S-3

QuickLinks -- Click here to rapidly navigate through this document

As filed with the Securities and Exchange Commission on May 22, 2001

Registration No. 333-    

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-3

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

EPIQ SYSTEMS, INC.
(Exact name of registrant as specified in its charter)

Missouri
(State or other jurisdiction of
incorporation or organization) 48-1056429
(I.R.S. Employer
Identification Number)

501 Kansas Avenue
Kansas City, Kansas 66105-1309
(913) 621-9500
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)

TOM W. OLOFSON
Chairman and Chief Executive Officer
501 Kansas Avenue, Kansas City, Kansas 66105-1309
(913) 621-9500
(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

RICHARD M. WRIGHT, JR., Esq.
Gilmore & Bell, P.C.
2405 Grand Boulevard, Suite 1100
Kansas City, Missouri 64108
(816) 221-1000 ROBERT C. LEVY, Esq.
Seigfreid, Bingham, Levy, Selzer & Gee, P.C.
2800 Commerce Tower
911 Main Street
Kansas City, Missouri 64105
(816) 421-4460 PETER D. VAN CLEVE, Esq.
Bryan Cave LLP
One Metropolitan Square
211 North Broadway, Suite 3600
St. Louis, Missouri 63102-2750
(314) 259-2000

Approximate date of commencement of proposed sale to the public: As soon as practicable after the registration statement becomes effective.

   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, check the following box. / /

   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 of Securities to be Registered	Amount to be Registered (1)	Proposed Maximum Offering Price Per Unit (2)	Proposed Maximum Aggregate Offering Price (2)	Amount of Registration Fee
Common Stock	1,725,000	$29.94	$51,646,500	$12,911.63

(1)

Includes 225,000 shares of common stock that may be purchased by the Underwriters to cover over-allotments, if any.

(2)

Estimated for purposes of calculating the registration fee pursuant to Rule 457(c) under the Securities Act of 1933, and based on the average of the high and low prices for the common stock reported on the Nasdaq National Market on May 16, 2001.

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date 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 the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

Subject to completion, dated May 22, 2001

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any State where the offer or sale is not permitted.

1,500,000 Shares

Common Stock

    We are offering 1,025,000 shares and the selling shareholders are offering 475,000 shares of common stock. We will not receive any of the proceeds from the sale of shares by the selling shareholders. Our common stock is quoted on the Nasdaq National Market under the symbol "EPIQ." On May 18, 2001, the last reported sale price of our common stock was $31.04 per share.

Investing in our common stock involves risks.
See "Risk Factors" beginning on page 5.

	Per Share	Total
Public offering price	$	$
Underwriting discount	$	$
Proceeds, before expenses, to EPIQ Systems	$	$
Proceeds, before expenses, to the selling shareholders	$	$

    The Underwriters named in this prospectus may purchase up to 225,000 additional shares of common stock from us, not the selling shareholders, under certain circumstances. The Underwriters expect to deliver the shares to purchasers on or about          , 2001.

    Neither the Securities and Exchange Commission nor any state securities regulators has approved or disapproved these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

A.G. Edwards & Sons, Inc. Needham & Company, Inc.

Prospectus dated              , 2001

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider before investing in our common stock. You should read the entire prospectus carefully.

EPIQ Systems

    We develop, market and license proprietary software solutions for workflow management and data communications infrastructure for the bankruptcy trustee market and the financial services market. Our specialized products streamline our customers' internal business operations and external communications and enable them to minimize operating costs through automation. In addition to our software products, we also provide a high level of coordinated support, including network integration, post-installation support and industry-specific value added services.

    For the bankruptcy trustee market, we provide Chapter 7 and Chapter 13 trustees comprehensive, turnkey, back-office systems that manage their entire caseloads. Our TCMS and CasePower software products serve as the cornerstone of the daily operations of a bankruptcy trustee's office and enable management of every aspect of the trustee's caseload. Unlike traditional software licensing arrangements in which the end-user pays a relatively significant up-front licensing fee and then more modest support fees over time, our bankruptcy trustee billing models generate ongoing monthly revenues from each customer. For our Chapter 7 business, we provide our products and services to trustee customers at no direct charge. Our trustee customers agree to deposit the cash proceeds from liquidations of debtors' assets with Bank of America, with whom we have a national marketing arrangement. Each Chapter 7 trustee customer relationship generates recurring revenues, which we collect through our marketing arrangement and which are based on a percentage of the total liquidated asset proceeds on deposit. To support our marketing arrangement, we also receive revenues from customized software, technology services and marketing and strategic consulting services we provide directly to Bank of America. For our Chapter 13 business, in addition to an initial implementation fee, we collect monthly revenues directly from each trustee customer based on the number of cases in the trustee's database and the number of printed documents we generate for the trustee.

    For the financial services market, our DataXpress product line provides cross-platform, software-based communications infrastructure that enables corporate customers to format and securely route business-critical data over the Internet and private networks, using a variety of communication protocols. Our products automate the electronic transmission of business data and are designed to deliver the data to the right recipient, at the right time, in the right format and with the appropriate security, while reducing labor and information technology infrastructure costs to our customers. The DataXpress product line includes a core data transmission and receiving engine, a real-time communications management console, a powerful data reformatting tool and an advanced suite of security and scheduling functions required for enterprise-class implementations. Our financial services customers include leading banking and financial services companies such as Bank of America, First Union, Fiserv EFT, J.P. Morgan Chase Bank and Visa USA.

Industries

    Bankruptcy comprises an ever present, integral part of the U.S. economy, and bankruptcy filings in the United States have remained near record levels for the past several years. For the 2000 government fiscal year, the Administrative Office of the U.S. Courts reported approximately 1.3 million new bankruptcy filings. We believe this high level of new filings is partially attributable to the proliferation of consumer debt, which has been fueled by the easy availability of credit, and to an important psychological shift away from the public stigma and negative connotations historically associated with

1

bankruptcy. The high number of filings has occurred despite what we perceived to be strong general economic conditions in the United States during this period.

    Chapter 7 (Liquidation) is the most prevalent form of bankruptcy and accounted for approximately 69% of all cases filed in 2000. In a Chapter 7 case, the debtor's assets are liquidated, and the resulting cash proceeds are used to pay creditors. Chapter 13 (Individual Reorganization) accounted for approximately 31% of all cases filed in 2000. Under Chapter 13, assets are not liquidated. Rather, the debtor makes periodic cash payments to a trustee under a plan of reorganization that typically extends between 36 and 60 months. The trustee, in turn, makes monthly distributions to the creditors from the payments received from the debtor. We estimate that there is approximately $3.0 to $3.5 billion in cash proceeds being administered in Chapter 7 by approximately 1,700 trustees. We also estimate that there were approximately 700,000 active cases in Chapter 13 at the end of 2000 being managed by approximately 180 standing Chapter 13 trustees.

    In the financial services industry, a combination of factors, including competition and the need to reduce information technology training requirements and labor costs, is leading financial institutions to focus on their core business and outsource their task-specific needs for mission-critical integrated solutions that provide them competitive advantages. The Gartner research firm estimates that United States financial institutions will spend as much as $100 billion per year on technology by 2004. A category of systems infrastructure software has emerged to help companies integrate or share data between their legacy internal systems and current web-based systems to improve enterprise-wide communications and data management. We believe we have entered an important subsegment of this market with our DataXpress communications infrastructure product line.

Solutions

    Our software products and services play important business-critical roles in our customers' daily activities. Our Chapter 7 TCMS solution provides easy-to-use tools for asset management, financial record keeping and claims administration. Our Chapter 13 CasePower solution assists trustees in managing databases that can contain over 10,000 active bankruptcies by managing debtor payments, monthly creditor distributions and the generation of legal noticing and government reporting. We believe our bankruptcy solutions provide our customers with significant benefits including:

•

Increased operating efficiency and reduced operating costs through automation;

•

Reliance on a single solution provider; and

•

Ongoing compliance with changing regulations and reporting requirements.

    Our financial services solutions centralize enterprise-wide data communications and link legacy systems with current technology tools. Simultaneously, we support the mission-critical needs of our customers, including data security, reformatting and data validation. We believe our financial services products provide our customers with significant benefits including:

•

Consolidation of enterprise-wide financial data communications into a single solution;

•

Simplified communications with business partners;

•

Mission-critical reliability and security; and

•

A clear upgrade path.

Strategy

    Our objectives are to attain market leadership in the industries we serve, sustain profitable growth and deliver shareholder value. The key elements of our strategy are to:

•

Continue to increase market share;

2

•

Expand product and technology leadership;

•

Leverage vertical market expertise; and

•

Pursue selected strategic acquisitions.

Significant Acquisitions

    In March 2000, we acquired the assets of PHiTECH, Inc. and began providing financial services software and services through our DataXpress product line. In November 1999, we acquired certain assets of DCI Chapter 7 Solutions, Inc., a wholly-owned subsidiary of Union Bank of California, N.A. DCI provided bankruptcy trustee software to Chapter 7 bankruptcy trustees and was one of our primary competitors in the Chapter 7 trustee software business.

About Us

    We were incorporated in Missouri on July 15, 1988, when we completed a transaction in which we acquired all of the assets of an unrelated predecessor corporation, including the name "Electronic Processing, Inc." On June 7, 2000, we changed our name from Electronic Processing, Inc. to EPIQ Systems, Inc.

    Our principal executive office is located at 501 Kansas Avenue, Kansas City, Kansas 66105-1309, and our telephone number is (913) 621-9500. Our website is located at www.epiqsystems.com. Information on our website is not part of this prospectus.

The Offering

Common stock:
	Shares offered by us	1,025,000 shares
	Shares offered by the selling shareholders	475,000 shares
	Common stock to be outstanding after this offering (1)	9,495,309 shares
Use of proceeds		For new product development, sales and marketing expansion, general corporate purposes and potential acquisitions.
Nasdaq National Market symbol		EPIQ

(1)

The number of shares of common stock that will be outstanding after this offering is based on the number of shares outstanding at May 18, 2001 and does not include 1,089,040 shares issuable under our stock option plan as of May 18, 2001, of which 889,309 shares are issuable upon exercise of options outstanding as of that date at a weighted average exercise price of $7.13 per share and 199,731 shares are available as of that date for future option grants.

The information above and all information included elsewhere in this prospectus assumes the Underwriters do not exercise the option that we have granted them to purchase up to 225,000 additional shares. All share amounts and prices included in this prospectus have been adjusted to give effect to the 3 for 2 split of our common stock effected as a 50% stock dividend paid on February 23, 2001.

TCMS™ is our registered trademark. We have filed trademark applications for DataXpress and CasePower, which are pending with the U.S. Patent and Trademark Office. This prospectus also includes references to registered trademarks of other companies. We have no proprietary rights in any of those other trademarks.

3

Summary Financial Data
(in thousands, except per share data)

    The following sets forth our summary financial data for the periods indicated. The table is derived from, should be read in conjunction with, and is qualified entirely by reference to our financial statements and the accompanying notes included elsewhere in this prospectus.

	Years ended December 31,										Three months ended March 31,
	1996		1997		1998		1999		2000		2000		2001
Income Statement Data:
Operating revenues	$	6,319	$	8,389	$	11,546	$	14,820	$	23,257	$	4,988	$	7,134
Gross profit		3,010		4,391		6,269		7,926		14,136		3,072		4,718
Amortization—goodwill/intangibles		—		—		—		63		1,223		209		339
Acquisition related expenses		—		—		—		315		414		358		—
Purchased in-process research and development		—		—		—		—		364		364		—
Loss on disposal of computer equipment		—		—		—		230		—		—		—
Income from operations		614		1,184		1,847		1,920		3,651		312		1,614
Net income (1)		334		365		1,321		1,496		2,132		207		1,036
Net income per share—diluted (1)			$	0.07	$	0.21	$	0.21	$	0.30	$	0.03	$	0.12
Weighted average common shares outstanding—diluted				5,051		6,425		7,171		7,223		7,228		8,774

	March 31, 2001
	Actual		As Adjusted (2)
Balance Sheet Data:
Cash and cash equivalents	$	10,622	$	40,159
Working capital		14,259		43,796
Total assets		41,862		71,399
Total debt (3)		1,272		1,272
Stockholders' equity		37,239		66,776

(1)

For the year ended December 31, 1996, we operated as an S corporation and were not subject to federal and certain state income taxes. We terminated our status as an S corporation and became a C corporation subject to federal and state income taxes as of February 4, 1997, the date of our initial public offering of common stock. Had we been a C corporation throughout 1996, we would have recorded income taxes for the year of $144, assuming a statutory corporate tax rate of 39% and including an allowance for additional taxes that would have been paid on certain non-deductible expenses. Net income for December 31, 1997, includes a $273 initial income tax provision to record the effects of temporary differences at the date of the change in tax status, which would not have been recorded by us on a pro forma basis. For the year ended December 31, 1996, pro forma net income per share—diluted was based on 2,700 weighted average common shares outstanding. Pro forma information for the years ended December 31, 1996 and 1997 is as follows:

	1996		1997
Pro forma net income	$	190	$	638
Pro forma net income per share—diluted	$	0.07	$	0.13

(2)

As adjusted to give effect to our sale of 1,025,000 shares of common stock in this offering less underwriting discounts and commissions and estimated offering expenses payable by us. See "Use of Proceeds," "Capitalization" and "Selected Financial Data" included elsewhere in this prospectus.

(3)

Consists of long-term obligations, current portion of long-term obligations and deferred acquisition price.

4

RISK FACTORS

You should carefully consider the following risk factors in addition to the other information set forth in this prospectus or incorporated by reference before purchasing shares of our common stock. Each of these risk factors could adversely affect our business, operating results and financial condition, as well as adversely affect the value of an investment in our common stock.

We depend on ongoing bankruptcy filings.

    Our bankruptcy and related services segment is highly dependent on the amount of liquidated asset proceeds deposited by bankruptcy trustees and the number of bankruptcy filings in the United States. Economic fluctuations in the United States affect the number of bankruptcy filings and the dollar volume flowing through the federal bankruptcy system. A significant reduction in liquidated asset proceeds on deposit by bankruptcy trustees or the number of pending bankruptcy cases would have a material adverse effect on our bankruptcy and related services segment and our overall financial position, results of operations and cash flows.

We have historically lacked product and business diversification.

    Prior to 1992, our sole line of business activity was the provision of automation services to Chapter 13 trustees. In 1992 we introduced a Chapter 7 product for DOS, and in 1996 we introduced our Chapter 7 product line for Windows. The provision of those bankruptcy services constituted our sole business endeavor until March 2000, when we entered the financial services market through the purchase of PHiTECH, Inc. The financial services segment of our business represented only 14.4% of our total operating revenues in 2000 and only 6.8% of our total operating revenues in the first quarter of 2001.

Bankruptcy reform legislation could adversely affect our business.

    Bankruptcy reform legislation has been introduced in Congress in each of the last few years and has again been introduced in 2001. The currently proposed bankruptcy legislation could tighten the rules for debtors filing for certain types of bankruptcy and could make the bankruptcy process more cumbersome for debtors. While this legislation, if passed, could affect the number of bankruptcy filings, we do not think the current proposals would materially affect the aggregate Chapter 7 deposits held by our trustee customers in the foreseeable future. There can be no assurance that this bill or any future bankruptcy legislation will not adversely affect us.

We rely on our national marketing arrangement for Chapter 7 revenue.

    Current regulation of Chapter 7 bankruptcy trustees has the practical effect of discouraging trustees from incurring direct administrative costs for computer systems expenses. Accordingly, we generate Chapter 7 revenues through an arrangement in which Chapter 7 trustee customers, in accordance with licensing agreements with us, make deposits of liquidated asset proceeds with Bank of America (or in a limited number of cases with other depository banks), through which we collect monthly revenues that include a percentage of the total trustee funds on deposit. We promote our Chapter 7 product exclusively through a national marketing arrangement with Bank of America that has been in place since November 1993. Our agreement with Bank of America has no fixed expiration date, but either party has the option to end the agreement upon six months notice. There can be no assurance that this agreement will not be terminated. Termination of this agreement could have a material adverse effect on our Chapter 7 business and our overall financial condition, results of operations and cash flows until and unless we can establish a replacement marketing arrangement or arrangements. Substantially all of our Chapter 7 revenues are collected through our relationship with Bank of America. Although we have other Chapter 7 banking relationships that either predate our

5

relationship with Bank of America or were acquired as part of our acquisition of the DCI Chapter 7 business in November 1999, there can be no assurance that another marketing arrangement or arrangements could be established with terms comparable to those we have with Bank of America or at all.

To support our national marketing arrangement for Chapter 7 trustees, we provide various products and services to a single customer from which we derive a significant percentage of our revenues.

    To support our national marketing arrangement for Chapter 7 trustees, we provide customized software solutions, related integration services and marketing and strategic consulting services to Bank of America. The revenues from these products and projects were 16.2% of our total bankruptcy and related services segment revenues in the first quarter of 2001, and 15.2% and 20.5% of our total bankruptcy and related services segment revenues in 1999 and 2000, respectively. Although we expect to continue to provide these types of products and services to Bank of America in the future, there can be no assurance that we will continue to do so. It is likely that we would not continue to provide these types of products and services to Bank of America if our Chapter 7 national marketing arrangement with Bank of America were terminated by Bank of America or us.

The loss of even a limited number of trustee customers could adversely affect our business.

    A single trustee customer with a large Chapter 7 deposit base or a large Chapter 13 caseload can comprise an important portion of our operating revenues, although sales to none of our bankruptcy trustee customers exceeded 5% of our revenues in 2000. Our future financial performance will depend on our ability to maintain existing trustee customer accounts and to attract business from trustees that are currently using a competitor's software product. The loss of even a limited number of trustee customers could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Our quarterly results may fluctuate in the future.

    Our quarterly results in the future may fluctuate more than they have in the past. This may occur for a number of reasons.

    First, our bankruptcy and related services segment will continue to be affected by a number of factors, any one of which could substantially affect our results of operations for a particular fiscal quarter. Specifically, our quarterly results of operations for this segment and our company as a whole can vary due to fluctuations in trustees' deposit balances or caseloads, unanticipated expenses related to software maintenance or customer service, the timing, cancellation or rescheduling of customer orders and the timing and market acceptance of new software versions or support services.

    Second, within our bankruptcy and related services segment, we have in the last three years provided customized software solutions, related integration services and strategic marketing and consulting services to Bank of America. The revenues from these products and projects are of a less recurring nature than our more traditional Chapter 7 and Chapter 13 revenues, and our receipt and recognition of these revenues tend to fluctuate on a quarterly basis. There can be no assurance that we will continue to provide these types of products and services to Bank of America or other financial institutions in the future or that these types of revenues will not fluctuate significantly from quarter to quarter. Additionally, the recognition of revenue from these types of contracts, like our financial services segment discussed in the following paragraph, is complex, and the timing of the recognition of revenue from these customized products and services can be unpredictable.

6

    Third, our financial services segment has a greater likelihood of quarterly fluctuations in revenues and earnings than our bankruptcy and related services segment. The quarterly results for our financial services segment may be affected by one or more of the following additional factors:

•

The extent and timing of revenues recognized. DataXpress products and services are presently offered in a traditional software license pricing model, with a relatively significant up-front licensing fee and then more modest support fees over time. In the future we may develop new revenue models for our DataXpress products and services, which we hope will optimize our long-term results, even if there are some short-term consequences. The recognition of revenue from contracts in software businesses like our financial services segment is complex.



•

Customer budget priorities and purchasing cycles will more directly affect sales of DataXpress and future products in our financial services segment than purchases by our trustee customers in the bankruptcy and related services segment.

    Due to the foregoing factors, many of which are beyond our control, our quarterly revenues and operating results may be increasingly difficult to forecast in the future. It is possible that our future quarterly results of operations from time to time will not meet the expectations of securities analysts or investors, which could have a material adverse effect on the market price of our common stock.

Our stock price may be volatile even if our quarterly results do not fluctuate significantly.

    If our quarterly results fluctuate, the market price for our common stock may fluctuate as well, and those fluctuations may be significant. Even if we report stable or increasing earnings, the market price of our common stock may become more volatile. There are a number of factors, beyond earnings fluctuations, that can affect the market price of our common stock, including the following:

•

a decrease in market demand for our stock;



•

downward revisions in securities analysts' estimates;



•

announcements of technological innovations or new products developed by us or our competitors;



•

the degree of customer acceptance of new products or enhancements offered by us; and



•

general market conditions and other economic factors.

    In addition, the stock market has experienced significant price and volume fluctuations that have particularly affected the market prices of stocks of technology companies and that have often been unrelated to the operating performance of particular companies. The market price of our common stock has been volatile and is likely to continue to be volatile.

Certain shares of our common stock are now covered by an effective registration statement and are subject to resale at any time, which could adversely affect our common stock price.

    We have registered 1,350,000 shares of our common stock with the SEC on behalf of four institutional investors. These institutional investors purchased the shares from us in a December 2000 private placement. The shares covered by this registration statement may be resold by the institutional holders on the open market without volume restrictions, which could adversely affect the price of our common stock. We are obligated to keep this registration statement effective until December 29, 2002.

There are only a limited number of potential trustee customers and the bankruptcy trustee market is highly competitive.

    There are a limited number of Chapter 7 and Chapter 13 trustees that can be served by us. We currently estimate that there is approximately $3.0 to $3.5 billion of liquidated asset proceeds on

7

deposit being managed by approximately 1,700 Chapter 7 trustees, and that there were approximately 700,000 active Chapter 13 cases at the end of 2000 managed by approximately 180 Chapter 13 trustees. There are several companies in the bankruptcy trustee market competing to sell to this limited group of trustee customers, and some of our competitors have substantially greater financial and marketing resources than do we. Our largest competitor in both Chapter 7 and Chapter 13 is J.P. Morgan Chase Bank, and we also compete with other regional competitors in selected markets. Although there are presently a limited number of firms that offer bankruptcy trustee solutions that directly compete with ours, there can be no assurance that other firms with resources significantly greater than ours will not enter this market. Our future financial performance will depend on our ability to maintain existing trustee customer accounts and to attract business from trustees who are currently using a competitor's software product.

    Because the number of bankruptcy trustees does not typically increase significantly, we can only increase our Chapter 7 and Chapter 13 trustee business through:

•

taking trustee business from our competitors;



•

increases in the amount of deposits of liquidated asset proceeds administered by our existing Chapter 7 trustee customers;



•

growth in the number of Chapter 13 cases managed by our existing Chapter 13 trustee customers; or



•

acquisition of the business or assets of one of our bankruptcy trustee competitors.

The financial services software market we serve is highly competitive.

    The financial services software market we now serve is highly competitive. Direct competition includes file transfer solutions developed by in-house information technology departments and commercial file transfer products offered by Sterling Commerce (a business unit of SBC Communications) and others. A number of our competitors, including Sterling Commerce, have substantially greater financial and marketing resources than do we.

We must be able to develop new technologies and respond to market changes.

    We regularly undertake new projects and initiatives in order to meet the changing needs of our customers. In doing so, we invest substantial resources with no assurance of their ultimate success. We believe our future success will depend, in part, upon our ability to:

•

enhance our existing products;



•

design and introduce new solutions that address the increasingly sophisticated and varied needs of our current and prospective customers;



•

maintain our technology leadership; and



•

respond to technological advances and emerging industry standards on a timely and cost-effective basis.

    There can be no assurance that future advances in technology will be beneficial to, or compatible with, our business or that we will be able to incorporate those advances into our business. In addition, keeping abreast of technological advances in our business may require substantial expenditures and lead-time. There can be no assurance that we will be successful in using new technologies, adapting our solutions to emerging industry standards or developing, introducing and marketing software products or enhancements, or that we will not experience difficulties that could delay or prevent the successful development, introduction or marketing of these products. If we incur increased costs or are unable, for technical or other reasons, to develop and introduce new products or enhancements in a timely manner

8

in response to changing market conditions or customer requirements, our business, financial position, results of operations and cash flows could be materially adversely affected.

Our new releases and products may have undetected errors.

    We intend to continue to issue new releases of our software products periodically. Complex software products, such as those we offer, frequently contain undetected errors or "bugs" when first introduced or as new versions are released that, despite our prior testing, are discovered only after a product has been installed and used by our customers. The introduction of new products and releases in the future, like our recent introductions of DataXpress Open Platform and TCMS 6.0, may have a greater risk of undetected errors or "bugs" than our historic software product upgrades.

    We have not experienced any material errors or "bugs" in the various upgrades of our TCMS and CasePower software products that we have released in recent years, and the DataXpress NonStop product we acquired in March 2000 does not appear to have experienced any material problems in the past. There can be no assurance, however, that errors will not be found in our software products in the future or that such errors, or difficulties in installing and maintaining our new software and releases or training customers and their staffs on the utilization of new products and releases will not result in a delay or loss of revenue, diversion of development resources, damage to our reputation, increased service costs or impaired market acceptance of our products. Errors and any resulting repercussions could have a material adverse effect on our business, financial position, results of operations and cash flows.

We may be harmed by security or product liability claims arising from our software products.

    We have included security features in our products that are intended to protect the privacy and integrity of data. Security for our products is a particularly critical aspect of those products given their use for Internet, private networks and other electronic transfers of highly confidential financial data. There can be no assurance, however, that our software products or the data communications they manage will not be subject to break-ins or disruptive problems caused by Internet or other users or that break-ins or problems will not result in a delay or loss of revenue, diversion of development resources, damage to our reputation, increased service costs or impaired market acceptance of our products, any of which could cause a material adverse effect on our business, financial position, results of operations and cash flows. Additionally, we could be exposed to potential liability for break-ins, product defects or other reasons. Defending such a liability claim could result in substantial costs to us and a significant diversion of our management's attention and could have a material adverse effect on our business, financial position, results of operations and cash flows.

Our intellectual property is not protected through patents or formal copyright registration.

    Historically, we have not protected our intellectual property rights through patents or formal copyright registration. We believe, however, that our results of operations will depend more upon the innovation and technological expertise of our employees than upon those protections. There can be no assurance that we will be able to protect our trade secrets or that others will not independently develop substantially equivalent proprietary information and techniques or otherwise gain access to our trade secrets. In addition, there can be no assurance that foreign intellectual property laws will protect our intellectual property rights. In addition, litigation may be necessary to enforce our intellectual property rights, to protect our trade secrets, to determine the validity and scope of the proprietary rights of others or to defend against claims of infringements. Such litigation could result in substantial costs to us and diversion of management and other resources and could have a material adverse effect on our business, financial position, results of operations and cash flows.

9

Compliance with government regulations is critical for our bankruptcy software.

    Although our products and services are not directly regulated by the government, our bankruptcy trustee customers are subject to significant regulation. Bankruptcy trustees are subject to the United States Bankruptcy Code, the Federal Rules of Bankruptcy Procedure and local rules and procedures established by bankruptcy courts. The Executive Office for United States Trustees, a division of the United States Department of Justice, oversees bankruptcy trustees and establishes administrative rules governing trustees' activities. The success of our bankruptcy and related services segment has been, and will continue to be, dependent in part on our ability to develop and maintain products and provide services that allow trustees to perform their duties within applicable regulatory and judicial rules and procedures. There can be no assurance that future regulation will not limit or eliminate the ability of trustees to utilize the types of products and services that we currently provide. Our failure to adapt our Chapter 7 and Chapter 13 products and services to changes in the Bankruptcy Code and applicable rules and procedures could have a material adverse effect on our business, financial position, results of operations and cash flows.

Acquiring businesses creates additional risks and challenges for us.

    In the last two years, we acquired two businesses at a combined cost of approximately $16 million. We intend to continue to consider additional opportunities to acquire other companies, assets or product lines that complement or expand our business. If we are unsuccessful in integrating these companies or product lines with our operations, or if integration is more difficult than anticipated, we may experience disruptions that could have a material adverse effect on our business, financial condition, results of operations and cash flows. Some of the risks that may affect our ability to integrate or realize any anticipated benefits from companies we acquire include those associated with:

•

unexpected losses of key employees or customers of the acquired company;



•

conforming the acquired company's standards, processes, procedures and controls with our operations;



•

coordinating our new product and process development;



•

hiring additional management and other critical personnel;



•

increasing the scope, geographic diversity and complexity of our operations;



•

difficulties in consolidating facilities and transferring processes and know-how;



•

other difficulties in the assimilation of acquired operations, technologies or products;



•

diversion of management's attention from our other business concerns; and



•

adverse effects on existing business relationships with customers.

    We expect that future acquisitions, if any, could provide for consideration to be paid in cash, shares of our common stock, or a combination of cash and shares. If the consideration for an acquisition is paid in common stock, this could dilute existing shareholders. Any amortization of a significant amount of goodwill or other intangible assets resulting from an acquisition could materially affect our business, financial position and results of operations.

Growth creates additional challenges for our management.

    We have experienced significant growth since we first publicly offered our common stock in February 1997. A continuing period of significant future growth could place a significant strain on our management, operations and other resources. Our ability to manage our anticipated future growth will require us to continue to invest in our operational, financial and information systems, and to attract,

10

retain, motivate and effectively manage our employees. Our inability to manage any future growth effectively could have a material adverse effect on our business, financial position, results of operations and cash flows.

We depend upon our key personnel.

    Our future success will depend in significant part upon the continued service of our senior management and certain of our key technical personnel and our continuing ability to attract, assimilate and retain highly qualified technical, managerial and sales and marketing personnel. Competition for such personnel is intense, and there can be no assurance that we can retain our key personnel or that we can attract, assimilate and retain those employees in the future. While we have non-disclosure agreements and non-compete agreements with substantially all of our employees, we do not have employment agreements with any of our executive officers or other employees. We maintain key-man life insurance policies on our Chairman and Chief Executive Officer and our President and Chief Operating Officer. The loss of the services of either of these persons or other key personnel or the inability to hire or retain qualified personnel in the future could have a material adverse effect upon our business, financial position, results of operations and cash flows.

We have broad discretion in the use of proceeds from this offering.

    The net proceeds to be received by us from the offering are expected to be used for new product development, sales and marketing expansion, general corporate purposes and potential acquisitions. We have no present agreements or understandings with respect to any potential acquisitions, and there can be no assurance that any acquisition will occur. Our board of directors and management will have broad discretion over the application of the net proceeds of the offering and may use the proceeds for purposes with which you may disagree.

We do not pay cash dividends on our common stock.

    We presently do not intend to pay any cash dividends on our common stock. The payment of future dividends is within the discretion of our board of directors and will depend upon our future earnings, if any, our capital requirements, financial condition and other factors that the board of directors may deem relevant. We currently intend to retain all earnings, if any, to invest in our operations. As a result, the success of your investment in our common stock will depend entirely upon its future appreciation. There is no guarantee that our common stock will appreciate in value after the offering or even maintain the price at which you purchased your shares.

Our directors and executive officers will continue to have a substantial influence over matters requiring a shareholder vote.

    After the offering, our directors and executive officers will beneficially own approximately 23.0% of the outstanding shares of common stock. For so long as our directors and executive officers own a significant percentage of our common stock, they will retain substantial influence over our affairs, which may result in decisions that are not in the best interests of all the shareholders. These factors may also have the effect of delaying or preventing a change in management or voting control of our company. The holders of a majority of the outstanding shares of common stock can elect all of our directors and, under Missouri law, the holders of more than one-third of the outstanding shares of common stock can delay or prevent certain fundamental corporate transactions, including mergers, consolidations and the sale of all or substantially all of our assets.

11

Our articles of incorporation contain a provision that could be used by us to discourage or prevent a takeover of our company.

    Our articles of incorporation authorize our board of directors to issue preferred stock in one or more series, without shareholder approval, and to fix the designation, rights and preferences of each series of preferred stock. Our board of directors could issue a series of preferred stock in a manner designed to prevent or discourage a takeover of our company.

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

    This prospectus includes statements that plan for or anticipate the future. These forward-looking statements include statements about our future business plans and strategies, and other statements that are not historical in nature. These forward-looking statements are based on our current expectations. Many of these statements are found in the "Business" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of this prospectus.

    Forward-looking statements may be identified by words or phrases such as "believe," "expect," "anticipate," "should," "planned," "may," "estimated" and "potential." Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 provide a "safe harbor" for forward-looking statements. In order to comply with the terms of the safe harbor, and because forward-looking statements involve future risks and uncertainties, listed in this prospectus are a variety of factors that could cause actual results and experience to differ materially from the anticipated results or other expectations expressed in our forward-looking statements. These factors include among other things each of the risk factors set forth under "Risk Factors" in this prospectus.

    In addition, there may be other factors that may cause actual results to differ materially from any forward-looking statements. We undertake no responsibility to update any forward-looking statements contained or incorporated by reference in this prospectus to reflect future events or developments.

12

USE OF PROCEEDS

    Our net proceeds from the sale of 1,025,000 shares of common stock in this offering will be approximately $29.5 million after deducting underwriting discounts and estimated offering expenses payable by us. We base this estimate on an assumed public offering price of $31.04 per share, the closing price of our common stock on May 18, 2001. We will not receive any proceeds from the sale of shares by the selling shareholders.

    We intend to use these net proceeds for:

•

new product development;



•

sales and marketing expansion;



•

general corporate purposes; and



•

potential acquisitions.

    We currently have no commitments or agreements with respect to any acquisitions. Until we use the net proceeds as described above, we intend to invest the net proceeds in short-term government securities or other investment grade interest-bearing obligations.

PRICE RANGE OF COMMON STOCK

    Our common stock is quoted on the Nasdaq National Market under the symbol "EPIQ." The following table sets forth, for the periods indicated, the high and low closing prices of our common stock as reported by the Nasdaq National Market.

	Price Range
	High		Low
Year Ended December 31, 1999
First Quarter	$	8.583	$	5.250
Second Quarter		7.083		4.917
Third Quarter		7.417		5.833
Fourth Quarter		10.000		6.083
Year Ended December 31, 2000
First Quarter		10.000		6.167
Second Quarter		8.292		6.167
Third Quarter		10.833		7.000
Fourth Quarter		12.750		9.667
Year Ending December 31, 2001
First Quarter		20.250		11.292
Second Quarter (through May 18, 2001)		31.040		18.375

    On May 18, 2001, the last reported sale price of our common stock on the Nasdaq National Market was $31.04 per share. As of May 18, 2001, there were approximately 80 owners of record of our common stock and approximately 2,500 beneficial owners of our common stock.

