<PAGE>
                                       
                                UNITED STATES
                     SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549
                                       
                                   FORM 10-Q



__X__  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
       EXCHANGE ACT OF 1934

For the quarterly period ended OCTOBER 31,1997

_____  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
       EXCHANGE ACT OF 1934

For the transitional period from _________ to _________


Commission File Number: 00-1033864
                        ----------


                                       
                                 DocuCorp, Inc.
           ------------------------------------------------------
           (Exact name of registrant as specified in its charter)



           Delaware                                           75-2690838
-------------------------------                          ----------------------
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                           identification number)



     5910 North Central Expressway, Suite 800, Dallas, Texas      75206
    ---------------------------------------------------------------------
          (Address of principal executive offices)             (Zip Code)

                                       
                                (214) 891-6500
               ----------------------------------------------------
               (Registrant's telephone number including area code)


               ----------------------------------------------------
               (Former name, former address and former fiscal year, 
                          if changed since last report)



     Indicate by check mark whether the registrant (1) 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 the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:  Class A Common Stock $.01
par value, 4,281,109 shares as of November 30, 1997.

<PAGE>
                                       
                                DOCUCORP, INC.
                              TABLE OF CONTENTS
                                  FORM 10-Q
                               October 31, 1997


                        PART I - FINANCIAL INFORMATION
                                                                           PAGE

Item 1.  Financial Statements

         Interim Consolidated Balance Sheets as of July 31, 1997 and
          October 31, 1997 (unaudited)                                       2

         Interim Consolidated Statements of Operations for the three month
          periods ended October 31, 1996 (unaudited) and 
          1997 (unaudited)                                                   3

         Interim Consolidated Statements of Cash Flows for the three month
          periods ended October 31, 1996 (unaudited) and
          1997 (unaudited)                                                   4

Notes to interim consolidated financial statements                           5


Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                           7


                        PART II - OTHER INFORMATION


Item 6.  Exhibits and Reports on Form 8-K                                   11


Signatures                                                                  12

<PAGE>

                                       
                                  DOCUCORP, INC.
                        INTERIM CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)

<TABLE>
                                                               July 31,        October 31,
                                                                 1997             1997
                                                             ------------     ------------
<S>                                                          <C>              <C>
ASSETS                                                                                      
 Current assets:                                                                             
   Cash and cash equivalents                                 $  2,869,458     $  1,442,947  
   Accounts receivable, net of allowance                                                  
    of $525,000 and $550,000, respectively                      9,010,784        9,079,655  
   Current portion of deferred taxes                              380,925          229,259  
   Income tax refund receivable                                   503,888          362,966  
   Other current assets                                           553,977        1,001,598  
                                                             ------------     ------------
     Total current assets                                      13,319,032       12,116,425  

 Fixed assets, net of accumulated depreciation                                               
   of $1,983,864 and $2,320,187, respectively                   3,087,578        2,950,537  
 Software, net of accumulated amortization of $5,397,344                                     
   and $5,802,298, respectively                                 7,408,113        7,439,435  
 Deferred taxes                                                 1,029,473          870,595  
 Goodwill, net of accumulated amortization                      7,544,535        7,351,908  
 Other assets                                                     309,434          292,051  
                                                             ------------     ------------
                                                             $ 32,698,165     $ 31,020,951  
                                                             ------------     ------------
                                                             ------------     ------------

LIABILITIES AND STOCKHOLDERS' DEFICIT                                                       
 Current liabilities:                                                                        
   Accounts payable                                          $  1,164,012     $    702,555
   Accrued liabilities:                                                                   
     Accrued compensation                                       1,142,199          710,833  
     Other                                                      1,532,300        1,631,173  
   Income taxes payable                                           412,000          434,904  
   Current portion of long-term debt                              191,652          191,652  
   Current portion of obligations under capital leases            454,199          337,362  
   Deferred revenue                                             6,778,212        7,207,649  
                                                             ------------     ------------
     Total current liabilities                                 11,674,574       11,216,128  

