems and included the subsidiaries of HIS in Singapore, Hong Kong
and Australia. As consideration for the HIS Acquisition, MAI issued 1,184,383
shares of Common Stock to HIS

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and assumed net liabilities of approximately $7.9 million. The 1,184,383 shares
do not reflect any possible adjustments on account of purchase price adjustments
or adjustments based on resolution of disputes, with respect to the HIS
Acquisition. Subject to certain conditions and limitations, all of the shares
issued in the HIS Acquisition are subject to registration rights. On October 28,
1996, the Company filed a registration statement on Form S-3 with respect to
such shares and shares that may be issued pursuant to the aforementioned
adjustments. To date, effectiveness of such registration statement has not been
requested, while the Company attempts to resolve certain disputes relating to
the HIS Acquisition. Any actual adjustment to the number of shares issuable to
HIS will be based on the public offering price determined at the time of
consummation of the offering of the shares acquired by HIS. The Company
currently estimates, based on certain assumptions that are subject to change,
that it will issue up to an additional 216,255 shares to HIS or its
shareholders.

USE OF PROCEEDS

The Company will not receive any proceeds from the sale of shares of
Common Stock by the Selling Stockholders.

BUSINESS

THE COMPANY

MAI's Hotel CompuSystem II and Paragon products, the LTI products and
the GSI products for the hospitality and gaming industry and the Company's
CIMPRO and MANBASE products for mid-sized process manufacturers enable MAI's
customers to operate more efficiently their businesses. More hotel and resort
rooms are managed by MAI's hospitality products, installed at more than 3,500
hotels and resorts worldwide, than any other front desk and back office software
product in the hospitality and resort industry. The GSI suite of products
provide complete slot accounting and player tracking functionality and are
installed in approximately 10,000 slot machines around the world. The CIMPRO and
MANBASE products are a suite of robust, full-featured products for process
manufacturers. In addition, MAI is a reseller of third-party networking and
applications products, including Microsoft Windows 95/NT, Novell Netware, the
Solomon suite of financial management products, Optika imaging systems and
Visual HR for human resource management. The Company also sells various
UNIX-based operating systems in conjunction with its computer equipment sales.

MAI's professional services include state of the art software
applications support for all the applications it offers to its customers,
software training, custom programming, project management, information systems
and telecommunications consulting, network design, remote network management and
various outsourcing offerings.

The Company has improved and intends to improve its strategic
positioning through acquisitions and product licensing. The Company recently
acquired Hotel Information Systems and the LTI products to complete its
offerings to the hospitality industry. It reacquired the distribution rights to
the advanced MANBASE products and it acquired the CIMPRO Division from Datalogix
International, Inc., a wholly-owned subsidiary of Oracle Corporation..

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MAI also sells, configures and installs for its customers a broad array
of network and other client/ server equipment produced by industry leaders such
as IBM, Cisco Systems, Compaq Computer and Bay Networks.

MARKET OVERVIEW

Until the mid-1980's most mid-sized companies (which comprised the
majority of MAI's customers) generally utilized host-based computer systems that
were based on proprietary hardware and software. The systems usually consisted
of a central processing unit located somewhere in a facility and terminals and
printers located throughout the enterprise. Data was input at the terminals and
was extracted through the use of programs that were created by the central MIS
department. Reports were printed at printers located throughout the facility or
distributed by the MIS department. The advantage that these systems offered was
that all of the components, the central processing unit, the operating system,
the application software, the printers and other peripheral devices were closely
integrated and worked together seamlessly. Among the disadvantages of these
systems were that they could only run applications that were specially written
to run on them, the actual users of the enterprise's information were limited to
reports that were available in the existing programs and new technologies were
often not compatible with the system. Additionally, the host-based computing
model required a staff of dedicated information system professionals to run it.

By the mid-1980's, the personal computer had become powerful enough,
and enough application software had been written, to enable it to perform most
of the tasks that were being performed by the older host-based systems. The
advantage of this new technology was immediately apparent: users of the data
could create their own reports to analyze data in new and creative ways and were
no longer limited to the forms of data inquiry that had been created by the
centralized information services department. A wide range of applications and
peripheral products from a variety of manufacturers was available to fill
virtually all of the needs of an end user. The equipment was inexpensive and
easy to maintain. The need for large information management staffs was
curtailed. With the further development of high speed computer networks,
client/server computing emerged. Businesses found that they could centrally
maintain key data which could be accessed by end users throughout the
enterprise. The end users could then manipulate the data and create their own
reports without dependence on the centralized information management department.
By the end of the decade, to a very large extent corporate America had begun the
migration from host-based, proprietary computing to open-system, client/server
computing.

Since the array of products used in an open-system environment often do
not operate in the seamless fashion of a proprietary system, many smaller
businesses are faced with the difficult situation of maintaining and integrating
these diverse products. In many cases, mid-size companies now out-source their
information management needs including the design, implementation and
maintenance of their networks, maintenance of their hardware and support of
their software. Companies like MAI have emerged to provide total information
solutions to these customers. These businesses design, integrate and maintain
systems comprised of industry-standard components from a wide variety of
developers and manufacturers. They provide on-site equipment maintenance,
telephonic software support and remote management of networks.

STRATEGY

MAI's strategy is to focus on delivering total information solutions to
customers in the hospitality and gaming industries and to mid-sized process
manufacturers, and to enable its host-based systems

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customers to maximize the value of their legacy systems and establish a
migration path to open systems client/server computing.

The Company offers industry-leading applications products, including
Hotel CompuSystem II, Paragon and Lodging Touch International front desk, back
office and central reservation system products for the hospitality industry, the
Gaming Systems International products for the gaming industry, and the CIMPRO
and MANBASE line of products for process manufacturers. The Company's strategy
is to develop total information systems around these applications to enable
customers to maximize the strategic value of their information resources. This
will be done through the design, implementation and support of information
systems which allow data to be input, output and exchanged throughout the
network. The Company matches its specific industry expertise with its experience
in designing, installing, integrating, maintaining and supporting
enterprise-wide information systems.

