<PAGE>


     In lieu of a separate annual report, this Form 10-K includes all financial
statements of the corporation.

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

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   ----------


                                    FORM 10-K

(Mark One)

     [X]         ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
            OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)


FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2000

                                       OR

     [ ]        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
            OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

For the transition period from              to
                               ------------    ------------

Commission file number 0-11527

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

<Table>
<S>                                                        <C>
          DELAWARE                                              73-1064024
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                             Identification No.)
</Table>

               4343 SOUTH 118TH EAST AVENUE, TULSA, OKLAHOMA 74146
              (Address of principal executive offices and zip code)

        Registrant's telephone number, including area code (918) 877-6774

        SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE

          SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                          COMMON STOCK, $.05 PAR VALUE
                          ----------------------------
                                (Title of Class)

     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  X     No
                                                ---       ---

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements or
any amendment to this Form 10-K. [X]

     The aggregate market value of common stock held by non-affiliates of the
registrant on September 30, 2000 was approximately $2,240,000.

     The number of shares outstanding of the registrant's common stock was
2,911,783 shares of $0.05 Par Value Common Stock as of September 30, 2000.

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



<PAGE>

                                MPSI SYSTEMS INC.
                                    FORM 10-K

                                    CONTENTS


<Table>
<Caption>
                                                                                                  PAGE
                                                                                                  ----
<S>                                                                                             <C>
PART I

         ITEM 1.  Business....................................................................      2

         ITEM 2.  Properties..................................................................     11

         ITEM 3.  Legal proceedings...........................................................     11

         ITEM 4.  Submission of matters to a vote of security holders.........................     11

PART II

         ITEM 5.  Market for the registrant's common equity and related
                  stockholder matters.........................................................     11

         ITEM 6.  Selected financial data.....................................................     12

         ITEM 7.  Management's discussion and analysis of financial
                  condition and results of operations.........................................     12

         ITEM 7A. Disclosures about market risk ..............................................     16

         ITEM 8.  Financial statements and supplementary data.................................     17

         ITEM 9.  Changes in and disagreements with accountants on accounting and
                  financial disclosure........................................................     33

PART III

         ITEM 10. Directors and executive officers of the registrant..........................     33

         ITEM 11. Executive compensation......................................................     35

         ITEM 12. Security ownership of certain beneficial owners and management..............     37

         ITEM 13. Certain relationships and related transactions..............................     38

PART IV

         ITEM 14. Exhibits, financial statement schedules, and
                  reports on Form 8-K.........................................................     38

Signatures        ............................................................................     42

Index to Exhibits ............................................................................     43
</Table>




<PAGE>


                                     PART I

All statements other than statements of historical fact included in this Form
10-K, including without limitation statements under "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business"
regarding the Company's financial position, business strategy and plans and
objectives of management of the Company for future operations, are
forward-looking statements. When used in this Form 10-K, words such as
"anticipate," "believe," "estimate," "expect" "intend," and similar expressions,
as they relate to the Company or its management, identify forward-looking
statements. Such forward-looking statements are based on the beliefs of the
Company's management as well as assumptions made by and information currently
available to the Company's management. Actual results could differ materially
from those contemplated by the forward-looking statements as a result of certain
factors, including but not limited to technological change, product development
risks, competitive factors, pricing pressures and general economic conditions.
Such statements reflect the current views of the Company with respect to future
events and are subject to these and other risks, uncertainties, and assumptions
relating to the operations, results of operations, growth strategy, and
liquidity of the Company.


ITEM 1. BUSINESS

GENERAL

     The operations of MPSI are comprised of three business segments wherein it
provides decision support products and services. These business segments are
designated as Convenience Retailing, Pricing, and DataMetrix(R). MPSI's core
competency, which spans all business units, is (a) the development of computer
software which models consumer behavior in certain retail situations, and (b)
the development of strategic geographic information systems ("GIS") databases
concerning specified markets ("Market Studies") designated by clients. These
products and services are designed to meet retail business planning requirements
of the Company's clients, who have traditionally been petroleum-oriented
convenience retailers.

     From its inception in 1970 until it became a publicly-held company in 1983,
the Company's decision support services were directed primarily at planning
requirements for petroleum companies and other multi-outlet retailers who were
concerned with retail site selection and retail network optimization. MPSI
products provided computerized models of specified retail markets which enabled
its clients to predict sales volumes at proposed new retail sites, while at the
same time indicating the effects of each new outlet on sales volumes at both the
client's and competitors' existing outlets. During this period, the Company's
operations were characterized by limited geographic diversification, centralized
management, centralized market study production and significant dependence on
the petroleum industry.

     With the 1983 capital infusion from its initial public offering, the
operating plan of the Company expanded. In order to diversify and maintain
growth, management initiated programs intended to expand the Company's
geographic presence and its client mix. Accordingly, during the period from 1983
to 1987, MPSI expanded its European operations and opened new offices in
Singapore, Japan and Brazil. This expansion led to decentralization of
management and market study production. In the late 1980's, MPSI also attempted
to diversify its product set and target industries through acquisitions. Such
acquisitions utilized all remaining funds from the initial public offering and
were supplemented by corporate debt. Ultimately, the burden of multi-faceted
product diversification was too great; and, when compounded by the negative
effect of the Persian Gulf War on the core petroleum business, the Company was
forced to substantially scale back and reorganize in the early 1990's. The
reorganization resulted in (1) sale of the two acquired companies, (2)
downsizing of foreign database production facilities in Singapore and Bristol,
England, (3) substantial personnel reductions (approximately 50%), and (4) an
equity infusion, the proceeds of which liquidated the remaining bank debt.

     Among other benefits, the equity infusion allowed the Company to redirect
funding from debt service to product development. Beginning in 1994 and in
response to client input, MPSI committed substantial funding and development
efforts toward release of a new generation of MPSI decision support products.
Early versions of these products were completed for commercial release in North
America during fiscal year 1995 (see discussion of CAPS(TM) and PVO(R) software
under "Product Development"). New versions of CAPS for European and South



                                                                               2
<PAGE>


American clients were scheduled for release in the first quarter of fiscal year
1996 but were ultimately released in June 1996. In order to address the
organizational implications of delayed product releases, MPSI undertook a
revision of its software development group and initiated an evaluation of its
database production methodology. These evaluations ultimately highlighted not
only short-term opportunities to streamline processes and reduce costs, but also
indicated competitive threats to MPSI's long-term growth.

     In 1997, MPSI undertook a complete strategic re-evaluation of its product
direction, competitive position, pricing structure, and cost structure. This
strategic planning, headed by an expert external consultant, encompassed most of
fiscal 1997 and identified several key issues and corrective initiatives which
management began to implement in fiscal 1998. Among other things, the Company
undertook to (1) completely re-engineer its core "retail planning" software
suite in order to reduce development/maintenance costs and to open new market
segments for its software applications, (2) launch a substantially expanded
effort to leverage its considerable data warehouse of business location and
operational information through new sales channels, and (3) expand its
consulting practice within the convenience retailing segment to encompass
broader services to its petroleum target market. These initiatives were designed
to make MPSI the "one-stop" shop for clients whose retail planning needs span
the gamut from raw data through sophisticated applications software, to the
ultimate "solution" (rather than the tools and data to develop a solution in
house).

     Although implementation of certain strategic measures was hampered in 1998
by a significant economic downturn in the Pacific Rim, management was able to
focus on development of significant new technology together with internal
process improvements, cost reductions, and industry diversification during
fiscal 1999.

     o    The roll out of new Retail Explorer ("REX"(TM)) software for U.S.
          customers in 1999, combined with the introduction of new price
          management and modeling software for global use, helped MPSI maintain
          its revenue base in spite of significant price pressure and client
          merger activities in both fiscal 1999 and 2000. The modeling
          methodology inherent in the REX and pricing software made it possible
          for MPSI to reduce the amount/types of data necessary for model
          development. As a result, the Company was able to streamline its
          retail database (market studies) production process which allowed for
          a 30% reduction in staff during 2000.

     o    The October 1998 formation of DataMetrix Inc. (see further discussions
          hereinafter) was intended to leverage MPSI's retail data warehouse as
          a vehicle whereby the Company could begin serving a more diverse
          population of clients outside its traditional petroleum-oriented
          convenience retailing niche. Product and brand development occupied
          most of the interval through January 2000, at which time the data
          suite of products was commercially released. The revenue growth rate
          has been disappointing in the DataMetrix unit, and the burden on
          corporate liquidity (both internally generated and from outside
          sources) has been substantial over the two-year start-up period. (See
          additional discussion regarding liquidity and bank financing issues in
          Management's Discussion and Analysis and Note 5 to the Consolidated
          Financial Statements.) In response to these issues, MPSI significantly
          downsized this operation in several phases throughout fiscal 2000 with
          the final reductions occurring in October 2000. MPSI expects to
          continue DataMetrix product sales as part of the MPSI product suite
          going forward.

PRODUCTS AND SERVICES

     The Company markets its services in the United States, Europe, Africa,
Canada, South America, Central America, the Caribbean Basin and the Pacific Rim.
See Note 7 to the Consolidated Financial Statements for financial information
addressing foreign and domestic operations and export sales. Generally, the
Company's marketing activities center on personal presentations to existing and
prospective clients, client referrals, proposal submissions, selective mailings,
limited print advertising, seminars and trade show participation. Most of the
Company's clients are presently identified by the Company's direct sales force.
In the future, use of the Internet and business partnerships are expected to
play an increasingly significant role in sales and marketing (as well as product
delivery) activities.




                                                                               3
<PAGE>

     The Company's operating cycle and cash flow are dependent upon the timing
of client orders for market studies. Such studies are high dollar projects and,
consequently, the timing of market study production and the resulting revenues
are subject to a degree of quarterly fluctuation. Quarterly/annual revenues can
also be impacted by the timing of software license agreements (although adoption
of a new accounting pronouncement described in Note 1 to the consolidated
financial statements lessens the magnitude of quarterly/annual fluctuations from
this source). Accordingly, management believes that quarterly results may not be
indicative of results for full fiscal years and that the comparability of annual
revenues and profitability should also be evaluated giving effect to the
potential impact of contract timing.

     Economic conditions throughout the world have varying degrees of impact on
the Company's products. Volatile oil prices and unsettled economic conditions in
the Pacific Rim negatively affected the Company's volume of new business in
fiscal 1998. The Company experienced a resurgence from the Pacific Rim region
during 1999, but alternate-year market study patterns resulted in softer
revenues in fiscal 2000 not only from the Pacific Rim but also in South America.
However, the 1999 introduction of REX and new pricing products fueled growth in
North American market study volume in fiscal 2000, which was masked by price
reductions in that region of 20% - 40% in response to competition.

     More than 97% of consolidated revenues were derived from the petroleum
industry during the fiscal years ended September 30, 2000, 1999, and 1998. In
each of those fiscal years, MPSI derived revenues representing 10% or more of
consolidated revenues from certain clients, together with their affiliates, as
set forth below (in millions of dollars):

<Table>
<Caption>
                             2000              1999             1998
                         --------------    -------------    -------------
                         AMOUNT      %     AMOUNT     %     AMOUNT     %
                         ------     ---    ------    ---    ------    ---
<S>                       <C>       <C>    <C>       <C>    <C>       <C>
ExxonMobil.........       $ 4.6      25     $4.4      23     $ 3.5     19
BP Amoco...........         2.6      14       *        *     $ 2.1     11
</Table>
        *Below 10% for this period.

     The Company would be adversely affected if certain petroleum industry
clients curtailed their long-term usage of MPSI products. In October 2001,
ExxonMobil informed the Company that they would be exploring alternative retail
planning technologies. Of the $4.6 million revenues from ExxonMobil during
fiscal 2000, $3.2 million related to retail planning market studies. The
following table shows the percentage of total revenue from operations that the
Company derived from various sources during each of the last three fiscal years.

               REVENUE DERIVED FROM KEY PRODUCTS AND SERVICES (%)

<Table>
<Caption>
                                         2000    1999  1998
                                         -----   ----  ----
<S>                                      <C>     <C>   <C>
Market information databases.........       70     65    62
Software licenses....................        2      3     3
Software maintenance agreements......        3      3     4
Other services.......................       25     29    31
                                         -----   ----  ----
                                           100    100   100
</Table>

     Described below are the computer applications software, information
databases and other services currently provided by the Company.

Convenience Retailing Segment

     Until 1995, the Company's primary convenience retailing applications
software was the mainframe computer-based Retail Planning System(R) ("RPS"). See
"Product Development" for discussion of major enhancements of RPS commercially
released beginning in fiscal year 1995 as the Capital Planning System
("CAPS(R)"). Long-term capital investment and retail operational issues were
thereafter addressed using CAPS. This software was replaced with the Retail
Explorer ("REX(TM)") software, the initial version of which was released in the
U.S. in September 1999. REX versions were released in all MPSI service regions,
except Japan, by September 30, 2001. REX allows clients to maximize their
investment planning in the areas of (1) new retail site location where the
system provides an objective



                                                                               4
<PAGE>

measure for comparing available sites based on competition and convenience to
demand, (2) identification of outlets to divest where the system isolates and
evaluates client locations that have poor performance, (3) identification of
outlets to be rebuilt by identifying sales potential to be realized by
remodeling or reformatting specified outlets and (4) assessing multiple profit
centers by forecasting the potential benefits of retailing complementary
products and services.

     Software licensing agreements for the RPS, CAPS and REX software (including
ancillary products) generally have multi-year (primarily five-year agreements),
noncancellable terms. These agreements offer the client an installment payment
option requiring a payment upon execution and annual payments on the succeeding
anniversary dates of the agreement. The software can be used by the client for a
particular industry (such as petroleum) and a particular geographic market (such
as Japan). The Company's software license agreements contain broad restrictions
on the use and disclosure of the software by the client. See "Trademarks,
Copyrights, and Licenses" below. Modifying the software typically involves
changes in the weighting of various supply and demand factors or the addition of
a new factor as the result of changes in the marketplace.

     MPSI provides full maintenance (postcontract customer support) services for
the RPS, CAPS and REX software and, where necessary, training of and
consultation with client staff. Software licenses, maintenance and optional
consulting services are set out separately in each multi-year license agreement.
These agreements state that any company-sponsored modification to the software
during the postcontract customer support period will be provided to the client
at no additional cost. Prices for these software products are based upon
formulas which address geographical boundaries, population, number of
automobiles and other factors.

Information Databases for use with Convenience Retailing Software

     The Company also constructs customized market study databases that are the
primary informational sources used by the retail planning and pricing software.
The database construction process involves acquisition of geographic digitized
mapping, traffic counts, and demographic demand data from governmental agencies
or independent suppliers, on-site survey of retail outlet supply information by
MPSI personnel or contract surveyors, collation of all demographic demand and
supply information into specified data layout, data editing and quality control
checking, and preparation of the client-specific deliverables. Separate
contracts govern each database order by a client and generally require advance
payments ranging from 35 percent to 70 percent of the total sales value. The
amount of the required prepayment is determined principally by the client's
delivery requirements. There is no retainage provision relative to these
production-type contracts. These databases are arranged and presented in several
types of studies.

          Multi-Year Study Program. These multi-year, noncancelable studies are
     used by clients who possess a large number of retail sites and who wish to
     analyze market conditions and evaluate site locations in metropolitan areas
     on a regular basis. The supply and demand data used in this type of study
     is collected by the Company. This type of study provides clients with a
     series of consecutive database updates over a specific time period,
     generally five years. Clients agree to pay for this program in periodic
     installments. It is tailored to individual client needs, and pricing is
     determined in part by the number of subscribers to a particular market
     during the commitment period and offers clients discounts for their
     multi-year commitments.

          Market Area Studies ("MAS"). These studies are similar to the
     multi-year studies except they may contain client-specific information and
     are therefore sold only to a single client. They generally carry a higher
     price than a multi-year study of the same market. Portions of the
     demographic data can generally be used as a major part of other studies in
     the same market for clients in the same or comparable retail industries.