 Obligations under capital leases                                  33,993                0  
 Long-term debt                                                 8,759,156        6,832,609  
 Other long-term liabilities                                      631,748          645,608  

 Redeemable Class B common stock, 7,000,000 shares authorized                                
  at $.01 par value, 4,686,024 and 4,690,935 shares issued and                                
  outstanding at redemption value, respectively                19,118,978       19,139,015  

 Stockholders' deficit:                                                                      
  Class A common stock, 20,000,000 shares authorized at                                      
    $.01 par value, 4,277,794 shares issued and outstanding        42,778           42,778 
  Additional paid-in capital                                    4,921,205        4,909,875 
  Retained deficit                                            (12,413,092)     (11,693,887)
  Notes receivable from stockholders                              (71,175)         (71,175)
                                                             ------------     ------------
     Total stockholders' deficit                               (7,520,284)      (6,812,409)
                                                             ------------     ------------
                                                             $ 32,698,165     $ 31,020,951 
                                                             ------------     ------------
                                                             ------------     ------------
</TABLE>

     See accompanying notes to interim consolidated financial statements.

                                       2
<PAGE>
                                       
                                 DOCUCORP, INC.
                 INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)

                                                     Three months ended   
                                                         October 31,
                                                -----------------------------
                                                   1996               1997
                                                ----------        -----------
REVENUES
  Professional services                         $  195,870        $ 6,688,010
  License                                        1,043,687          1,575,817
  Maintenance and other recurring                1,583,980          2,582,446
                                                ----------         -----------
    Total revenues                               2,823,537         10,846,273
                                                ----------         -----------

EXPENSES
  Professional services                            146,286          4,841,694
  Product development and support                  995,476          1,878,499
  Selling and marketing                            405,241          1,395,100
  General and administrative                       464,908          1,371,863
                                                ----------         -----------
    Total expenses                               2,011,911          9,487,156
                                                ----------         -----------
    Operating income                               811,626          1,359,117
  Other income (expense), net                       95,314           (155,912)
                                                ----------         -----------
    Income before income taxes                     906,940          1,203,205
  Provision for income taxes                       330,000            484,000
                                                ----------         -----------
    Net income                                  $  576,940         $  719,205
                                                ----------         -----------
                                                ----------         -----------
                                                                       
  Net income per share of common stock          $     0.11         $     0.07
                                                ----------         -----------
                                                ----------         -----------
                                            
  Weighted average number of shares of      
    common stock and common stock           
    equivalents outstanding                      5,421,481          10,721,074
                                                ----------         -----------
                                                ----------         -----------

     SEE ACCOMPANYING NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS.