For its legacy system customers, the Company offers products and
services which extend the useful life of the legacy system while linking it with
the state-of-the-art computing technology and enabling the system to utilize the
latest telecommunications technology. The Company assists these customers to
prepare for the time when it is appropriate for them to transition from the
proprietary system/host-based computer to the open system/client/server model.

Studies indicate that sixty percent of companies similar to the
Company's legacy customers intend to establish WANs and LANs before the turn of
the century. As its customers transition to network computing, the Company is
well positioned to help them make the transition. It is a reseller of popular
and reliable computing technology, including products manufactured by Bay
Networks, Cisco Systems, Compaq Computer, Inc., Hewlett Packard and IBM
Corporation. It is a Microsoft Solutions provider and has achieved certification
to provide support for Windows NT, the advanced operating system from Microsoft
Corporation. The Company believes that it can demonstrate to its current
customer base and to new customers that it is best suited to move them forward
to networked computing because of its familiarity with their information system
needs, the Company's expertise in complex WANs and LANs, its wide array of
products and services and its unique ability to provide reliable service and
support around the clock across the nation.

Because mid-sized-companies generally do not maintain large information
system staffs, these companies may rely on third parties like the Company to
help them design and maintain their information systems. MAI is well positioned
to provide the services that the customers will require and that it has the
knowledge base that will make it the preferred provider of these products and
services.

By successfully executing on these strategies, MAI believes that it can
become its customer's partner maximizing the utilization of its critical
resource: its information.

GENERAL

MAI provides software applications, professional services and networked
client/server computer equipment for the hotel, resort and gaming industries and
to mid-sized process manufacturers. In addition, the Company provides a variety
of products and services for its installed base of legacy customers. The Company
markets its proprietary software products and is the reseller of a variety of
third-party application products. It also designs, installs, integrates,
maintains and supports complex WANs and LANs which feature open system
components from well-known technology companies, such as IBM, Cisco Systems,
Compaq Computer and Bay Networks. MAI also provides on-site equipment
maintenance and installation throughout North America both directly and through
a relationship with Olivetti North America, Inc. and Olivetti Canada Ltd., and
it provides around-the-clock telephonic support and remote network management.

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The Company's software products operate on IBM RISC and Intel
Corporation-based microcomputer systems. The Company's OpenBASIC application
environment runs under various UNIX-based operating systems and enables
licensees of the Company's proprietary, BusinessBASIC-based applications to run
on open systems equipment. These products provide cost effective multi-user
solutions for customers whose needs range from entry-level systems to mid-size,
multiprocessor systems that support up to 500 users.

PRODUCTS AND SERVICES

Products and Services

MAI designs, implements, maintains and supports total information
system solutions utilizing complete WANs and LANs. In conjunction with these
solutions, the Company's approach is to analyze a customer's information system
requirements, propose a solution and then design, integrate, install and
maintain the system. One of the principal objectives of the Company is to help
its customers utilize their data across their entire enterprise so that
information that was once limited to one area of a business can now be available
to other areas where it can be utilized for new purposes. Once a system is
on-line, the Company typically continues its relationship with the customer by
providing around-the-clock telephonic support and, through its partnership with
Olivetti, on-site field support. The systems designed by the Company utilize the
Company's industry-leading property management system and process manufacturing
applications software, and industry-standard hardware and software products from
leading technology vendors including Cisco Systems, Compaq Computer, Hewlett
Packard, IBM, Larscom, Microsoft and Novell. Additionally, the Company resells
telecommunication services and equipment, including wide bandwidth T1 lines,
which enable its customers to achieve maximum utilization of their networks.

Products for Hotels, Resorts and Destinations

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

Hotel CompuSystem II provides one of the leading information systems in
the hotel and resort industry. Running under UNIX, Hotel CompuSystem II is
full-featured and provides customers with front desk, night audit, house-keeping
and numerous other functions. Its target client is a full-featured hotel or
resort with 300 to 1,000 rooms. Additionally, the CLS products interface to more
than 250 other hospitality-related information system products, such as
point-of-sale systems, telephone call monitoring systems and minibar maintenance
systems. The ease of connectivity with third-party products is one of the
system's competitive advantages. Hotel CompuSystem II is installed in over 2,000
sites worldwide.

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

The Lodging Touch International ("LTI") products are a state-of the-art
suite of products designed to take full advantage of the versatility of
Microsoft's Widows 95 and Windows NT operating systems. They are the industry's
first fully graphical products and the only ones to fully utilize the features
of the Windows operating system. With the LTI products, MAI has been named a
Mircosoft Solutions Partner.

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GSI's on-line slot accounting and player tracking product is comprised
of a proprietary circuit board which is installed inside electronic slot
machines, and database software which gathers and maintains data collected by
the circuit boards. The Company utilizes Novell-based LANs to link the slot
machines. The GSI system monitors the activity in the individual gaming machines
in real time, providing information on the activity of each machine, the amount
of money in the machine, whether or not the machine is operating properly and
alerting the casino management if the machine has been tampered with. The
software modules include stand-alone player tracking, cage/pit management, table
games accounting, slot maintenance, employee time and attendance, and numerous
other functions.

Products for Process Manufacturing

MAI develops and markets MANBASE and CIMPRO, both of which are
enterprise resource planning ("ERP") applications, used by process
manufacturers. The Company's typical customer generally has annual revenues
between $50 million and $500 million. These manufacturers convert raw material
into finished goods or into products used to manufacture other goods. Typical
users of the Company's ERP product would be manufacturers who convert raw milk
into cheese and other dairy products, or pharmaceutical manufacturers who
convert raw chemicals into medicinal products. These process manufacturers have
unique requirements in quality control, regulatory compliance, inventory control
and production planning that require an integrated application and system
solution.

