SecProbe.io

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Mail Stop 4-6

January 19, 2005

James W. Dolan
Chief Financial and Operating Officer
MAI Systems Corporation
26110 Enterprise Way
Lake Forest, California 92630

Re:	MAI Systems Corporation
	Schedule 13E-3 - File No. 5-38111, filed December 16, 2004
	Schedule 14C - File No. 1-09158, filed December 16, 2004
      Form 10-Q for the quarter ended September 30, 2004 - File
No.
1-09158

Dear Mr. Dolan:

      We have reviewed your filing and have the following
comments.
Where indicated, we think you should revise your document in
response
to these comments.  If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary.  Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.

      Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects.  We welcome
any questions you may have about our comments or any other aspect
of
our review.  Feel free to call us at the telephone numbers listed
at
the end of this letter.

General

1. Rule 13e-3 requires that each issuer and affiliate engaged in a
going private transaction file a Schedule 13E-3 and furnish the
required disclosures.  Mr. Richard S. Ressler, Orchard Capital
Corporation, James W. Dolan, W. Brian Kretzmer, and HIS Holding,
LLC
approved this reverse stock split by written consent and are
affiliates of the company.  Therefore, we believe they must be
included as filing persons on the Schedule 13E-3.  Please see
Section
III of Release No. 34-17719 and Section II.D.3 of our Current
Issues
and Rulemaking Projects Outline dated November 14, 2000 for
additional guidance.

2. Canyon Capital Advisors, LLC approved the transaction, and will
remain as one of the stockholders after the reverse stock split.
Therefore, we believe that Canyon Capital Advisors, LLC may also
be
engaged in this going private transaction.  Please add this
company
as a filer on the Schedule 13E-3 or supplementally explain why it
should not be so included.

3. Please note that each new filing person must individually
comply
with the filing, dissemination and disclosure requirements of
Schedule 13E-3.  A joint Schedule 13E-3 may be used by all
required
filers, however.  Revise the information to include all of the
information required by Schedule 13E-3 and its instructions for
each
additional filing person.  For example, each filing person must
include a statement as to whether such person believes the Rule
13e-3
transaction to be fair to unaffiliated security holders and an
analysis of the material factors upon which each relied in
reaching
such a conclusion.  Please see Item 1014 with respect to Item 8 of
Schedule 13E-3.  Please also note in particular Instruction C of
Schedule 13E-3 and the disclosure requirements of Items 1002(e)
and
(f) with respect to Item 2 of Schedule 13E-3.

4. Please provide us with your analysis for why the investor
group`s
other purchases of shares during the past year did not constitute
the
first steps in the going private transaction.  Refer to Rule 13e-
3(a)(3) and Question and Answer No. 4 of Exchange Act Release No.
34-
17719 (April 13, 1981).

Schedule 13E-3

Item 6. Purpose of the Transaction and Plans or Proposals.

5. Please provide the disclosure required under Item 1006(c) of
Regulation M-A.  Please see the Instruction to Item 6 of Schedule
13E-3 for additional guidance.

Item 7. Purposes, Alternatives, Reasons and Effects.

6. Please incorporate the section titled "Substantive Factors
Disfavoring the Reverse Stock Split" into Item 7(d) of your
Schedule
13E-3.

Item 8. Fairness of the Transaction.

7. With respect to Item 8(f) of your Schedule 13E-3, please state
whether any officer of the type described in paragraph (viii) of
Instruction 2 to Item 1014 of Regulation M-A has been received.

Item 9. Reports, Opinions, Appraisals and Negotiations.

8. Your incorporation by reference of the section titled "Special
Committee of the Board of Directors" does not appear to address
the
requirements of Item 1015(a) of Regulation M-A.  We note your
disclosure on page 15, however.  Please incorporate the section
entitled "Procedural Factors Disfavoring the Reverse Stock Split;
Interests of Our Chairman and Executive Officers in the Reverse
Stock
Split" or add the required disclosure to the section you have
currently incorporated by reference.

Schedule 14C

9. We note your use of such defined terms "Effective Time,"
"Cashed-
Out Stockholders," "Common Stock" and "Registration and Periodic
Reporting Obligations."  Please refrain from using so many defined
terms in your disclosure as it inhibits the readability of the
document.  Over-reliance on defined terms forces readers to learn
a
new vocabulary in order to understand the disclosure.  Please
revise
your disclosure so that the definitions of your terms are clear
from
their context.

