10-Q

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FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934

For the Quarterly Period Ended June 30, 2002

Commission File Number 0-22081

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

Missouri	48-1056429
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification Number)
501 Kansas Avenue, Kansas City, Kansas 66105-1300 (Address of principal executive office)
913-621-9500 (Registrant's telephone number)

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days Yes ý    No o

        The number of shares outstanding of registrant's common stock at June 30, 2002:

Class	Outstanding
Common Stock, $.01 par value	14,492,736

EPIQ SYSTEMS, INC.
FORM 10-Q
QUARTER ENDED JUNE 30, 2002

CONTENTS

		Page
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
	Condensed Statements of Income— Three months and six months ended June 30, 2002 and 2001 (Unaudited)	2
	Condensed Balance Sheets— June 30, 2002 (Unaudited) and December 31, 2001	3
	Condensed Statements of Cash Flows— Six months ended June 30, 2002 and 2001 (Unaudited)	5
	Notes to Condensed Financial Statements (Unaudited)	6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		11
Item 3. Quantitative and Qualitative Disclosures about Market Risk		16
PART II—OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders		17
Item 6. Exhibits and Reports on Form 8-K		17
Signatures		18

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PART I—FINANCIAL INFORMATION

ITEM 1.    Financial Statements.

EPIQ SYSTEMS, INC.
CONDENSED STATEMENTS OF INCOME
(Dollars in Thousands, Except Per Share Data)
(Unaudited)

			Three months ended June 30,						Six months ended June 30,
			2002			2001			2002			2001
OPERATING REVENUES			$	9,076		$	7,065		$	18,072		$	14,198
COST OF SALES:
	Cost of products and services			1,797			1,584			3,591			3,171
	Depreciation and amortization			1,190			903			2,320			1,731
		Total cost of sales		2,987			2,487			5,911			4,902
GROSS PROFIT				6,089			4,578			12,161			9,296
OPERATING EXPENSES:
	General and administrative			2,917			2,465			5,880			5,139
	Depreciation			136			96			257			187
	Amortization-goodwill/intangibles			116			336			233			676
		Total operating expenses		3,169			2,897			6,370			6,002
INCOME FROM OPERATIONS				2,920			1,681			5,791			3,294
INTEREST INCOME (EXPENSE):
	Interest income			115			115			250			270
	Interest expense			(18	)		(26	)		(40	)		(58	)
		Net interest income (expense)		97			89			210			212
INCOME BEFORE INCOME TAXES				3,017			1,770			6,001			3,506
PROVISION FOR INCOME TAXES				1,141			715			2,272			1,416
NET INCOME			$	1,876		$	1,055		$	3,729		$	2,090
NET INCOME PER SHARE INFORMATION:
	Basic		$	0.13		$	0.08		$	0.26		$	0.16
	Diluted		$	0.13		$	0.08		$	0.25		$	0.16
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
	Basic			14,446			12,736			14,428			12,697
	Diluted			14,951			13,394			14,974			13,315

See accompanying notes to financial statements.

2

EPIQ SYSTEMS, INC.
CONDENSED BALANCE SHEETS
(Dollars in Thousands, Except Share and Per Share Data)

			June 30, 2002		December 31, 2001
			(Unaudited)
ASSETS:
CURRENT ASSETS:
	Cash and cash equivalents		$	25,176	$	25,306
	Accounts receivable, trade, less allowance for doubtful accounts of $31 and $31, respectively			7,610		4,498
	Prepaid expenses and other			553		400
	Deferred income taxes			216		194
		Total Current Assets		33,555		30,398
PROPERTY AND EQUIPMENT:
	Land			192		192
	Building and improvements			5,527		3,419
	Furniture and fixtures			1,030		1,001
	Computer equipment			11,397		10,882
	Office equipment			414		398
	Transportation equipment			2,518		2,518
				21,078		18,410
	Less accumulated depreciation and amortization			8,771		7,473
		Total Property and Equipment, net		12,307		10,937
SOFTWARE DEVELOPMENT COSTS, net				4,278		4,126
OTHER ASSETS:
	Goodwill			21,054		21,224
	Other intangibles, net of accumulated amortization of $786 and $553, respectively			3,664		3,897
	Other			61		66
		Total Other Assets, net		24,779		25,187
			$	74,919	$	70,648

3

EPIQ SYSTEMS, INC.
CONDENSED BALANCE SHEETS
(Dollars in Thousands, Except Share and Per Share Data)

			June 30, 2002		December 31, 2001
			(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
	Accounts payable		$	1,010	$	1,164
	Accrued expenses			931		1,402
	Income taxes payable			725		222
	Deferred revenue			986		783
	Current portion of deferred acquisition price			221		236
	Current maturities of long-term obligations			98		103
		Total Current Liabilities		3,971		3,910
DEFERRED REVENUE				88		100
LONG-TERM OBLIGATIONS (less current portion)				112		163
DEFERRED ACQUISITION PRICE (less current portion)				223		431
DEFERRED INCOME TAXES				1,312		900
		Total Liabilities		5,706		5,504
STOCKHOLDERS' EQUITY:
	Preferred stock, $1 par value; 2,000,000 shares authorized; none issued and outstanding			—		—
	Common stock, $.01 par value; authorized 50,000,000 shares; issued and outstanding—14,492,736 and 14,398,929 shares at June 30, 2002 and December 31, 2001, respectively			145		144
	Additional paid-in capital			55,092		54,753
	Retained earnings			13,976		10,247
		Total Stockholders' Equity		69,213		65,144
			$	74,919	$	70,648

See accompanying notes to financial statements.

4

EPIQ SYSTEMS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)

				Six Months Ended June 30,
				2002			2001
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income			$	3,729		$	2,090
	Adjustments to reconcile net income to net cash from operating activities:
		Provision for deferred income taxes			390			279
		Depreciation and amortization			1,768			1,507
		Amortization of software development costs			809			411
		Amortization of goodwill and other intangible assets			233			676
		Loss on disposal or sale of equipment			80			78
		Accretion of discount on deferred acquisition price			27			33
	Changes in operating assets and liabilities acquisition:
		Accounts receivable			(3,112	)		(2,034	)
		Prepaid expenses and other assets			(149	)		1
		Accounts payable and accrued expenses			(625	)		(499	)
		Deferred revenue			191			(252	)
		Income taxes, including tax benefit from exercise of stock options			589			(272	)
			Net cash from operating activities		3,930			2,018
CASH FLOWS FROM INVESTING ACTIVITIES:
	Purchase of property and equipment				(3,277	)		(3,001	)
	Proceeds from sale of property and equipment				60			10
	Software development costs				(961	)		(999	)
	Net sales of short-term investments				170			1,250
			Net cash from investing activities		(4,008	)		(2,740	)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Net repayments of borrowings on line-of-credit				—			(3,575	)
	Principal payments under capital lease obligations				(55	)		(67	)
	Payments on deferred acquisition price				(250	)		(250	)
	Net proceeds from stock issuance				—			22,675
	Proceeds from exercise of stock options and warrants				254			534
			Net cash from financing activities		(51	)		19,317
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS					(130	)		18,595
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD					25,306			15,128
CASH AND CASH EQUIVALENTS, END OF PERIOD				$	25,176		$	33,723
Supplemental disclosures of cash flow information:
	Interest paid			$	40		$	58
	Income taxes paid			$	1,293		$	1,278

See accompanying notes to financial statements.

5

EPIQ SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)

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

Nature of Operations

        EPIQ Systems, 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.

Comprehensive Income

        The Company has no components of other comprehensive income, therefore comprehensive income equals net income.

Recent Accounting Pronouncements

        In August 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations. SFAS No. 143 requires the recognition of a liability if a company has a legal or contractual financial obligation in connection with the retirement of a tangible long-lived asset. The Company expects to adopt SFAS No. 143 in the fiscal year beginning January 1, 2003 and is currently assessing its effect on the Company's financial position, results of operations and cash flows.

        In October 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS No. 144 modifies the financial accounting and reporting for long-lived assets to be disposed of by sale and it broadens the presentation of discontinued operations to include more disposal transactions. The Company's adoption of this standard as of January 1, 2002 did not have a material effect on its financial position, results of operations and cash flows.

Reclassification

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

NOTE 2: INTERIM FINANCIAL STATEMENTS

        The accompanying financial statements have been prepared in accordance with the instructions to Form 10-Q of the SEC and in accordance with accounting principles generally accepted in the United States of America ("GAAP") applicable to interim financial statements, and do not include all of the information and footnotes required by GAAP for complete financial statements. The financial statements should be read in conjunction with the Company's audited financial statements and accompanying notes, which are included in its Form 10-K for the year ended December 31, 2001.

        In the opinion of management of the Company, the accompanying financial statements reflect all adjustments necessary (consisting solely of normal recurring adjustments) to present fairly the financial position of the Company as of June 30, 2002 and the results of its operations and its cash flows for the three months and six months then ended.

        The results of operations for the period ended June 30, 2002 are not necessarily indicative of the results to be expected for the entire year.