DIVIDEND POLICY

    We presently do not expect to declare or pay any cash dividends. We currently intend to retain our earnings for use in the operation and expansion of our business. The payment of future dividends is within the discretion of our board of directors and will depend upon our future earnings, if any, our capital requirements, financial condition and other factors that the board of directors may deem relevant.

13

CAPITALIZATION
(dollars in thousands, except per share data)

    The following table sets forth our cash and cash equivalents, current maturities of long-term obligations and deferred acquisition price, long-term obligations and deferred acquisition price, less current portion, stockholders' equity and capitalization at March 31, 2001:

•

on a historical basis; and



•

as adjusted to reflect the application of the net proceeds received by us in this offering at an assumed public offering price of $31.04 per share, the closing price of our common stock on May 18, 2001.

		March 31, 2001
		Actual		As Adjusted
Cash and cash equivalents		$	10,622	$	40,159
Current maturities of long-term obligations and deferred acquisition price		$	385	$	385
Long-term obligations and deferred acquisition price, less current portion		$	887	$	887
Stockholders' equity:
	Common stock, $0.01 par value, authorized 20,000,000 shares; issued and outstanding 8,454,979 shares (actual) and 9,479,979 shares (as adjusted)		85		95
	Additional paid-in capital		30,808		60,335
	Retained earnings		6,346		6,346
Total stockholders' equity			37,239		66,776
Total capitalization		$	38,126	$	67,663

14

SELECTED FINANCIAL DATA
(in thousands, except per share data)

    You should read the following selected financial data along with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our financial statements and the accompanying notes included elsewhere in this prospectus. We derived the selected financial data as of and for each of the five years ended December 31, 2000 from our audited financial statements. We derived the selected financial data as of and for each of the three-month periods ended March 31, 2000 and 2001, from our unaudited financial statements. In our opinion, the unaudited financial information includes all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation of that information. Our results of operations for the three-month period ended March 31, 2001 are not necessarily indicative of the results that we may achieve for the full year.

			Years ended December 31,													Three months ended March 31,
			1996			1997			1998		1999		2000			2000		2001
Income Statement Data:
Operating revenues			$	6,319		$	8,389		$	11,546	$	14,820	$	23,257		$	4,988	$	7,134
Cost of sales:
	Cost of products and services			2,498			2,947			3,824		4,737		6,022			1,244		1,588
	Depreciation and amortization			811			1,051			1,453		2,157		3,099			672		828
		Total cost of sales		3,309			3,998			5,277		6,894		9,121			1,916		2,416
Gross profit				3,010			4,391			6,269		7,926		14,136			3,072		4,718
Operating expenses:
	General and administrative			2,306			3,101			4,268		5,237		8,217			1,778		2,674
	Depreciation			90			106			154		161		267			51		91
	Amortization—goodwill/intangibles			—			—			—		63		1,223			209		339
	Acquisition related			—			—			—		315		414			358		—
	Purchased in-process research and development			—			—			—		—		364			364		—
	Loss on disposal of computer equipment			—			—			—		230		—			—		—
		Total operating expenses		2,396			3,207			4,422		6,006		10,485			2,760		3,104
Income from operations				614			1,184			1,847		1,920		3,651			312		1,614
Interest income (expense)				(280	)		(94	)		303		520		(199	)		35		123
Income before income taxes				334			1,090			2,150		2,440		3,452			347		1,737
Provision for income taxes (1)				—			725			829		944		1,320			140		701
Net income (1)			$	334		$	365		$	1,321	$	1,496	$	2,132		$	207	$	1,036
Net income per share:
	Basic					$	0.07		$	0.21	$	0.22	$	0.30		$	0.03	$	0.12
	Diluted (1)					$	0.07		$	0.21	$	0.21	$	0.30		$	0.03	$	0.12
Weighted average common shares outstanding:
	Basic						4,876			6,190		6,955		6,992			6,964		8,439
	Diluted						5,051			6,425		7,171		7,223			7,228		8,774

15

	December 31,											March 31,
	1996			1997		1998		1999		2000		2001
Balance Sheet Data:
Cash and cash equivalents	$	5		$	1,835	$	820	$	1,643	$	15,128	$10,622
Working capital		(1,177	)		1,776		12,191		4,347		13,032	14,259
Total assets		4,766			8,161		21,279		26,222		44,939	41,862
Total debt (2)		3,152			1,517		268		109		4,863	1,272
Stockholders' equity		990			5,599		19,391		20,925		35,923	37,239

(1)

For the year ended December 31, 1996, we operated as an S corporation and were not subject to federal and certain state income taxes. We terminated our status as an S corporation and became a C corporation subject to federal and state income taxes as of February 4, 1997, the date of our initial public offering of common stock. Had we been a C corporation throughout 1996, we would have recorded income taxes for the year of $144, assuming a statutory corporate tax rate of 39% and including an allowance for additional taxes that would have been paid on certain non-deductible expenses. Net income for December 31, 1997, includes a $273 initial income tax provision to record the effects of temporary differences at the date of the change in tax status, which would not have been recorded by us on a pro forma basis. For the year ended December 31, 1996, pro forma net income per share—diluted was based on 2,700 weighted average common shares outstanding. Pro forma information for the years ended December 31, 1996 and 1997 is as follows:

	1996		1997
Pro forma net income	$	190	$	638
Pro forma net income per share—diluted	$	0.07	$	0.13

(2)

Consists of long-term obligations, current portion of long-term obligations and deferred acquisition price.

16

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

    The following discussion should be read in conjunction with our financial statements and notes thereto and other financial information that appears elsewhere in this prospectus.

Overview

    We develop, market and license proprietary software solutions for workflow management and data communications infrastructure for the bankruptcy trustee market and the financial services market. We have achieved growth rates in operating revenues of 56.9% for 2000 compared to 1999, and 43.0% for the three-month period ended March 31, 2001 compared to the same period in 2000.

    The application of Chapter 7 bankruptcy regulations has the practical effect of discouraging trustees from incurring direct administrative costs for computer systems expenses. As a result, all nationally marketed Chapter 7 systems are provided to trustees without direct costs to the trustee. We have a national marketing arrangement with Bank of America to provide our comprehensive, turnkey, back-office computer systems to Chapter 7 trustees without direct charges to the trustee. Under this arrangement:

•

we license our proprietary software to the trustee and furnish hardware, conversion services, training and customer support, all at no cost to the trustee;

•

the trustee agrees to deposit with Bank of America the cash proceeds from all asset liquidations in the Chapter 7 cases managed by that trustee; and

•

we collect from Bank of America monthly revenues based upon a percentage of the total liquidated assets on deposit.

    Because of this arrangement, we have a recurring revenue stream from our Chapter 7 operations. We also derive Chapter 7 revenues from conversions, upgrades and customized software provided to Chapter 7 trustees, as well as from customized software, technology services and marketing and strategic consulting services that we provide directly to Bank of America in support of our national marketing arrangement.

    On November 29, 1999, we acquired certain assets of DCI Chapter 7 Solutions, Inc., a wholly-owned subsidiary of Union Bank of California, N.A. DCI provided bankruptcy trustee software to Chapter 7 bankruptcy trustees and was one of our primary competitors in the Chapter 7 trustee software business. At the time of acquisition, DCI had approximately 240 Chapter 7 trustee customers, with an aggregate deposit base of approximately $350 million, most of which was held at financial institutions other than Bank of America. Since the acquisition, we have successfully transferred the majority of these Chapter 7 trustee deposits to Bank of America. We accounted for the acquisition of DCI using the purchase method of accounting, and as such, our results of operations for the year ended December 31, 1999 include the results of DCI subsequent to November 29, 1999.

    For our Chapter 13 business, we typically receive an initial implementation fee from the Chapter 13 trustee. We also receive monthly revenues from each Chapter 13 trustee customer based on the total number of cases in that trustee's database, the type of equipment installed, the volume of printed documents to be outsourced to us, and the level of support service selected by the trustee.

    For our financial services segment, we sell our DataXpress product line utilizing a traditional server-based license, maintenance and professional services pricing model. Various optional features are available for additional fees.

    On March 17, 2000, we acquired the assets of PHiTECH, Inc. and began providing financial services software and services through our DataXpress products. From our inception until the date of this acquisition, we derived all of our revenues from our bankruptcy and related services segment. The

17

acquisition of PHiTECH was accounted for using the purchase method of accounting, and as such, our results of operations for the year ended December 31, 2000 include the results of our financial services segment subsequent to March 17, 2000.

    For our Chapter 7 bankruptcy software product, we generate monthly revenues from our Chapter 7 trustee customers though our national marketing arrangement with Bank of America, in which we receive revenues based on the level of trustees' deposits with Bank of America as well as for other services. We recognize revenues after the product is installed and deposits are transferred. We recognize revenues for Chapter 13 processing and noticing on a monthly basis upon completion of the services. All other ancillary fees are recognized as the services are provided.

    Our financial services revenues and a portion of our bankruptcy and related services revenues are derived from software licensing, consulting services and maintenance fees. Licensing fees are recorded as revenue following delivery and acceptance. Consulting revenues are recognized in the period in which the services are performed and in certain circumstances, depending on the nature of the arrangement, are recognized based on the percentage of completion method. Maintenance fees are collected in advance and recognized on a straight-line basis as revenue over the life of the maintenance contract.

Results of Operations

    The following table sets forth certain income statement data stated as a percentage of total operating revenues:

			Years ended December 31,						Three months ended March 31,
			1998		1999		2000		2000		2001
Operating revenues:
	Bankruptcy and related services		100.0	%	100.0	%	85.6	%	99.0	%	93.2	%
	Financial services		—		—		14.4		1.0		6.8
Total operating revenues			100.0		100.0		100.0		100.0		100.0
Cost of sales:
	Cost of products and services:
		Bankruptcy and related services	33.1		32.0		21.1		24.7		18.4
		Financial services	—		—		4.8		0.2		3.9
	Depreciation and amortization:
		Bankruptcy and related services	12.6		14.5		12.6		13.4		10.8
		Financial services	—		—		0.7		0.1		0.8
Total cost of sales			45.7		46.5		39.2		38.4		33.9
Gross profit			54.3		53.5		60.8		61.6		66.1
Operating expenses:
	General and administrative		37.0		35.3		35.3		35.6		37.4
	Depreciation		1.3		1.1		1.1		1.0		1.3
	Amortization—goodwill/intangibles		—		0.4		5.3		4.2		4.8
	Acquisition related		—		2.1		1.8		7.2		—
	Purchased in-process research and development		—		—		1.6		7.3		—
	Loss on disposal of computer equipment		—		1.6		—		—		—
Total operating expenses			38.3		40.5		45.1		55.3		43.5
Income from operations			16.0	%	13.0	%	15.7	%	6.3	%	22.6	%
Net income			11.4	%	10.1	%	9.2	%	4.1	%	14.5	%

18

Quarter Ended March 31, 2001 compared to Quarter Ended March 31, 2000

    Operating revenues increased 43.0% or $2,145,658 to $7,133,635 in the three-month period ended March 31, 2001 compared to $4,987,977 in the three-month period ended March 31, 2000. The growth in operating revenues was attributable to increased revenues generated by Chapter 7 bankruptcy and related services and from revenues generated from our financial services segment. The bankruptcy and related services revenues increased 34.7% or $1,712,230 to $6,652,005 in the three-month period ended March 31, 2001 compared to $4,939,775 in the three-month period ended March 31, 2000. The increase in bankruptcy and related services revenues was primarily a result of completing an expanded upgrade program in the three-month period ended March 31, 2001, which included higher fees and more trustees receiving the upgrade. In comparison, for the three-month period ended March 31, 2000, the upgrade process began in that three-month period but was not completed until the second quarter of 2000. Also contributing to the increase were revenues for marketing and strategic consulting and software enhancements for Bank of America, which were slightly offset by a reduction in technology integration revenues. Revenues received from these projects accounted for 16.2% of the bankruptcy and related services revenues for the three-month period ended March 31, 2001 compared to 13.6% of the bankruptcy and related services revenues for the three-month period ended March 31, 2000. Financial services revenues related to our DataXpress product contributed $433,428 to the total revenue increase for the three-month period ended March 31, 2001. This increase was a result of our acquisition of PHiTECH in March 2000.

    Total cost of sales increased 26.1% or $499,411 to $2,415,990 in the three-month period ended March 31, 2001 compared to $1,916,579 in the three-month period ended March 31, 2000. Total cost of sales as a percentage of operating revenues decreased to 33.9% in the three-month period ended March 31, 2001 compared to 38.4% in the three-month period ended March 31, 2000. Cost of products and services for bankruptcy and related services increased 6.4% or $79,377 to $1,312,802 in the three-month period ended March 31, 2001 compared to $1,233,425 in the three-month period ended March 31, 2000. The financial services segment contributed $264,696 to the increase in the total cost of products and services for the three-month period ended March 31, 2001. Bankruptcy and related services cost of products and services, as a percentage of bankruptcy and related services revenues was 19.7% in the three-month period ended March 31, 2001 compared to 25.0% in the three-month period ended March 31, 2000. The decrease in cost as a percentage of revenues was largely attributable to the increase in operating revenues from upgrade revenue, enhancement revenue and marketing and strategic consulting fees in the three-month period ended March 31, 2001 as compared to the three-month period ended March 31, 2000, as described above. Depreciation and amortization increased 23.1% or $155,338 to $827,662 in the three-month period ended March 31, 2001 compared to $672,324 in the three-month period ended March 31, 2000, primarily due to the purchase of computer equipment as new trustees adopted our TCMS product and equipment acquired with our March 2000 PHiTECH acquisition.

    Operating expenses increased 12.5% or $344,682 to $3,104,307 for the three-month period ended March 31, 2001 compared to $2,759,625 for the three-month period ended March 31, 2000. Operating expenses, as a percentage of operating revenues, were 43.5% for the three-month period ended March 31, 2001 compared to 55.3% in the three-month period ended March 31, 2000. The increase in operating expenses for the three-month period ended March 31, 2001 was due to a $895,721 increase in general and administrative expenses over the comparable period in 2000. This increase in general and administrative expenses was partially offset by the absence of any acquisition related expenses or charge for acquired in-process research and development in the three-month period ended March 31, 2001. Included in operating expenses in 2000 were acquisition related expenses of $357,656 and a charge for acquired in-process research and development of $363,738, which together represented 26.1% of the operating expenses for the three-month period ended March 31, 2000. The increase in general and administrative expenses for the three-month period ended March 31, 2001 was due primarily to

19

increases in compensation expense, related to both additional personnel and salary and benefit increases, and legal and accounting costs for additional SEC filings. The additional personnel expenses related primarily to new employees from our March 17, 2000 acquisition of PHiTECH and additional sales, marketing and support personnel hired since the acquisition to support that business. Operating expenses also increased in the three-month period ended March 31, 2001, compared to the same period in 2000 due to an increase in amortization of goodwill and intangibles. Since the PHiTECH acquisition occurred on March 17, 2000, the three-month period ended March 31, 2000 included only two weeks of goodwill and other intangibles amortization related to that acquisition, while the three-month period ended March 31, 2001 included three months of such amortization.

    The acquired in-process research and development charge related to PHiTECH's new Java-based product, DataXpress Open Platform, which was approximately 80% complete at the time of the acquisition. At the acquisition date, the technological feasibility of the acquired technology had not been established and the technology had no alternative uses. We expended additional costs of approximately $64,000 during calendar year 2000 in order to achieve technological feasibility, which was established in July 2000. Since technological feasibility was established, we have capitalized approximately $633,000 in expenditures as software development costs, of which approximately $290,000, was capitalized in the three-month period ended March 31, 2001. In April 2001, we incurred approximately $117,000 in additional costs in preparation for its April 2001 release. We plan to continue to enhance this software, and expect to access additional markets with this new technology. The value assigned to the acquired in-process research and development was estimated using the cost approach. This approach includes estimating a replacement cost based on the cost expended to recreate the utility of the technology. Estimates were made of the amount of time and effort that would be spent redesigning and reprogramming multiplied by a standardized measure of software development activity, based on an estimate of our current costs of development.

    We had net interest income of $123,289 for the three-month period ended March 31, 2001 compared to net interest income of $35,598 for the three-month period ended March 31, 2000. The increase in interest income is a result of our investment of the net proceeds received from a private placement of 1,350,000 shares of our common stock on December 29, 2000.

    Net income as a percentage of operating revenues increased to 14.5% in the three-month period ended March 31, 2001 from 4.1% in the three-month period ended March 31, 2000. The increase in net income as a percentage of operating revenues was largely due to the acquisition related charges and the acquired in-process research and development charge in the three-month period ended March 31, 2000.

Fiscal Year Ended December 31, 2000 compared to Fiscal Year Ended December 31, 1999

    Operating revenues increased 56.9% or $8,436,152 to $23,256,552 in 2000 compared to $14,820,400 in 1999. The growth in operating revenues was attributable to revenues generated by Chapter 7 bankruptcy and related services and from new revenues generated from financial services associated with our March 17, 2000 acquisition of PHiTECH. Bankruptcy and related services revenues increased 34.3% or $5,085,402 to $19,905,802 in 2000 compared to $14,820,400 in 1999. The increase in bankruptcy and related services revenue was due in part to the revenues generated from the growth in new Chapter 7 trustee business as a result of our November 1999 DCI acquisition and additional new customer growth as well as increases in revenues for licensing, marketing and strategic consulting and technology services for Bank of America. The licensing fees, marketing and strategic consulting fees, electronic banking services and technology services for Bank of America accounted for 20.5% of the bankruptcy and related services revenues for 2000 compared to 15.2% of the bankruptcy and related services revenues for 1999. The increase in Chapter 7 revenues was partially offset by a $731,050 decrease in Chapter 13 revenues, which was mainly a result of non-recurring hardware sales and CasePower related conversion fees in 1999 that related to Chapter 13 trustees upgrading to CasePower

20

from a legacy product and to a lesser extent a decrease in noticing revenues. Financial services revenues related to the DataXpress product contributed $3,350,750 to the total revenue increase for 2000.

    Total cost of sales increased 32.3% or $2,226,663 to $9,121,166 in 2000 compared to $6,894,503 in 1999. Total cost of sales as a percentage of operating revenues decreased to 39.2% in 2000 compared to 46.5% in 1999. Cost of sales for bankruptcy and related services increased 13.8% or $953,577 to $7,848,080 in 2000 compared to $6,894,503 in 1999. The financial services segment contributed $1,273,086 to the increase in the total cost of sales for 2000. Bankruptcy and related services cost of sales, as a percentage of bankruptcy and related services revenues, was 39.4% in 2000 compared to 46.5% in 1999. The decrease in this as a percentage of revenue was largely attributable to the increase in operating revenues from licensing fees, marketing and strategic consulting fees and technology services for Bank of America in 2000 as compared to 1999, as described above. Such fees were at a substantially higher gross margin than our historic Chapter 7 revenues. Depreciation and amortization increased 43.7% or $942,179 to $3,099,254 in 2000 compared to $2,157,075 in 1999, primarily due to the depreciation on additional equipment acquired with our DCI acquisition, the purchase of computer equipment as new trustees adopted our Chapter 7 product, and to a lesser extent equipment acquired with our March 2000 PHiTECH acquisition.

    Operating expenses increased 74.6% or $4,479,210 to $10,484,810 in 2000 compared to $6,005,600 in 1999. Operating expenses, as a percentage of operating revenues, were 45.1% in 2000 compared to 40.5% in 1999. The increase was due to increases in general and administrative infrastructure expenses necessary to support a higher level of revenues, including additional sales and marketing expenses related to growth of our Chapter 7 product and financial services products, the amortization of goodwill and intangibles, acquisition related expenses and a charge for acquired in-process research and development. Sales and marketing expenses include sales and marketing salaries, trade shows costs, travel associated with Chapter 7 installations and advertising costs. Sales and marketing expenses increased 58.9% or $670,230 to $1,807,652 in 2000 compared to $1,137,422 in 1999. Included in operating expenses in 2000 were acquisition related expenses of $413,657 and a charge for acquired in-process research and development of $363,738. These two charges represent 17.4% of the increase. Included in operating expenses in 1999 were acquisition related expenses of $315,197 and a loss of $230,069 from the write-off of computer equipment, which represented 34.4% of the operating expense increase in 1999. Acquisition related expenses include costs related to potential acquisitions that were not consummated and indirect costs related to our completed acquisitions.

    We had net interest expense of $199,056 in 2000 compared to net interest income of $519,693 in 1999. The change from income to expense resulted in part from a reduction in interest income for 2000 due to the use of cash for the DCI and PHiTECH acquisitions. The change was also due to an increase in interest expense as result of using our $3,500,000 line of credit to finance a portion of the PHiTECH acquisition cost.

    Our effective tax rate was 38.2% for 2000 compared to 38.7% for 1999.

    Net income as a percentage of operating revenues decreased to 9.2% in 2000 from 10.1% in 1999. The decrease in net income as a percentage of operating revenues was largely due to the amortization of goodwill and intangibles, acquisition related charges, the acquired in-process research and development charge, the decrease in interest income and the increase in interest expense.

Fiscal Year Ended December 31, 1999 Compared to Fiscal Year Ended December 31, 1998

    Operating revenues increased 28.4% or $3,274,127 to $14,820,400 in 1999 compared to $11,546,273 in 1998. Approximately 92.2% of the growth in operating revenues was attributable to revenues generated by the Chapter 7 business. Chapter 7 revenues increased 47.5% or $3,018,599 to $9,374,028 in 1999 compared to $6,355,429 in 1998. The increase in Chapter 7 trustee business was due in part to

21

the growth in new Chapter 7 trustee business and fees for electronic banking and technology services provided. Electronic banking and technology services for Bank of America accounted for approximately 15.2% of the bankruptcy and related services revenues in 1999 compared to less than 1.0% in 1998. Chapter 13 revenues increased 4.9% or $255,528 to $5,446,372 in 1999 compared to $5,190,844 in 1998. The relatively lower growth in Chapter 13 revenues was primarily due to servicing current Chapter 13 customers who had converted to our CasePower product and our emphasis on our Chapter 7 business and acquisitions.

    Total cost of sales increased 30.7% or $1,617,668 to $6,894,503 in 1999 compared to $5,276,835 in 1998. Total cost of sales as a percentage of operating revenues increased to 46.5% in 1999 compared to 45.7% in 1998. Cost of products and services for bankruptcy and related services increased 23.9% or $913,353 to $4,737,428 in 1999 compared to $3,824,075 in 1998. The increase in 1999 resulted principally from an increase in customer service expense to support the growth in Chapter 7 sales and expenses associated with providing electronic banking and technology services for Bank of America. Cost of products and services as a percentage of operating revenues decreased to 32.0% in 1999 compared to 33.1% in 1998. Depreciation and amortization increased 48.5% or $704,315 to $2,157,075 in 1999 compared to $1,452,760 in 1998, primarily due to the purchase of computer equipment for our Chapter 7 product.

    Operating expenses increased 35.8% or $1,583,660 to $6,005,600 in 1999 compared to $4,421,940 in 1998. Operating expenses, as a percentage of operating revenues, were 40.5% in 1999 compared to 38.3% in 1998. The dollar increase in operating expenses was due to increases in general and administrative infrastructure necessary to support a higher level of revenues including additional sales and marketing expenses related to growth of our Chapter 7 product, acquisition related expenses and the disposal of computer equipment. Sales and marketing expenses increased 41.3% or $332,297 to $1,137,422 in 1999 compared to $805,125 in 1998. Included in operating expenses in 1999 were acquisition related expenses of $315,197, which represented 19.9% of the operating expense increase in 1999. Also included in operating expenses was a loss of $230,069 from the write-off of computer equipment, which represented 14.5% of the operating expense increase. We acquired a significant amount of computer equipment with the DCI acquisition, and with the assimilation of DCI it was necessary to standardize certain equipment for efficiency purposes. As a result, certain equipment with a net book value of $230,069 was retired.

    Net interest income was $519,693 in 1999 compared to $302,359 in 1998. The increase resulted from the investment of the net proceeds from our sale of common stock in a public offering completed in June 1998. Outstanding debt was also paid off with a portion of the net proceeds from our stock offering, resulting in a reduction in interest expense.

    Our effective tax rate was 38.7% for 1999 compared to 38.6% for 1998.

    Net income as a percentage of operating revenues decreased to 10.1% in 1999 from 11.4% in the 1998. The decrease was largely due to acquisition related charges and the loss on disposal of computer equipment, offset by the increase in interest income and the decrease in interest expense.

Quarterly Financial Data

    The following table sets forth certain unaudited quarterly historical financial data for each of our last nine quarters ended March 31, 2001. This unaudited quarterly information has been prepared on the same basis as the annual information presented elsewhere in this prospectus and, in our opinion, includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the selected quarterly information. This information should be read in conjunction with the financial statements and related notes included elsewhere in this prospectus. The operating results for any quarter shown are not necessarily indicative of results for any future period.

22

Quarters Ended
(in thousands, except per share data)

	Mar. 31, 1999		June 30, 1999		Sep. 30, 1999		Dec. 31, 1999			Mar. 31, 2000		June 30, 2000		Sep. 30, 2000		Dec. 31, 2000		Mar. 31, 2001
Operating revenues	$	3,430	$	3,629	$	3,973	$	3,788		$	4,988	$	5,765	$	6,094	$	6,410	$	7,134
Gross profit		1,826		1,853		2,223		2,024			3,071		3,524		3,676		3,865		4,718
Amortization of goodwill/intangibles		1		1		1		60			209		334		334		346		339
Acquisition related expenses		—		—		—		315			358		56		—		—		—
Purchased in-process research and development		—		—		—		—			364		—		—		—		—
Loss on disposal of computer equipment		—		—		—		230			—		—		—		—		—
Income (loss) from operations		541		655		832		(108	)		312		1,007		1,184		1,148		1,614
Net income	$	412	$	478	$	605	$	1		$	207	$	569	$	677	$	679	$	1,036
Net income per share—diluted	$	0.06	$	0.07	$	0.08	$	0.00		$	0.03	$	0.08	$	0.09	$	0.09	$	0.12

Liquidity and Capital Resources

    Our cash and cash equivalents and short-term investments decreased to $10,622,246 as of March 31, 2001 compared to $16,377,916 as of December 31, 2000. The decrease in cash and cash equivalents and short-term investments was primarily attributable to paying off our lines of credit, purchasing equipment, developing software, use of cash for operations and the increase in accounts receivable. Our cash and cash equivalents and short-term investments increased to $16,377,916 as of December 31, 2000, compared to $5,492,848 as of December 31, 1999. The increase in cash and cash equivalents and short-term investments was primarily attributable to gross proceeds of $13,500,000 from our private placement of 1,350,000 shares of our common stock on December 29, 2000.

    We used cash in operations of $1,162,669 for the three-month period ended March 31, 2001. Net cash used primarily consisted of cash generated from net income plus depreciation and amortization which were offset by the increase in accounts receivables and the decrease in accounts payable and deferred revenue.

    We generated cash from operations of $3,733,878, $7,300,757 and $2,937,735 for the years ended December 31, 2000, 1999 and 1998, respectively. The cash flow generated from operations in 2000 primarily consisted of cash generated from net income plus depreciation and amortization, which were offset in part by the increase in accounts receivable and decrease in deferred revenue. The cash flow generated from operations in 1999 primarily consisted of net income plus depreciation and amortization and the increase in deferred revenue less an increase in accounts receivable. Deferred revenues increased in 1999 as a result of receiving $4.5 million from Bank of America for various technology and integration services related to our DCI acquisition, of which a large portion was deferred for services remaining to be performed. In 2000, the deferred revenues decreased as these services were performed and we recognized the related revenues.

    Net cash used in investing activities for the three months ended March 31, 2001 was $14,658, primarily consisting of purchases of computer equipment related to our Chapter 7 product and capitalized software development costs, offset by net proceeds from maturities of short-term investments.

    Net cash used in investing activities was $6,606,188, $6,357,189 and $15,146,836 for the years ended December 31, 2000, 1999 and 1998, respectively. Net cash used in investing activities in 2000 and 1999 was primarily related to our acquisitions of PHiTECH and DCI, respectively, and was primarily related to the purchase of short-term investments in 1998.

    Net cash used in financing activities for the three months ended March 31, 2001 was $3,328,343, primarily consisting of repayments on lines of credit.

23

    Net cash generated from (used in) financing activities was $16,357,378, ($120,976) and $11,194,124 for the years ended December 31, 2000, 1999 and 1998, respectively. Net cash generated from financing activities was principally from a private placement and a public offering of our common stock we completed in 2000 and 1998, respectively.

    We maintain a $3,500,000 working capital line of credit and a $2,500,000 line of credit to finance certain computer equipment purchases. No amounts were outstanding on either line of credit at March 31, 2001. Any outstanding principal on the working capital line is due upon demand, and if no demand is made, then upon expiration. Each borrowing on the equipment line of credit is due over a 36-month period from the date of the borrowing. If not renewed, the lines of credit will expire on June 20, 2001. We intend to seek renewals of both credit lines and anticipate no problems in obtaining renewals from the bank on similar terms.

    On May 18, 2001, we purchased our corporate headquarters building from a partnership, which is 50.0% owned by our Chairman and Chief Executive Officer, for a cash purchase price of $1,750,000. We paid the purchase price from our current cash resources.

    We believe that the net proceeds of this offering, together with our current cash and cash equivalents, cash generated from operations and amounts available under our lines of credit, will be sufficient to finance our currently anticipated working capital and property and equipment expenditures for the foreseeable future.

Quantitative and Qualitative Disclosures about Market Risk

    Market risk refers to the risk that a change in the level of one or more market prices, interest rates, indices, volatilities, correlations or other market factors such as liquidity, will result in losses for a certain financial instrument or group of financial instruments. We are currently exposed to credit risk on credit extended to customers and interest risk on capital lease obligations and short-term investments. We actively monitor these risks through a variety of controlled procedures involving senior management. We do not currently use any derivative financial instruments. Based on the controls in place, credit worthiness of the customer base and the relative size of these financial instruments, we believe the risk associated with these instruments will not have a material adverse affect on our business, financial position, results of operations and cash flows.

24

BUSINESS

    We develop, market and license proprietary software solutions for workflow management and data communications infrastructure for the bankruptcy trustee market and the financial services market. For the bankruptcy trustee market, we serve a national customer base with specialized products that facilitate the financial and administrative aspects of bankruptcy case management and that are accompanied by a high level of coordinated support, including network integration, post-installation support and value-added services.

    Our products are the cornerstone of the daily operations of a bankruptcy trustee's office and enable management of virtually every aspect of the trustee's caseload. Unlike traditional software licensing arrangements under which the end-user pays a relatively significant up-front licensing fee and then more modest support fees over time, our bankruptcy trustee billing models generate ongoing monthly revenues from each customer. For our Chapter 7 business, we provide our products and services to trustee customers at no direct charge. Our trustee customers agree to deposit the cash proceeds from liquidations of debtors' assets with Bank of America, with whom we have a national marketing arrangement. Each Chapter 7 trustee customer relationship generates recurring revenues, which we collect through our marketing arrangement and which are based on a percentage of the total liquidated asset proceeds on deposit. To support our marketing arrangement, we also receive revenues from customized software, technology services and marketing and strategic consulting services we provide directly to Bank of America. For our Chapter 13 business, in addition to an initial implementation fee, we collect monthly revenues directly from each trustee customer based on the number of cases in the trustee's database and the number of printed documents we generate for the trustee.

    For the financial services market, our DataXpress product line provides cross-platform, software-based communications infrastructure that enables corporate customers to format and securely route business-critical data over the Internet and private networks, using a variety of communication protocols. DataXpress automates this communication while reducing labor and information technology infrastructure costs to the customer. Our financial services customers include leading banking and financial services companies such as Bank of America, First Union, Fiserv EFT, J.P. Morgan Chase Bank and Visa USA.

Industries

Bankruptcy Industry

    Bankruptcy comprises an ever present, integral part of the U.S. economy, and bankruptcy filings in the United States have remained near record levels for the past several years. For the 2000 government fiscal year, the Administrative Office of the U.S. Courts reported approximately 1.3 million new bankruptcy filings. We believe this high level of new filings is partially attributable to the proliferation of consumer debt, which has been fueled by the easy availability of credit, and to an important psychological shift away from the public stigma and negative connotations historically associated with bankruptcy. The high number of filings has occurred despite what we perceived to be strong general economic conditions in the United States during this period.

    There are five chapters of the U.S. Bankruptcy Code that serve different purposes and require various types of services and information:

•

Chapter 7 (Liquidation) is the most prevalent form of bankruptcy and accounted for approximately 69% of all cases filed in 2000. In a Chapter 7 case, the debtor's assets are liquidated, and the resulting cash proceeds are used to pay creditors.



•

Chapter 13 (Individual Reorganization) accounted for approximately 31% of all cases filed in 2000. Under Chapter 13, assets are not liquidated. Rather, the debtor makes periodic cash

25

payments to a trustee under a plan of reorganization that typically extends between 36 and 60 months. The trustee, in turn, makes monthly distributions to the creditors from the payments received from the debtor.

•

Chapter 11 (Corporate Reorganization), Chapter 12 (Farm Reorganization) and Chapter 9 (Municipal Reorganization) together accounted for less than 1% of all cases filed in 2000.

    The participants in a bankruptcy proceeding include the debtor, the creditors and a trustee, as well as the presiding judge. The trustee acts as an intermediary between the debtor and creditors and is responsible for administering the bankruptcy case. The end-user customers of our bankruptcy products and services are trustees, not individual debtors or creditors.

    Bankruptcy trustees in Chapters 7 and 13 are appointed by the Office of the United States Trustee. A United States Trustee is appointed in most federal court districts and generally has responsibility for overseeing the integrity of the bankruptcy system. Bankruptcy trustees in Chapter 7 and Chapter 13 cases are charged with managing the administrative aspects of liquidation or reorganization bankruptcies. The trustee's primary responsibilities include liquidating the debtor's assets (Chapter 7) or collecting funds from the debtor (Chapter 13), distributing the collected funds to creditors pursuant to the orders of the bankruptcy court and preparing regular status reports, including financial updates, for the Office of the United States Trustee and for the bankruptcy court. Trustees typically are attorneys or certified public accountants who manage many different bankruptcy cases simultaneously. We estimate that Chapter 7 trustees typically manage over 100 cases simultaneously and that Chapter 13 trustees typically manage over 1,000 cases simultaneously. It is possible for a given individual trustee to have caseloads in both Chapter 7 and Chapter 13 bankruptcies, but normally a trustee will specialize in one or the other.