The CIMPRO product, which the Company acquired from Oracle Corporation
in March 1997, offers a fully integrated modular system for complete support of
process manufacturing planning and tracking, including inventory, production,
supply chain management, costing, accounting, electronic data interchange and
regulatory compliance. CIMPRO's customer base is primarily with food, chemical
and pharmaceutical manufacturers.

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

Legacy System Products and Services

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

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

The Company markets a family of upgradeable, industry-standard
platforms based upon IBM RISC and Intel Corporation microcomputer technology and
featuring the Company's OpenBASIC application environment running under various
UNIX-based operating systems. These products provide cost-effective,

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multi-user solutions for customers whose needs range from entry-level systems to
mid-size, multiprocessor systems that support up to 500 users.

MARKETING AND SALES

In the United States, the Company's systems are marketed by a direct
sales and marketing organization, which included, as of February 28, 1997, 113
sales, sales support, administrative and marketing personnel located in the
corporate headquarters and five satellite offices. In addition, the Company
markets its systems internationally through its subsidiaries, which operate in
Hong Kong, Singapore, Canada, Puerto Rico, Venezuela, Mexico and the Netherlands
(including a branch office in the United Kingdom) and through various
distributors that are exclusive in their jurisdiction. The Company's
international subsidiaries employed, as of February 28, 1997, 86 sales, sales
support, administrative and marketing personnel who are engaged in the marketing
of MAI products from two sales locations in Canada and 15 other sales locations
abroad. Additionally, the Company also sells its products through indirect
channels outside the United States. These indirect channels include independent
VARs, distributors, ISVs and local sales agents.

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

MAINTENANCE AND SUPPORT SERVICE

Remote network management, software support and on-site equipment
maintenance are key components of the Company's business strategy. The Company
operates around-the-clock redundant remote network management and software
support centers. In the event that power or communications are shut down at any
facility, through advanced telecommunication systems, calls are automatically
rerouted to remote support facilities. Trained personnel respond to customer
requests for application product support and provide remote network management
to anticipate and correct potential problems on customers' LANs and WANs.

The Company also provides on-site equipment maintenance, preventive
maintenance and reconditioning services for substantially all of the legacy
systems marketed by the Company. These services are available throughout the
United States and Canada (through outsource agreements with Olivetti North
America, Inc. and Olivetti Canada Ltd.), Puerto Rico and Venezuela. As of
February 28, 1997, the Company employed approximately 53 trained service
technicians at six service locations in Canada, Puerto Rico and Venezuela. From
October 15, 1996 through February 1997, primarily as a result of the recent
outsource agreement with Olivetti, the Company reduced its employees by
approximately 183 persons and has eliminated five service locations in the
United States and seven service locations in Canada.

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

PRODUCTION AND PROCUREMENT

In response to market demand for standardized hardware and software
products, all of the Company's current systems offerings utilize an open systems
architecture, which means that they will operate on a wide variety of
third-party hardware equipment. At present, the Company has relationships with a
number of

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suppliers of such systems, including Bay Networks, Cisco Systems, Compaq
Computer, Hewlett Packard and IBM Corporation and distributors such as MicroAge
and Ingram Micro. Management believes that these relationships have enabled the
Company to reduce product costs, permit earlier availability of new technology
and offer customers products with superior performance at competitive prices.
The Company no longer manufactures proprietary hardware products but does
refurbish for resale previously owned MAI equipment.

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

ORDER, SHIPMENT AND BACKLOG

The Company generally records and enters into backlog a purchase order
for equipment and software when it receives a customer's written order
requesting delivery within six months, once systems configuration and contract
provisions are verified. In the United States and in some areas outside the
United States, a deposit is also required from a customer before the order is
recorded and entered into backlog. Orders that are canceled by the customer and
orders that are not shipped within one year are removed from backlog. Orders
that are removed from backlog for non-shipment are restored if they are
reinstated by the customer.

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

RESEARCH AND DEVELOPMENT

The Company's research and development activities are focused on the
development of products for hospitality, gaming and manufacturing information
management systems and on extending and enhancing OpenBASIC. The Company's use
of OpenBASIC application environments and its system integration capability
permits it to have substantial independence from individual hardware
manufacturers and minimized the need for hardware research and development.

As of February 28, 1997, the Company employed 36 engineers, programmers
and other technical personnel in research and development activities. For the
first three quarters of 1996, the Company expensed approximately $1,366,000 for
research and development. The Company's research and development expenditures in
1995 related primarily to support and enhancement of existing software products.
In the years ended December 31, 1995, 1994 and 1993, the Company expensed
$2,667,000, $2,698,000 and $2,901,000, respectively, for research and
development. These amounts reflect engineering labor, material and engineering
overhead.

CUSTOMERS

The Company's customers are generally small and medium-sized
businesses, with fifty to 500 employees. During 1995 and 1996, no single
customer accounted for 10% or more of the Company's revenues.

COMPETITION

Competition is vigorous in all sectors of the worldwide market for
computer-based applications systems such as those which the Company offers. The
Company has numerous competitors varying widely in their size, capabilities,
market segment and geographical area, many of which are larger and have
financial resources far greater than the Company.