NOTE 3: NET INCOME PER SHARE

        Basic net income per share is computed based on the weighted average number of common shares outstanding during each period. Diluted net income per share is computed using the weighted average common

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shares and all potentially dilutive common share equivalents outstanding during the period. The computation of earnings per share for the three and six-months ended June 30, 2002 and 2001 is as follows:

		Three Months Ended June 30,				Six Months Ended June 30,
		2002		2001		2002		2001
		(In Thousands, Except Per Share Data)
Net Income		$	1,876	$	1,055	$	3,729	$	2,090
Weighted average common shares outstanding			14,446		12,736		14,428		12,697
Weighted average common share equivalents (stock options and warrants)			505		658		546		618
Weighted average diluted common shares outstanding			14,951		13,394		14,974		13,315
Net Income per share:
	Basic	$	0.13	$	0.08	$	0.26	$	0.16
	Diluted	$	0.13	$	0.08	$	0.25	$	0.16

        Options to purchase 94,000, 87,000 and 2,000 shares of common stock for the three-month period ending June 30, 2002 and six-month periods ended June 30, 2002 and 2001, respectively, were not included in the computation of diluted earnings per share because the exercise price exceeded the average market price. For the three months ended June 30, 2001, the Company had no options outstanding which were anti-dilutive.

NOTE 4: BUSINESS ACQUISITION

        On October 11, 2001, the Company acquired certain assets from ROC Technologies, Inc., the bankruptcy management software subsidiary of Imperial Bancorp. Imperial Bancorp is a subsidiary of Comerica, Inc. ("Comerica"). The acquisition followed Comerica's decision to exit the Chapter 7 trustee business. The purchase price totaled approximately $12,058,000, including acquisition costs of $188,000 and assumed liabilities of $40,000. The net purchase price of $12,017,000 was paid entirely in cash. The purchase price was allocated to property and equipment of $118,000, software of $270,000, trade name of $60,000 and customer contracts of $1,840,000. The software and trade name are being amortized on a straight-line basis over 3 years while the customer contracts are being amortized on a straight-line basis over 10 years. The remainder of the purchase price was allocated to goodwill and totaled $9,770,000. In accordance with SFAS No. 142, the goodwill is not being amortized. In accordance with the terms of the purchase agreement, Comerica paid $170,000 for assets that were originally listed as part of the assets acquired but were not located during the integration process. The amount represents the estimated fair value of the assets. The payment is treated as a reduction in the amount of goodwill originally allocated from the total purchase price.

        The acquisition was accounted for using the purchase method of accounting with the operating results included in the Company's statement of income since the date of acquisition.

        Unaudited pro forma operations assuming the purchase acquisition was made at the beginning of the year preceding the acquisition are shown below:

		Three Months Ended June 30, 2001		Six Months Ended June 30, 2001
		(In Thousands, Except Per Share Data)
Operating Revenues		$	7,690	$	15,250
Net Income			527		1,310
Net Income Per Share:
	Basic	$	0.04	$	0.10
	Diluted	$	0.04	$	0.10

        The pro forma information is not necessarily indicative of what would have occurred had the acquisition been completed on that date nor is it necessarily indicative of future operations.

        Pro forma data reflects the difference in amortization expense between the Company and the acquired company as well as a reduction in interest income based on the utilization of interest-bearing investments to purchase the business and interest expense related to borrowings to finance the acquisition.

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NOTE 5: GOODWILL AND INTANGIBLE ASSETS

        In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 141, Business Combinations, and SFAS No. 142 Goodwill and Other Intangible Assets. SFAS No. 141 requires the purchase method of accounting for business combinations initiated after June 30, 2001 and eliminates the pooling-of-interests method. SFAS No. 142, which was adopted by the Company on January 1, 2002, requires, among other things, the discontinuance of amortization of goodwill and certain other intangible assets. In addition, the statement includes provisions for the reclassification of certain existing recognized intangibles as goodwill, reassessment of the useful lives of existing recognized intangibles, reclassification of certain intangibles out of previously reported goodwill and the identification of reporting units for purposes of assessing potential future impairments of goodwill. As required by SFAS No. 142, the Company completed a transitional impairment test which resulted in no impairment of goodwill being required.

        Goodwill, net of amortization at December 31, 2001, was $17,398,000 for bankruptcy and related services and $3,826,000 for infrastructure software. At June 30, 2002, goodwill, net of amortization was $17,228,000 for bankruptcy and related services as a result of a return in purchase price of $170,000 during the first quarter of 2002. Goodwill for infrastructure software remained at $3,826,000.

        In accordance with SFAS No. 142, adopted January 1, 2002, the Company discontinued the amortization of goodwill. Net income and earnings per share for the three and six-months ended June 30, 2001 adjusted to exclude this amortization expense, net of tax, is as follows:

	Three Months Ended June 30, 2001		Six Months Ended June 30, 2001
	(In Thousands, Except Per Share Data)
Reported net income	$	1,055	$	2,090
Goodwill amortization, net of tax		159		322
Adjusted net income	$	1,214	$	2,412
Basic earnings per share	$	0.08	$	0.16
Goodwill amortization, net of tax		0.02		0.03
Adjusted basic earnings per share	$	0.10	$	0.19
Diluted earnings per share	$	0.08	$	0.16
Goodwill amortization, net of tax		0.01		0.02
Adjusted diluted earnings per share	$	0.09	$	0.18

        Intangible assets at June 30, 2002 and December 31, 2001 consisted of the following:

	June 30, 2002			December 31, 2001
	(In Thousands)
Customer contracts	$	3,440		$	3,440
Accumulated amortization		(464	)		(305	)
Customer contracts, net		2,976			3,135
Trade names		710			710
Accumulated amortization		(164	)		(121	)
Trade names, net		546			589
Non-compete agreement		300			300
Accumulated amortization		(158	)		(127	)
Non-compete agreement, net		142			173
Total intangible assets, net	$	3,664		$	3,897

        Amortization expense related to intangible assets other than goodwill was $116,000 and $65,000 in the three months and $233,000 and $131,000 in the six months ended June 30, 2002 and 2001, respectively.

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NOTE 6: 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 infrastructure software (formerly 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 management for court-appointed trustees. The individual bankruptcy segments have similar operating and economic characteristics and have been presented as one aggregated reportable segment. The Company also develops specialty infrastructure software products for the financial services and other markets and provides support for those software products, which has been reported as the second reportable segment.

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

			Three Months Ended June 30,					Six Months Ended June 30,
			2002			2001		2002			2001
			(In Thousands)
Operating revenues:
	Bankruptcy and related services		$	8,621		$	6,554	$	17,130		$	13,206
	Infrastructure software			455			511		942			992
Total operating revenues				9,076			7,065		18,072			14,198
Cost of sales:
	Cost of products and services:
		Bankruptcy and related services		1,566			1,316		3,111			2,629
		Infrastructure software		231			268		480			542
	Depreciation and amortization:
		Bankruptcy and related services		921			802		1,814			1,575
		Infrastructure software		269			101		506			156
Total cost of sales				2,987			2,487		5,911			4,902
Gross profit:
	Bankruptcy and related services			6,134			4,436		12,205			9,002
	Infrastructure software			(45	)		142		(44	)		294
Total gross profit			$	6,089		$	4,578	$	12,161		$	9,296

        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.

NOTE 7: LINES OF CREDIT

        On June 4, 2002, the Company replaced its lines of credit for equipment financing and working capital allowing for borrowings up to $2,500,000 and $5,000,000, respectively with a revolving line of credit for working capital allowing for borrowings up to $10,000,000. The line of credit accrues variable rate interest, revised daily, equal to the New York Prime Rate as published in the Wall Street Journal (4.75% at June 30, 2002). Borrowings are unsecured, however, the line contains certain financial covenants pertaining to the maintenance of net worth and net income to interest expense ratios. The revolving line of credit matures on June 4, 2003.

        As of December 31, 2001 all of the outstanding borrowings, plus accrued interest, under the equipment financing and working capital lines was repaid. There were no borrowings outstanding under the revolving line of credit at June 30, 2002. On July 15, 2002, $10,000,000 was borrowed against this line in anticipation of the acquisition of the assets of Trumbull Bankruptcy Services. See Note 8.

NOTE 8: SUBSEQUENT EVENT

        On July 10, 2002, the Company acquired the Chapter 7 trustee business of CPT Group, Inc. in Orange County, California. The purchase price totaled less than $1,000,000, was paid from the resources of the Company and was accounted for using the purchase method of accounting.

9

        On August 2, 2002, the Company announced that it had entered into an agreement to acquire the assets of Trumbull Bankruptcy Services, a unit of Trumbull Services L.L.C., for $31,000,000. Trumbull Services is a wholly owned subsidiary of The Hartford Financial Services Group, Inc. The purchase price will be paid from the Company's existing cash and investments and borrowings from its $10,000,000 line of credit. The transaction is expected to close in the next several weeks.

        Trumbull Bankruptcy Services provides technology-based case management and administrative services for large Chapter 11 bankruptcy filings. The company has developed an advanced, 100% web-based system for the claims administration and intensive document imaging activities associated with very large, complex Chapter 11 cases. Trumbull Bankruptcy Services also provides comprehensive support services for schedule preparation, docketing, inbound and outbound call center communications, and ballot processing and creditor distributions.

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ITEM 2.    Management's Discussion and Analysis of Financial Conditions and Results of Operations.

Overview

        The Company develops, markets and licenses proprietary software solutions for workflow management and data communications infrastructure for the bankruptcy trustee market and the financial services market.

