<Page>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
AMENDMENT NO. 1
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DECEMBER 17, 2001 (OCTOBER 11, 2001)
Date of Report (Date of earliest event reported)
EPIQ SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)
MISSOURI 0-22081 48-1056429
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification Number)
501 KANSAS AVENUE
KANSAS CITY, KS 66105
(Address of principal executive offices)
(913) 621-9500
(Registrant's telephone number, including area code)
<Page>
This Amendment No. 1 supplements and amends the Registrant's Current
Report on Form 8-K dated October 18, 2001, as follows:
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
As previously reported, on October 11, 2001, the Registrant acquired
certain assets from ROC Technologies, Inc. ("ROC"), the bankruptcy management
software subsidiary of Imperial Bancorp ("Imperial"). Imperial is a subsidiary
of Comerica, Inc. ("Comerica"). The acquisition followed Comerica's decision to
exit the Chapter 7 trustee business. The purchase price paid by the Registrant
for the assets acquired from ROC (prior to direct acquisition costs) was
$12,000,000, which was paid by the Registrant from its existing cash and
investments.
ROC provided bankruptcy administration software to Chapter 7 bankruptcy
trustees and, prior to the acquisition, was the Registrant's second largest
competitor in the Chapter 7 trustee market. As of October 11, 2001, ROC had
approximately 100 Chapter 7 trustee clients, with an aggregate deposit base of
approximately $250 million. While the Chapter 7 trustee customers of ROC had
their primary banking relationship with Imperial/Comerica, certain trustee
customers also maintained Chapter 7 trustee deposits with various other national
and regional third-party banks. The Registrant believes that the total Chapter 7
trustee deposits for ROC customers held at Imperial/Comerica were approximately
50% of ROC customers' total Chapter 7 trustee deposits.
The Registrant acquired certain of the assets of ROC in order to gain
accelerated access to their Chapter 7 Trustee customer base and related deposit
amounts so as to facilitate an increase in the Registrant's market share in key
geographic markets. The ROC customer portfolio included a significant
concentration of accounts in the Central District of California (the
metropolitan Los Angeles area) and Texas. In that regard, it is important to
note that the Registrant did not deem the historical financial statements of ROC
to be a relevant factor in determining the purchase price or the projected
operating performance of this business under the Registrant's ownership. This is
due primarily to the fact that the dealings between Imperial and its
wholly-owned subsidiary, ROC, were related party transactions, while the ROC
business will be operated by the Registrant as part of its Chapter 7 business.
The Registrant believes it is important for its stockholders and prospective
investors to understand this difference when reviewing the financial statements
for the acquired ROC business.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED:
ROC TECHNOLOGIES, INC.
Independent Auditors' Report
Balance Sheet as of September 30, 2001
Statement of Operations for the twelve month period ended
September 30, 2001
Statement of Changes in Stockholder's Equity for the twelve
month period ended September 30, 2001
Statement of Cash Flows for the twelve month period ended
September 30, 2001
Notes to Financial Statements
1
<Page>
(b) PRO FORMA FINANCIAL INFORMATION (UNAUDITED):
EPIQ SYSTEMS, INC.
Pro Forma Condensed Combined Balance Sheet as of September 30, 2001
Pro Forma Condensed Combined Statement of Income for the nine
months ended September 30, 2001
Pro Forma Condensed Combined Statement of Income for the year ended
December 31, 2000
Notes to Pro Forma Condensed Combined Financial Information
(c) EXHIBITS
23.1 Independent Auditors' Consent
2
<Page>
SIGNATURE
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 hereunto duly authorized.
EPIQ SYSTEMS, INC.
Date: December 17, 2001 /s/ Tom W. Olofson
------------------------------
Tom W. Olofson
Chairman of the Board
Chief Executive Officer
Director
3
<Page>
EPIQ SYSTEMS, INC.
INDEX TO FINANCIAL STATEMENTS
<Table>
<Caption>
FINANCIAL STATEMENTS PAGE
1. ROC TECHNOLOGIES, INC.
Independent Auditors' Report F-1
Balance Sheet as of September 30, 2001 F-2
Statement of Operations for the twelve month
period ended September 30, 2001 F-3
Statement of Changes in Stockholder's Equity for the
twelve month period ended September 30, 2001 F-4
Statement of Cash Flows for the twelve month period
ended September 30, 2001 F-5
Notes to Financial Statements F-6
2. EPIQ SYSTEMS, INC. PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
Pro Forma Condensed Combined Balance Sheet as of September 30, 2001 F-12
Pro Forma Condensed Combined Statement of Income for the
nine months ended September 30, 2001 F-14
Pro Forma Condensed Combined Statement of Income for the
year ended December 31, 2000 F-15
Notes to Pro Forma Condensed Combined Financial Information F-16
</Table>
<Page>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
EPIQ Systems, Inc.