    We estimate that there is approximately $3.0 to $3.5 billion in cash proceeds being administered in Chapter 7 by approximately 1,700 trustees. We also estimate that there were approximately 700,000 active Chapter 13 cases at the end of 2000 managed by approximately 180 standing Chapter 13 trustees. Because our billing models are related primarily to trustees' deposit balances in Chapter 7 and to trustees' caseloads in Chapter 13, we regard these factors as important indicators of market size. We believe there will continue to be a significant market for software products that address the business-critical needs of bankruptcy trustees for the foreseeable future.

Financial Services Industry

    Until recently, many financial organizations relied on internally developed communications infrastructure software to serve their data file transmission management needs. As financial services institutions become more sophisticated, they are continuing to increase their investments in information technology systems. A combination of numerous factors, including competition and the need to reduce information technology training requirements and labor costs, is leading financial institutions to focus on their core business and outsource their task-specific needs for mission-critical integrated solutions that provide them competitive advantages. The Gartner research firm estimates that United States financial institutions will spend as much as $100 billion per year on technology by 2004. A category of systems infrastructure software has emerged to help companies integrate or share data between their legacy internal systems and current web-based systems to improve enterprise-wide communications and data management. We believe we have entered an important subsegment of this market with our DataXpress communications infrastructure product line.

Solutions

    Our software products and services play important business-critical roles in our customers' daily activities. As a result, our customers demand that our software meets high standards for performance, security and reliability.

26

Bankruptcy Trustees

    We offer trustee customers comprehensive, turnkey back-office systems, which manage their entire bankruptcy caseloads primarily for Chapters 7 and 13. We believe our bankruptcy products and services offer our customers various strategic advantages and enable them to:

•

Increase operating efficiency and reduce operating costs through automation. Our comprehensive case management solutions are designed to leverage current technologies to streamline the complex and data intensive tasks associated with bankruptcy case management.



•

Rely on a single solution provider. We provide a comprehensive solution to trustee customers, which can include software, hardware, network integration, database conversion, report customization, on-site training, integrated electronic banking for Chapter 7 customers, and post-installation support. We also provide a variety of value-added services, including document printing and assembly, check generation and bank account reconciliation. Our solution provides customers with a single relationship through which their information technology requirements can be managed, eliminating the need to purchase and integrate separate solution components from multiple vendors.



•

Remain compliant with changing regulations and reporting requirements. Bankruptcy regulations and reporting requirements are continuously changing at the local bankruptcy court level. By closely monitoring these changes, we integrate solutions into our software that allow timely and efficient reporting compliance by our trustee customers.

Financial Services

    Our financial services products are designed to enable companies to deliver business data to the right recipient, at the right time, in the right format and with the appropriate security. We believe our financial services products offer our customers various strategic advantages and enable them to:

•

Consolidate enterprise-wide financial data communications through a single solution. Our products enable customers who previously adopted fragmented or manual data communications strategies to automate and streamline data communications operations across their entire enterprise into a single, highly manageable application.



•

Simplify communications with business partners. The DataXpress hub-and-spoke architecture requires that software only be installed at our customer's hub, eliminating the need for potentially complex and expensive information technology infrastructure with business partners at the spokes.



•

Provide mission-critical reliability and security. Our products provide customers a high level of configurable, security protection required by high volume, mission-critical operations. By combining constraints on operator activity, time-sensitive operational windows, assorted encryption and compression algorithms and database change logging, our solutions satisfy highly stringent information security requirements.



•

Maintain a clear upgrade path. Our products have been designed to protect customers' current information technology investments by offering flexible applications that can grow and evolve as customers' business environments change and as they adopt new communications technologies. The Java-based architecture of our DataXpress Open Platform product supports a wide range of relevant technology standards and has the ability to support new standards as they emerge.

27

Strategy

    Our objectives are to attain market leadership in the industries we serve, sustain profitable growth and deliver shareholder value. The key elements of our strategy are to:

•

Continue to increase market share. We have chosen to focus on niche markets where we believe we offer best-of-class solutions to customers and where we believe we can attain market leadership. For instance, in the Chapter 7 bankruptcy trustee market, we have grown our market share substantially over the past several years through replacement sales against incumbent competitors and our 1999 acquisition of a competitor. We entered the financial services market in March 2000 and are pursuing a goal of market leadership in this data communications infrastructure sector.



•

Expand product and technology leadership. We employ the latest technologies to develop enhancements and new products that improve the productivity of our customers. We regularly upgrade our core software applications to respond to technology advancements, our customers' evolving business requirements and related industry requirements. For example, we released TCMS 6.0 in March 2001, which represented our sixth consecutive, on-time annual version upgrade. In the financial services market, we recently introduced DataXpress Open Platform to complement our existing DataXpress NonStop product. We intend to continue to introduce innovative products through ongoing and significant product development.



•

Leverage vertical market expertise. We believe that the ongoing integration of vertical market expertise coupled with our proficiency in commercial software development is critical to the achievement of market leadership. Accordingly, we intend to continue to attract, recruit and retain employees who are skilled in these areas for both our bankruptcy and financial services products.



•

Pursue selected strategic acquisitions. In March 2000, we entered the financial services market through an acquisition. In November 1999, we acquired our second largest competitor in the Chapter 7 bankruptcy trustee market. We believe we evaluate acquisition opportunities carefully and have been selective in those we have pursued. We intend to continue to review actively potential strategic acquisitions and to respond to advantageous opportunities.

Products and Services

Bankruptcy Trustee Products and Services

    Our bankruptcy products and services include TCMS (Trustee Case Management System) for Chapter 7 and CasePower for Chapter 13. Additionally, TCMS can be utilized to administer Chapter 11 cases, and CasePower can be utilized to administer Chapter 12 cases. We produce our software applications internally with a full time staff of professional software developers.

Chapter 7

TCMS assists trustees in managing liquidation bankruptcies, whereby the trustee liquidates the debtor's assets and disburses the resulting funds to creditors. In March 2001, we released TCMS 6.0, which incorporated important new case management functions that we believe add significant value to a trustee's bankruptcy practice. Our release of TCMS 6.0 represented our sixth consecutive, on-time annual version upgrade.

TCMS is a package of proprietary, Windows-based software, computer equipment and support services offered to Chapter 7 trustees through our national marketing arrangement with Bank of America. TCMS provides easy-to-use tools for asset management, financial record keeping and claims administration. An electronic banking link developed by us gives users an automated mechanism for

28

entering banking transactions, and our electronic interface with the courts allows trustees automatically to electronically download claim information into their databases.

TCMS is provided to the end-user trustee customer without direct charge and includes the following products and services:

•

A license to use our proprietary TCMS software;



•

Computer hardware, laser printer, modem, tape backup and operating software, all of which are returned to us if the trustee does not deposit bankruptcy asset proceeds in the bank designated by us;



•

Customization of reports conforming to local bankruptcy court regulations;



•

Database conversion from previous computer systems;



•

Configuration and installation of hardware by our personnel;



•

On-site software training;



•

Toll-free customer service; and



•

Remote diagnostics.

    Our Chapter 7 revenues are based upon the total funds kept on deposit from the liquidation of debtors' assets, along with additional fees for conversions, upgrades and other services. In support of our marketing arrangement, we also derive Chapter 7 revenues from fees for customized software solutions, related integration services and marketing and strategic consulting services directly from Bank of America.

    TCMS Features.  Our TCMS software serves as the cornerstone for our Chapter 7 trustee customers' operations and most trustees use our system on a daily basis to perform the following tasks:

•

Asset Management. As assets are identified, the trustee enters them into TCMS through a convenient spreadsheet-like interface. The system automatically tracks the remaining values of assets as they are liquidated and provides a summary overview of properties within each case.



•

Banking. An online banking module we developed allows the trustee to open and close bank accounts electronically as well as to enter funds transfers. Simple to sophisticated financial transactions can be recorded on an online computer screen that resembles a personal check register. The system prepares encoded laser-printed checks and deposit slips on demand.



•

Claims Administration.TCMS categorizes each claim by class and desired priority level for distribution. Distribution checks are calculated and printed automatically, and all financial ledgers are updated. An extensive library of financial reports provides detailed information for each case. A proprietary interface feature allows information to be downloaded from the court into our trustee customer's database.



•

Calendaring and Docketing. Key events in asset cases are posted automatically to a central trustee's calendar. The software automatically schedules tasks required to close cases in a timely fashion.



•

Customized District Reports. We develop custom-tailored final reports and final accounts for each district where TCMS is installed. Preparing these documents has traditionally been one of the most time consuming tasks in Chapter 7 case administration. With TCMS, trustees can quickly generate a fully formatted report with all necessary information completed and calculated.

29

•

180 Day Reports. The Office of the United States Trustee requires trustees to submit detailed status reports for each case every six months in a very specific reporting format. TCMS prints these reports in compliance with the most recent regulations.

Chapter 13

CasePower is a proprietary Windows-based application for the comprehensive administration of Chapter 13 reorganization bankruptcies. CasePower assists Chapter 13 trustees in managing databases that can contain over 10,000 active bankruptcies by managing debtor payments, monthly creditor distributions, the generation of legal noticing and government reporting. Because Chapter 13 bankruptcy cases typically require 36 to 60 consecutive monthly distributions, Chapter 13 is considerably more transaction intensive and paperwork intensive than Chapter 7, where a single distribution to each creditor is normally made at the end of the case. Many of our Chapter 13 trustee customers outsource various activities to us to facilitate the preparation of large volumes of noticing and reporting, including document printing and assembly, check generation and bank account reconciliation.

    CasePower Features.  Our CasePower product serves as the cornerstone for our Chapter 13 trustee customers' operations, and most trustees use our system on a daily basis to perform the following tasks:

•

Case Management.CasePower stores and monitors key dates, names, addresses and text notes for every case in the system. A variety of retrieval mechanisms enable users to view case information from various perspectives.



•

Financial History Update. The office staff enters cash receipts and financial adjustments in the system as part of the daily bank deposit. The software updates the balances in each case and summarizes the day's financial transactions. Each month, the software prepares a single-page summary of the receipts and disbursements in every case.



•

Monthly Distribution. Our software's advanced distribution logic interprets payment orders from the bankruptcy court. Several different payment methodologies, such as pro rata, fixed monthly payment and per capita, may be spread over 99 separate distribution priority levels. Individual checks or voucher checks can be printed for each creditor. Claims on which objections have been filed can continue to accrue distributions without releasing funds until the objection has been settled.



•

Inquiry Processing. Chapter 13 offices receive a multitude of outside inquiries each day from creditors' and debtors' attorneys. CasePower provides instantaneous inquiry access to the financial status of each debtor and claim in the system. An optional creditor dial-in system gives outside parties inquiry only access to the system through a dial-in or web-based connection.



•

Noticing. When new cases are entered on the system, our data center can extract relevant information and prepare mandatory first meeting of creditors notices for each case. Subsequent forms, such as reset notices, correcting notices, motions to allow claims, motions to allow additional claims and motions to dismiss, can also be selected and prepared through the system.

Financial Services Products

    Our DataXpress product line enables corporate customers to format and securely route data in a fault tolerant environment over the Internet and private networks using a wide variety of web-based and legacy communications protocols. Our financial services customers use DataXpress to support applications such as ACH (automated clearinghouse) and payment processing, wire transfer, lockbox and account reconciliation, all of which entail moving, from one enterprise to another, a high volume of mission-critical data among a variety of constituents, applications and platforms. The DataXpress product family includes a core data transmission and receiving engine, a real-time communications management console, a powerful data reformatting tool and an advanced suite of security and

30

scheduling functions required for enterprise-class implementations. DataXpress NonStop leverages Compaq NonStop technology, providing high availability, fault-tolerant processing and recovery features to ensure accurate and timely data delivery. Our financial services segment also provides value-added services including systems integration, consulting and end-user education.

    In the second quarter of 2001, we introduced DataXpress Open Platform, a Java-based product intended to complement the existing DataXpress NonStop product. DataXpress Open Platform is offered both as a library of reusable software components that can be integrated into third-party systems and as a stand alone application.

    DataXpress Features.  The DataXpress product line centralizes enterprise-wide data communications and links legacy systems with current technology tools while supporting the mission-critical transmission needs of our customers, including data security, reformatting and data validation. The DataXpress product line enables our customers to communicate with any system at any time, using virtually any system configuration. The major capabilities of DataXpress include:

•

File Transmission.DataXpress automates data transfer by receiving and transmitting data from numerous sources and to numerous destinations utilizing a variety of communications protocols. Our software applies common scheduling, tracking and monitoring methods to each transmission. For example, DataXpress allows our customers to preset the automatic delivery of files at a specified time each day. DataXpress does not require specialized software at the remote sites, reducing the information technology infrastructure costs of both our customers and their customers.



•

Data Reformatting and Validation. Data destined for banks, service bureaus and brokerage houses often contain mission-critical components that require special formatting. These file transfers must maintain extremely high accuracy rates. DataXpress performs online data quality verification, helping customers to ensure minimal errors, including formatting irregularities or misplaced or lost files.



•

System Monitoring and Management.DataXpress tracks the progress of each file as it proceeds through the transfer process, providing on-line status, monitoring reports, and detailed information on end points, data transmissions, contacts, system activity and statistics.



•

Security.DataXpress provides application-level security to protect the privacy and integrity of business data in transit. It ensures system security at both the internal and external access levels. Data transmissions are encrypted and decrypted as they are in process and are also compressed as they enter DataXpress to reduce disk storage requirements.



•

Ease of Upgrades. Our new DataXpress Open Platform product protects a customer's existing information technology investment by maintaining a clear upgrade path and preserving system functionality, even through major changes in the customer's overall system configuration.

Customers

Bankruptcy Industry

    Our customers in the bankruptcy industry are primarily Chapter 7 and Chapter 13 bankruptcy trustees. Bankruptcy trustees typically are attorneys or certified public accountants appointed by the Office of the United States Trustee. A United States Trustee is appointed for most federal court districts and generally has responsibility for overseeing the integrity of the bankruptcy system. For Chapter 7 bankruptcy, each region of the country has a rotating panel of trustees. For Chapter 13 bankruptcy, most areas of the country have a single standing Chapter 13 trustee, who administers all Chapter 13 filings. To support our marketing arrangement, we also provide customized software solutions, technology services and marketing and strategic consulting services directly to Bank of

31

America. The fees received from Bank of America for these products and services accounted for 17.6% and 15.2% of our total operating revenues in calendar years 2000 and 1999, respectively, and 15.1% in the first quarter of 2001.

Financial Services Industry

    Our financial services customers include leading banking and financial services companies such as Bank of America, First Union, Fiserv EFT, J.P. Morgan Chase Bank and Visa USA.

Sales and Marketing

Bankruptcy Industry

    Our bankruptcy products and services are marketed directly to trustees through on-site sales calls by our internal sales department and, in the case of Chapter 7, by supporting representatives of Bank of America. Trustees make their own decisions regarding the software and service providers they use. We believe that the most important factors in attracting and retaining trustee customers are the quality and features of our software products and the quality of our post-installation support. The typical sales cycle for new Chapter 7 business lasts between two and four months.

    The Executive Office of the United States Trustee in Washington, D.C. regularly issues a directory of all current bankruptcy trustees which we use as our prospect list. Additionally, our sales representatives attend approximately eight bankruptcy trade shows annually. We conduct direct mail campaigns and advertise in trade journals to heighten our exposure and to stimulate sales.

    Chapter 7 Marketing Arrangement.  Since 1993 we have had a national marketing arrangement for Chapter 7 trustees with Bank of America, under which we jointly promote products and services to trustees in all 50 states. We hold the primary responsibility for developing all facets of the TCMS system and for driving the national sales and marketing effort. Bank of America personnel provide additional assistance in our marketing effort and are responsible for administering the banking services provided to the trustee customers. The structure of the marketing arrangement assists Bank of America to build its deposit base in this market.

    We also continue to support a number of trustee relationships through other banks, including banking relationships associated with our DCI acquisition.

Financial Services Industry

    We target financial services customers through a dedicated direct sales force and participation in key industry trade shows. Efforts are underway to develop alliances with infrastructure and platform-specific computer systems providers with the express purpose of extending sales and lead generation.

Competition

Bankruptcy Industry

    We work in an industry with a limited number of Chapter 7 and Chapter 13 trustees. We estimate that there is approximately $3.0 to $3.5 billion of liquidated debtor assets on deposit by approximately 1,700 Chapter 7 trustees and that there were approximately 700,000 active Chapter 13 cases at the end of 2000 being managed by approximately 180 Chapter 13 trustees. There are several companies in this market all competing for sales from this finite group of customers, and some of our competitors have substantially greater financial and marketing resources than we do. For our Chapter 7 and 13 products, we compete with J.P. Morgan Chase Bank, as well as other regional competitors in selected markets.

32

Financial Services Industry

    While a number of competitors exist in the financial services software integration marketplace, we believe our specialized niche within this segment has historically had a limited number of established competitors. Direct competition includes data file transfer solutions developed by in-house information technology departments and commercial data file transfer products offered by Sterling Commerce (a business unit of SBC Communications) and others.

Employees

    We employ approximately 120 full-time employees and believe the relationship with our employees is good.

Facilities

    Our corporate offices are located in a 30,000-square-foot facility in Kansas City, Kansas. In connection with corporate growth and the development of new products, this facility has been recently renovated and expanded. In May 2001, we purchased this building from T & J Investment Company, which is 50.0% owned by our Chairman and Chief Executive Officer, for a cash purchase price of $1,750,000. The purchase price was based on an independent MAI appraisal of the building obtained by us in January 2001.

    We also lease an approximately 4,200-square-foot office in San Francisco, which is dedicated primarily to the support of our financial services segment.

Legal Proceedings

    We occasionally become involved in litigation arising in the normal course of business. We do not expect that the results of any currently pending or threatened litigation will have a material adverse effect on our business, financial position, results of operations or cash flows.

33

MANAGEMENT

    Our executive officers and directors and their current ages and positions are set forth below.

Name	Age	Position
Tom W. Olofson	59	Chairman, Chief Executive Officer and Director
Christopher E. Olofson	31	President, Chief Operating Officer and Director
Albert T. Annillo	50	Senior Vice President—Industry Relations
Janice E. Katterhenry	44	Vice President, Chief Financial Officer and Corporate Secretary
Thomas L. Layton	58	Senior Vice President—Bankruptcy Services
Sally D. MacDonald	54	Vice President—Human Resources—San Francisco
Catherine M. Murray	53	Vice President—Human Resources—Kansas City
Robert C. Levy	54	Director
W. Bryan Satterlee	66	Director
Edward M. Connolly, Jr.	58	Director

    Tom W. Olofson.  Mr. Olofson led a private investor group that acquired EPIQ Systems in July 1988, and has served as Chief Executive Officer and Chairman of the board of directors since that time. During his business career, Mr. Olofson has held various management positions with Xerox Corporation and was a Senior Vice President and member of the Office of the President of Marion Laboratories, Inc. Mr. Olofson is a director of Saztec International, Inc., a provider of information management services, and also serves as a director of various private companies in which he is an investor. He earned a BBA from the University of Pittsburgh in 1963, and is currently a member of the Board of Visitors of the Katz Graduate School of Business at the University of Pittsburgh. He is the father of Christopher E. Olofson.

    Christopher E. Olofson.  Mr. Olofson joined us as a Vice President in June 1993, and was a part-time employee of EPIQ Systems from 1988 to 1993. In January 1994, he was named Senior Vice President—Operations, and became Executive Vice President and a member of the board of directors effective January 1, 1995. Effective July 1, 1996, Mr. Olofson also assumed the duties of Chief Operating Officer, and effective October 1, 1998, Mr. Olofson was named our President. He earned an AB degree from Princeton University in 1992, summa cum laude. He was named a Fulbright Scholar, and he completed a one-year program of study at the Stanford University Center in Taipei, Taiwan in 1993. He is the son of Tom W. Olofson.

    Albert T. Annillo.  Mr. Annillo has been our Senior Vice President since January 1995. Mr. Annillo joined us in October 1992 as a corporate Vice President. He was Assistant Director, Executive Office for United States Trustees, Department of Justice, Washington, D.C. for six years before his association with EPIQ Systems. He earned an MBA and an MED from William Patterson College in 1975 and 1979, respectively.

    Janice E. Katterhenry.  Ms. Katterhenry joined us in August 1999 as Vice President, Chief Financial Officer and Corporate Secretary. She was with Syntro Corporation, a bio-technology company focusing on animal health from 1987 to 1997, where she served as their Chief Accounting Officer and Vice President—Finance of the wholly owned subsidiary SyntroVet Inc. From 1997 until joining us, she was an independent financial consultant. Ms. Katterhenry has a BSBA from Kansas State University and a MS in Accounting from University of Missouri-Kansas City. Ms. Katterhenry has her Certified Public Accountant certificate.

    Thomas L. Layton.  Mr. Layton joined us as Vice President—Chapter 7 Services in September 1999. He was promoted to Senior Vice President—Bankruptcy Services in April 2000. Prior

34

to joining EPIQ Systems, he was a Vice President and General Manager for Automatic Data Processing, Inc. from 1989 to 1999. Mr. Layton has a BA degree from St. Mary's College.

    Sally D. MacDonald.  Ms. MacDonald rejoined us as Vice President—Human Resources—San Francisco in April 2000. Ms. MacDonald was Vice President Human Resources for us from 1996 to 1998. Ms. MacDonald earned a BS in Business Administration from the University of San Francisco in 1984.

    Catherine M. Murray.  Ms. Murray joined us in June 2000 as Vice President—Human Resources—Kansas City. Ms. Murray was with EFL Associates, an executive search firm in Kansas City prior to joining us. She also held human resources roles with Pizza Hut, Inc. and Payless ShoeSource. Ms. Murray earned her undergraduate degree from Vanderbilt University/Peabody College and her MBA from the University of Kansas.

    Robert C. Levy.  Mr. Levy is a director, shareholder and executive committee member of the law firm of Seigfreid, Bingham, Levy, Selzer & Gee, P.C. in Kansas City, Missouri. He has been one of our directors since July 1988. He earned a BS from Northwestern University in 1968, and a JD from the University of California at Berkeley in 1971. Mr. Levy formerly was Chairman of the Board of Directors of Blue Cross and Blue Shield of Kansas City.

    W. Bryan Satterlee.  Mr. Satterlee was elected to the board of directors in February 1997. Mr. Satterlee has been a partner since 1989 in NorthEast Ventures, a consulting firm based in Hartford, Connecticut, which specializes in business development services for and evaluations of technology-based venture companies. Mr. Satterlee's background includes ten years of management experience with IBM, as well as having been a founder of a computer leasing/software business, a telecommunications company and a venture investment services business. He earned a BS from Lafayette College in 1956.

    Edward M. Connolly, Jr.  Mr. Connolly was elected to the board of directors in January 2001. He served as President of the Aventis Pharmaceuticals Foundation and Vice President of Community Affairs for Aventis Pharmaceuticals. He retired from Aventis in October 2000. Prior to his work there, he held various executive positions, primarily in the human resources area, at Marion Laboratories, Marion Merrell Dow and Hoechst Marion Roussel, predecessor companies to Aventis. He holds a BA degree in psychology from Bellarmine University.

Board Committees

    The Audit Committee presently consists of Robert C. Levy, W. Bryan Satterlee and Edward M. Connolly, Jr. The function of the Audit Committee is to provide assistance to the corporate directors in fulfilling their responsibility to the shareholders, potential shareholders and investment community relating to corporate accounting, our reporting practices, and the quality and integrity of our financial reports. While the Audit Committee has the responsibilities and powers set forth in its Charter, it is not the duty of the Audit Committee to plan or conduct audits or to determine that our financial statements are complete and accurate and are in accordance with accounting principles generally accepted in the United States.

    The board of directors does not have a nominating or compensation committee.

Director Compensation

    We pay our non-employee directors a fee of $2,500 per quarter. We also reimburse non-employee directors for out-of-pocket expenses incurred in attending those meetings. In 2000, we granted Robert C. Levy and W. Bryan Satterlee each a 10-year option to acquire 7,500 shares of common stock at an exercise price of $7.00 per share which vests 20% per year over five years. In 2001, we granted Robert

35

C. Levy and W. Bryan Satterlee each a 10-year option to acquire 7,500 shares of common stock at an exercise price of $11.29 per share, which vests 20% per year over five years. Edward M. Connolly, Jr. received a 10-year option to acquire 11,250 shares of common stock at an exercise price of $11.50 upon joining the board in January 2001, which option vests 20% per year over five years.

Executive Compensation

    The following table sets forth the cash and other compensation paid in 2000, 1999, and 1998 to our Chief Executive Officer and each other executive officer who earned in excess of $100,000.

	Annual Compensation
Name and Principal Position						Other Annual Compensation (1)		All Other Compensation (2)
	Year	Salary		Bonus
Tom W. Olofson Chairman and Chief Executive Officer	2000 1999 1998	$	125,000 100,114 100,489	$	60,000 50,000 —	$	3,063 2,684 2,688	$	10,649 11,391 11,026
Christopher E. Olofson President and Chief Operating Officer	2000 1999 1998	$	172,500 150,108 138,102	$	60,000 25,000 —	$	4,245 3,063 3,063	$	6,000 6,000 6,000
Thomas L. Layton (3) Senior Vice President—Bankruptcy Services	2000	$	127,710		—	$	6,000	$	6,000
Sally D. MacDonald (4) Vice President—Human Resources— San Francisco	2000	$	112,500		—		—	$	2,869
Janice E. Katterhenry (5) Vice President, Chief Financial Officer and Corporate Secretary	2000	$	98,333	$	15,000	$	6,000	$	5,900

(1)

Includes for Tom W. Olofson $3,063 in 2000, $2,684 in 1999 and $2,688 in 1998 for personal use of a company automobile. Includes for Christopher E. Olofson $4,245 in 2000, $3,063 in 1999 and $3,063 in 1998 for personal use of a company automobile. Includes a $6,000 automobile allowance for Thomas L. Layton and Janice E. Katterhenry.

(2)

Includes for Tom W. Olofson $4,649 in 2000, $5,391 in 1999 and $5,026 in 1998 for group insurance and $6,000 in 2000, 1999 and 1998 for our matching contributions under the 401(k) plan. For Christopher E. Olofson, Thomas L. Layton, Janice E. Katterhenry and Sally D. MacDonald, consists solely of matching 401(k) contributions.

(3)

Mr. Layton joined us in September 1999.

(4)

Ms. MacDonald rejoined us in April 2000 after the acquisition of PHiTECH in San Francisco. From 1996 to 1998 she was the Vice President of Human Resources in Kansas City.

(5)

Ms. Katterhenry joined us in August 1999.

36

    The following table sets forth information concerning stock option grants made to the executive officers listed in the preceding table in the year ended December 31, 2000.

Option Grants in the Last Year

							Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term
		% of Total Options Granted to Employees in 2000
	Shares Underlying Options Granted
				Exercise Price per Share		Expiration Date
							5%		10%
Tom W. Olofson	—	—			—	—		—		—
Christopher E. Olofson	37,500	17.30	%	$	7.00	07/03/2010	$	154,864	$	386,927
Thomas L. Layton	15,000	6.92	%	$	7.00	07/03/2010	$	66,034	$	167,343
Sally D. MacDonald	15,000	6.92	%	$	7.00	04/11/2010	$	82,324	$	193,282
Janice E. Katterhenry	15,000	6.92	%	$	7.00	07/03/2010	$	66,034	$	167,343

    Since January 1, 2001, we have granted options to Christopher E. Olofson, Thomas L. Layton, Sally D. MacDonald and Janice E. Katterhenry to purchase 45,000, 3,000, 3,000 and 3,000 shares of our common stock, respectively, all at an exercise price of $11.29 per share, the value of our common stock on the date of grant. The options granted to Christopher E. Olofson are fully vested as of the date of this prospectus, and the options granted to each of the other executive officers vest 20% per year over five years.

    The following table sets forth information concerning stock options exercised by the executive officers listed in the compensation table during the year ended December 31, 2000, and the number of shares and the value of options outstanding as of December 31, 2000, for each of those executive officers:

Aggregate Option Exercises in the Last Year and Year-End
Option Values

			At December 31, 2000
			Number of Securities Underlying Unexercised Options		Value of Unexercised In-The-Money Options (1)
Name	Shares Acquired upon Exercise	Value Realized
			Exercisable	Unexercisable	Exercisable		Unexercisable
Tom W. Olofson	—	—	—	—		—		—
Christopher E. Olofson	—	—	255,000	37,500	$	1,571,258	$	165,626
Thomas L. Layton	—	—	3,300	28,200	$	17,025	$	134,351
Sally D. MacDonald	—	—	0	15,000	$	0	$	66,251
Janice E. Katterhenry	—	—	3,300	28,200	$	16,025	$	130,351

(1)

Based on the closing sales price of the common stock on the Nasdaq National Market of $11.4167 per share on December 31, 2000, less the option exercise price.

Stock Option Plan

    On October 17, 1995, we adopted the Electronic Processing, Inc. 1995 Stock Option Plan (the "1995 Plan"). The 1995 Plan, as amended, provides for the issuance of options to our employees, officers and directors ("Eligible Participants") to purchase up to an aggregate of 1,200,000 shares of common stock subject to adjustment under certain circumstances. Options granted under the 1995 Plan may be either incentive stock options ("ISOs") as defined by Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") or non-statutory stock options ("NSOs").

37

    The 1995 Plan is administered by the board of directors. The board of directors has sole discretion and authority, consistent with the provisions of the 1995 Plan, to grant ISOs or NSOs, determine in good faith the fair market value of the shares, select the Eligible Participants to whom options will be granted under the 1995 Plan, construe and interpret the 1995 Plan, promulgate, amend and rescind rules and regulations for the administration thereof, and make such other determinations which are necessary and advisable for the 1995 Plan's administration.

    The exercise price of ISOs granted under the 1995 Plan may be no less than the fair market value of a share of common stock on the date the option is granted (110.0% with respect to ISO optionees who own at least 10.0% of the outstanding common stock). With respect to NSOs, the exercise price will be determined by the board of directors and may not be less than 85.0% of the fair market value on the date of grant. The board of directors has the authority to determine the time or times at which options granted under the 1995 Plan become exercisable, but options expire no later than ten years from the date of grant (five years with respect to ISO optionees who own at least 10.0% of the outstanding common stock). Options are nontransferable, other than by will and the laws of descent, and generally may be exercised only by an employee while employed by us or within three months after termination of employment or one year in the event of termination by reason of death or disability.

    It has been our practice to grant stock options to all full-time employees after an initial period of employment with us.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    We had an operating lease for our corporate headquarters, which expired in February 2001, and became a month to month lease. Tom W. Olofson, our Chairman of the Board and Chief Executive Officer, holds a 50.0% interest in T & J Investment Company, the general partnership that leased this facility to us. The lease required us to pay property taxes, maintenance and insurance related to the building. We made rental payments to T & J Investment Company under this lease of $157,800 and $162,400 for calendar years 1999 and 2000, respectively.

    In May 2001, we purchased our corporate headquarters building from T & J Investment Company for a cash purchase price of $1,750,000. The purchase price was based on an independent MAI appraisal of the building obtained by us in January 2001.

    We believe that the above transactions were on terms no less favorable to us than could have been obtained from unaffiliated third parties on an arm's length basis.

38

PRINCIPAL AND SELLING SHAREHOLDERS

    The following table sets forth certain information regarding beneficial ownership of our common stock as of March 31, 2001, before and after giving effect to the sale of the shares of common stock offered hereby, by (i) each person who is known by us to own beneficially more than 5% of the outstanding shares of our common stock, (ii) the selling shareholders, (iii) each or our directors, (iv) each of the top five executive officers, and (v) all of our directors and executive officers as a group.

Name and Address of Beneficial Owner	Number of Shares Beneficially Owned		Number of Shares Being Offered	Percentage Owned Before Offering	Percentage Owned After Offering
Executive Officers and Directors (1)
Tom W. Olofson	2,100,000	(2)	420,000	24.8%	17.7%
Christopher E. Olofson	456,750	(3)	55,000	5.4	4.2
Robert C. Levy	38,250	(4)	—	*	*
W. Bryan Satterlee	24,000	(5)	—	*	*
Edward M. Connolly, Jr.	0	(6)	—	*	*
Thomas L. Layton	3,391	(7)	—	*	*
Sally D. MacDonald	6,750	(8)	—	*	*
Janice E. Katterhenry	3,345	(9)	—	*	*
All directors and executive officers as a group (10 persons)	2,651,499	(10)	475,000	31.4	23.0
5% Shareholders (11), (12)
Ashford Capital Management (13) P.O. Box 4172 Wilmington, Delaware 19807	837,000		—	9.9	8.8
Credit Suisse Asset Management, LLC (14) 466 Lexington Avenue New York, New York 10017	825,000		—	9.8	8.7
Security Management Company, LLC (15) 700 SW Harrison Street Topeka, Kansas 66636	525,000		—	6.2	5.5

*

Less than 1%

(1)

The address of all of the named individuals is c/o EPIQ Systems, Inc., 501 Kansas Avenue, Kansas City, Kansas 66105.

(2)

Excludes 60,750 shares owned by Mr. Olofson's son, Scott W. Olofson, as to which shares Mr. Olofson disclaims beneficial ownership.

(3)

Includes 337,500 shares of Common Stock issuable upon exercise of options that are currently exercisable or exercisable within 60 days.

(4)

Includes 4,500 shares of Common Stock issuable upon exercise of options that are currently exercisable or exercisable within 60 days.

(5)

Includes 13,500 shares of Common Stock issuable upon exercise of options that are currently exercisable or exercisable within 60 days.

(6)

Mr. Connolly joined the Board in January 2001 and neither owns stock nor has options that vest within 60 days.

(7)

Includes 3,300 shares of Common Stock issuable upon exercise of options that are currently exercisable or exercisable within 60 days.

(8)

Includes 3,000 shares of Common Stock issuable upon exercise of options that are currently exercisable or exercisable within 60 days.