        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. The Company has a national marketing arrangement with Bank of America to provide its comprehensive, turnkey, back-office computer systems to Chapter 7 trustees without direct charges to the trustee. Under this arrangement:

•

the Company licenses its proprietary software to the trustee and furnishes 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



•

the Company collects from Bank of America monthly revenues based upon the total deposits in the Chapter 7 bankruptcy portfolio and on the number of trustees.

        Because of this arrangement, the Company has a recurring revenue stream from its Chapter 7 operations. The Company also derives 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 the Company provides directly to Bank of America in support of its national marketing arrangement.

        On October 11, 2001, the Company acquired certain assets of ROC Technologies, Inc. ("ROC'), the bankruptcy management software subsidiary of Imperial Bankcorp, a subsidiary of Comerica Inc. ROC provided bankruptcy trustee software to Chapter 7 bankruptcy trustees and was one of the Company's primary competitors in the Chapter 7 trustee software business. ROC had approximately 100 Chapter 7 trustee customers, with an aggregate deposit base of approximately $250 million. While the Chapter 7 trustee customers of ROC had their primary banking relationships with Imperial/Comerica, certain customers also maintained Chapter 7 trustee deposits with various other national and regional third-party banks. The acquisition was accounted for using the purchase method of accounting, and as such, the Company's results of operations for the year ended December 31, 2001 included the results of ROC acquisition subsequent to October 11, 2001.

        For its Chapter 13 business, the Company typically receives an initial implementation fee from the Chapter 13 trustee. The Company also receives 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 noticing to be outsourced to the Company, and the level of support service selected by the trustee.

        For its infrastructure software segment, the Company markets its DataExpress product line utilizing a traditional server-based license, maintenance and professional services pricing model. Various optional features are available for additional fees.

Critical Accounting Policies

        The Company considers its accounting policies related to revenue recognition and software capitalization to be critical policies due to the estimation process involved in each.

        The Company recognizes revenue from the two reportable segments of its business: bankruptcy and related services, and infrastructure software. Within the bankruptcy and related services segment, the Company's Chapter 7 bankruptcy software product generates monthly fees from Bank of America and other smaller regional financial institutions. Revenues are recognized after the product is installed and deposits are transferred based on the number of trustees and the level of trustees' deposits with the financial institution. Revenues for Chapter 13 processing and noticing are recorded monthly at the completion of the services based on the trustees' month-end caseloads. All other ancillary fees are recognized as the services are provided.

        The infrastructure software revenues and a portion of the bankruptcy and related services revenues are derived from software licensing, consulting services and maintenance fees. Licensing fees are recorded as revenue following delivery, installation and acceptance. Consulting revenue is recognized in the period in which the

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services are performed and in limited circumstances, based on the nature of the 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.

        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 detailed program design, development costs are expensed and shown as general and administrative expenses on the statements of income. Capitalized costs are amortized based on the ratio of current revenue to 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. Management periodically reevaluates its previous estimated future revenue for each product and the remaining estimated economic life of the product.

Results of Operations

Three Months Ended June 30, 2002 Compared With Three Months Ended June 30, 2001

        Operating revenues increased 28.5% or $2,011,000 to $9,076,000 in the three-month period ended June 30, 2002 compared to $7,065,000 in the three-month period ended June 30, 2001. This growth is attributable to increased revenues generated by bankruptcy and related services, partially offset by a small decrease in revenues for infrastructure software. The bankruptcy and related services revenues increased 31.5%, or $2,067,000 to $8,621,000 in the three-month period ended June 30, 2002 compared to $6,554,000 in the three-month period ended June 30, 2001. The increase in bankruptcy and related services revenues was driven by increases in recurring revenues from the Chapter 7 business including fees generated from trustees gained through acquisition. Chapter 13 revenues were flat for the same period. Revenues received from licensing, marketing and strategic consulting and technology services that the Company provided directly to Bank of America in support of its national marketing arrangement accounted for 8.6% of the bankruptcy and related services revenues for the three-month period ended June 30, 2002 compared to 8.3% of the bankruptcy and related services revenues for the three-month period ended June 30, 2001. Infrastructure software revenues for the three-month period ended June 30, 2002, declined $56,000 compared to the three-month period ended June 30, 2001. This decrease in infrastructure software revenues was a result of lower licensing revenue.

        Total cost of sales increased 20.1% or $500,000 to $2,987,000 in the three-month period ended June 30, 2002 compared to $2,487,000 in the three-month period ended June 30, 2001. Total cost of sales as a percentage of operating revenues decreased to 32.9% in the three-month period ended June 30, 2002 compared to 35.2% in the three-month period ended June 30, 2001. Cost of products and services increased 13.5% or $213,000 to $1,797,000 in the three-month period ended June 30, 2002 compared to $1,584,000 in the three-month period ended June 30, 2001. Cost of products and services, as a percentage of revenues, was 19.8% in the three-month period ended June 30, 2002 compared to 22.4% in the three-month period ended June 30, 2001. The decrease as a percentage of revenue was largely attributable to the increase in the number of trustees and deposits from which revenues are generated. These bankruptcy-related fees provided increases in revenue without significant increases in the cost of products and services thus providing a positive impact on gross profit. Depreciation and amortization increased 31.7% or $287,000 to $1,190,000 in the three-month period ended June 30, 2002 compared to $903,000 in the three-month period ended June 30, 2001. This increase was due to the purchase of computer equipment as new trustees were added, an uptake in the recurring replacement of existing equipment and an increase in software amortization from the infrastructure software segment due to the completion of the latest releases of DataExpress products subsequent to the three-month period ended June 30, 2001.

        Operating expenses increased 9.4% or $272,000 to $3,169,000 for the three-month period ended June 30, 2002 compared to $2,897,000 for the three-month period ended June 30, 2001. Operating expenses, as a percentage of operating revenues were 34.9% for the three-month period ended June 30, 2002 compared to 41.0% in the three-month period ended June 30, 2001. The increase in operating expenses was due to an increase of $543,000 or 20.7% in general and administrative expenses that were partially offset by the reduction of goodwill amortization of approximately $271,000 as compared to the three-month period ended June 30, 2001. Goodwill is no longer being amortized due to the adoption of SFAS No. 142 on January 1, 2002. The increase in general and administrative expenses was due to expansion associated with the ROC acquisition, increased liability insurance costs, employee related expenses and an increase in depreciation expense. Insurance costs are higher due to a combination of increased protection limits, additional property and business equipment acquired during the period and increases in core rates.

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        The Company had net interest income of $97,000 for the three-month period ended June 30, 2002 compared to $89,000 for the three-month period ended June 30, 2001. The increase in net interest income is due to decreased acquisition related debt.

        The Company had an effective tax rate of 37.8% for the three-month period ended June 30, 2002 compared to 40.4% for the three-month period ended June 30, 2001. The decrease in the effective tax rate was a result of the utilization of federal tax credits.

        Net income as a percentage of operating revenues increased to 20.7% in the three-month period ended June 30, 2002 from 14.9% in the three-month period ended June 30, 2001. The increase in net income as a percentage of operating revenues was largely due to the improved gross margins on increased revenues and the reduction of amortization expense for goodwill due to the adoption of SFAS No. 142.

Six Months Ended June 30, 2001 Compared With Six Months Ended June 30, 2000

        Operating revenues increased 27.3% or $3,874,000 to $18,072,000 in the six-month period ended June 30, 2002 compared to $14,198,000 in the six-month period ended June 30, 2001. This growth is attributable to increased revenues generated by bankruptcy and related services, partially offset by a small decrease in revenues for infrastructure software. The bankruptcy and related services revenues increased 29.7%, or $3,924,000 to $17,130,000 in the six-month period ended June 30, 2002 compared to $13,206,000 in the six-month period ended June 30, 2001. The increase in bankruptcy and related services revenues was driven by increases in recurring revenues from the Chapter 7 business including fees generated from trustees gained through acquisition plus an increase in Chapter 13 revenues. Revenues received from licensing, marketing and strategic consulting and technology services that the Company provided directly to Bank of America in support of its national marketing arrangement accounted for 4.6% of the bankruptcy and related services revenues for the six-month period ended June 30, 2002 compared to 12.3% of the bankruptcy and related services revenues for the six-month period ended June 30, 2001. Infrastructure software revenues for the six-month period ended June 30, 2002, declined $50,000 compared to the six-month period ended June 30, 2001. This decrease in infrastructure software revenues was a result of lower licensing revenue.

        Total cost of sales increased 20.6% or $1,009,000 to $5,911,000 in the six-month period ended June 30, 2002 compared to $4,902,000 in the six-month period ended June 30, 2001. Total cost of sales as a percentage of operating revenues decreased to 32.7% in the six-month period ended June 30, 2002 compared to 34.5% in the six-month period ended June 30, 2001. Cost of products and services for bankruptcy and related services increased 18.3% or $482,000 to $3,111,000 in the six-month period ended June 30, 2002 compared to $2,629,000 in the six-month period ended June 30, 2001. Infrastructure software cost of products and services declined $62,000 for the six-month period ended June 30, 2001. Bankruptcy and related services cost of products and services, as a percentage of bankruptcy and related services revenues, was 18.2% in the six-month period ended June 30, 2002 compared to 19.9% in the six-month period ended June 30, 2001. The decrease as a percentage of revenue was due mainly to the increase in the number of trustees and deposits from which revenues are generated. These bankruptcy-related fees provided increases in revenue without significant increases in the cost of products and services resulting in a positive impact on gross profit. Depreciation and amortization increased 34.0% or $589,000 to $2,320,000 in the six-month period ended June 30, 2002, compared to $1,731,000 in the six-month period ended June 30, 2001, due to the purchase of computer equipment as new trustees were added, an uptake in the recurring replacement of existing equipment and an increase in software amortization from the infrastructure software segment due to the completion of the latest releases of DataExpress products.