Kansas City, Missouri
We have audited the accompanying balance sheet of Roc Technologies, Inc. (a
wholly-owned subsidiary of Comerica, Inc.) (the "Company") as of September 30,
2001 and the related statements of operations, changes in stockholder's equity
and cash flows for the twelve month period then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Roc Technologies, Inc. as of September 30,
2001, and the results of its operations and its cash flows for the twelve month
period then ended in conformity with accounting principles generally accepted in
the United States of America.
/s/ DELOITTE & TOUCHE LLP
Kansas City, Missouri
November 30, 2001
F-1
<Page>
ROC TECHNOLOGIES, INC.
(A WHOLLY-OWNED SUBSIDIARY OF COMERICA, INC.)
BALANCE SHEET
SEPTEMBER 30, 2001
- -------------------------------------------------------------------------------
<Table>
<Caption>
ASSETS:
CURRENT ASSETS:
Cash $ 485,046
Accounts receivable (no allowance for doubtful accounts considered necessary) 397,614
-----------
Total current assets 882,660
PROPERTY AND EQUIPMENT:
Furniture and fixtures 76,443
Computer equipment 314,163
Leasehold improvements 44,348
-----------
434,954
Less accumulated depreciation and amortization 338,057
-----------
Total property and equipment, net 96,897
SOFTWARE DEVELOPMENT COSTS, Net 1,217,720
GOODWILL, Net of accumulated amortization of $675,381 1,295,629
-----------
TOTAL ASSETS $ 3,492,906
===========
LIABILITIES AND STOCKHOLDER'S EQUITY:
CURRENT LIABILITIES:
Short-term borrowings from Parent $ 500,000
Accounts payable 232,124
Accrued expenses 123,895
Income taxes payable 11,682
----------
Total current liabilities 867,701
DEFERRED INCOME TAXES 30,929
COMMITMENTS AND CONTINGENCIES (NOTE 4)
---------
TOTAL LIABILITIES 898,630
STOCKHOLDER'S EQUITY:
Common stock, $1 par value; 5,000,000 shares authorized;
782,672 shares issued and outstanding 782,672
Additional paid-in capital 4,983,681
Accumulated deficit (3,172,077)
-----------
TOTAL STOCKHOLDER'S EQUITY 2,594,276
-----------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 3,492,906
===========
</Table>
See notes to financial statements.
F-2
<Page>
ROC TECHNOLOGIES, INC.
(A WHOLLY-OWNED SUBSIDIARY OF COMERICA, INC.)
STATEMENT OF OPERATIONS
TWELVE MONTH PERIOD ENDED SEPTEMBER 30, 2001
- -------------------------------------------------------------------------------
<Table>
<Caption>
OPERATING REVENUES $ 2,067,992
-------------------
COST OF SALES:
Cost of products and services 651,613
Depreciation and amortization 347,615
-------------------
999,228
GROSS PROFIT 1,068,764
OPERATING EXPENSES:
General and administrative 1,340,924
Depreciation and amortization 37,262
Amortization of goodwill 225,127
-------------------
1,603,313
-------------------
LOSS FROM OPERATIONS (534,549)
INTEREST INCOME (EXPENSE):
Interest income 11,509
Interest expense (20,096)
-------------------
(8,587)
-------------------
LOSS BEFORE INCOME TAX BENEFIT (543,136)
INCOME TAX BENEFIT 115,449
-------------------
NET LOSS $ (427,687)
===================
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 782,672
===================
BASIC AND DILUTED NET LOSS PER SHARE $ (0.55)
===================
</Table>
See notes to financial statements.
F-3
<Page>
ROC TECHNOLOGIES, INC.
(A WHOLLY-OWNED SUBSIDIARY OF COMERICA, INC.)
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
TWELVE MONTH PERIOD ENDED SEPTEMBER 30, 2001
<Table>
<Caption>
COMMON STOCK ADDITIONAL
-------------------------- PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
----------- ----------- ----------- ----------- ------------
BALANCE, OCTOBER 1, 2000 782,672 $ 782,672 $ 4,833,681 $(2,744,390) $ 2,871,963
Net loss (427,687) (427,687)
Capital contributed 150,000 150,000
----------- ----------- ----------- ----------- ------------
BALANCE, SEPTEMBER 30, 2001 782,672 $ 782,672 $ 4,983,681 $(3,172,077) $ 2,594,276
=========== =========== =========== =========== ===========
</Table>
See notes to financial statements.
F-4
<Page>
ROC TECHNOLOGIES, INC.
