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

                                    FORM 10-Q

                   QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934





For the nine months ended June 30, 2001              Commission file no. 0-11527




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



Delaware                                                             73-1064024
--------------------------------------------------------------------------------
(State or other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                             Identification No.)



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



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     .
   -----       -----



Number of shares of common stock outstanding at June 30, 2001 -        2,911,781
                                                               -----------------



<PAGE>



                                      INDEX


<Table>
<Caption>
                                                                                                            Page No.
                                                                                                            --------
<S>                                                                                                         <C>
Part I.  FINANCIAL INFORMATION:

      Financial Statements:
           Consolidated Balance Sheets - June 30, 2001 and September 30, 2000 ........................             3

           Consolidated Statements of Operations - Three Months and Nine Months
                Ended June 30, 2001 and 2000 .........................................................             5

           Consolidated Statement of Stockholders' Equity - Nine Months
                Ended June 30, 2001 ..................................................................             6

           Consolidated Statements of Cash Flow -
                Nine Months Ended June 30, 2001 and 2000 .............................................             7

           Notes To Consolidated Financial Statements ................................................             8

      Management's Discussion and Analysis of Financial Condition and
           Quarterly Results of Operations ...........................................................            12


Part II.  OTHER INFORMATION (Including Index to Exhibits) ............................................            15


SIGNATURES      ......................................................................................            16
</Table>



                                       2
<PAGE>



                       MPSI SYSTEMS INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS


<Table>
<Caption>
ASSETS
                                                                      JUNE 30,      SEPTEMBER 30,
                                                                       2001             2000
                                                                   -------------    -------------
                                                                    (UNAUDITED)
<S>                                                                <C>              <C>
Current assets:

      Cash and cash equivalents                                    $   1,190,000    $     876,000
      Short-term investments, at cost                                      3,000            3,000
      Receivables:
           Trade, net                                                  2,380,000        3,310,000
           Current portion of long-term receivables, net of
                unamortized discount                                     579,000        1,266,000

      Work in process inventory                                           68,000           47,000

      Prepayments                                                         75,000           88,000
                                                                   -------------    -------------
                Total current assets                                   4,295,000        5,590,000

Long-term receivables, net of current portion
      and unamortized discount                                           532,000          912,000

Property and equipment, net of accumulated amortization                1,026,000        1,046,000

Capitalized product development costs, net                             1,530,000        1,885,000

Other assets                                                             156,000          170,000
                                                                   -------------    -------------

                Total assets (Note 3)                              $   7,539,000    $   9,603,000
                                                                   =============    =============
</Table>


See accompanying notes to consolidated financial statements.


                                       3
<PAGE>



                       MPSI SYSTEMS INC. AND SUBSIDIARIES
                      CONSOLIDATED BALANCE SHEETS (CONT'D)


<Table>
<Caption>
LIABILITIES AND STOCKHOLDERS' EQUITY
                                                                             JUNE 30,         SEPTEMBER 30,
                                                                              2001               2000
                                                                          --------------     --------------
                                                                           (unaudited)
<S>                                                                       <C>                <C>
Current liabilities:

      Note payable to bank (Note 3)                                       $    1,200,000     $    2,000,000
      Accounts payable                                                           637,000          1,006,000
      Accrued liabilities                                                      1,065,000          1,187,000
      Deferred revenue                                                         1,441,000          1,284,000
                                                                          --------------     --------------
                Total current liabilities                                      4,343,000          5,477,000

Noncurrent deferred revenue                                                      577,000            712,000
Noncurrent deferred income taxes                                                 116,000            121,000
Other noncurrent liabilities                                                      60,000             96,000
                                                                          --------------     --------------

                Total liabilities                                              5,096,000          6,406,000
                                                                          --------------     --------------

Commitments and contingencies                                                         --                 --

Stockholders' Equity:
      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 shares issued and outstanding at
           June 30, 2001 and September 30, 2000                                  146,000            146,000

      Junior Common Stock, $.05 par value, 500,000 shares
           authorized, none issued or outstanding                                     --                 --