10. The individual members of the "Investor Group" should be
identified where that term is first used.

Summary Term Sheet, pp. 4-6

11. Please revise your summary term sheet to include a discussion
of
the additional filing persons referred to above and their
relationships to you.  Please also briefly discuss their recent
transactions with you.  The expanded disclosure should include a
section discussing their interests in this transaction that are
different from and potentially in conflict with those of
unaffiliated
shareholders generally.

12. The summary term sheet should discuss only the most material
features of this transaction.  In this regard, consider deleting
or
relocating extraneous information that detracts from the
presentation
of the most material aspects of the reverse stock split.  For
example, consider whether the information presented under "Effects
if
Reverse Stock Split is not Consummated" is critical, given the
consents you have received.  In addition, is the disclosure under
"Regulatory Filings and Approvals" necessary to a shareholder`s
understanding of the most materials terms of the reverse stock
split?
Please make these and any other necessary changes in order to
enhance
the readability of this section.

13. Please confirm that there were no negotiations with the
investor
group prior to November 15, 2004.  If there were any such
negotiations, please amend your disclosure here, in your summary
term
sheet, and in your Special Factors section to describe the
entirety
of the company`s dealings with the investor group, including, but
not
limited to, the identity of the members of the investor group, the
date and circumstances of the initial suggestion that the investor
group would become involved in the company`s going-private
transaction, members` relationship to the company, if any, and the
dates and topics of discussion of all meetings and all persons in
attendance.  In this respect, we note that in view of the possible
conflicts of interest involved in the reverse stock split, your
board
of directors unanimously decided on November 15, 2004, that it
would
be advisable to form the special committee of independent members
of
our board of directors consisting of Messrs. Mayer and Ross, with
Mr.
Ross as the chairman of the special committee, to evaluate the
reverse stock split proposal and assess whether the proposal is in
the best interests of stockholders.

Special Factors
The Reverse Stock Split
Effective Time of the Reverse Stock Split, p. 7

14. Please revise your disclosure to clearly state the record date
for the reverse stock split.  Please reconcile your current
disclosure that the record date is to be the "Effective Date" with
your disclosure on the first page which defines "Record Date" as
December 30, 2004.

Approval of the Reverse Stock Split By Our Board of Directors and
Stockholders, pp. 7-8

15. According to your disclosure on page 24, it appears that the
43,172,110 shares held by HIS Holding is comprised of (1)
10,000,000
shares issued pursuant to a private placement of $1,000,000 and
(2)
the conversion of $3,194,156 of indebtedness plus accrued
interest.
Please supplementally reconcile this share holding with the
disclosure you made in your definitive proxy statement filed
August
25, 2004 requesting approval from stockholders for the private
placement and conversion of indebtedness.  Your disclosure in the
proxy statement states that the $3,194,156 of indebtedness was to
be
converted at $.10 per share of common stock without any reference
to
the conversion of accrued interest.  Please inform us of the basis
upon which you were able to convert the accrued interest in light
of
the proxy statement disclosure and your stockholders` approval
based
on such disclosure.  Please also explain why the 2,433,333 shares
acquired by HIS Holding from CSA Private Limited are not reflected
in
HIS Holding`s share holdings.

16. We note, pursuant to your definitive proxy statement filed on
August 25, 2004, that Orchard Capital Corporation, owned by
Richard
Ressler, is managing member of HIS Holding, please state that here
and include such information throughout the document, where you
reference HIS Holding, including the beneficial holders table.
Add
the names of the investors of HIS Holding here, identifying those
who
are affiliated with the company, by title, and detail all shares
made
part of the written consent.

Stock Certificates, p. 8

17. We note your disclosure that "the transfer agent will send a
letter of transmittal to each affected stockholder."  By "affected
stockholder," we assume you mean a shareholder who will not be
cashed
out as a result of the reverse split. Please clarify.

18. Your current disclosure suggests that receipt of physical
stock
certificates are required prior to the exchange agent issuing new
shares or making the cash payment.  Please revise your disclosure
to
include a brief discussion about how stockholders who hold shares
in
street name should respond to the letter of transmittal as such
stockholders do not physically hold stock certificates to
surrender.