        Operating expenses increased 6.1% or $368,000 to $6,370,000 in the six-month period ended June 30, 2002 compared to $6,002,000 in the six-month period ended June 30, 2001. Operating expenses, as a percentage of operating revenues were 35.2% in the six-month period ended June 30, 2002 compared to 42.3% in the six-month period ended June 30, 2001. The increase in general and administrative expenses was due to expansion associated with the ROC acquisition, increased liability insurance costs, employee related expenses and an increase in depreciation expense partially offset by a reduction in goodwill amortization. Goodwill is no longer being amortized due to the adoption of SFAS No. 142 on January 1, 2002.

        The Company had net interest income of $210,000 in the six-month period ended June 30, 2002 which is virtually flat compared to the same period in the prior year.

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        The Company had an effective tax rate of 37.9% for the six-month period ended June 30, 2002 compared to 40.4% for the six-month period ended June 30, 2001. The decrease in the effective tax rate was a result of the utilization of federal tax credits.

        Net income as a percentage of operating revenues increased to 20.6% in the six-month period ended June 30, 2002 from 14.7% in the six-month period ended June 30, 2001. The increase in net income as a percentage of operating revenues was largely due to the improved gross margins on increased revenues and the reduction of amortization expense for goodwill due to the adoption of SFAS No. 142.

Liquidity and Capital Resources

        The Company's cash and cash equivalents and short-term investments are virtually unchanged at $25,176,000 as of June 30, 2002 compared to $25,306,000 at December 31, 2001. Cash generated from the net income, depreciation and amortization for the six-month period were offset by cash used in the purchase of property and equipment, software development costs, increased accounts receivable and decreased accounts payable and accrued expenses.

        The Company generated cash of $3,930,000 and $2,018,000 from operations for the six months ended June 30, 2002 and 2001, respectively. The cash flow generated from operations in the six months ended June 30, 2002, consisted primarily of cash generated from net income plus depreciation and amortization which were partially offset by an increase in accounts receivable and decreases in accounts payable and accrued expenses. Accounts receivable increased from $4,498,000 at December 31, 2001, to $7,610,000 at June 30, 2002, primarily due to the timing of billings to Bank of America for services supporting the national marketing arrangement. The cash flow generated from operations in the six months ended June 30, 2001 primarily consisted of revenues generated from net income plus depreciation and amortization which were offset by the increase in accounts receivable and decreases in accounts payable and accrued expenses and deferred revenue and the change in income taxes payable/refundable.

        Net cash used in investing activities for the six-month period ended June 30, 2002 and 2001 totaled $4,008,000 and $2,740,000, respectively. Use of cash included purchased property and equipment totaling $3,277,000 and $3,001,000 for the six-month period ended June 30, 2002 and 2001, respectively. Property and equipment purchased in the six-month periods ended June 30, 2002 and 2001 included the building expansion of the Company's headquarters facility and the installation of computer equipment at trustee locations for the bankruptcy services products. The Company does not expect to incur additional costs to complete the building.

        The Company incurred software development costs totaling $961,000 and $999,000 for the six-months ended June 30, 2002 and June 30, 2001, respectively. Internal software costs incurred in the creation of computer software products are capitalized as soon as technological feasibility has been established. Prior to the completion of a detailed program design, development costs are expensed. Capitalized costs are amortized based on current and future revenue for each product with an annual minimum equal to straight-line amortization over the remaining estimated economic life of the product, not to exceed five years. The Company anticipates future investments in software development will be at or above levels in previous periods.

        Net cash generated from (used in) financing activities totaled ($51,000) and $19,317,000 for the six-month period ended June 30, 2002 and 2001, respectively. During the six month period ended June 30, 2002, proceeds from the exercise of stock options were offset by principal payments on capital lease obligations and debt resulting from previous acquisitions. Net cash from financing activities during the six-month period ended June 30, 2001 was due to the follow-on offering of common stock that generated net proceeds of $22,675,000 and the exercise of stock options and warrants totaling $534,000 that was partially offset by repayments on the line of credit for $3,575,000.

        The Company replaced its lines of credit for equipment financing and working capital allowing for borrowings up to $2,500,000 and $5,000,000, respectively with a $10,000,000 revolving line of credit for working capital. No amounts were outstanding at June 30, 2002. On July 15, 2002, $10,000,000 was borrowed against this line in anticipation of the acquisition of the assets of Trumbull Bankruptcy Services. Any outstanding principal on the working capital line is due upon demand, and if no demand is made, then upon expiration. On August 7, 2002, the Company reached an agreement to enter into an additional $5,000,000 line of credit for working capital purposes. Terms will mirror the $10,000,000 line of credit, except that it will mature on February 7, 2003. There are no amounts presently outstanding on this line.

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        On July 10, 2002, the Company acquired the Chapter 7 trustee business of CPT Group, Inc. in Orange County, California. The purchase price totaled less than $1,000,000, was paid from the cash resources of the Company and was accounted for using the purchase method of accounting.

        On August 2, 2002, the Company announced that it had entered into an agreement to acquire the assets of Trumbull Bankruptcy Services, a unit of Trumbull Services L.L.C., for $31,000,000. Trumbull Services is a wholly owned subsidiary of The Hartford Financial Services Group, Inc. The purchase price will be paid from the Company's existing cash and investments and borrowings from its $10,000,000 line of credit. The transaction is expected to close in the next several weeks.

        Trumbull Bankruptcy Services provides technology-based case management and administrative services for large Chapter 11 bankruptcy filings. The company has developed an advanced, 100% web-based system for the claims administration and intensive document imaging activities associated with very large, complex Chapter 11 cases. Trumbull Bankruptcy Services also provides comprehensive support services for schedule preparation, docketing, inbound and outbound call center communications, and ballot processing and creditor distributions.

        The Company believes that the funds generated from operations will be sufficient to finance the Company's currently anticipated working capital and property and equipment expenditure for the foreseeable future.

Forward-Looking Statements

        In this report, the Company makes statements that plan for or anticipate the future. These forward-looking statements include statements about the Company's future business plans and strategies, and other statements that are not historical in nature. These forward-looking statements are based on the Company's current expectations.

        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, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, provide a "safe harbor" for forward-looking statements. Because forward-looking statements involve future risks and uncertainties, listed below 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, but are not limited to, (1) any material changes in our total number of Chapter 7 trustees or Chapter 7 deposits, (2) any material changes in our total number of Chapter 13 trustees or material changes in the number of cases processed by these Chapter 13 trustees, (3) changes in the number of bankruptcy filings each year, (4) changes in bankruptcy legislation, (5) our reliance on our marketing arrangement with Bank of America for Chapter 7 revenue, (6) risks associated with the integration of acquisitions into our existing business operations, (7) our ability to achieve or maintain technological advantages, (8) uncertainties related to the infrastructure software business and the future operations of that business, and (9) other risks detailed from time to time in our filings with the SEC, including the "Risk Factors" discussed in our Annual Report on Form 10-K for the year ended December 31, 2001. In addition, there may be other factors not included in our SEC filings that may cause actual results to differ materially from any forward-looking statements. We undertake no obligations to update any forward-looking statements contained herein to reflect future events or developments.

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ITEM 3:    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. The Company is currently exposed to credit risk on credit extended to customers and interest risk on capital lease obligations and the line of credit borrowings, the deferred acquisition price note and cash equivalents. The Company actively monitors these risks through a variety of controlled procedures involving senior management. The Company does 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, the Company believes the risk associated with these instruments will not have a material adverse affect on our business, financial position, results of operations and cash flows.

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EPIQ SYSTEMS, INC.
JUNE 30, 2002 FORM 10-Q

PART II—OTHER INFORMATION

ITEM 4:    Submission of Matters to a Vote of Security Holders

        The Annual Meeting of the Shareholders of the Company was held on June 5, 2002, at which the shareholders elected the directors named below and approved a proposal to amend the Company's 1995 Stock Option Plan to increase the number of shares of common stock available for issuance under the plan from 1,800,000 to 3,000,000. The results of the voting at the Annual Meeting were as follows:

Election of Directors	For	Withhold Authority
Tom W. Olofson	10,474,809	2,452,020
Christopher E. Olofson	10,479,184	2,447,645
W. Bryan Satterlee	12,563,830	362,999
Robert C. Levy	12,467,069	459,760
Edward M. Connolly, Jr.	12,563,580	363,249

	For	Against	Abstain	Broker Non-Vote
Amend the 1995 Stock Option Plan	8,616,602	2,219,262	13,442	2,077,523

        No other matters were submitted to a vote of the shareholders at the Annual Meeting.

ITEM 6.    Exhibits and Reports on Form 8-K.

(a)

Exhibits.