      Additional paid-in capital                                              13,145,000         13,145,000

      Deficit                                                                (11,265,000)       (10,539,000)

      Other accumulated comprehensive income                                     417,000            445,000
                                                                          --------------     --------------

                Total stockholders' equity                                     2,443,000          3,197,000
                                                                          --------------     --------------

                Total liabilities and stockholders' equity                $    7,539,000     $    9,603,000
                                                                          ==============     ==============
</Table>



See accompanying notes to consolidated financial statements



                                       4
<PAGE>



                       MPSI SYSTEMS INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<Table>
<Caption>
                                                              THREE MONTHS ENDED JUNE 30,        NINE MONTHS ENDED JUNE 30,
                                                               2001              2000              2001               2000
                                                           -------------     -------------     -------------     -------------
<S>                                                        <C>               <C>               <C>               <C>
Revenues:
    Information services and software maintenance          $   3,475,000     $   5,192,000     $  11,372,000     $  13,575,000
    Software licensing                                            30,000           251,000            91,000           372,000
                                                           -------------     -------------     -------------     -------------

       Total revenues                                          3,505,000         5,443,000        11,463,000        13,947,000
                                                           -------------     -------------     -------------     -------------

Cost of Sales:
    Information services and software maintenance              1,360,000         1,967,000         4,036,000         5,128,000
    Software licensing                                           159,000           160,000           535,000           376,000
                                                           -------------     -------------     -------------     -------------

          Total cost of sales                                  1,519,000         2,127,000         4,571,000         5,504,000
                                                           -------------     -------------     -------------     -------------

       Gross profit                                            1,986,000         3,316,000         6,892,000         8,443,000
Operating expenses:
    General and administrative                                   719,000           936,000         2,383,000         2,711,000
    Marketing and client services                              1,362,000         1,365,000         3,950,000         4,538,000
    Research and development                                     271,000           262,000           937,000           919,000
                                                           -------------     -------------     -------------     -------------

       Total operating expenses                                2,352,000         2,563,000         7,270,000         8,168,000
                                                           -------------     -------------     -------------     -------------

       Operating income (loss)                                  (366,000)          753,000          (378,000)          275,000
Other income (expense):
    Interest income                                               20,000            48,000            77,000           131,000
    Interest expense                                             (80,000)         (103,000)         (321,000)         (275,000)
    Loss on foreign exchange                                     (25,000)          (31,000)          (63,000)          (18,000)
    Other, net                                                     1,000           (93,000)           13,000           (90,000)
                                                           -------------     -------------     -------------     -------------

       Income (loss) before income taxes                        (450,000)          574,000          (672,000)           23,000
Provision for income taxes                                        23,000            14,000            54,000            13,000
                                                           -------------     -------------     -------------     -------------

       Net income (loss)                                   $    (473,000)    $     560,000     $    (726,000)    $      10,000
                                                           =============     =============     =============     =============

Per share:
    Basic income (loss)                                    $        (.16)    $         .19     $        (.25)    $         .00
    Diluted income (loss)                                  $        (.16)    $         .19     $        (.25)    $         .00
Shares Outstanding:
    Basic                                                      2,912,000         2,912,000         2,912,000         2,878,000
    Diluted                                                    2,912,000         2,923,000         2,912,000         2,900,000
</Table>


See accompanying notes to consolidated financial statements.



                                       5
<PAGE>



                       MPSI SYSTEMS INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                         NINE MONTHS ENDED JUNE 30, 2001
                                   (UNAUDITED)