                                       3
<PAGE>

                                 DOCUCORP, INC.
                   INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
                                                                       Three months ended
                                                                           October 31,
                                                                    -------------------------
                                                                       1996          1997
                                                                    ----------    -----------
<S>                                                                 <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                                                        $  576,940    $   719,205
  Adjustments to reconcile net income to
   net cash provided by operating activities:
     Stock option compensation expense                                  12,380          5,327
     Depreciation                                                      100,889        336,323
     Amortization of capitalized software                              198,315        404,954
     Amortization of goodwill                                                0        192,627
     Increase in allowance for doubtful accounts                             0         25,000
     Changes in assets and liabilities:                                                                    
       (Increase) decrease in accounts receivable                      360,858        (93,871)
       Decrease in income tax refund receivable                              0        140,922
       Decrease in deferred tax assets                                  78,996        310,544
       (Increase) decrease in other assets                              70,887       (430,238)
       Decrease in accounts payable                                   (101,072)      (461,457)
       Decrease in accrued liabilities                                (191,176)      (332,493)
       Increase (decrease) in income taxes payable                    (278,748)        22,904
       Increase in deferred revenue                                    117,162        429,437
       Increase in deferred tax liabilities                            187,004              0
       Increase in other long-term liabilities                               0         13,860
                                                                    ----------    -----------
         Total adjustments                                             555,495        563,839
                                                                    ----------    -----------
         Net cash provided by operating activities                   1,132,435      1,283,044
                                                                    ----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES
  Sale of short-term investments, net                                  308,806              0
  Purchase of fixed assets                                            (104,660)      (199,282)
  Development of software                                             (139,373)      (436,276)
                                                                    ----------    -----------
         Net cash (used in) provided by investing activities            64,773       (635,558)
                                                                    ----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES
  Repayment of debt                                                          0     (1,926,547)
  Principal payments under capital lease obligations                   (15,103)      (150,830)
  Proceeds from exercise of stock options                                    0          3,380
                                                                    ----------    -----------
         Net cash used in financing activities                         (15,103)    (2,073,997)
                                                                    ----------    -----------
Net increase (decrease) in cash and cash equivalents                 1,182,105     (1,426,511)
Cash and cash equivalents at beginning of period                     1,909,016      2,869,458
                                                                    ----------    -----------
Cash and cash equivalents at end of period                          $3,091,121    $ 1,442,947
                                                                    ----------    -----------
                                                                    ----------    -----------
</TABLE>

     SEE ACCOMPANYING NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS.

                                       4

<PAGE>

                                 DOCUCORP, INC.
               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited Interim Consolidated Financial Statements include
the accounts of DocuCorp, Inc. and its subsidiaries (collectively, the
"Company").

The unaudited financial statements included herein have been prepared in
accordance with generally accepted accounting principals for interim financial
information and with the instructions to Form 10-Q and Regulation S-X.
Accordingly, they do not contain all of the information and footnotes required
by generally accepted accounting principles for complete financial statements,
and should be read in conjunction with the audited consolidated financial
statements included in the Company's annual report on Form 10-K for the year
ended July 31, 1997.  In the opinion of management, the accompanying unaudited
financial statements reflect all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation of the Company's
financial position at October 31, 1997 and results of operations for the three
month periods ended October 31, 1996 and 1997.  The interim results presented
herein are not necessarily representative of the results that may be expected
for the fiscal year ended July 31, 1998 or for any future period.

NOTE 2 - BUSINESS ACQUISITION

On January 15, 1997, Image Sciences, Inc. ("Image Sciences") entered into an
Agreement and Plan of Merger (the "Merger") with FormMaker Software, Inc.
("FormMaker"), pursuant to which the stockholders of Image Sciences and
FormMaker agreed to exchange their shares for common stock of the Company. The
Merger was completed on May 15, 1997.  Concurrent with the closing of the
Merger, Image Sciences distributed approximately $8,000,000 via (i) a tender
offer to its common stockholders and certain holders of options to purchase
common stock and (ii) a dividend to its preferred stockholder.

The Merger was treated as an acquisition of FormMaker by Image Sciences;
accordingly, the Merger transaction was recorded under the purchase method of
accounting.  For historical accounting purposes, Image Sciences is considered
to be the acquirer in the Merger and purchase accounting is not required
related to the conversion of Image Sciences common stock and preferred stock
into Company common stock.  The financial statements of Image Sciences are
presented as historical statements of the Company for periods prior to the
Merger. The excess of the purchase price over the fair value of the net
identifiable assets acquired of $7,705,057 has been recorded as goodwill and is
being amortized on a straight-line basis over ten years.

                                   5
<PAGE>

                            DOCUCORP, INC.
    NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                              (UNAUDITED)

The following unaudited pro forma information for the three months ended
October 31, 1996 presents a summary of consolidated results of operations of
Image Sciences and FormMaker as if the acquisition had occurred at the
beginning of fiscal 1997.  Such pro forma amounts are not necessarily
indicative of what the actual results might have been had the Merger occurred
at the beginning of fiscal 1997.  The unaudited pro forma amounts exclude non-
recurring charges recorded in the year ended July 31, 1997 for acquired in-
process technology, Merger-related compensation charges, and other Merger-
related costs of $13,500,000, $7,649,740, and $228,115, respectively.