          Mini-Market Area Studies. These studies are similar to the MAS except
     the area studied does not contain more than 75 outlets. Likewise, the
     accompanying study deliverables are scaled down.

          Single Site Studies. These studies are used to evaluate market
     conditions or the effects of various operating decisions at a specific
     location within a specified geographic area.


                                                                               5
<PAGE>

     Licensed software clients generally use the PC-based software (as discussed
hereinafter) on laptop or desktop computers but may also utilize the models in
workstation environments to facilitate multi-user access. For this type of
activity, clients may utilize the retail planning software and information
databases on their own computer facilities, may dial in to MPSI's computers and
use the software interactively (subject to certain usage restrictions), or may
elect to have MPSI run tactics (that is, pose "what if" questions) on MPSI's
computers. In cases where software is installed on client computers, the Company
charges for installation of the software and training the client's personnel. A
client may then run unlimited tactics on its own equipment. If tactics are run
on the Company's computers, the client pays a fee per tactic. Clients who have
entered into long-term user agreements are entitled to discounts on databases
and on tactics or support services. The Company also provides consulting
services to its convenience retailing clients which include specialized data
acquisitions (e.g., consumer research); competitive analyses to identify key
competitors; brand value assessment; market entry/exit strategies; and
litigation support.

Pricing Segment

     Pricing software is generally licensed on a perpetual basis for each retail
outlet utilizing the software. Revenue on these perpetual licenses is recognized
upon delivery to the client. The contracts provide that subsequent upgrades will
be provided as MPSI determines them to be necessary for a given geographic
region and the client will receive such upgrades upon payment for the enhanced
modules, albeit at a discount for licensed users. Post-installation maintenance
and support services are offered to clients through separate optional
agreements. Revenue associated with annual maintenance agreements is recognized
ratably over the life of the agreement (generally one year). Revenue recognition
on support services, such as training, is recognized as completed.

     In the pricing segment, MPSI offers decision support software to meet
several client planning needs. Price Zones(TM) software ("PZS") allows a client
to establish different pricing zones within major markets relative to supplying
its dealer networks with petrol fuels. Price Volume Optimizer ("PVO"(R)) allows
a client to react to competitive price changes on a daily basis at the
individual outlet level in order to set prices for the ultimate consumer. MPSI's
newest product, the StreetBack Pricing(TM) ("SBP") system incorporates Price
Zone methodology in order to group outlets for the purpose of identifying
competition. Once competition is identified, the client selects representative
outlets for price tracking surveys and then formats that pricing data into a
data set to feed the SBP software. Based on competitive factors and the client's
desired margins by product, SBP determines the price at which desired sales
volume to the dealers can be achieved. During fiscal year 2001, MPSI replaced
PVO with a significantly enhanced product, PriceIt! Pro(TM).

     As with convenience retailing products, MPSI provides not only the pricing
products geared to a client's needs, but in many cases, also provides portions
of the market information necessary for the pricing software to perform. MPSI's
PriceTracker(TM) service is an example of customized data collection. MPSI
performs customized pricing surveys which allow clients to obtain high quality,
timely retail pricing information on a recurring basis in order to track pricing
trends in the marketplace.

DataMetrix(R) Segment - Generic Information Databases

     During fiscal year 1999, MPSI began the development of a new suite of GIS
database products with the formation of its new DataMetrix segment. This suite
of market information data products contains many of the data components
inherent in MPSI's traditional market study databases, but is designed to go
significantly beyond those traditional products in the scope of geographic
coverage. MPSI initially concentrated development on a national database for the
U.S. This initiative was undertaken in an effort to (a) leverage the customized
data sets the Company already has available in major markets by repackaging them
with other information into a data product which will be amenable in both price
and content to a broader segment of the Company's traditional petroleum-oriented
convenience retailing target market, and (b) allow the Company to attract
customers in other industries who may also be retail oriented. Due to
disappointing results from this unit and its failure to achieve critical mass on
a stand-alone basis, the unit was significantly downsized and absorbed in a new
"Business Development" initiative in fiscal 2001. MPSI continues to market
certain products under the DataMetrix brand.



                                                                               6
<PAGE>

      The principal DataMetrix product offered is StreetMetrixPlus(TM), which
encompasses the entire U.S. and contains, among other things, the major road
network, consumer demographics, automobile traffic counts, and key topographical
features. The basic geophysical information required by a spatially oriented
business client is contained in this database. If a client only wants the
traffic information or the geophysical information, they can obtain a subset of
StreetMetrixPlus. Should a customer be involved in petroleum or convenience
retailing, an add-on data set called PointMetrix(TM) gives them geocoded and
plotted information about existing petroleum retail outlets and convenience
stores in major markets. Late in fiscal 2000, MPSI released an interactive
Internet product, SiteMetrix Plus, which allows subscribers to customize a
geographic area of interest (state, county, trade area, etc.) and obtain
detailed road network, demographic, traffic and retail outlet information
anywhere in the U.S. Revenue is recognized on these products ratably over the
life of the subscription.

COMPETITION

     Since its inception in 1970 the Company has provided comprehensive
applications software and database systems, primarily to the retail petroleum
industry, and currently has more than 139 clients in 76 countries. There has
recently been a worldwide trend toward competitive product development of this
type due to the availability of computer resources and acceptance of retail
modeling theory. The Company believes its competition lies in two areas: first,
in the information technology and market research staffs of petroleum companies
or potential customers who develop and manage their own software and data; and
second, in consulting firms and data companies which compete for portions of the
Company's business.

     The Company has found that the market research staffs of some large
petroleum companies, supported by their internal IT groups, continue to
concentrate on in-house data gathering and customized site selection methods,
while other companies with more limited resources must consider low cost
alternatives for obtaining market information. To be successful, MPSI must
overcome the desire of its customers for total control on the one hand and cost
sensitivity on the other. It has been MPSI's experience that clients often
encounter substantial cost barriers relative to internally-developed systems.
Without the economies of scale, data gathering expertise and modeling
sophistication that MPSI has obtained during its 30-year existence, clients
often find that systems developed in house may be more customized to their
particular situation and may appear to cost less to develop initially (i.e.,
incremental pricing methods do not generally include costs of their internal
development personnel), but are expensive to maintain given changing market
conditions, require market information with an inherent degree of accuracy which
is difficult to obtain with internal resources, and the results of such systems
do not justify the associated costs and effort. Additionally, as clients or
potential clients struggle to manage operating costs and consider outsourcing
certain activities where economically feasible, the capabilities of companies
like MPSI offer an attractive alternative to internal systems.

     Because of the trend in large companies to outsource certain functions and
because of the growth in business consulting generally, independent consulting
and research companies have challenged certain products the Company offers such
as demographic data collection, geographic databases, retail outlet surveys,
retail consulting, pricing applications, and single site studies. Occasionally,
such consultants are engaged to develop a proprietary internal model for their
clients. Often competitive services of this type are offered by independent
consultants as part of a larger consulting project wherein pricing for the
retail planning segment can be very competitive with MPSI's pricing. Certain of
such companies are offering computerized tools and services which, the Company
believes, are not as sophisticated as MPSI products but may be attractive to
customers willing to sacrifice accuracy for a lower cost solution to their
business needs.

     The Company believes it competes with the internal solution and the
external consulting firms by providing generic, high-quality, sophisticated
software and reliable, accurate databases at a reasonable cost. MPSI further
believes its historical expertise and success in the areas of volume projections
and retail network planning provide a substantial barrier to entry for
competitors in the petroleum and convenience retailing sectors. Further, MPSI's
maintenance programs and its service to multiple clients in multiple geography
result in products that reflect the most up-to-date decision support
methodologies and market information available. The Company attributes its
ability to provide these quality products and services to the expertise and
experience of its personnel.


                                                                               7
<PAGE>

     By focusing on PC-oriented products and services, the Company believes it
is also well positioned to challenge "lower cost competitors." New data
collection techniques, implemented in late 1999, allows more timely and regular
updating of market data using handheld data collection technology and PC-based
data transmission and delivery technology. These processes have reduced MPSI's
data collection costs relative to market studies and thereby allowed the Company
to leverage data already collected or to collect custom data for clients who may
not require full market study information.

     In addition to addressing low-cost competitors, MPSI regularly evaluates
potential strategic alliances with independent companies who will allow MPSI to
offer a wider variety of integrated products and/or provide a wider product
distribution system. The target firms are those who service industries in which
MPSI has historical expertise (e.g., petroleum, government/postal, and banking).
Such alliances can also provide MPSI the opportunity to sub-contract portions of
larger consulting projects thereby establishing MPSI's credibility with the
client and allowing interface with customer personnel who are potentially
valuable sales contacts for future business. As an integrated service provider
and trusted advisor that can draw on both its own resources and also bring to
bear specific expertise of its business partners to meet a client's needs for a
variety of retail decision support information and services, MPSI can combat
both the small competitor's pricing pressure (because the client can identify
the added value of MPSI's multi-purpose data and software as compared to the
individual product or service pricing by a competitor) and the larger consulting
firm's encroachment on retail business segments (by offering particular industry
expertise and a proven track record in our retail planning niche which the
larger firms cannot equal).

BACKLOG

     The Company's September 30, 2000 and 1999 backlog consisted principally of
orders for market information databases (2000 -- $8,219,000, 1999 -- $9,287,000)
and multi-year commitments by customers for software and maintenance services
(2000 -- $1,451,000, 1999 -- $1,763,000). The Company expects that the market
information databases in backlog at September 30, 2000 will be recognized in
fiscal year revenues as follows: 2001 -- $2,764,000, 2002 -- $3,131,000, 2003 --
$626,000, 2004 -- $1,385,000, and 2005 -- $313,000. Maintenance and support
services in backlog are the result of noncancelable client contractual
obligations to purchase support services generally over periods of three to five
years. Such revenues will be recognized, and backlog accordingly reduced, on a
ratable basis over the life of each underlying agreement. Of the aggregate
software and maintenance backlog at September 30, 2000, future fiscal year
revenues are expected to be recognized as follows: 2001 -- $587,000, 2002 --
$417,000, 2003 -- $180,000, 2004 -- $176,000, 2005 -- $82,000 and beyond --
$9,000.

EMPLOYEES

     As of September 30, 2000, the Company employed 153 people, including 125 in
the convenience retail segment, 21 in the DataMetrix segment, and 7 in the
pricing segment. Of the total employees, there are 58 in marketing (which
includes sales and client services); 31 in research and development (which
includes software development and system support); 46 in database analysis,
consulting, and production; and 18 in management, administration, and finance.
Of these, 129 are employed in the United States and 24 are employed in foreign
countries. In October 2000, MPSI completed its multi-phase reduction in force
with the release of twenty additional staff, primarily in the DataMetrix and
database production groups.

PRODUCT DEVELOPMENT

     MPSI's product development cycle consists of four primary stages. During
the product specification phase the Company identifies the initial requirements
of the software, determines the functional requirements and begins the initial
design. During this stage, the Company sets forth the database requirements as
well as the hardware, operating systems, third-party imbedded software and
general functional requirements. From this information a business plan,
conceptual prototype and a project plan are developed. The prototypes developed
during this stage are not fully functional prototypes, but are designed to
present the "look and feel" of the end product. Upon completion of this phase,
the Company has generally completed a detailed program design and, accordingly,
established the



                                                                               8

<PAGE>

technological feasibility of the project. Following the product specification
phase, the project enters the build phase where actual software programming
takes place. Once coding is complete, the project enters the quality assurance
phase which encompasses various internal systems testing and user acceptance
testing. Once testing is complete, the project enters the implementation phase
where hardware and software installation procedures and user documentation are
finalized.

     Software development costs incurred prior to completion of the detailed
program design are expensed as research and development costs. Costs incurred
during the build, quality assurance and implementation phases are generally
capitalized. At the point where the software product is ready for general
release to the customers, capitalization of costs ceases.

     Over the last five years, the major development efforts of the Company have
been directed toward (1) enhancement of retail planning products in order to
extend petroleum utilization around the world, (2) portation of the software to
a variety of workstation/PC platforms, and (3) incorporation of internally
developed or third-party software in order to enhance the user interface, speed
and efficiency of this software.

     From 1994 until 1999, the CAPS software and related databases were the
premier MPSI product set. The CAPS software for North America was released in
January 1995, and from that time until 1999, MPSI had developed and released
CAPS and PVO so that those products were capable of serving all MPSI operating
regions. In 1999, MPSI began to replace CAPS with new REX technology. In fiscal
2000, the Company began to develop PriceIt! Pro to replace PVO.

     Management extended the September 1999 roll out of the North American REX
to encompass all MPSI service regions, except Japan, during 2001. Implicit in
the REX design is (1) less expensive and less complex client deliverables, (2)
modular architecture which will yield maximum flexibility for interface with
existing client technology and maximum flexibility for MPSI to apply its
technology to industries other than retail petroleum, (3) a substantially
reduced data requirement thereby significantly reducing data gathering costs,
(4) a higher degree of predictive accuracy in geographic areas of sparse housing
density (high transient areas) and (5) improved predictive capabilities with
respect to convenience stores. At September 30, 2000, the Company had
capitalized approximately $463,000 of development costs related to the U.S.
version of REX. The Company has internally funded the development of REX.
However, additional development costs which may be associated with utilization
of this new technology to service industries other than retail petroleum may
require external funding.

     The initial commercial version of PVO was completed in August of 1995 with
Price Zones following the next year. These products represent a continuing
opportunity for MPSI to leverage its retail data warehouse and allows the
Company to expand its services to other management units within our clients'
retail groups. Although acceptance of this new price-prediction technology was
slow initially, the pricing segment was profitable in 1998, and enjoyed revenue
growth and profitability through fiscal year 1999. Results fell off in fiscal
2000 as client mergers began to slow new business prospects. During fiscal 1999,
MPSI developed two spin-off products from PVO -- PriceIt that will take this
technology to the smaller user and is potentially the first Internet pricing
offering by MPSI, and StreetBack Pricing software for petroleum franchisee
pricing. These products contributed to geographic expansion of pricing users in
2000, but revenue was flat in 2000, and, as a result of increased costs
associated with market penetration initiatives, operating income declined.

     In addition to the enhancements to retail planning and pricing product
lines noted above, the Company has undertaken development of two new products
aimed at (a) expanding usage of retail modeling within the petroleum industry by
smaller customers, and (b) positioning the Company to begin penetrating
retail-oriented industries other than petroleum. In February 1999, the Company
acquired exclusive rights to market the most recent retail/customer analysis
software product developed by Dr. David Huff. This new data mining tool allows
clients to analyze customer segments for target marketing, product segmentation
and a variety of other merchandising purposes. The first commercial roll out of
the Huff Market Area Planner software product ("Huff") took place in mid-2000.
The Company has also formed the DataMetrix business segment, whose primary
mission is to develop and market a suite of U.S.-market data products. These
products include road networks, traffic density, demographic and retail outlet
characteristics, which should allow clients in a variety of industries to
evaluate competition, analyze consumers and



                                                                               9
<PAGE>
plan retail spending. Initial versions of the data products were commercially
available in July 1999, but with the release of version 2.0 in January 2000, the
Company was better positioned versus data competitors. However, the unit's
failure to achieve critical mass ultimately led management to significantly
reduce the staff and cost structure of the unit.

     Management committed resources in fiscal 2000 to development of certain
software and data products for use and/or delivery via the Internet. This
initiative should allow the Company to reach a much broader client base and
reduce product development and support costs in future periods.

     During the years ended September 30, 2000, 1999, and 1998, the Company
spent $2,467, 000, $3,101,000, and $2,282,000, respectively, on research and
development, product support, enhancement of new products, and the maintenance
of existing products. The amounts spent on research and development were
primarily Company sponsored, meaning there was no material amount of direct
recoupment of expenses from clients.

TRADEMARKS, COPYRIGHTS, AND LICENSES

     The Company holds a number of trademarks, some of which are registered at
the U.S. Patent and Trademark Office. To date, registrations have been sought
only in the United States and Mexico. Set forth below are the Company's
trademarks and final filing dates required to renew trademark status.