<Table>
<Caption>
                                                                                                     OTHER
                                        COMMON STOCK               ADDITIONAL                      ACCUMULATED           TOTAL
                               -------------------------------       PAID-IN                      COMPREHENSIVE      STOCKHOLDERS'
                                  SHARES            AMOUNT           CAPITAL         DEFICIT          INCOME            EQUITY
                               -------------     -------------    -------------   -------------    -------------     -------------
<S>                            <C>               <C>              <C>             <C>              <C>               <C>
Balance,
  September 30,
    2000                           2,912,000     $     146,000    $  13,145,000   $ (10,539,000)   $     445,000     $   3,197,000
  Net loss                                --                --               --        (726,000)              --          (726,000)
  Other accumulated
    comprehensive
    income:
    Foreign currency
      translation adjustment              --                --               --              --          (28,000)          (28,000)
                                                                                                                     -------------
Total comprehensive loss                                                                                             $    (754,000)
                               -------------     -------------    -------------   -------------    -------------     -------------
Balance,
  June 30, 2001                    2,912,000     $     146,000    $  13,145,000   $ (11,265,000)   $     417,000     $   2,443,000
                               =============     =============    =============   =============    =============     =============
</Table>


See accompanying notes to consolidated financial statements.



                                       6
<PAGE>



                       MPSI SYSTEMS INC. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF CASH FLOW (NOTE 2)
                                   (UNAUDITED)

<Table>
<Caption>
                                                                                       NINE MONTHS ENDED JUNE 30,
                                                                                    -------------------------------
                                                                                        2001               2000
                                                                                    -------------     -------------
<S>                                                                                 <C>               <C>
Income (loss) from operations                                                       $    (726,000)    $      10,000

Adjustments to reconcile net income (loss) from operations to cash provided by
      operations:
      Depreciation and amortization of property and equipment                             238,000           327,000
      Amortization of product development costs                                           830,000           540,000

Changes in assets and liabilities:
      Decrease (increase) in assets:
           Receivables                                                                  1,996,000           287,000
           Inventories                                                                    (21,000)           10,000
           Other assets                                                                    26,000            35,000
      Increase (decrease) in liabilities:
           Trade payables and accruals                                                   (529,000)          181,000
           Taxes payable                                                                  (30,000)         (106,000)
           Deferred revenue                                                                22,000          (364,000)
                                                                                    -------------     -------------

           Net cash provided by operating activities                                    1,806,000           920,000
                                                                                    -------------     -------------

Cash flows from investing activities:
      Proceeds from asset dispositions                                                         --            25,000
      Purchase equipment                                                                 (114,000)          (80,000)
      Software developed for internal use                                                (100,000)         (107,000)
      Capitalized product development costs                                              (478,000)         (880,000)
                                                                                    -------------     -------------

           Net cash used by investing activities                                         (692,000)       (1,042,000)
                                                                                    -------------     -------------

Cash flows from financing activities:
      Exercise of stock options                                                                --            70,000
      Net proceeds from bank line of credit                                                    --           425,000
      Debt repayments                                                                    (800,000)               --
                                                                                    -------------     -------------

           Net cash provided (used) by financing activities                              (800,000)          495,000
                                                                                    -------------     -------------

Increase in cash and cash equivalents                                                     314,000           373,000

Cash and cash equivalents at beginning of period                                          876,000           296,000
                                                                                    -------------     -------------

Cash and cash equivalents at end of period                                          $   1,190,000     $     669,000
                                                                                    =============     =============
</Table>


See accompanying notes to consolidated financial statements.



                                       7
<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.    GENERAL NOTES:

      Certain notes to the September 30, 2000 audited consolidated financial
      statements filed with Form 10-K are applicable to the unaudited
      consolidated financial statements for the nine months ended June 30, 2001.
      Accordingly, reference should be made to the audited financial statements
      at September 30, 2000.

      In the opinion of the Company, the unaudited consolidated financial
      statements as of June 30, 2001 contain all adjustments (including normal
      recurring accruals) necessary to fairly present the financial position and
      the results of operations of the Company. The timing of new or renewed
      long-term software license agreements, with the normally attendant market
      study orders, can have a substantial impact upon reported revenues and net
      income between accounting periods.

2.    SUPPLEMENTAL CASH FLOW INFORMATION:

      The Company paid interest of $321,000 and $275,000 during the nine months
      ended June 30, 2001 and 2000, respectively. Net income taxes of $84,000
      and $119,000 were paid during the same respective periods.