(9)

Includes 3,300 shares of Common Stock issuable upon exercise of options that are currently exercisable or exercisable within 60 days.

(10)

Includes 384,000 shares of Common Stock issuable upon exercise of options that are currently exercisable or exercisable within 60 days.

(11)

Excludes 5% shareholders listed above as executive officers or directors.

(12)

Based solely on the Schedule 13G filings with the SEC.

(13)

Includes shares held by its affiliates, Anvil Investment Associates, L.P. and Ashford Capital Partners, L.P.

(14)

Consists of shares held by its affiliate, Warburg Pincus Emerging Growth Fund.

(15)

Includes shares held by its affiliates, SBL Fund, Series J and Security Ultra Fund.

39

DESCRIPTION OF CAPITAL STOCK

    Under our articles of incorporation, our authorized capital stock consists of 20,000,000 shares of common stock, par value $0.01 per share, and 2,000,000 shares of preferred stock, par value $1.00 per share. At our annual meeting of shareholders to be held on June 6, 2001, our shareholders will vote on a proposal to amend our articles of incorporation to increase the number of authorized shares of common stock from 20,000,000 to 50,000,000.

Common Stock

    The holders of common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the holders of common stock. Cumulative voting is not permitted in the election of directors. The holders of common stock are entitled to receive ratably such dividends as may be declared by our board of directors out of funds legally available therefor. See "Dividend Policy." If we are liquidated, dissolved or wound-up, the holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities, subject to the rights of any holders of preferred stock. The holders of common stock have no preemptive or subscription rights, and there are no redemption or conversion rights with respect to such shares. All outstanding shares of common stock are fully paid and non-assessable, and, upon completion of the offering, the shares of common stock offered by us will be fully paid and non-assessable.

Preferred Stock

    Our board of directors is authorized to designate any series of preferred stock and the powers, preferences and rights of the shares of such series and the qualifications, limitations or restrictions thereof without further action by the holders of common stock. No shares of preferred stock are issued or outstanding.

    Our board of directors may create and issue a series of preferred stock with rights, privileges or restrictions, and adopt a shareholder rights plan, having the effect of discriminating against an existing or prospective holder of such securities as a result of such security holder beneficially owning or commencing a tender offer for a substantial amount of common stock. One of the effects of authorized but unissued and unreserved shares of capital stock may be to render more difficult or discourage an attempt by a potential acquiror to obtain control of us by means of a merger, tender offer, proxy contest or otherwise, and thereby protect the continuity of our management. The issuance of such shares of capital stock may have the effect of delaying, deferring or preventing a change in control without any further action by the shareholders. We have no present intention to adopt a shareholder rights plan, but could do so without shareholder approval at any future time.

Missouri Anti-Takeover Statutes

    The Missouri General and Business Corporations Law ("GBCL") requires the affirmative vote of the holders of at least two-thirds of the outstanding shares of common stock to approve certain fundamental corporate transactions, including mergers, consolidations or the sale of all or substantially all our assets. After the completion of the offering, our directors and executive officers will beneficially own approximately 23.0% of our outstanding shares of common stock.

Indemnification of Directors and Officers

    Pursuant to the GBCL, our bylaws provide that we will indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, other than an action by or in the right of EPIQ Systems, by reason of the fact that he is or was our director, officer, employee or agent (or is or was serving at our request as a director, officer, trustee or in any other comparable position of another

40

entity) against all liabilities and expenses, including without limitation, attorneys' fees, judgments, fines and amounts paid in settlement (provided that the settlement and all amounts paid in connection therewith are approved in advance by us in accordance with our bylaws), ERISA excise taxes or penalties or other expenses actually and reasonably incurred by him in connection with the action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to our best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful; provided that we are not required to indemnify or advance any expenses to him in connection with any action, suit or proceeding initiated by him (including any cross-claim or counterclaim) unless the initiation of the action, suit or proceeding was authorized by our Board of Directors or as otherwise provided in our bylaws.

    Our bylaws also provide that we will indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in our right to procure a judgment in our favor by reason of the fact that the person is or was our director, officer, employee or agent (or is or was serving at our request as a director, officer, trustee or in any other comparable position of another entity) against amounts paid in settlement of the action (provided that the settlement and all amounts paid in connection with the settlement are approved in advance by us in accordance with the our bylaws) and all expenses, including attorneys' fees, actually and reasonably incurred by him in connection with the defense or settlement of the action, suit or proceeding (including, without limitation, the investigation, defense, settlement or appeal of the action, suit or proceeding) if he acted in good faith and in a manner he reasonably believed to be in or not opposed to our best interests; provided that no indemnification will be made in respect of any such claim, issue or matter as to which the person has been adjudged to be liable for negligence or misconduct in the performance of his duties to us, except as otherwise set forth in our bylaws.

    Any indemnification with regard to the foregoing, unless ordered by a court, will be made by us only as authorized in the specific case upon a determination that indemnification of the person is proper in the circumstances because he has met the applicable standard of conduct set forth in our bylaws. The determination will be made by a majority vote of a quorum of disinterested directors, or if the quorum is not attainable, or even if obtainable, at the direction of a quorum of disinterested directors, by independent legal counsel in a written opinion, or by the shareholders.

    Our bylaws also provide that expenses incurred in defending a civil or criminal action, suit or proceeding will be paid by us in advance of the final disposition of the action, suit or proceeding as authorized by our Board in the specific case upon receipt of an undertaking by or on behalf of the person to repay the amounts unless it is ultimately determined that he is entitled to be indemnified by us as authorized in our bylaws.

    The indemnification discussed in this section is not exclusive of any other rights the party seeking indemnification may have. We also maintain directors and officers liability insurance on our directors and executive officers.

    Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons under the foregoing provisions or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

Transfer Agent and Registrar

    Wells Fargo Bank, N.A. is the transfer agent and registrar for our common stock.

41

SHARES ELIGIBLE FOR FUTURE SALES

    After this offering, we will have outstanding 9,495,309 shares of common stock if the Underwriters do not exercise their over-allotment option, and 9,720,309 shares of common stock if the Underwriters exercise their over-allotment option in full. Of these shares, an aggregate of 6,356,809 shares, including the shares to be sold in this offering by EPIQ Systems, or 6,581,809 shares if the Underwriters exercise their over-allotment option in full, will be freely tradeable without restriction under the Securities Act, except for any shares purchased by one of our "affiliates" as defined in Rule 144 under the Securities Act. At the conclusion of this offering, a total of 3,138,500 shares will be "restricted securities" within the meaning of Rule 144 under the Securities Act or subject to lock-up agreements. Of these 3,138,500 restricted shares, however, 1,350,000 are covered by an effective registration statement and may be resold without restriction, as described below. Except as noted in the preceding sentence, the restricted securities generally may not be sold unless they are registered under the Securities Act or are sold pursuant to an exemption from registration, such as the exemption provided by Rule 144 under the Securities Act.

    We, our executive officers and directors and the selling shareholders have entered into lock-up agreements under which we and they have agreed not to offer or sell any shares of common stock or securities convertible into or exchangeable or exercisable for shares of common stock other than shares being sold in the offering for a period of 90 days from the date of this prospectus without the prior written consent of A.G. Edwards & Sons, Inc., on behalf of the Underwriters. A.G. Edwards & Sons, Inc. may, at any time and without notice, waive any of the terms of these lock-up agreements.

    We have filed two registration statements on Form S-8, which are effective, to register shares of common stock reserved for issuance under our stock option plan. Shares issued under the plan may be sold in the open market, subject in the case of certain holders, to the Rule 144 limitations applicable to affiliates, the above-referenced lock-up agreements and vesting restrictions imposed by us. As of May 18, 2001, there were 889,309 shares subject to options outstanding under the plan.

    We have registered 1,350,000 shares of our common stock with the SEC on behalf of four institutional investors. These institutional investors purchased the shares from us in a December 2000 private placement. The shares covered by this registration statement may be resold by the institutional holders on the open market without volume restrictions. We are obligated to keep this registration statement effective until December 29, 2002. We have agreed to indemnify the institutional investors against certain liabilities under the federal securities laws arising from their sales under this registration statement.

UNDERWRITING

    Subject to the terms and conditions of the underwriting agreement among the selling shareholders, EPIQ Systems and representatives on behalf of the Underwriters, each Underwriter has agreed severally to purchase from us and the selling shareholders the following respective number of shares of common stock at the offering price less the underwriting discounts and commissions set forth on the cover page of this prospectus.

Underwriters		Shares
A.G. Edwards & Sons, Inc.
Needham & Company, Inc.
	Total

    The underwriting agreement provides that the obligations of the Underwriters are subject to certain conditions precedent and that the Underwriters will purchase all shares of the common stock if any of these shares are purchased. The Underwriters are obligated to take and pay for all of the shares

42

of common stock offered in this offering, other than those covered by the over-allotment option described below, if any are taken.

    The representatives of the Underwriters have advised the selling shareholders and us that they propose to offer the shares of common stock to the public at the offering price set forth on the cover page of this prospectus and to certain dealers at that price less a concession not in excess of $      per share. The Underwriters may allow, and the dealers may re-allow, a concession not in excess of $      per share to some other dealers. After the offering, the offering price and other selling terms may be changed by the Underwriters.

    Pursuant to the underwriting agreement, we have granted to the Underwriters an option, exercisable for 30 days after the date of this prospectus, to purchase from us up to 225,000 additional shares of common stock at the offering price, less the underwriting discounts and commissions set forth on the cover page of this prospectus, solely to cover over-allotments.

    To the extent the Underwriters exercise their option, the Underwriters will become obligated, subject to some conditions, to purchase approximately the same percentage of the additional shares as the number set forth next to the Underwriter's name in the preceding table bears to the total number of shares in the table, and we will be obligated, pursuant to the option, to sell these shares to the Underwriters.

    We and each of our directors and executive officers and the selling shareholders have agreed not to sell or otherwise dispose of any shares of our common stock for a period of 90 days after the date of this prospectus without the prior written consent of A.G. Edwards & Sons, Inc. A.G. Edwards may, in its sole discretion, allow any of these parties to dispose of common stock or other securities prior to the expiration of the 90-day period. There are, however, no agreements between A.G. Edwards and the parties that would allow them to do so as of the date of this prospectus.

    The representatives have advised us that they do not intend to confirm sales to any account over which they exercise discretionary authority.

    The following table summarizes the discounts and commissions to be paid to the Underwriters by the selling shareholders and us in connection with this offering. These amounts are shown assuming both no exercise and full exercise of the Underwriters' option to purchase additional shares of common stock.

	Paid By EPIQ Systems		Paid By The Selling Shareholders
	No Exercise	Full Exercise	No Exercise	Full Exercise
Per share	$	$	$	$
Total	$	$	$	$

    We expect to incur expenses, excluding underwriting discounts and commissions, of approximately $450,000 in connection with this offering.

    We and the selling shareholders have agreed to indemnify the Underwriters against some liabilities, including liabilities under the Securities Act, or contribute payments the Underwriters may be required to make in respect of those liabilities.

    Until the distribution of the common stock is completed, rules of the SEC may limit the ability of the Underwriters and some selling group members to bid for and purchase the common stock. As an exception to these rules, the Underwriters are permitted to engage in certain transactions that stabilize, maintain or otherwise affect the price of the common stock.

43

    If the Underwriters create a short position in common stock in connection with the offering, i.e., if they sell a greater aggregate number of shares of common stock than is set forth on the cover page of this prospectus, the Underwriters may reduce the short position by purchasing shares of common stock in the open market. This is known as a "syndicate covering transaction." The Underwriters may also elect to reduce any short position by exercising all or part of the over-allotment option described above.

    Naked short sales are sales in excess of the over-allotment option. The Underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the Underwriters are concerned that there may be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering.

    The Underwriters may also impose a penalty bid on some selling group members. This means that if the Underwriters purchase common stock in the open market to reduce the selling group members' short position or to stabilize the price of the common stock, it may reclaim the amount of the selling concession from the selling group members who sold those shares of common stock as part of the offering.

    In general, purchases of a security for the purpose of stabilization or to reduce a short position could cause the price of the security to be higher than it might be in the absence of the purchases. The imposition of a penalty bid might also have an effect on the price of a security to the extent that it were to discourage resale of the security.

    Such activities, which may be commenced and discontinued at any time, may be effected on the Nasdaq National Market, in the over-the-counter market or otherwise. Also, prior to the pricing of the shares and until such time when a stabilizing bid may have been made, some or all of the Underwriters who are market makers in the shares may make bids for or purchases of shares subject to certain restrictions, known as passive market making activities.

    Neither EPIQ Systems nor the representatives make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the common stock. In addition, neither EPIQ Systems nor the representatives make any representation that the Underwriters will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice.

    A.G. Edwards & Sons, Inc. has provided and A.G. Edwards & Sons, Inc. and Needham & Company, Inc. may in the future provide financial advisory and investment banking services to EPIQ Systems from time to time.

LEGAL MATTERS

    The validity of the securities offered hereby will be passed upon for EPIQ Systems and the selling shareholders by Gilmore & Bell, P.C., Kansas City, Missouri. Certain legal matters for the Underwriters will be passed upon by Bryan Cave LLP, St. Louis, Missouri.

EXPERTS

    The financial statements of EPIQ Systems, Inc. as of and for the year ended December 31, 2000, included and incorporated by reference in this prospectus have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report which is included and incorporated by reference herein, and have been so included and incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

44

    Baird, Kurtz & Dobson, who were our independent auditors for the years ended December 31, 1999 and 1998, audited our balance sheet as of December 31, 1999 and the related statements of income, stockholders' equity and cash flows for the years ended December 31, 1999 and 1998, included and incorporated by reference in the financial statements set forth in this prospectus. Such financial statements are included and incorporated herein in reliance on Baird, Kurtz & Dobson's report, which is included and incorporated by reference herein, given on their authority as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

    This prospectus constitutes a part of a registration statement on Form S-3 filed by us with the Securities and Exchange Commission under the Securities Act of 1933. You may want to refer directly to the registration statement for more information about us and our common stock. You may want to review a copy of any contract or document filed as an exhibit to the registration statement.

    We file annual, quarterly and special reports, proxy statements and other information with the SEC. You may read and copy any documents we file at the SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. You may also obtain our SEC filings from the SEC's website at www.sec.gov.

    The SEC allows us to "incorporate by reference" the information we file with them, which means that we can disclose important information to you by referring you to those documents. Statements made in this prospectus as to the contents of any contract, agreement or other documents are not necessarily complete, and, in each instance, we refer you to a copy of such document filed as an exhibit to the registration statement or otherwise filed with the SEC. The information incorporated by reference is considered to be part of this prospectus. When we file information with the SEC in the future, that information will automatically update and supersede this information. We incorporate by reference the documents listed below and any future filings we will make with the SEC prior to the termination of this offering under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934:

1.

Our annual report on Form 10-K for the year ended December 31, 2000;



2.

Our quarterly report on Form 10-Q for the quarter ended March 31, 2001;



3.

Our definitive proxy statement for our 2001 Annual Meeting of Shareholders filed with the SEC on April 30, 2001; and



4.

Our current report on Form 8-K, as filed with the SEC on January 11, 2001 and the current report on Form 8-K, as filed with the SEC on January 26, 2001.

We will provide without charge to each person to whom a copy of this prospectus is delivered, upon written or oral request, a copy of any of the information that is incorporated by reference in this prospectus (including exhibits that are specifically incorporated by reference in that information). Any request should be directed to: Investor Relations, EPIQ Systems, Inc., 501 Kansas Avenue, Kansas City, Kansas 66105-1309, telephone (913) 621-9500.

45

EPIQ SYSTEMS, INC.

INDEX TO FINANCIAL STATEMENTS

		Page
INDEPENDENT AUDITORS' REPORT—DELOITTE & TOUCHE LLP		F-2
INDEPENDENT ACCOUNTANTS' REPORT—BAIRD, KURTZ & DOBSON		F-3
FINANCIAL STATEMENTS
	Balance Sheets at December 31, 1999 and 2000 and Unaudited Balance Sheet at March 31, 2001	F-4
	Statements of Income for the Years Ended December 31, 1998, 1999 and 2000 and Unaudited Statements of Income for the Three Months Ended March 31, 2000 and 2001	F-5
	Statements of Changes in Stockholders' Equity for the Years Ended December 31, 1998, 1999 and 2000 and Unaudited Statement of Changes in Stockholders' Equity for the Three Months Ended March 31, 2001	F-6
	Statements of Cash Flows for the Years Ended December 31, 1998, 1999 and 2000 and Unaudited Statements of Cash Flows for the Three Months Ended March 31, 2000 and 2001	F-7
	Notes to Financial Statements	F-8

F–1

INDEPENDENT AUDITORS' REPORT

Board of Directors
EPIQ Systems, Inc.
Kansas City, Kansas

    We have audited the accompanying balance sheet of EPIQ Systems, Inc. (formerly Electronic Processing, Inc.) (the "Company") as of December 31, 2000, and the related statements of income, changes in stockholders' equity and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of the Company as of December 31, 1999 and each of the two years then ended were audited by other auditors whose report, dated February 25, 2000, expressed an unqualified opinion on those statements.

    We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

    In our opinion, such financial statements present fairly, in all material respects, the financial position of EPIQ Systems, Inc. as of December 31, 2000, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

/s/ Deloitte & Touche LLP

Kansas City, Missouri
February 23, 2001

F–2

INDEPENDENT ACCOUNTANTS' REPORT

Board of Directors
Electronic Processing, Inc.
Kansas City, Kansas

    We have audited the accompanying balance sheets of Electronic Processing, Inc. as of December 31, 1999, and the related statements of income, changes in stockholders' equity and cash flows for the years ended December 31, 1999 and 1998. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

    We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

    In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Electronic Processing, Inc. as of December 31, 1999, and the results of its operations and its cash flows for the years ended December 31, 1999 and 1998, in conformity with generally accepted accounting principles.

/s/ BAIRD, KURTZ & DOBSON

Kansas City, Missouri
February 25, 2000

F–3

EPIQ SYSTEMS, INC.
BALANCE SHEETS

			December 31,
									March 31, 2001
			1999			2000
									(Unaudited)
ASSETS:
CURRENT ASSETS:
	Cash and cash equivalents		$	1,642,848		$	15,127,916		$	10,622,246
	Short-term investments			3,850,000			1,250,000			—
	Accounts receivable, trade, less allowance for doubtful accounts of $5,000, $30,560 and $30,560, respectively			1,954,806			3,579,874			6,241,272
	Prepaid expenses and other			167,990			222,206			270,074
	Deferred income taxes			85,700			279,000			275,000
	Refundable income taxes			107,063			—			—
		Total Current Assets		7,808,407			20,458,996			17,408,592
PROPERTY AND EQUIPMENT:
	Furniture and fixtures			667,905			952,525			978,867
	Computer equipment			7,753,615			9,949,232			10,248,419
	Office equipment			269,961			398,183			398,183
	Leasehold improvements			941,393			1,073,598			1,081,655
	Transportation equipment			14,969			14,969			14,969
				9,647,843			12,388,507			12,722,093
	Less accumulated depreciation and amortization			(3,338,323	)		(5,443,901	)		(5,810,418	)
		Total Property and Equipment, net		6,309,520			6,944,606			6,911,675
SOFTWARE DEVELOPMENT COSTS, Net				2,252,917			2,811,244			3,146,679
OTHER ASSETS:
	Goodwill, net of accumulated amortization of $74,580, $1,067,280 and $1,341,415, respectively			8,705,250			12,374,104			12,099,969
	Other intangibles, net of accumulated amortization of $9,524, $240,580 and $306,026, respectively			1,140,476			2,309,420			2,243,974
	Other			5,584			40,172			51,222
		Total Other Assets, net		9,851,310			14,723,696			14,395,165
			$	26,222,154		$	44,938,542		$	41,862,111
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
	Short-term borrowings		$	—		$	3,575,250		$	—
	Accounts payable			762,958			1,753,318			1,066,509
	Accrued expenses			588,189			499,208			605,955
	Income taxes payable			—			164,000			265,000
	Deferred revenue			2,067,566			1,070,910			826,883
	Current portion of deferred acquisition price			—			226,159			243,460
	Current maturities of long-term obligations			42,406			137,837			141,770
		Total Current Liabilities		3,461,119			7,426,682			3,149,577
DEFERRED REVENUE				1,176,458			138,717			159,790
LONG-TERM OBLIGATIONS (less current portion)				66,894			295,278			258,327
DEFERRED ACQUISITION PRICE (less current portion)				—			628,555			628,555
DEFERRED INCOME TAXES				592,700			526,000			427,000
		Total Liabilities		5,297,171			9,015,232			4,623,249
STOCKHOLDERS' EQUITY:
	Preferred stock—$1 par value; 2,000,000 shares authorized; none issued and outstanding			—			—			—
	Common stock, $.01 par value; authorized 10,000,000 shares at December 31, 1999 and 20,000,000 shares at December 31, 2000 and March 31, 2001, respectively; issued and outstanding—4,642,068, 8,374,452 and 8,454,979 at December 31, 1999 and 2000 and March 31, 2001, respectively			46,421			83,745			84,550
	Additional paid-in capital			17,698,965			30,528,448			30,808,010
	Retained earnings			3,179,597			5,311,117			6,346,302
		Total Stockholders' Equity		20,924,983			35,923,310			37,238,862
			$	26,222,154		$	44,938,542		$	41,862,111

See Notes to Financial Statements.

F–4

EPIQ SYSTEMS, INC.
STATEMENTS OF INCOME

			Years Ended December 31,									Three Months Ended March 31,
			1998			1999			2000			2000			2001
												(Unaudited)
OPERATING REVENUES			$	11,546,273		$	14,820,400		$	23,256,552		$	4,987,977		$	7,133,635
COST OF SALES:
	Cost of products and services			3,824,075			4,737,428			6,021,912			1,244,255			1,588,328
	Depreciation and amortization			1,452,760			2,157,075			3,099,254			672,324			827,662
		Total cost of sales		5,276,835			6,894,503			9,121,166			1,916,579			2,415,990
GROSS PROFIT				6,269,438			7,925,897			14,135,386			3,071,398			4,717,645
OPERATING EXPENSES:
	General and administrative			4,267,846			5,235,676			8,217,114			1,777,920			2,673,641
	Depreciation			154,094			161,337			266,815			50,942			91,085
	Amortization- goodwill/intangibles			—			63,321			1,223,486			209,369			339,581
	Acquisition related			—			315,197			413,657			357,656			—
	Purchased in-process research and development			—			—			363,738			363,738			—
	Loss on disposal of computer equipment			—			230,069			—			—			—
		Total operating expenses		4,421,940			6,005,600			10,484,810			2,759,625			3,104,307
INCOME FROM OPERATIONS				1,847,498			1,920,297			3,650,576			311,773			1,613,338
INTEREST INCOME (EXPENSE):
	Interest income			392,114			537,162			160,705			66,665			154,739
	Interest expense			(89,755	)		(17,469	)		(359,761	)		(31,067	)		(31,450	)
		Net interest income (expense)		302,359			519,693			(199,056	)		35,598			123,289
INCOME BEFORE INCOME TAXES				2,149,857			2,439,990			3,451,520			347,371			1,736,627
PROVISION FOR INCOME TAXES				829,239			944,000			1,320,000			140,392			701,000
NET INCOME			$	1,320,618		$	1,495,990		$	2,131,520		$	206,979		$	1,035,627
NET INCOME PER SHARE:
	Basic		$	0.21		$	0.22		$	0.30		$	0.03		$	0.12
	Diluted		$	0.21		$	0.21		$	0.30		$	0.03		$	0.12
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
	Basic			6,190,019			6,955,233			6,992,312			6,964,220			8,438,974
	Diluted			6,424,641			7,171,215			7,222,634			7,227,815			8,774,480

See Notes to Financial Statements.

F–5

EPIQ SYSTEMS, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

			Years Ended December 31,							Three Months Ended March 31,
			1998		1999		2000			2001
										(Unaudited)
PREFERRED SHARES (2,000,000 authorized as of December 31, 1999 and 2000 and March 31, 2001, respectively):						—		—			—
COMMON SHARES (10,000,000, 10,000,000, 20,000,000 and 20,000,000 authorized as of December 31, 1998, 1999 and 2000 and March 31, 2001, respectively):
	Shares, beginning of period			3,400,000		4,633,268		4,642,068			8,374,452
	Shares issued upon exercise of options and warrants			92,768		8,800		40,900			80,527
	Shares issued in secondary public offering			1,140,500		—		—			—
	Shares issued in private placement of stock			—		—		900,000			—
	Stock split			—		—		2,791,484			—
		Shares, end of period		4,633,268		4,642,068		8,374,452			8,454,979
COMMON STOCK—PAR VALUE $.01 PER SHARE:
	Balance, beginning of period		$	34,000	$	46,333	$	46,421		$	83,745
	Shares issued upon exercise of options and warrants, including related tax benefit			928		88		409			805
	Net proceeds from secondary public offering			11,405		—		—			—
	Net proceeds from private placement of stock			—		—		9,000			—
	Stock split			—		—		27,915			—
		Balance, end of period		46,333		46,421		83,745			84,550
ADDITIONAL PAID-IN CAPITAL:
	Balance, beginning of period			5,202,000		17,660,878		17,698,965			30,528,448
	Shares issued upon exercise of options and warrants, including related tax benefit			60,972		38,087		323,611			279,562
	Net proceeds from secondary public offering			12,397,906		—		—			—
	Net proceeds from private placement of stock			—		—		12,533,787			—
	Stock split			—		—		(27,915	)		—
		Balance, end of period		17,660,878		17,698,965		30,528,448			30,808,010
RETAINED EARNINGS:
	Balance, beginning of period			362,989		1,683,607		3,179,597			5,311,117
	Cash dividends paid in lieu of fractional shares			—		—		—			(442	)
	Net income			1,320,618		1,495,990		2,131,520			1,035,627
		Balance, end of period		1,683,607		3,179,597		5,311,117			6,346,302
TOTAL STOCKHOLDERS' EQUITY			$	19,390,818	$	20,924,983	$	35,923,310		$	37,238,862

See Notes to Financial Statements.

F–6

EPIQ SYSTEMS, INC.
STATEMENTS OF CASH FLOWS

				Years Ended December 31,									Three Months Ended March 31,
				1998			1999			2000			2000			2001
													(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income				$	1,320,618		$	1,495,990		$	2,131,520		$	206,979		$	1,035,627
	Adjustments to reconcile net income to net cash from operating activities:
		Deferred income taxes			188,511			16,860			(260,000	)		(286,200	)		(95,000	)
		Depreciation and amortization			1,182,452			1,793,413			2,582,907			553,054			735,121
		Amortization of software development costs			422,389			524,998			783,162			170,212			183,626
		Amortization of goodwill and other intangible assets			2,013			63,321			1,223,486			209,368			339,581
		In-process research and development acquired			—			—			363,738			363,738			—
		Loss (gain) on disposal or sale of equipment			35,862			303,393			104,252			(4,940	)		43,407
		Accretion of discount on purchase agreement obligation			—			—			57,485			3,128			17,301
	Changes in operating assets and liabilities, net of effects from business acquisitions:
		Accounts receivable			(471,879	)		(323,303	)		(1,386,830	)		(1,126,852	)		(2,661,398	)
		Prepaid expenses and other assets			(107,272	)		126,362			(69,179	)		30,386			(58,918	)
		Accounts payable and accrued expenses			385,329			175,434			811,736			370,290			(580,062	)
		Deferred revenue			—			3,244,024			(2,879,462	)		(830,794	)		(222,954	)
		Income taxes payable/refundable			(20,288	)		(119,735	)		271,063			358,971			101,000
			Net cash from operating activities		2,937,735			7,300,757			3,733,878			17,340			(1,162,669	)
CASH FLOWS FROM INVESTING ACTIVITIES:
	Purchase of property and equipment				(3,421,690	)		(2,796,929	)		(3,054,278	)		(918,490	)		(750,156	)
	Proceeds from sale of property and equipment				16,814			307,613			162,358			17,678			4,559
	Software development costs				(1,041,960	)		(660,969	)		(979,795	)		(198,478	)		(519,061	)
	Cash paid for acquisition of business, net of cash acquired				—			(10,056,904	)		(5,334,473	)		(5,334,473	)		—
	Net (purchases) sales/maturities of short-term investments				(10,700,000	)		6,850,000			2,600,000			3,850,000			1,250,000
			Net cash from investing activities		(15,146,836	)		(6,357,189	)		(6,606,188	)		(2,583,763	)		(14,658	)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Borrowings from (payments on) lines of credit—net				967,270			—			3,575,250			3,500,000			(3,575,250	)
	Principal payments under capital lease obligations				(368,435	)		(159,151	)		(84,679	)		(12,694	)		(33,018	)
	Principal payments on long-term debt				(1,875,922	)		—			—			—			—
	Net proceeds from stock issuance				12,409,311			—			12,542,787			—			—
	Proceeds from exercise of stock options and warrants				61,900			38,175			324,020			14,100			280,367
	Cash dividends paid in lieu of fractional shares				—			—			—			—			(442	)
			Net cash from financing activities		11,194,124			(120,976	)		16,357,378			3,501,406			(3,328,343	)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS					(1,014,977	)		822,592			13,485,068			934,983			(4,505,670	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD					1,835,233			820,256			1,642,848			1,642,848			15,127,916
CASH AND CASH EQUIVALENTS, END OF PERIOD				$	820,256		$	1,642,848		$	15,127,916		$	2,577,831		$	10,622,246

See Notes to Financial Statements.

F–7

EPIQ SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1999 AND 2000
AND MARCH 31, 2000 AND 2001 (UNAUDITED)

NOTE 1:  NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

    EPIQ Systems, Inc. (formerly Electronic Processing, Inc.) (the "Company") develops, markets and licenses proprietary software solutions for workflow management and data communications infrastructure that serve the bankruptcy trustee market and financial services market. The Company serves a national client base with specialized products that streamline the internal business operations of its customers. The products are accompanied by a high level of coordinated support including network integration, post-installation support and value added services.

Common Stock Split

    On January 24, 2001, the Company announced that its Board of Directors had approved a 3 for 2 stock split effected as a 50% stock dividend, payable February 23, 2001, to holders of record as of February 8, 2001. The Company paid cash to shareholders in lieu of fractional shares. All per share and shares outstanding data in the statements of income and notes to the financial statements have been retroactively restated to reflect the stock split.

Cash and Cash Equivalents

    Cash and cash equivalents include cash on hand and in banks and all liquid investments with original maturities of three months or less.

Short-Term Investments

    Debt and marketable equity securities which the Company holds for short-term investment purposes are classified as available-for-sale securities and are carried at fair value. At December 31, 1999 and 2000, short-term investments consisted of Auction Rate Certificates, which are floating rate investments based on pooled State and Federal agency securities. Such investments trade at par so no realized or unrealized gains or losses were present during 1998, 1999 or 2000.

Property and Equipment

    Property and equipment is stated at cost and depreciated on a straight-line basis over the estimated useful life of each asset as follows:

Furniture and fixtures	5-10 years
Computer equipment	3-5 years
Office equipment	5-10 years
Transportation equipment	3-5 years

    Leasehold improvements are depreciated over the shorter of the lease term or the estimated useful lives (5-10 years) of the improvements.

Software Development Costs

    Certain internal software development costs incurred in the creation of computer software products are capitalized once technological feasibility has been established. Prior to the completion of a

F–8

detail program design, development costs are expensed and shown as general and administrative expenses on the statements of income. Capitalized costs are amortized based on current and estimated future revenue for each product with an annual minimum equal to the straight-line amortization over the remaining estimated economic life of the product, not to exceed five years.

Intangible Assets

    The excess of cost over fair value of net assets acquired, customer contracts, and tradenames in the PHiTECH, Inc. ("PHiTECH") acquisition are each being amortized on a straight-line basis over 10 years. The excess of cost over fair value of net assets acquired and customer contracts in the DCI Chapter 7 Solutions, Inc. ("DCI") acquisitions are each being amortized on a straight-line basis over 14 years. The agreements not to compete for PHiTECH and DCI are being amortized on a straight-line basis over the lives of the agreements which is 4 years and 5 years, respectively.

Impairment of Long-lived Assets

    The Company, using its best estimates based on reasonable and supportable assumptions and projections, reviews for impairment long-lived assets and identifiable intangibles to be held and used whenever events or changes in circumstances indicate that the carrying amount of its assets might not be recoverable, and has concluded no financial statement adjustment is required.

Income Taxes

    The Company recognizes a liability or asset for the deferred tax consequences of temporary differences between the tax basis of assets or liabilities and their reported amounts in the financial statements. A valuation allowance is provided when, in the opinion of management, it is more likely than not that some portion or all of a deferred tax asset will not be realized.

Stock-Based Compensation

    The Company accounts for stock based compensation for employees in accordance with the provisions of Accounting Principles Board Opinion ("APB") No. 25, Accounting for Stock Issued to Employees, and related Interpretations and makes the pro forma information disclosures in accordance with Statement of Financial Accounting Standards ("SFAS") No. 123, Accounting for Stock Based Compensation.

Revenue Recognition

    In December 1999, the staff of the Securities and Exchange Commission issued Staff Accounting Bulletin ("SAB") No. 101 Revenue Recognition. SAB No. 101, as amended, was adopted by the Company in the fourth quarter of fiscal year 2000. The adoption of SAB No. 101 did not have a material effect on the Company's financial statements.

    For the Company's Chapter 7 bankruptcy software product, monthly fees are received from a national financial institution and revenues are recognized after the product is installed and deposits are transferred based on the level of trustees' deposits with that institution. Revenues for Chapter 13 processing and noticing are recorded monthly at the completion of the services based on the total number of cases in the trustees' databases. All other ancillary revenues are recognized as the services are provided.

    The financial services revenues and a portion of the bankruptcy and related revenues are derived from software licensing, consulting services and maintenance fees. Licensing revenues are recorded as revenue following delivery, installation and acceptance. Consulting revenues are recognized in the period in which the services are performed and in certain circumstances, based on the nature of the

F–9

arrangement, are recognized on the percentage of completion method. Maintenance fees are collected in advance and recognized on a straight-line basis as revenue over the life of the maintenance contract.