(A WHOLLY-OWNED SUBSIDIARY OF COMERICA, INC.)
STATEMENT OF CASH FLOWS
TWELVE MONTH PERIOD ENDED SEPTEMBER 30, 2001
- -------------------------------------------------------------------------------
<Table>
<Caption>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (427,687)
Adjustments to reconcile net loss to net cash used in
operating activities:
Deferred income taxes (70,090)
Depreciation and amortization 78,321
Amortization of software development costs 306,556
Amortization of goodwill 225,127
Changes in operating assets and liabilities:
Accounts receivable (62,954)
Accounts payable and accrued expenses 185,204
Income taxes payable (958,323)
------------
Net cash used in operating activities (723,846)
------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (76,184)
Software development costs (864,871)
------------
Net cash used in investing activities (941,055)
------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from short-term borrowings from Parent 500,000
Capital contributed 150,000
------------
Net cash provided by financing activities 650,000
------------
NET DECREASE IN CASH (1,014,901)
CASH, BEGINNING OF PERIOD 1,499,947
------------
CASH, END OF PERIOD $ 485,046
===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $ 20,096
===========
Income taxes paid, net of refunds $ 876,541
===========
</Table>
See notes to financial statements.
F-5
<Page>
ROC TECHNOLOGIES, INC.
(A WHOLLY-OWNED SUBSIDIARY OF COMERICA, INC.)
NOTES TO FINANCIAL STATEMENTS
TWELVE MONTH PERIOD ENDED SEPTEMBER 30, 2001
- -------------------------------------------------------------------------------
1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS - Roc Technologies, Inc. (the "Company"), a
wholly-owned subsidiary of Comerica, Inc. ("Comerica" or "Parent"),
develops, markets and licenses proprietary software solutions for the
Chapter 7 bankruptcy trustee market.
CHANGE OF OWNERSHIP - In September 1998, the Company's sole shareholder
was acquired by Imperial Bancorp ("Imperial") in a business combination
accounted for as a purchase. The Company recorded goodwill as a result of
the push-down of the basis of Imperial. On January 29, 2001, Imperial was
acquired by Comerica in a business combination accounted for as a
pooling-of-interests. Concurrently, the Company became a wholly-owned
subsidiary of Comerica. This transaction did not have a significant affect
on the Company's financial statements.
PROPERTY AND EQUIPMENT - Property and equipment is stated at cost and is
depreciated on a straight-line basis over the estimated useful life of
each asset as follows:
Furniture and fixtures 5 years
Computer equipment 3 years
Leasehold improvements are depreciated over the shorter of the lease term
or the estimated useful lives (generally 5 years) of the improvements.
Depreciation expense on computer equipment held at trustee locations is
included in cost of sales depreciation and amortization in the statement
of operations. Depreciation expense on the remaining property and
equipment is included in operating expenses depreciation and amortization
in the statement of operations.
SOFTWARE DEVELOPMENT COSTS - Certain internal software development costs
incurred in the creation of computer software products are capitalized
once technological feasibility has been established. Prior to the
completion of a detail program design, development costs are expensed and
shown as general and administrative expenses on the statement of
operations. Capitalized costs are amortized based on current and estimated
future revenue for each product with an annual minimum equal to the
straight-line amortization over the remaining estimated economic life of
the product, not to exceed three years. Amortization expense is included
in cost of sales depreciation and amortization in the statement of
operations.
IMPAIRMENT OF LONG-LIVED ASSETS - The Company, using its best estimates
based on reasonable and supportable assumptions and projections, reviews
for impairment of long-lived assets and identifiable intangibles to be
held and used whenever events or changes in circumstances indicate that
the carrying amount of its assets might not be recoverable.
GOODWILL - Goodwill is stated at cost and is amortized on a straight-line
basis over an estimated useful life of approximately nine years.
F-6
<Page>
INCOME TAXES - The Company is included in the consolidated tax return of
its Parent. Income taxes were calculated on a stand-alone basis as though
the Company filed a separate income tax return. Income taxes payable or
receivable are due to or from its Parent. The Company recognizes a
liability or asset for the deferred tax consequences of temporary
differences between the tax basis of assets or liabilities and their
reported amounts in the financial statements. A valuation allowance is
provided when, in the opinion of management, it is more likely than not
that some portion or all of a deferred tax asset will not be realized.
REVENUE RECOGNITION - The Company installs its bankruptcy software product
at a trustee location and the trustees' deposits are transferred to a
designated financial institution. The Company receives monthly fees from
financial institutions and revenues are recognized based on the level of
trustees' deposits with that institution.
A portion of the revenues are derived from software licensing and
consulting services. Licensing fees are recorded as revenue following
delivery, installation and acceptance. Consulting revenue is recognized in
the period in which the services are performed.