10.1

Commercial Loan Agreement dated June 4, 2002, between Gold Bank and the Company for $10,000,000 revolving loan.

10.2

Promissory Note dated June 4, 2002, from the Company to Gold Bank.

99.1

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

99.2

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(b)

Reports on Form 8-K.

        None.

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SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	EPIQ Systems, Inc.
Date: August 12, 2002	/s/  TOM W. OLOFSON Tom W. Olofson Chairman of the Board Chief Executive Officer Director (Principal Executive Officer)
Date: August 12, 2002	/s/  ELIZABETH M. BRAHAM Elizabeth M. Braham Vice President, Chief Financial Officer (Principal Financial Officer)
Date: August 12, 2002	/s/  MICHAEL A. RIDER Michael A. Rider Controller (Principal Accounting Officer)

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CONTENTS
PART I—FINANCIAL INFORMATION

ITEM 1. Financial Statements.

ITEM 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations.
ITEM 3: Quantitative and Qualitative Disclosures About Market Risk.

PART II—OTHER INFORMATION

ITEM 4: Submission of Matters to a Vote of Security Holders
ITEM 6. Exhibits and Reports on Form 8-K.

SIGNATURES

EX-10.1

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Exhibit 10.1

LOAN NUMBER
1031000029-502
NOTE AMOUNT
$10,000,000.00 LOAN NAME
EPIQ Systems, Inc.
INDEX (w/Margin)
Wall Street Journal Prime ACCT. NUMBER

RATE
4.75%
Creditor Use Only AGREEMENT DATE
06/04/02
MATURITY DATE
06/04/03 INITIALS
JLH
LOAN PURPOSE
Commercial

COMMERCIAL LOAN AGREEMENT
Revolving Draw Loan

DATE AND PARTIES.    The date of this Commercial Loan Agreement (Agreement) is June 4, 2002. The parties and their addresses are as follows:

LENDER:
        GOLD BANK
        11301 Nall Avenue
        Leawood, Kansas 66211

BORROWER:
        EPIQ SYSTEMS, INC.
        a Kansas Corporation
        501 Kansas Avenue
        Kansas City, Kansas 66105

1. DEFINITIONS.    For the purposes of this Agreement, the following terms have the following meanings.

A. Accounting Terms.    In this Agreement, any accounting terms that are not specifically defined will have their customary meanings under generally accepted accounting principles.

B. Insiders.    Insiders include those defined as insiders by the United States Bankruptcy Code, as amended; or to the extent left undefined, include without limitation any officer, employee, stockholder or member, director, partner, or any immediate family member of any of the foregoing, or any person or entity which, directly or indirectly, controls, is controlled by or is under common control with me.

C. Loan.    The Loan refers to this transaction generally, including obligations and duties arising from the terms of all documents prepared or submitted for this transaction.

D. Pronouns.    The pronouns "I", "me" and "my" refer to every Borrower signing this Agreement, individually or together, and their heirs, successors and assigns. "You" and "your" refers to the Loan's lender, any participants or syndicators, or any person or company that acquires an interest in the Loan and their successors and assigns.

E. Property.    Property is any property, real, personal or intangible, that secures my performance of the obligations of this Loan.

2. ADVANCES.    Advances under this Agreement are made according to the following terms and conditions.

A. Multiple Advances—Revolving.    In accordance with the terms of this Agreement and other Loan documents, you will provide me with a revolving draw note and the maximum outstanding principal balance will not exceed $10,000,000.00 (Principal).

B. Requests for Advances.    My requests are a warranty that I am in compliance with all the Loan documents. When required by you for a particular method of advance, my requests for an advance must specify the requested amount and the date and be accompanied with any agreements, documents, and instruments that you require for the Loan. Any payment by you of any check, share draft or other charge may, at your option, constitute an advance on the Loan to me. All advances will be made in United States dollars. I will indemnify you and hold you harmless for your reliance on any request for advances that you reasonably believe to be genuine. To the extent permitted by law, I will indemnify you and hold you harmless when the person making any request represents that I authorized this person to request an advance even when this person is unauthorized or this person's signature is not genuine.

I or anyone I authorize to act on my behalf may request advances by the following methods.

(1) I make a request in person.

(2) I make a request by phone.

(3) I make a request by mail.

(4) I make a written request.

C. Advance Limitations.    In addition to any other Loan conditions, requests for, and access to, advances are subject to the following limitations.

(1) Obligatory Advances. You will make all Loan advances subject to this Agreement's terms and conditions.

(2) Advance Amount. Subject to the terms and conditions contained in this Agreement, advances will be made in exactly the amount I request.

(3) Cut-Off Time. Requests for an advance received before 03:00 PM will be made on any day that you are open for business, on the day for which the advance is requested.

(4) Disbursement of Advances. On my fulfillment of this Agreement's terms and conditions, you will disburse the advance in any manner as you and I agree.

(5) Credit Limit. I understand that you will not ordinarily grant a request for an advance that would cause the unpaid principal of my Loan to be greater than the Principal limit. You may, at your option, grant such a request without obligating yourselves to do so in the future.

(6) Records. Your records will be conclusive evidence as to the amount of advances, the Loan's unpaid principal balances and the accrued interest.

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D. Conditions.    I will satisfy all of the following conditions before you either issue any promissory notes or make any advances under this Agreement.

(1) No Default. There has not been a default under this Agreement or other Loan documents nor would a default result from making the Loan or any advance.

(2) Information. You have received all documents, information, certifications and warranties as you may require, all properly executed, if appropriate, on forms acceptable to you. This includes, but is not limited to, the documents and other items listed in the Loan Checklist Report which is hereby incorporated by reference into this Agreement.

(3) Inspections. You have made all inspections that you consider necessary and are satisfied with this inspection.

(4) Conditions and Covenants. I will have performed and complied with all conditions required for an advance and all covenants in this Agreement and any other Loan documents.

(5) Warranties and Representations. The warranties and representations contained in this Agreement are true and correct at the time of making the requested advance.

(6) Financial Statements. My most recent financial statements and other financial reports, delivered to you, are current, complete, true and accurate in all material respects and fairly represent my financial condition.

(7) Bankruptcy Proceedings. No proceeding under the United States Bankruptcy Code has been commenced by or against me or any of my affiliates.

3. MATURITY DATE.    I agree to fully repay the Loan by June 4, 2003.

4. WARRANTIES AND REPRESENTATIONS.    I make to you the following warranties and representations which will continue as long as this Loan is in effect, except when this Agreement provides otherwise.

A. Power.    I am duly organized, and validly existing and in good standing in all jurisdictions in which I operate. I have the power and authority to enter into this transaction and to carry on my business or activity as it is now being conducted and, as applicable, am qualified to do so in each jurisdiction in which I operate.

B. Authority.    The execution, delivery and performance of this Loan and the obligation evidenced by the Note are within my powers, have been duly authorized, have received all necessary governmental approval, will not violate any provision of law, or order of court or governmental agency, and will not violate any agreement to which I am a party or to which I am or any of my property is subject.

C. Name and Place of Business.    Other than previously disclosed in writing to you I have not changed my name or principal place of business within the last 10 years and have not used any other trade or fictitious name. Without your prior written consent, I do not and will not use any other name and will preserve my existing name, trade names and franchises.

D. Loan Purpose.    This Loan is for Commercial purposes.

E. No Other Liens.    I own or lease all property that I need to conduct my business and activities. I have good and marketable title to all property that I own or lease. All of my Property is free and clear of all liens, security interests, encumbrances and other adverse claims and interests, except those to you or those you consent to in writing.

F. Compliance With Laws.    I am not violating any laws, regulations, rules, orders, judgments or decrees applicable to me or my property, except for those which I am challenging in good faith through proper proceedings after providing adequate reserves to fully pay the claim and its challenge should I lose.

G. Legal Dispute.    There are no pending or threatened lawsuits, arbitrations or other proceedings against me or my property that singly or together may materially and adversely affect my property, operations, financial condition, or business.

H. Adverse Agreements.    I am not a party to, nor am I bound by, any agreement that is now or is likely to become materially adverse to my business, Property or operations.

I. Other Claims.    There are no outstanding claims or rights that would conflict with the execution, delivery or performance by me of the terms and conditions of this Agreement or the other Loan documents. No outstanding claims or rights exist that may result in a lien on the Property, the Property's proceeds and the proceeds of proceeds, except liens that were disclosed to and agreed to by you in writing.

J. Solvency.    I am able to pay my debts as they mature, my assets exceed my liabilities and I have sufficient capital for my current and planned business and other activities. I will not become insolvent by the execution or performance of this Loan.

5. FINANCIAL STATEMENTS.    I will prepare and maintain my financial records using consistently applied generally accepted accounting principles then in effect. I will provide you with financial information in a form that you accept and under the following terms.

A. Certification.    I represent and warrant that any financial statements that I provide you fairly represents my financial condition for the stated periods, is current, complete, true and accurate in all material respects, includes all of my direct or contingent liabilities and there has been no material adverse change in my financial condition, operations or business since the date the financial information was prepared.

B. Frequency.    Annually, I will provide to you my financial statements, tax returns, annual internal audit reports or those prepared by independent accountants as soon as available or at least within 90 days after the close of each of my fiscal years. Any annual financial statements that I provide you will be prepared statements.