<Table>
<Caption>
                                            STATUS OF
                 PRODUCT                       MARK              EXPIRATION             COUNTRY
---------------------------------------     ----------           ----------             -------
<S>                                         <C>              <C>                    <C>
MPSI's Site Evaluation System..........     Registered         October 25, 2001           U.S.
MPSI and Design........................     Registered         February 5, 2002       U.S. / Mexico
MPSI...................................     Registered         January 29, 2002       U.S. / Mexico
MPSI's OPS.............................     Registered         November 9, 2004           U.S.
Retail Planning System.................     Registered           August 7, 2005           U.S.
Location Volume........................     Registered            July 23, 2006           U.S.
Facility/Location Volume...............     Registered        February 11, 2007           U.S.
MPSI's CAPS............................     Registered        November 12, 2007       U.S. / Mexico
MPSI Systems...........................     Registered                      N/A          Mexico
Capital Planning Systems...............     Registered                      N/A          Mexico
Retail Explorer........................     Trademark         Common Law Rights           U.S.

PVO....................................     Registered            April 2, 2006           U.S.
Price Volume Optimizer.................     Registered        February 11, 2007           U.S.
PriceIt!...............................     Trademark         Common Law Rights           U.S.
PriceTracker...........................     Trademark         Common Law Rights           U.S.
PriceIt! Pro...........................     Trademark         Common Law Rights           U.S.
Price Zones............................     Trademark         Common Law Rights           U.S.
StreetBack Pricing.....................     Trademark         Common Law Rights           U.S.

DataMetrix.............................     Registered        November 13, 2010           U.S.
StreetMetrix...........................     Trademark         Common Law Rights           U.S.
StreetMetrixPlus.......................     Trademark         Common Law Rights           U.S.
TrafficMetrix..........................     Trademark         Common Law Rights           U.S.
</Table>

     The Company does not hold any patents or registered copyrights. The
Company's long-term software license agreements require customer acknowledgment
of the proprietary nature of the Company's software. The Company relies on these
agreements, together with trade secret laws, internal nondisclosure safeguards,
and international treaties, to protect its products. To date, the Company has
had no indication of any material breach in the security of its products. Should
a material breach in the security of the Company's software products occur, it
might have the impact of reducing the current barriers to entry for competitors
and thus adversely affect long-term results of Company operations. The Company's
modeling methodology, mathematical modeling algorithms and data gathering
processes have been developed over an extensive period of time and would, in the
absence of a material breach in the security, require potential competitors a
substantial period of time to duplicate. Even in the event that a material
breach did occur, such as a reverse engineering of an MPSI software product, the
Company believes that because of the annual change in technology, the retail
markets served, and the regular software upgrades potentially associated
therewith, such breach would not result in a material adverse effect on the
Company's short-term business because



                                                                              10
<PAGE>


new versions of its products would likely reduce the competitive value of older
versions breached by potential competitors.

ITEM 2. PROPERTIES

     All office facilities are leased, including the headquarters lease that
expires in June 2003. The Company's principal facility and corporate
headquarters in Tulsa, Oklahoma (56,000 square feet) is the primary location for
software development and market study production. The Bristol, England facility
encompasses 500 square feet, and the Rio de Janeiro, Brazil office encompasses
1,500 square feet. Both foreign offices do single site and special project work
in addition to their primary marketing role. Regional sales offices in
Singapore; Johannesburg, South Africa; Tokyo, Japan; Bangkok, Thailand; and
Seoul, South Korea remained the Company's principal client liaison facilities in
those areas at September 30, 2000. Management believes that the various
facilities are properly sized to meet anticipated business levels.

ITEM 3. LEGAL PROCEEDINGS

         There are no material pending legal proceedings at September 30, 2000
which meet the criteria for disclosure under this item.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         On September 28, 2000, MPSI held its Annual Meeting of Stockholders in
Tulsa, Oklahoma. At the close of business on the record date of August 18, 2000,
the Company had 2,911,783 shares of Common Stock outstanding and entitled to
vote. Approximately 2.3 million shares were represented at this meeting in
person or by proxy constituting the required quorum for the meeting. There were
two proposals presented at this meeting: (1) Election of the six incumbent
Directors, and (2) ratification of the appointment of Ernst & Young LLP as the
Company's independent auditors. Both proposals were approved by a majority of
the stockholders.


                                     PART II


ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
        STOCKHOLDER MATTERS


The Company's Common Stock was listed on The NASDAQ SmallCap Market tier of The
Nasdaq Market (hereafter NASDAQ) until February 22, 2001. Nasdaq advised the
registrant on January 17, 2001 that it would de-list the registrant's securities
from The Nasdaq Stock Market on January 26, 2001 unless the registrant filed its
annual report on Form 10-K for the year ended September 30, 2000 on or before
January 25, 2001. As the registrant intended to file its September 30, 2000 Form
10-K upon securing an alternative credit facility, the registrant filed an
appeal with Nasdaq, but was unable to file the document with the SEC in time to
avoid being de-listed. Accordingly, effective close of business February 22,
2001, MPSI's stock was de-listed from The Nasdaq Stock Market and subsequently
trades Over the Counter on Pink Sheets. The subsequent Form 10-Q's for the
quarters ended December 31, 2000, March 31, 2001, and June 30, 2001 were also
not filed on a timely basis due to the continuing banking uncertainty. See
Note 5 to the Consolidated Financial Statements.



                                                                              11
<PAGE>


     Information in the table below reflects the high and low sales prices
reported by NASDAQ.

<Table>
<Caption>
                                                                  LOW         HIGH
                                                                 -----        -----
<S>                                                              <C>         <C>
Fiscal 1999
  First Quarter Ended December 31, 1998 ..............            0.88         3.00
  Second Quarter Ended March 31 ......................            1.38         3.56
  Third Quarter Ended June 30 ........................            1.38         3.00
  Fourth Quarter Ended September 30  .................            2.38         2.88

Fiscal 2000
  First Quarter Ended December 31, 1999 ..............            1.06         3.25
  Second Quarter Ended March 31 ......................            1.81         5.69
  Third Quarter Ended June 30 ........................            1.16         3.06
  Fourth Quarter Ended September 30  .................            1.19         2.31
</Table>

     The 2,911,783 shares of Common Stock outstanding at September 30, 2000,
were held by 892 stockholders of record. At that date, an additional 168,000
shares were subject to options to purchase Common Stock (See Note 8 to the
Consolidated Financial Statements). The per share bid and offer price on
September 30, 2000, was $1.81. Common Stock that could be sold pursuant to Rule
144 under the 1933 Act totals 1,674,000 shares as of September 30, 2000.

     The Company intends to reinvest its earnings in its business and therefore
does not anticipate paying any cash dividends in the foreseeable future. The
Company has not paid cash dividends since its inception.

ITEM 6. SELECTED FINANCIAL DATA

                             SELECTED FINANCIAL DATA
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<Table>
<Caption>
                                                                           FOR THE YEAR ENDED SEPTEMBER 30,
                                                     --------------------------------------------------------------------------
                                                         2000             1999           1998           1997           1996
                                                     ------------    ------------   ------------    ------------   ------------
<S>                                                  <C>             <C>            <C>             <C>            <C>
OPERATING DATA:
Revenues .........................................   $     18,283    $     19,332   $     19,101    $     23,438   $     21,745
Net income (loss) ................................           (267)             87         (1,499)          1,103           (623)

Per share:
   Basic income (loss) per common share ..........   $       (.09)   $        .03   $       (.53)   $        .39   $       (.23)
   Weighted average common shares outstanding ....          2,886           2,849          2,844           2,798          2,756
   Diluted income (loss) per common and common
        equivalent share .........................   $       (.09)   $        .03   $       (.53)   $        .39   $       (.23)
   Weighted average shares of common stock and
        dilutive common stock equivalents
         outstanding .............................          2,886           2,894          2,844           2,820          2,756


BALANCE SHEET DATA:
Total assets .....................................   $      9,603    $     10,518   $      9,490    $     11,638   $     10,319
Noncurrent deferred revenue ......................            712           1,146          1,346           1,634          1,342
Noncurrent deferred income taxes .................            121              86             86             442             98
Other noncurrent liabilities .....................             96             133            172              37             79
</Table>


ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS

     The following table sets forth (in thousands), for the periods indicated,
certain items in the consolidated statements of operations.



                                                                              12
<PAGE>



<Table>
<Caption>
                                                           YEAR ENDED SEPTEMBER 30
                                                -----------------------------------------------
                                                     2000             1999             1998
                                                -------------    -------------    -------------
<S>                                             <C>              <C>              <C>
Revenues ....................................   $      18,283    $      19,332    $      19,101
Cost of sales ...............................           7,542            8,245            8,796
                                                -------------    -------------    -------------
  Gross profit ..............................          10,741           11,087           10,305
                                                -------------    -------------    -------------
Operating expenses:
  General and administrative ................           3,653            3,184            3,312
  Marketing and client services .............           5,925            6,235            6,773
  Research and development ..................           1,189            1,216            1,888
                                                -------------    -------------    -------------
          Total operating expenses ..........          10,767           10,635           11,973
                                                -------------    -------------    -------------
Operating income (loss) .....................             (26)             452           (1,668)
Other income (expense), net .................             (53)             (58)             (30)
                                                -------------    -------------    -------------
Income (loss)  before income taxes ..........             (79)             394           (1,698)
Income taxes ................................             188              307             (199)
                                                -------------    -------------    -------------
Net income (loss) ...........................   $        (267)   $          87    $      (1,499)
                                                =============    =============    =============
</Table>

RESULTS OF OPERATIONS

         CONSOLIDATED OPERATIONS. MPSI reported a net loss of $267,000 or $.09
per share for fiscal year 2000 compared with net income of $87,000 or $.03 per
share in fiscal year 1999 and a loss of $1,499,000 or $.53 per share in fiscal
year 1998. The trend of consolidated revenues has been impacted by reductions in
retail database prices to meet competition and disruptions of order patterns due
to mergers involving several of MPSI's most significant petroleum industry
customers. From a positive perspective, however, management is pleased with the
increased interest generated by the late 1999 release of the new Retail
Explorer ("REX") software modeling technology in the U.S. market. The
implementation of new database production processes in association with that new
technology has allowed the Company to reduce its U.S. operating costs as
discussed hereafter.

         The Company presently operates in three business segments. Due to the
reduced postal activity and overlapping skill sets, the previous Postal and
DataMetrix segments were combined during fiscal year 2000. Generally, MPSI has
experienced solid performance in the Convenience Retailing segment of its
business (traditional core operations), which accounts for more than 80% of
consolidated revenues in fiscal years 2000, 1999, and 1998. The Company's
Pricing segment, dedicated to retail pricing products and services, was
profitable in fiscal 2000 despite a decline in revenue. The positive results
from these two divisions in 2000 and 1999 are masked in the consolidated results
by the significant start-up losses incurred in the DataMetrix segment since its
operations began early in fiscal year 1999. Set forth below is supplemental
information concerning the operations of the indicated business segments.

         CONVENIENCE RETAILING SEGMENT. This segment accounted for revenues of
$15,337,000, $16,372,000 and $17,326,000 in fiscal years 2000, 1999 and 1998,
respectively. Corresponding operating income (loss) was $1,907,000, $1,170,000
and ($1,340,000). The 1998 operating results were attributable in large measure
to the significant economic uncertainties in the Pacific Rim, which generally
accounts for 30% - 40% of consolidated convenience retailing revenue.

         Fiscal year 2000 convenience retailing revenues, and to a lesser
extent, revenues in the last half of fiscal year 1999 as well, were negatively
impacted by (1) price reductions of 20% - 40% for certain products in certain
operating regions, (2) market turmoil in Japan where retail petroleum
deregulation has slowed the pace of retail network development, (3) merger
activity involving several of MPSI's major clients, and (4) off-year effects of
the "every-other-year" cycles for market studies by certain clients in Southeast
Asia, Europe and South America. Management estimates that the price decreases in
fiscal year 1999 negatively affected convenience retailing revenues by less than
5% but had an estimated 10% (approximately $1.5 million) negative impact in
fiscal year 2000. Management believes that with these price adjustments, the
competitive threat based on price has been effectively neutralized. As a result
of market uncertainties caused by Japanese deregulation, MPSI's revenues from
traditional Japanese clients were approximately $1 million lower in fiscal year
2000. Since the Company generally experiences relatively high gross margins on
Japanese database work because of the consistent multi-client studies, this
issue also had the effect of lowering gross profit margins on Japanese work by
about 5%. Cyclical study cycles negatively impacted fiscal 2000 revenues by
approximately $1.5 million.



                                                                              13
<PAGE>


         Despite pricing pressures, regulatory turmoil and merger activities,
MPSI was able to minimize the revenue downturn in fiscal 2000 compared with 1999
and 1998 in large part because of the positive reception afforded the release of
our REX modeling software in North America (September 1999). Management
estimates that North American market study volume increased by approximately 70%
in response to its new technology. Increased multi-client studies combined with
implementation of new, more efficient production processes associated with
REX-oriented database delivery helped increase the gross margin on North
American databases by over 100% in fiscal year 2000. During North American
implementation and in contemplation of similar benefit, as REX was rolled out
globally, the Company was able to reduce staff by approximately 30%. The global
roll out of REX began in August 2000 for Latin American customers and was
completed for all MPSI operating regions, except Japan, during fiscal 2001.
While MPSI shared a portion of these benefits with its customers (see pricing
adjustments discussed above), management contemplates improved profitability
from foreign operations similar to the improvement experienced in North America.

         PRICING SEGMENT. MPSI experienced a leveling off of revenue from its
suite of retail pricing products during fiscal 2000. The Company reported
revenues of $2,208,000, $2,248,000 and $1,524,000 for fiscal years 2000, 1999
and 1998, respectively. The Company began to experience sales and technical
resource constraints in fiscal year 2000 which management believes may have
slowed revenue growth. Due to adverse operational and cash flow concerns with
the DataMetrix segment (see below), MPSI was not able to add staff to the
pricing unit in fiscal year 2000. The nominal revenue decline compared with 1999
was affected by timing of client technology tests and the relatively long sales
cycle associated with these products. The increased fiscal 1999 revenue compared
with 1998 was the result of market penetration with new pricing software
products.

         DATAMETRIX SEGMENT. In fiscal 1998, MPSI formed a separate wholly-owned
subsidiary, DataMetrix Inc., whose mission was to leverage MPSI's substantial
data warehouse and modeling competency. The unit was to target non-traditional
customers in industries other than the core petroleum-oriented convenience
retail niche of the Company. Fiscal 1998 results reflect initial market
penetration with a small start-up staff. The Company committed significant
resources to complete the initial product development during fiscal year 1999
wherein DataMetrix incurred an operating loss of $1,169,000. In fiscal year
2000, the focus was on development of brand recognition and marketing, including
the release of an interactive Internet product wherein a customer can obtain a
wealth of retail information about virtually any size of geographic unit (city,
county, trade area). Although fiscal 2000 revenues increased compared with 1999,
the unit incurred an operating loss of $2,047,000 and had still not reached
critical mass. The results in fiscal 1999 and 2000 mask the otherwise positive
performance of MPSI's traditional core activities. Subsequent to September 30,
2000, in recognition that MPSI could not continue to internally fund operating
losses of this magnitude, management substantially reduced the staff and cost
structure of the unit. Although the DataMetrix brand is perpetuated, the
previously stand-alone unit was absorbed into a new Business Development segment
in fiscal 2001, and support staff were significantly reduced.

         CONSOLIDATED OPERATING EXPENSES. Consolidated operating costs were
$11,969,000, $12,441,000 and $12,174,000 in fiscal years 2000, 1999 and 1998,
respectively (including all capitalized development costs of $1,202,000,
$1,806,000 and $201,000).