COMPREHENSIVE LOSS - The Company has no components of other comprehensive
income or loss, therefore comprehensive loss equals net loss for the
twelve month period ended September 30, 2001.
NET LOSS PER SHARE - Basic net loss per share was computed by dividing net
loss by the weighted average number of common shares outstanding for the
period. As there are no other securities outstanding that are considered
common stock equivalents, diluted net loss per share equals basic net loss
per share.
SEGMENT INFORMATION - Management believes the Company is a single
reportable operating segment conducting business in the Chapter 7
bankruptcy trustee market. All of the Company's revenues are derived from
sources within the United States of America and all of its long-lived
assets are located in the United States of America.
DERIVATIVES - As the Company does not hold any derivatives or embedded
derivatives, as defined by Statement of Financial Accounting Standards
("SFAS") No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING
ACTIVITIES, as amended and interpreted, the adoption of the Statement on
January 1, 2001, did not result in a transition adjustment.
USE OF ESTIMATES - The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
RECENT ACCOUNTING PRONOUNCEMENTS - The Financial Accounting Standards
Board ("FASB") recently issued SFAS No. 142, GOODWILL AND OTHER INTANGIBLE
ASSETS, and SFAS No. 144, ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF
LONG-LIVED ASSETS. SFAS No. 142 modifies the financial accounting and
reporting for acquired goodwill and other intangible assets, including the
requirement that goodwill and some intangible assets no longer be
amortized. Also some intangibles are reclassified to goodwill.
Additionally, goodwill should be tested for impairment at least annually.
SFAS No. 144 modifies the financial accounting and reporting for
long-lived assets to be disposed of by sale and it broadens the
presentation of discontinued operations to include more disposal
transactions. SFAS No. 142 and 144 are effective for the Company for
fiscal years beginning after December 15, 2001 and will be adopted by the
Company on January 1, 2002. Upon the adoption of SFAS No. 142, annual
goodwill amortization of
F-7
<Page>
approximately $225,000 will cease. The Company has not yet determined
if any impairment will result from the adoption of this Statement. The
Company is currently assessing SFAS No. 144's effect on the Company's
financial position, results of operations and cash flows.
2. SOFTWARE DEVELOPMENT COSTS
<Table>
<Caption>
The following is the activity of software development costs:
Amounts capitalized, beginning of period $ 1,308,763
Development costs capitalized 864,871
-----------
Amounts capitalized, end of period 2,173,634
Accumulated amortization, end of period (955,914)
-----------
Net software development costs $ 1,217,720
===========
</Table>
Included in the above are development costs relating to products not yet
released. Such costs totaled $922,777 at September 30, 2001.
3. SHORT-TERM BORROWINGS FROM PARENT
On January 24, 2001, the Company entered into a working capital line of
credit agreement with Imperial. The line of credit was assumed by Comerica
upon Imperial's merger with Comerica. The line of credit has a maturity
date of December 31, 2001, allows for maximum borrowings of up to $500,000
and accrues variable rate interest, revised quarterly, equal to a margin
of 2.5% over the London Interbank Offering Rate (2.59% as of September 30,
2001) as published in the WALL STREET JOURNAL. Borrowings under the line
of credit are unsecured, accrued interest is payable quarterly and the
principal is payable at maturity. At September 30, 2001 the Company had
borrowed $500,000 under this line of credit and unpaid interest accrued
was approximately $7,000.
4. OPERATING LEASES
The Company has a non-cancelable operating lease for office space in
Houston, Texas that expires in December 2001 with two one year renewal
options. The lease requires the Company to pay all executory costs
(property taxes, maintenance and insurance). Additionally, the Company has
non-cancelable operating leases for various office equipment and an
apartment expiring through December 2001. Future minimum lease payments at
September 30, 2001 are $17,156 all payable prior to December 31, 2001.
Rental expense was $59,479 for the twelve month period ended September 30,
2001.
5. RELATED PARTY TRANSACTIONS
The Company has cash deposits with its Parent in the form of bank accounts
of approximately $264,000 at September 30, 2001 included in cash in the
balance sheet.
The Company recognized $979,389 of revenue from its Parent during the
twelve month period ended September 30, 2001 and had a related receivable
from its Parent of $236,648 at September 30, 2001 included in accounts
receivable in the balance sheet.
F-8
<Page>
The Company's Parent processed and paid the Company's payroll and did not
charge the Company a fee for these services. The Company reimbursed the
Parent for these payroll charges, including employer payroll taxes and
employee benefits of approximately $1,438,000 for the twelve month period
ended September 30, 2001. At September 30, 2001, the Company had a payable
to its Parent in the amount of $38,934 included in accounts payable on the
balance sheet for payroll charges.