(1) Interim Financial Reports. Each fiscal quarter, I will provide to you my financial statements, internal audit reports or those prepared by independent accountants, tax reports, statements of cash flow, budgets and forecasts, certificates and schedules of Property as soon as available or at least within 20 days after the close of this business period. Any interim financial statements that I provide you will be prepared statements.

C. SEC Reports.    I will provide you with true and correct copies of all reports, notices or statements that I provide to the Securities and Exchange Commission, any securities exchange or my stockholders, owners, or the holders of any material indebtedness as soon as available or at least within 30 days after issuance.

D. Requested Information.    I will provide you with any other information about my operations, financial affairs and condition within 30 days after your request.

6. COVENANTS.    Until the Loan and all related debts, liabilities and obligations are paid and discharged, I will comply with the following terms, unless you waive compliance in writing.

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A. Participation.    I consent to you participating or syndicating the Loan and sharing any information that you decide is necessary about me and the Loan with the other participants or syndicators.

B. Inspection.    Upon reasonable notice, I will permit you or your agents to enter any of my premises and any location where my Property is located during regular business hours to do the following.

(1) You may inspect, audit, check, review and obtain copies from my books, records, journals, orders, receipts, and any correspondence and other business related data.

(2) You may discuss my affairs, finances and business with any one who claims to be my creditor.

After prior notice to me, you may discuss my financial condition and business operations with my independent accountants, if any, or my chief financial officer and I may be present during these discussions. As long as the Loan is outstanding, I will direct all of my accountants and auditors to permit you to examine my records in their possession and to make copies of these records. You will use your best efforts to maintain the confidentiality of the information you or your agents obtain, except you may provide your regulator, if any, with required information about my financial condition, operation and business or that of my parent, subsidiaries or affiliates.

C. Business Requirements.    I will preserve and maintain my present existence and good standing in the jurisdiction where I am organized and all of my rights, privileges and franchises. I will do all that is needed or required to continue my business or activities as presently conducted, by obtaining licenses, permits and bonds everywhere I engage in business or activities or own, lease or locate my property. I will obtain your prior written consent before I cease my business or before I engage in any new line of business that is materially different from my present business.

D. Compliance with Laws.    I will not violate any laws, regulations, rules, orders, judgments or decrees applicable to me or my Property, except for those which I challenge in good faith through proper proceedings after providing adequate reserves to fully pay the claim and its appeal should I lose. Laws include without limitation the Federal Fair Labor Standards Act requirements for producing goods, the federal Employee Retirement Income Security Act of 1974's requirements for the establishment, funding and management of qualified deferred compensation plans for employees, health and safety laws, environmental laws, tax laws, licensing and permit laws. On your request, I will provide you with written evidence that I have fully and timely paid my taxes, assessments and other governmental charges levied or imposed on me, my income or profits and my property. Taxes include without limitation sales taxes, use taxes, personal property taxes, documentary stamp taxes, recordation taxes, franchise taxes, income taxes, withholding taxes, FICA taxes and unemployment taxes. I will adequately provide for the payment of these taxes, assessments and other charges that have accrued but are not yet due and payable.

E. New Organizations.    I will obtain your written consent and any necessary changes to the Loan documents before I organize or participate in the organization of any entity, merge into or consolidate with any one, permit any one else to merge into me, acquire all or substantially all of the assets of any one else or otherwise materially change my legal structure, management, ownership or financial condition.

F. Dealings with Insiders.    I will not purchase, acquire or lease any property or services from, or sell, provide or lease any property or services to, or permit any outstanding loans or credit extensions to, or otherwise deal with, any Insiders except as required under contracts existing at the time I applied for the Loan and approved by you or as this Agreement otherwise permits. I will not change or breach these contracts existing at Loan application so as to cause an acceleration of or an increase in any payments due.

G. Other Debts.    I will pay when due any and all other debts owed or guaranteed by me and will faithfully perform, or comply with all the conditions and obligations imposed on me concerning the debt or guaranty.

H. Other Liabilities.    I will not incur, assume or permit any debt evidenced by notes, bonds or similar obligations, except: debt in existence on the date of this Agreement and fully disclosed to you; debt subordinated in payment to you on conditions and terms acceptable to you; accounts payable incurred in the ordinary course of my business and paid under customary trade terms or contested in good faith with reserves satisfactory to you.

I. Notice to You.    I will promptly notify you of any material change in my financial condition, of the occurrence of a default under the terms of this Agreement, or a default by me under any agreement between me and any third party which materially and adversely affects my property, operations, financial condition or business.

J. Certification of No Default.    On your request, my chief financial officer or my independent accountant will provide you with a written certification that to the best of their knowledge no event of default exists under the terms of this Agreement or the other Loan documents, and that there exists no other action, condition or event which with the giving of notice or lapse of time or both would constitute a default. As requested, my chief financial officer or my independent accountant will also provide you with computations demonstrating compliance with any financial covenants and ratios contained in this Agreement. If an action, condition or event of default does exist, the certificate must accurately and fully disclose the extent and nature of this action, condition or event and state what must be done to correct it.

K. Use of Loan Proceeds.    I will not permit the loan proceeds to be used to purchase, carry, reduce, or retire any loan incurred to purchase or carry any margin stock.

L. Dispose of No Assets.    Without your prior written consent or as the Loan documents permit, I will not sell, lease, assign, transfer, dispose of or otherwise distribute all or substantially all of my assets to any person other than in the ordinary course of business for the assets' depreciated book value or more.

M. No Other Liens.    I will not create, permit or suffer any lien or encumbrance upon any of my properties for or by anyone, other than you, except for: nonconsensual liens imposed by law arising out of the ordinary course of business on obligations that are not overdue or which I am contesting in good faith after making appropriate reserves; valid purchase money security interests on personal property; or any other liens specifically agreed to by you in writing.

N. Guaranties.    I will not guaranty or become liable in any way as surety, endorser (other than as endorser of negotiable instruments in the ordinary course of business) or accommodation endorser or otherwise for the debt or obligations of any other person or entity, except to you or as you otherwise specifically agree in writing.

O. No Default under Other Agreements.    I will not allow to occur, or to continue unremedied, any act, event or condition which constitutes a default, or which, with the passage of time or giving of notice, or both, would constitute a default under any agreement, document, instrument or undertaking to which I am a party or by which I may be bound.

P. Legal Disputes.    I will promptly notify you in writing of any threatened or pending lawsuit, arbitration or other proceeding against me or any of my property, not identified in my financial statements, or that singly or together with other proceedings may materially and adversely affect my property, operations, financial condition or business. I will use my best efforts to bring about a favorable and speedy result of any of these lawsuits, arbitrations or other proceedings.

Q. Other Notices.    I will immediately provide you with any information that may materially and adversely affect my ability to perform this Agreement and of its anticipated effect.

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R. No Change in Capital.    I will not release, redeem, retire, purchase or otherwise acquire, directly or indirectly, any of my capital stock or other equity security or partnership interest, or make any change in my capital structure, except to the extent required by any agreements signed prior to this Agreement and disclosed to you or with your prior written consent.

S. Loan Obligations.    I will make full and timely payment of all principal and interest obligations, and comply with the other terms and agreements contained in this Agreement and in the other Loan documents.

T. Insurance.    I will obtain and maintain insurance with insurers, in amounts and coverages that are acceptable to you and customary with industry practice. This may include without limitation insurance policies for public liability, fire, hazard and extended risk, workers compensation, and, at your request, business interruption and/or rent loss insurance. At your request, I will deliver to you certified copies of all of these insurance policies, binders or certificates. I will obtain and maintain a mortgagee or loss payee endorsement for you when these endorsements are available. I will immediately notify you of cancellation or termination of insurance. I will require all insurance policies to provide you with at least 10 days prior written notice to you of cancellation or modification. I consent to you using or disclosing information relative to any contract of insurance required by the Loan for the purpose of replacing this insurance. I also authorize my insurer and you to exchange all relevant information related to any contract of insurance required by any document executed as part of this Loan.

U. Minimum Tangible Net Worth.    I will maintain at all times a tangible net worth, determined under consistently applied generally accepted accounting principles, of $35,000,000.00 or more. Tangible net worth is the amount that total assets exceed total liabilities. For determining tangible net worth, total assets will exclude all intangible assets, including without limitation goodwill, patents, trademarks, trade names, copyrights, and franchises, and will also exclude all Accounts Receivable, owed by my Insiders, that do not provide for a repayment schedule.

V. Minimum Ratio of Net Income to Interest Expense.    During this Agreement's term, I will maintain a ratio of net income before interest and taxes to interest expense of 1.5:1 or more as determined on last day of each fiscal year under consistently applied generally accepted accounting principles. For this determination, net income before interest and taxes excludes any extraordinary gains and losses and any gains or losses from the sale or other disposition of assets outside of the ordinary course of business.

7. DEFAULT.    I will be in default if any of the following occur:

A. Payments.    I fail to make a payment in full when due.

B. Insolvency or Bankruptcy.    I make an assignment for the benefit of creditors or become insolvent, either because my liabilities exceed my assets or I am unable to pay my debts as they become due; or I petition for protection under federal, state or local bankruptcy, insolvency or debtor relief laws, or am the subject of a petition or action under such laws and fail to have the petition or action dismissed within a reasonable period of time not to exceed 60 days.