         General and administrative expenses increased $469,000 as compared to
1999 principally as the result of severance costs associated with reductions in
workforce that occurred throughout fiscal year 2000. The efficiencies gained
through implementation of the new REX technology database production allowed
MPSI to reduce staff by approximately 30% (although the net change in headcount
is lower due to hiring of new technical and sales personnel in other functional
departments). Administrative costs in 1999 decreased $128,000 compared with 1998
principally due to corporate moving costs that were reflected in 1998.

         Consolidated marketing and client service expenses declined $310,000
and $538,000 in fiscal years 2000 and 1999, respectively, as compared with
applicable preceding years. The reduction of costs in fiscal year 2000 was
principally due to downsizing of DataMetrix. The net cost decrease in 1999
compared with 1998 was attributable to lower staffing, travel and office
overhead costs (approximately $1,030,000) in the convenience retailing segment,
offset by $888,000 of costs associated with new sales infrastructure in the
DataMetrix segment. An additional



                                                                              14
<PAGE>

component of the decrease in consolidated marketing expenses was approximately
$396,000 attributable to cost reductions and efficiencies after start up in the
pricing and postal segments.

         Consolidated research and development costs (including amounts
capitalized for product development as discussed under Financial Condition and
Liquidity below) were approximately $631,000 lower in fiscal year 2000 than in
1999. This was principally attributable to the completion of DataMetrix product
development in December 1999 (first quarter of fiscal 2000) at an aggregate
incremental cost of $400,000 compared with $800,000 incurred from such
activities in fiscal 1999. The $800,000 costs in 1999 reflects new development
staff and related costs in the DataMetrix unit dedicated to initial development
of the U.S. geographic database and accounts for most of the $933,000 (45%)
increase in development costs compared with 1998.

         OTHER INCOME AND EXPENSES. The fiscal year decrease of $5,000 in these
categories compared with 1999, while immaterial on a net basis, reflects two
significant opposing fluctuations. The Company incurred $171,000 more interest
expense in fiscal 2000 due to carrying higher debt balances throughout the
fiscal year, mainly to fund the operating losses of the DataMetrix unit.
Offsetting these expenses was a $337,000 higher net exchange gain in fiscal 2000
as compared to fiscal 1999 principally due to the closure of the Australian
office and the related reporting of accumulated translation adjustments in other
income. Other exchange gains/losses result from the fact that MPSI denominates
some transactions in currencies other than the U.S. dollar to accommodate
clients in certain markets (principally denominated in Japanese Yen, Singapore
dollars or British Pounds). The Company limits the number of contracts
denominated in foreign currencies.

         INCOME TAXES. Income taxes decreased $119,000 in fiscal 2000 compared
with 1999 principally because of (1) a decline in pretax earnings, (2) lower
foreign income tax withholding at the source by clients making remittances to
the U.S., which were offset by an increase in non-deductible foreign losses, and
(3) the settlement of an IRS exam during fiscal 2000 for an amount less than was
previously provided. Income taxes for fiscal 1999 increased $506,000 over those
in 1998 primarily because of higher foreign tax withheld at the source by
remitting customers.

FINANCIAL CONDITION AND LIQUIDITY

         LIQUIDITY. Working capital of $113,000 at September 30, 2000 was down
slightly when compared to the $259,000 amount at September 30, 1999. Despite the
cash drain from the DataMetrix start-up activities, the Company was able to
generate increased cash flow from operations by $315,000 (30%) compared with
fiscal year 1999. This is largely due to the strength of core convenience
retailing activities associated with the new REX technology. When combined with
the lower expenditures on both fixed assets and capitalized product development
(combined decline of $907,000 versus fiscal year 1999), the cash flow from
operations in combination with additional borrowing under the Company's
revolving credit agreement helped fund the DataMetrix unit and the build-up of
cash reserves which increased $580,000.

         EXTERNAL FINANCING. In June 2000, the Company's principal bank, Bank of
America, announced its internal plans to substantially reduce its lending
exposures in certain industries and to certain customer categories. MPSI fell
within the criteria and, accordingly, was notified effective June 30, 2000 that
it must either liquidate or move its line of credit. The outstanding balance at
that time was $2,000,000, and the Company was given 120 days to effect a change.
Subsequent to that notice, MPSI has diligently worked this issue on two fronts:
(1) investigation of alternative financing sources, and (2) regular pay down of
the debt from operating cash flows. Although no acceptable financing alternative
has been identified, the outstanding balance has been steadily reduced from
$2,000,000 at September 30, 2000 to $900,000 at September 30, 2001 as a result
of (1) cash generated from operations, (2) installment payments received on
long-term software license agreements (where revenue had been recognized in
previous years), and (3) lower capital software development costs following the
release of REX globally in the first half of fiscal 2001. The pay downs have
continually pressured MPSI's operating liquidity and prevented accumulation of
additional cash reserves even though the Company had generated positive cash
flow from operations of more than $1.9 million in fiscal 2001. Largely on the
basis of the Company's diligent efforts at liquidation, Bank of America has
granted extensions of the credit maturity effective October 2000, January 2001,
April 2001, May 2001 and October 2001. With each extension, except October 2001,
the Bank also waived the $3,500,000 minimum net worth covenant requirement with
which the Company had not been in compliance. The latest extension by Bank of
America, effective January 6, 2002, was granted concurrent with a $250,000 pay
down by the Company and set the new maturity date at October 1, 2002. See Note 5
to the consolidated financial statements for further information about the
extension. This action significantly lengthened the Bank's commitment to MPSI
when compared with previous extension periods and provided for an adjustment of
the minimum net worth covenant, with which the Company had not been in
compliance, down to $1.7 million.

         In the absence of an alternative banking solution that provided some
measure of working capital draw capability, MPSI had to deal with peaks and
valleys in cash flow by adjusting payments to suppliers and other creditors. On
occasion during 2001, this situation caused the Company to fall behind with
timely payment of payroll taxes, 401(k) matching contributions and some
operational overheads such as insurance premiums. Thus far, MPSI has been able
to manage these situations satisfactorily such that no significant exposure or
loss of critical suppliers has resulted. Additionally, as of the date of the
latest extension by the bank, the Company had significantly improved the payment
timing to its suppliers and other creditors. Management expects that cash flow
from operations will be sufficient to meet operating requirements and liquidate
the remaining bank debt in fiscal 2002. However, if the Company is unable to
maintain the minimum net worth covenant or to maintain an adequate collateral
level as determined through a defined borrowing base computation, the bank could
call the note before its maturity date. The bank has not taken such action to
date. If this were to occur, the Company may not have sufficient cash to repay
the note requiring management to take such actions as delaying payments to
suppliers or reducing operating expenditures. Such actions, if necessary, could
have an adverse effect on the Company's operations or financial condition.
Management will continue to seek cost-effective alternate financing sources, not
only as a means of accelerating liquidation of the current note, but also to
provide back-up working capital availability.


                                                                              15
<PAGE>


         NONCURRENT ASSETS. Expenditures for the acquisition/upgrade of computer
equipment were $83,000, down $303,000 when compared with fiscal year 1999.
Having made substantial investment in computer systems in prior years, and as a
result of the fiscal 2000 reduction in force, the Company is well positioned to
meet its operating needs from an equipment standpoint.

         Capitalized development costs were $1,202,000 and $1,806,000 in fiscal
years 2000 and 1999, respectively. These amounts represent significant annual
increases over capitalized development since 1995 and primarily relate to:

     o    Initial development of the DataMetrix U.S. geographic and retail
          database on which the Company spent $400,000 in fiscal 2000 and
          $800,000 in fiscal 1999.

     o    Development of the REX software on which the Company spent $463,000 in
          fiscal year 2000 and $348,000 in fiscal 1999.

     o    Development of new pricing software products in the amount of $109,000
          in fiscal 2000 and $16,000 in fiscal 1999.

     o    Development of entirely new software for utilization in the internal
          database production process to parallel the requirements of the REX
          software at a cost of $107,000 in 2000 and $353,000 in 1999.

         MPSI has historically committed more than $2 million annually to
product research and development. Generally development projects will be funded
out of operating cash flow.

         BACKLOG. MPSI's backlog of market study projects was $8,219,000 and
$9,287,000 at September 30, 2000 and 1999, respectively. This backlog contains a
number of recurring studies under multi-year client commitments. Because
customer commitments for market studies may entail multi-year terms, the number
of such agreements in force at a particular point in time may have significant
implications on the conclusions to be drawn concerning fluctuations in backlog
between accounting periods. An analysis which identifies a declining backlog
might erroneously conclude that the Company's business is declining, when in
fact it is servicing its customers satisfactorily and can rightfully expect
renewed study commitments in the future. Management believes that its backlog
continues to indicate substantial commitment to MPSI technology on the part of
its customers in spite of the fact that, subsequent to September 30, 2001,
MPSI's largest customer notified the Company that it would explore other
convenience retailing technology as a possible alternative to MPSI products and
services. Of the $4.6 million revenues from that customer in fiscal 2000, $3.2
million relates to such convenience retailing activities.

YEAR 2000

         MPSI has not incurred any substantial expenses in response to Year 2000
issues and does not expect to receive any henceforth. No amounts are presently
accrued and no unasserted claims are pending to the Company's knowledge.

ITEM 7A. DISCLOSURES ABOUT MARKET RISK

         The Company is exposed to the impact of interest rate fluctuations as a
result of current borrowings under its revolving line of credit with an interest
rate of Bank of America prime plus 3% (See Note 5 to the Consolidated Financial
Statements included elsewhere herein). The Company believes the fair market
value of the revolving line of credit approximates its carrying amount. The
impact on the Company's results of operations of a one-point interest rate
change on the outstanding balance under the revolving line of credit as of
September 30, 2000 would not be material. The Company denominates certain of its
transactions in currencies other than the US Dollar to accommodate clients in
certain foreign markets. The Company does not utilize derivative financial
instruments to hedge its foreign currency or interest rate risks.


                                                                              16
<PAGE>


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

       INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL SCHEDULES


<Table>
<Caption>
CONSOLIDATED FINANCIAL STATEMENTS:                                             PAGE NO.
                                                                               --------
<S>                                                                            <C>
Report of Independent Auditors............................................        18

Consolidated Statements of Operations for the Years Ended September 30,
2000, 1999 and 1998.......................................................        19

Consolidated Balance Sheets at September 30, 2000 and 1999................        20

Consolidated Statements of Cash Flow for the Years Ended September 30,
2000, 1999 and 1998.......................................................        21

Consolidated Statements of Stockholders' Equity - Years Ended
September 30, 2000, 1999 and 1998.........................................        22

Notes to Consolidated Financial Statements................................        23

FINANCIAL STATEMENT SCHEDULE:

Schedule VIII - Valuation and Qualifying Accounts.........................        41
</Table>

All other schedules are omitted because they are not applicable or the required
information is shown in the Consolidated Financial Statements or Notes thereto.



                                                                              17
<PAGE>


                         REPORT OF INDEPENDENT AUDITORS



The Board of Directors and Stockholders MPSI Systems Inc.

     We have audited the accompanying consolidated balance sheets of MPSI
Systems Inc. and subsidiaries as of September 30, 2000 and 1999, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the three years in the period ended September 30, 2000. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of MPSI Systems
Inc. and subsidiaries at September 30, 2000 and 1999, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended September 30, 2000 in conformity with accounting principles
generally accepted in the United States.




                                                        ERNST & YOUNG LLP


Tulsa, Oklahoma

February 25, 2002






                                                                              18
<PAGE>


                       MPSI SYSTEMS INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS


<Table>
<Caption>
                                                                                  YEAR ENDED SEPTEMBER 30,
                                                                       --------------------------------------------
                                                                           2000             1999            1998
                                                                       ------------    ------------    ------------
<S>                                                                    <C>             <C>             <C>
Revenues:
   Information services and software maintenance ...................   $ 17,968,000    $ 18,772,000    $ 18,563,000
   Software licensing ..............................................        315,000         560,000         538,000
                                                                       ------------    ------------    ------------
       Total revenues ..............................................     18,283,000      19,332,000      19,101,000
                                                                       ------------    ------------    ------------
Cost of sales:
   Information services and software maintenance ...................      7,004,000       8,088,000       8,482,000
   Software licensing (Note 4) .....................................        538,000         157,000         314,000
                                                                       ------------    ------------    ------------
       Total cost of sales .........................................      7,542,000       8,245,000       8,796,000
                                                                       ------------    ------------    ------------
       Gross profit ................................................     10,741,000      11,087,000      10,305,000
Operating expenses:
   General and administrative ......................................      3,653,000       3,184,000       3,312,000
   Marketing and client services ...................................      5,925,000       6,235,000       6,773,000
   Research and development ........................................      1,189,000       1,216,000       1,888,000
                                                                       ------------    ------------    ------------
       Total operating expenses ....................................     10,767,000      10,635,000      11,973,000
                                                                       ------------    ------------    ------------
      Operating income (loss) ......................................        (26,000)        452,000      (1,668,000)
Other income (expense):
   Interest income .................................................        179,000         240,000         292,000
   Interest expense ................................................       (414,000)       (243,000)        (99,000)
   Foreign exchange gains (losses) .................................        280,000         (57,000)       (240,000)
   Other, net ......................................................        (98,000)          2,000          17,000
                                                                       ------------    ------------    ------------
       Income (loss) before income taxes ...........................        (79,000)        394,000      (1,698,000)
Income taxes .......................................................        188,000         307,000        (199,000)
                                                                       ------------    ------------    ------------
       Net income (loss) ...........................................   $   (267,000)   $     87,000    $ (1,499,000)
                                                                       ============    ============    ============

Per share (Note 11):
   Basic and diluted income (loss) per common share ................   $       (.09)   $        .03    $       (.53)
</Table>



          See accompanying notes to consolidated financial statements.



                                                                              19
<PAGE>


                       MPSI SYSTEMS INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS


<Table>
<Caption>
                                                                                  SEPTEMBER 30,
                                                                         ------------------------------
                                                                              2000             1999
                                                                         -------------    -------------
<S>                                                                      <C>              <C>
Current assets:
  Cash and cash equivalents ..........................................   $     876,000    $     296,000
  Short-term investments, at cost ....................................           3,000            3,000
  Receivables (Note 2):
     Trade ...........................................................       3,310,000        3,849,000
     Current portion of long-term receivables, net of unamortized
      discount .......................................................       1,266,000        1,307,000
  Work in process inventory ..........................................          47,000          107,000
  Prepayments ........................................................          88,000          137,000
                                                                         -------------    -------------
     Total current assets ............................................       5,590,000        5,699,000
Long-term receivables, net of unamortized discount (Note 2) ..........         912,000        1,756,000
Property and equipment, net (Note 3) .................................       1,046,000          945,000
Capitalized product development costs, net (Note 4) ..................       1,885,000        1,933,000
Other assets .........................................................         170,000          185,000
                                                                         -------------    -------------
     Total assets (Note 5)............................................   $   9,603,000    $  10,518,000
                                                                         =============    =============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Note payable to bank  (Note 5) .....................................   $   2,000,000    $   1,575,000
  Accounts payable ...................................................       1,006,000          686,000
  Accrued liabilities (Notes 6 and 8) ................................       1,187,000        1,617,000
  Deferred revenue ...................................................       1,284,000        1,562,000
                                                                         -------------    -------------
     Total current liabilities .......................................       5,477,000        5,440,000
Noncurrent deferred revenue ..........................................         712,000        1,146,000
Noncurrent deferred income taxes (Note 6) ............................         121,000           86,000
Other noncurrent liabilities .........................................          96,000          133,000
                                                                         -------------    -------------
          Total liabilities ..........................................       6,406,000        6,805,000
                                                                         -------------    -------------
Stockholders' equity (Note 8):
  Preferred Stock, $.10 par value, 1,000,000 shares authorized,
     none issued or outstanding ......................................              --               --
  Common Stock, $.05 par value, 20,000,000 shares authorized,
     2,912,000 and 2,849,000 shares issued and outstanding at
     September 30, 2000 and 1999 .....................................         146,000          142,000
  Junior Common Stock, $.05 par value, 500,000 shares authorized,
     none issued or outstanding ......................................              --               --
  Additional paid-in capital .........................................      13,145,000       13,079,000
  Deficit ............................................................     (10,539,000)     (10,272,000)
  Other accumulated comprehensive income .............................         445,000          764,000
                                                                         -------------    -------------
          Total stockholders' equity .................................       3,197,000        3,713,000
                                                                         -------------    -------------
          Total liabilities and stockholders' equity .................   $   9,603,000    $  10,518,000
                                                                         =============    =============
</Table>


          See accompanying notes to consolidated financial statements.


