<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                               -------------------

                                    FORM 10-K

[X]  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  
     EXCHANGE ACT OF 1934 for the Fiscal Year Ended October 31, 1997 or

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 for the Transition period from _____ to _____

                         Commission file number: 0-26208

                             BUSINESS RESOURCE GROUP
             (Exact name of Registrant as specified in its charter)

                California                             77-0150337
      (State or other jurisdiction of               (I.R.S. Employer
      incorporation or organization)               Identification No.)

                       2150 NORTH FIRST STREET, SUITE 101
                           SAN JOSE, CALIFORNIA 95131
                                 (408) 325-3200
          (Address and telephone number of principal executive offices)
                       ----------------------------------

        Securities registered pursuant to Section 12(b) of the Act: None

           Securities registered pursuant to Section 12(g) of the Act:
                          Common Stock $0.01 par value
                       ----------------------------------

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 than the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO __

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

The aggregate market value of the voting stock held by non-affiliates of the
Registrant was approximately $6,258,836 as of January 9, 1998, based upon the
closing sale price on the Nasdaq National Market reported for such date. Shares
of Common Stock held by each officer and director and by each person who owns 5%
or more of the outstanding Common Stock have been excluded in that such persons
may be deemed to be affiliates. This determination of affiliate status is not
necessarily a conclusive determination for other purposes.

There were 4,914,249 shares of Registrant's Common Stock issued and outstanding
as of January 9, 1998.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the annual meeting of shareholders to be
held on March 2, 1998 are incorporated by reference into Part III of this report
on Form 10-K.



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                             INTRODUCTORY STATEMENT

        Except for the historical information contained in this Annual Report on
Form 10-K, the matters discussed herein are forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act of 1934, as amended,
and are subject to certain risks and uncertainties that could cause the actual
results to differ materially from those projected. Such forward-looking
statements include, without limitation, statements relating to the Company's
future revenue, gross margins, operating expenses, management's plans and
objectives for the Company's future operations and the sufficiency of financial
resources to support future operations and expenditures. Factors that could
cause actual results to differ materially include, but are not limited to, the
timely availability, delivery and acceptance of new products and services, the
continued strength of sales to Cisco Systems, Inc. (one of the Company's
principal customers), the impact of competitive products and pricing, the
management of growth and acquisitions, and other risks detailed below and
included from time to time in the Company's other SEC reports and press
releases, copies of which are available from the Company upon request. Readers
are cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date hereof. The Company undertakes no obligation to
publicly release the results of any revisions to these forward-looking
statements which may be made to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.

        References made in this Annual Report on Form 10-K to "BRG," the
"Company" or the "Registrant" refer to Business Resource Group.

                                     PART I

ITEM 1.    BUSINESS

        Business Resource Group is a leading provider of workspace services and
products to businesses, primarily in the western United States. Since
commencement of operations in 1986 as an office furniture dealer, the Company
has added related services such as computerized space planning and design,
project management, product specification, order management, move management,
installation, computer-aided facilities management (CAFM) services and ongoing
facilities management outsourcing services. The Company believes that its broad
scope of services allow it to offer a customer-oriented integrated solution well
suited for the needs of both large, mature companies as well as rapidly growing
businesses that want economic, comprehensive solutions for their workspace
requirements, while minimizing involvement of their in-house staff through
outsourcing to the most efficient and responsive suppliers. The Company markets
its services and products through a direct sales force, focusing to date
primarily on rapidly growing companies and on companies in the process of
significantly changing their facilities arrangements.

INDUSTRY BACKGROUND

        According to trade association estimates, manufacturers' sales of
business furnishings in the United States in 1997 were approximately $11
billion. The Company believes that a key trend in the workspace products and
services market is the shift to open area configurations which commenced in the
early 1980's. Open area configurations employ standard partitions and components
to form individual cubicle workspaces for employees in a layout customized for
the needs of each business. The emergence of the personal computer as a business
productivity tool in combination with the emphasis on competitiveness and
efficiency in business in the United States has contributed to the trend toward
these configurations. Open area configurations accomplish the following:

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    o   Economize by placing more workers in a specified floor area than a
        segregated office layout;

    o   Facilitate individual ergonomic design of employees' work areas,
        increasing worker productivity and reducing injuries in the workplace
        and related costs;

    o   Promote worker communication and cooperation within the office
        workforce;

    o   Permit quicker adjustment to workspace arrangements in response to
        changes in the business environment; and

    o   Minimize the need for expensive and permanent hard wall tenant
        improvements.

        Demand for open office systems has also increased as a result of the
flattening of the business organization. Increased individual requirements for
both data and communications equipment and connectivity as well as
group-oriented work practices such as consensus decision making are driving
changes in workspace configuration requirements. Rapidly growing businesses
additionally benefit from open office systems because they allow companies to
expand with less disruption and downtime. Large companies also benefit from
flexible office arrangements that make it easier for them to restructure or
downsize as they anticipate and respond to changes in their business.

        Relocations to new facilities drive demand for new office furniture
because customers find it more effective to replace furniture than to incur the
costs and work disruptions associated with moving it. The Company believes that
with or without relocation, a significant portion of the large installed base of
office furniture is replaced by new furniture every five to seven years.
Recycling old furniture through refurbishment and sale to smaller companies with
modest budgets presents a related business opportunity for providers of new
workspace products.

        Traditional Players. The Company believes that the three largest
manufacturers, Steelcase, Inc., Herman Miller, Inc. and Haworth, Inc. account
for approximately half of the manufacturers' annual sales to dealers in the
United States. The "big three" manufacturers depend on their own sales personnel
as well as captive dealer relationships to sell their products in any given
geographic area. The "big three," which have built strong brand name
recognition, are in a position to place territorial, price, sourcing and
delivery limitations on their dealers. The business of these dealers is
primarily to serve as the manufacturer representative of one of the "big three"
manufacturers whose products they sell in a limited geographic area specified by
the manufacturer. The Company believes that the geographic limitations imposed
by the "big three" manufacturers on their dealers are a primary reason for the
highly fragmented nature of the workspace products distribution industry.

        The annual revenues of each of the next eight largest office furniture
manufacturers range between approximately $180 million and $800 million. Lacking
the brand name identity of the "big three," however, these manufacturers rely
upon design intermediaries or smaller, regional multi-line dealers for their
sales. These smaller dealers have historically lacked the capital or breadth of
services to compete on large orders or to achieve significant revenue levels.

        Workspace specification in larger corporations has traditionally
involved a facilities manager and other members of senior management, influenced
by service providers such as designers, architects, real estate professionals or
other outsourced facilities management providers. Small, rapidly growing


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businesses lacking in-house facilities management and unfamiliar with or
reluctant to spend money on design intermediaries have historically handled
workspace specifications in a more ad-hoc manner. In either case, the
traditional furniture dealer is often left in a passive order taking and
fulfillment role.

        Changing Customer Requirements. The Company believes, based on its
experience with customers, that the desire to minimize in-house facilities
management headcount, reduce overhead and improve coordination has lead many
companies to outsource facilities related tasks where feasible, including space
planning, design and project management and fulfillment services. Furthermore,
customers' use of modular office systems has reduced the importance of
manufacturers' brand names in the purchasing decision and increased the
importance of other factors such as product functionality and layout, which have
become increasingly complex due to the need to integrate rapidly changing office
technology requirements. Together, these trends have led to the demand for a
proactive workspace services and products solution.

CUSTOMER ORIENTED INTEGRATED SOLUTION

        Business Resource Group believes that traditional approaches to the
business furnishings industry are not well suited to meet the current
requirements of growing and changing businesses. In response, the Company has
positioned itself as the representative of the customer rather than the
manufacturer and as a provider of integrated workspace solutions. Business
Resource Group has grown rapidly due to management's early recognition and
response to customer requirements for a single source solution for facilities
needs. By foregoing the captive dealer agreements required by the largest office
furniture manufacturers, the Company believes it is able to offer the customer a
much broader range of value-added services and product choices than its major
competitors, all at a competitive price. The benefits to customers of the
Company's integrated solution approach include:

  o       Reduced overhead and improved coordination by having a single point of
          contact;

  o       Improved pricing, product selection and delivery available from a
          multi-line representative;

  o       Accelerated design and installation through early coordination with a
          service provider; and

  o       Superior customer communications, response and project control through
          the implementation of highly automated systems.

          Key elements of the customer oriented integrated solution approach 
are:

        Services and Products Integration. Business Resource Group determined
that both large, mature companies as well as rapidly growing companies want
economic, comprehensive solutions for their workspace requirements while
minimizing involvement of their in-house staff. The Company has leveraged its
knowledge of the office furniture industry, including suppliers and business
methods, to develop an integrated approach which offers a "single source" point
of contact for modern interior workspaces. This begins with the Company's
consultative selling approach in which its sales representatives listen to the
customer's problem. A team of Business Resource Group professionals, chosen for
each account for their relevant functional capabilities, then meets with the
customer to build a partnership and reach consensus on the solution which best
suits the customer's needs. The Company is able to fashion an integrated
solution because of the wide array of services and products it can provide.
Among the Company's services that may be included in this solution are project
management, layout and 

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design, furniture specification and selection, purchasing, move management,
installation, asset management and maintenance. The Company has the flexibility
to offer customers any of its services and products in any combination to form
the ideal integrated solution.

        Customer Representation. Unlike traditional furniture dealers, Business
Resource Group represents the customer, not the manufacturer. Since providing
only one of the "big three" contract furniture lines would restrict the customer
in variety and pricing options, the Company has formed relationships with
multiple suppliers (including seven of the remaining top ten in sales volume)
for each product segment. Using multiple suppliers, the Company is able to
obtain the best features and value for its customers. This approach also
provides for supply alternatives if a major line manufacturer cannot meet a
customer's delivery requirements. Business Resource Group purchases significant
annual volumes from over a dozen suppliers of system lines, casegoods, seating
and specialty goods.

        Advanced Support Technology. Business Resource Group has developed a
technology leadership position within its industry by utilizing computer based
design and specification software to provide space planning and product
selection tools for the customer in real time, even before the Company has been
selected as a provider by the customer. The Company uses customized software and
systems for product specification, order management, job costing and variance
analysis, and has integrated these packages with its computer aided design
tools, allowing the Company to track the profitability of every order. The
Company also supports electronic ordering for certain products.

EXPANSION STRATEGY

        The Company's objective is to be a leading provider of workspace
services and products. Principal elements of the Company's strategy to achieve
this objective are as follows:

        Expand Through Acquisition. The Company has in the past expanded and
plans to continue to expand its business through acquisition of dealers in
target markets similar to Northern California's Silicon Valley, which are
characterized by a large number of technology driven, high growth companies.
Because these prospective customers need comprehensive advice and quick
turnaround in addressing rapid facilities expansion, the Company believes its
methods of operation can be successfully applied in these new markets. In
addition, many of the Company's larger customers have operations in multiple
markets, including markets the Company has targeted for expansion and as such,
represent attractive business opportunities in those markets. Since many
contract furniture dealers and facilities management firms are small and lack
the breadth of services and capital necessary to respond to the facilities
outsourcing requirements of medium and large growth-oriented corporations, the
Company believes that certain of these dealers will be available and attractive
acquisition candidates.

        Continue to Broaden Its Range of Services and Products. The Company
believes that a growing number of companies want to deal with fewer vendors for
the procurement of workspace services and products. As such, the Company has a
long term strategy which includes the acquisition of service providers and
product distributors, and distribution rights for additional product lines that
complement its existing offerings, where available on reasonable terms.

        Form Strategic Alliances With Complementary Service Providers. A number
of facilities-related businesses offer services and products that are
complementary to those provided by the Company. Such services include real
estate and property management, architectural design, network cabling, and
operations and maintenance services such as janitorial and security. The market
leaders in these facilities related businesses are large and national in scope,
providing services and products to both large and small 

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customers in many industries. The Company believes that a long-term opportunity
exists to form strategic alliances with some of these companies on a selective
basis to offer a broad facilities-related solution to large corporate customers
which desire to outsource these services. While the Company has not entered into
nor is it currently in the process of negotiating any such strategic alliances,
such alliances could involve the formation of a joint venture by the Company and
its joint venture partner for the purpose of servicing a target customer
account, contractual arrangements whereby the Company acts as a service provider
on behalf of its joint venture partner, or contractual arrangements or other
relationships whereby the Company is deemed a preferred vendor or service
provider by its joint venture partner in connection with competition for target
accounts.

SERVICES AND PRODUCTS

        Business Resource Group provides integrated workspace solutions for
customers from the suite of services and products it offers. A substantial
portion of these services are initiated prior to delivery of workspace products,
including overall project management, computerized space planning and design,
product specification and order management. These services are key
differentiators which contribute significantly to the Company's ability to win
initial orders. The Company's pre-installation services build a close and
efficient partnership with customers, moving them from needs identification and
analysis through to the development and selection of the solutions which best
fit their needs. The Company generally bundles these services into overall
product pricing. Once the customer has identified the workspace products best
suited to its needs, the Company often provides additional services at specified
prices to implement setup and maintenance of these products in the customer's
facility and provides coordination and management services both during and after
the move. These services, covering all stages of a project from planning through
execution, enable the Company to provide comprehensive, turnkey solutions to its
customers. Customers' recognition of the value of this suite of services and
products is evident in the high level of repeat business which the Company
receives from its client base. Services provided by the Company are as follows:

        Pre Installation Services

               Space Planning and Design. Space planning is the first task for a
workspace project. The Company's use of automated tools, such as the AutoCAD
computer software program used in space planning, provide it substantial
productivity gains while offering easily modifiable space configurations.