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Within its targeted application markets, the Company has positioned
itself to sell complete solutions to the hospitality and gaming industries and
to mid-sized manufacturing businesses. Regarding the hospitality, gaming and
manufacturing application software and system markets, the Company competes with
several applications software providers, local VARs and ISVs who usually resell
hardware, software and networking products of larger original equipment
manufacturers, and internal information management departments with significant
application development resources. In marketing its products and services to
mid-sized manufacturers, the Company competes with many software applications
vendors, none of which individually commands significant market share, and local
VARs and ISVs, who usually resell hardware or networking products of larger
original equipment manufacturers. The VARs and ISVs with which the Company often
competes are typically smaller organizations that are usually dependent on one
or two specialized software application products targeted for specific industry
market segments. Although certain of these suppliers have national (or
international) capability, most are regional and unable to provide the full
range of technical support and maintenance services offered by the Company.

The Company also competes with independent service organizations
("ISOs"), which provide service to end users of the Company's software products,
and third-party maintenance organizations ("TPMs"), which provide service to
users of the Company's hardware products. In addition to competing with these
companies on the basis of price and quality of service and support, the Company
has also sought to enforce its copyrights when these organizations infringe upon
its rights. For example, the Company's application software licenses prohibit
end users or their agents from porting its software to different hardware
platforms, an act which is sometimes performed by ISOs. The Company has
prevailed in litigation against TPMs who have utilized its proprietary
diagnostic software to provide maintenance services to customers of the
Company's hardware products. See "--Legal Proceedings." Many of the Company's
services are also provided by in-house MIS departments.

TRADEMARKS, COPYRIGHTS AND LICENSES

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

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

OpenBASIC and certain other intellectual property formerly owned by the
Company is currently owned by Triple P Management BV ("Triple P"), a corporation
organized under the laws of the Netherlands, which acquired the rights from
Application Systems, Inc. ("ASI"), a Delaware corporation controlled by the
Company's former bank lenders (the "Banks"), which holds the stock of certain of
the Company's former European subsidiaries, which stock was acquired by the
Banks in connection with the foreclosure described under "Chapter 11 Bankruptcy
Proceedings." MAI retained an exclusive license to use the intellectual property
in the western hemisphere. The license is perpetual and royalty free, but
subject to termination under certain circumstances.

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LEGAL PROCEEDINGS

The Company has filed and will continue to file objections to claims
asserted in its Chapter 11 bankruptcy proceedings. The majority of these claims
would, if upheld, give rise to allowed unsecured claims entitling the respective
claimants to distributions of new Common Stock. A number of filed objections in
respect of secured claims, administrative claims, priority claims, tax claims,
convenience claims and cure claims were still outstanding at December 31, 1996.
To the extent the Company's objections to such claims are not sustained, the
Company will be obligated to pay such claims in a lump sum in the case of
convenience claims and administrative claims and, in the case of secured claims,
priority claims, tax claims and cure claims, on a deferred basis over six to
seven years, depending on the type of claim, at an interest rate of 6% in
accordance with the Plan of Reorganization. The Company does not believe the
outcome of these objections to be material.

The Company is also involved in various other legal proceedings which
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 or results of operations of the Company. See "--Competition."

EMPLOYEES

As of February 28, 1997, the Company had approximately 550 employees,
of which 364 were employed in the United States, 33 in Canada, 14 in Mexico, 13
in the Netherlands, 11 in Puerto Rico, 56 in Venezuela and 60 in Asia (Hong
Kong, People's Republic of China, Indonesia, Malaysia and Singapore). From
October 15, 1996 through February 1997, primarily as a result of the recent
outsource agreement with Olivetti, the Company reduced its employees by
approximately 183 persons. In March 1995, a petition for election of a
collective bargaining representative was filed with regard to field service
technicians at the Company's Chicago, Illinois office, but the petition was
withdrawn prior to the election. The Company has not experienced any work
stoppages and considers its relationship with its employees to be good.

CHAPTER 11 BANKRUPTCY PROCEEDINGS

Prior to its Chapter 11 Bankruptcy proceedings, the Company had
followed certain business strategies that eventually led to its defaulting on
its and its Canadian subsidiary's U.S. and Canadian Credit Agreements (the
"Credit Agreements"). Thereafter, shortly before the Company filed for
bankruptcy protection, the bank lenders (the "Banks"), parties to the Credit
Agreements, foreclosed on all of the outstanding capital stock of certain of the
Company's former European subsidiaries, on certain intellectual property of the
Company and on amounts due to the Company from the European subsidiaries in
satisfaction of all amounts due under the Credit Agreements which, at such time,
amounted to approximately $84,500,000.

On November 18, 1993, the United States Bankruptcy Court for the
District of Delaware entered an order confirming the Plan of Reorganization. The
Company had been operating under Chapter 11 of the Bankruptcy Code since April
12, 1993. The order was not appealed and became final and nonappealable on
November 29, 1993. On January 27, 1994, the Bankruptcy Court entered an order
which fixed January 27, 1994 as the effective date of the Plan of
Reorganization. The 1995 Form 10-K which is incorporated by reference herein
contains a summary of the material features of the Plan of Reorganization. Such
summary is qualified in its entirety by reference to the Plan of Reorganization
which is filed as an exhibit to the Registration Statement of which this
Prospectus is a part.

The Plan of Reorganization provided for, among other things, (i) the
satisfaction of substantially all of the Debtors' unsecured (non-priority)
indebtedness through the issuance of the Company's Common Stock and (ii) the
cancellation of existing equity interests in the Debtors. The Plan of
Reorganization also provided

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for the substantive consolidation and merger of the Debtors and the
corresponding extinguishment of intercompany liabilities and contracts among the
Debtors. At June 30, 1996, the aggregate amount of tax claims had been reduced
to $711,697 and the Company continues to dispute certain tax claims.

The Company commenced distribution of Common Stock to holders of
unsecured claims on April 14, 1994. The Common Stock is issued pursuant to
section 1145 of the Bankruptcy Code, which contains an exemption from
registration under the Securities Act of 1933, as amended. Through December 31,
1996, the Company had distributed 6,728,256 shares of Common Stock to its former
creditors, and the Company has estimated that an additional 75,000 shares are
issuable in settlement of other creditor claims. The Plan of Reorganization
provided holders of unsecured claims the right to elect a limited cash recovery,
and through December 31, 1996, $74,570 in cash had been distributed pursuant to
such provision.