During the twelve month period ended September 30, 2001, the Company was
charged $34,158 by its Parent for administrative services and overhead
charges. These charges are included in general and administrative expenses
on the statement of operations.
During the twelve month period ended September 30, 2001, the Company
remitted a net amount of $876,541 to its Parent related to the Company's
share of its Parent's consolidated income tax obligation. The net amount
remitted to the Parent includes a payment of $970,005 related to an income
tax obligation of its former sole shareholder. At September 30, 2001, the
Company had a payable to its Parent in the amount of $11,682 included in
income taxes payable on the balance sheet for income tax obligations.
6. PROFIT SHARING PLAN
The Company has a defined contribution 401(k) plan, offered through its
Parent, covering substantially all employees. The Company matches 50% of
the first $1,000 of employee contributions, and 25% of the next $2,000 of
employee contributions and also has the option of making discretionary
contributions. The Company's expense related to this plan amounted to
$9,122 for the twelve month period ended September 30, 2001.
7. INCOME TAXES
The income tax benefit includes the following components:
<Table>
<Caption>
Current income taxes $ 45,359
Deferred income taxes 70,090
---------
$ 115,449
=========
</Table>
A reconciliation of the income tax benefit at the statutory rate to the
income tax benefit at the Company's effective rate is shown below:
<Table>
<Caption>
Computed at the statutory rate (35%) $ 190,098
(Decrease) increase in income tax benefit resulting from:
Nondeductible expenses and
nontaxable income (84,080)
State income taxes, net of federal
tax effect and other 9,431
---------
Income tax benefit $ 115,449
=========
</Table>
F-9
<Page>
The tax effects of temporary differences related to deferred taxes shown
on the accompanying balance sheet are as follows:
<Table>
<Caption>
Deferred tax assets:
Net operating loss carryforwards $ 358,515
Less valuation allowance (352,471)
------------
6,044
Deferred tax liabilities:
Software and other (36,973)
------------
Net deferred income tax liability -
long-term $ (30,929)
============
</Table>
The Company has previously recorded a valuation allowance against its net
operating loss carryforwards in an amount required to reduce the balance
to an amount expected to be realized. Current period net operating losses
were funded by the Parent and therefore were realized. Management has
determined that no adjustment related to this valuation allowance was
needed for the twelve month period ended September 30, 2001. At September
30, 2001 the Company had $892,331 of net operating loss carryforwards
expiring in 2011 through 2018.
8. SIGNIFICANT CUSTOMERS AND CONCENTRATION
For the twelve month period ended September 30, 2001, approximately 47%,
or $979,389, of the Company's revenue related to its Parent. Approximately
60%, or $236,648, of the Company's accounts receivable at September 30,
2001 related to its Parent.
Two of the Company's other customers each represent greater than 10% of
the Company's revenues. These two customers represent approximately 27%
and 11% of the Company's revenues for the twelve month period ended
September 30, 2001 and approximately 12% and 14% of the Company's accounts
receivable at September 30, 2001.
9. SUBSEQUENT EVENT
On October 11, 2001, certain assets of the Company were acquired by EPIQ
Systems, Inc. from Comerica for $12,000,000. The assets acquired include
the Company's bankruptcy administration software, customer lists,
equipment and contracts.
******
F-10
<Page>
EPIQ SYSTEMS, INC.
PRO FORMA FINANCIAL INFORMATION
(UNAUDITED)
F-11
<Page>
EPIQ SYSTEMS, INC.
PRO FORMA CONDENSED COMBINED BALANCE SHEET
SEPTEMBER 30, 2001
(UNAUDITED)
(IN THOUSANDS)
<Table>
<Caption>
EPIQ ROC
Systems, Technologies, Pro Forma Pro Forma
Inc. Inc. Combined Adjustments Combined
----------- ----------- ----------- ----------- -----------
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents $ 34,258 $ 485 $ 34,743 $ (485) 1.a. $ 22,123
(12,135) 1.b.
Accounts receivable, trade, net of
allowance for doubtful accounts 5,450 398 5,848 (398) 1.a. 5,450
Prepaid expenses and other 567 567 567
Deferred income taxes 177 177 177
----------- ----------- ----------- ---------- ----------
Total Current Assets 40,452 883 41,335 (13,018) 28,317
PROPERTY AND EQUIPMENT, net 9,751 97 9,848 30 1.b. 9,878
SOFTWARE DEVELOPMENT COSTS, net 3,651 1,218 4,869 (818) 1.b. 4,051
OTHER ASSETS:
Goodwill, net 11,557 1,295 12,852 (1,295) 1.a. 21,265
9,708 1.b.