                                   (UNAUDITED)
                               THREE MONTHS ENDED
                                OCTOBER 31, 1996
                               ------------------
Revenues                           $9,022,000
Net income                            314,000
Net income per share                      .03

NOTE 3 - LONG-TERM DEBT

In connection with the Merger, the Company assumed a $10,000,000 revolving
credit facility with a bank which was guaranteed by Safeguard Scientifics, Inc.
("Safeguard"), FormMaker's largest stockholder.  Effective September 1997, the
revolving credit facility was renegotiated.  The maximum amount available under
this credit arrangement is $10,000,000, and repayment of $3,500,000 is
guaranteed by Safeguard.  Under the credit arrangement, the Company is required
to maintain certain financial covenants.  Amounts outstanding under this credit
arrangement bear interest at variable rates determined by various provisions of
the credit arrangement. These rates generally approximate or equal the bank's
prime rate or the London Interbank Rate ("LIBOR").

NOTE 4 - RECENT ACCOUNTING PRONOUNCEMENTS

In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 ("SFAS 128"), "Earnings per Share",
which is required to be adopted for fiscal years ending after December 15,
1997.  At that time, the Company will be required to change the method
currently used to compute earnings per share and to restate all prior periods.
Under the new requirements for calculating basic earnings per share, the
dilutive effect of stock options and warrants will be excluded.

                                   6
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

Certain information contained herein may include forward-looking statements
that involve risks and uncertainties. The Company's actual results may differ
materially from those discussed in the forward-looking statements.  Potential
risks and uncertainties include, but are not limited to, integration of Image
Sciences and FormMaker and their respective products, reliance on a major
client relationship, dependence upon the insurance industry, fluctuations in
operating results, and the timely development and acceptance of new products
and services. Consequently, the actual results realized by the Company could
differ materially from the statements made herein.  Readers of this report are
cautioned not to place undue reliance on the forward-looking statements made
herein.

OVERVIEW

The Company provides software, technologies, services, and outsourcing to
insurance, financial services, utilities, telecommunications, transportation,
government, education, and other enterprises and industries.  The Company was
incorporated in Delaware in January 1997 in connection with the Merger of Image
Sciences and FormMaker.  The Merger was treated as an acquisition of FormMaker
by Image Sciences; accordingly, the Merger transaction was recorded under the
purchase method of accounting.

The accompanying unaudited Interim Consolidated Financial Statements include 
the accounts of the Company and its subsidiaries, Image Sciences, FormMaker, 
and Micro Dynamics, Ltd.  Results of FormMaker and Micro Dynamics, Ltd. are
included from the effective date of the Merger, May 15, 1997.

RESULTS OF OPERATIONS

The following table sets forth selected data of the Company expressed as a
percentage of total revenues for the periods indicated:

                                                   Three months ended
                                                       October 31,
                                                       (unaudited)
                                                   ------------------
                                                    1996        1997
                                                    ----        ----
REVENUES
     Professional services                             7%        62%
     License                                          37         14
     Maintenance and other recurring                  56         24
                                                     ---        ---
        Total revenues                               100        100

EXPENSES
     Professional services                             5         45
     Product development and support                  35         17
     Selling and marketing                            14         13
     General and administrative                       17         13
                                                     ---        ---
        Total expenses                                71         88
                                                     ---        ---
     Operating income                                 29         12
     Other income (expense), net                       3         (1)
                                                     ---        ---
        Income before income taxes                    32         11
     Provision for income taxes                       12          4
                                                     ---        ---
        Net income                                    20%         7%
                                                     ---        ---
                                                     ---        ---
                                   7
<PAGE>

COMPARATIVE ANALYSIS OF QUARTERLY RESULTS FOR THE THREE MONTHS ENDED
OCTOBER 31, 1996 AND 1997

REVENUES

The Company derives its revenues from license fees, recurring maintenance fees,
and professional services related to its software products.  License revenues
are generally derived from perpetual and term licenses of software products.
Maintenance and other recurring revenues consist primarily of recurring license
fees and annual maintenance contracts.  Professional services revenues include
fees for consulting, implementation, processing, contract programming projects,
and education services.