               Product Specification. After completing the space planning phase,
the Company works with the customer to choose specific products. Using
information generated from the computerized space plan, product specification
can be executed quickly and accurately with applications software programs such
as AutoCAD or CAP Spex.

               Order Management. Order management is necessary to fulfill the
customer's specific requirements for workspace products on a timely basis. Order
management includes product procurement, product tracking, updating the customer
about order status and coordinating the ultimate delivery. The Company makes
purchases of workspace products based solely on customer orders and generally
coordinates the direct shipment of such products to the customer's facilities.
The Company's inventory consists primarily of inventory in transit.

               Project Management Services. Focusing on product specification,
installation management, change order management and quality control, the
Company's project managers add significant value in managing the customer's
entire workspace project.

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        Products

               Modular Systems. The Company's modular system products, which
include office partitions and modular furniture, provide a flexible solution for
defining work environments within an open interior building space without the
need for costly tenant improvements to the building interior. Modular systems
provide the ability to define individual employee workspaces and functional
relationships while integrating electrical, voice and data requirements for the
individual workstation. While requiring value added installation services to be
functional, modular systems allow for different arrangements of components
(overhead shelves, cabinets, lateral files, work surfaces and pedestals) to meet
varying needs of customers. With many fabric and finish selections, modular
system lines provide visual appeal as well as effective workspace utilization
and productivity. The leading providers of these products to the Company include
Knoll Inc., Teknion Inc., Kimball Office Furniture Co. ("Kimball"), Allsteel,
and The Hon Company. A typical modular system installation at a customer
facility ranges from $1,500 to $4,000 per workspace, depending on the number of
workspaces as well as the products and features specified.

               Casegoods. Casegoods include desks, bookcases, filing cabinets,
credenzas and tables. Available in both wood and metal, casegoods are generally
used in private offices, conference rooms and other interior spaces divided by
physical walls. Casegoods complement the solution for most work environments
that include both open and private space. The leading providers of these
products to the Company include Kimball, Creative Wood Products, Inc. and
National Office Furniture Company. A casegoods installation at a customer
facility can range from $800 to $10,000 per office.

               Seating. Variations in seating have proliferated to satisfy a
diversity of settings and ergonomic requirements. These variations include
adjustable seating used at a standard workstation or desk, which allows the user
to adjust the configuration for personal preference. Non-adjustable seating is a
less expensive alternative that can be used in cafeterias, conference rooms and
lobbies. The leading providers of these products to the Company include Office
Master, Inc., United Chair Company and HAG, Inc. Customer pricing typically
ranges from $50 to $600 per chair.

               Specialty Furniture Products. The Company's specialty products
include white boards, ergonomic devices used in conjunction with other furniture
products (such as wrist rests, foot rests and adjustable keyboards) and custom
manufactured products.

               Refurbished Furniture. The Company's customer-oriented integrated
solution approach to its business frequently leads its customers to rely on the
Company for most aspects of a facilities relocation including disposition of the
existing furniture in the customer's prior facility. The Company purchases
selected products on favorable terms which it considers both standard and
reusable, refurbishes them when necessary and resells them to smaller businesses
with modest workspace budgets.

        Product Implementation Services

        Once a workspace has been planned and products have been specified and
ordered, Business Resource Group provides separately-billed services to
implement the customer's plan.

               Installation and Maintenance. Installation is a process by which
a modular system is converted from unconnected and unconfigured pieces to a true
workspace solution. The Company's product installers normally follow a specific
process which begins with a field study to verify space-related issues that
affect installation, such as the location and size of doors, elevators,
stairwells and other 


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building specifications. Upon verification of installation drawings and receipt
of workspace products at the customer's facility either directly from the
manufacturer or from a Company-rented warehouse, the installation is completed.
The Company provides substantial training to its installation staff concerning
applicable safety procedures in order to minimize the risk of injury or property
damage as well as general business education on subjects pertinent to these
employees. As the final step in meeting a customer's relocation or move
requirement, installation plays a very important role. The cost of typical
installation services ranges from $120 to $300 per modular station, or
approximately eight percent of the sales price.

        Workspace Management Services

        The Company, through its Workspace Management Services ("WMS") group
provides the following service offerings to help companies manage their
facilities' resources more effectively without adding headcount:

               Workspace Planning. The Company provides a systematic needs
analysis based on a customer's current facility and their future growth plans.
The resulting analysis will often yield a strategic facility plan which allows
for facility programming, site selection, and lease reviews. The plan may also
call for the use of other WMS services in order to optimize the customer's
facilities alternatives.

               Design Management. The Company manages a design team on behalf of
its customer, ensuring that the customer's design requirements are met while
staying within timeframe commitments and budget constraints.

               Construction Management. The Company coordinates, on behalf of
its customer, the activities of the landowner, real estate broker, architect,
and construction trades to meet the customer's building construction
requirements. This service also offers bid process management, permit process
coordination, build-to-suit project management and overall cost and schedule
control.

               Move Management. The Company coordinates all components of a
customer's move to a new location including the development of a master move
plan, communication to employees, the coordination of all vendor activities, and
the management of building activation. This service is provided with minimal
involvement or downtime to the customer's employees or disruption to ongoing
business activities.

               Workspace Outsourcing. The Company fulfills a customer's short or
long term staffing requirements by providing experienced facility professionals
for specific temporary assignments. This service offers the customer operational
and financial flexibility in meeting staffing requirements by allowing the
customer to focus fixed resources on its core competencies.

               Computer-Aided Facility Management. The Company provides
"system-solutions" for a customer's facilities department. Many of the solutions
offer an efficient mechanism to capture and verify facility and asset
information and then provides reporting and financial planning tools by
incorporating this information in a visually-oriented database software program
offered by the Company. This service offers current business process mapping,
business process re-engineering, software selection, and system implementation.

        The Company bills its customers on an hourly basis for such services,
with typical projects ranging from $5,000 to $50,000 in aggregate billings.

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SALES AND MARKETING

        Sales Organization. Business Resource Group markets its products and
services through a direct sales force which consisted of 42 individuals as of
October 31, 1997, operating out of the Company's offices in San Jose and San
Francisco, California; Phoenix, Arizona; Dallas and San Antonio, Texas and
Denver, Colorado. As of October 31, 1997, the Company also employed 20 customer
service representatives to support the direct sales force. The Company's sales
resources are targeted at various management levels within target accounts. The
Company's customer service representatives are account focused, and teams
generally consisting of the sales representative, customer service
representative, project manager and installers are created around each new
account that the Company obtains.

        Sales Approach. The Company's sales strategy and approach begins with
the identification of target accounts by its direct sales staff. The Company's
salespersons maintain a contact network of real estate brokers, venture
capitalists, attorneys, bankers, phone system resellers, independent facilities
managers and other persons in a position to influence office furniture and
facilities management outsourcing decisions. After identifying target accounts,
the Company's sales personnel contact the appropriate decision-makers at various
management levels (such as in-house facilities managers, purchasing agents or
chief financial officers) seeking to position the Company as the service
provider of choice by showcasing its account team and often preparing a space
plan at no charge to the prospective customer. The final stage in the sales
process is the preparation of a price quotation, over which each of the
Company's sales representatives has considerable pricing discretion within
guidelines set by the Company's management.

        Sales and Sales Support Compensation: The Company recognizes that its
long term growth and profitability is based upon three critical elements; the
expansion of its customer base, the retention of its existing customers and the
effective management of key strategic relationships within its customer base.
The growth of the customer base is directly attributable to the talent, size,
and motivation of the Company's sales force. To accomplish this the Company
offers compensation which can be exclusively commission-based or a combination
of base salary plus commissions, either of which are intended to offer a better
than industry standard compensation package and a market advantage in attracting
and retaining top sales personnel. The retention of existing customers and the
management of key strategic relationships is a function of the Company's ability
to provide responsive, innovative high quality support to its customers. The
Company has significantly expanded its professional staff in Project Management,
Installation, and Customer Service, to ensure a qualified team is available to
provide such support. The Company offers competitive salaries to its sales
support personnel, often coupled with incentive programs based on the attainment
of functional performance objectives.

        Marketing. In addition to its networking efforts with persons in a
position to influence workspace products and facilities management purchase
decisions, the Company markets its services and products over the Internet and
through industry conferences and trade shows, cooperative and stand-alone
advertising, educational seminars (including space planning and asset management
seminars coordinated through the Company's WMS group), direct mail and other
customary public relations methods. The Company's San Jose corporate
headquarters, the San Francisco office, the Company's office in Phoenix, the
Company's offices in Dallas and San Antonio also function as working showrooms.



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CUSTOMERS

        Business Resource Group has developed a diverse and extensive client
base, including companies in the networking and communications, software,
electronics, financial services, life sciences and health care industries, as
well as service providers of various types. The Company's customers also vary
widely in size, ranging from large enterprises with over $1 billion in sales, to
emerging companies, which are often thinly staffed and are therefore receptive
to comprehensive solution providers such as the Company.

        The Company provided services and sold products to approximately 1,200
customers during the fiscal year ended October 31, 1997. Fifty customers
accounted for approximately 72% of the Company's net revenues during fiscal
1997. Cisco Systems accounted for approximately 30% of net revenues for the
fiscal year ended October 31, 1997. Historically, the Company has had
substantial recurring sales from current customers. Over 57% of the Company's
net revenues during the fiscal year ended October 31, 1997 were derived from
customers which were also customers during fiscal 1996.


VENDORS

        Business Resource Group purchases its workspace products from a variety
of suppliers. The table below summarizes principal product lines the Company
purchases from its suppliers.
<TABLE>
<CAPTION>
                                                             Product Lines
                                          --------------------------------------------
                                          Modular
                  Vendor                  Systems     Casegoods     Seating  Specialty
                  ------                  -------     ---------     -------  ---------
       <S>                                <C>         <C>           <C>      <C>
        Arcadia Furniture Corporation                     X            X
        Creative Wood Products, Inc.                      X            X
        Eagan Visual West, Inc.                                                   X
        Eck Adams Corp.                                                X
        Global Wholesalers West, Inc.                                  X
        The Gunlocke Company                  X           X            X
        Hag, Inc.                                                      X
        Harpers Furniture                     X           X            X
        The Hon Company/Allsteel              X           X            X
        Kimball Office Furniture Co.          X           X            X          X
        Knoll, Inc.                           X           X            X
        Krueger International, Inc.           X           
        National Office Furniture Co.                     X            X
        Office Master, Inc.                                            X
        Office Specialty                      X           X            X
        SIS Human Factors Technology, Inc.                                        X
        TAB Products Co.                      X           X            
        Teknion, Inc.                         X           X            X
        Trendway, Inc.                        X                        
        United Chair Co.                                               X
</TABLE>

                                      -10-
<PAGE>   11

        None of the products currently offered by the Company is obtained on a
sole-source basis from any vendor or dealer. During the fiscal year ended
October 31, 1997, the Company purchased approximately $16.0 million, $7.2
million and $6.9 million, respectively, from Teknion Inc., Knoll, Inc., and The
Hon Company. The Company also subcontracts for delivery, freight services and a
small percentage of its installation services.

        While the Company's strategy is to maintain multiple sources of supply
for each of its workspace product lines, the Company is dependent upon these
suppliers for timely delivery and product quality once orders are placed. The
Company has, from time to time, experienced delays in product delivery from a
number of suppliers. These delays have adversely affected the timing of customer
deliveries and installations. Delays by suppliers have also resulted in
increased costs to the Company and in certain cases lost revenues. Almost all of
the Company's purchases from its vendors are made on a purchase order basis, and
liabilities of such vendors to the Company for late deliveries are therefore
principally based on the terms and conditions set forth in the applicable
purchase order and the supplier's confirming document (if any). The Company
customarily enters into negotiations with its vendors for price adjustments and
late fees as may be appropriate in the event of late deliveries. Future delays
in delivery by suppliers or poor product quality could have a material adverse
effect on the Company's ability to meet customer requirements and thereby
adversely affect revenues or increase costs.

OPERATIONS

        The Company's operations include ongoing order processing and
coordination with its vendors through a software system developed by principals
of the Company through an entity controlled by them at that time, but which is
now independently owned. Order processing is performed in each of the Company's
regional offices and such personnel are also responsible for customer service
support to the sales representatives. The Company carries out its accounting and
credit & collection function from its San Jose headquarters. Accounting
functions include general ledger, accounts payable, accounts receivable and
payroll. Responsibility for the Company's technology hardware and software
upgrades and purchases is shared by Directors of System Administration and
Applications Development. Training in sales, project management, customer
service and installation services is carried out in both the Company's regional
offices and its San Jose headquarters.

COMPETITION

        Workspace products and services are provided by a large number of
companies. The office workspace products marketplace is highly fragmented in the
metropolitan areas of the United States. For example, at least 25 traditional
furniture dealers compete with the Company in the San Francisco Bay Area
marketplace alone. The Company believes that its largest local competitor is
Lindsay Ferrari, formed as a result of the 1994 merger of Lindsay's and Rucker
Fuller, both local Steelcase dealers. The Company believes its comprehensive
range of products and services is a competitive advantage relative to these
companies. Its recent addition of workspace management services further
differentiates it from traditional furniture dealers. In the workspace
management services market, the Company competes with numerous, primarily small
companies, depending on the type of service or location.