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PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth (i) certain information regarding
beneficial ownership of the Company's Common Stock as of February 28, 1997 by
(1) each person who is known by the Company to own beneficially more than 5% of
the outstanding shares of Common Stock, (2) each director and executive officer
of the Company, (3) all directors and executive officers of the Company as a
group and (4) VSOP Computer, Inc., Roy Student and Harley Kaufman (the "Selling
Stockholders") and (ii) the information set forth in (i) as adjusted to reflect
the sale of the shares offered hereby. Unless otherwise indicated below, to the
knowledge of the Company, all persons listed below have sole voting and
investment power with respect to the shares of Common Stock, except to the
extent authority is shared by spouses under applicable law.

BENEFICIAL OWNERSHIP PRIOR BENEFICIAL OWNERSHIP
TO OFFERING(1) AFTER OFFERING(1)
------------------------------ -------------------------
NUMBER OF
NUMBER OF SHARES TO NUMBER
NAME SHARES PERCENT BE SOLD OF SHARES PERCENT
- -------------------------------------- ----------------- --------- ------------ ------------ ---------

CSA(2)(3)............................. 517,319 6.0 % -- 517,319 6.0 %
Montreux Equity
Partners III, L.P.(3)................. 118,569 1.4 -- 118,569 1.4
Richard S. Ressler(4)................. 1,414,791 16.4 -- 1,414,791 16.4
CPI Securities LP group (5)........... 955,000 11.1 -- 955,000 11.1
George G. Bayz(6)(7).................. 34,250 * -- 34,250 *
Lewis H. Stanton...................... -- -- -- -- --
W. Brian Kretzmer(6)(7)............... 20,833 * -- 20,833 *
Stanley P. Witkow(6)(7)............... 22,833 * -- 22,833 *
Alan A. Gleicher...................... 12,500 * -- 12,500 *
Morton O. Schapiro.................... 12,500 * -- 12,500 *
VSOP Computer, Inc.(8)................ 98,462 1.1 142,222 -- --
Harley Kaufman(9) 7,465 * 8,039 -- --
Roy Student(9) 7,465 * 8,039 -- --
All directors and executive officers as
a group (7 persons)................... 1,467,707 17.0 -- 1,467,707 17.0

<FN>
- ---------------
* Less than 1%.
(1) The number of shares beneficially owned by each beneficial owner listed
above is based upon the numbers reported by such owner in documents
publicly filed with the Commission, publicly available information or
information available to the Company. The percentage of each class is
calculated based on the total number of shares of each class actually
outstanding at February 28, 1997. Such number (i.e. 8,615,851 shares)
differs from the total of shares issued and issuable as of such date. The
foregoing table includes shares with respect to which such beneficial
owner has the right to acquire beneficial ownership as specified in Rule
13d-3(d)(1) of the Exchange Act.
(2) The shares are held by Computer Systems Advisors (Private) Limited and
CSA Pte Ltd (collectively, "CSA"). CSA's address is 221 Henderson Road,
08-01, Henderson Building, Singapore 0315.