    At the time of the acquisition of the assets of DCI on November 29, 1999, the Company received $4,500,000 from a national financial institution for various technology and general integration services. The Company has accounted for this payment as a multiple element project with the revenues being recorded as such elements are completed and delivered, primarily using the percentage of completion method. As of December 31, 1999 and 2000, $3,244,024 and $345,668 respectively, was included as deferred revenue.

Comprehensive Income

    The Company has no components of other comprehensive income, therefore comprehensive income equals net income for each of the three years ended December 31, 1998, 1999 and 2000.

Net Income Per Share

    Basic net income per share was computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted net income per share reflects the potential dilution of securities by adding other common stock equivalents, including stock options and warrants, in the weighted average number of common shares outstanding for a period, if dilutive.

Segment Information

    In fiscal year 1998, the Company adopted SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information. SFAS No. 131 establishes standards for reporting information about operating segments as well as related disclosures about products and services, geographic areas, and major customers. In determining the Company's reportable segments under the provisions of SFAS No. 131, the Company examines the way it organizes its business internally for making operating decisions and assessing business performance. Nearly all of the Company's revenues are derived from sources within the United States of America, and all of its long-lived assets are located in the United States of America.

Use of Estimates

    The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Recent Accounting Pronouncements

    In June 2000, the Financial Accounting Standards Board ("FASB") issued SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities-an Amendment of FASB Statement No. 133. In June 1999, the FASB also issued SFAS No. 137, Accounting for Derivative Instruments and Hedging Activities-Deferral of the Effective Date of FASB Statement No. 133. SFAS No. 137 defers the provisions of SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, until January 1, 2001. SFAS No. 133, as amended by SFAS No. 138, requires, among other things, that all derivatives be recognized in the balance sheets as either assets or liabilities and measured at fair value. The corresponding derivative gains and losses should be reported based upon the hedge relationship. If such a relationship exists, changes in the fair value of derivatives that are not designated as hedges or that do not meet the hedge accounting criteria in SFAS No. 133 are required to be reported in income. As the Company does not hold any derivatives or embedded derivatives, as

F–10

defined by the statements, the adoption of the statement on January 1, 2001, did not result in a transition adjustment.

Reclassification

    Certain reclassifications have been made to the prior periods' financial statements to conform with the current period's financial statement presentation.

Unaudited Interim Financial Statements

    The unaudited interim financial statements as of March 31, 2001 and for the three-month periods ended March 31, 2000 and 2001 were prepared in accordance with the SEC rules and regulations for interim financial statements. In the opinion of management, the unaudited interim financial statements reflect all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation. The accounting principles applied in preparation of the interim financial statements are consistent with those applied in the annual financial statements. Results of operations for the three-month period ended March 31, 2001 are not necessarily indicative of the results that may be expected for the year ending December 31, 2001.

NOTE 2:  SOFTWARE DEVELOPMENT COSTS

    The following is a summary of software development costs capitalized:

	December 31,
	1999			2000
Amounts capitalized, beginning of year	$	2,670,196		$	3,431,165
Development costs capitalized		660,969			979,795
Acquisitions		100,000			361,694
Amounts capitalized, end of year		3,431,165			4,772,654
Accumulated amortization, end of year		(1,178,248	)		(1,961,410	)
Net software development costs	$	2,252,917		$	2,811,244

    Included in the above are development costs relating to products not yet released. Such costs totaled $432,663 and $1,144,768 at December 31, 1999 and 2000, respectively.

NOTE 3:  LINES OF CREDIT AND LONG-TERM OBLIGATIONS

Lines of Credit

    On September 27, 1999, the Company entered into two line of credit agreements with a bank. The lines of credit were for equipment financing (the "Equipment Line") and for working capital (the "Working Capital Line"). Each line of credit had a maturity date of October 1, 2000, allowed for maximum borrowings of up to $2,500,000 and accrued variable rate interest, revised daily, equal to the New York Prime Rate as published in the Wall Street Journal. Borrowings under the Equipment Line are secured by computer equipment and are due on demand, or if not demanded, in amounts equal to 1/36^th of the outstanding principal balance, with interest payable monthly. Borrowings under the Working Capital Line are unsecured, however, this line contains certain financial covenants pertaining to the maintenance of certain earnings, net worth and debt to net worth ratios. There were no borrowings under these lines during 1999.

    On February 8, 2000, the maximum available borrowings under the Working Capital Line was increased to $3,500,000. On March 17, 2000, the Company received an advance of $3,500,000 against this line that was utilized to partially fund the PHiTECH acquisition. Borrowings under this line are

F–11

due on demand, and if not demanded, upon expiration of the line and interest is payable monthly. As of December 31, 2000, the entire amount remained outstanding under this line.

    On June 20, 2000, both lines were renewed to expire on June 20, 2001, unless renewed.

    On October 27, 2000, the Company borrowed $79,212 under the Equipment Line to finance the purchase of computer equipment. As of December 31, 2000, $75,250 remained outstanding and $2,424,750 remained available under this line.

    At December 31, 2000, the variable interest rate on the lines, as defined above, was 9.5%. The Company was in compliance with all of the financial covenants under the Working Capital Line as of and for the years ended December 31, 1999 and 2000.

    On January 2, 2001, all of the outstanding borrowings, plus accrued interest, under both lines was repaid.

Obligations under Capital Leases

    Capital leases are for the use of office equipment for no more than five years, expiring through August 2004. Aggregate annual payments for these obligations at December 31, 2000 are as follows:

2001	$	179,135
2002		156,283
2003		111,593
2004		68,168
Future minimum lease payments		515,179
Less amount representing interest		(82,064	)
Present value of future minimum lease payments		433,115
Less current maturities		(137,837	)
Noncurrent portion	$	295,278

    For the above obligations, the carrying value approximates the fair value.

    As of December 31, 1999 and 2000 property and equipment include the following assets under capital leases:

	1999			2000
Office equipment	$	218,205		$	549,693
Less accumulated amortization		(70,648	)		(99,023	)
	$	147,557		$	450,670

NOTE 4:  OPERATING LEASES

    The Company has two non-cancelable operating leases for office space, one for office space in San Francisco which expires in November 2002, and one for office space in Kansas City, Kansas, which expired in February 2001 and then became month to month (see Note 15). The San Francisco lease is renewable for an additional 5-year term, expiring in November 2007. The Chairman of the Board and Chief Executive Officer of the Company is a partner in the partnership that leases the Kansas City office space to the Company. Both leases require the Company to pay all executory costs (property taxes, maintenance and insurance). Additionally, the Company has non-cancelable operating leases for various office equipment, apartments and automobiles expiring through June 2005.

F–12

    Future minimum lease payments at December 31, 2000, are as follows:

2001	$	308,300
2002		196,454
2003		71,387
2004		65,325
2005 and thereafter		7,459
	$	648,925

    Rental expense was $356,493, $309,686 and $506,559 for the years ended December 31, 1998, 1999 and 2000, respectively. Included in rental expense was $154,000, $157,800 and $162,400 paid to the related party above for the years ended December 31, 1998, 1999 and 2000, respectively.

NOTE 5:  RELATED PARTY TRANSACTIONS

    The Company recorded receivables from the related party disclosed in Note 4 for reimbursement of property taxes of $32,923 and $34,658 as of December 31, 1999 and 2000, respectively. Reimbursement for property taxes amounted to $33,138 for the year ended December 31, 1998. The receivable balance as of December 31, 1999 was reimbursed during 2000.

    The related party reimbursed the Company for consulting services in the amount of $19,000 for the year ended December 31, 1998. There were no such reimbursements for the years ended December 31, 1999 and 2000.

    The related party reimbursed the Company for expenses paid on his behalf in the amount of $30,000 for the year ended December 31, 1998. There were no such reimbursements for the years ended December 31, 1999 and 2000.

NOTE 6:  PROFIT SHARING PLAN

    The Company has a defined contribution 401(k) plan covering substantially all employees. The Company matches 60% of the first 10% of employee contributions and also has the option of making discretionary contributions. Contributions amounted to $96,825, $122,025 and $202,833 for the years ended December 31, 1998, 1999 and 2000, respectively.

NOTE 7:  STOCKHOLDERS' EQUITY

    In May 1998, the Company completed a follow-on public offering of 1,500,000 shares of common stock and received gross proceeds of $11,160,000. In June 1998, the underwriter exercised its over-allotment option associated with the follow-on offering by purchasing 210,750 additional shares at a net price of $1,567,980.

    On July 19, 1999, the shareholders approved amending the Articles of Incorporation of the Company by authorizing the issuance of up to 2,000,000 shares of $1 par value preferred stock.

    On June 7, 2000, the shareholders approved amending the Articles of Incorporation of the Company to increase the number of authorized common shares to 20,000,000 from 10,000,000.

    On December 29, 2000, the Company completed a private placement of 1,350,000 shares of its common stock and received gross proceeds of $13,500,000.

    In connection with the initial public offering, the Company issued warrants to purchase 240,000 shares of stock at $2.80 per share to its underwriters which expire at the close of business on February 3, 2002. During the year ended December 31, 1998, 156,300 warrants were converted in a cashless exercise, resulting in 116,052 shares of stock being issued and 12,000 warrants were exercised for their exercise price, resulting in the issuance of an additional 12,000 shares of common stock. At December 31, 1998, 1999 and 2000, warrants to purchase 71,700 shares of stock remained outstanding. In January 2001, 69,113 warrants were exercised for their exercise price, resulting in the issuance of an additional 69,113 shares of common stock, leaving 2,587 warrants outstanding.

F–13

NOTE 8:  INCOME TAXES

    The provision (benefit) for income taxes includes the following components:

			Years Ended December 31,
			1998		1999		2000
Taxes currently payable:
	Federal		$	527,191	$	762,850	$	1,300,000
	States			113,537		164,290		280,000
		Total		640,728		927,140		1,580,000
Deferred income taxes				188,511		16,860		(260,000	)
			$	829,329	$	944,000	$	1,320,000

    A reconciliation of the provision for income taxes at the statutory rate to provision for income taxes at the Company's effective rate is shown below:

			Years Ended December 31,
			1998		1999		2000
Computed at the statutory rate (34%)			$	731,000	$	830,000	$	1,174,000
Increase in taxes resulting from:
	Nondeductible expenses and nontaxable income			29,300		32,400		26,000
	State income taxes, net of federal tax effect and other			68,939		81,600		120,000
		Tax provision	$	829,239	$	944,000	$	1,320,000

    The tax effects of temporary differences related to deferred taxes shown on the accompanying balance sheets are as follows:

		December 31,
		1999			2000
Deferred tax assets:
	Allowance for doubtful accounts	$	1,900		$	12,000
	Accrued compensated absences		78,800			123,000
	Accrued stock options		15,000			13,000
	Deferred revenue		—			131,000
	Intangible assets		97,500			138,000
			193,200			417,000
Deferred tax liabilities:
	Property and equipment		700,200			664,000
		$	(507,000	)	$	(247,000	)

F–14

    The above net deferred tax liability is presented on the balance sheets as follows:

	December 31,
	1999			2000
Deferred income taxes—current	$	85,700		$	279,000
Deferred income taxes—long-term		(592,700	)		(526,000	)
	$	(507,000	)	$	(247,000	)

NOTE 9:  NET INCOME PER SHARE

    The details of the basic and diluted net income per share calculations are as follows:

		December 31,
		1998					1999					2000
		Net Income		Weighted Average Shares Outstanding	Per Share Amount		Net Income		Weighted Average Shares Outstanding	Per Share Amount		Net Income		Weighted Average Shares Outstanding	Per Share Amount
Basic net income per share:
	Income available to common shareholders	$	1,320,618	6,190,019	$	0.21	$	1,495,990	6,955,233	$	0.22	$	2,131,520	6,992,312	$	0.30
Effect of dilutive securities:
	Warrants			46,468					30,141					48,645
	Stock options			188,154					185,841					181,677
Diluted net income per share:
	Income available to common shareholders and assumed conversions	$	1,320,618	6,424,641	$	0.21	$	1,495,990	7,171,215	$	0.21	$	2,131,520	7,222,634	$	0.30

March 31,

		2000					2001
		Net Income		Weighted Average Shares Outstanding	(Unaudited)				Weighted Average Shares Outstanding	Per Share Amount
					Per Share Amount		Net Income
Basic net income per share:
	Income available to common shareholders	$	206,979	6,964,220	$	0.03	$	1,035,627	8,438,974	$	0.12
Effect of dilutive securities:
	Warrants			46,219					11,506
	Stock options			217,376					324,000
Diluted net income per share:
	Income available to shareholders and assumed conversions	$	206,979	7,227,815	$	0.03	$	1,035,627	8,774,480	$	0.12

    As of December 31, 1998, 1999 and 2000 and March 31, 2000, the Company had 104,250, 104,250, 10,124, and 90,700 options outstanding, respectively, which were anti-dilutive and, therefore not considered in the diluted earnings per share calculation above. As of March 31, 2001, the Company had no options outstanding which were anti-dilutive.

NOTE 10:  STOCK OPTIONS

    The Company's 1995 Stock Option Plan (the "Plan") was adopted by the Board of Directors on October 17, 1995 and approved by the shareholders of the Company on that day. As adopted, the Plan provided that options to purchase a maximum of 405,000 shares of common stock may be granted. The shareholders have approved two separate amendments to the Plan in 1998 and 2000 to increase the maximum number of shares of common stock available under the Plan to 1,200,000. Under the Plan,

F–15

the option price may not be less than 85% of the fair market value of the common stock on the date of grant for a non-qualified stock option and not less than 100% of the fair market value of the common stock on the date of grant for an incentive stock option ("ISO").

    The Board of Directors administers the Plan and has discretion to determine the term of an option, which may not be exercised more than 10 years after the date of grant. In the case of an ISO granted to an employee owning more than 10% of the voting stock of the Company, the term may not exceed five years from the date of grant. Options may not be transferred by an optionee except by will or the laws of descent and distribution and are exercisable during the lifetime of an optionee only by the optionee or the optionee's guardian or legal representatives. Assuming the option is otherwise still exercisable, options must be exercised within one year after a termination of employment due to death, one year after a termination of employment due to disability, and three months after any other termination of employment.

    The Board of Directors may require in its discretion that any option granted becomes exercisable only in installments or after some minimum period of time, or both. The options vesting schedule ranges from immediately to five years.

    At December 31, 2000, 358,275 options were available for future grants.

    A summary of the Company's stock options outstanding as of December 31, 1998, 1999 and 2000 is presented below:

	1998				1999				2000
	Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
Outstanding, beginning of year	337,500		$	3.10	537,975		$	4.84	683,475		$	5.35
Granted	256,875			6.95	198,750			6.46	216,750			7.29
Forfeited	(45,300	)		4.35	(40,050	)		5.37	(82,800	)		6.53
Exercised	(11,100	)		2.55	(13,200	)		2.89	(61,350	)		4.16
Outstanding, end of year	537,975			4.84	683,475			5.35	756,075			5.88

    Weighted-average fair value of options granted during the year 1998, 1999 and 2000 were $7.00, $6.41 and $5.05, respectively.

    The following table summarizes information about stock options under the plan outstanding at December 31, 2000:

Range of Exercise Prices	Number Outstanding	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Number Exercisable	Weighted Average Exercise Price
$2.33 to $3.30	170,850	6.3 years	$	2.70	123,150	$	2.77
$4.53 to $6.67	223,500	7.9 years		5.70	139,048		5.45
$7.00 to $9.00	361,725	8.7 years		7.49	93,300		7.78
	756,075				355,498

    The Company accounts for this plan under APB Opinion No. 25, under which only an immaterial amount of compensation cost has been recognized. Had compensation cost been determined based on the fair value at the grant dates using FASB Statement No. 123, the Company's December 31, 1998,

F–16

1999 and 2000 net income and net income per share would have been reduced to the following pro forma amounts:

		Years Ended December 31,
		1998		1999		2000
Net income	As reported	$	1,320,618	$	1,495,990	$	2,131,520
	Pro forma	$	820,925	$	1,076,109	$	1,717,457
Net income per share—Basic	As reported	$	0.21	$	0.22	$	0.30
	Pro forma	$	0.13	$	0.15	$	0.25
Net income per share—Diluted	As reported	$	0.21	$	0.21	$	0.30
	Pro forma	$	0.13	$	0.15	$	0.24

    Pro forma amounts presented here are based on actual earnings and consider only the effects of estimated fair values of stock options.

    The fair value of the above options was estimated at the date of grant using the Black-Scholes option-pricing model with the following key assumptions:

	Years Ended December 31,
	1998	1999	2000
Expected life (years)	6.75	6.75	6.75
Volatility	238%	237%	67%
Risk-free interest rate	5.0%–6.7%	5.0%–6.7%	5.9%–6.4%
Dividend yield	0%	0%	0%

    The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions, including the expected stock price volatility. Because the Company's employee stock options have characteristics significantly different from those of traded options and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.

NOTE 11:  SIGNIFICANT CUSTOMER AND CONCENTRATION

    For its Chapter 7 software product, the Company collects revenue from its Chapter 7 trustee clients through an exclusive marketing arrangement with a national financial institution in which the Company receives revenues based on the level of trustees' deposits with that institution as well as for other services. Revenues recognized by the Company from this financial institution as a result of these arrangements were $6,301,386 for 1998, $9,316,561 for 1999 and $14,609,818 for 2000. The revenues consist of fees from deposits, conversions, upgrades, electronic banking services, technology services and marketing and consulting services. The majority of the increase in 1999 and 2000 was from electronic banking, technology, licensing fees and marketing and consulting services.

    Additionally, that institution represented approximately 66% and 69% of the Company's December 31, 1999 and 2000 accounts receivable balance, respectively.

NOTE 12:  BUSINESS ACQUISITIONS

    On March 17, 2000, the Company acquired substantially all of the business assets of PHiTECH, a California corporation that provided software-based solutions that enabled corporate customers to format and securely route business-critical data over the Internet and private networks using a wide variety of web-based and legacy communications protocols. The Company plans to further develop the next-generation software product. The acquisition has been accounted for using the purchase method of

F–17

accounting with the operating results of PHiTECH included in the Company's statement of income since the date of acquisition.

    The total value of the transaction was $7,109,435, of which $5,338,441 was paid in cash (partially financed with short-term borrowings under a line of credit, see Note 3), $797,229 was deferred in the form of a non-interest bearing note with a face value of $1,000,000 discounted using an implied rate of 9% per year and $973,765 represented assumed liabilities. The note is payable in four annual installments of $250,000, beginning thirteen months after the date of acquisition and is presented as deferred acquisition price on the balance sheet. The purchase price was allocated to net tangible assets of $322,719, software of $361,694, a non-compete agreement of $50,000, and $363,738 was allocated to acquired in-process research and development ("IPRD") and treated as a charge to earnings reducing after tax income for 2000 by $216,788 or $.03 per share on a diluted basis. The acquired IPRD related to PHiTECH's new Java™—based product, which the Company was in the process of completing in the first quarter of 2001, and was approximately 80% complete at the time of the acquisition. The remainder of the purchase price, $6,011,284, was allocated as follows: $650,000 to trade names, $700,000 to customer contracts and $4,661,284 to goodwill, which are being amortized on a straight-line basis over 10 years.

    On November 29, 1999, the Company acquired substantially all of the business assets of DCI in a purchase business combination with the operating results of DCI included in the Company's statements of income since the date of acquisition. The purchase price totaled $10,056,904, and was paid entirely in cash. The purchase price was allocated to net tangible assets of $107,330, software of $100,000, and a non-compete agreement of $250,000. The remainder of the purchase price was allocated to customer contracts of $900,000 and goodwill of $8,699,574, which are being amortized on a straight-line basis over 14 years.

    With the DCI acquisition, the Company acquired a significant amount of computer equipment. With the assimilation of DCI, it was necessary to standardize certain equipment for efficiency purposes going forward, and the Company, therefore, determined that certain existing equipment with a net book value of $230,069 should be retired.

    The Company capitalized direct costs of approximately $49,000 and $80,000 in conjunction with the acquisitions of DCI and PHiTECH, respectively. Costs related to potential acquisitions which were not consummated and indirect costs related to completed acquisitions are charged to expense as incurred and are reflected as acquisition related expenses on the statements of income.

    Unaudited pro forma operations assuming the purchases were made at the beginning of each period are shown below:

		Years Ended December 31,				Three Months Ended March 31,
		1999		2000		2000
						(Unaudited)
Operating revenues		$	18,462,481	$	23,550,243	$	5,281,668
Net income		$	79,582	$	1,961,170	$	38,030
Net income per share:
	Basic	$	0.01	$	0.28	$	0.01
	Diluted	$	0.01	$	0.27	$	0.01

    The pro forma information is not necessarily indicative of what would have occurred had the acquisitions been completed on those dates, nor is it necessarily indicative of future operations.

    Pro forma data reflect the difference in amortization expense between the Company and the acquired companies as well as a reduction in interest income based on the utilization of interest-

F–18

bearing investments to purchase the acquirees and interest expense related to borrowings to finance the PHiTECH acquisition.

NOTE 13:  SEGMENT REPORTING

    The Company has three operating segments in which it allocates resources and assesses performance: Chapter 7 and related bankruptcy services, Chapter 13 services, and financial services. For Chapter 7 and related bankruptcy services and Chapter 13 services, the Company serves a national client base of bankruptcy trustees and related entities by developing specialty software products and providing coordinated support (network integration, post-installation support and other value-added services), which facilitate the administrative aspects of bankruptcy case management for court-appointed trustees. The individual bankruptcy segments have similar operating and economic characteristics and have been presented as one aggregated reportable segment. With the acquisition of PHiTECH, the Company also provides data communication infrastructure solutions for the financial services industry, which has been reported as the second operating segment.

    Information concerning operations in these reportable segments of business is as follows:

			Years Ended December 31,						Three Months Ended March 31,
			1998		1999		2000		2000		2001
									(Unaudited)
Operating revenues:
	Bankruptcy and related services		$	11,546,273	$	14,820,400	$	19,905,802	$	4,939,775	$	6,652,005
	Financial services			—		—		3,350,750		48,202		481,630
Total operating revenues				11,546,273		14,820,400		23,256,552		4,987,977		7,133,635
Cost of sales:
	Cost of products and services:
		Bankruptcy and related services		3,824,075		4,737,428		4,900,003		1,233,425		1,312,802
		Financial services		—		—		1,121,909		10,830		275,526
	Depreciation and amortization:
		Bankruptcy and related services		1,452,760		2,157,075		2,948,077		666,134		773,713
		Financial services		—		—		151,177		6,190		53,949
Total cost of sales				5,276,835		6,894,503		9,121,166		1,916,579		2,415,990
Gross profit:
	Bankruptcy and related services			6,269,438		7,925,897		12,057,722		3,040,216		4,565,490
	Financial services			—		—		2,077,664		31,182		152,155
Total gross profit			$	6,269,438	$	7,925,897	$	14,135,386	$	3,071,398	$	4,717,645

    The Company has not disclosed assets or net income by segment, as the information is not reviewed by the chief operating decision maker, is not produced internally and its preparation is impracticable.

F–19

NOTE 14:  ADDITIONAL CASH FLOWS INFORMATION

		Years Ended December 31,						Three Months Ended March 31,
		1998		1999		2000		2000		2001
								(Unaudited)
Additional Cash Information
	Interest paid	$	97,780	$	18,167	$	290,760	$	31,067	$	31,450
	Income taxes paid, net of refunds	$	654,438	$	1,034,899	$	1,308,937	$	67,621	$	695,000
Noncash Investing and Financing Activities
	Capital lease obligation incurred for equipment	$	28,828	$	—	$	369,437	$	—	$	—

    The Company acquired substantially all business assets of DCI during November 1999 and PHiTECH during March 2000 (see Note 12). In conjunction with these acquisitions, cash flow information is as follows:

	DCI			PHiTECH
Fair value of assets acquired	$	10,155,432		$	7,109,435
Deferred obligation incurred in purchase transaction		—			(797,229	)
Liabilities assumed		(98,528	)		(973,765	)
Cash paid for acquisition		10,056,904			5,338,441
Cash acquired		—			3,968
Cash paid for acquisition, net of cash acquired	$	10,056,904		$	5,334,473

NOTE 15:  SUBSEQUENT EVENT (UNAUDITED)

    In May 2001, the Company purchased its corporate headquarters building from a partnership, in which its Chairman of the Board and Chief Executive Officer is a 50% partner, for a cash purchase price of $1,750,000.

F–20

You may rely on the information contained in this prospectus. We have not authorized anyone to provide information different from that contained in this prospectus. Neither the delivery of this prospectus nor sale of common stock means that information contained in this prospectus is correct after the date of this prospectus. This prospectus is not an offer to sell or solicitation of an offer to buy these shares of common stock in any circumstances under which the offer or solicitation is unlawful.

TABLE OF CONTENTS

	Page
Prospectus Summary	1
Risk Factors	5
Information Regarding Forward-Looking Statements	12
Use of Proceeds	13
Price Range of Common Stock	13
Dividend Policy	13
Capitalization	14
Selected Financial Data	15
Management's Discussion and Analysis of Financial Condition and Results of Operations	17
Business	25
Management	34
Certain Relationships and Related Transactions	38
Principal and Selling Shareholders	39
Description of Capital Stock	40
Shares Eligible for Future Sales	42
Underwriting	42
Legal Matters	44
Experts	44
Where You Can Find More Information	45
Index to Financial Statements	F-1

1,500,000 Shares

Common Stock

PROSPECTUS

A.G. Edwards & Sons, Inc.

Needham & Company, Inc.

            , 2001

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution

    The following table sets forth the costs and expenses, other than underwriting discounts and commissions, payable by the Company in connection with the registration of the shares of common stock being offered for sale by it and the selling shareholders. All amounts are estimates except the Securities and Exchange Commission registration fee and the NASD filing fee.

Securities and Exchange Commission registration fee		$	12,912
NASD filing fee			5,665
Legal fees and expenses			125,000
Accounting fees and expenses			125,000
Transfer agent fees and expenses			5,000
Printing and engraving costs			100,000
Miscellaneous			76,423
	Total	$	450,000

Item 15. Indemnification of Directors and Officers

    Pursuant to the Missouri General and Business Corporations Law, the Company's bylaws provide that the Company shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, other than an action by or in the right of the Company, by reason of the fact that he is or was a director, officer, employee or agent of the Company (or is or was serving at the request of the Company as a director, officer, trustee or in any other comparable position of another entity) against all liabilities and expenses, including without limitation, attorneys' fees, judgments, fines and amounts paid in settlement (provided that such settlement and all amounts paid in connection therewith are approved in advance by the Company in accordance with the bylaws), ERISA excise taxes or penalties or other expenses actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful; provided that the Company will not be required to indemnify or advance any expenses in connection with any action, suit or proceeding initiated by such person (including without limitation, any cross-claim or counterclaim) to any such person unless the initiation of such action, suit or proceeding was authorized by the Board of Directors or as otherwise provided in the Company's bylaws.

    The Company's bylaws also provide that the Company shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Company to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee or agent of the Company (or is or was serving at the request of the Company as a director, officer, trustee or in any other comparable position of another entity) against amounts paid in settlement thereof (provided that such settlement and all amounts paid in connection therewith are approved in advance by the Company in accordance with the bylaws) and all expenses, including attorneys' fees, actually and reasonably incurred by him in connection with the defense or settlement of the action, suit or proceeding (including, without limitation, the investigation, defense, settlement or appeal of the action, suit or proceeding) if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company; provided that no indemnification shall be made in respect of any such claim, issue or matter as to which the person shall

II–1

have been adjudged to be liable for negligence or misconduct in the performance of the person's duties to the Company, except as otherwise set forth in the Company's bylaws.

    Any indemnification with regard to the foregoing, unless ordered by a court, shall be made by the Company only as authorized in the specific case upon a determination that indemnification of the person is proper in the circumstances because he has met the applicable standard of conduct set forth in the bylaws. The determination shall be made by a majority vote of a quorum of disinterested directors, or if such quorum is not attainable, or even if obtainable, at the direction of a quorum of disinterested directors, by independent legal counsel in a written opinion, or by the shareholders.

    The Company's bylaws also provide that expenses incurred in defending a civil or criminal action, suit or proceeding shall be paid by the Company in advance of the final disposition of the action, suit or proceeding as authorized by the Board in the specific case upon receipt of an undertaking by or on behalf of the person to repay such amounts unless it shall be ultimately determined that he is entitled to be indemnified by the Company as authorized in the bylaws.

    The indemnification discussed in this section is not exclusive of any other rights the party seeking indemnification may have. The Company also maintains directors and officers liability insurance on its directors and executive officers.

Item 16. Exhibits

Exhibit No.	Description
1.1	Form of Underwriting Agreement.*
3.1	Articles of Incorporation, as amended.(1)
3.2	Bylaws, as amended and restated.(2)
4.1	Reference is made to exhibits 3.1 and 3.2.
5.1	Opinion of Gilmore & Bell, P.C.*
23.1	Consent of Gilmore & Bell, P.C. included in Exhibit 5.1.
23.2	Consent of Deloitte & Touche LLP, Independent Auditors.*
23.3	Consent of Baird, Kurtz & Dobson, Certified Public Accountants.*
24.1	Power of Attorney (included on the signature page hereof).

*

Filed herewith.

(1)

Incorporated by reference and previously filed as an exhibit to the quarterly report on Form 10-Q for the quarter ended June 30, 2000.

(2)

Incorporated by reference and previously filed as an exhibit to the quarterly report on Form 10-Q for the quarter ended March 31, 2001.

Item 17. Undertakings

    The Company hereby undertakes:

(1) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Company pursuant to its bylaws, or otherwise, the Company has been advised that in the opinion of the Securities and Exchange Commission that indemnification is against public policy as expressed in the Securities Act of 1933, and is, therefore, unenforceable. In the event that a claim for indemnification against liabilities arising under the Securities Act of 1933 (other than the payment by the Company of expenses incurred or paid by a director, officer, or controlling person of the Company in the successful defense of any action, suit or

II–2

proceeding) is asserted by that director, officer or controlling person in connection with the securities that the Company is registering, the Company will, unless in the opinion of the Company's counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether the indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of that issue.

(2) That for determining liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Company pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act will be deemed to be part of this registration statement as of the time it was declared effective.

(3) That for determining liability under the Securities Act of 1933, each annual report filed pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference into the registration statement and each post-effective amendment that contains a form of prospectus will be deemed to be a new registration statement relating to the securities offered therein, and the offering of the securities at that time will be deemed to be the initial bona fide offering thereof.

II–3

SIGNATURES

    Pursuant to the requirements of the Securities Act of 1933, as amended, the Company certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and it has authorized this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Kansas City, State of Kansas, on this 22nd day of May, 2001.

EPIQ SYSTEMS, INC.
By:	/s/ Tom W. Olofson  Tom W. Olofson   Chairman and Chief Executive Officer

POWER OF ATTORNEY

    We, the undersigned officers and directors of EPIQ Systems, Inc., severally constitute Tom W. Olofson, or Janice E. Katterhenry, in the order named, our true and lawful attorney-in-fact with full power to each, to sign for us and in our names in the capacities indicated below, this registration statement on Form S-3 filed with the Securities and Exchange Commission and any and all subsequent amendments to this registration statement, and generally to do all things in our names and on our behalf in our capacities as officers and directors to enable EPIQ Systems, Inc. to comply with all requirements of the Securities and Exchange Commission.

    In accordance with the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities and on the dates indicated:

Signature	Name and Title	Date
/s/ Tom W. Olofson Tom W. Olofson	Chairman of the Board, Chief Executive Officer and Director (Principal Executive Officer)	May 22, 2001
/s/ Christopher E. Olofson Christopher E. Olofson	President, Chief Operating Officer and Director	May 22, 2001
/s/ Janice E. Katterhenry Janice E. Katterhenry	Vice President, Chief Financial Officer and Secretary (Principal Financial Officer)	May 22, 2001
/s/ Michael A. Rider Michael A. Rider	Controller (Principal Accounting Officer)	May 22, 2001
/s/ Robert C. Levy Robert C. Levy	Director	May 22, 2001
/s/ W. Bryan Satterlee W. Bryan Satterlee	Director	May 22, 2001
/s/ Edward M. Connolly, Jr. Edward M. Connolly, Jr.	Director	May 22, 2001

II–4

EXHIBIT INDEX

Exhibit No.	Description
1.1	Form of Underwriting Agreement.*
3.1	Articles of Incorporation, as amended.(1)
3.2	Bylaws, as amended and restated.(2)
4.1	Reference is made to exhibits 3.1 and 3.2.
5.1	Opinion of Gilmore & Bell, P.C.*
23.1	Consent of Gilmore & Bell, P.C. included in Exhibit 5.1.
23.2	Consent of Deloitte & Touche LLP, Independent Auditors.*
23.3	Consent of Baird, Kurtz & Dobson, Certified Public Accountants.*
24.1	Power of Attorney (included on the signature page hereof).

*

Filed herewith.

(1)

Incorporated by reference and previously filed as an exhibit to the quarterly report on Form 10-Q for the quarter ended June 30, 2000.

(2)

Incorporated by reference and previously filed as an exhibit to the quarterly report on Form 10-Q for the quarter ended March 31, 2001.