                                      -11-
<PAGE>   12
        The workspace products manufacturing industry is dominated by Steelcase,
Herman Miller, Inc. and Haworth, Inc., each of which distributes their products
directly and through captive dealers. The Company is not an authorized dealer
for these manufacturers. There can be no assurance that these manufacturers will
not price their products or services or offer other terms to become more
competitive or to allow their dealers to become more competitive or that such
actions would not have a material adverse effect on the Company or its results
of operations.

        The Company believes that the primary competitive factors in its
targeted market are customer responsiveness, breadth of services and products
offered, quality and price. To remain competitive, the Company must continue to
offer a broad range of services and products to meet the needs of its customers,
maintain quality levels, offer flexible delivery schedules, deliver finished
products on a reliable basis and compete favorably on the basis of price.

FACTORS AFFECTING FINANCIAL RESULTS AND STOCK PRICE

        The Company's future results of operations may be adversely affected by
various factors, including those discussed below. The Company's revenues and
operating results may fluctuate substantially from period to period depending on
such factors as the timing of significant customer orders, the timing of revenue
and cost recognition, variations in contract service and product mix, changes in
customer buying patterns, changes in vendor lead times and trends in the economy
of the geographic region in which the Company operates. Any unfavorable changes
in these or other factors could have a material adverse effect on the Company's
business and results of operations. Given the variability of these factors, the
Company expects that quarter to quarter performance may fluctuate for the
foreseeable future and that results in any single quarter may therefore not be
indicative of future results.

        A large portion of the Company's net revenues for any period are
frequently dependent on a few large customer projects involving relocation,
including a move to a new facility or an upgrade of an existing facility. At the
conclusion of a major project, that customer may not have an immediate need for
additional services or products on the same scale. The Company does not enter
into long term or volume purchase contracts with its customers, and customers
may discontinue further purchases of the Company's services or products at any
time without notice. There can be no assurance that any of the Company's
customers will expand their operations, relocate their offices or facilities or
otherwise require the Company's services or products in the future. To maintain
or increase existing levels of revenues and profits, the Company must identify
and book major projects within its existing base of customers or with new
customers. There can be no assurance that any of the Company's current customers
will engage the Company for major projects in the future or that the Company
will be able to obtain additional new customers.

        The market for workspace services and products is influenced by economic
conditions, including consumer behavior and consumer confidence, the level of
discretionary spending, interest rates and credit availability. Purchases of
these services and products are often discretionary and tend to be deferred in
times of economic stress. During economic downturns, the furniture industry
tends to experience longer and deeper periods of recession than the general
economy. Although the economy in the United States, and in particular that of
the San Francisco Bay Area, the Southwest and Texas, has been expanding in
recent years, there can be no assurance that it will continue to expand or that
it will not decline in the future.



                                      -12-
<PAGE>   13

        The Company has made acquisitions during prior fiscal years and may
continue to make acquisitions in the future. The expansion of corporate
operations in addition to managing acquired operations in new geographic areas
entails numerous operational and financial risks, including difficulties in
assimilating acquired operations, diversion of management's attention to other
business concerns, amortization of acquired intangible assets, potential loss of
employees or customers of acquired operations and difficulties in developing a
local market for the Company's services and products. There can be no assurance
that the Company will be able to achieve growth, or effectively manage any such
growth, and failure to do so could have a material adverse effect on the
Company's operating results.

        The Company will require significant capital for the expansion of its
existing business, expansion into other geographic markets and acquisition of
other businesses, each of which are key elements of the Company's strategy.
There are no assurances that this capital will be available or available on
terms which will not have a material adverse effect on the Company or its
financial results.

        The market price of the Company's common stock may be subject to
significant fluctuations. These fluctuations may be due to factors specific to
the Company, such as quarterly fluctuations in the Company's financial results,
changes in analyst's estimates of future results, litigation, changes in
investors' perceptions of the Company or the announcement of new products by the
Company or its competitors. In addition, such fluctuations may be due to or
exacerbated by conditions in the financial markets generally.

EMPLOYEES

        As of October 31, 1997, Business Resource Group had 248 employees of
whom 84 were in installation, 44 were in project management, 43 were in
marketing and sales, 35 were in finance and administration, 30 were in design
and customer service, and 12 were in other technical services. Of these
employees, 164 were located in the Company's principal offices in San Jose,
California, 47 were located in the Texas offices in Dallas and San Antonio, 19
were located in the Southwest regional office in Phoenix, Arizona, 12 were
located in the San Francisco, California office, and 6 were located in Denver,
Colorado. The Company believes its relationship with its employees is good.

        The success of the Company depends to a significant extent upon the
continued services of the Company's management. The Company has benefited from
important contributions made by Brian McNay, Jeffrey Tuttle, and others. Mr.
McNay and Mr. Tuttle have each made significant contributions to the Company's
sales to date, accounting for approximately 31% and 7% of the Company's sales in
the fiscal year ended October 31, 1997. The loss of the services of either of
these individuals could have a material adverse effect on the Company.

        None of the Company's employees is represented by a labor union. From
time to time, installations of workspace products require the use of union labor
to comply with the requirements of the customer or the work rules for the job
location. In these situations, the Company subcontracts the installation to
other parties that employ union labor. To date, the Company has not experienced
difficulties obtaining subcontract installation services where required.

ITEM 2.    PROPERTIES

        Business Resource Group currently leases approximately 21,000 square
feet of office space at 2150 North First Street in San Jose, California. The
Company leases most of this space under an operating lease which runs through
August 2001. The San Jose office serves as the Company's principal 

                                      -13-
<PAGE>   14
offices and also functions as a working showroom for products offered by the
Company. The Company also leases approximately 5,500 square feet of office and
showroom space in San Francisco, California on a month-to-month basis. In
addition, the Company leases approximately 5,700 square feet of space in
Phoenix, Arizona, under an operating lease which runs through February 2002. The
Company also leases approximately 7,000 square feet of space in Dallas, Texas,
where its Texas regional headquarters is located. The Company leases this space
under an operating lease which runs through March 2002. In addition, within the
Texas region, the Company leases approximately 3,400 square feet in San Antonio
under an operating lease with a term running through November 2001. Also, within
the Texas region, the Company maintains two distribution centers under operating
leases for approximately 9,600 and 21,000 square feet of space running through
September 1998 and October 2002 in Richardson, Texas and Dallas, Texas,
respectively. The Company also leases approximately 1,400 square feet of office
space in Denver, Colorado to support a sales office. The Company may expand its
office space in San Jose and Dallas to accommodate its growing sales, sales
support and Workspace Management Services organizations. Otherwise, the Company
believes that its existing facilities will generally be sufficient for its
operational purposes within the Company's existing regions through the end of
fiscal year 1998. The Company believes that additional space sufficient to meet
its anticipated needs is available on reasonable terms.

ITEM 3. LEGAL PROCEEDINGS

Business Resource Group is not currently subject to any significant legal
proceedings. The Company may from time to time become a party to various legal
proceedings arising in the normal course of its business. These actions could
include product liability, employee related issues and disputes with vendors or
customers.

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

Not applicable.
                                     PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS

        The Company's Common Stock has been traded on the Nasdaq National Market
under the symbol BRGP since the effective date of the Company's initial public
offering on June 27, 1995. The price per share reflected in the table below
represents the range of low and high closing sale prices for the Company's
Common Stock as reported in the Nasdaq National Market for the quarters
indicated.
<TABLE>
<CAPTION>

          FISCAL 1997                                     HIGH                 LOW
                                                          ----                 ---
<S>                                                       <C>                 <C>
             Fourth Quarter ended October 31, 1997         4 3/4               3 5/8
             Third Quarter ended July 31, 1997             5 1/8               3 3/8
             Second Quarter ended April 30, 1997           5 1/2               4 11/16
             First Quarter ended January 31, 1997          5 1/2               3 5/8
</TABLE>

<TABLE>
<CAPTION>

          FISCAL 1996                                     HIGH                 LOW
                                                          ----                 ---
<S>                                                       <C>                 <C>
             Fourth Quarter ended October 31, 1996         4 5/8               3 5/8
             Third Quarter ended July 31, 1996             6 1/4               4
             Second Quarter ended April 30, 1996           5 5/8               3 1/2
             First Quarter ended January 31, 1996          5 3/8               3 1/16
</TABLE>


                                      -14-
<PAGE>   15

        The Company estimates it had approximately 380 shareholders as of
October 31, 1997, including beneficial owners included in securities position
listings as described in Rule 17Ad-8.

        The Company has never paid a cash dividend on its capital stock.
Covenants in the Company's revolving line of credit facility prohibit the
Company from paying dividends without prior approval by the lender. The Company
currently anticipates that it will retain all available funds for use in the
operation and expansion of its business, and does not anticipate paying any cash
dividends in the foreseeable future.



                                      -15-
<PAGE>   16

ITEM 6.   SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
                                         SUMMARY FINANCIAL DATA
                                 (IN THOUSANDS, EXCEPT PER SHARE DATA)

STATEMENTS OF INCOME DATA:
                                                               YEAR ENDED OCTOBER 31,
                                                 ------------------------------------------------------
                                                  1997        1996       1995       1994          1993
                                                 ------      -------    -------    -------       ------
<S>                                              <C>          <C>       <C>        <C>           <C>
 Net revenues:
    Workspace products ........................  $58,303     $67,834    $33,940    $32,197      $18,604
    Workspace services ........................   14,127      10,155      6,119      4,258        2,453
    Vendor commissions ........................      271         291        569        657           32
                                                  ------     -------    -------    -------       ------
        Total net revenues ....................   72,701      78,280     40,628     37,112       21,089
                                                  ------     -------    -------    -------       ------
 Cost of net revenues:
    Workspace products ........................   47,100      55,051     26,605     25,044       14,604
    Workspace services ........................   10,330       7,320      4,179      3,131        1,887
                                                  ------     -------    -------    -------       ------
        Total cost of net revenues ............   57,430      62,371     30,784     28,175       16,491

 Gross profit .................................   15,271      15,909      9,844      8,937        4,598
 Selling, general and
    administrative expenses ...................   16,622      12,870      8,143      6,425        3,825
                                                  ------     -------    -------    -------       ------
 Income / (loss) from operations ..............   (1,351)      3,039      1,701      2,512          773
 Interest income (expense) - net ..............       66         124          7        (77)           1
                                                  ------     -------    -------    -------       ------
 Income / (loss) before income taxes ..........   (1,285)      3,163      1,708      2,435          774
 Income taxes .................................     (523)      1,309        122         70           20
                                                  ------     -------    -------    -------       ------
 Net income / (loss) ..........................   $ (762)    $ 1,854    $ 1,586    $ 2,365       $  754
                                                  ======     =======    =======    =======       ======
 Net income / (loss) per common
    and common equivalent share ...............   $(0.16)    $  0.38
                                                  ======     ======= 
 Shares used in computation ...................    4,902       4,886
                                                  ======     ======= 
 Pro forma (1):
    Historical income before
        income taxes ..........................                           1,708
    Pro forma income taxes ....................                             709
                                                                        -------
 Pro forma net income .........................                         $   999
                                                                        =======

 Pro forma net income per common
    and common equivalent share ...............                         $  0.26
                                                                        =======

 Pro forma shares used in computation .........                           3,834
                                                                        =======

</TABLE>

(1) See Note 2 to Financial Statements for a discussion of pro forma amounts. 


                                      -16-
<PAGE>   17

BALANCE SHEET DATA:
<TABLE>
<CAPTION>
                                                                               OCTOBER 31,
                                                            -------------------------------------------------
                                                              1997        1996      1995      1994      1993
                                                            -------      ------    -------   ------    ------
                                                                               (IN THOUSANDS)
<S>                                                         <C>          <C>       <C>       <C>       <C>   
 Working capital.......................................     $ 9,279      $10,063   $ 9,470   $2,784    $1,160
 Total assets..........................................      20,760       22,560    16,053    7,640     4,496
 Long-term obligations.................................          --           --       120      123        --
 Shareholders' equity..................................      12,452       13,002    11,020    3,296     1,444
</TABLE>

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

        The following discussion should be read in conjunction with the
Financial Statements and Notes thereto included elsewhere in this Annual Report
on Form 10-K.

OVERVIEW

        Business Resource Group is a provider of workspace services and
products. Most of the Company's net revenues are derived from billings for
workspace products, including modular systems, casegoods, seating, filing
systems and specialty furniture products. The Company's experience is that its
success in generating these revenues is dependent upon the provision of related
services, such as project management, space planning and design, product
specification and order management. The price of these services is frequently
included in product billing to its customers as part of its integrated workspace
solution. Approximately 19% of the Company's net revenues are derived from
workspace services, including installation and maintenance, delivery and
Workspace Management Services. Less than one percent of the Company's net
revenues are derived from commissions on product sales which certain of the
Company's vendors bill directly.

        The Company's net revenues and operating results fluctuate substantially
from period to period depending on such factors as the timing of significant
customer orders, the timing of revenue and cost recognition, variations in
contract service and product mix, the ability of the Company's suppliers to
manufacture and deliver products on a timely basis, changes in customer buying
patterns and trends in the economy of the geographic region in which the Company
operates. Any unfavorable changes in these or other factors could have a
material adverse effect on the Company's business and results of operations.