The inclusion of FormMaker's results for the three months ended October 31,
1997 was primarily responsible for the 284% increase in total revenues.
Professional services revenues increased significantly due to the inclusion of
FormMaker services in the three months ended October 31, 1997.  License
revenues increased 51% due to the execution of several large contracts in the
utilities industry. The Company is committed to further developing its presence
in the insurance industry, and also penetrating other vertical markets,
especially the utilities industry. Maintenance and other recurring revenues
increased 63% as a result of an increased customer base for DocuFlex and
inclusion of the customer base of the DAP product line. The Company expects
maintenance and other recurring revenue to continue to increase as its customer
base expands.

FormMaker has entered into various agreements with a major customer (Policy
Management Systems or "PMSC") to provide certain processing services and to
grant PMSC certain marketing and licensing rights to FormMaker's software.
Effective May 1997, PMSC provided 12 months termination notice of its agreement
with FormMaker regarding processing services.  The marketing agreement expires
on December 31, 1999; however, PMSC can unilaterally terminate the marketing
agreement with FormMaker beginning January 1, 1998 by providing 90 days' prior
written notice.

PROFESSIONAL SERVICES EXPENSE

Professional services expense is composed primarily of personnel expenses
related to professional services and processing services.  The majority of the
significant increase is due to the inclusion of FormMaker personnel and related
expenses during the three months ended October 31, 1997. Postage and supplies
expense of approximately $1,270,000 for processing services also contributed to
the increase. For the three months ended October 31, 1996 and 1997, costs for
professional services expense represented 75% and 72% of professional services
revenues respectively.  The decrease in cost as a percentage of professional
services revenue is primarily due to economies of scale of the expanded
services operations. As the Company expects professional services revenues to
increase, professional services expense is also anticipated to increase in
order to meet the additional resource requirements.

PRODUCT DEVELOPMENT AND SUPPORT EXPENSE

Product development and support expense consists primarily of research and
development efforts, amortization of capitalized software development costs,
customer support, and other product support costs. For the three month period
ended October 31, 1997, product development and support expense increased 89%,
largely due to the inclusion of FormMaker operations.  The Company continues to
commit significant resources to developing new products and technologies to
meet current and future market needs, along with further developing and
supporting their existing product lines.

                                   8
<PAGE>

SELLING AND MARKETING EXPENSE

Selling and marketing expense increased 244% for the three month period ended
October 31, 1997 from the comparable prior year period.  The increase in
selling and marketing expense is primarily the result of inclusion of
FormMaker's operations and increased commissions.  Sales commissions increased
due to additional revenues and a new fiscal 1998 sales compensation plan that
provides compensation on all revenue types.  Personnel and associated costs
will be added as deemed necessary to achieve the Company's growth objectives.

GENERAL AND ADMINISTRATIVE EXPENSE

For the three month period ended October 31, 1997, general and administrative
expense increased 195%. The increased expense for the fiscal 1998 period
resulted from inclusion of FormMaker's operations, and goodwill amortization as
a result of the Merger.

OTHER INCOME (EXPENSE), NET

For the three month period ended October 31, 1997, the 264% decrease in other
income (expense) was due to a decrease in interest income and a significant
increase in interest expense.  Interest income decreased as a result of an
$8,000,000 cash distribution to stockholders and certain option holders in May
1997.  Interest expense increased significantly due to the assumption of debt
and capitalized leases of FormMaker.