                                                                              20
<PAGE>


                       MPSI SYSTEMS INC. AND SUBSIDIARIES

         CONSOLIDATED STATEMENTS OF CASH FLOW (SEE ALSO NOTES 1 AND 10)


<Table>
<Caption>
                                                                                     YEAR ENDED SEPTEMBER 30,
                                                                         --------------------------------------------
                                                                              2000           1999            1998
                                                                         ------------    ------------    ------------
<S>                                                                      <C>             <C>             <C>
Income (loss) from operations ........................................   $   (267,000)   $     87,000    $ (1,499,000)
Adjustments to reconcile income (loss) from
     operations to cash provided (used) by operations:
     Depreciation and amortization of property and
         equipment ...................................................        416,000         403,000         425,000
     Amortization of capitalized product development .................        799,000         153,000         314,000
     Deferred income taxes ...........................................         35,000              --        (354,000)
     Loss on sale of assets ..........................................        (10,000)         (1,000)             --
     Foreign exchange gain ...........................................       (330,000)             --              --
Changes in assets and liabilities:
     Decrease (increase) in assets:
         Receivables .................................................      1,419,000         718,000         295,000
         Inventories .................................................         60,000              --          90,000
         Other assets ................................................         45,000         (91,000)         76,000
     Increase (decrease) in liabilities:
         Trade payables, accruals and other liabilities ..............        (75,000)        319,000        (406,000)
         Taxes payable ...............................................        (27,000)         17,000          51,000
         Deferred revenue ............................................       (712,000)       (567,000)       (194,000)
                                                                         ------------    ------------    ------------
              Net cash provided (used) by operating activities .......      1,353,000       1,038,000      (1,202,000)
                                                                         ------------    ------------    ------------

Cash flows from investing activities:
     Purchase equipment ..............................................        (83,000)       (386,000)       (255,000)
     Software developed for internal use .............................       (107,000)       (353,000)             --
     Capitalized product development costs ...........................     (1,095,000)     (1,453,000)       (201,000)
     Proceeds from disposition of assets .............................         17,000           1,000          31,000
                                                                         ------------    ------------    ------------
             Net cash used by investing activities ...................     (1,268,000)     (2,191,000)       (425,000)
                                                                         ------------    ------------    ------------
Cash flows from financing activities:
     Net proceeds from bank line of credit ...........................        425,000       1,225,000         203,000
     Proceeds from exercised stock options ...........................         70,000              --          49,000
                                                                         ------------    ------------    ------------
             Net cash provided by financing activities ...............        495,000       1,225,000         252,000
                                                                         ------------    ------------    ------------
Increase (decrease) in cash and cash equivalents .....................        580,000          72,000      (1,375,000)
Cash and cash equivalents at beginning of period .....................        296,000         224,000       1,599,000
                                                                         ------------    ------------    ------------
Cash and cash equivalents at end of period ...........................   $    876,000    $    296,000    $    224,000
                                                                         ============    ============    ============
</Table>

          See accompanying notes to consolidated financial statements.



                                                                              21
<PAGE>


                       MPSI SYSTEMS INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                  YEARS ENDED SEPTEMBER 30, 2000, 1999 AND 1998

<Table>
<Caption>
                                               COMMON STOCK                                              OTHER
                                       ----------------------------    ADDITIONAL                     ACCUMULATED           TOTAL
                                                          CARRYING       PAID-IN                     COMPREHENSIVE   STOCKHOLDERS'
                                          SHARES           VALUE         CAPITAL        DEFICIT         INCOME          EQUITY
                                       ------------    ------------   ------------   ------------    ------------    ------------
<S>                                    <C>             <C>            <C>            <C>             <C>             <C>
BALANCE - SEPTEMBER 30, 1997 .......      2,833,000    $    142,000   $ 13,030,000   $ (8,860,000)   $    957,000    $  5,269,000
COMPREHENSIVE INCOME:
   Net loss ........................             --              --             --     (1,499,000)             --      (1,499,000)
   Other accumulated compre-
      hensive income:
      Foreign currency translation
         adjustment ................             --              --             --             --        (274,000)       (274,000)
TOTAL COMPREHENSIVE LOSS ...........                                                                                 $ (1,773,000)
   Stock options exercised .........         16,000              --         49,000             --              --          49,000
                                       ------------    ------------   ------------   ------------    ------------    ------------
BALANCE - SEPTEMBER 30, 1998 .......      2,849,000         142,000     13,079,000    (10,359,000)        683,000       3,545,000
COMPREHENSIVE INCOME:
   Net income ......................             --              --             --         87,000              --          87,000
   Other accumulated compre-
      hensive income:
      Foreign currency translation
         adjustment ................             --              --             --             --          81,000          81,000
TOTAL COMPREHENSIVE INCOME .........                                                                                 $    168,000
                                       ------------    ------------   ------------   ------------    ------------    ------------
BALANCE - SEPTEMBER 30, 1999 .......      2,849,000         142,000     13,079,000    (10,272,000)        764,000       3,713,000
COMPREHENSIVE INCOME:
  Net loss .........................             --              --             --       (267,000)             --        (267,000)
  Other accumulated compre-
     hensive income:
    Foreign currency translation
        adjustment .................             --              --             --             --        (319,000)       (319,000)
TOTAL COMPREHENSIVE LOSS ...........                                                                                 $   (586,000)
    Stock options exercised ........         63,000           4,000         66,000             --              --          70,000
                                       ------------    ------------   ------------   ------------    ------------    ------------
BALANCE - SEPTEMBER 30, 2000 .......      2,912,000    $    146,000   $ 13,145,000   $(10,539,000)   $    445,000    $  3,197,000
                                       ============    ============   ============   ============    ============    ============
</Table>


          See accompanying notes to consolidated financial statements.



                                                                              22
<PAGE>



1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

     Nature of Operations: MPSI Systems Inc. is a United States-based,
multinational corporation whose principal line of business is providing decision
support software, information databases and consulting services to businesses
which have an investment in retail outlet networks. The Company markets its
products and services in North America, the Pacific Rim, Latin America, Europe
and South Africa through a direct sales force located in various foreign
countries. As discussed more fully in Note 7, over 45% of consolidated revenues
are generated from foreign customers, and portions of such revenues are billed
in foreign currencies. Most of the Company's business comes from the petroleum
industry, including several customers who individually account for a significant
portion of consolidated revenues. Services are also provided for clients in the
banking, convenience food, quick service restaurant and government postal
industries. All software development and substantially all of the information
database preparation are performed at the Company's headquarters facility in
Tulsa, Oklahoma.

     Principles of Consolidation: The accompanying consolidated financial
statements include the accounts of MPSI Systems Inc. and its wholly owned
subsidiaries. All significant intercompany transactions and accounts have been
eliminated in consolidation. Prior year amounts have been restated to conform
with current year presentation.

     Revenue Recognition: Revenues and costs related to production of market
information databases are recorded based upon the ratio of costs incurred to
total estimated completion costs (percentage-of-completion method). Revenues and
costs related to single site studies, mini-market studies and other projects
which are completed in a short time period are recognized at completion.
Anticipated losses on contracts are charged against earnings at the time such
losses are identified.

     Effective October 1, 1999, the Company adopted the provisions of the
Accounting Standards Executive Committee's Statement of Position 97-2 ("SOP
97-2") entitled "Software Revenue Recognition" (as amended by SOP 98-9). Under
the terms of SOPs 97-2 and 98-9, companies are required to defer all revenue
from multiple-element software arrangements if sufficient vendor specific
objective evidence does not exist for the allocation of revenue to the various
elements of the arrangement. As a result, the Company now recognizes revenue on
multi-year software license agreements ratably over the life of the arrangement.
If the provisions of these SOPs had been adopted in fiscal 1999, $398,000 of
software licensing revenue would have been deferred to future periods.

     Prior to the adoption of SOP 97-2 as amended by SOP 98-9, software license
revenues equal to the present value of the aggregate annual license installments
were recognized at the latter of contract execution or software delivery when
collection was probable. When it could not be determined that collection was
probable, or if a contract contained cancellation options, software revenues
were deferred. The long-term receivables and deferred maintenance revenue from
contracts entered into were stated at the discounted present value of annual
license and maintenance payments to be received over the contract term based
upon the prime rate of interest on the effective date of each contract. The
present value discount, related to installments due after one year, was
amortized to interest income using an accelerated method that equated interest
earnings with outstanding receivable balances.

     At the time revenue is recognized, the Company has no remaining obligations
under the software license and maintenance contracts other than providing
post-contract customer support services related to the maintenance portion of
the contract and performance obligations under any optional and separately
priced training or consulting arrangements. Maintenance revenues are recognized
ratably over the term of the contracts as the post-contract customer support
services are provided and the related costs incurred and recognized. Optional
training and consulting represents service transaction on which revenue and
expense are recognized when the earnings process is substantially complete.


     Statement of Cash Flows: For purposes of the statement of cash flows, the
Company considers all highly liquid debt instruments purchased with an original
maturity of three months or less to be cash equivalents.



                                                                              23
<PAGE>

     Property and Equipment: Property and equipment, including the capitalized
cost of software developed for internal use, is stated at cost. Depreciation is
provided using the straight-line method, over the estimated useful lives of the
respective assets, except for leasehold improvements which are amortized over
the lesser of the lease term or the economic life of the underlying asset. Since
such assets are employed in all facets of the Company's operations, depreciation
expense is reflected in cost of sales as well as in each category of operating
expenses. The Company charges the cost of repairs and maintenance to expense as
incurred and capitalizes the cost of replacements, renewals and betterments.
When property or equipment is retired, the cost and accumulated depreciation are
removed from the accounts, and the resulting gain or loss on the disposition is
reflected in other income (expense).

     Capitalized Product Development Costs: Cost of software held for resale
(which was either purchased with the intent to incorporate the acquired software
in MPSI products or developed internally) are presented net of accumulated
amortization.

     The costs of internally developed software held for resale include direct
labor, materials and overhead, and relate to significant enhancements to
existing software or to development of new software products. All costs incurred
to establish the technological feasibility of internally developed software are
charged to research and development expense as incurred. Royalties, which may
become payable because of ongoing proprietary interests related to third-party
software imbedded in MPSI products, are charged to cost of sales-software
licensing as applicable software sales are recognized.

     The annual amortization of software products is computed on a
product-by-product basis and is the greater of the amount determined using (1)
the ratio that current gross revenues for a product bear to the total of current
and anticipated future gross revenues for that product or (2) the straight-line
method over the remaining economic life of the product. Historically, the
straight-line method has resulted in a greater amount of amortization in each
accounting period and has, therefore, been the basis for amortization in the
current period and in prior periods. Amortization starts when a product is
available for general release to customers and is reflected in cost of sales--
software licensing.

     In the event that capitalized product development costs are determined not
to be fully recoverable from future operations, the carrying value of such
software is reduced to an amount equal to its net realizable value less costs of
marketing and distribution. The reduction in carrying value is recorded in cost
of sales.

     Inventory: Work-in-process is composed of direct labor, costs of gathering
demographic data, indirect costs and overhead. Indirect costs and overhead are
allocated to each contract based upon the direct labor incurred.

     Income Taxes: The Company applies the liability method of accounting for
income taxes. Under this method, deferred income taxes are recognized for the
tax consequences of "temporary differences" by applying enacted statutory tax
rates applicable to future years to differences between the financial statement
carrying amounts and the tax bases of existing assets and liabilities. The
effect on deferred taxes of a change in tax rates is recognized in the results
of operations during the period that includes the enactment date.

     Earnings Per Share: Basic earnings per share is based upon the average
number of common shares outstanding. Diluted earnings per share consider the
dilutive effect of common stock equivalents.

     Foreign Currency Translation: Assets and liabilities of the Company's
foreign operations, except Brazil, are translated from the foreign operating
currency to the U.S. Dollar equivalent for consolidated reporting purposes using
the applicable exchange rates at the balance sheet date. Revenues and expenses
are translated at average rates for the year. Exchange differences from these
translations are included in other comprehensive income. Where amounts
denominated in a foreign currency are, or are expected to be, converted into
dollars by remittance or repayment, the realized exchange differences are
reflected in the results of operations. Brazil transactions and accounting
records are maintained in U.S. Dollar equivalents. During fiscal 2000, the
Company substantially liquidated its Australian subsidiary and reported the net
effect of accumulated translation adjustments of $330,000 in other income.



                                                                              24
<PAGE>

     Advertising: Costs of advertising were $292,000, $87,000, and $90,000 in
fiscal years 2000, 1999, and 1998, respectively, and are expensed as incurred.

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

2. RECEIVABLES:

     Trade accounts receivable include unbilled amounts of $675,000 at September
30, 2000 and $984,000 at September 30, 1999. These amounts represent market
study revenues recognized under the percentage-of-completion method in excess of
amounts billed and will generally be billable during the succeeding twelve
months upon completion of the respective studies.

     Current and noncurrent receivables also include unbilled amounts of
$2,173,000 at September 30, 2000 and $3,158,000 at September 30, 1999 (before
present value discount and excluding $93,000 and $142,000 which had been billed
at September 30, 2000 and 1999, respectively) related to multi-year software
license and maintenance agreements. Since these agreements contain annual
installment billing provisions, the unbilled receivable balance for some
contracts is as much as four years' future annual billings. Of the September 30,
2000 unbilled amounts, $1,239,000 (compared with $1,314,000 at September 30,
1999) will be billed in the succeeding twelve months, and the remainder will be
billed thereafter at such future dates as are specified in the respective
contracts. The portion of such future billings related to software and
maintenance services not yet performed is offset by corresponding amounts in
deferred revenue. The current portions of long-term receivables are reduced by
unamortized present value discount of $66,000 and $149,000 at September 30, 2000
and 1999, respectively. Noncurrent long-term receivables are presented net of
unamortized present value discount in the amount of $22,000 and $88,000 at
September 30, 2000 and 1999, respectively. The present value discount is imputed
based upon the New York prime rate on the effective date of each agreement.
Interest income related to these agreements was $149,000, $225,000, and $267,000
in fiscal years 2000, 1999, and 1998, respectively.

     A significant portion of the Company's business activity is with the major
multinational oil companies. At September 30, 2000, 94% ($5,239,000) of the
Company's receivables (before present value discounts) were from petroleum
clients ($6,890,000 or 97% at September 30, 1999). The receivable portfolio is
well diversified geographically which tends to mitigate the potential impact of
fluctuations in petroleum activities which may otherwise result if receivables
were confined to a particular geographic area. Software license agreements are
payable over several years (generally five-year agreements) and are expected to
be paid from operating cash flows of the customers. The Company does not require
collateral or other security to support these contractual receivables. The
carrying value of long-term receivables, net of unearned discount, approximates
market value.


3. PROPERTY AND EQUIPMENT:

     Property and equipment consists of:

<Table>
<Caption>
                                                                     SEPTEMBER 30,
                                                 USEFUL LIFE  --------------------------
                                                   IN YEARS      2000           1999
                                                 -----------  -----------    -----------
<S>                                              <C>          <C>            <C>
Leasehold improvements ......................       Various   $   190,000    $   198,000
Computer equipment and
   internal-use software ....................           4-5     4,585,000      4,600,000
Office furnishings and equipment ............          3-10       999,000      1,085,000
                                                              -----------    -----------
                                                                5,774,000      5,883,000
Accumulated depreciation ....................                  (4,728,000)    (4,938,000)
                                                              -----------    -----------

          Net property and equipment ........                 $ 1,046,000    $   945,000
                                                              ===========    ===========
</Table>



                                                                              25
<PAGE>

     The provision for depreciation was $416,000, $403,000, and $425,000 for the
years ended September 30, 2000, 1999, and 1998, respectively. At September 30,
2000, fully depreciated assets with an aggregate original cost of approximately
$3,816,000 remain in use.