        The Company is currently in the process of evaluating its computer
software and databases to determine whether or not modifications will be
required to prevent problems related to the year 2000. These problems could
cause malfunctions in certain software and databases with respect to dates on or
after January 1, 2000, unless corrected. At this time, the Company has not yet
determined the cost of evaluating its computer software or databases or of
making any modifications required to correct any potential problems related to
the year 2000.

        Between July 1989 and June 25, 1995, the Company was an S Corporation
pursuant to the Internal Revenue Code of 1986, as amended (the "Code"), and
therefore was not subject to federal and most state income taxes. In lieu of
corporate income taxes, the shareholders of the Company were taxed on their
proportionate share of the Company's taxable income. Subsequent to June 25,
1995, the 

                                      -17-
<PAGE>   18

Company terminated its S Corporation status and became subject to federal and
state income taxes. See Note 2 to financial statements.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, certain income
statement data as a percentage of net revenues:
<TABLE>
<CAPTION>
                                                   YEAR ENDED OCTOBER 31,
                                                 -------------------------
                                                  1997     1996     1995
                                                 -----     -----    -----
<S>                                               <C>       <C>      <C>  
      Net revenues:
         Workspace products ................      80.2%     86.6%    83.5%
         Workspace services ................      19.4      13.0     15.1
         Vendor commissions ................        .4        .4      1.4
                                                 -----     -----    -----
             Total net revenues ............     100.0     100.0    100.0
                                                 -----     -----    -----
      Cost of net revenues:
         Workspace products ................      64.8      70.3     65.5
         Workspace services ................      14.2       9.4     10.3
                                                 -----     -----    -----
             Total cost of net revenues ....      79.0      79.7     75.8
                                                 -----     -----    -----

      Gross profit .........................      21.0      20.3     24.2
      Selling, general and
         administrative expenses ...........      22.9      16.4     20.0
                                                 -----     -----    -----
      Income / (loss) from operations ......      (1.9)      3.9      4.2
      Interest income (expense) - net ......       0.1       0.1      0.0
                                                 -----     -----    -----

      Income / (loss) before income taxes ..      (1.8)      4.0      4.2
      Income taxes .........................       (.7)      1.6      0.3
                                                 -----     -----    -----
      Net income / (loss) ..................      (1.1)%     2.4%     3.9%
                                                 =====     =====    =====

      Pro forma:
         Historical income before
             income taxes ..................                          4.2%
         Pro forma income taxes ............                          1.7
                                                                    -----
      Pro forma net income .................                          2.5%
                                                                    =====
</TABLE>

YEARS ENDED OCTOBER 31, 1997, 1996 AND 1995.

Net Revenues

        Net revenues decreased 7% to $72.7 million in fiscal 1997 from $78.3
million in fiscal 1996. The decrease was attributable to a decrease in sales to
Cisco Systems, with revenue of $21.9 million for the year ended October 31,
1997, down from $29.2 million for the same period of 1996. The Company maintains
an excellent working relationship with Cisco Systems and expects Cisco Systems
to continue 

                                      -18-
<PAGE>   19

to order product. However, there can be no assurance that the Company's
financial results for future quarters will not be materially and adversely
affected should there be any continued reduction in orders.

        Net revenues increased 93% to $78.3 million in fiscal 1996 from $40.6
million in fiscal 1995. The increase was primarily attributable to new large
project business from both new and existing customers and revenues generated by
the Company's southwestern United States and Texas regional business units
acquired in September 1995 and January 1996, respectively.

        Service revenue increased 39% during fiscal 1997 to $14.1 million from
$10.2 million in fiscal 1996 due to increases in delivery services,
installation, and workspace and management services. Such increases along with
the lower overall revenue base contributed to the increase in service revenue as
a percentage of total revenue which rose to 19% for fiscal 1997, compared to 13%
for fiscal 1996.

        The increase in service revenue during fiscal 1996 to $10.2 million from
$6.1 million in fiscal 1995 was primarily attributable to increase in delivery
services, installation, and workspace management services.

        Vendor commissions decreased $20,000 to $271,000 in fiscal 1997 from
$291,000 in fiscal 1996. As was the case in the prior year, most vendors have
discontinued their policies of billing customers directly and only paying a
commission to the Company.

        Vendor commissions decreased $278,000 to $291,000 in fiscal 1996 from
$569,000 in fiscal 1995 as most vendors discontinued their policies of billing
customers directly and only paying a commission to the Company. Additionally,
during the third quarter of fiscal 1996, the Company discontinued its Records
Management business in order to streamline its operations and focus on its
Workspace Products and Workspace Management Services businesses. Vendor
commissions from TAB, for sales of records management products, totalled
approximately $224,000 and $245,000 in fiscal 1996 and 1995, respectively.

         Gross Profit

        Gross profit as a percentage of net revenues increased to 21% in fiscal
1997 from 20% in fiscal 1996. This increase was mainly due to a slight increase
in product margins, a shift in revenue mix to higher margin service revenue,
partially offset by a slight decrease in service margins. The decrease in
service margins is due to an underabsorption of overhead in the Company's
installation businesses, and the use of outside contract installation companies
in certain out-of-state locations.

        Gross profit as a percentage of net revenues decreased to 20% in fiscal
1996 from 24% in fiscal 1995. Product margins decreased to 19% in fiscal 1996
from 22% in fiscal 1995, the result of a shift in product mix from higher margin
projects to higher volume, lower margin projects and the impact of the Company's
decision to accept certain low margin projects which the Company felt were
important to its competitive positioning and its ability to penetrate certain
markets. Service margins also decreased as a percentage of revenue to 28% from
32% in fiscal 1995, the result of a service mix shift to lower margin
volume-related services, start-up costs in the Company's Workspace Management
Services business, underabsorption of overhead in the Company's installation
businesses and the use of outside contract installation companies in certain
out-of-state locations.

        Gross profit has varied and is expected to continue to vary as a result
of such factors as the mix of workspace products and services sold, the
percentage of sales to new customers relative to repeat 

                                      -19-
<PAGE>   20

customers and the percentage of total net revenues generated through large
customer orders relative to small customer orders.

Selling, General and Administrative Expenses

        Selling, general and administrative expenses increased 29% to $16.6
million in fiscal 1997 from $12.9 million in fiscal 1996, while increasing as a
percentage of net revenues to 23% in fiscal 1997 from 16% in fiscal 1996. The
increase in selling, general and administrative expenses was primarily the
result of the steps taken to restructure operations in Texas, Arizona, and San
Jose. The Company has also incurred additional expenses related to the expansion
of its sales and project management infrastructure and the Company's computer
network.

        Selling, general and administrative expenses increased 58% to $12.9
million in fiscal 1996 from $8.1 million in fiscal 1995, while decreasing as a
percentage of net revenues to 16% in fiscal 1996 from 20% in fiscal 1995. The
increase in selling, general and administrative expenses was primarily the
result of increased revenue and related commissions, expanded operations in
Arizona, Nevada and Texas, and a continuing effort to build the infrastructure
necessary to run a larger business. The decrease in these expenses as a
percentage of net revenues reflected allocation of administrative costs over a
larger sales volume.

Interest Income - net

        Interest income, net of interest and other expense totaled $66,000 for
the twelve months ended October 31, 1997 versus $124,000 for the same period of
fiscal 1996. The decrease in net interest income was due to lower average cash
balances during the twelve month period.

        Interest income, net of interest and other expense totaled $124,000 for
the twelve months ended October 31, 1996 versus $7,000 for the same period of
fiscal 1995. The increase in net interest income was due to higher cash balances
as a result of the Company's initial public offering of its common stock in June
1995.

Income Taxes

        The Company was a C Corporation for tax purposes for all of fiscal 1997
and 1996 and an S Corporation for approximately eight of the twelve months of
fiscal 1995. As a result, the Company's effective tax rates were 41%, 41%, and
7% for the twelve month periods ended October 31, 1997, 1996 and 1995,
respectively. The Company has used a tax rate of 41% for the 1995 pro forma
information.

LIQUIDITY AND CAPITAL RESOURCES

        Working capital at October 31, 1997 was $9.3 million, down from $10.1
million at October 31, 1996.

        In the twelve months ended October 31, 1997 the Company generated
$572,000 in cash from operations compared to using $2.1 million in cash from
operations in the twelve months ended October 31, 1996. In addition, positive
cash flows from operations were due to a decrease in accounts receivable of $2.4
million and an increase in accrued liabilities of $1.3 million. These positive
cash flows were offset primarily by a net loss of $762,000, a decrease in
accounts payable of $1.9 million and increases in prepaids and other current
assets and inventory of $689,000 and $424,000, respectively.

                                      -20-
<PAGE>   21
        Net cash used in investing activities was $948,000 in the twelve months
ended October 31, 1997 primarily resulting from the purchase of property and
equipment for $928,000.

        Net cash used in financing activities was $361,000 in the twelve months
ended October 31, 1997. The primary financing activity during this period was
the payback of the Company's bank overdraft of $476,000 offset by the issuance
of common stock under the Company's 1995 Employee Stock Purchase Plan which
provided $212,000 in cash.

        The Company's $8.0 million credit facility expired in September 1997 and
was replaced with a new $15.0 million credit facility with an option on a $1.0
million term loan. As of October 31, 1997 the Company had no bank borrowings
under the existing credit facility. The Company believes existing cash, together
with cash generated from operations and the Company's available borrowing
capacity will provide sufficient funds to meet the Company's anticipated working
capital requirements for the foreseeable future.



                                      -21-
<PAGE>   22

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


<TABLE>
<CAPTION>
                                 INDEX TO FINANCIAL STATEMENTS



                                                                                                 PAGE
                                                                                                 ----
<S>                                                                                               <C>
  Independent Auditors' Report................................................................    23


  Financial Statements:

     Balance Sheets at October 31, 1997 and 1996..............................................    24

     Statements of Operations for the Years Ended October 31, 1997, 1996 and 1995.............    25

     Statements of Shareholders' Equity for the Years Ended October 31, 1997, 1996 and 1995...    26

     Statements of Cash Flows for the Years Ended October 31, 1997, 1996 and 1995.............    27

     Notes to Financial Statements for the Years Ended October 31, 1997, 1996 and 1995........    28

</TABLE>



                                      -22-
<PAGE>   23

                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Shareholders of Business Resource Group:

We have audited the accompanying balance sheets of Business Resource Group (the
Company) as of October 31, 1997 and 1996, and the related statements of
operations, shareholders' equity and cash flows for each of the three years in
the period ended October 31, 1997. Our audits also included the financial
statement schedule listed at Item 14(a)(2). These financial statements and
financial statement schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.

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

In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company at October 31, 1997 and 1996,
and the results of its operations and its cash flows for each of the three years
in the period ended October 31, 1997 in conformity with generally accepted
accounting principles. Also, in our opinion, such financial statement schedule,
when considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.





DELOITTE & TOUCHE LLP
San Jose, California
Decenber 16, 1997


                                      -23-
<PAGE>   24
<TABLE>
<CAPTION>
                                    BUSINESS RESOURCE GROUP
                                        BALANCE SHEETS
                        (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

                                                                         OCTOBER 31,
                                                                     -------------------
                                                                      1997        1996
                                                                     -------    -------
<S>                                                                  <C>        <C>    

                                     ASSETS

Current assets:
   Cash and equivalents .........................................    $   274    $ 1,011
   Accounts receivable, less allowance for doubtful accounts
      of $90 in 1997 and $57 in 1996 ............................     13,764     16,122
   Inventory ....................................................      1,398        974
   Prepaids and other current assets ............................      2,076      1,387
                                                                     -------    -------
      Total current assets ......................................     17,512     19,494

Property and equipment - net ....................................      2,346      2,017
Other assets ....................................................        902      1,049
                                                                     -------    -------
                                                                     $20,760    $22,560
                                                                     =======    =======

                             LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
   Bank overdraft ...............................................    $    --    $   476
   Accounts payable .............................................      3,997      5,935
   Accrued liabilities ..........................................      4,236      3,020
                                                                     -------    -------
      Total current liabilities .................................      8,233      9,431

Deferred income tax liability ...................................         75        127

Shareholders' equity:
   Preferred stock, par value $0.01 per share; 2,000,000 shares
      authorized; no shares outstanding .........................         --         --
   Common stock, par value $0.01 per share; 50,000,000 shares
      authorized; outstanding:
      4,913,712 shares in 1997 and 4,858,864 shares in 1996 .....         49         49
   Additional paid-in capital ...................................     10,897     10,685
   Retained earnings ............................................      1,506      2,268
                                                                     -------    -------
      Total shareholders' equity ................................     12,452     13,002
                                                                     -------    -------
                                                                     $20,760    $22,560
                                                                     =======    =======
</TABLE>




                       See notes to financial statements


                                      -24-
<PAGE>   25
<TABLE>
<CAPTION>

                             BUSINESS RESOURCE GROUP
                            STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