3.    NOTE PAYABLE TO BANK, SUBSEQUENT EVENTS:

      At June 30, 2001, the Company owed $1,200,000 to Bank of America under a
      revolving line of credit arrangement secured by accounts and contracts
      receivable, inventory, general intangibles and certain cash accounts. The
      note bears interest at Bank of America floating prime rate plus 5%
      (approximately 13%). The weighted average interest rates were 14.45% for
      the nine months ended June 30, 2001 and 9.85% for the nine months ended
      June 30, 2000.

      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. A further debt payment of $100,000
      is required on or before April 1, 2002. In connection with the 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.





                                       8
<PAGE>



      4.  BUSINESS SEGMENTS:

      The Company identifies segments based upon line of business, which results
      in three reportable segments: Convenience Retailing, Pricing, and Business
      Development. The Business Development segment includes the former
      DataMetrix and Postal activities. 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 Business Development segment derives its revenues primarily from the
      sales of DataMetrix branded products, including 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. Depreciation is
      allocated to each reported segment through pre-determined corporate
      percentages. Identifiable assets in the Convenience Retailing, Pricing and
      Business Development 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 the June 30, 2001 disclosure format. Information on segments
      and a reconciliation to income (loss) before taxes for the quarters ended
      June 30, 2001 and 2000 are as follows:

<Table>
<Caption>
                                                                                SEGMENTS
                                                   -------------------------------------------------------------------
                                                    CONVENIENCE                          BUSINESS
                                                     RETAILING          PRICING         DEVELOPMENT          TOTAL
                                                   -------------     -------------     -------------     -------------
<S>                                                <C>               <C>               <C>               <C>
      QUARTER ENDED JUNE 30, 2001
      Revenues:
         Information services and
            software maintenance                   $   2,922,000     $     457,000     $      96,000     $   3,475,000
         Software licensing                               28,000                --             2,000            30,000
                                                   -------------     -------------     -------------     -------------
              Total revenues                       $   2,950,000     $     457,000     $      98,000     $   3,505,000
                                                   =============     =============     =============     =============
         Operating loss                            $     (37,000)    $    (120,000)    $    (209,000)    $    (366,000)
                                                   =============     =============     =============
         Other income (expense)                                                                                (84,000)
                                                                                                         -------------
         Loss before income tax                                                                          $    (450,000)
         Amortization of capitalized
              product development                  $     129,000     $          --     $      29,000     $     158,000
         Amortization of U.S.
              geographic database                             --                --            99,000            99,000
         Depreciation                                     56,000            11,000             4,000            71,000
         Identifiable assets                           7,539,000                --                --         7,539,000
         Additions to long-lived assets                  114,000                --                --           114,000
      QUARTER ENDED JUNE 30, 2000
      Revenues:
         Information services and
            software maintenance                   $   4,670,000     $     382,000     $     140,000     $   5,192,000
         Software licensing                               77,000           174,000                --           251,000
                                                   -------------     -------------     -------------     -------------
              Total revenues                       $   4,747,000     $     556,000     $     140,000     $   5,443,000
                                                   =============     =============     =============     =============
         Operating income (loss)                   $   1,366,000     $       9,000     $    (622,000)    $     753,000
                                                   =============     =============     =============
         Other income (expense)                                                                               (179,000)
                                                                                                         -------------
         Income before income tax                                                                        $     574,000
         Amortization of capitalized
              product development                  $     143,000     $       2,000     $      16,000     $     161,000
         Amortization of U.S.
              geographic database                             --                --            99,000            99,000
         Depreciation                                     83,000             3,000            18,000           104,000
         Identifiable assets                          10,729,000                --                --        10,729,000
         Additions to long-lived assets                   26,000                --                --            26,000
</Table>



                                       9
<PAGE>



      Information on segments and a reconciliation to income before taxes for
      the nine months ended June 30, 2001 and 2000 are as follows:

<Table>
<Caption>
                                                                               SEGMENTS
                                                      -------------------------------------------------------------------
                                                       CONVENIENCE                          BUSINESS
                                                        RETAILING         PRICING          DEVELOPMENT          TOTAL
                                                      -------------     -------------     -------------     -------------
<S>                                                   <C>               <C>               <C>               <C>
NINE MONTHS ENDED JUNE 30, 2001
     Revenues:
         Information services and
            software maintenance                      $   9,512,000     $   1,513,000     $     347,000     $  11,372,000
         Software licensing                                  63,000            22,000             6,000            91,000
                                                      -------------     -------------     -------------     -------------
              Total revenues                          $   9,575,000     $   1,535,000     $     353,000     $  11,463,000
                                                      =============     =============     =============     =============
         Operating income (loss)                      $     335,000     $    (198,000)    $    (515,000)    $    (378,000)
                                                      =============     =============     =============
         Other income (expense)                                                                                  (294,000)
                                                                                                            -------------
         Loss before income tax                                                                             $    (672,000)
                                                                                                            =============

         Amortization of capitalized
              product development                     $     446,000     $          --     $      87,000     $     533,000
         Amortization of U.S.
              geographic database                                --                --           297,000           297,000
         Depreciation                                       190,000            36,000            12,000           238,000
         Identifiable assets                              7,539,000                --                --         7,539,000
         Additions to long-lived assets                     214,000                --                --           214,000

NINE MONTHS ENDED JUNE 30, 2000
     Revenues:
         Information services and
            software maintenance                      $  11,541,000     $   1,574,000     $     460,000     $  13,575,000
         Software licensing                                  91,000           280,000             1,000           372,000
                                                      -------------     -------------     -------------     -------------
              Total revenues                          $  11,632,000     $   1,854,000     $     461,000     $  13,947,000
                                                      =============     =============     =============     =============
         Operating income (loss)                      $   1,779,000     $     110,000     $  (1,614,000)    $     275,000
                                                      =============     =============     =============
         Other income (expense)                                                                                  (252,000)
                                                                                                            -------------
         Income before income tax                                                                           $      23,000
                                                                                                            =============

         Amortization of capitalized
              product development                     $     336,000     $      13,000     $      26,000     $     375,000
         Amortization of U.S.
              geographic database                                --                --           165,000           165,000
         Depreciation                                       264,000            10,000            53,000           327,000
         Identifiable assets                             10,729,000                --                --        10,729,000
         Additions to long-lived assets                     187,000                --                --           187,000
</Table>



                                       10
<PAGE>



5.    COMPREHENSIVE INCOME

      Comprehensive income is net income, plus certain other items that are
      recorded directly to shareholders' equity, bypassing net income. The only
      such items currently applicable to the Company are foreign currency
      translation adjustments.

      Comprehensive income (loss) was $(466,000) and $564,000 for the quarters
      ended June 30, 2001 and 2000, respectively. For the nine months ended June
      30, 2001 and 2000, comprehensive income (loss) was $(754,000) and $9,000,
      respectively.



                                       11
<PAGE>



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

RESULTS OF OPERATIONS

CONSOLIDATED OPERATIONS. MPSI reported a net loss of $473,000 or $.16 per share
on revenues of $3.5 million for the quarter ended June 30, 2001 compared with
net income of $560,000 or $.19 per share on revenues of $5.4 million for the
comparable quarter last year. For the nine months ended June 30, 2001 MPSI
reported a net loss of $726,000 or $.25 per share on revenues of $11.5 million.
This compared with net income of $10,000 or $.00 per share on revenues of $13.9
million for the comparable nine months of last fiscal year. As discussed in more
detail below, while revenues for the quarter and nine months ended June 30, 2001
were down as compared with last year, operating expenses decreased significantly
due to downsizing and cost reduction programs which occurred during fiscal 2000.