-20-
<PAGE>

(3) On October 28, 1996, the Company filed a registration statement on Form
S-3 with respect to the shares held by CSA and Montreux Equity Partners
III, L.P. Such stockholders beneficially own in the aggregate 635,888
shares of Common Stock and the Company currently estimates, based on
certain assumptions that are subject to change, that it will issue up to
an additional 216,255 shares to such stockholders. The estimated
additional shares are not included in the table.
(4) Includes a warrant to purchase 625,000 shares of Common Stock, which is
currently exercisable. Mr. Ressler's address is c/o MAI Systems
Corporation, 9600 Jeronimo Road, Irvine, California 92718. Mr. Ressler
also holds a warrant to purchase 50,000 shares of Common Stock, which
warrant was issued March 6, 1997 to Orchard Capital Corporation and
transferred to him on that date.
(5) CPI Securities L.P., Canpartners Incorporated, The Value Realization Fund
L.P., The Canyon Value Realization Fund (Cayman), Ltd., GRS Partners II,
Mitchell R. Julis, Joshua S. Friedman, R. Christian B. Evensen, K. Robert
Turner, Patrick Dooley, Scott Imbach, Monica Young, Douglas Claman and
Michael McCarthy, as a group, beneficially own 955,000 shares. The
address of all the above-referenced entities other than The Canyon Value
Realization Fund (Cayman), Ltd. and GRS Partners II is 9665 Wilshire
Boulevard, Suite 200, Beverly Hills, California 90212; the addresses for
The Canyon Value Realization Fund (Cayman), Ltd. and GRS Partners II are
c/o MeesPierson (Cayman) Limited, British American Center, Phase 3, Dr.
Roy's Drive, Grand Cayman, B.W.I. and c/o Grosvenor Capital Management,
L.P., 333 West Wacker Drive, Suite 1600, Chicago, Illinois 60606. The
955,000 shares does not include 750,000 shares of Common Stock issuable
upon exercise of warrants held by The Value Realization Fund, L.P., The
Canyon Value Realization Fund (Cayman), Ltd., GRS Partners II and CPI
Securities L.P. On March 17, 1997, the Company filed a registration
statement on Form S-3 to register 400,000 shares of Common Stock held by
The Value Realization Fund, L.P., The Canyon Value Realization Fund
(Cayman), Ltd., GRS Partners II and CPI Securities, L.P., as well as the
warrants held by such entities and the 750,000 shares of Common Stock
issuable upon exercise of such warrants.
(6) Includes shares subject to options that are currently exercisable. For
Mr. Bayz (31,249 shares), Mr. Kretzmer (20,833 shares), Mr. Witkow
(20,833 shares), Mr. Gleicher (12,500 shares) and Mr. Schapiro (12,500
shares).
(7) Excludes shares subject to options granted during 1995 and 1996 and that
become exercisable incrementally with full vesting occurring three years
following the date of grant. For Mr. Bayz (172,500 shares), Mr. Kretzmer
(77,500 shares) and Mr. Witkow (77,500 shares).
(8) The shares being sold by the VSOP Selling Stockholder are issued to the
VSOP Selling Stockholder pursuant to the Stock Purchase Agreement. The
Company is obligated pursuant to the Stock Purchase Agreement to issue to
the Selling Stockholder an aggregate number of shares with a total fair
market value of $960,000. The number of shares issued will be determined
based on the closing price of the Common Stock on the day immediately
preceding the effective date of the registration statement of which this
Prospectus forms a part. Based on an assumed closing price of $6.50 (the
closing price as of March 20, 1997), the Company would be obligated to
issue an additional 43,760 shares of Common Stock to the Selling
Stockholder. Such additional 43,760 shares are included in the column
entitled Number of Shares to be Sold, but not in the column entitled
Beneficial Ownership Prior to Offering. The address for the VSOP Selling
Stockholder is 2875 Cooper Creek Drive, Henderson, Neveda 89014.
(9) The shares being shold by the Individual Selling Stockholders are issued
to the Individual Selling Stockholders pursuant to the Option
Cancellation Agreement. The Company is obligated pursuant to the Option
Cancellation Agreement to issue to each of the Selling Stockholders an
aggregate number of shares with a total fair market value of $52,250. The
number of shares issued will be determined based on the closing price of
the Common Stock on the date immediately preceding the effective date of
the registration statement of which this Prospectus forms a part. Based
on an assumed closing price of $6.50 per share (the closing price as of
March 20, 1997), the Company would be obligated to issue an additional
574 shares to each of the Individual Selling Stockholders. Such
additional 1,148 shares are included in the column entitled Number of
Shares to be Sold, but not in the column entitled Beneficial Ownership
Prior to Offering. Harley Kaufman's address is 3131 Piedmont Road, N.E.,
Suite 200, Atlanta, Georgia 30305. Roy Student's address is c/o Gaming
Systems International, 6000 Southeastern Blvd., Suite 6A, Las Vegas,
Nevada 89119.

</FN>
</TABLE>

The services of Richard S. Ressler, Chairman of the Board and Director
of the Company, are provided pursuant to an agreement entered into in August
1994 with Orchard Capital Corp. ("Orchard"), which is his employer. Pursuant to
that agreement, Orchard agreed to provide Mr. Ressler's services on a
non-exclusive basis for two years, which expired in August 1996. In October
1996, the agreement was retroactively renewed for one additional year. Orchard
is paid $24,000 per month during the term of the

-21-
<PAGE>

agreement ($20,000 per month during the original term) and was awarded a bonus
of $1,187,500 in January 1996. Additionally, Orchard was granted a warrant to
purchase up to 625,000 shares of the Company's Common Stock at $1.90 per share
and a warrant to purchase up to 50,000 shares of Common Stock at $7.50 per
share, which warrants are currently exercisable; Mr. Ressler currently holds
such warrants directly. The warrants expire August 14, 1999 and March 6, 2002,
respectively.

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 25,000,000
shares of Common Stock, par value $0.01 per share (the "Common Stock"). At
February 28, 1997, there were 8,690,851 shares of Common Stock issued and
issuable. This total does not include 993,793 shares issuable upon the exercise
of outstanding options under the Company's stock option plans, 699,750 shares
issuable upon the exercise of outstanding warrants, up to 216,255 shares that
the Company expects to issue pursuant to the agreements relating to the
acquisition of HIS and up to 750,000 shares issuable upon exercise of
outstanding warrants issued on March 3, 1997. Most of the 699,750 warrants
mentioned above are held by Mr. Richard S. Ressler. See "Principal and Selling
Stockholders."

Shares of Common Stock have been and are being issued as described
above under "Chapter 11 Bankruptcy Proceedings" and will also be issued to
optionees under the Company's 1993 Stock Option Plan and the 1995 Non-Employee
Directors Stock Option Plan. At February 28, 1997, the number of shares of
Common Stock reserved for issuance upon exercise of options (both granted and
available for grant) equaled 1,034,172. The information in the preceding
paragraph reflects options granted. The Company's stock option plans will permit
additional options to be granted in the future.

All outstanding shares of Common Stock are, and the shares to be issued
as contemplated herein will be, validly authorized, fully paid and
nonassessable. All holders of Common Stock have full voting rights and are
entitled to one vote for each share held of record on all matters submitted to a
vote of the stockholders. Votes may not be cumulated in the election of
directors. Stockholders have no preemptive or subscription rights. The Common
Stock is neither redeemable nor convertible, and there are no sinking funds
provisions. Holders of Common Stock are entitled to dividends when and as
declared by the Board of Directors from funds legally available therefore and
are entitled in the event of liquidation, to share ratably in all assets
remaining after payment of liabilities. The rights of holders of Common Stock
will be subject to any preferential rights of any Preferred Stock which may be
issued in the future.

The Company's Amended Certificate of Incorporation does not presently
authorize any Preferred Stock.

CERTAIN CHARTER AND BY-LAWS PROVISIONS

Certain provisions of the Company's restated certificate of
incorporation and by-laws could have anti-takeover effects and may delay, defer
or prevent a takeover attempt that a stockholder might consider in its best
interest. These provisions are intended to enhance the likelihood of continuity
and stability in the composition of the policies formulated by the board of
directors. In addition, these provisions are also intended to ensure that the
board of directors will have sufficient time to act in what the board of
directors believes to be the best interests of the Company and its stockholders.