Other intangibles, net 2,113 2,113 1,900 1.b. 4,013
Other 50 50 50
----------- ----------- ----------- ----------- -----------
Total Other Assets 13,720 1,295 15,015 10,313 25,328
----------- ----------- ----------- ----------- -----------
TOTAL ASSETS $ 67,574 $ 3,493 $ 71,067 $ (3,493) $ 67,574
=========== =========== =========== =========== ===========
</Table>
(continued)
F-12
<Page>
EPIQ SYSTEMS, INC.
PRO FORMA CONDENSED COMBINED BALANCE SHEET
SEPTEMBER 30, 2001
(UNAUDITED)
(IN THOUSANDS)
<Table>
<Caption>
EPIQ ROC
Systems, Technologies, Pro Forma Pro Forma
Inc. Inc. Combined Adjustments Combined
----------- ----------- ----------- ----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Short-term borrowings $ 500 $ 500 $ (500) 1.a.
Accounts payable $ 647 232 879 (232) 1.a. $ 647
Accrued expenses 1,016 124 1,140 (124) 1.a. 1,016
Income taxes payable 568 12 580 (12) 1.a. 568
Deferred revenue 716 716 716
Current portion of deferred acquisition
price 222 222 222
Current maturities of long-term obligations 105 105 105
----------- ----------- ----------- ----------- -----------
Total Current Liabilities 3,274 868 4,142 (868) 3,274
DEFERRED REVENUE 114 114 114
LONG-TERM OBLIGATIONS
(LESS CURRENT PORTION) 187 187 187
DEFERRED ACQUISITION PRICE
(LESS CURRENT PORTION) 431 431 431
DEFERRED INCOME TAXES 776 31 807 (31) 1.a. 776
----------- ----------- ----------- ------------ -----------
Total Liabilities 4,782 899 5,681 (899) 4,782
STOCKHOLDERS' EQUITY:
Common stock 95 782 877 (782) 1.a. 95
Additional paid-in capital 53,803 4,984 58,787 (4,984) 1.a. 53,803
Retained earnings (Accumulated deficit) 8,894 (3,172) 5,722 3,172 1.a. 8,894
----------- ------------ ----------- ----------- -----------
62,792 2,594 65,386 (2,594) 62,792
----------- ----------- ----------- ----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 67,574 $ 3,493 $ 71,067 $ (3,493) $ 67,574
=========== =========== =========== =========== ===========
</Table>
(concluded)
See notes to pro forma condensed combined financial information.
F-13
<Page>
EPIQ SYSTEMS, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 2001
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<Table>
<Caption>
EPIQ ROC
Systems, Technologies, Pro Forma Pro Forma
Inc. Inc. Combined Adjustments Combined
----------- ----------- ----------- ----------- -----------
OPERATING REVENUES $ 21,890 $ 1,662 $ 23,552 $ 23,552
----------- ----------- ----------- ----------- -----------
COST OF SALES:
Cost of products and services 4,702 502 5,204 5,204
Depreciation and amortization 2,672 262 2,934 $ (205) 2.d. 2,729
----------- ----------- ----------- ----------- -----------
7,374 764 8,138 (205) 7,933
----------- ----------- ----------- ----------- -----------
GROSS PROFIT 14,516 898 15,414 205 15,619
----------- ----------- ----------- ----------- -----------
OPERATING EXPENSES:
General and administrative 7,857 1,026 8,883 8,883
Depreciation 301 32 333 333
Amortization-goodwill/intangibles 1,014 169 1,183 ( 26) 2.a. 1,157
----------- ----------- ----------- ------------ -----------
9,172 1,227 10,399 ( 26) 10,373
----------- ----------- ----------- ------------ -----------
INCOME (LOSS) FROM OPERATIONS 5,344 (329) 5,015 231 5,246
INTEREST INCOME (EXPENSE):
Interest income 592 592 (408) 2.c. 184
Interest expense (84) ( 20) (104) (104)
------------ ------------ ------------ ----------- ------------
508 ( 20) 488 (408) 80
------------ ------------ ------------ ----------- ------------
INCOME (LOSS) BEFORE INCOME
TAXES 5,852 (349) 5,503 (177) 5,326
PROVISION (BENEFIT) FOR INCOME TAXES
2,269 ( 74) 2,195 ( 69) 2.e. 2,126
----------- ------------ ----------- ------------ -----------
NET INCOME (LOSS) $ 3,583 $ (275) $ 3,308 $ (108) $ 3,200
=========== =========== =========== =========== ===========
NET INCOME PER SHARE:
Basic $ 0.41 $ 0.36
=========== ===========
Diluted $ 0.39 $ 0.35
=========== ===========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING:
Basic 8,817 8,817
=========== ===========
Diluted 9,230 9,230
=========== ===========
</Table>
See notes to pro forma condensed combined financial information.