C. Business Termination.    I merge, dissolve, reorganize, end my business or existence, or a partner or majority owner dies or is declared legally incompetent.

D. Failure to Perform.    I fail to perform any condition or to keep any promise or covenant of this Agreement.

E. Other Documents.    A default occurs under the terms of any other transaction document.

F. Other Agreements.    I am in default on any other debt or agreement I have with you.

G. Misrepresentation.    I make any verbal or written statement or provide any financial information that is untrue, inaccurate, or conceals a material fact at the time it is made or provided.

H. Judgment.    I fail to satisfy or appeal any judgment against me.

I. Forfeiture.    The Property is used in a manner or for a purpose that threatens confiscation by a legal authority.

J. Name Change.    I change my name or assume an additional name without notifying you before making such a change.

K. Property Transfer.    I transfer all or a substantial part of my money or property.

L. Property Value.    The value of the Property declines or is impaired.

M. Material Change.    Without first notifying you, there is a material change in my business, including ownership, management, and financial conditions.

N. Insecurity.    You reasonably believe that you are insecure.

8. REMEDIES.    After I default, and after you give any legally required notice and opportunity to cure the default, you may at your option do any one or more of the following.

A. Acceleration.    You may make all or any part of the amount owing by the terms of the Loan immediately due.

B. Sources.    You may use any and all remedies you have under state or federal law or in any instrument securing the Loan.

C. Insurance Benefits.    You may make a claim for any and all insurance benefits or refunds that may be available on my default.

D. Payments Made On My Behalf.    Amounts advanced on my behalf will be immediately due and may be added to the balance owing under the terms of the Loan, and accrue interest at the highest post-maturity interest rate.

E. Termination.    You may terminate my right to obtain advances and may refuse to make any further extensions of credit.

F. Set-Off.    You may use the right of set-off. This means you may set-off any amount due and payable under the terms of the Loan against any right I have to receive money from you.

My right to receive money from you includes any deposit or share account balance I have with you; any money owed to me on an item presented to you or in your possession for collection or exchange; and any repurchase agreement or other non-deposit obligation. "Any amount due and payable under the terms of the Loan" means the total amount to which you are entitled to demand payment under the terms of the Loan at the time you set-off.

Subject to any other written contract, if my right to receive money from you is also owned by someone who has not agreed to pay the Loan, your right of set-off will apply to my interest in the obligation and to any other amounts I could withdraw on my sole request or endorsement.

Your right of set-off does not apply to an account or other obligation where my rights arise only in a representative capacity. It also does not apply to any Individual Retirement Account or other tax-deferred retirement account.

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You will not be liable for the dishonor of any check when the dishonor occurs because you set-off against any of my accounts. I agree to hold you harmless from any such claims arising as a result of your exercise of your right of set-off.

G. Waiver.    Except as otherwise required by law, by choosing any one or more of these remedies you do not give up your right to use any other remedy. You do not waive a default if you choose not to use a remedy. By electing not to use any remedy, you do not waive your right to later consider the event a default and to use any remedies if the default continues or occurs again.

9. COLLECTION EXPENSES AND ATTORNEYS' FEES.    On or after Default, to the extent permitted by law, I agree to pay all expenses of collection, enforcement or protection of your rights and remedies under this Agreement. Expenses include, but are not limited to, attorneys' fees, court costs and other legal expenses. These expenses are due and payable immediately. If not paid immediately, these expenses will bear interest from the date of payment until paid in full at the highest interest rate in effect as provided for in the terms of this Loan. All fees and expenses will be secured by the Property I have granted to you, if any. To the extent permitted by the United States Bankruptcy Code, I agree to pay the reasonable attorneys' fees you incur to collect this debt as awarded by any court exercising jurisdiction under the Bankruptcy Code.

10. APPLICABLE LAW.    This Agreement is governed by the laws of Kansas, the United States of America and to the extent required, by the laws of the jurisdiction where the Property is located. In the event of a dispute, the exclusive forum, venue and place of jurisdiction will be in Kansas, unless otherwise required by law.

11. JOINT AND INDIVIDUAL LIABILITY AND SUCCESSORS.    My obligation to pay this Loan is independent of the obligation of any other person who has also agreed to pay it. You may sue me alone, or anyone else who is obligated on this Loan, or any number of us together, to collect this Loan. Extending this Loan or new obligations under this Loan, will not affect my duty under this Loan and I will still be obligated to pay this Loan. The duties and benefits of this Loan will bind and benefit the successors and assigns of you and me.

12. AMENDMENT, INTEGRATION AND SEVERABILITY.    This Agreement may not be amended or modified by oral agreement. No amendment or modification of this Agreement is effective unless made in writing and executed by you and me. This Agreement is the complete and final expression of the understanding between you and me. If any provision of this Agreement is unenforceable, then the unenforceable provision will be severed and the remaining provisions will still be enforceable.

13. INTERPRETATION.    Whenever used, the singular includes the plural and the plural includes the singular. The section headings are for convenience only and are not to be used to interpret or define the terms of this Agreement.

14. NOTICE, FINANCIAL REPORTS AND ADDITIONAL DOCUMENTS.    Unless otherwise required by law, any notice will be given by delivering. or mailing it by first class mail to the appropriate party's address listed in the DATE AND PARTIES section, or to any other address designated in writing. Notice to one party will be deemed to be notice to all parties. I will inform you in writing of any change in my name, address or other application information. I will provide you any financial statement or information you request. All financial statements and information I give you will be correct and complete. I agree to sign, deliver, and file any additional documents or certifications that you may consider necessary to perfect, continue, and preserve my obligations under this Loan and to confirm your lien status on any Property. Time is of the essence.

THIS WRITTEN AGREEMENT IS THE FINAL EXPRESSION OF THE AGREEMENT BETWEEN YOU AND LENDER, AND AS SUCH IT MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY PRIOR OR CONTEMPORANEOUS ORAL AGREEMENT.

ADDITIONAL TERMS:

BY SIGNING OR INITIALING BELOW, BOTH PARTIES AFFIRM THAT NO UNWRITTEN ORAL AGREEMENT BETWEEN THEM EXISTS.

LENDER:

Gold Bank

/s/ Julie L. Hook, Vice President

BORROWER:

EPIQ Systems, Inc.

/s/ Tom W. Olofson, CEO

15. SIGNATURES.    By signing, I agree to the terms contained in this Agreement. I also acknowledge receipt of a copy of this Agreement.

BORROWER:

EPIQ Systems, Inc.

/s/ Tom W. Olofson, CEO

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Exhibit 10.1

EX-10.2

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Exhibit 10.2

LOAN NUMBER
1031000029-502
NOTE AMOUNT
$10,000,000.00 LOAN NAME
EPIQ Systems, Inc.
INDEX (w/Margin)
Wall Street Journal Prime ACCT. NUMBER RATE
4.75%
Creditor Use Only NOTE DATE
06/04/02
MATURITY DATE
06/04/03 INITIALS
JLH
LOAN PURPOSE
Commercial

PROMISSORY NOTE
(Commercial—Revolving Draw—Variable Rate)

DATE AND PARTIES.    The date of this Promissory Note (Note) is June 4, 2002. The parties and their addresses are:

LENDER:

GOLD BANK
11301 Nall Avenue
Leawood, Kansas 66211
Telephone: (913) 307-2427

BORROWER:

EPIQ SYSTEMS, INC.
a Kansas Corporation
501 Kansas Avenue
Kansas City, Kansas 66105

1. DEFINITIONS.    As used in this Note, the terms have the following meanings:

A. Pronouns.    The pronouns "I," "me," and "my" refer to each Borrower signing this Note, individually and together with their heirs, successors and assigns, and each other person or legal entity (including guarantors, endorsers, and sureties) who agrees to pay this Note. "You" and "Your" refer to the Lender, with its participants or syndicators, successors and assigns, or any person or company that acquires an interest in the Loan.

B. Note.    Note refers to this document, and any extensions, renewals, modifications and substitutions of this Note.

C. Loan.    Loan refers to this transaction generally, including obligations and duties arising from the terms of all documents prepared or submitted for this transaction such as applications, security agreements, disclosures or notes, and this Note.

D. Property.    Property is any property, real, personal or intangible, that secures my performance of the obligations of this Loan.

E. Percent.    Rates and rate change limitations are expressed as annualized percentages.

2. PROMISE TO PAY.    For value received, I promise to pay you or your order, at your address, or at such other location as you may designate, amounts advanced from time to time under the terms of this Note up to the maximum outstanding principal balance of $10,000,000.00 (Principal), plus interest from the date of disbursement, on the unpaid outstanding Principal balance until this Note matures or this obligation is accelerated.

I may borrow up to the Principal amount more than one time.

All advances made will be made subject to all other terms and conditions of this Loan.

A. Purpose of Advances.    I agree that all advances made under this Loan are for the same purpose I originally stated on the application.

3. INTEREST.    Interest will accrue on the unpaid Principal balance of this Note at the rate of 4.75 percent (Interest Rate) until June 5, 2002, or which time it may change as described in the Variable Rate subsection.

A. Interest After Default.    If you declare a default under the terms of this Loan, including for failure to pay in full at maturity, you may increase the Interest Rate payable on the outstanding Principal balance of this Note. In such event, interest will accrue on the outstanding Principal balance at 18.000 percent until paid in full.