                                                   YEAR ENDED OCTOBER 31,
                                             --------------------------------
                                              1997         1996        1995
                                             -------      -------     -------
<S>                                          <C>          <C>         <C>    
  Net revenues:
     Workspace products ................     $58,303      $67,834     $33,940
     Workspace services ................      14,127       10,155       6,119
     Vendor commissions ................         271          291         569
                                             -------      -------     -------
      Total net revenues ...............      72,701       78,280      40,628
                                             -------      -------     -------
 Cost of net revenues:
     Workspace products ................      47,100       55,051      26,605
     Workspace services ................      10,330        7,320       4,179
                                             -------      -------     -------
         Total cost of net revenues ....      57,430       62,371      30,784
                                             -------      -------     -------

 Gross profit ..........................      15,271       15,909       9,844
 Selling, general and
     administrative expenses ...........      16,622       12,870       8,143
                                             -------      -------     -------
 Income (loss) from operations .........      (1,351)       3,039       1,701
 Interest income - net .................          66          124           7
                                             -------      -------     -------
Income (loss) before income taxes ......      (1,285)       3,163       1,708
 Income taxes (Note 2) .................        (523)       1,309         122
                                             -------      -------     -------
 Net income (loss) .....................     $  (762)     $ 1,854     $ 1,586
                                             =======      =======     =======
 Net income (loss) per common and common
     equivalent share ..................     $ (0.16)     $  0.38
                                             =======      =======   

 Shares used in computation ............       4,902        4,886
                                             =======      =======  

     Pro forma (Note 2):
     Historical income before
         income taxes ..................                              $ 1,708
     Pro forma income taxes ............                                  709
                                                                      -------
 Pro forma net income ..................                              $   999
                                                                      =======


 Pro forma net income per common and
        common equivalent share ........                              $  0.26
                                                                      =======
 Pro forma shares used in computation ..                                3,834
                                                                      =======
</TABLE>

                        See notes to financial statements

                                      -25-
<PAGE>   26
                             BUSINESS RESOURCE GROUP
                       STATEMENTS OF SHAREHOLDERS' EQUITY
                        (IN THOUSANDS, EXCEPT SHARE DATA)




<TABLE>
<CAPTION>
 
                                                              COMMON STOCK       ADDITIONAL
                                                         ----------------------    PAID-IN    RETAINED
                                                           SHARES       AMOUNT     CAPITAL    EARNINGS     TOTAL
                                                         ----------     -------  ----------   --------    ---------
<S>                                                      <C>            <C>        <C>        <C>         <C>     
Balances, October 31, 1994 .........................      3,070,224     $    31    $   275    $ 2,990     $  3,296

  Distribution to S Corporation
    shareholders ...................................             --          --         --     (4,162)      (4,162)
  Issuance of common stock (including $67 
    recorded as stock compensation) ................         15,244          --         76         --           76
   Initial public offering, net of
    issuance costs of $1,926 .......................      1,725,000          17     10,132         --       10,149
   Issuance of common stock in
    connection with acquisition ....................         10,275          --         75         --           75
  Net income .......................................             --          --         --      1,586        1,586
                                                        -----------     -------    -------    -------     --------
Balances, October 31, 1995..........................      4,820,743          48     10,558        414       11,020

  Employee stock purchase program ..................         38,121           1        127         --          128
  Net income .......................................             --          --         --      1,854        1,854
                                                        -----------     -------    -------    -------     --------

Balances, October 31, 1996..........................      4,858,864          49     10,685      2,268       13,002

  Employee stock purchase program...................         54,848          --        212         --          212
  Net loss .........................................             --          --         --       (762)        (762)
                                                        -----------     -------    -------    -------     --------
Balances, October 31, 1997..........................      4,913,712     $    49    $10,897    $ 1,506     $ 12,452
                                                        ===========     =======    =======    =======     ========
</TABLE>







                              See notes to financial statements.



                                      -26-
<PAGE>   27

                             BUSINESS RESOURCE GROUP
                            STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                                  YEAR ENDED OCTOBER 31,
                                                                              -------------------------------
                                                                                1997       1996        1995
                                                                              -------    --------    --------
<S>                                                                           <C>        <C>         <C>     
 Cash flows from operating activities:
   Net income (loss)......................................................    $  (762)   $  1,854    $  1,586
        Adjustments to reconcile to net cash provided
          (used) by operating activities:
             Depreciation and amortization................................        766         455         257
             Loss on disposal of fixed assets.............................         --          --          11
             Stock compensation...........................................         --          --          67
             Deferred income taxes........................................       (292)        (15)       (132)
             Changes in operating assets and liabilities (net of 
               effect of acquisitions):
                 Accounts receivable - net................................      2,358      (8,533)     (1,197)
                 Inventory................................................       (424)        (52)        243
                 Prepaids and other current assets........................       (449)       (318)       (374)
                 Accounts payable.........................................     (1,938)      3,583         228
                 Accrued liabilities......................................      1,216         958          81
                                                                              -------    --------    --------
                      Net cash provided (used) by operating activities....        476      (2,068)        770
                                                                              -------    --------    --------

 Cash flows from investing activities:
   Purchase of property and equipment.....................................       (928)     (1,549)       (451)
   Cash paid for acquisitions.............................................         --        (300)       (375)
   Other assets...........................................................        (20)       (101)        (14)
                                                                              -------    --------    --------
                      Net cash used by investing activities...............       (948)     (1,950)       (840)
                                                                              -------    --------    --------
 Cash flows from financing activities:
   Bank overdraft increase (decrease).....................................       (476)       (175)        651
   Repayment of notes payable and capital lease obligations...............         --        (250)       (268)
   Issuance of common stock...............................................        212         128      10,158
   Distributions to shareholders..........................................         --          --      (4,162)
   Borrowings on line of credit - net.....................................         --          --      (1,175)
                                                                              -------    --------    --------
                      Net cash provided (used) by financing activities....       (265)       (297)      5,204
                                                                              -------    --------    --------

 Increase (decrease) in cash and equivalents..............................       (737)     (4,315)      5,134

 Cash and equivalents  balances:
   Beginning of period....................................................      1,011       5,326         192
                                                                              -------    --------    --------
   End of period..........................................................    $   274    $  1,011    $  5,326
                                                                              =======    ========    ========
   Supplemental disclosures of cash flow information -
     cash paid during the period for:
      Interest............................................................    $    --    $     39    $    131
                                                                              =======    ========    ========
   Income taxes                                                               $   470    $  1,250    $    340
                                                                              =======    ========    ========

 Noncash investing and financing transactions:
   Sale of distribution rights for note receivable (Note 10)                  $    --    $    177     $    --
                                                                              =======    ========    ========

 Acquisitions:
   Tangible assets acquired...............................................    $    --    $    333    $    820
   Intangible assets acquired.............................................         --         255         781
   Liabilities assumed....................................................         --        (288)       (801)
   Notes payable issued...................................................         --          --        (350)
   Common stock issued....................................................         --          --         (75)
                                                                              -------    --------    --------
                      Cash paid for acquisitions..........................    $    --    $    300    $    375
                                                                              =======    ========    ========
</TABLE>


                       See notes to financial statements.


                                      -27-
<PAGE>   28

                             BUSINESS RESOURCE GROUP

                          NOTES TO FINANCIAL STATEMENTS
                   YEARS ENDED OCTOBER 31, 1996, 1995 AND 1994



1.   ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

     ORGANIZATION - Business Resource Group, a California corporation (the
     Company), provides workspace products and services.

     CERTAIN SIGNIFICANT RISKS AND UNCERTAINTIES - The preparation of financial
     statements in conformity with generally accepted accounting principles
     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. Such
     management estimates include the allowance for doubtful accounts
     receivable, inventory reserves, certain accruals and the valuation
     allowance for deferred tax assets. Actual results could differ from those
     estimates.

     CONCENTRATION OF CREDIT RISK - Financial instruments which potentially
     subject the Company to concentration of credit risk consist principally of
     cash, cash equivalents and accounts receivable. Management believes the
     credit risk associated with cash and cash equivalents is minimal.
     Substantially all of the Company's business activities are located in
     Northern California, Arizona, Nevada and Texas. The Company performs
     on-going credit evaluations of its customers and requires deposits for
     sales on credit when deemed necessary. The Company maintains reserves for
     estimated discounts and potential credit losses.

     FAIR VALUE OF FINANCIAL INSTRUMENTS - The estimated fair value of amounts
     have been determined by the Company using available market information and
     appropriate valuation methodologies. The carrying values of cash and cash
     equivalents, accounts receivable, accounts payable, and accrued liabilities
     approximate fair values due to the short term nature of these instruments.

     CASH EQUIVALENTS are highly liquid debt investments purchased with a
     maturity of three months or less.

     INVENTORY consists primarily of goods in transit shipped directly to
     customers by suppliers and is valued at the lower of cost (specific
     identification) or market value.

     PROPERTY AND EQUIPMENT are stated at cost and are depreciated and amortized
     using the straight-line method over useful lives of three to seven years
     for equipment and over the lesser of the useful life or the lease term for
     leasehold improvements.

     OTHER ASSETS - Goodwill and customer list intangibles purchased in
     acquisitions are included in other assets and are amortized using the
     straight-line method over estimated useful lives of three to ten years. The
     Company evaluates the recoverability of goodwill on a quarterly basis based
     on estimated undiscounted future cash flows. Amortization of intangibles
     amounted to $167,000, $187,000, and $84,000 in fiscal 1997, 1996 and 1995,
     respectively.



                                      -28-
<PAGE>   29

     REVENUE RECOGNITION - Revenues from workspace product sales and vendor
     commissions are recognized upon receipt of products by the customer.
     Service revenues are recognized upon customer acceptance of the project.

     STOCK BASED COMPENSATION - The Company accounts for stock-based awards to
     employees using the intrinsic value method in accordance with Accounting
     Principles Board Opinion No. 25 (APB 25), Accounting for Stock Issued to
     Employees.

     STOCK COMPENSATION - In connection with the issuance of 15,244 shares of
     common stock during the year ended October 31, 1995, the Company has
     recorded the difference between the deemed fair value for accounting
     purposes and amounts paid by the acquiring shareholders, as specified in
     the stock purchase agreements, as compensation expense in the periods which
     services were performed.

     INCOME TAXES - Income taxes are provided for using the asset and liability
     approach.

     SHAREHOLDER DISTRIBUTIONS - The Company made distributions to its S
     Corporation shareholders to allow payment of their federal and state income
     taxes and to distribute previously undistributed S Corporation earnings as
     of the date the Company terminated its status as an S Corporation.

     NEW ACCOUNTING PRONOUNCEMENTS - In February 1997, the Financial Accounting
     Standards Board issued SFAS No. 123, "Earnings per Share". The Company is
     required to adopt SFAS 128 in December 1997.

     SFAS 128 replaces current EPS reporting requirements and requires a dual
     presentation of basic and diluted EPS. Basic EPS excludes dilution and is
     computed by dividing net income available to common stockholders by the
     weighted average number of common shares outstanding for the period.
     Diluted EPS reflects the potential dilution that could occur if securities
     or other contracts to issue common stock were exercised or converted into
     common stock.

     Pro forma amounts for basic and diluted EPS, assuming SFAS 128 had been in
     effect, are as follows:

<TABLE>
<CAPTION>

                                                             FISCAL YEAR ENDED OCTOBER 31,
                                                             -----------------------------
                                                              1997       1996        1995
                                                             ------      ----        ----
<S>                                                          <C>         <C>        <C>  
     Net income per share:
     Basic................................................   $(0.16)     $0.38      $0.26
     Diluted..............................................   $(0.16)     $0.38      $0.26
</TABLE>

     In June 1997, the Financial Accounting Standards Board adopted SFAS No.
     130, "Reporting Comprehensive Income," which requires that an enterprise
     report, by major components and as a single total, the change in its net
     assets during the period from nonowner sources; and No. 131, "Disclosures
     about Segments of an Enterprise and Related Information", which establishes
     annual and interim reporting standards for an enterprises operating
     segments. It also establishes standards for related disclosures about
     products, services, geographic areas and major customers. Adoption of these
     statements will not impact the Company's financial position, results of
     operations or cash flows, and any effect will be limited to the form and
     content of its disclosures. Both statements are effective for fiscal years
     beginning after December 15, 1997, with earlier application permitted.


                                      -29-
<PAGE>   30

2.   PRO FORMA NET INCOME AND NET INCOME PER COMMON AND COMMON EQUIVALENT SHARES

     Through June 1995, the Company was not subject to federal and most state
     income taxes since its shareholders elected that the Company be taxed as an
     S Corporation pursuant to the Internal Revenue Code. In lieu of corporate
     income taxes, the shareholders of an S Corporation are taxed on their
     proportionate share of the Company's taxable income. Therefore, no
     provision for federal income taxes has been included in these financial
     statements for fiscal 1994 and the portion of fiscal 1995 during which the
     Company was an S Corporation. Although the S Corporation election is
     recognized for California income tax purposes, the State of California
     requires S Corporations to pay a tax of 1.5% of taxable income. Effective
     June 1995, in conjunction with the Company's initial public offering of its
     common stock, the Company's status as an S Corporation was terminated and
     the Company became subject to federal and state income taxes.

     The pro forma information presented on the statements of income and in the
     Selected Quarterly Data (Unaudited) in Note 15 reflect a provision for
     income taxes at an effective rate of 41% for fiscal 1995. Pro forma
     financial information is provided to show what the significant effects on
     the historical financial information might have been had the Company been
     treated as a C Corporation for income tax purposes prior to June 1995.