F-14
<Page>
EPIQ SYSTEMS, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 2000
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<Table>
<Caption>
EPIQ ROC
Systems, Technologies, Pro Forma Pro Forma
Inc. Inc. Combined Adjustments Combined
----------- ----------- ----------- ----------- -----------
OPERATING REVENUES $ 23,257 $ 1,580 $ 24,837 $ 24,837
----------- ----------- ----------- ----------- -----------
COST OF SALES:
Cost of products and services 6,022 448 6,470 6,470
Depreciation and amortization 3,099 250 3,349 $ (211) 2.d. 3,138
----------- ----------- ----------- ----------- -----------
9,121 698 9,819 (211) 9,608
----------- ----------- ----------- ------------ -----------
GROSS PROFIT 14,136 882 15,018 211 15,229
----------- ----------- ----------- ----------- -----------
OPERATING EXPENSES:
General and administrative 8,195 1,358 9,553 9,553
Depreciation 267 23 290 290
Amortization-goodwill/intangibles 1,223 225 1,448 ( 35) 2.a. 1,413
Acquisition related 436 436 436
Purchased in-process research and
development 364 364 364
----------- ----------- ----------- ----------- -----------
10,485 1,606 12,091 ( 35) 12,056
----------- ----------- ----------- ----------- -----------
INCOME (LOSS) FROM OPERATIONS 3,651 (724) 2,927 246 3,173
INTEREST INCOME (EXPENSE):
Interest income 161 59 220 220
Interest expense ( 360) (360) (1,108) 2.b. (1,468)
------------ ----------- ----------- ----------- -----------
( 199) 59 (140) (1,108) (1.248)
------------ ----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE INCOME
TAXES 3,452 (665) 2,787 (862) 1,925
PROVISION (BENEFIT) FOR INCOME TAXES
1,320 (141) 1,179 (330) 2.e. 849
----------- ------------ ----------- ------------ -----------
NET INCOME (LOSS) $ 2,132 $ (524) $ 1,608 $ (532) $ 1,076
=========== =========== =========== =========== ===========
NET INCOME PER SHARE:
Basic $ 0.30 $ 0.15
=========== ===========
Diluted $ 0.30 $ 0.15
=========== ===========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING:
Basic 6,992 6,992
=========== ===========
Diluted 7,218 7,218
=========== ===========
</Table>
See notes to pro forma condensed combined financial information.
F-15
<Page>
EPIQ SYSTEMS, INC.
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
(UNAUDITED)
(IN THOUSANDS)
On October 11, 2001, EPIQ Systems, Inc. (the "Company") acquired certain assets
from ROC Technologies, Inc. ("ROC"), the bankruptcy management software
subsidiary of Imperial Bancorp ("Imperial"). Imperial is a subsidiary of
Comerica Incorporated ("Comerica"). The purchase price for the assets acquired
from ROC (prior to direct acquisition costs) was $12,000, which was paid by the
Company from its existing cash and investments.
The Company's unaudited balance sheet as of September 30, 2001 was derived from
the information provided in its Form 10-Q filed on November 13, 2001. The ROC
balance sheet data was derived from the audited financial statements, as of
September 30, 2001, included in this current report on Form 8-K/A.
The Company's statements of income for the nine months ended September 30, 2001
and the year ended December 31, 2000, were derived from the information provided
in the Company's Form 10-Q filed November 13, 2001 and the Company's Form 10-K
filed March 27, 2001, respectively.
The ROC income statement data reported for the nine months ended September 30,
2001, was derived from the last nine month period of the ROC Statement of
Operations for the twelve month period ended September 30, 2001. The ROC income
statement data reported for the year ended December 31, 2000, was derived from
ROC's internal unaudited financial statements for the year ended December 31,
2000. Only the Statement of Operations for the twelve month period ended
September 30, 2001 used in this calculation is included in this current report
on Form 8-K/A.
1. The pro forma condensed combined balance sheet of the Company and ROC
as of September 30, 2001 has been prepared as if the acquisition
occurred on September 30, 2001 in accordance with the following
assumptions:
a. The transaction is accounted for utilizing the purchase method
of accounting. The assets and liabilities of ROC that were not
purchased by the Company have been eliminated. The
eliminations include ROC's cash, accounts receivable,
goodwill, short-term borrowings, accounts payable, accrued
expenses, income taxes payable, deferred income taxes, common
stock, additional paid-in capital and accumulated deficit.