Provision for Unaffiliated Stockholders, p. 8

19. Please discuss the reasons for not having made any provision
to
grant unaffiliated stockholders access to corporate files or to
obtain counsel or appraisal services for such stockholders.

Source of Funds and Financial Effect of the Reverse Stock Split,
p. 8

20. Please provide additional disclosure discussing the basis for
your estimate that the reverse stock split will result in a cash
expenditure of approximately $24,000.  How did you arrive at this
amount?  What is the chance that the cash expenditure will be
significantly higher than your estimate?  You should state whether
or
not the company has paid or will be responsible for paying any or
all
expenses.  Please see Item 1007(c) of Regulation M-A.

Special Committee of the Board of Directors, p. 9

21. Disclose the facts and circumstances surrounding the board of
directors` request that your senior management and legal counsel
present an analysis of the positive and negative factors relating
to
the `privatization` of the company.  For example, when and why did
the board first consider the privatization of the company?  How
and
why did it determine to pursue a going private transaction?  Did
all
board members agree that such path should be pursued?

22. You should detail the possible conflicts of interest involved
in
the reverse stock split that the board considered.  We note that
because of these factors the board unanimously decided on November
15, 2004 that it would be advisable to form the special committee
to
evaluate the reverse stock split proposal.  Please disclose the
nature of CIM Group`s affiliate relationship with you.

23. Please disclose any relationship that exist or has existed
between you and Rutan & Tucker, LLP.  We note your disclosure that
Rutan & Tucker, LLP, has no relationship with any of the
independent
directors constituting the special committee.  We also note your
disclosure in the first paragraph of this section stating that
your
legal counsel assisted your board of directors by discussing the
various alternatives for going private.  Please disclose the
identity
of your legal counsel.  Further, we note your statement in the
fourth
paragraph of the sentence stating that the special committee`s
questions were responded to by your "senior management and legal
counsel."  Please confirm whether such questions were directed to
your legal counsel as opposed to Rutan & Tucker, LLP.

24. Please elaborate on the considerations made by the special
committee in determining that a third-party opinion would not be
cost-effective.  Please also elaborate further on why the special
committee felt satisfied in relying on the internal company study.

25. State the date that your board adopted the special committee`s
recommendation regarding the reverse stock split based on the
special
committee`s determination that the reverse stock split was fair
and
in the best interests of the company and the stockholders.

26. Item 1014(a) of Regulation M-A requires a filing person on the
Schedule 13E-3 to state a belief as to the fairness of the
proposed
transaction to "unaffiliated security holders." Your disclosure in
this section states that the special committee and the board
determined that the reverse stock split was fair to the "company
and
our stockholders," which is a different concept.  Please revise
throughout the disclosure materials to provide the finding as to
non-
affiliates as a distinct group, as required by Item 1014(a).  As
indicated in our comment above, such finding must be made by each
filing person, including those you may add as a result of our
comments.

27. Where a transaction will impact different subsets of
shareholders
differently, the fairness determination required by Item 1014(a)
must
be made as to each group separately.  See Q&A No. 19 in Exchange
Act
Release No. 17719 (April 13, 1981).  Revise the disclosure
throughout
this information statement to separately address fairness to those
shareholders being cashed out in the reverse stock split, and
fairness to those who will remain as shareholders in a private
company.

Financial Analysis Performed by Management, pp. 10-12

28. You state that management used financial projections and
forecasts in evaluating the fairness of this transaction.  Such
financial forecasts forming the basis of its fairness analysis
should
be disclosed here.  In addition, the material assumptions
underlying
the projections should be explained.

29. To the extent applicable, consider the need to reconcile any
such
projections to GAAP, pursuant to Regulation G.

30. With respect to each valuation analysis conducted by
management,
please disclose the actual values calculated.  For example, how
did
management conclude that the recommended price of $.10 per share
to
be paid in lieu of issuing fractional shares in connection with
the
reverse stock split was fair to the unaffiliated stockholders?
Please discuss the weight given by management to each valuation
analysis and the reasons a particular valuation analysis was
considered important or rejected in making management`s valuation
determination.

31. Please revise your disclosure with respect to each valuation
analysis in order to describe each valuation methodology and the
application of the methodologies to your particular facts.  What
is
and how do you derive a "going concern value" or a "discounted
cash
flow value?"  For example, with respect to your disclosure under
"Earnings Value," what was the value of the company derived using
this methodology?  What do the implied multiples indicate and what
we