PROVISION FOR INCOME TAXES

The income tax provision was calculated utilizing income tax rates for
corporations.  Effective tax rates for the three months ended October 31, 1996
and 1997 were approximately 36% and 40%, respectively. These rates differ from
the Federal statutory rate primarily due to state income taxes and the non-
deductibility of certain items. The Company used a portion of its net operating
loss carryforwards and outstanding tax credits to offset its current tax
liability for the three months ended October 31, 1996 and 1997.

LIQUIDITY AND CAPITAL RESOURCES

At October 31, 1997, the Company's principal sources of liquidity consisted of
cash and cash equivalents of $1,442,947.  $6,407,000 was available under the
Company's $10,000,000 revolving credit facility at October 31, 1997.

Cash and cash equivalents decreased $1,426,511 due to cash used by various
investing and financing activities, and was partially offset by cash provided 
by operating activities.  Cash flows from operating activities were $1,283,044
primarily as the result of profitable operations and various other cash and non-
cash operating activities. Cash flows from investing activities used $635,558
in cash primarily for development of software.  Cash flows from financing
activities used $2,073,997 in cash principally for repayment of debt.

Working capital was $900,297 at October 31, 1997, compared with $1,644,458 at
July 31, 1997.

In connection with the Merger, the Company assumed a $10,000,000 revolving
credit facility from FormMaker.  At October 31, 1997, borrowings under this
credit facility totaled $3,593,000 bearing interest at a weighted average rate
of 7.8%

The credit facility was renegotiated in September 1997.  Under the new
agreement, $3,500,000 bears interest at the bank's prime rate less .25%, or
8.25% as of October 31, 1997, and is guaranteed by

                                   9
<PAGE>

Safeguard.  The remaining $6,500,000 bears interest at the bank's prime rate
of 8.50% as of October 31, 1997 and is collateralized by substantially all of
the Company's assets. Borrowings under the credit facility are utilized
primarily for working capital.

In addition, stockholders loaned the Company $3,000,000 in the form of
subordinated notes concurrent with the Merger.  The notes bear interest at
prime plus 1%, or 9.50% as of October 31, 1997, and are due in full at the
earlier of the closing of a public offering yielding net proceeds to the
Company in excess of $13,000,000 or May 15, 2000.  The notes are unsecured
obligations of the Company and are subordinated to all senior debt.

The Company's liquidity needs will arise primarily from funding the continued
development, enhancement, and support of its software offerings, and the
selling and marketing costs associated principally with continued entry into
new vertical and international markets.

Capital expenditures are generally not material.  Management believes that the
Company's cash and availability under its credit facility will be sufficient to
meet cash flow requirements for fiscal 1998.

Historically, a significant portion of FormMaker's revenues have been derived
from its marketing agreement with PMSC.  There can be no assurances that such
revenues will continue at historical levels.  In the event that PMSC-generated
revenues decrease or the PMSC marketing agreement is otherwise terminated as
provided by its terms, the Company's liquidity requirements would be increased
accordingly.  Although management believes that any such additional liquidity
requirements would be short-term in nature, there can be no assurance that
additional capital would not be required.

                                   10
<PAGE>

                       PART II - OTHER INFORMATION


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K


      (a)  Exhibits.

           10. Credit Agreement between NationsBank, N.A. and the Registrant
               dated September 29, 1997.

           11. Computation of Earnings Per Share.

           27. Financial Data Schedule (for EDGAR filing purposes only).

      (b)  Reports on Form 8-K.

           No reports on Form 8-K have been filed by the Registrant during the
           three months ended October 31, 1997.

                                   11
<PAGE>

                               SIGNATURES

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


     DocuCorp, Inc.
-----------------------------------
       (Registrant)


/s/  Todd Rognes                                  Date   November 14, 1997
-----------------------------------                    ------------------------
Senior Vice President, Finance
(Duly Authorized Officer and Principal Financial Officer)


                                   12