The Company's restated certificate of incorporation and by-laws require
that special meetings of the stockholders of the Company may be called only by
the board of directors, the Chairman of the Board, or the President, and shall
be called by the Secretary upon the request in writing of a stockholder or
stockholders holding of record at least 51% of the voting power of the issued
and outstanding shares of stock.

-22-
<PAGE>

SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW

The Company is subject to Section 203 of the Delaware General
Corporation Law which, subject to certain exceptions, prohibits a Delaware
corporation from engaging in a business combination (as defined therein) with an
"interested stockholder" (defined generally as any person who beneficially owns
15% or more of the outstanding voting stock of the Company or any person
affiliated with such person) for a period of three years following the date that
such stockholder became an interested stockholder, unless (i) prior to such date
the board of directors of the corporation approved either the business
combination or the transaction that resulted in the stockholder becoming an
interested stockholder; (ii) upon consummation of the transaction that resulted
in the stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation at the
time the transaction commenced (excluding for purposes of determining the number
of shares outstanding those shares owned (x) by directors who are also officers
of the corporation and (y) by employee stock plans in which employee
participants do not have the right to determine confidentially whether shares
held subject to the plan will be tendered in a tender or exchange offer); or
(iii) on or subsequent to such date the business combination is approved by the
board of directors of the corporation and authorized at a meeting of
stockholders by the affirmative vote of at least 662/3% of the outstanding
voting stock of the corporation not owned by the interested stockholder.

LIMITATION ON DIRECTORS' AND OFFICERS' LIABILITY

The Company's certificate of incorporation limits the liability of
directors to the fullest extent permitted by the Delaware General Corporation
Law. In addition, the Company's by-laws provide that the Company shall indemnify
directors and officers of the Company as permitted by such law.

TRANSFER AGENT

The transfer agent and registrar for the Common Stock is ChaseMellon
Shareholder Services, L.L.C.

PLAN OF DISTRIBUTION

The sale or distribution of the Offered Shares may be effected directly
to purchasers by the Selling Stockholder as principal or through one or more
underwriters, brokers, dealers or agents from time to time in one or more
transactions (which may involve crosses or block transactions) (i) on any stock
exchange or in the over-the-counter market, (ii) in transactions otherwise than
on any stock exchange or in the over-the-counter market or (iii) through the
writing of options (whether such options are listed on an options exchange or
otherwise) on, or settlement of short sales of, the Offered Shares. Any of such
transactions may be effected at market prices prevailing at the time of sale, at
prices related to such prevailing market prices, at varying prices determined at
the time of sale or at negotiated or fixed prices, in each case as determined by
the Selling Stockholder or by agreement between the Selling Stockholder and
underwriters, brokers, dealers or agents, or purchasers. If the Selling
Stockholder effects such transactions by selling Offered Shares to or through
underwriters, brokers, dealers or agents, such underwriters, brokers, dealers or
agents may receive compensation in the form of discounts, concessions or
commissions from the Selling Stockholder or commissions from purchasers of
Offered Shares for whom they may act as agent (which discounts, concessions or
commissions as to particular underwriters, brokers, dealers or agents may be in
excess of those customary in the types of transactions involved). The Selling
Stockholder and any brokers, dealers or agents that participate in the
distribution of the Offered Shares may be deemed to be underwriters, and any
profit on the sale of Offered Shares by them and any discounts, concessions or
commissions received by any such underwriters, brokers, dealers or agents may be
deemed to be underwriting discounts and commissions under the Securities Act.

-23-
<PAGE>

Under the Securities laws of certain states, the Offered Shares may be
sold in such states only through registered or licensed brokers or dealers. In
addition, in certain states the Offered Shares may not be sold unless an
exemption from registration or qualification is available and is complied with.

The Company will pay all of the expenses incident to the registration,
offering and sale of the Offered Shares to the public hereunder other than
commissions, fees and discounts of underwriters, brokers, dealers and agents.
The Company estimates that the expenses of the offering to be borne by it will
be approximately $20,000.

VALIDITY OF COMMON STOCK

The validity of the shares of Common Stock offered hereby is being
passed upon for the Company by Stanley P. Witkow, Esq., General Counsel of the
Company. See "Principal and Selling Stockholders."

EXPERTS

The consolidated financial statements and schedule of MAI Systems
Corporation at December 31, 1995 and 1994, and for each of the years in the
three-year period ended December 31, 1995, have been incorporated by reference
herein and in the Registration Statement in reliance upon the report of KPMG
Peat Marwick LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.

-24-
<PAGE>

- --------------------------------------- -----------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON
HAS BEEN AUTHORIZED IN CONNECTION WITH
THIS OFFERING TO GIVE ANY INFORMATION OR
TO MAKE ANY REPRESENTATION NOT CONTAINED
IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, THE SELLING
STOCKHOLDERS OR ANY OTHER PERSON. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER MAI SYSTEMS
TO SELL OR A SOLICITATION OF ANY OFFER
TO BUY ANY OF THE SECURITIES OFFERED CORPORATION
HEREBY TO ANY PERSON IN ANY JURISDICTION
IN WHICH IT IS UNLAWFUL TO MAKE ANY SUCH
OFFER OR SOLICITATION IN SUCH COMMON STOCK
JURISDICTION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF OR THAT THE -------------------------
INFORMATION CONTAINED HEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO ITS DATE. PROSPECTUS

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

TABLE OF CONTENTS Page
Available
Information..........................2
Incorporation of Certain
Documents by Reference.............2
Prospectus Summary...................3
Risk Factors.........................5
The Company..........................9
Use of Proceeds.....................10
Business............................10
Chapter 11 Bankruptcy
Proceedings.........................18
Principal and Selling
Stockholders........................20
Description of Capital Stock........22
Plan of Distribution................23
Validity of Common Stock............24
Experts.............................24

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

<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution.