3.   PROPERTY AND EQUIPMENT

     Property and equipment consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                  1997       1996
                                                -------    -------
<S>                                               <C>      <C>    
Computer equipment ......................         2,251    $ 1,596
Office furniture and equipment ..........         1,177        935
 Leasehold improvement ..................           146        115
                                                -------    -------
                                                  3,574      2,646
Accumulated depreciation and amortization        (1,228)      (629)
                                                -------    -------
Total property and equipment - net ......       $ 2,346    $ 2,017
                                                =======    =======
</TABLE>

4.   LINE OF CREDIT

     The Company has a $15,000,000 revolving line of credit with a bank, which
     expires in August 1999. The line bears interest at prime (8.50% at October
     31, 1997) and is collateralized by substantially all of the Company's
     assets. Among other conditions and restrictions, the Company has agreed to
     certain financial covenants including maintenance of (1) a current ratio of
     at least 1.00 to 1; (2) total debt to tangible net worth ratio, as defined,
     of no more than 1.25 to 1; (3) net worth, as defined, of at least
     $11,750,000; and (4) a cash flow coverage ratio, as defined, of not less
     than 1.5 to 1; and (5) profitability in the current year and no loss in
     consecutive quarters. In addition, the Company is prohibited from paying
     dividends on its common stock without prior approval of the lender. At
     October 31, 1997, the Company received waivers from the bank for covenants
     with which they were not in compliance.


                                      -30-


<PAGE>   31

5. ACCRUED LIABILITIES

     Accrued liabilities consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                                         OCTOBER 31,
                                                                      -----------------
                                                                       1997       1996
                                                                      ------    -------
<S>                                                                   <C>       <C>    
     Accrued commissions payable:
        Shareholders......................................            $  179    $   515
        Others............................................               333        758
     Sales taxes payable..................................               546        693
     Customer deposits....................................             2,201        327
     Other accrued liabilities............................               998        727
                                                                      ------    -------
     Total accrued liabilities...........................             $4,236    $ 3,020
                                                                      ======    =======
</TABLE>

6.   NOTES PAYABLE AND LEASE OBLIGATIONS

     As of October 31, 1996, the cost of equipment acquired under capital leases
     was $70,000 and accumulated amortization was $61,000. The capital leases
     expired during the year ended October 31, 1997. The Company also leases
     operating facilities under noncancelable operating leases which contain
     various renewal options. Future minimum lease payments under noncancelable
     operating leases are as follows (in thousands):

<TABLE>
<CAPTION>

     YEARS ENDING
      OCTOBER 31,
     ------------
<S>                                                           <C>   
        1998...............................................   $  999
        1999...............................................      936
        2000...............................................      936
        2001...............................................      936
        2002...............................................      724
                                                              ------
     Total future minimum payments.........................   $4,531
                                                              ======
</TABLE>

     Total rent expense for the years ended October 31, 1997, 1996 and 1995
     under operating leases was approximately $803,000, $636,000 and $324,000,
     respectively.

7.   EMPLOYEE BENEFIT PLAN

     The Company has a 401(k) plan which covers substantially all full-time
     employees. The plan operates on a calendar year. All eligible employees are
     permitted to make tax deferred contributions of up to 20% of their annual
     compensation, subject to certain Internal Revenue Service limitations. The
     Company provides matching contributions of 25% of employees' contributions
     (up to 6% of employees' cash compensation). Employee contributions and
     earnings thereon are vested immediately; Company contributions vest over
     five years. In fiscal 1997, 1996 and 1995, the Company contributed $93,000,
     $71,000 and $22,000 to the plan.


                                      -31-
<PAGE>   32

8.   INCOME TAXES

     The provision for income taxes consisted of the following (in thousands):

<TABLE>
<CAPTION>

                                                              YEAR ENDED OCTOBER 31,
                                                          -------    -------    -------
                                                            1997       1996       1995
                                                          -------    -------    -------
<S>                                                       <C>        <C>        <C>    
     Current:
        Federal....................................       $  (229)   $ 1,043    $   183
        State......................................            (2)       281         71
                                                          -------    -------    -------
                                                             (231)     1,324        254
                                                          -------    -------    -------
     Deferred:
        Federal....................................          (207)       (25)      (106)
        State......................................           (85)        10        (26)
                                                          -------    -------    -------
                                                             (292)       (15)      (132)
                                                          -------    -------    -------
     Total.........................................       $  (523)   $ 1,309    $   122
                                                          =======    =======    =======
</TABLE>


     The pro forma provision for income taxes for the year ended October 31,
     1995 consists of the following:

<TABLE>

     Current:
<S>                                                                 <C>   
        Federal..............................................       $  618
        State................................................          191
                                                                    ------
                                                                       809
                                                                    ------
     Deferred:
        Federal..............................................          (75)
        State................................................          (25)
                                                                    ------
                                                                      (100)
                                                                    ------
     Total pro forma.........................................       $  709
                                                                    ======
</TABLE>

     The components of the actual deferred tax assets and liabilities at October
     31, 1997 and 1996 were as follows (in thousands):

<TABLE>
<CAPTION>
                                                                      OCTOBER 31,
                                                                    --------------
                                                                     1997    1996
                                                                    -----   ------
<S>                                                                 <C>     <C>   
     Deferred tax assets:
        Accruals recognized in different periods for tax
          purposes...............................................   $ 477   $  274
        Amortization of intangibles..............................     138       46
          Deferred tax liabilities - accelerated depreciation....    (176)    (173)
                                                                    -----   ------
         Net deferred tax assets ................................   $ 439   $  147
                                                                    =====   ======
</TABLE>


                                      -32-
<PAGE>   33

     Current deferred income tax assets of $514,000 and $274,000 at October 31,
     1997 and 1996, respectively, are included in prepaids and other current
     assets.

     The provision for income taxes for the year ended October 31, 1996 and the
     pro forma provision for income taxes for the fiscal years ended October 31,
     1995 and 1994, differs from the amount computed by applying the federal
     statutory income tax rate to income before income taxes as follows:

<TABLE>
<CAPTION>

                                                              YEAR ENDED OCTOBER 31,
                                                          ----------------------------
                                                            1997      1996       1995
                                                          -------    -------    ------

<S>                                                        <C>         <C>        <C>  
     Tax computed at federal statutory rate............    (35.0)%     35.0%      35.0%
     State income taxes, net of federal effect.........     (6.1)       6.1        6.1
     Other.............................................     (0.4)       0.3        0.4
                                                          ------      -----      -----
     Effective income tax rate.........................    (40.7)%     41.4%      41.5%
                                                          ======      =====      =====
</TABLE>

9.   RELATED PARTY TRANSACTIONS

     The Company purchased products from a vendor (affiliate) during fiscal
     1995. This affiliate was owned by certain shareholders of the Company.
     Purchases from affiliate were $277,000 in fiscal 1995. There were no
     accounts payable to the affiliate as of October 31, 1997, 1996 and 1995,
     respectively. The assets of the affiliate were acquired by the Company in
     April 1995 for $95,000 and no further purchases were made from the
     affiliate following the acquisition.

     In fiscal 1994, the Company entered into a direct sales representative
     agreement for certain vendor products within a specified territory. In June
     1995, an officer of the vendor was elected to the Board of Directors of the
     Company. In the year ended October 31, 1996, the Company purchased $1.0
     million of product and earned $224,000 in commissions from the vendor. In
     the year ended October 31, 1995, the Company purchased $2.7 million of
     product and earned $245,000 in commissions from the vendor. At October 31,
     1996, the Company had no accounts receivable due from the vendor. In July
     1996, the Company entered into an agreement with the vendor to relinquish
     its exclusive distribution rights, in exchange for a $177,000 note
     receivable, payable to the Company over twelve months, bearing interest at
     4.625%. The note has been paid in full as of October 31, 1997.

10.  MAJOR CUSTOMERS AND VENDORS

     Two customers represented 30% and 5%, 37% and 5%, and 18% and 18% of net
     revenues for the years ended October 31, 1997, 1996 and 1995, respectively.

     Two vendors represented 24% and 7%, 35% and 7%, and 13% and 7% of total
     purchases for the years ended October 31, 1997, 1996 and 1995,
     respectively.

11.  WARRANTS

     The Company issued warrants in fiscal year 1995 to purchase 110,000 shares
     of common stock, at an exercise price per share of 120% of the initial
     offering price ($8.40 per share), to the underwriters who managed the
     initial public offering of the Company's common stock. The 



                                      -33-
<PAGE>   34

     warrants are exercisable over a period of five years beginning from the
     date of the initial public offering (June 1995). The Company also issued a
     warrant in fiscal 1997 to purchase 60,000 shares of common stock, at an
     exercise price per share of $5.50 per share, to an advisor. Such warrant is
     exercisable at any time from April 1997 until it expires in April 2002. As
     of October 31, 1997, no warrants have been exercised.

12.  STOCK PLANS

     At October 31, 1997, the Company had two stock-based compensation plans
     (described below). Business Resource Group uses the intrinsic method in
     accordance with APB 25 to account for its plans. Accordingly, no
     compensation cost has been recognized for its stock purchase plan.
     Compensation cost applicable to the Company's fixed stock plans was
     immaterial for each of the three years presented. Pro forma information
     regarding net income (loss) and net income (loss) per share is required by
     Statement of Financial Accounting Standard No. 123 ("FAS 123"), which
     requires that the information be determined as if BRG had used the fair
     value method to account for its stock-based compensation awards granted
     subsequent to October 31, 1995. Had compensation cost for the Company
     stock-based compensation awards been determined at the grant date
     (subsequent to October 31, 1995) using the fair value method in accordance
     with FAS 123, the Company's net loss and net loss per share would have been
     increased to the pro forma amounts indicated below.

     For purposes of calculating such pro forma amounts, the fair value of each
     option grant is estimated on the date of grant using the Black-Scholes
     multiple option-pricing model. The following weighted average assumptions
     were used for grants in fiscal 1996 and 1997: risk-free interest rates of
     6.0 percent, and expected option life of 1.0 years beyond each respective
     vesting period, expected volatility of 88% and dividend yield of zero.

     The Black-Scholes model used by the Company to calculate option values for
     purposes of this note, as well as other currently accepted option valuation
     models (as called for in accordance with FAS 123), were developed to
     estimate the fair value of stock options that are freely tradable and fully
     transferable and that have no vesting restrictions. These models also
     require highly subjective assumptions, including future stock price
     volatility and expected term until exercise, which greatly affect the
     calculated values. Accordingly, management believes that this model does
     not necessarily provide a reliable measure of the fair value of the
     Company's option awards.

<TABLE>
<CAPTION>

                                                            1997         1996
                                                          -------      ------
                                                          (in thousands, except
                                                              per share data)
<S>                                                       <C>          <C>   
               Net income / (loss)
                 As reported                              $  (762)     $1,854
                 Pro forma (1)                            $(1,241)     $1,536
               Net income / (loss) per share:
                 As reported                                (0.16)       0.38
                 Pro forma (1)                              (0.25)       0.31

</TABLE>

     1995 Stock Option Plan

     During fiscal 1997, the Company increased the number of shares of common
     stock reserved for issuance under the 1995 Stock Option Plan (the 1995
     Plan) from 1,200,000 to 1,700,000. The 1995 



                                      -34-
<PAGE>   35

     Plan provides for the granting of incentive stock options at an exercise
     price of not less than 100% of fair market value on the date of the grant
     and nonstatutory stock options at not less than 85% of the fair market
     value on the date of the grant. Stock options granted under the 1995 Plan
     for new employees generally become exercisable at the rate of 1/8 of the
     total shares granted six months after the date of the grant and 1/48 of the
     total number of shares granted each month thereafter. Generally, stock
     options granted for existing employees become exercisable at a rate of 1/48
     of the toal shares granted each month after the date of the grant.

     Directors' Stock Option Plan

     A total of 175,000 shares of common stock have been reserved for issuance
     under the 1995 Directors' Stock Option Plan (the Directors' Plan). The
     Directors' Plan provides for an initial grant of nonstatutory stock options
     to all nonemployee directors of the Company on the date on which they join
     the Board and automatic annual grants of nonstatutory stock options issued
     on the first day of each fiscal year to all nonemployee directors of the
     Company who have served at least three months as of such grant date.
     Options are granted under the Directors' Plan at an exercise price equal to
     the fair market value on the grant date. Initial grants become exercisable
     ratably over four years and automatic grants become exercisable four years
     after the grants.

     Additional information relative to the Company's fixed stock option plans
     is as follows:

<TABLE>
<CAPTION>

                                       1997                        1996                      1995
                             ----------------------------------------------------------------------------------
                                             Weighted                   Weighted                   Weighted
                              Options         Average       Options      Average       Options      Average
                              -------     Exercise Price    -------   Exercise Price   -------   Exercise Price
                                          --------------              --------------             --------------
<S>                           <C>            <C>            <C>         <C>            <C>        <C>
Outstanding - beginning
   of year                    865,844        $   5.12       546,805     $   5.98            --          --
   Granted                    295,742        $   4.24       475,250     $   4.24       569,000    $   5.98
   Exercised                  (34,051)       $   4.00            --           --            --         --
   Cancelled                 (389,672)       $   5.43      (156,211)    $   5.47       (22,195)   $   5.92
Outstanding - end of year     737,863        $   4.65       865,844     $   5.12       546,805    $   5.98
Exercisable at end of year    243,315        $   4.89       249,732     $   5.57        82,859    $   6.03

</TABLE>

     Weighted-average fair value of options granted during the year was $3.06
     per share in 1997 and $3.07 per share in 1996.