     CONVENIENCE RETAILING SEGMENT. This business unit accounted for revenues of
$2,950,000 and $4,747,000 for the fiscal quarters ended June 30, 2001 and 2000,
respectively, with a corresponding operating loss of $37,000 for the quarter
ended June 30, 2001 as compared to an operating income of $1,366,000 for the
quarter ended June 30, 2000. The decline in revenues ($1,797,000) and
profitability ($1,403,000) for the third fiscal quarter of 2001 as compared with
2000 is primarily attributable to fewer multi-client market studies during 2001.
This is primarily because major clients are currently undergoing post-merger
reorganizations and have delayed retail decisions until they sort out their
infrastructure issues. The revenue decline is further impacted because the
Company has offered significant price reductions as new software technology is
released globally. The Company was able to do this as the result of significant
staff reductions taken during fiscal 2000. The Company was able to reduce prices
35%, on average, for U.S. customers in fiscal 2000 and expects to be similarly
competitive in foreign arenas. Revenues for the nine months ended June 30, 2001
and 2000 were $9,575,000 and $11,632,000, respectively. Operating income for the
nine months ended June 30, 2001 was $335,000 as compared to an operating income
of $1,779,000 for the comparable period last year. The revenue decline of
$2,057,000, for the reasons noted herein, had a significant impact on operating
income, which decreased $1,444,000. The Company continues to experience
increased interest in its product offerings. Management attributes this
interest, and potential orders, to the attractive attributes of the new Retail
Explorer ("REX")(TM) technology and to the Company's revised pricing policies.
The timing of new or renewed market study orders can have a substantial impact
upon reported revenues and net income between accounting periods.

     In October 2001, MPSI's largest customer notified the Company that it would
explore other convenience retailing software and data services as a possible
alternative to MPSI products. Of the $4.6 million annual revenues derived from
that customer in fiscal 2000, approximately $3.2 million related to convenience
retailing products and services.

     PRICING SEGMENT. Revenues of $457,000 for the quarter ended June 30, 2001,
as compared to $556,000 during the same quarter last fiscal year, are down
$99,000 primarily due to the timing of orders from customers undergoing
post-merger transition. The Company experienced an operating loss of $120,000
for the third fiscal quarter of 2001 compared to an operating income of $9,000
during the comparable quarter last year. Revenues for the nine months ended June
30, 2001 were $1,535,000 as compared to $1,854,000 reported for the nine months
ended June 30, 2000. This segment reported an operating loss of $198,000 for the
nine months ended June 30, 2001 as compared to an operating income of $110,000
for the comparable period last year. Because this segment deals with a
relatively small number of high dollar projects, timing of client pilot tests
and orders can substantially affect period results.

     BUSINESS DEVELOPMENT SEGMENT. This unit (which continues to market mapping
products under the DataMetrix brand, and is in the process of developing
products which will be marketed through the Internet) generated revenues of
$98,000 during the fiscal quarter ended June 30, 2001 as compared with $140,000
during the comparable period last fiscal year. Business Development incurred an
operating loss of $209,000 for the quarter ended June 30, 2001 as compared with
an operating loss of $622,000 during the same fiscal quarter last year. For the
nine months ended June 30, 2001 and 2000, Business Development generated
revenues of $353,000 and $461,000, respectively, with related operating losses
of $515,000 and $1,614,000. These changes were a result of reduced costs
associated with the downsizing of the old DataMetrix unit. This segment has not
yet achieved critical mass which has resulted in continuing, although reduced,
losses.

     This unit introduced a new Internet modeling product during the June 2001
quarter. LocationXpert(TM) targets independent petroleum retailers who have many
of the same retail network planning needs as the major oil companies but may
have lesser resources in house. The product had no material impact on the June
2001 results.



                                       12
<PAGE>



     For the nine months ended June 30, 2001 and 2000, Business Development
generated revenues of $353,000 and $461,000, respectively, with related
operating losses of $515,000 and $1,614,000. This segment has not yet achieved
critical mass which has resulted in continuing, although reduced, losses.