B. Maximum Interest Amount.    Any amount assessed or collected as interest under the terms of this Note or obligation will be limited to the Maximum Lawful Amount of interest allowed by state or federal law. Amounts collected in excess of the Maximum Lawful Amount will be applied first to the unpaid Principal balance. Any remainder will be refunded to me.

C. Statutory Authority.    The amount assessed or collected on this Note is authorized by the Kansas usury laws under Kan. Stat. Ann. § 16207.

D. Accrual.    During the scheduled term of this Loan interest accrues using an Actual/360 days counting method.

E. Variable Rate.    The Interest Rate may change during the term of this transaction.

(1) Index. Beginning with the first Change Date, the Interest Rate will be based on the following index: the highest base rate on corporate loans posted by at least 75% of the nation's 30 largest banks that The Wall Street Journal publishes as the Prime Rate.

The Current Index is the most recent index figure available on each Change Date. You do not guaranty by selecting this Index, or the margin, that the Interest Rate on this Note will be the same rate you charge on any other loans or class of loans you make to me or other borrowers. If this Index is no longer available, you will substitute a similar index. You will give me notice of your choice.

(2) Change Date. Each date on which the Interest Rate may change is called a Change Date. The Interest Rate may change June 5, 2002 and daily thereafter.

(3) Calculation Of Change. On each Change Date, you will calculate the Interest Rate, which will be the Current Index. The result of this calculation will be rounded to the nearest ..001 percent. Subject to any limitations, this will be the Interest Rate until the next Change Date. The new Interest Rate will become effective on each Change Date. The Interest Rate and other charges on this Note will never exceed the highest rate or charge allowed by law for this Note.

(4) Effect Of Variable Rate. A change in the Interest Rate will have the following effect on the payments: The amount of scheduled payments will change.

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4. REMEDIAL CHARGES.    In addition to interest or other finance charges, I agree that I will pay these additional fees based on my method and pattern of payment. Additional remedial charges may be described elsewhere in this Note.

A. Late Charge.    If a payment is more than 10 days late, I will be charged 5.000 percent of the Unpaid Portion of Payment or $25.00, whichever is greater. I will pay this late charge promptly but only once for each late payment.

B. Returned Check Charge.    I agree to pay a service charge not to exceed $30.00 for each check, negotiable order of withdrawal or draft I issue in connection with this Loan that is returned because it has been dishonored.

5. GOVERNING AGREEMENT.    This Note is further governed by the Commercial Loan Agreement executed between you and me as part of this Loan, as modified, amended or supplemented. Upon execution of this Note, I represent that I have reviewed and am in compliance with the terms contained in the Commercial Loan Agreement.

6. PAYMENT.    I agree to pay all accrued interest on the balance outstanding from time to time in regular payments beginning July 4, 2002, then on the same day of each month thereafter. Any payment scheduled for a date falling beyond the last day of the month, will be due on the last day. A final payment of the entire unpaid outstanding balance of Principal and interest will be due June 4, 2003.

Payments will be rounded to the nearest $.01. With the final payment I also agree to pay any additional fees or charges owing and the amount of any advances you have made to others on my behalf. Payments scheduled to be paid on the 29th, 30th or 31st day of a month that contains no such day will, instead, be made on the last day of such month.

Interest payments will be applied first to any charges I owe other than late charges, then to accrued, but unpaid interest, then to late charges. Principal payments will be applied first to the outstanding Principal balance, then to any late charges. If you and I agree to a different application of payments, we will describe our agreement on this Note. The actual amount of my final payment will depend on my payment record.

7. PREPAYMENT.    I may prepay this Loan in full or in part at any time. Any partial prepayment will not excuse any later scheduled payments until I pay in full.

8. LOAN PURPOSE.    The purpose of this Loan is to renew and increase Promissory Note #1001008337-1 dated June 20, 2001 with a credit limit of $3,500,000.00 and payable on June 20, 2002.

9. ADDITIONAL TERMS.    Non-usage Fee: There is a ¹/8% non-usage fee for the increased portion ($5,000,000.00) of the credit line or $6,250.00. This amount will be collected semi-annually.

10. SECURITY.    This Loan is not secured.

11. WAIVERS AND CONSENT.    To the extent not prohibited by law, I waive protest, presentment for payment, demand, notice of acceleration, notice of intent to accelerate and notice of dishonor.

A. Additional Waivers By Borrower.    In addition, I, and any party to this Note and Loan, to the extent permitted by law, consent to certain actions you may take, and generally waive defenses that may be available based on these actions or based on the status of a party to this Note.

(1) You may renew or extend payments on this Note, regardless of the number of such renewals or extensions.

(2) You may release any Borrower, endorser, guarantor, surety, accommodation maker or any other co-signer.

(3) You may release, substitute or impair any Property securing this Note.

(4) You, or any institution participating in this Note, may invoke your right of set-off.

(5) You may enter into any sales, repurchases or participations of this Note to any person in any amounts and I waive notice of such sales, repurchases or participations.

(6) I agree that any of us signing this Note as a Borrower is authorized to modify the terms of this Note or any instrument securing, guarantying or relating to this Note.

B. No Waiver By Lender.    Your course of dealing, or your forbearance from, or delay in, the exercise of any of your rights, remedies, privileges or right to insist upon my strict performance of any provisions contained in this Note, or other Loan documents, shall not be construed as a waiver by you, unless any such waiver is in writing and is signed by you.

12. APPLICABLE LAW.    This Note is governed by the laws of Kansas, the United States of America and to the extent required, by the laws of the jurisdiction where the Property is located. In the event of a dispute, the exclusive forum, venue and place of jurisdiction will be in Kansas, unless otherwise required by law.

13. JOINT AND INDIVIDUAL LIABILITY AND SUCCESSORS.    My obligation to pay this Loan is independent of the obligation of any other person who has also agreed to pay it. You may sue me alone, or anyone else who is obligated on this Loan, or any number of us together, to collect this Loan. Extending this Loan or new obligations under this Loan, will not affect my duty under this Loan and I will still be obligated to pay this Loan. The duties and benefits of this Loan will bind and benefit the successors and assigns of you and me.

14. AMENDMENT, INTEGRATION AND SEVERABILITY.    This Note may not be amended or modified by oral agreement. No amendment or modification of this Note is effective unless made in writing and executed by you and me. This Note is the complete and final expression of the agreement. If any provision of this Note is unenforceable, then the unenforceable provision will be severed and the remaining provisions will still be enforceable.

15. INTERPRETATION.    Whenever used, the singular includes the plural and the plural includes the singular. The section headings are for convenience only and are not to be used to interpret or define the terms of this Note.

16. NOTICE, FINANCIAL REPORTS AND ADDITIONAL DOCUMENTS.    Unless otherwise required by law, any notice will be given by delivering it or mailing it by first class mail to the appropriate party's address listed in the DATE AND PARTIES section, or to any other address designated in writing. Notice to one party will be deemed to be notice to all parties. I will inform you in writing of any change in my name, address or other application information. I agree to sign, deliver, and file any additional documents or certifications that you may consider necessary to perfect, continue, and preserve my obligations under this Loan and to confirm your lien status on any Property. Time is of the essence.

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17. CREDIT INFORMATION.    I agree that from time to time you may obtain credit information about me from others, including other lenders and credit reporting agencies, and report to others (such as a credit reporting agency) your credit experience with me. I agree that you will not be liable for any claim arising from the use of information provided to you by others or for providing such information to others.

18. ERRORS AND OMISSIONS.    I agree, if requested by you, to fully cooperate in the correction, if necessary, in the reasonable discretion of you of any and all loan closing documents so that all documents accurately describe the loan between you and me. I agree to assume all costs including by way of illustration and not limitation, actual expenses, legal fees and marketing losses for failing to reasonably comply with your requests within thirty (30) days.

19. SIGNATURES.    By signing, I agree to the terms contained in this Note. I also acknowledge receipt of a copy of this Note.

BORROWER:

EPIQ Systems, Inc.

/s/ Tom W. Olofson, CEO

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Exhibit 10.2

EX-99.1

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Exhibit 99.1

CERTIFICATION OF CEO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        I, Tom W. Olofson, Chief Executive Officer of EPIQ Systems, Inc. (the "Company"), hereby certify pursuant to Section 1350, of chapter 63 of title 18, United States Code, and Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge, (1) the quarterly report on Form 10-Q of the Company to which this Exhibit is attached (the "Report") fully complies with the requirements of section 15(d) of the Securities Exchange Act of 1934, and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/  TOM W. OLOFSON Tom W. Olofson

Dated: August 12, 2002

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Exhibit 99.1

EX-99.2

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Exhibit 99.2

CERTIFICATION OF CFO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        I, Elizabeth M. Braham, Chief Financial Officer of EPIQ Systems, Inc. (the "Company"), hereby certify pursuant to Section 1350, of chapter 63 of title 18, United States Code, and Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge, (1) the quarterly report on Form 10-Q of the Company to which this Exhibit is attached (the "Report") fully complies with the requirements of section 15(d) of the Securities Exchange Act of 1934, and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/  ELIZABETH M. BRAHAM Elizabeth M. Braham

Dated: August 12, 2002

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Exhibit 99.2