               Outstanding and Exercisable By Price Range as of October 31, 1997
<TABLE>
<CAPTION>
                                    Options Outstanding                                     Options Exercisable
                           ----------------------------------------------------------------------------------------------
                               Number          Weighted-Average        Weighted             Number            Weighted
       Range of            Outstanding As of       Remaining            Average        Exercisable As of       Average
   Exercise Prices          October 31, 1997    Contractual Life     Exercise Price    October 31, 1997    Exercise Price
   ---------------         -----------------   -----------------     --------------    -----------------   --------------
<S>          <C>               <C>                    <C>               <C>                <C>                 <C>    
 $  3.010 -- $ 5.000           510,509                4.2               $ 4.088            145,129             $ 4.033
 $  5.010 -- $10.000           227,354                6.0               $ 5.916             98,185             $ 6.146
 -------------------           -------                ---               -------            -------             -------
 $  3.010 -- $10.000           737,863                4.8               $ 4.651            243,315             $ 4.885
</TABLE>



                                      -35-
<PAGE>   36

     Employee Stock Purchase Plan

     A total of 200,000 shares of common stock have been reserved for issuance
     under the 1995 Employee Stock Purchase Plan. Eligible employees may
     purchase common stock through payroll deductions of up to 10% of their
     compensation at a purchase price equal to the lower of 85% of the fair
     market value of the Company's common stock at the beginning or end of each
     six-month offering period. There were 54,848 and 38,121 shares issued under
     the Employee Stock Purchase Plan in fiscal 1997 and 1996, respectively.

13.  ACQUISITIONS

     In January 1996, the Company acquired, in a purchase transaction, certain
     assets and assumed certain liabilities of Corporate Source for a purchase
     price of $300,000 in cash. The acquisition agreement also provides for the
     payment of certain cash amounts if specific performance milestones are met.
     Corporate Source provided workspace products and services in Texas.

     In September 1995, the Company acquired, in a purchase transaction, certain
     assets and assumed certain liabilities of RST & Associates (RST) for a
     purchase price of $400,000 including $225,000 paid in cash, 10,275 shares
     of common stock (valued at $75,000), and two contingent payments of
     $100,000 each coupled to specific performance milestones, due in the first
     fiscal quarter of 1997 and 1998, if earned. No payment was made in fiscal
     1997. RST provided workspace products and services in the southwestern
     United States.

     In April 1995, the Company acquired, in a purchase transaction, certain
     assets and assumed certain liabilities of Landmark-Pacific Group, Inc.
     (Landmark) for a purchase price of $300,000, including $150,000 paid in
     cash and issuance of a note payable in two equal payments due April 1996
     and 1997. Approximately $21,000 of the April 1996 amount was paid in July
     1995. Landmark provides facilities management services.

     In April 1995, the Company acquired, in a purchase transaction, the net
     assets of RPS (see Note 9) for a note payable in the amount of $95,000,
     which was paid in full during fiscal 1995.

     Results of operations include those operations relating to the acquired
     companies' assets and liabilities from the date of acquisition. In
     connection with these acquisitions, the Company recorded intangible assets
     consisting primarily of goodwill and customer lists, totaling $278,000 for
     Landmark, $85,000 for RPS, $416,000 for RST and $335,000 for Corporate
     Source which will be amortized over periods ranging from three to 10 years.

     Had these acquisitions taken place at the beginning of fiscal 1996 and
     1995, unaudited pro forma net revenues would have been approximately $79.3
     million and $44.5 million, respectively, and pro forma net income and net
     income per common and common equivalent share would not have changed
     significantly.


                                      -36-
<PAGE>   37

14.  SELECTED QUARTERLY DATA (UNAUDITED)

     The following presents unaudited quarterly operating results for fiscal
     years ended October 31, 1997 and 1996:

     (In thousands, except per share data)
<TABLE>
<CAPTION>

                                                     JANUARY 31,   APRIL 30,    JULY 31,  OCTOBER 31,
     FISCAL 1997                                     ----------- -----------  ----------  -----------  
<S>                                                  <C>         <C>          <C>           <C>      
        Net revenues..............................   $  22,312   $  22,526    $  12,884     $  14,979
        Gross profit..............................       4,749       4,922        2,487         3,113
        Net income (loss) ........................         509         534       (1,001)         (804)

        Net income (loss) per common
         and common equivalent share .............   $     .10   $     .11    $    (.20)    $    (.16)

     FISCAL 1996
        Net revenues..............................   $  14,503   $  20,640    $  21,340     $  21,797
        Gross profit..............................       3,068       3,852        4,299         4,690
        Net income   .............................         406         527          419           502
        Net income per common and
         common equivalent share .................   $     .08   $     .11    $     .09     $     .10
</TABLE>


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

        Not applicable.




                                      -37-
<PAGE>   38

                                    PART III

        Certain information required by Part III is omitted from this report
because the Registrant will file a definitive proxy statement within 120 days
after the end of its fiscal year pursuant to Regulation 14A (the "Proxy
Statement") for its annual meeting of shareholders to be held March 2, 1998 and
the information included therein is incorporated herein by reference.

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

        Information with respect to directors of the Company is incorporated by
reference from the information under the caption "Election of
Directors--Nominees" in the Registrant's Proxy Statement.

        The executive officers of the Company, and their ages as of October 31,
1997, are as follows:
<TABLE>
<CAPTION>

     NAME                 AGE                 POSITION
     ----                 ---                 --------

<S>                        <C>          <C>                                  
John W. Peth               49           President, Chief Executive Officer,
                                        Chief Financial Officer and Director
Brian D. McNay             41           Executive Vice President of Sales and
                                        Director
Jeffrey Tuttle             40           Executive Vice President of Marketing
                                         and Director
</TABLE>


     Mr. Peth has served as President, Chief Executive Officer and Chief
Financial Officer since December 1997 and as a director of the Company since
April 1995. From July 1997 to December 1997, Mr. Peth was a consultant to the
Company. From June 1996 to March 1997, Mr. Peth served as Acting President and
Chief Executive Officer of Tab Products Co. ("TAB"), an office filing and
furniture systems manufacturer and distributor. From April 1991 until June 1997,
Mr. Peth served as Executive Vice President and Chief Operating Officer of TAB.
From August 1984 to April 1991, Mr. Peth served as the managing partner of the
San Jose office of Deloitte & Touche LLP and one of its predecessor accounting
firms. Mr. Peth is also a director of Aspect Telecommunications, Inc., a
manufacturer of call transaction processing systems. Mr. Peth received his BA
degree in Economics in 1970 from the University of Califonia at Santa Barbara,
and an MBA from the University of California at Los Angeles in 1972.

     Mr. McNay has served as Executive Vice President of Sales since April 1995,
and as a member of the Board of Directors since its inception in April 1987. Mr.
McNay also served as President between April 1987 and April 1995. Mr. McNay was
also the founder and owner of Business Interiors, a sole proprietorship sold to
the Company in April 1987. In addition, Mr. McNay served as a sales executive at
various office furniture dealerships from 1979 to 1986, including the Contract
Source Center, the Contract Office Group and Design Performance.

     Mr. Tuttle has served as Executive Vice President of Marketing since April
1995, and as a member of the Board of Directors since its inception in 1987. Mr.
Tuttle also served as Vice President of Sales between April 1987 and April 1995.
From 1978 to 1987, Mr. Tuttle served as a sales executive with KBM Office
Furniture, an office furniture dealership. He received his BS degree in
Marketing in 1980 from Santa Clara University.



                                      -38-
<PAGE>   39

ITEM 11.   EXECUTIVE COMPENSATION

        Incorporated by reference from the information under the captions
"Compensation of Executive Officers" and "Transactions with Management and
Others" in the Registrant's Proxy Statement.

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

        Incorporated by reference from the information under the caption "Common
Stock Ownership of Certain Beneficial Owners and Management" in the Registrant's
Proxy Statement.

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

        Incorporated by reference from the information under the captions
"Compensation of Executive Officers" and "Transactions with Management and
Others" in the Registrant's Proxy Statement.






                                      -39-
<PAGE>   40

                                     PART IV

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

(a)     The following documents are filed as part of this Report:

        (1)    FINANCIAL STATEMENTS

               See index to Financial Statements at Item 8 of this report.

        (2)    FINANCIAL STATEMENT SCHEDULE

               Schedule II - Valuation and Qualifying Accounts (see page 45).

        (3)    EXHIBITS (NUMBERED IN ACCORDANCE WITH ITEM 601 OF REGULATION S-K)
<TABLE>
<CAPTION>

Exhibit
Number                             Description
-------                            -----------

<S>      <C>
  3.1    Amended and Restated Articles of Incorporation of Registrant. (1)

  3.2    Bylaws of Registrant. (1)

  4.1    Buy and Sell Agreement dated October 31, 1987, as amended on March 15,
         1988, August 17, 1994, October 27, 1994 and April 22, 1995 among the
         Registrant, Brian McNay, Charles Winter, Jeffrey Tuttle, Alison Lazarus
         and Jeffrey Bernstein. (1)

  10.1   1995 Stock Option Plan, as amended and forms of agreements 
         thereunder. (2)

  10.2   1995 Directors' Stock Option Plan and form of option agreement 
         thereunder. (1)

  10.3   1995 Employee Stock Purchase Plan and form of subscription agreement 
         thereunder. (1)

  10.4   Form of Directors' and Officers' Indemnification Agreement. (1)

  10.5   Form of Common Stock Purchase Warrant. (1)

  10.6   North First Street Plaza Lease Agreement dated May 28, 1991, as amended
         on December 21, 1993, between the Registrant and Wells Fargo Bank, N.A.
         (1)

  10.6A  Second Amendment to Lease between the Registrant and Wells Fargo Bank,
         NA, dated November 30, 1995 with respect to premises at 2150 N. First
         Street, San Jose, CA 95131. (3)

  10.7   Sublease Agreement dated January 15, 1995, as amended on April 20,
         1995, by and between the Registrant and First Franklin Financial
         Corporation. (1)

  10.8   Lease  Agreement  dated June 10, 1994 between the Registrant and 
         Alexander M. Maisin, Trustee of the Alexander M. and June L. Maisin
         Revocable Trust. (1)
</TABLE>

                                      -40-
<PAGE>   41
<TABLE>

<S>      <C>              
  10.9   Business Loan Agreements between the Registrant and Silicon Valley
         Bank, including related promissory notes and amendments thereto. (1)

  10.9A  Business Loan Modification Agreement between the Registrant and 
         Silicon Valley Bank, dated January 16, 1996. (3)

  10.9B  Business Loan Modification Agreement between the Registrant and 
         Silicon Valley Bank, dated March 6, 1996. (3)

  10.9C  Business Loan Modification Agreement between the Registrant and 
         Silicon Valley Bank, dated March 13, 1996. (3)

  10.10  Commercial Security Agreement dated March 15, 1988, as amended on
         February 25, 1993, between the Registrant and Silicon Valley Bank. (1)

  10.11  Direct Sales Representative Agreement dated October 5, 1994 between 
         the Registrant and TAB Products Co. (1)

  10.12  Letter Agreement dated April 28, 1995 between the Registrant and 
         Landmark Pacific Group, Inc. (1)

  10.13  Letter Agreement dated April 30, 1995 between the Registrant and 
         Refurbished Panel Systems. (1)

  10.14  Asset Purchase Agreement dated September 27, 1995 between the 
         Registrant and RST & Associates, Inc. (4)

  10.15  Assignment and Assumption of Lease between RST & Associates, Inc. and
         the Registrant dated September 1, 1995 with respect to premises at 2010
         East University, Tempe, Arizona. (4)

  10.16  Assignment and Assumption of Lease between RST & Associates Inc. and
         the Registrant dated September 27, 1995 with respect to premises at
         3957 East Speedway, Tucson, Arizona. (4)

  10.17  Assignment and Assumption of Lease between RST & Associates Inc. and
         the Registrant dated September 27, 1995 with respect to premises at
         5140 South Rogers, Las Vegas, Nevada. (4)

  10.18  Purchase Agreement between Cisco Systems, Inc., Teknion, Inc., Teknion
         International and the Registrant effective as of September 1, 1995.
         (4)

  10.19  Master Lease and Lease Renewal Agreement between the Registrant and OMI
         Properties Inc., dated July 21, 1995 and February 1, 1996,
         respectively, for facilities located at 130 Andover Park East, Suite
         204, Tukwila, WA 98188. (3)

  10.20  Master Lease Agreement between the Registrant and IM Joint Venture,
         dated June 23, 1995, for facilities located at Infomart Suite 5001,
         1950 Stemmons Freeway, Dallas, Texas 75207. (3)
</TABLE>


                                      -41-
<PAGE>   42
<TABLE>

<S>      <C>                        
  10.21  Asset Purchase Agreement dated January 25, 1996 between the Registrant
         and Darthmouth Group, Inc. d/b/a Corporate Source. (3)

  10.22  Assignment and Assumption of Lease between the Registrant and Corporate
         Source, dated January 25, 1996 with respect to premises at 2811
         McKinney Avenue, Suite 18, Dallas, Texas 75204. (3)

  10.23  Assignment and Assumption of Lease between the Registrant and Corporate
         Source, dated January 25, 1996 with respect to premises at 1367 & 1369
         Glenville Drive, Richardson, Texas 75081. (3)