     CONSOLIDATED OPERATING EXPENSES. Consolidated operating expenses were
$2,352,000 for the quarter ended June 30, 2001 as compared with $2,563,000
during the same quarter last fiscal year. For the nine months ended June 30,
2001, consolidated operating expenses were $7,270,000 as compared with
$8,168,000 for the same period last fiscal year. The overall reductions are a
direct result of downsizing, which occurred during the end of fiscal 2000 and
the first quarter of fiscal 2001.

     Consolidated general and administrative expenses for the quarter ended June
30, 2001 were down approximately $217,000 (23%) as compared to the same fiscal
quarter of last year. General and administrative expenses for the nine months
ended June 30, 2001 were down approximately $328,000 (12%) as compared to the
same period last fiscal year. The decline in costs for the quarter and nine
months were the result of reduced costs associated with the downsizing as
discussed above.

     Consolidated marketing and client service expenses of $1,362,000 for the
quarter ended June 30, 2001 were comparable with $1,365,000 during the same
fiscal quarter of last year. For the nine months ended June 30, 2001, expenses
were down approximately $588,000 (13%) as compared with the same fiscal period
of last year. Consolidated marketing expenses have been significantly reduced as
a result of (1) focused target marketing on major global petroleum marketers,
and (2) increased reliance on value-added resellers to service smaller
customers. Additionally, the Company has adjusted its selling and marketing
objectives to accommodate for changes in product offerings and the marketplace
and has realigned personnel to meet those objectives.

     Consolidated research and development expenses (excluding amounts
capitalized for product development as discussed under Financial Condition and
Liquidity below) for the quarter and nine months ended June 30, 2001, were
comparable with the same fiscal periods last year. Total costs associated with
product development and maintenance of existing products have been reduced as a
result of new technology policies which seek to produce modular products which
are easier to develop, less costly to customize and maintain, and can more
readily be transported to other vertical market applications.

     OTHER INCOME AND EXPENSES. Interest expense of $80,000 was lower for the
quarter ended June 30, 2001 as compared to $103,000 for the comparable quarter
of last fiscal year as a result of a significant decrease ($800,000) of
corporate bank debt. Although the Company's bank debt has been significantly
reduced as of June 30, 2001, interest expense of $321,000 was higher during the
nine months ended June 30, 2001, as compared to $275,000 for the comparable
period last fiscal year. The additional expense relates to increased carrying
charges assessed by vendors. Additionally, revenues were down as the result of
more competitive pricing as compared to last fiscal year, which had an adverse
impact on billings and cash flows. This trend will continue until such time as
volume growth can overcome lower prices.

     MPSI enters into multi-year contracts for market studies, some of which are
denominated in foreign currencies (principally the Singapore Dollar and the
British Pound Sterling ). This exposes MPSI to exchange gains or losses
depending upon the periodic value of the U.S. Dollar relative to the respective
foreign currencies. The Company experienced exchange losses of approximately
$25,000 and $63,000 during the quarter and nine months ended June 30, 2001,
respectively, as compared to $31,000 and $18,000 for the comparable periods last
fiscal year. Although MPSI anticipates continuing exposure to exchange
fluctuations, no material adverse effect is expected as the Company denominates
a limited number of contracts in foreign currencies. The Company does not
utilize derivative financial instruments to hedge their foreign currency risks.

     INCOME TAXES. Income taxes for the quarter and nine months ended June 30,
2001 were $23,000 and $54,000, respectively, as compared to $14,000 and $13,000
for the same fiscal periods last year. The changes in income taxes are primarily
due to (a) losses incurred during fiscal 2001, (b) foreign taxes withheld at the
source by customers and (c) settlement of an IRS tax audit (for which the
Company had accrued approximately $60,000 at September 30, 1999 against an
ultimately lower settlement which resulted in a favorable adjustment of
approximately $45,000 in the first fiscal quarter of 2000). The amount of
foreign income taxes withheld can fluctuate significantly between fiscal periods
based upon not only



                                       13
<PAGE>
the geographic areas in which the Company operates, but on the particular
products and services delivered within an individual country.