F-16
<Page>
b. In accordance with the purchase method of accounting, the
acquired assets of ROC are adjusted to their respective fair
values on a preliminary basis. The purchase price allocation
will be finalized upon completion of additional valuation
procedures. The components of the transaction assumed in the
pro forma condensed combined balance sheet are outlined as
follows:
<Table>
Cash paid for ROC assets acquired, including estimated $ 12,135
acquisition costs
Less: Historical book value of the acquired assets of ROC:
Software development costs 1,218
Property and equipment 97 1,315
------------ -------------
Less: Adjustments to reflect the preliminary fair values of the
acquired assets of ROC:
Software development costs (818)
Property and equipment 30
Other intangibles 1,900 1,112
------------ -------------
Goodwill $ 9,708
===============
</Table>
2. The pro forma condensed combined statements of income of the Company
and ROC for the nine months ended September 30, 2001 and the year ended
December 31, 2000 have been prepared as if the acquisition occurred as
of January 1, 2000. The transaction was accounted for utilizing the
purchase method of accounting and accordingly, the operations of ROC
are included in the pro forma combined results of operations for the
nine months ended September 30, 2001 and for the year ended December
31, 2000.
a. The net change in amortization expense is comprised of the following:
<Table>
<Caption>
Nine Months Ended Year Ended
September 30, 2001 December 31, 2000
------------------ -------------------
Amortization expense for the trade name acquired in
the Company's acquisition of ROC $ 8 $ 10
Amortization expense for the customer contracts
acquired in the Company's acquisition of ROC 135 180
Elimination of amortization expense for ROC's
historical goodwill (169) (225)
------------ -----------
Net increase in amortization expense $ (26) $ (35)
============ ===========
</Table>
- The trade name acquired, with an estimated fair value of $100,
is being amortized over a period of 10 years using the
straight-line basis. This has been determined based on the
acquired customer relationships and strength of the trade name
in the marketplace.
- The customer contracts acquired, with an estimated fair value
of $1,800, are being amortized using the straight-line basis
over the estimated life of the underlying customer
relationships, which has been determined to be 10 years.
- ROC's historical goodwill was being amortized over a period of
approximately 9 years
F-17
<Page>
on the straight-line basis. Subsequent to the assumed
acquisition date, the Financial Accounting Standards Board
released Statement of Financial Accounting Standards ("SFAS")
No. 142, GOODWILL AND OTHER INTANGIBLE ASSETS, which requires,
among other things, the discontinuance of amortization of
goodwill and certain intangible assets upon adoption by the
Company. The Company is required to adopt SFAS No. 142 on
January 1, 2002. Although the Company has not yet adopted SFAS
No. 142, the statement requires that goodwill acquired in a
business combination after June 30, 2001 not be amortized.
b. Interest expense has been recorded based on the assumed use of
borrowings by the Company to pay for the acquisition of the ROC
assets as of January 1, 2000. As of January 1, 2000, the Company
had a line-of-credit with a variable interest rate. The
estimated interest expense was based on the $12,000 borrowing
being outstanding for the entire year at the weighted average
New York Federal Reserve Prime Interest Rate for the twelve
months in 2000 (9.23%).
c. On December 29, 2000, the Company completed a private placement
of 1,350,000 shares of its common stock and received gross
proceeds of $13,500. Interest income of the Company has been
reduced based on the assumed reduction of interest bearing
investments had the Company used $12,000 of these assets to fund
the acquisition of the ROC assets. The reduction assumes a
weighted average return on these interest bearing assets for the
nine months of 2001 (4.54%).
d. Reduction of amortization expense resulting from the fair value
adjustment of software development costs pushed back to the
beginning of the earliest period presented. The reduction is
equal to the lesser of actual amortization expense for the
period presented or the fair value adjustment amortized using a
3 year useful life.
e. The tax effect of these adjustments is calculated using the
Company's incremental tax rate of 38.2% for the year ended
December 31, 2000 and 38.8% for the nine months ended September
30, 2001.
In the accompanying pro forma condensed combined financial information, the
Company has not attempted to project the impact of the different Chapter 7
revenue model that exists between ROC/Comerica and the existing Company
arrangement. Additionally, no attempt has been made to contrast the level of
management fees which ROC has incurred during the subject periods to the actual
level of operating costs which would be present in the combined entity's
financials.
The pro forma condensed combined financial information, which has been prepared
by the Company's management based upon the historical financial statements of
the Company and ROC, should be read in conjunction with the accompanying audited
financial statements and notes thereto of ROC contained elsewhere in this
document. The pro forma condensed combined financial information is not
necessarily indicative of the financial position or the results of operations of
the combined entities as they may be in the future or as they might have been if
the transaction had been in effect on the dates indicated.
F-18