4. CAPITALIZED PRODUCT DEVELOPMENT COSTS:

<Table>
<Caption>
                                                                   SEPTEMBER 30,
                                                           --------------------------
                                                               2000            1999
                                                           -----------    -----------
<S>                                                        <C>            <C>
Software held for resale ...............................   $ 5,669,000    $ 4,891,000
Internal use software development in process ...........            --        420,000
U.S. geographic database ...............................     1,187,000        794,000
                                                           -----------    -----------

     Total capitalized costs ...........................   $ 6,856,000    $ 6,105,000
Accumulated amortization ...............................    (4,971,000)    (4,172,000)
                                                           -----------    -----------

     Net capitalized product development costs .........   $ 1,885,000    $ 1,933,000
                                                           ===========    ===========
</Table>

     Amortization of capitalized product development costs is generally based
upon useful lives of 18 to 36 months. The provision for amortization, reflected
in Software Licensing cost of sales, was $535,000, $153,000, and $314,000 for
the years ended September 30, 2000, 1999, and 1998, respectively. Amortization
of the U.S. geographic database, which was completed during fiscal 2000, was
$264,000 and was reflected in Information Services cost of sales. Based upon
current sales forecasts, capitalized product development costs are projected to
be recoverable. However, these sales forecasts are subject to certain
vulnerabilities which could potentially affect the recoverability of those
costs.


5. NOTE PAYABLE TO BANK, SUBSEQUENT EVENTS:

     At September 30, 2000 and 1999 the Company owed $2,000,000 and $1,575,000,
respectively, to its principal U.S. bank under a revolving line of credit
arrangement secured by accounts and contracts receivable, inventory, general
intangibles and certain cash accounts which have a net book value of
approximately $5,915,000 at September 30, 2000. The note bears interest at Bank
of America floating prime rate plus 2% (approximately 13%). By virtue of having
equity of $3,197,000 at September 30, 2000, the Company was not in compliance
with the minimum net worth covenant of $3,500,000. The annual weighted average
interest rates were 10.02% in fiscal year 2000 and 8.94% in fiscal year 1999.

     In June 2000, Bank of America notified the Company that it must either
liquidate or move its line of credit. The outstanding balance at that time was
$2,000,000, and the Company was given 120 days to effect a change. Subsequent to
that notice, MPSI has diligently worked this issue on two fronts: (1)
investigation of alternative financing sources, and (2) regular pay down of the
debt from operating cash flows. Although no acceptable financing alternative has
been identified, the outstanding balance has been steadily reduced from
$2,000,000 at September 30, 2000 to $900,000 at September 30, 2001. Bank of
America has granted extensions of the credit maturity effective October 2000,
January 2001, April 2001, May 2001 and October 2001. With each extension, except
October 2001, the Bank also waived the minimum net worth covenant requirement of
$3,500,000. The latest extension by Bank of America, effective January 6, 2002,
was granted concurrently with a $250,000 pay down by the Company and set the new
maturity date at October 1, 2002. Additionally, the agreement requires a
$100,000 payment on or before April 1, 2002. In connection with that extension,
the Bank revised the $3.5 million minimum net worth covenant with which the
Company had not been in compliance. Henceforth, the Company will be required to
maintain a minimum net worth of $1,700,000. Balances outstanding under the
extension bear interest at Bank of America floating prime plus 7% (approximately
13% presently). Additionally, the extension agreement eliminated subjective
acceleration clauses from the original agreements which remain in effect except
to the extent amended by the extension documents.

     If the Company is unable to maintain the revised minimum net worth covenant
or if the Company fails to maintain an adequate collateral level as determined
through a defined borrowing base computation, the bank could call the note
before its maturity date. If this were to occur, the Company may not have
sufficient cash to repay the note requiring management to take actions such as
delaying payments to suppliers or reducing operating expenditures. Such actions,
if necessary, could have an adverse effect on the Company's operations or
financial condition.


                                                                              26
<PAGE>



6. INCOME TAXES:

<Table>
<Caption>
                                                                       YEAR ENDED SEPTEMBER 30,
                                                           ----------------------------------------------
                                                                2000             1999            1998
                                                           -------------    -------------   -------------
<S>                                                        <C>              <C>             <C>
Income (loss) before income taxes:
  Domestic .............................................   $     (18,000)   $     111,000   $  (1,987,000)
  Foreign ..............................................         (61,000)         283,000         289,000
                                                           -------------    -------------   -------------
          Total ........................................   $     (79,000)   $     394,000   $  (1,698,000)
                                                           =============    =============   =============
Income taxes (benefits):
  Current:
     Federal ...........................................   $       4,000    $      15,000   $          --
     State .............................................         (34,000)          45,000              --
     Foreign ...........................................         183,000          247,000         155,000
                                                           -------------    -------------   -------------
          Current income taxes .........................         153,000          307,000         155,000
  Deferred:
     Federal ...........................................          35,000               --        (307,000)
     State .............................................              --               --         (50,000)
     Foreign ...........................................              --               --           3,000
                                                           -------------    -------------   -------------
          Deferred income taxes ........................          35,000               --        (354,000)
                                                           -------------    -------------   -------------
               Provision for total income taxes ........   $     188,000    $     307,000   $    (199,000)
                                                           =============    =============   =============
</Table>

     A reconciliation of the provision for income taxes at the applicable
Federal statutory income tax rate to the actual provision for income taxes
follows:

<Table>
<Caption>
                                                            YEAR ENDED SEPTEMBER 30,
                                                -----------------------------------------------
                                                     2000             1999              1998
                                                -------------    -------------    -------------
<S>                                             <C>              <C>              <C>
Expense (benefit) at statutory rate .........   $     (28,000)   $     138,000    $    (595,000)
Foreign income taxes, net ...................         213,000           78,000           57,000
State income taxes ..........................         (34,000)          45,000               --
Increase (decrease) in valuation
    allowance ...............................         211,000          (47,000)         302,000
Other, net ..................................        (174,000)          93,000           37,000
                                                -------------    -------------    -------------
    Income taxes (benefit) ..................   $     188,000    $     307,000    $    (199,000)
                                                =============    =============    =============
</Table>

     Income taxes of $4,000 were receivable at September 30, 2000 ($60,000
payable at September 30, 1999). The Company does not accrue income taxes on
undistributed earnings of certain foreign subsidiaries which are permanently
invested. At September 30, 2000 and 1999, the amount of undistributed earnings
for which taxes have not been accrued was insignificant.

     At September 30, 2000, the Company has various U.S. tax credits of $998,000
which expire between 2001 and 2005. At September 30, 2000, certain foreign
subsidiaries have net operating loss carryforwards of approximately $8,205,000
which may be utilized in future years.

     Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax liabilities and assets are as follows:

<Table>
<Caption>
                                                                         SEPTEMBER 30,
                                                               -----------------------------
                                                                    2000            1999
                                                               -------------   -------------
<S>                                                            <C>             <C>
Deferred tax liabilities:
   Software revenue ........................................   $   1,005,000   $     958,000
   Depreciation ............................................         123,000         163,000
   Other ...................................................         121,000         121,000
                                                               -------------   -------------
          Total deferred tax liabilities ...................       1,249,000       1,242,000
                                                               -------------   -------------
Deferred tax assets:
   Accrued liabilities and other miscellaneous items .......         302,000         482,000
   U.S. and foreign loss carryforwards .....................       3,070,000       2,956,000
   U.S. tax credit carryforwards ...........................         533,000         284,000
                                                               -------------   -------------
          Total deferred tax assets ........................       3,905,000       3,722,000
Valuation allowance for deferred tax assets ................       2,777,000       2,566,000
                                                               -------------   -------------
          Net deferred tax assets ..........................       1,128,000       1,156,000
                                                               -------------   -------------
               Net deferred tax liabilities ................   $     121,000   $      86,000
                                                               =============   =============
</Table>


                                                                              27
<PAGE>

     Utilization of the Company's tax credit and loss carryforwards is dependent
on realizing taxable income in the appropriate tax jurisdiction. Deferred tax
assets for these carryforwards have been reduced by the valuation allowance to
an amount that is more likely than not to be realized.

7. BUSINESS SEGMENT AND REVENUE FROM MAJOR CUSTOMERS:

     The Company identifies segments based upon line of business that results in
three reportable segments: Convenience Retailing, Pricing, and DataMetrix(R)
segments. (Due to the reduced postal activity and overlapping skill sets, the
previous Postal and DataMetrix segments were combined during fiscal year 2000.)
The Convenience Retailing segment derives its revenues from providing decision
support software, information databases and consulting services to businesses
which have an investment in retail outlet networks, primarily in the petroleum
industry. In many cases, pricing products are sold within the same customer base
applicable to Convenience Retailing. However, Pricing services are directed more
towards operational issues rather than retail site location or operation. The
DataMetrix(R) segment derives its revenues primarily from the sales of visual
mapping information for cities in the United States. The Company's measure of
segment profit is operating income. Amortization is specifically assigned to
each reported segment as capitalized development costs are written off to
segmented cost of sales over their useful economic life. Development of the
DataMetrix segment core product was not completed as of September 30, 1999 and,
therefore, no amortization was recorded. Depreciation is allocated to each
reported segment through pre-determined corporate percentages. Identifiable
assets in the Convenience Retailing, Pricing and DataMetrix segments, which are
recorded in the Convenience Retailing segment, are shared resources which are
not specifically allocated. All assets acquired are managed as shared resources
and are not identifiable to specific reporting segments.

     Comparative business segment information has been reclassified herein to
conform with fiscal year 2000 disclosure formats. Information on segments and a
reconciliation to income (loss) before taxes are as follows:


<Table>
<Caption>
                                                --------------------------------------------------------------
                                                                            SEGMENTS
                                                --------------------------------------------------------------
                                                 CONVENIENCE
                                                  RETAILING         PRICING       DATAMETRIX         TOTAL
                                                -------------    -------------   -------------   -------------
<S>                                             <C>              <C>             <C>             <C>
YEAR ENDED SEPTEMBER 30, 2000
Revenues:
    Information services and
       software maintenance .................   $  15,281,000    $   1,950,000   $     737,000   $  17,968,000
    Software licensing ......................          56,000          258,000           1,000         315,000
                                                -------------    -------------   -------------   -------------
         Total revenues .....................   $  15,337,000    $   2,208,000   $     738,000   $  18,283,000
                                                =============    =============   =============   =============
    Operating income (loss) .................   $   1,907,000    $     114,000   $  (2,047,000)  $     (26,000)
                                                =============    =============   =============
    Other income (expense) ..................                                                          (53,000)
                                                                                                 -------------
    Loss before income tax ..................                                                    $     (79,000)
                                                                                                 =============

    Amortization of capitalized
         product development ................   $     482,000    $      11,000   $      42,000   $     535,000
    Amortization of U.S. geographic
         database ...........................              --               --         264,000         264,000
    Depreciation ............................         374,000           21,000          21,000         416,000
    Identifiable assets .....................       9,603,000               --              --       9,603,000
    Additions to long-lived assets. .........         190,000               --              --         190,000
</Table>

(See continuation of table on next page)



                                                                              28
<PAGE>



<Table>
<Caption>
                                                ---------------------------------------------------------------
                                                                            SEGMENTS
                                                ---------------------------------------------------------------
                                                 CONVENIENCE
                                                  RETAILING         PRICING        DATAMETRIX         TOTAL
                                                -------------    -------------   -------------    -------------
<S>                                             <C>              <C>             <C>              <C>
YEAR ENDED SEPTEMBER 30, 1999
Revenues:
    Information services and
       software maintenance .................   $  15,998,000    $   2,062,000   $     712,000    $  18,772,000
    Software licensing ......................         374,000          186,000              --          560,000
                                                -------------    -------------   -------------    -------------
         Total revenues .....................   $  16,372,000    $   2,248,000   $     712,000    $  19,332,000
                                                =============    =============   =============    =============
    Operating income (loss) .................   $   1,170,000    $     451,000   $  (1,169,000)   $     452,000
                                                =============    =============   =============
    Other income (expense) ..................                                                           (58,000)
                                                                                                  -------------
    Income before income tax ................                                                     $     394,000
                                                                                                  =============

    Amortization ............................   $     130,000    $      23,000   $          --    $     153,000
    Depreciation ............................         325,000           13,000          65,000          403,000
    Identifiable assets .....................      10,518,000               --              --       10,518,000
    Additions to long-lived assets ..........         739,000               --              --          739,000

YEAR ENDED SEPTEMBER 30, 1998
Revenues:
    Information services and
       software maintenance .................   $  16,818,000    $   1,494,000   $     251,000    $  18,563,000
    Software licensing ......................         508,000           30,000              --          538,000
                                                -------------    -------------   -------------    -------------
         Total revenues .....................   $  17,326,000    $   1,524,000   $     251,000    $  19,101,000
                                                =============    =============   =============    =============
    Operating income (loss) .................   $  (1,340,000)   $     135,000   $    (463,000)   $  (1,668,000)
                                                =============    =============   =============
    Other income (expense) ..................                                                           (30,000)
                                                                                                  -------------
    Loss before income tax ..................                                                     $  (1,698,000)
                                                                                                  =============

    Amortization ............................   $     314,000    $          --   $          --    $     314,000
    Depreciation ............................         397,000           19,000           9,000          425,000
    Identifiable assets .....................       9,490,000               --              --        9,490,000
    Additions to long-lived assets ..........         255,000               --              --          255,000
</Table>

     The Company's principal production facility in the United States is
supported by satellite production facilities in England and Brazil. Foreign
sales offices or representatives are currently maintained in Brazil, Japan,
South Africa, South Korea, Shanghai, the United Kingdom and Singapore. The
following table sets forth the revenues by each of the Company's three
production centers, export sales from the United States and long-lived assets.




                                                                              29
<PAGE>



<Table>
<Caption>
                                                           YEAR ENDED SEPTEMBER 30
                                                 ---------------------------------------------
                                                     2000             1999            1998
                                                 -------------   -------------   -------------
<S>                                              <C>             <C>             <C>
Revenues from external customers:

    United States ............................   $  17,606,000   $  18,992,000   $  18,102,000
    Europe ...................................         243,000         181,000         550,000
    South America ............................         434,000         159,000         449,000
                                                 -------------   -------------   -------------
Total revenues ...............................   $  18,283,000   $  19,332,000   $  19,101,000

Export sales from the United States:
    Canada ...................................   $     587,000   $     264,000   $     478,000
    Central America ..........................          52,000         326,000         489,000
    South America ............................         360,000         776,000         295,000
    Europe ...................................         185,000         546,000         582,000
    Asia/Pacific Rim .........................       5,703,000       7,506,000       5,991,000
    Africa ...................................         837,000         312,000         829,000
                                                 -------------   -------------   -------------
Total export sales ...........................   $   7,724,000   $   9,730,000   $   8,664,000
                                                 =============   =============   =============

Long-lived assets:
    United States ............................   $   3,756,000   $   4,478,000   $   3,182,000
    Foreign offices ..........................         257,000         341,000         411,000
                                                 -------------   -------------   -------------
Total long-lived assets ......................   $   4,013,000   $   4,819,000   $   3,593,000
                                                 =============   =============   =============
</Table>


     More than 97% of total revenues were derived from the petroleum industry
during each of the years ended September 30, 2000, 1999, and 1998. Individual
customers accounted for MPSI revenues that were in excess of 10% of consolidated
revenues in those years as follows (in millions of dollars):


<Table>
<Caption>
                                      2000                      1999                     1998
                            -----------------------   -----------------------   -----------------------
                              AMOUNT          %         AMOUNT          %         AMOUNT         %

<S>                         <C>          <C>          <C>          <C>          <C>          <C>
ExxonMobil ..............   $      4.6           25   $      4.4           23   $      3.5           19
BP Amoco ................          2.6           14            *            *   $      2.1           11
</Table>

             *Below 10% for this period.