FINANCIAL CONDITION AND LIQUIDITY

     Working capital, the Company's primary measure of liquidity, was $(48,000)
at June 30, 2001 as compared with $113,000 at September 30, 2000. Working
capital at June 30, 2000 was $834,000. Generally, the decrease in liquidity is
principally attributable to (a) reduction of the corporate bank debt of
$800,000, (b) lower prices, and (c) slower revenue generation due to client
reorganization delays as discussed above. Although cash has increased by
approximately $314,000 during the current fiscal year, net trade receivables
have decreased by $1,617,000 as a result of aggressive collection efforts.

     Accounts payable and accrued liabilities were reduced by approximately
$491,000 during the first nine months of fiscal 2001. Deferred revenue of
approximately $1,441,000, which represents billings in excess of recognized
revenue, increased by $157,000 over the amount reported at September 30, 2000.
While deferred revenue has the effect of lowering working capital, such amounts
do not require commensurate cash outflows as is the case with other current
liability accounts.

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
3 to the consolidated financial statements for additional 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.

     Capitalized product development expenditures for the nine months ended June
30, 2001 were $478,000 compared with $880,000 in the same period last year. The
fiscal year 2001 capitalized costs principally reflect completion of the REX
generic global system, initial work on the REX updates and the Company's
Internet product offering released during the June 2001 quarter. The Internet
offering is intended to open up access to many smaller clients who have
traditionally not been able to utilize the Company's technology due to price or
computer system constraints.

     MPSI's backlog of market studies at June 30, 2001 in the amount of
approximately $10.7 million, ($8.2 million at September 30, 2000), contained a
substantial 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 may have significant implications on the
conclusions to be drawn concerning fluctuations in backlog between accounting
periods. For example, if a customer commits to a five-year series of market
studies in year one, backlog of that year would substantially increase.
Thereafter, as the Company delivers successive market studies, backlog would
decline in years 2 - 4.



                                       14
<PAGE>


----------
Portions of this document may constitute forward-looking statements as defined
by federal law. Although the Company believes any such statements are based on
reasonable assumptions, there is no assurance that actual outcomes will not be
materially different. Additional information about issues that could lead to
material changes in performance is contained in the Company's annual report on
Form 10-K which is filed with the Securities and Exchange Commission.



PART II - OTHER INFORMATION

Item 1 -- Legal Proceedings - No material items.

Item 2 -- Changes in Securities - None.

Item 3 -- Defaults Upon Senior Securities -

               The registrant's credit facility with Bank of America in the
          amount of approximately $900,000 became due and payable according to
          its terms on January 5, 2002. Prior to the due date, the registrant
          had breached a covenant in the credit facility requiring the
          maintenance of a minimum net worth. See Note 3 to the consolidated
          financial statements for additional information about the Company's
          banking relationship. 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. This action significantly lengthened the Bank's commitment to
          MPSI when compared with previous extension periods and provided for
          adjustment of the equity covenant down to $1.7 million.

Item 4 -- Submission of Matters to a Vote of Security Holders - None.

Item 5 -- Other Information -

               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 Form 10-K upon securing
          an alternative credit facility, the registrant filed an appeal with
          Nasdaq, but was unable to file the financial 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.

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

               (a)  Exhibits:

                    11.1 Earnings per share computation

               (b)  Reports on Form 8-K - None



                                       15
<PAGE>



                                   SIGNATURES




Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed in its behalf by the
undersigned hereunto duly authorized.




                                         MPSI SYSTEMS INC.




Date        February 25, 2002             By  /s/ Ronald G. Harper
      ------------------------------        ---------------------------------
                                             Ronald G. Harper, President
                                             (Chief Executive Officer) and
                                             Director





Date        February 25, 2002             By  /s/ James C. Auten
      ------------------------------        -----------------------------------
                                             James C. Auten
                                             Vice President
                                             (Chief Financial Officer)



                                       16
<PAGE>




                                INDEX TO EXHIBITS

<Table>
<Caption>
Exhibit
Number                     Description
------                     -----------
<S>                        <C>
11.1                       Earnings Per Share Computation
</Table>