QuickLinks

PROSPECTUS SUMMARY
EPIQ Systems
Summary Financial Data (in thousands, except per share data)
RISK FACTORS
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
USE OF PROCEEDS
PRICE RANGE OF COMMON STOCK
DIVIDEND POLICY
CAPITALIZATION (dollars in thousands, except per share data)
SELECTED FINANCIAL DATA (in thousands, except per share data)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Quarters Ended (in thousands, except per share data)
BUSINESS
MANAGEMENT
Option Grants in the Last Year
Aggregate Option Exercises in the Last Year and Year-End Option Values
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PRINCIPAL AND SELLING SHAREHOLDERS
DESCRIPTION OF CAPITAL STOCK
SHARES ELIGIBLE FOR FUTURE SALES
UNDERWRITING
LEGAL MATTERS
EXPERTS
WHERE YOU CAN FIND MORE INFORMATION
EPIQ SYSTEMS, INC. INDEX TO FINANCIAL STATEMENTS

INDEPENDENT AUDITORS' REPORT

INDEPENDENT ACCOUNTANTS' REPORT
EPIQ SYSTEMS, INC. BALANCE SHEETS
EPIQ SYSTEMS, INC. STATEMENTS OF INCOME
EPIQ SYSTEMS, INC. STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
EPIQ SYSTEMS, INC. STATEMENTS OF CASH FLOWS
EPIQ SYSTEMS, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1998, 1999 AND 2000 AND MARCH 31, 2000 AND 2001 (UNAUDITED)

NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NOTE 2: SOFTWARE DEVELOPMENT COSTS
NOTE 3: LINES OF CREDIT AND LONG-TERM OBLIGATIONS
NOTE 4: OPERATING LEASES
NOTE 5: RELATED PARTY TRANSACTIONS
NOTE 6: PROFIT SHARING PLAN
NOTE 7: STOCKHOLDERS' EQUITY

NOTE 8: INCOME TAXES
NOTE 9: NET INCOME PER SHARE
NOTE 10: STOCK OPTIONS
NOTE 11: SIGNIFICANT CUSTOMER AND CONCENTRATION
NOTE 12: BUSINESS ACQUISITIONS
NOTE 13: SEGMENT REPORTING
NOTE 14: ADDITIONAL CASH FLOWS INFORMATION
NOTE 15: SUBSEQUENT EVENT (UNAUDITED)

PART II INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution
Item 15. Indemnification of Directors and Officers
Item 16. Exhibits
Item 17. Undertakings

SIGNATURES
POWER OF ATTORNEY
EXHIBIT INDEX

EX-1.1

                                                                   Exhibit 1.1

                                1,500,000 SHARES
                                  COMMON STOCK
                                ($0.01 PAR VALUE)

                             UNDERWRITING AGREEMENT


                                                        __________________, 2001



A.G. EDWARDS & SONS, INC.
NEEDHAM & COMPANY, INC.
   As Representatives of the Several Underwriters
     c/o A.G. Edwards & Sons, Inc.
     One North Jefferson Avenue
     St. Louis, Missouri 63103

         The undersigned, EPIQ Systems, Inc., a Missouri corporation (the
"Company"), and the persons listed on Schedule I hereto (the "Selling
Shareholders"), hereby address you as the representatives (the
"Representatives") of each of the persons, firms and corporations listed on
Schedule II hereto (collectively, the "Underwriters") and hereby confirm their
agreement with the several Underwriters as follows:

         1. DESCRIPTION OF SHARES. The Company proposes to issue and sell to the
Underwriters 1,025,000 shares of its Common Stock, par value $0.01 per share,
and the Selling Shareholders propose to sell to the Underwriters a total of
475,000 shares of the Company's Common Stock, par value $0.01 per share, as set
forth on Schedule I hereto (such 1,500,000 shares of Common Stock are herein
collectively referred to as the "Firm Shares"). Solely for the purpose of
covering over-allotments in the sale of the Firm Shares, the Company further
proposes to grant to the Underwriters the right to purchase up to an additional
225,000 shares of Common Stock (the "Option Shares"), as provided in Section 3
of this Agreement. The Firm Shares and the Option Shares are herein sometimes
referred to as the "Shares" and are more fully described in the Prospectus
hereinafter defined.

         2. PURCHASE, SALE AND DELIVERY OF FIRM SHARES. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees and each Selling
Shareholder agrees, severally and not jointly, to sell to the Underwriters, and
each such Underwriter agrees, severally and not jointly, (a) to purchase from
the Company and from each of the Selling Shareholders, pro rata, at a purchase
price of $___ per share, the number of Firm Shares set forth opposite the name
of such Underwriter in Schedule II hereto and (b) to purchase from the Company
any additional number of Option Shares which such Underwriter may become
obligated to purchase pursuant to Section 3 hereof.





         The Company and the Selling Shareholders will deliver definitive
certificates for the Firm Shares at the office of A.G. Edwards & Sons, Inc., 77
Water Street, New York, New York ("Edwards' Office"), or such other place as you
and the Company may mutually agree upon, for the accounts of the Underwriters
against payment to the Company and the Selling Shareholders of the purchase
price for the Firm Shares sold by them to the several Underwriters by wire
transfer of immediately available funds payable to the order of the Company and
the Selling Shareholders, as their respective interests may appear, and
delivered to One North Jefferson Avenue, St. Louis, Missouri 63103, or at such
other place as may be agreed upon between you and the Company (the "Place of
Closing"), at 10:00 a.m., St. Louis time, on ____________, 2001, or at such
other time and date not later than five full business days thereafter as you and
the Company may agree, such time and date of payment and delivery being herein
called the "Closing Date."

         The certificates for the Firm Shares so to be delivered will be made
available to you for inspection at Edwards' Office (or such other place as you
and the Company may mutually agree upon) at least one full business day prior to
the Closing Date and will be in such names and denominations as you may request
at least forty-eight hours prior to the Closing Date.

         It is understood that an Underwriter, individually, may (but shall not
be obligated to) make payment on behalf of the other Underwriters whose funds
shall not have been received prior to the Closing Date for Shares to be
purchased by such Underwriter. Any such payment by an Underwriter shall not
relieve the other Underwriters of any of their obligations hereunder.

         It is understood that the Underwriters propose to offer the Shares to
the public upon the terms and conditions set forth in the Registration Statement
hereinafter defined.

         3. PURCHASE, SALE AND DELIVERY OF THE OPTION SHARES. The Company hereby
grants an option to the Underwriters to purchase from them on a pro rata basis
up to 225,000 Option Shares, respectively, on the same terms and conditions as
the Firm Shares; provided, however, that such option may be exercised only for
the purpose of covering any over-allotments which may be made by them in the
sale of the Firm Shares. No Option Shares shall be sold or delivered unless the
Firm Shares previously have been, or simultaneously are, sold and delivered.

         The option is exercisable on behalf of the several Underwriters by you,
as Representatives, at any time, and from time to time, before the expiration of
30 days from the date of the Prospectus (or, if such 30th day shall be a
Saturday or Sunday or a holiday, on the next day thereafter when The Nasdaq
National Market is open for trading), for the purchase of all or part of the
Option Shares covered thereby, by notice given by you to the Company and in the
manner provided in Section 13 hereof, setting forth the number of Option Shares
as to which the Underwriters are exercising the option, and the date of delivery
of said Option Shares, which date shall not be more than five business days
after such notice unless otherwise agreed to by the parties. You may terminate
the option at any time, as to any unexercised portion thereof, by giving written
notice to the Company to such effect.



                                       2




         You, as Representatives, shall make such allocation of the Option
Shares among the Underwriters as may be required to eliminate purchases of
fractional Shares.

         Delivery of the Option Shares with respect to which the option shall
have been exercised shall be made to or upon your order at Edwards' Office (or
at such other place as you and the Company may mutually agree upon), against
payment by you of the per share purchase price to the Company by wire transfer
of immediately available funds. Such payment and delivery shall be made at 10:00
a.m., St. Louis time, on the date designated in the notice given by you as above
provided for (which may be the same as the Closing Date), unless some other date
and time are agreed upon, which date and time of payment and delivery are called
the "Option Closing Date." The certificates for the Option Shares so to be
delivered will be made available to you for inspection at Edwards' Office at
least one full business day prior to the Option Closing Date and will be in such
names and denominations as you may request at least forty-eight hours prior to
the Option Closing Date. On the Option Closing Date, the Company shall provide
the Underwriters such representations, warranties, agreements, opinions,
letters, certificates and covenants with respect to the Option Shares as are
required to be delivered on the Closing Date with respect to the Firm Shares.

         4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY AND THE
SELLING SHAREHOLDERS. (a) The Company represents and warrants to and agrees with
each Underwriter that:

                  (i) A registration statement (Registration No. 333-_____) on
         Form S-3 with respect to the Shares, including a preliminary
         prospectus, and such amendments to such registration statement as may
         have been required to the date of this Agreement, has been carefully
         prepared by the Company pursuant to and in conformity with the
         requirements of the Securities Act of 1933, as amended (the "1933
         Act"), and the rules and regulations thereunder (the "1933 Act Rules
         and Regulations") of the Securities and Exchange Commission (the "SEC")
         and has been filed with the SEC under the 1933 Act. The Company meets
         the requirements for use of Form S-3 under the 1933 Act. Copies of such
         registration statement, including any amendments thereto, each related
         preliminary prospectus (meeting the requirements of Rule 430 or 430A of
         the 1933 Act Rules and Regulations) contained therein, and the
         exhibits, financial statements and schedules thereto have heretofore
         been delivered by the Company to you. If such registration statement
         has not become effective under the 1933 Act, a further amendment to
         such registration statement, including a form of final prospectus,
         necessary to permit such registration statement to become effective
         will be filed promptly by the Company with the SEC. If such
         registration statement has become effective under the 1933 Act, a final
         prospectus containing information permitted to be omitted at the time
         of effectiveness by Rule 430A of the 1933 Act Rules and Regulations
         will be filed promptly by the Company with the SEC in accordance with
         Rule 424(b) of the 1933 Act Rules and Regulations. The term
         "Registration Statement" as used herein means the registration
         statement as amended at the time it becomes effective under the 1933
         Act (the "Effective Date"), including financial statements and all
         exhibits and all documents incorporated by reference therein pursuant
         to Item 12 of Form S-3 under the 1933 Act and, if applicable,


                                       3




         the information deemed to be included by Rule 430A of the 1933 Act
         Rules and Regulations. If it is contemplated, at the time this
         Agreement is executed, that a post-effective amendment to such
         registration statement will be filed and must be declared effective
         before the offering of Shares may commence, the term "Registration
         Statement" as used herein means the registration statement as amended
         by said post-effective amendment. If an abbreviated registration
         statement is prepared and filed with the SEC in accordance with Rule
         462(b) under the 1933 Act (an "Abbreviated Registration Statement"),
         the term "Registration Statement" as used in this Agreement includes
         the Abbreviated Registration Statement. The term "Prospectus" as used
         herein means (i) the prospectus as first filed with the SEC pursuant to
         Rule 424(b) of the 1933 Act Rules and Regulations, or (ii) if no such
         filing is required, the form of final prospectus included in the
         Registration Statement at the Effective Date or (iii) if a Term Sheet
         or Abbreviated Term Sheet (as such terms are defined in Rule 434(b) and
         434(c), respectively, of the 1933 Act Rules and Regulations) is filed
         with the SEC pursuant to Rule 424(b)(7) of the 1933 Act Rules and
         Regulations, the Term Sheet or Abbreviated Term Sheet and the last
         Preliminary Prospectus filed with the SEC prior to the time the
         Registration Statement became effective, taken together, including, in
         each case, the documents incorporated by reference therein pursuant to
         Item 12 of Form S-3 under the 1933 Act. The term "Preliminary
         Prospectus" as used herein shall mean a preliminary prospectus as
         contemplated by Rule 430 or 430A of the 1933 Act Rules and Regulations
         included at any time in the Registration Statement. For purposes of
         this Agreement, the words "amend," "amendment," "amended," "supplement"
         or "supplemented" with respect to the Registration Statement or the
         Prospectus shall mean amendments or supplements to the Registration
         Statement or the Prospectus, as the case may be; as well as documents
         filed after the date of this Agreement and prior to the completion of
         the distribution of the Shares and incorporated by reference therein as
         described above.

                  (ii) Neither the SEC nor any state or other jurisdiction or
         other regulatory body has issued, and neither is, to the knowledge of
         the Company, threatening to issue, any stop order under the 1933 Act or
         other order suspending the effectiveness of the Registration Statement
         (as amended or supplemented) or preventing or suspending the use of any
         Preliminary Prospectus or the Prospectus or suspending the
         qualification or registration of the Shares for offering or sale in any
         jurisdiction nor instituted or, to the knowledge of the Company,
         threatened to institute proceedings for any such purpose. Each
         Preliminary Prospectus at its date of issue, the Registration Statement
         and the Prospectus and any amendments or supplements thereto contain or
         will contain, as the case may be, all statements which are required to
         be stated therein by, and in all material respects conform or will
         conform, as the case may be, to the requirements of, the 1933 Act and
         the 1933 Act Rules and Regulations. Neither the Registration Statement
         nor any amendment thereto, as of the applicable effective date,
         contains or will contain, as the case may be, any untrue statement of a
         material fact or omits or will omit to state any material fact required
         to be stated therein or necessary to make the statements therein, not
         misleading, and neither any Preliminary Prospectus, the Prospectus nor
         any supplement thereto contains or will contain, as the case may be,
         any untrue statement of a material fact or omits or will omit to state
         any material fact required to be stated therein or



                                       4



         necessary to make the statements therein, in the light of the
         circumstances under which they were made, not misleading; provided,
         however, that the Company makes no representation or warranty as to
         information contained in or omitted from the Registration Statement or
         the Prospectus, or any such amendment or supplement, in reliance upon,
         and in conformity with, written information furnished to the Company
         relating to the Underwriters by or on behalf of the Underwriters
         expressly for use in the preparation thereof (as provided in Section 14
         hereof). There is no contract or document required to be described in
         the Registration Statement or Prospectus or to be filed as an exhibit
         to the Registration Statement which is not described or filed as
         required. The documents incorporated by reference in the Prospectus
         pursuant to Item 12 of Form S-3 under the 1933 Act, at the time they
         were filed with the SEC, complied in all material respects with the
         requirements of the Securities Exchange Act of 1934, as amended (the
         "1934 Act"), and the rules and regulations adopted by the SEC
         thereunder (the "1934 Act Rules and Regulations"); any future documents
         incorporated by reference so filed, when they are filed, will comply in
         all material respects with the requirements of the 1934 Act and the
         1934 Act Rules and Regulations; no such incorporated document contained
         or will contain any untrue statement of a material fact or omit to
         state a material fact required to be stated therein or necessary to
         make the statements therein not misleading; and, when read together and
         with the other information in the Prospectus, at the time the
         Registration Statement became effective and at the Closing Date, each
         such incorporated document did not or will not, as the case may be,
         contain an untrue statement of a material fact or omit to state a
         material fact required to be stated therein or necessary to make the
         statements therein not misleading.

                  (iii) This Agreement has been duly authorized, executed and
         delivered by the Company and constitutes a valid and legally binding
         obligation of the Company enforceable against the Company in accordance
         with its terms, except as enforceability may be limited by bankruptcy,
         insolvency, fraudulent conveyance, reorganization, moratorium and other
         similar laws relating to or affecting creditors' rights generally and
         by general principles of equity (the "Exceptions") and except to the
         extent the enforceability of the indemnification and contribution
         provisions hereof may be limited by public policy considerations as
         expressed in the 1933 Act as construed by courts of competent
         jurisdiction.

                  (iv) The Company has been duly organized and is validly
         existing as a corporation in good standing under the laws of the State
         of Missouri, with full power and authority (corporate and other) to
         own, lease and operate its properties and conduct its business as
         described in the Prospectus and to execute and deliver, and perform the
         Company's obligations under, this Agreement; the Company is duly
         qualified to do business as a foreign corporation in good standing in
         each state or other jurisdiction in which its ownership or leasing of
         property or conduct of business legally requires such qualification,
         except where the failure to be so qualified, individually or in the
         aggregate, would not have a Material Adverse Effect. The term "Material
         Adverse Effect" as used herein means any material adverse effect on the
         condition (financial or other), net worth,



                                       5



         business, affairs, management, prospects, results of operations or cash
         flow of the Company.

                  (v) The Company has not sustained since the date of the latest
         audited financial statements included or incorporated by reference in
         the Prospectus any material loss or interference with its business from
         fire, explosion, flood or other calamity, whether or not covered by
         insurance, or from any labor dispute or court or governmental action,
         order or decree, otherwise than as set forth in the Prospectus and,
         since the respective dates as of which information is given in the
         Prospectus, there has not been any change in the capital stock or
         long-term debt of the Company or any material adverse change, or any
         development involving a prospective material adverse change, in or
         affecting the general affairs, management, financial position,
         stockholders' equity or results of operations of the Company, otherwise
         than as set forth in the Prospectus.

                  (vi) The issuance and sale of the Shares and the execution,
         delivery and performance by the Company of this Agreement, and the
         consummation of the transactions herein contemplated, will not conflict
         with or result in a breach or violation of any of the terms or
         provisions of, or constitute a default under, or result in the creation
         or imposition of any lien, charge or encumbrance upon any properties or
         assets of the Company under, any indenture, mortgage, deed of trust,
         loan agreement or other agreement or instrument to which the Company is
         a party or by which the Company is bound or to which any of the
         properties or assets of the Company is subject, except to such extent
         as, individually or in the aggregate, does not have a Material Adverse
         Effect, nor will such action result in any violation of the provisions
         of the Company's articles of incorporation or bylaws or any statute,
         rule, regulation or other law, or any order or judgment, of any court
         or governmental agency or body having jurisdiction over the Company or
         any of its properties; and no consent, approval, authorization, order,
         registration or qualification of or with any such court or governmental
         agency or body is required for the execution, delivery and performance
         of this Agreement, the issuance and sale of the Shares or the
         consummation of the transactions contemplated hereby, except such as
         have been, or will be prior to the Closing Date, obtained under the
         1933 Act or as may be required by the National Association of
         Securities Dealers, Inc. (the "NASD") and such consents, approvals,
         authorizations, registrations or qualifications as may be required
         under state securities or blue sky laws in connection with the purchase
         and distribution of the Shares by the Underwriters.

                  (vii) The Company has duly and validly authorized capital
         stock as set forth in the Prospectus; all outstanding shares of Common
         Stock of the Company and the Shares conform, or when issued will
         conform, to the description thereof in the Prospectus and have been,
         or, when issued and paid for in the manner described herein will be,
         duly authorized, validly issued, fully paid and non-assessable; and the
         issuance of the Shares to be purchased from the Company hereunder is
         not subject to preemptive or other similar rights, or any restriction
         upon the voting or transfer thereof pursuant to applicable law or the
         Company's articles of incorporation, by-laws or governing documents or
         any agreement to which the Company is a party or by which it may be
         bound. All corporate



                                       6



         action required to be taken by the Company for the authorization,
         issuance and sale of the Shares has been duly and validly taken. Except
         as disclosed in the Prospectus, there are no outstanding subscriptions,
         rights, warrants, options, calls, convertible securities, commitments
         of sale or rights related to or entitling any person to purchase or
         otherwise to acquire any shares of, or any security convertible into or
         exchangeable or exercisable for, the capital stock of, or other
         ownership interest in, the Company.

                  (viii) The statements set forth in the Prospectus describing
         the Shares and this Agreement, insofar as they purport to describe the
         provisions of the laws and documents referred to therein, are accurate,
         complete and fair.

                  (ix) The Company is in possession of and is operating in
         compliance with all franchises, grants, authorizations, licenses,
         certificates, permits, easements, consents, orders and approvals
         ("Permits") from all state, federal, foreign and other regulatory
         authorities, and has satisfied the requirements imposed by regulatory
         bodies, administrative agencies or other governmental bodies, agencies
         or officials, that are required for the Company lawfully to own, lease
         and operate its properties and conduct its business as described in the
         Prospectus, and, the Company is conducting its business in compliance
         with all of the laws, rules and regulations of each jurisdiction in
         which it conducts its business, in each case with such exceptions,
         individually or in the aggregate, as would not have a Material Adverse
         Effect; the Company has filed all notices, reports, documents or other
         information ("Notices") required to be filed under applicable laws,
         rules and regulations, in each case, with such exceptions, individually
         or in the aggregate, as would not have a Material Adverse Effect; and,
         except as otherwise specifically described in the Prospectus, the
         Company has not received any notification from any court or
         governmental body, authority or agency, relating to the revocation or
         modification of any such Permit or, to the effect that any additional
         authorization, approval, order, consent, license, certificate, permit,
         registration or qualification ("Approvals") from such regulatory
         authority is needed to be obtained by any of them, in any case where it
         could be reasonably expected that obtaining such Approvals or the
         failure to obtain such Approvals, individually or in the aggregate,
         would have a Material Adverse Effect.

                  (x) Other than calendar year 2000 federal and state income
         tax returns, for which the Company has filed timely extensions, the
         Company has filed all necessary federal, state and foreign income and
         franchise tax returns and paid all taxes shown as due thereon; all
         such tax returns are complete and correct in all material respects;
         all tax liabilities are adequately provided for on the books of the
         Company except to such extent as would not have a Material Adverse
         Effect; the Company has made all necessary payroll tax payments and
         are current and up-to-date; and the Company has no knowledge of any
         tax proceeding or action pending or threatened against the Company
         which, individually or in the aggregate, might have a Material
         Adverse Effect.

                  (xi) Except as described in the Prospectus, the Company owns
         or possesses, or can acquire on reasonable terms, adequate patents,
         patent licenses, trademarks, service marks and trade names necessary to
         conduct the business now operated by it, and the


                                       7



         Company has not received any notice of infringement of or conflict with
         asserted rights of others with respect to any patents, patent licenses,
         trademarks, service marks or trade names which, individually or in the
         aggregate, if the subject of an unfavorable decision, ruling or
         finding, would have a Material Adverse Effect.

                  (xii) The Company has good and marketable title in fee simple
         to all items of real property and good and marketable title to all
         personal property owned by it, in each case free and clear of all
         liens, encumbrances, restrictions and defects except such as are
         described in the Prospectus or do not materially affect the value of
         such property and do not interfere with the use made and proposed to be
         made of such property; and any property held under lease or sublease by
         the Company is held under valid, subsisting and enforceable leases or
         subleases with such exceptions as are not material and do not interfere
         with the use made and proposed to be made of such property by the
         Company; and the Company does not have any notice or knowledge of any
         material claim of any sort which has been, or may be, asserted by
         anyone adverse to the Company's rights as lessee or sublessee under any
         lease or sublease described above, or affecting or questioning the
         Company's rights to the continued possession of the leased or subleased
         premises under any such lease or sublease in conflict with the terms
         thereof.

                  (xiii) Except as described in the Prospectus, there is no
         factual basis for any action, suit or other proceeding involving the
         Company or any of its material assets for any failure of the Company,
         or any predecessor thereof, to comply with any requirements of federal,
         state or local regulation relating to air, water, solid waste
         management, hazardous or toxic substances, or the protection of health
         or the environment. Except as described in the Prospectus, none of the
         property owned or leased by the Company is, to the best knowledge of
         the Company, contaminated with any waste or hazardous substances, and
         the Company may not be deemed an "owner or operator" of a "facility" or
         "vessel" which owns, possesses, transports, generates or disposes of a
         "hazardous substance" as those terms are defined in Section 9601 of the
         Comprehensive Environmental Response, Compensation and Liability Act of
         1980, 42 U.S.C. Section 9601 ET SEQ.

                  (xiv) No labor disturbance exists with the employees of the
         Company or is imminent which, individually or in the aggregate, would
         have a Material Adverse Effect. None of the employees of the Company is
         represented by a union and, to the best knowledge of the Company, no
         union organizing activities are taking place. The Company has not
         violated any federal, state or local law or foreign law relating to
         discrimination in hiring, promotion or pay of employees, nor any
         applicable wage or hour laws, or the rules and regulations thereunder,
         or analogous foreign laws and regulations, which might, individually or
         in the aggregate, result in a Material Adverse Effect.

                  (xv) The Company is in compliance in all material respects
         with all presently applicable provisions of the Employee Retirement
         Income Security Act of 1974, as amended, including the regulations and
         published interpretations thereunder ("ERISA"); no "reportable event"
         (as defined in ERISA) has occurred with respect to any "pension plan"
         (as defined in ERISA) for which the Company would have any liability;
         the


                                       8



         Company has not incurred and does not expect to incur liability under
         (i) Title IV of ERISA with respect to termination of, or withdrawal
         from, any "pension plan" or (ii) Sections 412 or 4971 of the Internal
         Revenue Code of 1986, as amended, including the regulations and
         published interpretations thereunder (the "Code"); and each "pension
         plan" for which the Company would have any liability that is intended
         to be qualified under Section 401(a) of the Code is so qualified in all
         material respects, and nothing has occurred, whether by action or by
         failure to act, which would cause the loss of such qualification.

                  (xvi) The Company maintains insurance of the types and in the
         amounts generally deemed adequate for its business, including, but not
         limited to, directors' and officers' insurance, insurance covering real
         and personal property owned or leased by the Company against theft,
         damage, destruction, acts of vandalism and all other risks customarily
         insured against, all of which insurance is in full force and effect.
         The Company has not been refused any insurance coverage sought or
         applied for, and the Company has no reason to believe that it will not
         be able to renew its existing insurance coverage as and when such
         coverage expires or to obtain similar coverage from similar insurers as
         may be necessary to continue its business at a cost that would not have
         a Material Adverse Effect.

                  (xvii) The Company is not, nor with the giving of notice or
         lapse of time or both would be, in default or violation with respect to
         its articles of incorporation or by-laws. The Company is not, nor with
         the giving of notice or lapse of time or both would be, in default in
         the performance or observance of any material obligation, agreement,
         covenant or condition contained in any indenture, mortgage, deed of
         trust, loan agreement, lease or other agreement or instrument to which
         the Company is a party or by which the Company is bound or to which any
         of the properties or assets of the Company is subject, or in violation
         of any statutes, laws, ordinances or governmental rules or regulations
         or any orders or decrees to which it is subject, including, without
         limitation, Section 13 of the 1934 Act, which default or violation,
         individually or in the aggregate, would have a Material Adverse Effect.
         The Company has not, at any time during the past five years, (A) made
         any unlawful contributions to any candidate for any political office,
         or failed fully to disclose any contribution in violation of law, or
         (B) made any payment to any state, federal or foreign government
         official, or other person charged with similar public or quasi-public
         duty (other than payment required or permitted by applicable law).

                  (xviii) Other than as set forth in the Prospectus, there are
         no legal or governmental proceedings pending to which the Company is a
         party or of which any property of the Company is the subject that, if
         determined adversely to the Company, would individually or in the
         aggregate have a Material Adverse Effect or which would materially and
         adversely affect the consummation of the transactions contemplated
         hereby or which is required to be disclosed in the Prospectus; to the
         best of the Company's knowledge, no such proceedings are threatened or
         contemplated.


                                       9



                  (xix) The Company is not and, after giving effect to the
         offering and sale of the Shares, will not be an "investment company" or
         an entity "controlled" by an "investment company," as such terms are
         defined in the Investment Company Act of 1940, as amended (the "1940
         Act").

                  (xx) Baird, Kurtz & Dobson and Deloitte & Touche LLP, the
         accounting firms which have certified the financial statements filed
         with or incorporated by reference in and as a part of the Registration
         Statement, are independent public accounting firms within the meaning
         of the 1933 Act and the 1933 Act Rules and Regulations. The Company
         maintains a system of internal accounting controls sufficient to
         provide reasonable assurance that: (1) transactions are executed in
         accordance with management's general or specific authorizations; (2)
         transactions are recorded as necessary to permit preparation of
         financial statements in conformity with generally accepted accounting
         principles and to maintain accountability for assets; (3) access to
         assets is permitted only in accordance with management's general or
         specific authorization; and (4) the recorded accounts for assets is
         compared with the existing assets at reasonable intervals and
         appropriate action is taken with respect thereto. The financial
         statements and schedules of the Company, including the notes thereto,
         filed with (or incorporated by reference) and as a part of the
         Registration Statement or Prospectus, are accurate in all material
         respects and present fairly the financial condition of the Company as
         of the respective dates thereof and the results of operations and
         changes in financial position and statements of cash flow for the
         respective periods covered thereby, all in conformity with generally
         accepted accounting principles applied on a consistent basis throughout
         the periods involved except as otherwise disclosed therein. All
         adjustments necessary for a fair presentation of results for such
         periods have been made. The selected financial data included or
         incorporated by reference in the Registration Statement and Prospectus
         present fairly the information shown therein and have been compiled on
         a basis consistent with that of the audited financial statements. Any
         operating or other statistical data of the Company included or
         incorporated by reference in the Registration Statement and Prospectus
         comply in all material respects with the 1933 Act and the 1933 Act
         Rules and Regulations and present fairly the information shown
         therein.

                  (xxi) Except as disclosed in the Prospectus, no holder of any
         security of the Company has any right to require registration of shares
         of Common Stock or any other security of the Company because of the
         filing of the Registration Statement or the consummation of the
         transactions contemplated hereby and, except as disclosed in the
         Prospectus, no person has the right to require registration under the
         1933 Act of any shares of Common Stock or other securities of the
         Company. No person has the right, contractual or otherwise, to cause
         the Company to permit such person to underwrite the sale of any of the
         Shares. Except for this Agreement, there are no contracts, agreements
         or understandings between the Company and any person that would give
         rise to a valid claim against the Company or any Underwriter for a
         brokerage commission, finder's fee or like payment in connection with
         the issuance, purchase and sale of the Shares.



                                       10



                  (xxii) The Company has not distributed and, prior to the later
         to occur of (i) the Closing Date or the Option Closing Date, if any,
         and (ii) completion of the distribution of the Shares, will not
         distribute any offering material in connection with the offering and
         sale of the Shares other than the Registration Statement, the
         Preliminary Prospectus and the Prospectus.

                  (xxiii) The Company has not taken and will not take, directly
         or indirectly, any action designed to or which might reasonably be
         expected to cause or result in stabilization or manipulation of the
         price of the Company's Common Stock, and the Company is not aware of
         any such action taken or to be taken by affiliates of the Company.

                  (xxiv) The Company has no subsidiaries and, except as
disclosed in the Prospectus, is not affiliated with any corporation,
partnership, limited liability company or other business entity.

                  (xxv) The Company' Common Stock is included on The Nasdaq
National Market and the Shares have been approved for inclusion, subject to
official notice of issuance of the Shares.

         (b) Each Selling Shareholder severally represents and warrants to and
agrees with each Underwriter and the Company that:

                  (i) All consents, approvals, authorizations and orders
         necessary for the execution and delivery by it of this Agreement, and
         the Custody Agreement and Power of Attorney (as defined herein) and the
         sale and delivery of the Shares to be sold by such Selling Shareholder
         hereunder and thereunder have been given and are in full force and
         effect on the date hereof and will be in full force and effect on the
         Closing Date. This Agreement and the Custody Agreement and Power of
         Attorney have been duly authorized, executed and delivered by or on
         behalf of such Selling Shareholder and are the valid and legally
         binding obligations of such Selling Shareholder enforceable in
         accordance with their terms except as enforceability may be limited by
         the Exceptions and except to the extent the enforceability of the
         indemnification and contribution provisions hereof and thereof may be
         limited by public policy considerations as expressed in the 1933 Act as
         construed by courts of competent jurisdiction.

                  (ii) Such Selling Shareholder has, and on the Closing Date
         will have good, valid and marketable title to the Shares to be sold by
         such Selling Shareholder, free and clear of all liens, mortgages,
         pledges, encumbrances, claims, equities and security interests
         whatsoever, including any restriction on transfer other than pursuant
         to this Agreement and the Custody Agreement and Power of Attorney
         referred to herein, and now has, and on the Closing Date, will have,
         full right, power and authority, and any approval required by law, to
         enter into this Agreement and the Custody Agreement and Power of
         Attorney and to sell, assign, transfer and deliver the Shares to be
         sold by such Selling Shareholder hereunder.


                                       11



                  (iii) Upon delivery of and payment for such Shares hereunder,
         the several Underwriters will acquire good, valid and marketable title
         to such Shares to be sold by such Selling Shareholder hereunder, free
         and clear of all liens, mortgages, pledges, encumbrances, claims,
         equities and security interests whatsoever.

                  (iv) The execution, delivery and performance of this Agreement
         and the Custody Agreement and Power of Attorney by such Selling
         Shareholder, and the consummation by such Selling Shareholder of the
         transactions contemplated herein and therein will not conflict with or
         result in a breach or violation of any of the terms or provisions of,
         or constitute a default under, or result in the creation or imposition
         of any lien, charge or encumbrance upon any of the properties or assets
         of such Selling Shareholder under, any indenture, mortgage, deed of
         trust, loan agreement or other agreement or instrument to which such
         Selling Shareholder is a party or by which it is bound or to which any
         of the properties or assets of such Selling Shareholder is subject (or
         any certificate or articles of incorporation or bylaws, partnership
         agreement, trust document or articles of association of such Selling
         Shareholder, as applicable), or any order or decree, or statute, law,
         ordinance, rule or regulation applicable to such Selling Shareholder of
         any court or of any governmental agency, authority or body having
         jurisdiction over such Selling Shareholder or its properties or assets.

                  (v) Such Selling Shareholder does not have any knowledge or
         any reason to believe that the Registration Statement or the Prospectus
         (or any amendment or supplement thereto) contains any untrue statement
         of a material fact or omits to state any material fact required to be
         stated therein or necessary to make the statements therein not
         misleading. The representations and warranties of such Selling
         Shareholder in the Custody Agreement and Power of Attorney are, and on
         the Closing Date will be, true and correct.

                  (vi) Such Selling Shareholder has not taken and will not take,
         directly or indirectly, any action designed to or which might be
         reasonably expected to cause or result in stabilization or manipulation
         of the price of the Common Stock, and such Selling Shareholder is not
         aware of any such action taken or to be taken by affiliates of such
         Selling Shareholder.

                  (vii) When the Registration Statement becomes effective and at
         all times subsequent thereto until the expiration of the period when a
         prospectus relating to any of the Shares is required to be delivered
         under the 1933 Act by any Underwriter or dealer, such information in
         the Registration Statement and Prospectus and any amendments or
         supplements thereto as specifically relates to such Selling Shareholder
         will not contain any untrue statement of a material fact or omit to
         state any material fact required to be stated therein or necessary to
         make the statements therein not misleading.

                  (viii) Certificates in negotiable form representing all of the
         Shares to be sold by such Selling Shareholder hereunder have been
         placed in the custody of Tom W. Olofson (the "Custodian") under a
         Custody Agreement and Power of Attorney (the "Custody


                                       12




         Agreement and Power of Attorney"), duly executed and delivered by such
         Selling Shareholder, with the Custodian having the authority to deliver
         the Shares to be sold by such Selling Shareholder hereunder, and such
         Selling Shareholder has duly executed and delivered the Custody
         Agreement and Power of Attorney appointing Tom W. Olofson as such
         Selling Shareholder's agent and attorney-in-fact (the
         "Attorney-in-Fact") with the Attorney-in-Fact having authority to
         execute and deliver this Agreement on behalf of such Selling
         Shareholder, to determine the purchase price to be paid by the
         Underwriters to the Selling Shareholders as provided in Section 2, to
         authorize the delivery of the Shares to be sold by it hereunder and
         otherwise to act on behalf of such Selling Shareholder in connection
         with the transactions contemplated by this Agreement and such Custody
         Agreement.