     Although the Company would be adversely affected if certain petroleum
industry customers curtailed their long-term usage of MPSI products or, in the
event of a significant long-term economic downturn in the petroleum industry
generally, the Company's petroleum clients are well diversified geographically
which reduces the long-term risk attendant with its industry dependence. In
October 2001, ExxonMobil informed the Company that they would be exploring other
retail planning technologies. Of the $4.6 million revenue in the table above for
fiscal 2000, $3.2 million relates to retail planning market studies.


8. EMPLOYEE BENEFITS:

     Under an employee stock ownership and investment plan, all qualifying U.S.
employees may contribute up to 16% of their annual earnings. Subject to certain
limitations, the Company will contribute in cash or Common Stock an amount equal
to but not less than 50% or more than 100% of a participant's salary deferral
contributions that are not in excess of 6% of the participant's earnings for the
year. Contributions may be invested in various equity or fixed-income funds. The
Company recorded expense related to its matching contribution of $138,000,
$166,000, and $155,000 in fiscal years 2000, 1999, and 1998, respectively. At
September 30, 2000 and 1999, the Company had accrued $274,000 and $136,000 of
liabilities for matching contributions to the 401(k) plan (which in the case of




                                                                              30
<PAGE>

September 30, 2000, included the unfunded matching contribution of $136,000 for
the Plan year ended December 31, 1999). During fiscal year 1999, the Company
liquidated its matching contribution liability for the Plan year ended December
31, 1998 in cash. The matching contribution for Plan year ended December 31,
1999 was paid in December 2000. The matching contribution for Plan year ended
December 31, 2000 was paid by December 2001.

     The Company had reserved 750,000 shares of Common Stock for issuance of
stock options under a 1988 stock option plan covering all employees that expired
in November 1998. At September 30, 2000, 97,000 options granted under that plan
remain outstanding, are fully vested, and will not expire until 2002. An
additional 750,000 shares are reserved under a 1998 stock plan. Options of
71,000 are outstanding under the 1998 plan, expire from 2003 to 2005, and also
vest one-third annually over a three-year period.

     The Company has elected to follow Accounting Principals Board Opinion No.
25, "Accounting for Stock Issued to Employees" (APB 25) and related
interpretations in accounting for its employee stock options because the
alternative fair value accounting provided under FASB Statement 123, "Accounting
for Stock-Based Compensation," requires the use of option valuation models that
were not developed for use in valuing stock options. Under APB 25, the Company
only recognizes compensation expense when the exercise price of the Company's
employee stock options is less than the market price of the underlying stock on
the date of grant.

     Pro forma information regarding net income and earnings per share is
required by FASB 123 and has been determined as if the Company had accounted for
its employee stock options under the fair value method of that Statement. The
fair value for these options was estimated at the date of the grant using a
Black-Scholes option-pricing model. The fair value of the options was estimated
at the date of the grants with the following average assumptions: expected life
of the stock options 4 years; volatility of the expected market price of the
Company's common stock price of 123%, 109%, and 107% in 2000, 1999, and 1998,
respectively; risk-free interest rate of 5.73%, 5.81%, and 5.77% in 2000, 1999,
and 1998, respectively, and a no-dividend yield.

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

    For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The Company's
pro forma information follows:


<Table>
<Caption>
                                            2000                          1999                       1998
                                 --------------------------    -------------------------   --------------------------
                                     PRO                           PRO                        PRO
                                    FORMA         REPORTED        FORMA        REPORTED      FORMA         REPORTED
                                 -----------    -----------    -----------   -----------   -----------    -----------
<S>                              <C>            <C>            <C>           <C>           <C>            <C>
Net income (loss) ............   $  (313,000)   $  (267,000)   $    24,000   $    87,000   $(1,675,000)   $(1,499,000)
Basic and diluted income
   (loss) per share ..........   $      (.11)   $      (.09)   $       .01   $       .03   $      (.59)   $      (.53)
</Table>




                                                                              31
<PAGE>


     A summary of the Company's stock option activity and related information
for the years ended September 30 follows:

<Table>
<Caption>
                                                                    WEIGHTED-AVERAGE
                                                   OPTIONS          EXERCISE  PRICE        EXERCISABLE
                                                   -------          ----------------       -----------
<S>                                             <C>               <C>                    <C>
     AT SEPTEMBER 30, 1997                         213,535             $  4.21                117,810
         Granted..............                       3,000                4.63
         Exercised............                     (17,516)               2.82
         Forfeited............                      (5,233)               3.34
         Expired..............                     (33,967)               2.25
     AT SEPTEMBER 30, 1998                         159,819                4.75                153,597
         Granted..............                     121,500                1.41
         Exercised............                          --                 --
         Forfeited............                      (4,867)               4.99
         Expired..............                     (10,000)               3.60
     AT SEPTEMBER 30, 1999                         266,452                3.31                141,952
         Granted..............                      13,000                1.17
         Exercised............                     (61,900)               1.11
         Forfeited............                     (28,900)               4.53
         Expired..............                     (21,051)               3.00
     AT SEPTEMBER 30, 2000                         167,601                3.80                116,268
</Table>

     The weighted average grant date fair value for options granted during each
of the three fiscal years ended September 30, 2000, 1999, and 1998 were $1.16,
$1.33, and $3.45, respectively.

     The following table summarizes information about stock options outstanding
as of September 30, 2000:

<Table>
<Caption>
                                                      Weighted                       Weighted
                                                      average                         average
                                       Weighted       exercise                        exercise
                     Number of          average       price of         Number of      price of
  Range of            options          remaining      options           options      exercisable
exercise prices     outstanding      life in years   outstanding      exercisable     options
---------------     -----------      -------------   -----------      ------------  -------------
<S>                 <C>              <C>             <C>              <C>           <C>
$1.00 to 1.50            35,000               3.63        $ 1.08             7,333      $ 1.02
 2.19 to 3.25            38,500               3.46          2.35            14,834        2.47
 3.94 to 5.50            94,101        less than 1          5.40            94,101        5.40
$1.00 to 5.50           167,601               1.68        $ 3.80           116,268      $ 4.75
</Table>


     The Company accrued $4,000 at September 30, 2000 ($127,000 accrued at
September 30, 1999); in connection with incentive award programs for certain
employees. The awards were accrued based upon the Company's achievement of
certain revenue and operating income objectives and the respective contributions
of certain employees to the achievement of those objectives. The various
incentive plans specify cash settlement of the accrued liability prior to
December 31, 2000.

     At September 30, 2000 and 1999, the Company had accrued $558,000 and
$613,000, respectively, related to employee vacations earned but not yet taken.

9. COMMITMENTS AND CONTINGENCIES:

     The Company leases office space and equipment under various agreements,
substantially all of which have been accounted for as operating leases. Rental
expense of $1,123,000 was recorded during the year ended September 30, 2000
($1,126,000 in 1999 and $952,000 in 1998). Aggregate future rentals under these
commitments are as follows: 2001 -- $1,006,000, 2002 -- $886,000, 2003 --
$534,000, 2004 -- $7, 000, 2005 -- $2,000, and thereafter -- $2,000.

10. SUPPLEMENTAL CASH FLOW INFORMATION:

     The Company paid interest of $414,000 during fiscal year 2000, $243,000
during fiscal year 1999, and $99,000 during fiscal year 1998. Income taxes of
$179,000, $290,000, and $105,000 were paid during fiscal years 2000, 1999, and
1998, respectively.






                                                                              32
<PAGE>

11. BASIC AND DILUTED EARNINGS PER SHARE:

     The following sets forth the computation of basic and diluted earnings
(loss) per share for the years ended September 30:

<Table>
<Caption>
     In thousands (except per share data):          2000             1999             1998
                                                -------------    -------------   -------------
<S>                                             <C>              <C>             <C>
Basic weighted-average shares ...............           2,886            2,849           2,844
Effect of dilutive stock options ............              --               45              --
Diluted weighted-average shares .............           2,886            2,894           2,844

Net income (loss): ..........................   $        (267)   $          87   $      (1,499)
Basic and diluted earnings (loss)
     per common share .......................   $        (.09)   $         .03   $        (.53)
                                                -------------    -------------   -------------
</Table>


     Exercisable antidilutive options for 108,000 and 142,000 shares were
outstanding at September 30, 2000 and 1999, respectively.

ITEM  9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
           FINANCIAL DISCLOSURE

     There were no changes in accountants or disagreements with accountants on
matters related to accounting or financial disclosure during the fiscal years
ended September 30, 2000 and 1999.


                                    PART III

ITEM 10.     DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

(a) and (b) Identification of directors and officers.

     The directors and executive officers of the Company are as follows:

<Table>
<Caption>
                    NAME                         AGE                    POSITION
                    ----                         ---                    --------
<S>                                           <C>         <C>

             Ronald G. Harper (1)                 62       Chairman of the Board of Directors,
                                                           President and Chief Executive Officer
             Roger A. Finn                        63       President - DataMetrix Inc.
             Bryan D. Porto                       51       Executive Vice President and Director
             Bryan D. Gross                       43       Vice President, Technology
             J. Scott Smathers                    39       Assistant to the President
             James C. Auten                       52       Vice President, Chief Financial Officer
             William H. Webb                      60       Gen. Mgr., Corporate Human Resources
             John C. Bumgarner, Jr. (1)(2)        58       Director
             Dr. David L. Huff (1)                69       Director
             Joseph C. McNay (1)(2)               66       Director
             John J. McQueen (2)                  79       Director

             (1) Member of the Compensation Committee
             (2) Member of the Audit Committee
</Table>

(c) Identification of certain significant employees.

         Not applicable.



                                                                              33
<PAGE>

(d) Family relationships.

         Not applicable.

(e) Business experience.

          Mr. Harper, who founded the Company in 1970, has served as its
     President, Chairman of the Board and Chief Executive Officer since
     inception.

          Mr. Finn was named President of DataMetrix Inc. in 1999. He was
     previously Vice President, Pricing Division. Mr. Finn joined MPSI in 1982
     as Director of Network Planning and has served in various marketing and
     network planning positions since that time.

          Mr. Porto was appointed Executive Vice President of MPSI's Petroleum
     Service Division in 1998. He previously served as Sr. Vice President -
     Retail Petroleum and has served in marketing and network planning positions
     since joining MPSI in the Rio de Janeiro office in 1985. Mr. Porto was
     named to MPSI's Board of Directors in June 1998.

         Dr. Gross was appointed Vice President of Technology in November 1999.
     Prior to this position, he led the Core Product Re-engineering effort and
     Corporate Research activities. Dr. Gross joined MPSI in 1984 as Project
     Supervisor in Network Planning. He joined QuikTrip Corporation in 1991 as
     Manager of Statistical Research and Site Selection, returning to MPSI in
     1997 as General Manager of Corporate Technology.

          Mr. Smathers is currently serving in the position of Assistant to the
     President and is responsible for implementing MPSI's Internet initiative
     and the Systems Department. He joined MPSI in 1984 and has served on
     several international assignments, including Australia and England. Prior
     to his current position, Mr. Smathers was Vice President of Operations and
     Software Development.

          Mr. Auten was appointed Vice President and Chief Financial Officer in
     1996. Mr. Auten joined MPSI in 1984 as Corporate Controller and held such
     position until December 1992 when he was appointed Principal Accounting
     Officer. Prior to joining MPSI, Mr. Auten was with KPMG Peat Marwick
     accounting firm.

          Mr. Webb joined MPSI as General Manager, Corporate Human Resources on
     April 8, 1996. Previously, Mr. Webb spent 14 years with Amerada Hess
     Corporation as Manager of Personnel Administration.

          Mr. Bumgarner serves in the following capacities for The Williams
     Companies, Inc., a Tulsa-based conglomerate - Senior Vice President,
     Corporate Development and Planning; President, Williams International;
     President, Strategic Investments, Williams Communications Group; and
     President, Williams Headquarter Building Group. He has been employed by The
     Williams Companies, Inc. since 1977. He is also a director of TRANSCO,
     James River Coal Company and several privately held companies. He has
     served on MPSI's Board since 1982.

          Dr. Huff has been a member of the faculty at the University of Texas
     since 1968. He has been a Fulbright Lecturer and has published numerous
     books and articles, including "Market Area Analysis, A Graphical Index of
     Consumer Expectation," "Measures of Market Area Overlap," and "Retail
     Location Theory." He is an expert in computer modeling techniques. He has
     served on MPSI's Board since 1982.

          Mr. McNay has been the President, Director and Chairman of the Board
     of Essex Investment Management Company, Inc., a company engaged in
     investment and advisory services, since 1976. Mr. McNay is also a director
     of Softech, Inc. and Alpha 1 Biomedical, Inc., which are publicly held
     companies. He has served on MPSI's Board since 1982.


                                                                              34

<PAGE>

          Mr. McQueen has been in the private practice of law in the Tulsa area
     since 1959. He has also served as a certified public accountant with KPMG
     Peat Marwick, as a tax specialist with Warren Petroleum Corp., and as
     controller of Davis Investments, a company engaged in oil and real estate
     activities. He has served on MPSI's Board since 1982.

(f) Involvement in certain legal proceedings.

     Not applicable.

(g) Promoters and control persons.

     Not applicable.

(h) Compliance with Section 16(a) of the Exchange Act.

          Based upon a review of Forms 3, 4 and 5 furnished to the Company with
     respect to its most recent fiscal year, the Company has determined that
     reports required pursuant to Section 16(a) of the Securities Exchange Act
     of 1934, as amended, were filed on a timely basis.

ITEM 11. EXECUTIVE COMPENSATION

         Summary Compensation Table. The following table summarizes the
compensation paid over the last three completed fiscal years to the Company's
CEO and the other executive officers of the Company who received compensation of
$100,000 or more during the fiscal year ended September 30, 2000:


                           SUMMARY COMPENSATION TABLE


<Table>
<Caption>
                                                                                          LONG TERM COMPENSATION
                                                                                  ------------------------------------
                                                    ANNUAL COMPENSATION                   AWARDS             PAYOUTS
                                            -----------------------------------   -----------------------   ----------
                                                                       OTHER                                                ALL
                                                                       ANNUAL                                              OTHER
                                                                       COMPEN-    RESTRICTED                  LTIP         COMPEN-
          NAME AND                                         BONUS       SATION        STOCK      OPTIONS/     PAYOUTS       SATION
     PRINCIPAL POSITION          YEAR      SALARY ($)      ($)         ($) (1)      AWARDS      SARS (#)       ($)         ($) (2)
     ------------------       ----------   ----------   ----------   ----------   ----------   ----------   ----------   ----------
<S>                           <C>          <C>          <C>          <C>          <C>          <C>          <C>          <C>
Ronald G. Harper ..........         2000      246,195           --        8,716           --           --           --        6,218
Chairman of the Board,              1999      252,531           --        7,885           --           --           --       10,682
President & CEO                     1998      205,863           --        7,885           --           --           --       10,121

Bryan D. Porto ............         2000      172,329           --           --           --           --           --        1,021
Executive Vice President,           1999      159,390           --           --           --       10,000           --        5,821
Petroleum                           1998      156,856       14,541           --           --           --           --        4,771

James C. Auten ............         2000      114,851           --           --           --           --           --        1,021
Vice President and                  1999      117,185           --           --           --           --           --        2,720
Chief Financial Officer             1998      103,375       10,671           --           --           --           --        2,035

Roger A. Finn .............         2000      127,563           --           --           --           --           --        1,021
President, DataMetrix Inc.          1999      105,919        3,094           --           --           --           --        3,878
                                    1998      103,012           --           --           --           --           --        3,859

Bryan D. Gross ............         2000      147,275           --           --           --        3,000           --          898
Vice President Technology           1999       90,848       10,000           --           --        8,000           --        3,403
</Table>

(1)  Represents automobile lease paid to or on behalf of Mr. Harper.