  10.24  Vehicle Lease Service Agreement between the Company and Penske Truck
         Leasing Co., L.P., dated January 23, 1996. (3)

  10.25  Master Lease Agreement between the Registrant and Southwestern Bell
         Telephone Company Inc., dated May 2, 1996 for facilities located at 105
         Auditorium Circle, San Antonio, Texas 78209. (5)

  10.26  Third Amendment to Lease between the Registrant and Wells Fargo Bank,
         NA, dated August 5, 1996 with respect to premises at 2150 N. First
         Street, San Jose, CA 95131. (5)

  10.27  Amended and Restated Loan and Security Agreement between the Registrant
         and Silicon Valley Bank, dated July 3, 1996. (5)

  10.28  Master Lease Agreement between the Registrant and Centennial Plaza,
         LLC, dated October 4, 1996 for facilities located at Centennial Airport
         Plaza Building, 12200 E. Briarwood Avenue, Suite 199, Englewood,
         Colorado 80112. (4)

  10.29  Master Lease Agreement between the Registrant and Amberjack Ltd., dated
         December 16, 1996 for facilities located at 1515 E. Missouri, Phoenix,
         AZ 85014. (4)

  10.30  Common Stock Purchase Warrant Agreement between the Company and
         Gateway Advisors dated April 21, 1997. (6)

  10.31  Revolving Credit Loan and Security Agreement between the Company and
         Comerica Bank dated August 8, 1997. (7)

  10.32  Severance and Mutual Release Agreement between the Company and
         Charles J. Winter dated December 17, 1997. (2)

  11.1   Computation of Pro Forma Net Income Per Common and Common
         Equivalent Share (see page 46). (2)

  23.1   Independent Auditor's Consent. (2)

  24.1   Power of Attorney (see page 44). (2)
</TABLE>


                                      -42-
<PAGE>   43

(b)        Reports on Form 8-K:

           None

-----------------
(1)     Incorporated by reference to exhibits filed in response to Item 16(a),
        "Exhibits," of the Registrant's Registration Statement on Form S-1 and
        Amendment No. 1, Amendment No. 2 and Amendment No. 3 thereto (File No.
        33-46527), which became effective on June 27, 1995.

(2)     Filed herewith.

(3)     Incorporated by reference to exhibits filed in response to Item 6,
        "Exhibits," of the Registrant's Form 10-Q dated March 14, 1996.

(4)     Incorporated by reference to exhibits filed in response to Item 14,
        "Exhibits," of the Registrant's Form 10-K dated January 22, 1996.

(5)     Incorporated by reference to exhibits filed in response to Item 6,
        "Exhibits," of the Registrant's Form 10-Q dated September 13, 1996.

(6)     Incorporated by reference to exhibits filed in response to Item 6,
        "Exhibits," of the Registrant's Form 10-Q dated June 13, 1997.

(7)     Incorporated by reference to exhibits filed in response to Item 6,
        "Exhibits," of the Registrant's
        Form 10-Q dated September 13, 1997.



                                      -43-
<PAGE>   44

                                   SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) 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.

                                    BUSINESS RESOURCE GROUP

Date:  January 26, 1998             By: /s/ John W. Peth
                                       -------------------------
                                       John W. Peth
                                       President, Chief Executive Officer, Chief
                                       Financial Officer and Director



                                POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints John W. Peth and Jeffrey Tuttle, his
attorney-in-fact, with the power of substitution, for him in any and all
capacities, to sign any amendments to this Report on Form 10-K, and to file the
same, with exhibits thereto and other documents in connection therewith with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorney-in-fact, or his substitute or substitutes may do or cause to be
done by virtue hereof.

        Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>

           Signature                                Title                      Date
           ---------                                -----                      ----

<S>                                     <C>                              <C> 
/s/ John W. Peth                        President, Chief Executive       January 26, 1998
-----------------------------------     Officer, Chief Financial
(John W. Peth)                          Officer and Director


/s/ Brian D. McNay                      Executive Vice President of      January 26, 1998
-----------------------------------     Sales and Director
(Brian D. McNay)                        


/s/ Jeffrey Tuttle                      Executive Vice President of      January 26, 1998
-----------------------------------     Marketing, Secretary and
(Jeffrey Tuttle)                        Director


/s/ Charles J. Winter                   Director                         January 26, 1998
-----------------------------------
(Charles J. Winter)


/s/ Harry S. Robbins                    Director                         January 26, 1998
-----------------------------------
(Harry S. Robbins)


/s/ Jack A. Bradley                     Director                         January 26, 1998
-----------------------------------
(Jack A. Bradley)

</TABLE>



                                      -44-
<PAGE>   45

                             BUSINESS RESOURCE GROUP

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                                 (IN THOUSANDS )

<TABLE>
<CAPTION>

                                             ADDITIONS
                                       -----------------------
                           BALANCE AT  CHARGED TO   CHARGED TO               BALANCE AT
                           BEGINNING   COSTS AND      OTHER                    END OF
     DESCRIPTION           OF PERIOD    EXPENSES     ACCOUNTS    DEDUCTIONS    PERIOD
     -----------           ----------  ----------   ----------   ----------  ----------

<S>                          <C>          <C>           <C>        <C>           <C>
Allowance for
   doubtful accounts:

   Fiscal 1995............     50          --           75(1)        --          125
   Fiscal 1996............    125          --           --          (68)(2)       57
   Fiscal 1997............     57          33           --           --           90
</TABLE>

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

(1) Purchase business combination.
(2) Charge off of accounts, net of recoveries.








                                      -45-
<PAGE>   46

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit
Number                             Description                                             Page No.
-------                            -----------                                             --------

<S>      <C>                                                                                <C>
  3.1    Amended and Restated Articles of Incorporation of Registrant. (1)

  3.2    Bylaws of Registrant. (1)

  4.1    Buy and Sell Agreement dated October 31, 1987, as amended on March 15,
         1988, August 17, 1994, October 27, 1994 and April 22, 1995 among the
         Registrant, Brian McNay, Charles Winter, Jeffrey Tuttle, Alison Lazarus
         and Jeffrey Bernstein. (1)

  10.1   1995 Stock Option Plan, as amended and forms of agreements 
         thereunder. (2)

  10.2   1995 Directors' Stock Option Plan and form of option agreement 
         thereunder. (1)

  10.3   1995 Employee Stock Purchase Plan and form of subscription agreement 
         thereunder. (1)

  10.4   Form of Directors' and Officers' Indemnification Agreement. (1)

  10.5   Form of Common Stock Purchase Warrant. (1)

  10.6   North First Street Plaza Lease Agreement dated May 28, 1991, as amended
         on December 21, 1993, between the Registrant and Wells Fargo Bank, N.A.
         (1)

  10.6A  Second Amendment to Lease between the Registrant and Wells Fargo Bank,
         NA, dated November 30, 1995 with respect to premises at 2150 N. First
         Street, San Jose, CA 95131. (3)

  10.7   Sublease Agreement dated January 15, 1995, as amended on April 20,
         1995, by and between the Registrant and First Franklin Financial
         Corporation. (1)

  10.8   Lease  Agreement  dated June 10, 1994 between the Registrant and 
         Alexander M. Maisin, Trustee of the Alexander M. and June L. Maisin
         Revocable Trust. (1)
</TABLE>

<PAGE>   47

<TABLE>
<S>      <C>                                                                                <C>

  10.9   Business Loan Agreements between the Registrant and Silicon Valley
         Bank, including related promissory notes and amendments thereto. (1)

  10.9A  Business Loan Modification Agreement between the Registrant and 
         Silicon Valley Bank, dated January 16, 1996. (3)

  10.9B  Business Loan Modification Agreement between the Registrant and 
         Silicon Valley Bank, dated March 6, 1996. (3)

  10.9C  Business Loan Modification Agreement between the Registrant and 
         Silicon Valley Bank, dated March 13, 1996. (3)

  10.10  Commercial Security Agreement dated March 15, 1988, as amended on
         February 25, 1993, between the Registrant and Silicon Valley Bank. (1)

  10.11  Direct Sales Representative Agreement dated October 5, 1994 between 
         the Registrant and TAB Products Co. (1)

  10.12  Letter Agreement dated April 28, 1995 between the Registrant and 
         Landmark Pacific Group, Inc. (1)

  10.13  Letter Agreement dated April 30, 1995 between the Registrant and 
         Refurbished Panel Systems. (1)

  10.14  Asset Purchase Agreement dated September 27, 1995 between the 
         Registrant and RST & Associates, Inc. (4)

  10.15  Assignment and Assumption of Lease between RST & Associates, Inc. and
         the Registrant dated September 1, 1995 with respect to premises at 2010
         East University, Tempe, Arizona. (4)

  10.16  Assignment and Assumption of Lease between RST & Associates Inc. and
         the Registrant dated September 27, 1995 with respect to premises at
         3957 East Speedway, Tucson, Arizona. (4)

  10.17  Assignment and Assumption of Lease between RST & Associates Inc. and
         the Registrant dated September 27, 1995 with respect to premises at
         5140 South Rogers, Las Vegas, Nevada. (4)

  10.18  Purchase Agreement between Cisco Systems, Inc., Teknion, Inc., Teknion
         International and the Registrant effective as of September 1, 1995.
         (4)

  10.19  Master Lease and Lease Renewal Agreement between the Registrant and OMI
         Properties Inc., dated July 21, 1995 and February 1, 1996,
         respectively, for facilities located at 130 Andover Park East, Suite
         204, Tukwila, WA 98188. (3)

  10.20  Master Lease Agreement between the Registrant and IM Joint Venture,
         dated June 23, 1995, for facilities located at Infomart Suite 5001,
         1950 Stemmons Freeway, Dallas, Texas 75207. (3)
</TABLE>


<PAGE>   48
<TABLE>
<S>      <C>                                                                                <C>

  10.21  Asset Purchase Agreement dated January 25, 1996 between the Registrant
         and Darthmouth Group, Inc. d/b/a Corporate Source. (3)

  10.22  Assignment and Assumption of Lease between the Registrant and Corporate
         Source, dated January 25, 1996 with respect to premises at 2811
         McKinney Avenue, Suite 18, Dallas, Texas 75204. (3)

  10.23  Assignment and Assumption of Lease between the Registrant and Corporate
         Source, dated January 25, 1996 with respect to premises at 1367 & 1369
         Glenville Drive, Richardson, Texas 75081. (3)

  10.24  Vehicle Lease Service Agreement between the Company and Penske Truck
         Leasing Co., L.P., dated January 23, 1996. (3)

  10.25  Master Lease Agreement between the Registrant and Southwestern Bell
         Telephone Company Inc., dated May 2, 1996 for facilities located at 105
         Auditorium Circle, San Antonio, Texas 78209. (5)

  10.26  Third Amendment to Lease between the Registrant and Wells Fargo Bank,
         NA, dated August 5, 1996 with respect to premises at 2150 N. First
         Street, San Jose, CA 95131. (5)

  10.27  Amended and Restated Loan and Security Agreement between the Registrant
         and Silicon Valley Bank, dated July 3, 1996. (5)

  10.28  Master Lease Agreement between the Registrant and Centennial Plaza,
         LLC, dated October 4, 1996 for facilities located at Centennial Airport
         Plaza Building, 12200 E. Briarwood Avenue, Suite 199, Englewood,
         Colorado 80112. (4)

  10.29  Master Lease Agreement between the Registrant and Amberjack Ltd., dated
         December 16, 1996 for facilities located at 1515 E. Missouri, Phoenix,
         AZ 85014. (4)

  10.30  Common Stock Purchase Warrant Agreement between the Company and
         Gateway Advisors dated April 21, 1997. (6)

  10.31  Revolving Credit Loan and Security Agreement between the Company and
         Comerica Bank dated August 8, 1997. (7)

  10.32  Severance and Mutual Release Agreement between the Company and
         Charles J. Winter dated December 17, 1997. (2)

  11.1   Computation of Pro Forma Net Income Per Common and Common
         Equivalent Share (see page 46). (2)

  23.1   Independent Auditor's Consent. (2)

  24.1   Power of Attorney (see page 44). (2)

</TABLE>

<PAGE>   49

(b)        Reports on Form 8-K:

           None

-----------------
(1)     Incorporated by reference to exhibits filed in response to Item 16(a),
        "Exhibits," of the Registrant's Registration Statement on Form S-1 and
        Amendment No. 1, Amendment No. 2 and Amendment No. 3 thereto (File No.
        33-46527), which became effective on June 27, 1995.

(2)     Filed herewith.

(3)     Incorporated by reference to exhibits filed in response to Item 6,
        "Exhibits," of the Registrant's Form 10-Q dated March 14, 1996.

(4)     Incorporated by reference to exhibits filed in response to Item 14,
        "Exhibits," of the Registrant's Form 10-K dated January 22, 1996.

(5)     Incorporated by reference to exhibits filed in response to Item 6,
        "Exhibits," of the Registrant's Form 10-Q dated September 13, 1996.

(6)     Incorporated by reference to exhibits filed in response to Item 6,
        "Exhibits," of the Registrant's Form 10-Q dated June 13, 1997.

(7)     Incorporated by reference to exhibits filed in response to Item 6,
        "Exhibits," of the Registrant's
        Form 10-Q dated September 13, 1997.