The expenses in connection with the issuance and distribution of the securities
being registered, other than underwriting discounts and commissions, are
estimated as follows:

Securities and Exchange Commission Registration Fee.........$ 323
Transfer Agent and Registrar Fees*.......................... 1,000
Legal Fees and Expenses*.................................... 10,000
Accounting Fees and Expenses*............................... 4,000
Miscellaneous*.............................................. 4,677
-------
Total....................................................... $20,000
======

* Estimated

Item 15. Indemnification of Directors and Officers.

Section 145 of the Delaware General Corporation Law grants to the
Company the power to indemnify the officers and directors of the Company, under
certain circumstances and subject to certain conditions and limitations as
stated therein, against all expenses and liabilities incurred by or imposed upon
them as a result of suits brought against them as such officers and directors if
they act in good faith and in a manner they reasonably believe to be in or nor
opposed to the best interests of the Company and, with respect to any criminal
action or proceeding, have no reasonable cause to believe their conduct was
unlawful. The Company's Certificate of Incorporation provides for
indemnification of officers and directors to the fullest extent permitted by
law.

Item 16. Exhibits.

2.1 First Amended Joint Chapter 11 Plan of Reorganization of MAI
Systems Corporation, Brooke Acquisition Corp. and CLS Software,
Inc., as confirmed by the United States Bankruptcy Court for the
District of Delaware on November 13, 1993 (incorporated by
reference to Exhibit 2.1 to the Registrant's Current Report on
Form 8-K dated January 15, 1994).

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

3.1 Amended and Restated Certificate of Incorporation of Registrant,
as amended.*

3.2 Bylaws of Registrant (incorporated by reference to Exhibit 3.2
to Registrant's registration statement on Form S-3 (Commission
File No. 333-14947) filed on October 28, 1996).

5.1 Opinion of Stanley P. Witkow, Esq. as to validity of Common
Stock.*

23.1 Consent of KPMG Peat Marwick LLP.

23.3 Consent of Stanley P. Witkow, Esq. (included in the opinion
filed as Exhibit 5.1 to this Registration Statement).

24.1 Power of Attorney (included on page II-4 hereof).

- ---------------------------
* To be filed by amendment.

<PAGE>

Item 17. Undertakings

The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933 (the "Securities
Act"), each filing of the Registrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act")
(and, where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference
in this Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.

Insofar as indemnification for liabilities under the Securities Act of
1933 (the "Securities Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the provisions described in
Item 15 above, or otherwise, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim of indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in a successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the registration statement; and

(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;

provided, however, that paragraphs (1)(i) and (1)(ii) do not
apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.

II-2
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Irvine, California, on the th day of March 21, 1997.

MAI SYSTEMS CORPORATION
(Registrant)

By: /s/ George G. Bayz
George G. Bayz
Chief Executive Officer

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Stanley P. Witkow and L wis H. Stanton,
his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments, including post-effective
amendments, to this Registration Statement and any related Rule 462(b)
registration statement or amendment thereto, and to file the same, with all
exhibits thereto, and other documents in connection therewith with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully and to all intents and purposes as he might or could do in
person hereby ratifying and confirming all that said attorneys-in-fact and
agents, or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated and on March 21, 1997.

/s/ Richard S. Ressler Chairman of the Board and Director
Richard S. Ressler

/s/ George G. Bayz Director and Chief Executive Officer
George G. Bayz

/s/ Lewis H. Stanton Executive Vice President and Chief Operating and
Lewis H. Stanton Financial Officer (Chief Accounting Officer)

/s/ Alan A. Gleicher Director
Alan A. Gleicher

/s/ Morton O. Schapiro Director
Morton O. Schapiro

II-3
<PAGE>

EXHIBIT INDEX

EXHIBIT
NUMBER DOCUMENT DESCRIPTION

2.1 First Amended Joint Chapter 11 Plan of Reorganization of MAI Systems
Corporation, Brooke Acquisition Corp. and CLS Software, Inc., as
confirmed by the United States Bankruptcy Court for the District of
Delaware on November 13, 1993 (incorporated by reference to Exhibit
2.1 to the Registrant's Current Report on Form 8-K dated January 15,
1994).

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

3.1 Amended and Restated Certificate of Incorporation of Registrant, as
amended.*

3.2 Bylaws of Registrant (incorporated by reference to Exhibit 3.2 to
Registrant's registration statement on Form S-3 (Commission File No.
333-14947) filed on October 28, 1996).

5.1 Opinion of Stanley P. Witkow as to validity of Common Stock.*

23.1 Consent of KPMG Peat Marwick LLP.

23.3 Consent of Stanley P. Witkow (included in the opinion filed as
Exhibit 5.1 to this Registration Statement).

24.1 Power of Attorney (included on page II-4 hereof).

- ---------------------------------
* To be filed by amendment.

II-4

CONSENT OF INDEPENDENT AUDITORS

The Board of Directors
MAI Systems Corporation:

We consent to the incorporation by reference in the Registration Statement on
Form S-3 of MAI Systems Corporation of our report dated February 9, 1996,
relating to the consolidated balance sheets of MAI Systems Corporation as of
December 31, 1995 and 1994, and the related consolidated statements of
operations, stockholders' equity and cash flows and related schedule for each of
the years in the three-year period ended December 31, 1995, which report appears
in the December 31, 1995 Annual Report on Form 10-K of MAI Systems Corporation.

We also consent to the reference to our firm under the heading "Experts" in the
prospectus.

/s/ KPMG Peat Marwick LLP

Orange County, California
March 21, 1997