                  (ix) The Shares represented by the certificates held in
         custody for such Selling Shareholder under the Custody Agreement and
         Power of Attorney are subject to the interests of the Underwriters
         hereunder, and the arrangements made by such Selling Shareholder for
         such custody, and the appointment by such Selling Shareholder of the
         Custodian and of the Attorney-in-Fact under the Custody Agreement and
         Power of Attorney, are, except as specifically provided therein,
         irrevocable.

                  (x) The obligations of such Selling Shareholder hereunder and
         under the Custody Agreement and Power of Attorney shall not be
         terminated by any Selling Shareholder or operation of law, whether by
         the death or incapacity of any individual Selling Shareholder or, in
         the case of an estate or trust, by the death or incapacity of any
         executor or trustee or the termination of such estate or trust, or, in
         the case of a partnership, corporation or other entity, upon any
         dissolution, winding up, distribution of assets or other event
         affecting the legal existence of such Selling Shareholder, or by the
         occurrence of any other event; and if any individual Selling
         Shareholder or any such executor or trustee should die or become
         incapacitated, or if any such estate or trust should be terminated, or
         if any such partnership, corporation or other entity should dissolve,
         wind up or distribute assets or any other event affecting the legal
         existence of such Selling Shareholder should occur, or if any other
         such event should occur before the delivery of the Shares hereunder,
         certificates representing the Shares shall be delivered by or on behalf
         of each Selling Shareholder in accordance with the terms and conditions
         of this Agreement and of the Custody Agreement; and actions taken by
         the Custodian or by the Attorney-in-Fact pursuant to the Custody
         Agreement and Power of Attorney shall be as valid as if such death,
         incapacity, termination, dissolution, winding up, distribution of
         assets or other event had not occurred, regardless of whether or not
         the Custodian or Attorney-in-Fact, or any of them, shall have received
         notice of such death, incapacity, termination, dissolution, winding up,
         distribution of assets or other event.

                  (xi) Such Selling Shareholder is not prompted to sell shares
         of Common Stock by any information concerning the Company which is not
         included in the Registration Statement.


                                       13




         (c) Any certificate signed by any officer of the Company and delivered
to you or to counsel for the Underwriters shall be deemed a representation and
warranty by the Company to each Underwriter as to the matters covered thereby;
and any certificate signed by or on behalf of the Selling Shareholders as such
and delivered to you or to counsel for the Underwriters shall be deemed a
representation and warranty by the Selling Shareholders to each Underwriter as
to the matters covered thereby.

         5. ADDITIONAL COVENANTS. The Company and, where expressly indicated,
the Selling Shareholders, covenant and agree with the several Underwriters that:

         (a) The Company will timely transmit copies of the Prospectus, and any
amendments or supplements thereto, or a Term Sheet or Abbreviated Term Sheet, as
applicable, to the SEC for filing pursuant to Rule 424(b) of the 1933 Act Rules
and Regulations.

         (b) The Company will deliver to each of the Representatives, and to
counsel for the Underwriters (i) three signed copies of the Registration
Statement as originally filed, including copies of exhibits thereto (other than
any exhibits incorporated by reference therein), of any amendments and
supplements to the Registration Statement (including all documents incorporated
by reference therein) and (ii) a signed copy of each consent and certificate
included or incorporated by reference in, or filed as an exhibit to, the
Registration Statement as so amended or supplemented; the Company will deliver
to the Underwriters through the Representatives as soon as practicable after the
date of this Agreement as many copies of the Prospectus (including all documents
incorporated by reference therein) as the Representatives may reasonably request
for the purposes contemplated by the 1933 Act and the 1933 Act Rules and
Regulations; if the Registration Statement is not effective under the 1933 Act,
the Company will use its best efforts to cause the Registration Statement to
become effective as promptly as possible, and it will notify you, promptly after
it shall receive notice thereof, of the time when the Registration Statement has
become effective; the Company will promptly advise the Representatives of any
request of the SEC for amendment of the Registration Statement or for supplement
to the Prospectus or for any additional information, and of the issuance by the
SEC or any state or other jurisdiction or other regulatory body of any stop
order under the 1933 Act or other order suspending the effectiveness of the
Registration Statement (as amended or supplemented) or preventing or suspending
the use of any Preliminary Prospectus or the Prospectus or suspending the
qualification or registration of the Shares for offering or sale in any
jurisdiction, and of the institution or threat of any proceedings therefor, of
which the Company shall have received notice or otherwise have knowledge prior
to the completion of the distribution of the Shares; and the Company will use
its best efforts to prevent the issuance of any such stop order or other order
and, if issued, to secure the prompt removal thereof.

         (c) The Company will not file any amendment or supplement to the
Registration Statement or the Prospectus (or any other prospectus relating to
the Shares filed pursuant to Rule 424(b) of the 1933 Act Rules and Regulations)
that differs from the Prospectus as filed pursuant to such Rule 424(b) and will
not file any document under the 1934 Act before the termination of the offering
of the Shares by the Underwriters if the document would be deemed to be
incorporated by reference into the Registration Statement or the Prospectus, of
which the


                                       14



Underwriters shall not previously have been advised and furnished with a copy or
to which the Underwriters shall have reasonably objected or which is not in
compliance with the 1934 Act Rules and Regulations; and the Company will
promptly notify you after it shall have received notice thereof of the time when
any amendment to the Registration Statement becomes effective or when any
supplement to the Prospectus has been filed.

         (d) During the period when a prospectus relating to any of the Shares
is required to be delivered under the 1933 Act by any Underwriter or dealer, the
Company will comply, at its own expense, with all requirements imposed by the
1933 Act and the 1933 Act Rules and Regulations, as now and hereafter amended,
and by the rules and regulations of the SEC thereunder, as from time to time in
force, so far as necessary to permit the continuance of sales of or dealing in
the Shares during such period in accordance with the provisions hereof and as
contemplated by the Prospectus.

         (e) If, during the period when a prospectus relating to any of the
Shares is required to be delivered under the 1933 Act by any Underwriter or
dealer, (i) any event relating to or affecting the Company or of which the
Company shall be advised in writing by the Representatives shall occur as a
result of which, in the opinion of the Company or the Representatives, the
Prospectus as then amended or supplemented would include any untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading or (ii) it shall be necessary to amend or supplement the
Registration Statement or the Prospectus to comply with the 1933 Act, the 1933
Act Rules and Regulations, the 1934 Act or the 1934 Act Rules and Regulations,
the Company will forthwith at its expense prepare and file with the SEC, and
furnish to the Representatives a reasonable number of copies of, such amendment
or supplement or other filing that will correct such statement or omission or
effect such compliance.

         (f) During the period when a prospectus relating to any of the Shares
is required to be delivered under the 1933 Act by any Underwriter or dealer, the
Company will furnish such proper information as may be lawfully required and
otherwise cooperate in qualifying the Shares for offer and sale under the
securities or blue sky laws of such jurisdictions as the Representatives may
reasonably designate and will file and make in each year such statements or
reports as are or may be reasonably required by the laws of such jurisdictions;
PROVIDED, HOWEVER, that the Company shall not be required to qualify as a
foreign corporation or shall not be required to qualify as a dealer in
securities or to file a general consent to service of process under the laws
of any jurisdiction.

         (g) In accordance with Section 11(a) of the 1933 Act and Rule 158 of
the 1933 Act Rules and Regulations, the Company will make generally available to
its security holders and to holders of the Shares, as soon as practicable, an
earning statement (which need not be audited) in reasonable detail covering the
12 months beginning not later than the first day of the month next succeeding
the month in which occurred the effective date (within the meaning of Rule 158)
of the Registration Statement.



                                       15



         (h) So long as the Company is subject to the reporting requirements
of the 1934 Act, the Company will furnish to its security holders annual
reports containing financial statements audited by independent public
accountants and quarterly reports containing financial statements and
financial information which may be unaudited. The Company will, for a period
of five years from the Closing Date, deliver to the Underwriters at their
principal executive offices a reasonable number of copies of annual reports,
quarterly reports, current reports and copies of all other documents, reports
and information furnished by the Company to its shareholders or filed with
any securities exchange or market pursuant to the requirements of such
exchange or market or with the SEC pursuant to the 1933 Act or the 1934 Act.

         (i) During the period beginning from the date of this Agreement and
continuing to and including the earlier of (i) the termination of trading
restrictions on the Shares, as determined by the Underwriters, and (ii) 90 days
after the Closing Date, the Company will not, without the prior written consent
of the Representatives, offer for sale, sell or enter into any agreement to
sell, or otherwise dispose of, any equity securities of the Company, except for
the Shares and issuances of shares and options under the Company's stock
option plan.

         (j) The Company will apply the proceeds from the sale of the Shares as
set forth in the description under "Use of Proceeds" in the Prospectus, which
description complies in all respects with the requirements of Item 504 of
Regulation S-K.

         (k) The Company will promptly provide you with copies of all
correspondence to and from, and all documents issued to and by, the SEC in
connection with the registration of the Shares under the 1933 Act or relating to
any documents incorporated by reference into the Registration Statement or the
Prospectus.

         (l) Prior to the Closing Date (and, if applicable, the Option Closing
Date), the Company will furnish to you, as soon as they have been prepared,
copies of any unaudited interim financial statements of the Company for any
periods subsequent to the periods covered by the financial statements appearing
in the Registration Statement and the Prospectus.

         (m) Prior to the Closing Date (and, if applicable, the Option Closing
Date), neither the Company nor any Selling Shareholder will issue any press
releases or other communications directly or indirectly and will hold no press
conferences with respect to the Company, the financial condition, results of
operations, business, properties, assets or liabilities of the Company, or the
offering of the Shares, without your prior written consent.

         (n) The Company will use its best efforts to obtain approval for, and
maintain the inclusion of the Shares on, The Nasdaq National Market.

         (o) The Company will cause its directors and officers to furnish to
you, on or prior to the date of this Agreement, a letter or letters, in form and
substance satisfactory to counsel for the Underwriters, pursuant to which each
such person shall agree not to, and the Company will not, directly or
indirectly, offer for sale, contract to sell, sell, distribute, grant any
option, right or



                                       16



warrant to purchase, pledge, hypothecate or otherwise dispose of any shares
of Common Stock, any securities convertible into, or exercisable or
exchangeable for, Common Stock or any other rights to acquire such shares,
for a period of 90 days from the Effective Date, without the prior written
consent of A.G. Edwards & Sons, Inc., except for the Shares sold hereunder,
except for sales of shares of Common Stock to the Company's employees
pursuant to the exercise of options under the Company's stock option plan
and except for sales of shares in accordance with the Company's effective
Registration Statement on Form S-3 (Registration No. 333-57786).

         (p) The Company will maintain and keep accurate books and records
reflecting its assets and maintain internal accounting controls which provide
reasonable assurance that (1) transactions are executed in accordance with
management's authorization, (2) transactions are recorded as necessary to permit
the preparation of the Company's consolidated financial statements and to
maintain accountability for the assets of the Company, (3) access to the assets
of the Company is permitted only in accordance with management's authorization,
and (4) the recorded accounts of the assets of the Company are compared with
existing assets at reasonable intervals.

         (q) During any period in which a prospectus is required by law to be
delivered by an Underwriter or dealer, the Company will promptly file all
documents required to be filed with the SEC pursuant to Sections 13, 14 or 15(d)
of the 1934 Act.

         (r) If the Company elects to rely on Rule 462(b) under the 1933 Act,
the Company shall both file an Abbreviated Registration Statement with the SEC
in compliance with Rule 462(b) and pay the applicable fees in accordance with
Rule 111 of the 1933 Act by the earlier of (i) 9:00 p.m., St. Louis time, on the
date of this Agreement, and (ii) the time that confirmations are given or sent,
as specified by Rule 462(b)(2).

         (s) Each of the Selling Shareholders severally agrees with the several
Underwriters as follows:

                  (i) Such Selling Shareholder will cooperate to the extent
         necessary to cause the Registration Statement or any post-effective
         amendment thereto to become effective at the earliest possible time.

                  (ii) Such Selling Shareholder will pay all Federal and other
         taxes, if any, on the transfer or sale of the Shares being sold by the
         Selling Shareholder to the Underwriters.

                  (iii) Such Selling Shareholder will do or perform all things
         required to be done or performed by the Selling Shareholder prior to
         the Closing Date to satisfy all conditions precedent to the delivery of
         the Shares pursuant to this Agreement.

                  (iv) For a period of 90 days from the Effective Date, the
         Selling Shareholders will not directly or indirectly offer for sale,
         contract to sell, sell, distribute, grant any option, right or warrant
         to purchase, pledge, hypothecate or otherwise dispose of any shares of
         Common Stock, any securities convertible into, or exercisable or
         exchangeable



                                       17



         for, Common Stock or rights to acquire such shares, without the prior
         written consent of A.G. Edwards & Sons, Inc., except for the Shares
         sold hereunder by the Selling Shareholders.

                  (v) Except as stated in this Agreement and in the Preliminary
         Prospectus and the Prospectus, such Selling Shareholder has not taken
         and will not take, directly or indirectly, any action designed to or
         that might reasonably be expected to cause or result in stabilization
         or manipulation of the price of the Common Stock to facilitate the sale
         or resale of the Shares.

         6. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several obligations of
the Underwriters to purchase and pay for the Shares, as provided herein, shall
be subject to the accuracy, as of the date hereof and as of the Closing Date
(and, if applicable, the Option Closing Date), of the representations and
warranties of the Company and the Selling Shareholders contained herein, to the
performance by the Company and the Selling Shareholders of their covenants and
obligations hereunder, and to the following additional conditions:

         (a) The Registration Statement and all post-effective amendments
thereto shall have become effective not later than 1:00 p.m., St. Louis time, on
the date hereof, or, with your consent, at a later date and time, not later than
10:00 a.m., St. Louis time, on the first business day following the date hereof,
or at such later date and time as may be approved by the Representatives; if the
Company has elected to rely on Rule 462(b) under the 1933 Act, the Abbreviated
Registration Statement shall have become effective not later than the earlier of
(x) 10:00 p.m. St. Louis time, on the date hereof, or (y) at such later date and
time as may be approved by the Representatives. All filings required by Rule 424
and Rule 430A of the 1933 Act Rules and Regulations shall have been made. No
stop order suspending the effectiveness of the Registration Statement, as
amended from time to time, shall have been issued and no proceeding for that
purpose shall have been initiated or, to the knowledge of the Company or any
Underwriter, threatened or contemplated by the SEC, and any request of the SEC
for additional


                                       18



information (to be included in the Registration Statement or the Prospectus or
otherwise) shall have been complied with to the reasonable satisfaction of the
Underwriters.

         (b) No Underwriter shall have advised the Company on or prior to the
Closing Date (and, if applicable, the Option Closing Date), that the
Registration Statement or Prospectus or any amendment or supplement thereto
contains an untrue statement of fact which, in the opinion of counsel to the
Underwriters, is material, or omits to state a fact which, in the opinion of
such counsel, is material and is required to be stated therein or is necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.

         (c) On the Closing Date (and, if applicable, the Option Closing Date),
you shall have received the opinion of Gilmore & Bell, P.C., counsel for the
Company, addressed to you and dated the Closing Date (and, if applicable, the
Option Closing Date), to the effect that:

                  (i) The Registration Statement and all post-effective
         amendments thereto and the Abbreviated Registration Statement, if any,
         have become effective under the 1933 Act; any required filing of the
         Prospectus or any supplement thereto pursuant to Rule 424(b) or
         otherwise has been made in the manner and within the time period
         required thereby; and, to the knowledge of such counsel after due
         inquiry, no stop or other order suspending the effectiveness of the
         Registration Statement has been issued and no proceedings for that
         purpose have been instituted or are pending or contemplated under the
         1933 Act or under the securities laws of any jurisdiction.

                  (ii) The Registration Statement and the Prospectus, and each
         amendment or supplement thereto (including any document incorporated by
         reference into the Prospectus), as of their respective effective or
         issue date, comply as to form and appear on their face to be
         appropriately responsive in all material respects to the requirements
         of Form S-3 under the 1933 Act and the applicable 1933 Act Rules and
         Regulations (except that such counsel need express no opinion as to the
         financial statements or other financial data); the conditions for use
         of Form S-3 have been satisfied; and, as of the date they were filed
         with the SEC, the documents incorporated by reference in the Prospectus
         appear on their face to comply as to form and be appropriately
         responsive in all material respects with the requirements of the 1934
         Act and the applicable 1934 Act Rules and Regulations (except that such
         counsel need express no opinion as to the financial statements or other
         financial data).

                  (iii) The descriptions in the Registration Statement and
         Prospectus of proceedings, contracts and other documents are accurate
         in all material respects and fairly present the information required
         to be shown under the 1933 Act and the 1933 Act Rules and Regulations.

                  (iv) This Agreement has been duly authorized, executed and
         delivered by the Company and constitutes a valid and legally binding
         obligation of the Company enforceable against the Company in accordance
         with its terms, except as enforceability may be limited by the
         Exceptions and except to the extent the enforceability of the



                                       19



         indemnification and contribution provisions of Section 7 of the
         Agreement may be limited by public policy considerations as expressed
         in the 1933 Act as construed by courts of competent jurisdiction.

                  (v) The Company has been duly incorporated and is validly
         existing as a corporation in good standing under the laws of the State
         of Missouri, with full power and authority (corporate and other) to
         own, lease and operate its properties and conduct its businesses as
         described in the Prospectus and, with respect to the Company, to
         execute and deliver, and perform the Company's obligations under, this
         Agreement; the Company is duly qualified to do business as a foreign
         corporation in good standing in each state or other jurisdiction in
         which its ownership or leasing of property or conduct of business
         legally requires such qualification, except where the failure to be so
         qualified would not have a Material Adverse Effect. The Company has no
         subsidiaries and, to the knowledge of such counsel and except as
         disclosed in the Prospectus, is not affiliated with any corporation,
         partnership, limited liability company or other business entity.

                  (vi) The issuance and sale of the Shares and the execution,
         delivery and performance by the Company of this Agreement, and the
         consummation of the transactions herein contemplated, will not conflict
         with or result in a breach or violation of any of the terms or
         provisions of, or constitute a default under, or result in the creation
         or imposition of any lien, charge or encumbrance upon any properties or
         assets of the Company under, any indenture, mortgage, deed of trust,
         loan agreement or other agreement or instrument known to such counsel
         after due inquiry to which the Company is a party or by which the
         Company is bound or to which any of the properties or assets of the
         Company is subject, except to such extent as does not have a Material
         Adverse Effect, nor will such action result in any violation of the
         provisions of the Company's articles of incorporation or bylaws or any
         statute, rule, regulation or other law, or any order or judgment known
         to such counsel after due inquiry, of any court or governmental agency
         or body having jurisdiction over the Company or any of its properties.

                  (vii) No consent, approval, authorization, order, registration
         or qualification of or with any court or governmental agency or body is
         required in connection with the execution, delivery and performance of
         this Agreement, and the issuance and sale of the Shares or the
         consummation of the transactions contemplated hereby, except such as
         may be required under the 1933 Act or the 1933 Act Rules and
         Regulations and have been obtained, or as may be required by the NASD
         or under state securities or blue sky laws in connection with the
         purchase and distribution of the Shares by the Underwriters.

                  (viii) To the knowledge of such counsel after due inquiry and
         other than as set forth in the Prospectus, there are no legal or
         governmental proceedings pending to which the Company is a party or of
         which any property of the Company is the subject; and, to the knowledge
         of


                                       20



         such counsel after due inquiry, no such proceedings are threatened or
         contemplated by governmental authorities or threatened by others.

                  (ix) The Company has duly and validly authorized capital stock
         as set forth under the caption "Capitalization" in the Prospectus; all
         outstanding shares of Common Stock of the Company and the Shares
         conform, or when issued will conform, as to legal matters to the
         description thereof in the Prospectus and have been duly authorized,
         validly issued, fully paid and non-assessable; and the Shares to be
         sold by the Company have been duly authorized and, when delivered and
         paid for in accordance with this Agreement, will be validly issued,
         fully paid and non-assessable. All corporate action required to be
         taken by the Company for the authorization, issue and sale of the
         Shares has been duly and validly taken. The Shares are duly authorized
         for inclusion, subject to official notice of issuance and evidence of
         satisfactory distribution, on The Nasdaq National Market. The issuance
         of the Shares to be purchased from the Company hereunder is not subject
         to preemptive or other similar rights, or any restriction upon the
         voting or transfer thereof pursuant to applicable law or the articles
         of incorporation, bylaws or governing documents of the Company or any
         agreement known to us to which the Company is a party or by which it
         may be bound; and, to such counsel's knowledge, except as described in
         the Prospectus, there are no outstanding subscriptions, rights,
         warrants, options, calls, convertible securities, commitments of sale
         or rights related to or entitling any person to purchase or otherwise
         acquire any shares of, or any security convertible into or exercisable
         or exchangeable for, the capital stock of, or other ownership interest
         in, the Company.

                  (x) To the knowledge of such counsel after due inquiry, the
         Company holds all licenses, certificates, permits and approvals from
         all state, federal and other regulatory authorities, and have satisfied
         in all material respects the requirements imposed by regulatory bodies,
         administrative agencies or other governmental bodies, agencies or
         officials, that are required for the Company lawfully to own, lease and
         operate its properties and conduct its business as described in the
         Prospectus, and, to the knowledge of such counsel after due inquiry,
         the Company is conducting its business in compliance in all material
         respects with all of the laws, rules and regulations of each
         jurisdiction in which it conducts its business; provided, however, that
         such counsel need not express an opinion as to the compliance of the
         Company's software products with the U.S. Bankruptcy Code, any rules or
         regulations thereunder or any rules, regulations, procedures or
         practices of any local jurisdiction of the federal bankruptcy courts.

                  (xi) The statements made in the Prospectus under the captions
         "Risk Factors - We rely on our national marketing arrangement for
         Chapter 7 revenue and - Our directors and executive officers will
         continue to have a substantial influence over matters requiring a
         shareholder vote," "Description of Capital Stock," "Management - Stock
         Option Plan," "Certain Relationships and Related Transactions," and
         "Shares Eligible for Future Sale," Item 15 of Part II of the
         Registration Statement, to the extent that they constitute summaries of
         documents referred to therein or matters of law or legal conclusions,
         have been reviewed by such counsel and are accurate summaries and
         fairly present the information disclosed therein.




                                       21



                  (xii) To the knowledge of such counsel after due inquiry, the
         Company is not, nor with the giving of notice or lapse of time or both
         would be, in default in the performance or observance of any material
         obligation, agreement, covenant or condition contained in any
         indenture, mortgage, deed of trust, loan agreement, lease or other
         agreement or instrument to which the Company is a party or by which the
         Company is bound or to which any of the properties or assets of the
         Company is subject, or in violation of any statutes, laws, ordinances
         or governmental rules or regulations or any orders or decrees to which
         it is subject, including, without limitation, Section 13 of the 1934
         Act, which default or violation would have a Material Adverse Effect.

                  (xiii) To the knowledge of such counsel after due inquiry,
         there are no contracts or documents of a character required to be
         described in the Registration Statement or the Prospectus or to be
         filed as an exhibit to the Registration Statement which are not
         described or filed as required.

                  (xiv) The Company is not and, after giving effect to the
         offering and sale of the Shares and application of the net proceeds
         from such sale as described in the Prospectus under the caption "Use of
         Proceeds," will not be an "investment company" or an entity
         "controlled" by an "investment company," as such terms are defined in
         the 1940 Act.

                  (xv) To the knowledge of such counsel after due inquiry and
         except as disclosed in the Prospectus, no holder of any security of the
         Company has any right to require registration of shares of Common Stock
         or any other security of the Company because of the filing of the
         Registration Statement or the consummation of the transactions
         contemplated hereby and, except as disclosed in the Prospectus, no
         person has the right to require registration under the 1933 Act of any
         shares of Common Stock or other securities of the Company.

         Such counsel shall confirm that during the preparation of the
Registration Statement and Prospectus, such counsel participated in conferences
with the Representatives and their counsel and with officers and representatives
of the Company and its independent accountants, at which conferences the
contents of the Registration Statement and the Prospectus were discussed,
reviewed and revised. On the basis of the information which was developed in the
course thereof, considered in light of such counsel's understanding of
applicable law and the experience gained by such counsel through their practice
thereunder, without such counsel assuming responsibility for the accuracy and
completeness of such statements except to the extent


                                       22




expressly provided above, such counsel shall confirm that nothing came to their
attention that would lead them to believe that either the Registration Statement
(including any document filed under the 1934 Act and deemed incorporated by
reference therein), as of the Effective Date, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or the Prospectus or any amendment
or supplement thereto (including any document filed under the 1934 Act and
deemed incorporated by reference therein) as of its respective issue date and as
of the Closing Date, or, if applicable, the Option Closing Date, contained or
contains any untrue statement of a material fact or omitted or omits to state a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading (other than the financial statements or other financial data as to
which such counsel need express no opinion).

         In rendering the foregoing opinion, such counsel may rely, (1) as to
matters involving laws of any jurisdiction other than Missouri or the United
States, upon opinions addressed to the Underwriters of other counsel
satisfactory to them and Bryan Cave LLP, and (2) as to all matters of fact, upon
certificates and written statements of the executive officers of, and
accountants for, the Company, provided, in either case, that such counsel shall
state in their opinion that they and the Underwriters are justified in relying
thereon.

         (d) On the Closing Date, you shall have received the opinion of Gilmore
& Bell, P.C., counsel to the Selling Shareholders, addressed to you and dated
the Closing Date, to the effect that:

                  (i) The Custody Agreement and Power of Attorney has been duly
         executed and delivered by such Selling Shareholders and constitutes a
         legal, valid and binding agreement of such Selling Shareholders
         enforceable in accordance with its terms.

                  (ii) This Agreement has been duly authorized, executed and
         delivered on behalf of the Selling Shareholders, and is a legal, valid
         and binding obligation of the Selling Shareholders enforceable against
         the Selling Shareholders in accordance with its terms, except as
         enforceability may be limited by the Exceptions and except to the
         extent the enforceability of the indemnification and contribution
         provisions of Section 7 of the Agreement may be limited by public
         policy considerations as expressed in the 1933 Act as construed by
         courts of competent jurisdiction. The execution and delivery of this
         Agreement and the Custody Agreement and Power of Attorney by such
         Selling Shareholders, the consummation by such Selling Shareholders of
         the transactions contemplated herein and therein and the fulfillment by
         such Selling Shareholders of the terms hereof and thereof will not
         result in a breach or violation of any terms or provisions of, or
         constitute a default under, or result in the creation or imposition of
         any lien, charge or encumbrance upon any of the properties or assets of
         such Selling Shareholders under any bond, debenture, note or other
         evidence of indebtedness or any indenture, mortgage, deed of trust,
         sale and leaseback arrangement, joint venture or any other agreement or
         instrument known to such counsel to which any such Selling Shareholder
         is a party, or by which it is bound or to which any of the properties
         or assets of any such Selling



                                       23



         Shareholder is subject (or any certificate or articles of incorporation
         or bylaws, partnership agreement, trust document or articles of
         association of any such Selling Shareholder, as applicable), or any
         order or decree, or statute, law, ordinance, rule or regulation
         applicable to any such Selling Shareholder of any court or of any
         governmental agency, authority or body having jurisdiction over any
         such Selling Shareholder or its properties.

                  (iii) Each Selling Shareholder has full legal right, power and
         authority, and any approval required by law (other than as required by
         the 1933 Act, the NASD and state securities and Blue Sky Laws) to sell,
         assign, transfer and deliver the Shares to be sold by such Selling
         Shareholder.

                  (iv) No consent, approval, authorization or order of any
         court, or governmental agency or body is required for consummation of
         the transactions contemplated by this Agreement in connection with the
         Shares to be sold by each Selling Shareholder hereunder except such as
         may be required under the 1933 Act or the 1933 Act Rules and
         Regulations or as may be required by the NASD or under state securities
         laws.

                  (v) Each Selling Shareholder has good and valid
         title to the Shares being sold by such Selling Shareholder hereunder,
         free and clear of any "adverse claims" as defined in Section 400.8-102
         of the Missouri UCC other than pursuant to this Agreement and the
         Custody Agreement and Power of Attorney, and has transferred to the
         Underwriters good and valid title to the Shares being sold by such
         Selling Shareholder on the Closing Date, free and clear of any
         adverse claims other than pursuant to this Agreement and the Custody
         Agreement and Power of Attorney.

         In rendering the foregoing opinion, such counsel may rely, (1) as to
matters involving laws of any jurisdiction other than Missouri or the United
States, upon opinions addressed to the Underwriters of other counsel
satisfactory to them and Bryan Cave LLP, and (2) as to all matters of fact, upon
certificates and written statements of the Selling Shareholders, provided, in
either case, that such counsel shall state in their opinion that they and the
Underwriters are justified in relying thereon.

         (e) You shall have received on the Closing Date (and, if applicable,
the Option Closing Date), from Bryan Cave LLP, counsel to the Underwriters, such
opinion or opinions, dated the Closing Date (and, if applicable, the Option
Closing Date) with respect to such matters as you may reasonably require; and
the Company and Selling Shareholders shall have furnished to such counsel such
documents as they reasonably request for the purposes of enabling them to review
or pass on the matters referred to in this Section 6 and in order to evidence
the accuracy, completeness and satisfaction of the representations, warranties
and conditions herein contained.

         (f) You shall have received at or prior to the Closing Date from Bryan
Cave LLP a memorandum or memoranda, in form and substance satisfactory to you,
with respect to the



                                       24



qualification for offering and sale by the Underwriters of the Shares under
state securities or Blue Sky laws of such jurisdictions as the Underwriters may
have designated to the Company.

         (g) On the business day immediately preceding the date of this
Agreement and on the Closing Date (and, if applicable, the Option Closing Date),
you shall have received from Deloitte & Touche LLP, a letter or letters, dated
the date of this Agreement and the Closing Date (and, if applicable, the Option
Closing Date), respectively, in form and substance satisfactory to you,
confirming that they are independent public accountants with respect to the
Company within the meaning of the 1933 Act and the 1933 Act Rules and
Regulations, and stating to the effect set forth in Schedule III hereto.

         (h) Except as contemplated in the Prospectus, (i) the Company shall not
have sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus any loss or interference
with its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree; and (ii) subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, the
Company shall not have incurred any liability or obligation, direct or
contingent, or entered into any transactions, and there shall not have been any
change in the capital stock or short-term or long-term debt of the Company or
any change, or any development involving or which might reasonably be expected
to involve a prospective change in the condition (financial or other), net
worth, business, affairs, management, prospects, results of operations or cash
flow of the Company, the effect of which, in any such case described in clause
(i) or (ii), is in your judgment so material or adverse as to make it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Shares being delivered on such Closing Date (and, if applicable, the
Option Closing Date) on the terms and in the manner contemplated in the
Prospectus.

         (i) There shall not have occurred any of the following: (i) a
suspension or material limitation in trading in securities generally on the New
York Stock Exchange or the American Stock Exchange or The Nasdaq National Market
or the establishing on such exchanges or market by the SEC or by such exchanges
or markets of minimum or maximum prices which are not in force and effect on the
date hereof; (ii) a suspension or material limitation in trading in the
Company's securities on The Nasdaq National Market or the establishing on such
market by the SEC or by such market of minimum or maximum prices which are not
in force and effect on the date hereof; (iii) a general moratorium on commercial
banking activities declared by either federal or any state authorities; (iv) the
outbreak or escalation of hostilities involving the United States or the
declaration by the United States of a national emergency or war, which in your
judgment makes it impracticable or inadvisable to proceed with the public
offering or the delivery of the Shares in the manner contemplated in the
Prospectus; or (v) any calamity or crisis, change in national, international or
world affairs, act of God, change in the international or domestic markets, or
change in the existing financial, political or economic conditions in the United
States or elsewhere, which in your judgment makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the Shares in
the manner contemplated in the Prospectus.



                                       25




         (j) You shall have received certificates, dated the Closing Date (and,
if applicable, the Option Closing Date) and signed by the President and the
Chief Financial Officer of the Company, in their capacities as such, stating
that:

                  (i) the condition set forth in Section 6(a) has been fully
         satisfied;

                  (ii) they have carefully examined the Registration Statement
         and the Prospectus as amended or supplemented and all documents
         incorporated by reference therein and nothing has come to their
         attention that would lead them to believe that either the Registration
         Statement or the Prospectus, or any amendment or supplement thereto or
         any documents incorporated by reference therein as of their respective
         effective, issue or filing dates, contained, and the Prospectus as
         amended or supplemented and all documents incorporated by reference
         therein and when read together with the documents incorporated by
         reference therein, at such Closing Date, contains any untrue statement
         of a material fact, or omits to state a material fact required to be
         stated therein or necessary in order to make the statements therein, in
         light of the circumstances under which they were made, not misleading;

                  (iii) since the Effective Date, there has occurred no event
         required to be set forth in an amendment or supplement to the
         Registration Statement or the Prospectus which has not been so set
         forth and there has been no document required to be filed under the
         1934 Act and the 1934 Act Rules and Regulations that upon such filing
         would be deemed to be incorporated by reference into the Prospectus
         that has not been so filed;

                  (iv) all representations and warranties made herein by the
         Company are true and correct at such Closing Date, with the same effect
         as if made on and as of such Closing Date, and all agreements herein to
         be performed or complied with by the Company on or prior to such
         Closing Date have been duly performed and complied with by the Company;

                  (v) the Company has not sustained since the date of the latest
         audited financial statements included or incorporated by reference in
         the Prospectus any material loss or interference with its business from
         fire, explosion, flood or other calamity, whether or not covered by
         insurance, or from any labor dispute or court or governmental action,
         order or decree;

                  (vi) except as disclosed in the Prospectus, subsequent to the
         respective dates as of which information is given in the Registration
         Statement and the Prospectus, the Company has not incurred any
         liabilities or obligations, direct or contingent, other than in the
         ordinary course of business, or entered into any transactions not in
         the ordinary course of business, which in either case are material to
         the Company; and there has not been any change in the capital stock or
         material increase in the short-term debt or long-term debt of the
         Company or any material adverse change or any development involving or
         which may reasonably be expected to involve a prospective material
         adverse change, in the condition (financial or other), net worth,
         business, affairs, management, prospects, results of


                                       26



         operations or cash flow of the Company; and there has been no dividend
         or distribution of any kind, paid or made by the Company on any class
         of its capital stock;

                  (vii) there has not been any change or decrease specified in
         paragraph 5(a) of the letter or letters delivered to the Underwriters
         referred to in Section 6(g) above, except those changes and decreases
         that are disclosed therein; and

                  (viii) covering such other matters as you may reasonably
         request.