(2)  The components of "All Other Compensation" for the fiscal years ended
     September 30, 2000, 1999, and 1998 include (a) Company matching
     contributions to the Company's 401(k) defined contribution plan (Mr.
     Harper--$0, $4,800, and $4,750; Mr. Porto -- $0, $4,800, and $3,961; Mr.
     Auten--$0, $1,699, and $1,387; and Mr. Finn--$0, $2,857 and $3,049,
     respectively; and Dr. Gross--$0 and $2,544 in 2000 and 1999); and (b)
     supplemental life insurance premiums paid by the Company (Mr.
     Harper--$6,218, $5,882, and $5,371; Mr. Porto--$1,021, $1,021, and $810;
     Mr. Auten--$1,021, $1,021, and $648; Mr. Finn--$1,021, $1,021 and $810,
     respectively; and Dr. Gross--$898 and $859 in 2000 and 1999).




                                                                              35
<PAGE>


Options/SAR Grants Table. The following table sets forth certain information
with respect to stock options granted to the named executive officers during the
last completed fiscal year:

                      OPTION/SAR GRANTS IN LAST FISCAL YEAR

<Table>
<Caption>
                                                      Individual Grants
                                 -----------------------------------------------------------
                                                                                                         Potential
                                                                                                     Realizable Value
                                                 % of Total                                         at Assumed Annual
                                                  Options /                                        Rates of Stock Price
                                 Options /          SARs                                            Appreciation for
                                    SARs         Granted to       Exercise or                          Option Term
                                  Granted        Employees in      Base Price     Expiration       --------------------
Name                                (#)          Fiscal Year        ($/Sh)           Date          5% ($)      10% ($)
----                             --------       -------------    -------------    ----------       ------     -------
<S>                                <C>               <C>            <C>            <C>   <C>       <C>        <C>
Bryan D. Gross                     3,000             23%            $1.19          11/11/04        $986       $2,180
</Table>

     Options Exercised Table. The following table sets forth information
concerning each exercise of stock options by the named executive officers during
the last completed fiscal year together with information concerning unexercised
options held by the named executive officers:

            AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
                           FY-END OPTIONS/SAR VALUES

<Table>
<Caption>
       (a)                      (b)                (c)                    (d)                            (e)
                                                                   Number of Securities
                               Shares                              Underlying Unexercised           Value of Unexercised
                              Acquired                            Options/SARs at FY-End         In-the-Money Options/SARs
                                 on               Value                   (#)                        at FY-End ($)
                              Exercise           Realized
Name                            (#)                ($)          Exercisable/Unexercisable      Exercisable/Unexercisable
----                        -------------      -----------      -------------------------      -------------------------
<S>                         <C>                <C>              <C>                            <C>
James C. Auten                   *                   *                   7,500 / -                      -- / --
Bryan D. Porto                 2,900           $    8,700               16,834 / 6,666              $3,334 / $6,666
Roger A. Finn                    *                   *                  16,000 / 2,000              $1,000 / $2,000
William D. Webb                  *                   *                     667 / -                      -- / --
Bryan D. Gross                   *                   *                   7,334 / 11,666             $1,000 / $5,570
J. Scott Smathers                *                   *                   2,850 / 2,000              $1,000 / $2,000
</Table>

    *None exercised during the period.

EMPLOYMENT CONTRACTS AND SEVERANCE ARRANGEMENTS

     The Company maintains a severance policy applicable to all full-time
regular employees with at least one year of full-time service. Eligible
employees are those who are terminated as the result of (1) a reduction of the
Company's work force, (2) elimination of a job or position, (3) inability to
satisfactorily perform required responsibilities, or (4) relocation of
applicable Company facilities. The amount of severance paid is based upon the
employee's base salary and length of service, and includes payment for vested
but unused vacations and pro rated automobile allowances, if applicable. The
only named executive officer who would receive aggregate severance in excess of
$100,000 under the current policy is Mr. Ronald G. Harper. Mr. Harper's
aggregate severance would be approximately $128,000 at September 30, 2000.



                                                                              36
<PAGE>


COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     Ronald G. Harper, Chief Executive Officer of the Company, is the only
member of the Compensation Committee who is also an employee or officer of the
Company.

DIRECTORS' COMPENSATION

     Members of the Board of Directors who are employees of the Company receive
no additional compensation as a result of their service as directors. Directors
who are not employees of the Company are compensated at the rate of $1,500 for
each board meeting attended and are reimbursed for any out-of-pocket expenses
incurred in attending meetings.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth information as of September 30, 2000, as to
shares of Common Stock beneficially owned by the directors (all of whom are
nominees for another term), certain executive officers, the directors and
officers of the Company as a group, and certain persons known to the Company to
own beneficially more than five percent of the Common Stock. Except as otherwise
indicated, each person has sole investment and voting power with respect to the
shares shown. Ownership information is based upon information furnished by the
respective individuals.


<Table>
<Caption>
                                                                                       BENEFICIAL OWNERSHIP
                                                                                          OF COMMON STOCK
                                                                                     ------------------------
                                                                                      NUMBER          PERCENT
NAME OF COMMON STOCKHOLDER                                                           OF SHARES       OF CLASS
--------------------------                                                           ---------       --------
<S>                                                                                <C>               <C>
Ronald G. Harper (2)............................................................    1,192,036(1)         41%
  4343 South 118th East Avenue
  Tulsa, Oklahoma 74146

John C. Bumgarner, Jr...........................................................      222,322             8%
  4900 Bank of Oklahoma Tower
  One Williams Center
  Tulsa, Oklahoma 74172

Joseph C. McNay.................................................................      242,722             8%
  125 High Street, 29th Floor
  Boston, Massachusetts 02110

Bank of Oklahoma, N.A...........................................................      285,200            10%
  P.  O. Box 2300
  Tulsa, Oklahoma 74192

RS Investment Management Co., LLC (3)...........................................      225,838             8%
  388 Market Street, Suite 200
  San Francisco, California 94111

Sanford Orkin...................................................................      222,222             8%
  3414 Peachtree Road, N.E., Suite 236
  Atlanta, Georgia 30326

James C. Auten (2)..............................................................        9,354              *
Bryan D. Porto (2)..............................................................       20,736              *
Roger A. Finn (2) ..............................................................       24,397              *
J. Scott Smathers (2)...........................................................        5,200              *
Bryan D. Gross (2)..............................................................        6,560              *
William H. Webb (2).............................................................          667              *
All officers and directors as a group (9 persons)...............................    1,723,994            58%
</Table>

* Less than 1%.



                                                                              37
<PAGE>


ITEM 12 (continued)

(1)  Includes 374.910 shares of Common Stock held in trust for the benefit of
     Mr. Harper's family and 434,209 shares held in trust for the benefit of
     certain charities. Mr. Harper has sole voting and investment power over all
     of the trust shares except for 135,637 shares over which he shares
     investment or voting power and 235,773 shares over which he has no
     investment or voting power. Mr. Harper disclaims beneficial ownership of
     these trust shares.

(2)  The indicated individuals are executive officers of the Company.

(3)  As reported in the Schedule 13G filed by the named person (among others),
     voting and dispositive power over the listed shares may be deemed shared
     among the RS Value Group, RSIM, LP, the RS Orphan Fund, LP and the RS
     Orphan Offshore Fund and the named person by reason of corporate
     relationships. Each such beneficial owner has the same address as that set
     forth above for the named person.


ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     In February 1999, the Company obtained an exclusive license to incorporate
in a new suite of products a software modeling engine, Huff 2000, developed by
Dr. David L. Huff. Dr. Huff has been a director of MPSI since 1982. The
five-year license agreement provides that MPSI shall be responsible for all
sales and marketing as well as the development of user interfaces. The Company
and Dr. Huff shall each share 50% in any net software revenues derived from
utilization of this new software technology. Through September 30, 2001, no
material revenues have resulted relative to this agreement.


                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)  (1)  The response to this portion of ITEM 14 is submitted as a separate
          section of this report under ITEM 8.

     (2)  The response to this portion of ITEM 14 is set forth in ITEM 14(d)
          below.

     (3)  Exhibits.

EXHIBIT
NUMBER                                    DESCRIPTION
------                                    -----------

  *3.1   --    Certificate of Incorporation of MPSI Systems Inc., as amended,
               filed as the same numbered exhibit with the Company's Form 10-Q
               dated March 31, 1987, File No. 0-11527.

  *3.2   --    By-laws, as amended, filed as Exhibit 3.1 with the Company's Form
               10-Q dated June 30, 1987, File No. 0-11527.

  *3.3   --    Certificate of Designation dated September 23, 1993 establishing
               the rights conferred on $.10 Par Value Convertible Preferred
               Stock, Series 1993, filed as the same numbered exhibit with the
               Company's 1993 Form 10-K, File No. 0-11527.

  *3.4   --    Amendment to Certificate of Incorporation dated November 16, 1993
               to reflect a one-for-ten reverse stock split, filed as the same
               numbered exhibit with the Company's 1993 Form 10-K, File No.
               0-11527.




                                                                              38
<PAGE>



     (3) Exhibits. (Continued)

<Table>
<Caption>
EXHIBIT
NUMBER                                DESCRIPTION
-------                               -----------
<S>                 <C>
    *10.1   --      MPSI Systems Inc. 1998 Stock Plan, filed as the same
                    numbered exhibit with the Company's 1998 Form 10-K, File No.
                    0-11527.

    *10.7   --      Real property lease dated February 11, 1998, between
                    American Southwest Properties, Inc., as lessor, and the
                    Company, as lessee, relating to the Company's Tulsa,
                    Oklahoma facility, filed as the same numbered exhibit with
                    the Company's 1998 Form 10-K, File No. 0-11527.

    *10.15  --      Indemnification Agreements with Directors and Officers of
                    MPSI Systems Inc. filed as the same numbered exhibit with
                    the Company's 1986 Form 10-K, File No. 0-11527.

    *10.16  --      MPSI Systems Inc. Amended and Restated 1988 Stock Option
                    Plan, effective November 29, 1988, filed as Exhibit 4.5 with
                    the Company's 1994 Form S-8, File No. 0-11527.

    *10.17  --      Stock Option Agreement pursuant to MPSI Systems Inc. Amended
                    and Restated 1988 Stock Option Plan, filed as Exhibit 4.6
                    with the Company's 1994 Form S-8, File No. 0-11527.

    *10.20  --      MPSI Systems Inc. Matching Investment Plan, effective
                    January 1, 1990, filed as Exhibit 4(c) with Pre-effective
                    Amendment No. 1 to the Company's Form S-8, filed on December
                    29, 1989, File No. 0-11527.

     21.1   --      List of Subsidiaries.

     23.1   --      Consent of Independent Auditors -- Ernst & Young LLP.
</Table>


----------

* Incorporated by reference.

(b)  No report on Form 8-K was filed by the Company during or applicable to the
     quarter ended September 30, 2000.

(c)  Exhibits - The response to this ITEM is submitted as a separate section of
     this report.

(d)  Financial Statement Schedules - The response to this Item is submitted as a
     separate section of this report.



                                                                              39
<PAGE>



         REPORT OF INDEPENDENT AUDITORS ON FINANCIAL STATEMENT SCHEDULE



We have audited the consolidated financial statements of MPSI Systems Inc. and
subsidiaries as of September 30, 2000 and 1999, and for each of the three years
in the period ended September 30, 2000, and have issued our report thereon dated
February 25, 2002 (included elsewhere in this Form 10-K). Our audits also
included the financial statement schedule included in this Form 10-K. This
schedule is the responsibility of the Company's management. Our responsibility
is to express an opinion based on our audits.

In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.



                                       ERNST & YOUNG LLP



Tulsa, Oklahoma
February 25, 2002



                                                                              40
<PAGE>


                                                                   SCHEDULE VIII


                       MPSI SYSTEMS INC. AND SUBSIDIARIES

                        VALUATION AND QUALIFYING ACCOUNTS

                      THREE YEARS ENDED SEPTEMBER 30, 2000


<Table>
<Caption>
              COLUMN A                       COLUMN B                COLUMN C                COLUMN D           COLUMN E
-----------------------------------        ------------   ----------------------------     ------------       ------------
                                                                    ADDITIONS
                                                          ---------------------------
                                             BALANCE AT     CHARGED TO                        OTHER             BALANCE
                                             BEGINNING      COSTS AND    REDUCTION OF      (DEDUCTIONS)         AT END OF
             DESCRIPTION                     OF PERIOD      EXPENSES       REVENUES         ADDITIONS            PERIOD
             -----------                   ------------   ------------   ------------      ------------       ------------
<S>                                        <C>            <C>            <C>               <C>                <C>
FOR THE YEAR ENDED SEPTEMBER 30, 1998
  Accumulated depreciation .............   $  7,302,000   $    425,000   $         --      $ (2,151,000)(2)   $  5,576,000
  Accumulated amortization .............      3,705,000        314,000             --                --          4,019,000
  Unamortized discount on software
    license agreements .................        506,000             --        121,000(1)       (267,000)(1)        360,000
FOR THE YEAR ENDED SEPTEMBER 30, 1999
  Accumulated depreciation .............   $  5,576,000   $    403,000   $         --      $ (1,041,000)(2)   $  4,938,000
  Accumulated amortization .............      4,019,000        153,000             --                --          4,172,000
  Unamortized discount on software
    license agreements .................        360,000             --        102,000(1)       (225,000)(1)        237,000
FOR THE YEAR ENDED SEPTEMBER 30, 2000
  Accumulated depreciation .............   $  4,938,000   $    416,000   $         --      $   (627,000)(2)   $  4,728,000
  Accumulated amortization .............      4,172,000        799,000             --                --          4,971,000
  Unamortized discount on software
    license agreements .................        237,000             --             --          (149,000)(1)         88,000
</Table>

----------

(1)  Reduction of unamortized discount on long-term receivables represents
     current period interest income recognition (see Note 2 to Consolidated
     Financial Statements). Increases to unamortized discount represent the
     present-value-discount on new software license agreements net of adjustment
     for any contract cancellations or revisions.

(2)  Reduction is due to retirement of fully amortized assets and to assets sold
     or otherwise disposed.




                                                                              41
<PAGE>



     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant, a corporation organized and existing under
the laws of the State of Delaware, has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Tulsa,
State of Oklahoma, on the 25th day of February, 2002.

                                              MPSI SYSTEMS INC.


                                              By       /s/ Ronald G. Harper
                                                 -------------------------------
                                                          Ronald G. Harper
                                                       Chairman of the Board,
                                                        President and Chief
                                                         Executive Officer

     Pursuant to the requirements of the Securities Act of 1934, this Report has
been signed below by the following persons on behalf of the Registrant, in the
capacities and on the date indicated.


<Table>
<S>                                   <C>                                <C>
    /s/ Ronald G. Harper              Chairman of the Board,             February 25, 2002
-------------------------------       President and Chief
      Ronald G. Harper                Executive Officer


     /s/ James C. Auten               Vice President and Chief--         February 25, 2002
-------------------------------       Financial Officer
       James C. Auten


/s/ John C. Bumgarner, Jr.            Director                           February 25, 2002
-------------------------------
   John C. Bumgarner, Jr.


     /s/ David L. Huff                Director                           February 25, 2002
-------------------------------
       David L. Huff


    /s/ Joseph C. McNay               Director                           February 25, 2002
-------------------------------
      Joseph C. McNay


    /s/ John J. McQueen               Director                           February 25, 2002
-------------------------------
      John J. McQueen


     /s/ Bryan D. Porto               Director                           February 25, 2002
-------------------------------
       Bryan D. Porto
</Table>


                                                                              42
<PAGE>


                                INDEX TO EXHIBITS

<Table>
<Caption>
EXHIBIT
NUMBER                EXHIBIT
-------               -------
<S>       <C>  <C>
  21.1    --   List of Subsidiaries

  23.1    --   Consent of Independent Auditors -- Ernst & Young LLP
</Table>




                                                                              43