1027207--3/8/2006--EPIQ_SYSTEMS

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{system, service, information}

{regulation, government, change}

{acquisition, growth, future}

{stock, price, operating}

{property, intellectual, protect}

{interest, director, officer}

{personnel, key, retain}

{regulation, change, law}

{investment, property, distribution}

{condition, economic, financial}

{customer, product, revenue}

{stock, price, share}

{provision, law, control}

{product, market, service}

{operation, international, foreign}

A significant reduction in the amount of Chapter 7 liquidated asset proceeds on deposit by our Chapter 7 bankruptcy trustee customers or in the number of pending bankruptcy cases would cause our revenues and earnings to drop significantly. Substantially all of our Chapter 7 revenues are collected through a single financial institution, and the termination of that marketing arrangement could cause uncertainty and adversely affect our future Chapter 7 revenue and earnings. We have established new arrangements with additional financial institutions, and changes in or terminations of those marketing arrangements could cause uncertainty and adversely affect our future Chapter 7 revenue and earnings. Some of our pricing models for Chapter 7 trustee clients have or are scheduled to have a component of pricing tied to prevailing interest rates, and a significant decline in interest rates would adversely affect our revenues and earnings. If a financial institution with which we have a marketing arrangement for Chapter 7 products and services is perceived negatively by current or prospective trustee clients, our case management revenue and earnings could be adversely affected. Bankruptcy reform legislation could alter the market for our products and services, which could cause a reduction in our revenues and earnings. Tort reform legislation could reduce the number and scope of class action and mass action cases, thus reducing our business prospects in the class action market. We have a limited number of bankruptcy trustee clients and a limited number of significant referral sources for corporate restructuring and class action and mass tort engagements. The loss of even a limited number of our trustee customers or referral sources could result in a loss of revenue and earnings. We encounter competition for our products and services from other third party providers and we could lose existing customers and fail to attract new business. The fluctuations in quarterly projects for clients have affected and may affect in the future the timing of our quarterly revenues and earnings and are likely to affect our future quarterly results. Our quarterly results have fluctuated in the past and may fluctuate in the future. If they do, our operating results may not meet the expectations of securities analysts or investors. This could cause fluctuations in the market price of our common stock. Our stock price may be volatile even if our quarterly results do not fluctuate significantly. If corporate restructuring cases on which we are retained convert to Chapter 7, we may not be paid for the products and services we have provided. If the bankruptcy court reduces or eliminates our fees in major corporate restructuring cases, our results of operations could be impaired. If we are unable to develop new technologies, we could lose existing customers and fail to attract new business. New releases of our software products may have undetected errors, which could cause litigation claims against us or damage to our reputation. Security problems with, or product liability claims arising from, our software products and business processes could cause increased expense for litigation, increased service costs and damage to our reputation. Interruptions or delays in service from our third-party Web hosting facility could impair the delivery of our service and harm our business. If our security measures are breached and unauthorized access is obtained to a customer s data, our service may be perceived as not being secure, customers may curtail or stop using our service and we may incur significant liabilities. We may be sued by third parties for alleged infringement of their proprietary rights. We rely on third-party hardware and software that may be difficult to replace or which could cause errors or failures of our service. Our intellectual property is not protected through patents or formal copyright registration. Therefore, we do not have the full benefit of patent or copyright laws to prevent others from replicating our software. Our failure to develop and maintain products and services that assist our customers in complying with significant government regulation could result in decreased demand for our products and services. The integration of acquired businesses is time consuming, may distract our management from our other operations, and can be expensive, all of which could reduce or eliminate our expected earnings. Our business and results of operations may be adversely affected if we are unable to manage our growth effectively. We have non-U.S. operations which are subject to certain inherent risks. The use of our common stock to fund acquisitions or to refinance debt incurred for acquisitions could dilute existing shares. We depend upon our key personnel and we may not be able to retain them or to attract, assimilate and retain highly qualified employees in the future. We do not pay cash dividends on our common stock and our common stock may not appreciate in value or even maintain the price at which you purchased your shares. Our articles of incorporation contain a provision that could be used by us, without shareholder approval, to discourage or prevent a takeover of our company. Compliance with changing regulation of corporate governance and public disclosure may result in additional expenses.

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1027207--3/8/2006--EPIQ_SYSTEMS_INC