         (k) You shall have received certificates, dated the Closing Date signed
by each of the Selling Shareholders, stating that (i) all representations and
warranties made herein by such Selling Shareholder are true and correct at such
Closing Date, with the same effect as if made on and as of such Closing Date,
and all agreements herein to be performed or complied with by such Selling
Shareholder on or prior to such Closing Date have been duly performed or
complied with by such Selling Shareholder and (ii) covering such other matters
as you may reasonably request.

         (l) The Company and each of the Selling Shareholders shall not have
failed, refused, or been unable, at or prior to the Closing Date (and, if
applicable, the Option Closing Date) to have performed any agreement on their
part to be performed or any of the conditions herein contained and required to
be performed or satisfied by them at or prior to such Closing Date.

         (m) The Company and the Selling Shareholders shall have furnished to
you at the Closing Date (and, if applicable, the Option Closing Date) such
further information, opinions, certificates, letters and documents as you may
have reasonably requested.

         (n) The Shares shall have been approved for inclusion upon official
notice of issuance on The Nasdaq National Market.

         (o) You shall have received duly and validly executed letter agreements
referred to in Section 5(m) hereof.

         All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are satisfactory in form and
substance to you and to Bryan Cave LLP, counsel for the several Underwriters.
The Company and Selling Shareholders will furnish you with such signed and
conformed copies of such opinions, certificates, letters and documents as you
may request.

         If any of the conditions specified above in this Section 6 shall not
have been satisfied at or prior to the Closing Date (and, if applicable, the
Option Closing Date) or waived by you in writing, this Agreement may be
terminated by you on notice to the Company and the Selling Shareholders.

         7. INDEMNIFICATION AND CONTRIBUTION. (a) The Company will indemnify and
hold harmless each Underwriter for and against any losses, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the 1933 Act or otherwise, insofar as such



                                       27



losses, damages or liabilities (or actions or claims in respect thereof) arise
out of or are based upon (i) an untrue statement or alleged untrue statement of
a material fact contained in any Preliminary Prospectus, the Registration
Statement, the Prospectus or any other prospectus relating to the Shares, or any
amendment or supplement thereto, or in any blue sky application or other
document executed by the Company or based on any information furnished in
writing by the Company, filed in any state or other jurisdiction in order to
qualify any or all of the Shares under the securities laws thereof (the "Blue
Sky Application"), or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any legal or
other expenses incurred by such Underwriter in connection with investigating,
preparing, pursuing or defending against or appearing as a third party witness
in connection with any such loss, damage, liability or action or claim,
including, without limitation, any investigation or proceeding by any
governmental agency or body, commenced or threatened, including the reasonable
fees and expenses of counsel to the indemnified party, as such expenses are
incurred (including such losses, damages, liabilities or expenses to the extent
of the aggregate amount paid in settlement of any such action or claim, provided
that (subject to Section 7(d) hereof) any such settlement is effected with the
written consent of the Company); PROVIDED, HOWEVER, that the Company shall not
be liable in any such case to the extent, but only to the extent, that any such
loss, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any Preliminary
Prospectus, the Registration Statement, the Prospectus or any other prospectus
relating to the Shares, or any such amendment or supplement, in reliance upon
and in conformity with written information relating to the Underwriter furnished
to the Company by you or by any Underwriter through you, expressly for use in
the preparation thereof (as provided in Section 14 hereof).

         (b) Each Selling Shareholder will indemnify and hold harmless each
Underwriter for and against any losses, damages or liabilities to which the
Company may become subject, under the 1933 Act or otherwise, insofar as such
losses, damages or liabilities (or actions or claims in respect thereof) arise
out of or are based upon (i) an untrue statement or alleged untrue statement of
a material fact contained in any Preliminary Prospectus, the Registration
Statement, the Prospectus or any other prospectus relating to the Shares, or any
amendment or supplement thereto, or any Blue Sky Application, or (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in any
Preliminary Prospectus, the Registration Statement, the Prospectus or any other
prospectus relating to the Shares, or any such amendment or supplement, or any
Blue Sky Application, in reliance upon and in conformity with written
information furnished to the Company or any Underwriter by such Selling
Shareholder specifically for use in the preparation thereof, and will reimburse
each Underwriter for any legal or other expenses incurred by such Underwriter in
connection with investigating, preparing, pursuing or defending against or
appearing as a third party witness in connection with any such loss, damage,
liability or action or claim, including, without limitation, any investigation
or proceeding by any governmental agency or body, commenced or threatened,
including the reasonable fees and expenses of counsel to the indemnified party,
as such expenses are incurred (including such losses, damages, liabilities or
expenses to the extent of the aggregate



                                       28




amount paid in settlement of any such action or claim, provided that (subject to
Section 7(d) hereof) any such settlement is effected with the written consent of
such Selling Shareholder).

         (c) Each Underwriter, severally and not jointly, will indemnify and
hold harmless the Company and each Selling Shareholder for and against any
losses, damages or liabilities to which the Company may become subject, under
the 1933 Act or otherwise, insofar as such losses, damages or liabilities (or
actions or claims in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement, the Prospectus or any other
prospectus relating to the Shares, or any amendment or supplement thereto, or
any Blue Sky Application, or arise out of are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in any Preliminary
Prospectus, the Registration Statement, the Prospectus or any other prospectus
relating to the Shares, or any such amendment or supplement, or any Blue Sky
Application, in reliance upon and in conformity with written information
relating to the Underwriter furnished to the Company by you or by any
Underwriter through you, expressly for use in the preparation thereof (as
provided in Section 14 hereof), and will reimburse the Company or any such
Selling Shareholder for any legal or other expenses incurred by the Company or
any such Selling Shareholder, as the case may be, in connection with
investigating or defending any such action or claim as such expenses are
incurred (including such losses, damages, liabilities or expenses to the extent
of the aggregate amount paid in settlement of any such action or claim, provided
that (subject to Section 7(d) hereof) any such settlement is effected with the
written consent of the Underwriters).

         (d) Promptly after receipt by an indemnified party under Section 7(a),
7(b) or 7(c) hereof of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against an
indemnifying party under Section 7(a), 7(b) or 7(c) hereof, notify each such
indemnifying party in writing of the commencement thereof, but the failure so to
notify such indemnifying party shall not relieve such indemnifying party from
any liability except to the extent that it has been prejudiced in any material
respect by such failure or from any liability that it may have to any such
indemnified party otherwise than under Section 7(a), 7(b) or 7(c) hereof. In
case any such action shall be brought against any such indemnified party and it
shall notify each indemnifying party of the commencement thereof, each such
indemnifying party shall be entitled to participate therein and, to the extent
that it shall wish, jointly with any other indemnifying party under Section
7(a), 7(b) or 7(c) hereof similarly notified, to assume the defense thereof,
with counsel satisfactory to such indemnified party (who shall not, except with
the consent of such indemnified party, be counsel to such indemnifying party),
and, after notice from such indemnifying party to such indemnified party of its
election so to assume the defense thereof, such indemnifying party shall not be
liable to such indemnified party under Section 7(a), 7(b) or 7(c) hereof for any
legal expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. The indemnified party shall have the
right to employ its own counsel in any such action, but the fees and expenses of
such counsel shall be at the expense of such indemnified party unless (i) the
employment of counsel by such



                                       29




indemnified party at the expense of the indemnifying party has been authorized
by the indemnifying party, (ii) the indemnified party shall have been advised by
such counsel that there may be a conflict of interest between the indemnifying
party and the indemnified party in the conduct of the defense, or certain
aspects of the defense, of such action (in which case the indemnifying party
shall not have the right to direct the defense of such action with respect to
those matters or aspects of the defense on which a conflict exists or may exist
on behalf of the indemnified party) or (iii) the indemnifying party shall not in
fact have employed counsel reasonably satisfactory to such indemnified party to
assume the defense of such action, in any of which events such fees and expenses
to the extent applicable shall be borne, and shall be paid as incurred, by the
indemnifying party. No such indemnifying party shall, without the written
consent of such indemnified party, effect the settlement or compromise of, or
consent to the entry of any judgment with respect to, any pending or threatened
action or claim in respect of which indemnification or contribution may be
sought hereunder (whether or not such indemnified party is an actual or
potential party to such action or claim) unless such settlement, compromise or
judgment (A) includes an unconditional release of such indemnified party from
all liability arising out of such action or claim and (B) does not include a
statement as to or an admission of fault, culpability or a failure to act, by or
on behalf of any such indemnified party. In no event shall such indemnifying
parties be liable for the fees and expenses of more than one counsel, including
any local counsel, for all such indemnified parties in connection with any one
action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances.

         (e) If the indemnification provided for in this Section 7 is
unavailable to or insufficient to indemnify or hold harmless an indemnified
party under Section 7(a), 7(b) or 7(c) hereof in respect of any losses, damages
or liabilities (or actions or claims in respect thereof) referred to therein,
then each indemnifying party under Section 7(a), 7(b) or 7(c) hereof shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, damages or liabilities (or actions or claims in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company and the Selling Shareholders, on the one hand, and the
Underwriters, on the other hand, from the offering of the Shares. If, however,
the allocation provided by the immediately preceding sentence is not permitted
by applicable law or if the indemnified party failed to give the notice required
under Section 7(d) hereof and such indemnifying party was prejudiced in a
material respect by such failure, then each such indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault, as applicable, of the Company and the Selling Shareholders,
on the one hand, and the Underwriters, on the other hand, in connection with the
statements or omissions that resulted in such losses, damages or liabilities (or
actions or claims in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by, as applicable, the Company
and the Selling Shareholders, on the one hand, and the Underwriters, on the
other hand, shall be deemed to be in the same proportion as the total net
proceeds from such offering (before deducting expenses) received by the Company
and the Selling Shareholders bear to the total underwriting discounts and
commissions received by the Underwriters. The relative fault, as applicable, of
the Company or the Selling Shareholders, on the one hand, and the Underwriters,
on the other hand, shall be determined by reference to, among other things,
whether the untrue or


                                       30



alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or the
Selling Shareholders, on the one hand, or the Underwriters, on the other hand,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company, the
Selling Shareholders and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7(e) were determined by PRO
RATA allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to above in this Section 7(e). The amount paid
or payable by such an indemnified party as a result of the losses, damages or
liabilities (or actions or claims in respect thereof) referred to above in this
Section 7(e) shall be deemed to include any legal or other expenses incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7(e), no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Shares underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages that
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The obligations of the Underwriters in this
Section 7(e) to contribute are several in proportion to their respective
underwriting obligations with respect to the Shares and not joint.

         (f) The obligations of the Company and the Selling Shareholders under
this Section 7 shall be in addition to any liability that the Company and the
Selling Shareholders may otherwise have and shall extend, upon the same terms
and conditions, to each officer, director, employee, agent or other
representative and to each person, if any, who controls any Underwriter within
the meaning of the 1933 Act; and the obligations of the Underwriters under this
Section 7 shall be in addition to any liability that the respective Underwriters
may otherwise have and shall extend, upon the same terms and conditions, to each
officer and director of the Company who signed the Registration Statement and to
each person, if any, who controls the Company within the meaning of the 1933 Act
and to each person, if any, who controls the Selling Shareholders within the
meaning of the 1933 Act.

         (g) The parties to this Agreement hereby acknowledge that they are
sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions hereof, including, without limitation, the
provisions of this Section 7, and are fully informed regarding such provisions.
They further acknowledge that the provisions of this Section 7 fairly allocate
the risks in light of the ability of the parties to investigate the Company and
its business in order to assure that adequate disclosure is made in the
Registration Statement, any Preliminary Prospectus, the Prospectus, and any
supplement or amendment thereof, as required by the 1933 Act.

         8. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. The respective
representations, warranties, agreements and statements of the Company and the
Selling Shareholders and the Underwriters, as set forth in this Agreement or
made by or on behalf of



                                       31




them, respectively, pursuant to this Agreement, shall remain operative and in
full force and effect regardless of any investigation (or any statement as to
the results thereof) made by or on behalf of any Underwriter or any controlling
person of any Underwriter, the Company or any of its officers, directors or any
controlling persons, or the Selling Shareholders, and shall survive delivery of
and payment for the Shares hereunder.

         9. SUBSTITUTION OF UNDERWRITERS. (a) If any Underwriter shall default
in its obligation to purchase the Shares which it has agreed to purchase
hereunder, you may in your discretion arrange for you or another party or other
parties to purchase such Shares on the terms contained herein. If within
thirty-six hours after such default by any Underwriter you do not arrange for
the purchase of such Shares, then the Company and the Selling Shareholders shall
be entitled to a further period of thirty-six hours within which to procure
another party or parties reasonably satisfactory to you to purchase such Shares
on such terms. In the event that, within the respective prescribed periods, you
notify the Company and the Selling Shareholders that you have so arranged for
the purchase of such Shares, or the Company and the Selling Shareholders notify
you that they have so arranged for the purchase of such Shares, you or the
Company and the Selling Shareholders shall have the right to postpone the
Closing Date for a period of not more than seven days, in order to effect
whatever changes may thereby be made necessary in the Registration Statement or
the Prospectus, or in any other documents or arrangements, and the Company
agrees to file promptly any amendments to the Registration Statement or the
Prospectus which in your opinion may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any persons substituted
under this Section 9 with like effect as if such person had originally been a
party to this Agreement with respect to such Shares.

         (b) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters made by you and the Company
and the Selling Shareholders as provided in subsection (a) above, the aggregate
number of Shares which remains unpurchased does not exceed one-eleventh of the
total Shares to be sold on the Closing Date, then the Company and the Selling
Shareholders shall have the right to require each non-defaulting Underwriter to
purchase the Shares which such Underwriter agreed to purchase hereunder and, in
addition, to require each non-defaulting Underwriter to purchase its pro rata
share (based on the number of Shares which such Underwriter agreed to purchase
hereunder) of the Shares of such defaulting Underwriter or Underwriters for
which such arrangements have not been made; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.

         (c) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters made by you and the Company
and the Selling Shareholders as provided in subsection (a) above, the number of
Shares which remains unpurchased exceeds one-eleventh of the total Shares to be
sold on the Closing Date, or if the Company and the Selling Shareholders shall
not exercise the right described in subsection (b) above to require the
non-defaulting Underwriters to purchase Shares of the defaulting Underwriter or
Underwriters, then this Agreement (or, with respect to the Option Closing Date,
the obligations of the Underwriters to purchase and of the Company and the
Selling Shareholders to sell the Option Shares) shall thereupon terminate,
without liability on the part of any non-defaulting Underwriter or the Company
and the Selling Shareholders except for the expenses


                                       32



to be borne by the Company and the Underwriters as provided in Section 11 hereof
and the indemnity and contribution agreements in Section 7 hereof; but nothing
herein shall relieve a defaulting Underwriter from liability for its default.

         10. EFFECTIVE DATE AND TERMINATION. (a) This Agreement shall become
effective at 1:00 p.m., St. Louis time, on the first business day following the
effective date of the Registration Statement, or at such earlier time after the
effective date of the Registration Statement as you in your discretion shall
first release the Shares for offering to the public; provided, however, that the
provisions of Section 7 and 11 shall at all times be effective. For the purposes
of this Section 10(a), the Shares shall be deemed to have been released to the
public upon release by you of the publication of a newspaper advertisement
relating to the Shares or upon release of telegrams, facsimile transmissions or
letters offering the Shares for sale to securities dealers, whichever shall
first occur.

         (b) This Agreement may be terminated by you at any time before it
becomes effective in accordance with Section 10(a) by notice to the Company and
the Selling Shareholders; provided, however, that the provisions of this Section
10 and of Section 7 and Section 11 hereof shall at all times be effective. In
the event of any termination of this Agreement pursuant to Section 9 or this
Section 10(b) hereof, the Company and the Selling Shareholders shall not then be
under any liability to any Underwriter except as provided in Section 7 or
Section 11 hereof.

         (c) This Agreement may be terminated by you at any time at or prior to
the Closing Date by notice to the Company and the Selling Shareholders if any
condition specified in Section 6 hereof shall not have been satisfied on or
prior to the Closing Date. Any such termination shall be without liability of
any party to any other party except as provided in Sections 7 and 11 hereof.

         (d) This Agreement also may be terminated by you, by notice to the
Company, as to any obligation of the Underwriters to purchase the Option Shares,
if any condition specified in Section 6 hereof shall not have been satisfied at
or prior to the Option Closing Date or as provided in Section 9 of this
Agreement.

         If you terminate this Agreement as provided in Sections 10(b), 10(c) or
10(d), you shall notify the Company and the Selling Shareholders by telephone or
telegram, confirmed by letter.

         11. COSTS AND EXPENSES. The Company, whether or not the transactions
contemplated hereby are consummated or this Agreement is prevented from
becoming effective under Section 10 hereof or is terminated, will bear and
pay the costs and expenses incident to the registration of the Shares and
public offering thereof, including, without limitation, (a) all expenses
(including stock transfer taxes) incurred in connection with the delivery to
the several Underwriters of the Shares, the filing fees of the SEC, the fees
and expenses of the Company's counsel and accountants and counsel to the
Selling Shareholders, (b) the preparation, printing, filing, delivery and
shipping of the Registration Statement, each Preliminary Prospectus, the
Prospectus and any amendments or supplements thereto (except as otherwise
expressly provided in Section 5(d) hereof) and the printing, delivery and
shipping of this Agreement and other underwriting documents, including

                                       33




the Agreement Among Underwriters, the Selected Dealer Agreement,
Underwriters' Questionnaires and Powers of Attorney and Blue Sky Memoranda,
and any instruments or documents related to any of the foregoing, (c) the
furnishing of copies of such documents (except as otherwise expressly
provided in Section 5(d) hereof) to the Underwriters, (d) the registration or
qualification of the Shares for offering and sale under the securities laws
of the various states and other jurisdictions, including the fees and
disbursements of counsel to the Underwriters relating to such registration or
qualification and in connection with preparing any Blue Sky Memoranda or
related analysis, (e) the filing fees of the NASD (if any) and fees and
disbursements of counsel to the Underwriters relating to any review of the
offering by the NASD, (f) all printing and engraving costs related to
preparation of the certificates for the Shares, including transfer agent and
registrar fees, (g) all fees and expenses relating to the authorization of
the Shares for inclusion on The Nasdaq National Market, (h) all travel
expenses, including air fare and accommodation expenses, of representatives
of the Company in connection with the offering of the Shares, and (i) all of
the other costs and expenses incident to the performance by the Company of
the registration and offering of the Shares; provided, that each Selling
Shareholder, whether or not the transactions contemplated hereby are
consummated or this Agreement is prevented from becoming effective under
Section 10 hereof or is terminated, will pay or cause to be paid all costs
and expenses incident to the performance of such Selling Shareholder's
obligations hereunder which are not otherwise specifically provided for in
this Section; including (i) such Selling Shareholder's pro rata share of the
fees and expenses of the Attorney-in-fact and the Custodian, and (ii) all
expenses (including stock transfer taxes) incident to the sale and delivery
of the Shares to be sold by such Selling Shareholder to the Underwriters
hereunder; provided further, that the Underwriters will bear and pay the fees
and expenses of the Underwriters' counsel (except as provided in this Section
11), the Underwriters' out-of-pocket expenses, and any advertising costs and
expenses incurred by the Underwriters incident to the public offering of the
Shares.

         If this Agreement is terminated by you in accordance with the
provisions of Section 10(c), the Company shall reimburse the Underwriters for
all of their out-of-pocket expenses, including the fees and disbursements of
counsel to the Underwriters.

         12. DEFAULT OF SELLING SHAREHOLDERS. Failure or refusal by any of the
Selling Shareholders to sell and deliver on the Closing Date the Shares agreed
to be sold and delivered by such Selling Shareholder shall in no manner relieve
the other Selling Shareholders or the Company of their respective obligations
under this Agreement. If any Selling Shareholder should fail or refuse to sell
and deliver his Shares, the remaining Selling Shareholders shall have the right
hereby granted to increase, pro rata or otherwise, the number of Shares to be
sold by them hereunder to the total number of Shares to be sold by all Selling
Shareholders as set forth in Schedule I. If the remaining Selling Shareholders
do not fully exercise the right to increase the number of Shares to be sold by
them, the Underwriters, at your option, will have the right to elect to purchase
or not to purchase the Shares to be sold by the Company and the remaining
Selling Shareholders. In the event the Underwriters purchase the Shares of the
Company and such other


                                       34




Selling Shareholders pursuant to this Section 12, the Closing Date shall be
postponed for a period of not more than seven days in order that the
Registration Statement and Prospectus or other documents may be amended or
supplemented to the extent necessary under the provisions of the 1933 Act and
the 1933 Act Rules and Regulations or under the securities laws of any
jurisdiction. If the Underwriters determine not to purchase the Shares of the
Company and the other Selling Shareholders, if any, this Agreement shall
terminate and neither the Company nor the Underwriters nor any other Selling
Shareholder shall be under any obligation under this Agreement except as
provided in Section 7 hereof and except for the obligation of the Company to pay
for such expenses as are set forth in Section 11 hereof. Nothing herein shall
relieve a defaulting Selling Shareholder from liability for his default or from
liability under Section 7 hereof or for expenses imposed by this Agreement upon
such Selling Shareholder.

         13. NOTICES. All notices or communications hereunder, except as herein
otherwise specifically provided, shall be in writing and if sent to the
Underwriters shall be mailed, delivered, sent by facsimile transmission, or
telegraphed and confirmed c/o A.G. Edwards & Sons, Inc. at One North Jefferson
Avenue, St. Louis, Missouri 63103, Attention: Director, Corporate Finance,
facsimile number (314) ___-____, with a copy to ___________________, Attention:
General Counsel, facsimile number [(314) ___-____], or if sent to the Company
shall be mailed, delivered, sent by facsimile transmission, or telegraphed and
confirmed to the Company at 501 Kansas Avenue, Kansas City, Kansas 66105-1309,
facsimile number (913) 321-6392, or if sent to any Selling Shareholder shall be
mailed, delivered, sent by facsimile transmission or telegraphed and confirmed
to such Selling Shareholder, c/o the Attorney-in-Fact at the address of the
Company. Notice to any Underwriter pursuant to Section 7 shall be mailed,
delivered, sent by facsimile transmission, or telegraphed and confirmed to such
Underwriter's address as it appears in the Underwriters' Questionnaire furnished
in connection with the offering of the Shares or as otherwise furnished to the
Company and the Selling Shareholder.

         14. INFORMATION FURNISHED BY UNDERWRITERS. The statements set forth
in (i) the last paragraph of the cover page of the Prospectus and (ii) the
statements in the first, third and seventh paragraphs under the caption
"Underwriting" in the Prospectus constitute the only information furnished by
or on behalf of the Underwriters through you as such information is referred
to in Section 4(a)(ii) and Section 7 hereof.

         15. PARTIES. This Agreement shall inure to the benefit of and be
binding upon the Underwriters, the Company, the Selling Shareholders and, to
the extent provided in Sections 7 and 8, the officers and directors of the
Company and each person who controls the Company, any Selling Shareholder or
any Underwriter and their respective heirs, executors, administrators,
successors and assigns. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, corporation or other
entity any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision herein contained; this Agreement and all
conditions and provisions hereof being intended to be and being for the sole
and exclusive benefit of the parties hereto and their respective successors
and assigns and said controlling persons and said officers and directors, and
for the benefit of no other person, corporation or


                                       35



other entity. No purchaser of any of the Shares from any Underwriter shall be
construed a successor or assign by reason merely of such purchase.

         In all dealings hereunder, you shall act on behalf of each of the
several Underwriters, and the parties hereto shall be entitled to act and rely
upon any statement, request, notice or agreement on behalf of the Underwriters,
made or given by you jointly or by A.G. Edwards & Sons, Inc. on behalf of you as
the representatives, as if the same shall have been made or given in writing by
the Underwriters; and in all dealings with any Selling Shareholders hereunder,
you and the Company shall be entitled to act and rely upon any statement,
request, notice or agreement on behalf of such Selling Shareholder made or given
by the Attorney-in-fact for such Selling Shareholder.

         16. COUNTERPARTS. This Agreement may be executed by any one or more of
the parties hereto in any number of counterparts, each of which shall be deemed
to be an original, but all such counterparts shall together constitute one and
the same instrument.

         17. PRONOUNS. Whenever a pronoun of any gender or number is used
herein, it shall, where appropriate, be deemed to include any other gender and
number.

         18. TIME OF ESSENCE. Time shall be of the essence of this Agreement.

         19. APPLICABLE LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Missouri, without giving effect to
the choice of law or conflict of laws principles thereof.



                                       36



         If the foregoing is in accordance with your understanding, please so
indicate in the space provided below for that purpose, whereupon this letter
shall constitute a binding agreement among the Company, each of the Selling
Shareholders and the Underwriters.

                                 EPIQ SYSTEMS, INC.



                                 By: __________________________
                                 Title:  ________________________



                                 Selling Shareholders Named in Schedule I Hereto



                                 By: __________________________
                                 Attorney-in-Fact

Accepted in St. Louis,
Missouri as of the date
first above written, on
behalf of ourselves and
each of the several
Underwriters named in
Schedule II hereto.

A.G. EDWARDS & SONS, INC.
NEEDHAM & COMPANY, INC.
   As Representatives of the Several
   Underwriters named on Schedule II hereto

By:  A.G. EDWARDS & SONS, INC.

By:
   ------------------------
Title:
      ---------------------



                                       37



                                   SCHEDULE I




                                                             NUMBER OF
SELLING SHAREHOLDERS                                         FIRM SHARES
- --------------------                                         ------------

                                                          
Tom W. Olofson                                               420,000
Christopher E. Olofson                                        55,000


Total                                                        475,000






                                       38




                                   SCHEDULE II




                                                             NUMBER OF
NAME                                                         SHARES
- ----                                                         ---------

                                                          
A.G. Edwards & Sons, Inc.
Needham & Company, Inc.

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


Total                                                        1,500,000




                                       39




                                  SCHEDULE III


         Pursuant to Section 6(g) of the Underwriting Agreement, Deloitte &
Touche LLP shall furnish letters to the Underwriters to the effect that:

             (i) They are independent certified public accountants with respect
to the Company within the meaning of the 1933 Act and the 1933 Act Rules and
Regulations thereunder.

             (ii) In their opinion, the financial statements and any
supplementary financial information and schedules audited (and, if applicable,
prospective financial statements and/or pro forma financial information
examined) by them and included or incorporated by reference in the Prospectus or
the Registration Statement comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the 1933 Act Rules and
Regulations with respect to registration statements on Form S-3; and, if
applicable, they have made a review in accordance with standards established by
the American Institute of Certified Public Accountants of the unaudited
consolidated interim financial statements, selected financial data, pro forma
financial information, prospective financial statements and/or condensed
financial statements derived from audited financial statements of the Company
for the periods specified in such letter, as indicated in their reports thereon,
copies of which have been furnished to the Representatives of the Underwriters
(the "Representatives").

             (iii) On the basis of limited procedures, not constituting an audit
in accordance with generally accepted auditing standards, consisting of a
reading of the unaudited financial statements and other information referred to
below, performing the procedures specified by the AICPA for a review of interim
financial information as discussed in SAS No. 71, Interim Financial Information,
on the latest available interim financial statements of the Company, inspection
of the minute books of the Company since the date of the latest audited
financial statements included in the Prospectus, inquiries of officials of the
Company responsible for financial and accounting matters and such other
inquiries and procedures as may be specified in such letter, nothing came to
their attention that caused them to believe that:

                  (A) any material modifications should be made to the unaudited
         statements of consolidated income, statements of consolidated financial
         position and statements of consolidated cash flows included or
         incorporated by reference in the Prospectus for them to be in
         conformity with generally accepted accounting principles, or the
         unaudited statements of consolidated income, statements of consolidated
         financial position and statements of consolidated cash flows included
         in the Prospectus do not comply as to form in all material respects
         with the applicable accounting requirements of the 1933 Act and the
         1933 Act Rules and Regulations.

                  (B) any other unaudited income statement data and balance
         sheet items included or incorporated by reference in the Prospectus do
         not agree with the


                                       40



         corresponding items in the unaudited consolidated financial statements
         from which such data and items were derived, and any such unaudited
         data and items were not determined on a basis substantially consistent
         with the basis for the corresponding amounts in the audited
         consolidated financial statements included or incorporated by reference
         in the Prospectus.

                  (C) the unaudited financial statements which were not included
         or incorporated by reference in the Prospectus but from which were
         derived any unaudited condensed financial statements referred to in
         Clause (A) and any unaudited income statement data and balance sheet
         items included in the Prospectus and referred to in Clause (B) were not
         determined on a basis substantially consistent with the basis for the
         audited consolidated financial statements included or incorporated by
         reference in the Prospectus.

                  (D) any unaudited pro forma consolidated condensed financial
         statements included or incorporated by reference in the Prospectus do
         not comply as to form in all material respects with the applicable
         accounting requirements of the 1933 Act and the 1933 Act Rules and
         Regulations or the pro forma adjustments have not been properly applied
         to the historical amounts in the compilation of those statements.

                  (E) as of a specified date not more than five days prior to
         the date of such letter, there have been any changes in the
         consolidated capital stock or any increase in the consolidated
         long-term debt of the Company, or any decreases in consolidated working
         capital, net current assets or net assets, or any changes in any other
         items specified by the Representatives, in each case as compared with
         amounts shown in the latest balance sheet included or incorporated by
         reference in the Prospectus, except in each case for changes, increases
         or decreases which the Prospectus discloses have occurred or may occur
         or which are described in such letter.

                  (F) for the period from the date of the latest financial
         statements included or incorporated by reference in the Prospectus to
         the specified date referred to in Clause (E) there were any decreases
         in consolidated net revenues or operating profit or the total or per
         share amounts of consolidated net income or any changes in any other
         items specified by the Representatives, in each case as compared with
         the comparable period of the preceding year and with any other period
         of corresponding length specified by the Representatives, except in
         each case for changes, decreases or increases which the Prospectus
         discloses have occurred or may occur or which are described in such
         letter.

         (iv) In addition to the audit referred to in their report(s) included
or incorporated by reference in the Prospectus and the limited procedures,
inspection of minute books, inquiries and other procedures referred to in
paragraph (iii) above, they have carried out certain specified procedures, not
constituting an audit in accordance with generally accepted



                                       41



auditing standards, with respect to certain amounts, percentages and financial
information specified by the Representatives, which are derived from the general
accounting records of the Company for the periods covered by their reports and
any interim or other periods since the latest period covered by their reports,
which appear or are incorporated by reference in the Prospectus, or in Part II
of, or in exhibits and schedules to, the Registration Statement specified by the
Representatives, and have compared certain of such amounts, percentages and
financial information with the accounting records of the Company and have found
them to be in agreement.




                                       42

EX-5.1

                                                                     EXHIBIT 5.1

                          [Gilmore & Bell, P.C. Letterhead]



                                  May 22, 2001


EPIQ Systems, Inc.
501 Kansas Avenue
Kansas City, Kansas  66105

         Re:      EPIQ Systems, Inc. Registration Statement on Form S-3
                  Reg. No. 333-_____ (the "Registration Statement")

Dear Sir/Madam:

         You have requested our opinion as special counsel to EPIQ Systems,
Inc., a Missouri corporation (the "Company"), and certain shareholders (the
"Selling Shareholders") referred to below in connection with the preparation and
filing with the Securities and Exchange Commission under the Securities Act of
1933, as amended, of the Registration Statement relating to the public offering
through A.G. Edwards & Sons, Inc. and Needham & Company, Inc. of 1,025,000
shares of the Company's Common Stock, par value $0.01 per share, offered by the
Company (plus 225,000 shares of Common Stock to cover over-allotments) (the
"Primary Shares"), and 475,000 shares of Common Stock offered by the Selling
Shareholders (the "Secondary Shares").

         In so acting, we have examined originals, or copies certified or
otherwise identified to our satisfaction, and such corporate records, documents,
certificates and other instruments as in our judgment are necessary or
appropriate to enable us to render the opinion expressed below.

         We are of the opinion as follows:

         1. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the state of Missouri.

         2. The Primary Shares, when issued and sold in the manner contemplated
by the Registration Statement, will be legally issued, fully paid and
non-assessable.

         3. The Secondary Shares, when sold by the Selling Shareholders in the
manner contemplated by the Registration Statement, will be legally issued, fully
paid and non-assessable.

         We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the Prospectus that is a part thereof.

                                            Very truly yours,


                                            /s/ Gilmore & Bell, P.C.

EX-23.2

                                                                    EXHIBIT 23.2








INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in this Registration Statement
of EPIQ Systems, Inc. on Form S-3 of our report dated February 23, 2001,
included in and incorporated by reference in the Annual Report on Form 10-K
of EPIQ Systems, Inc. for the year ended December 31, 2000, and to the use of
our report dated February 23, 2001, appearing in the Prospectus, which is
part of this Registration Statement.

We also consent to the reference to us under the heading "Experts" in such
Prospectus.


 /s/ Deloitte & Touche LLP


Kansas City, Missouri
May 21, 2001

EX-23.3

                                                                    EXHIBIT 23.3








INDEPENDENT ACCOUNTANTS' CONSENT


We consent to the incorporation by reference in this Registration Statement
of EPIQ Systems, Inc. on Form S-3 of our report dated February 25, 2000,
included in and incorporated by reference in the Annual Report on Form 10-K
of EPIQ Systems, Inc. for the year ended December 31, 2000, and to the use
of our report dated February 25, 2000, appearing in the Prospectus, which is
part of this Registration Statement.

We also consent to the reference to us under the heading "Experts" in the
Prospectus, which is part of this Registration Statement.


/s/  Baird, Kurtz & Dobson


Kansas City, Missouri
May 22, 2001