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

                                  FORM 10-Q/A
   
                                AMENDMENT NUMBER 1
    

(Mark one)
                 [x]      Quarterly report pursuant to Section 13 or 15(d) of
                          the Securities Exchange Act of 1934 for the quarterly
                          period ended December 31, 1996.

                 [ ]      Transition report pursuant to Section 13 or 15(d) of
                          the Securities Exchange Act of 1934.

                          Commission file number:

                             METAL MANAGEMENT, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

               DELAWARE                               94-2835068
    (State or other jurisdiction of      (I.R.S. Employer Identification No.)
    incorporation or organization)

                       500 N. DEARBORN STREET, SUITE 405
                               CHICAGO, IL 60610
           (Address of principal executive office including zip code)

       Registrant's telephone number, including area code: (312) 645-0700



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



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 periods as the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past ninety days
                            YES   X       NO
                                -----        -----

     Number of Shares of Common Stock outstanding as of February 11, 1997:
                                  10,150,000.




<PAGE>   2
   
                              PURPOSE OF AMENDMENT

         This Amendment Number 1 to the Quarterly Report on Form 10-Q for the
quarter ended December 31, 1996, is being filed to amend certain financial
information contained in the original Report on Form 10-Q that was filed on
February 11, 1997.  Such Form 10-Q is being restated for an accounting error at
the Registrant's EMCO Recycling Corporation ("EMCO") Subsidiary.  See Note 1 of
the "Notes to Consolidated Condensed Financial Statement."

                                     INDEX

                                     PART I
<TABLE>
<CAPTION>
                                                              FINANCIAL INFORMATION
<S>              <C>                                                                                           <C>
ITEM 1:          Financial Statements (Unaudited)
                 Consolidated Condensed Balance Sheets December 31, 1996 and March 31, 1996 . . . . . . . . .   3
                 Consolidated Condensed Statements of Operations for the three months ended
                 December 31, 1996 and January 31, 1996; for the three months ended
                 December 31, 1995 for EMCO Recycling Corp. and pro forma for the three months
                 ended January 31, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   4
                 Consolidated Condensed Statements of Operations for the nine months ended
                 December 31, 1996 and January 31, 1996; for the nine months ended December 31, 1995
                 for EMCO Recycling Corp. and pro forma for the nine months ended January 31, 1996  . . . . .   5
                 Consolidated Condensed Statements of Cash Flows for the nine months ended
                 December 31, 1996 and January 31, 1996; for the nine months ended December 31, 1995
                 for EMCO Recycling Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   6
                 Notes to Consolidated Condensed Financial Statements . . . . . . . . . . . . . . . . . . . .   8

ITEM 2:          Management's Discussion and Analysis of Financial
                 Condition and Results of Operations  . . . . . . . . . . . . . . . . . . . . . . . . . . .    14


                                                                     PART II

                                                                OTHER INFORMATION

ITEM 6:          Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    26

                 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    27

                 Exhibit Index  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    28
</TABLE>
    




                                      -2-
<PAGE>   3
                             METAL MANAGEMENT, INC.
                      CONSOLIDATED CONDENSED BALANCE SHEET
                                  (UNAUDITED)

                                     PART I
                             FINANCIAL INFORMATION
   
<TABLE>
<CAPTION>
 ITEM 1:
                                                                                DECEMBER 31,           MARCH 31,
                                                                                    1996             1996 (NOTE 2)
                                                                                ------------         --------------
<S>                                                                             <C>                    <C>
ASSETS:
Current Assets:
     Cash and cash equivalents (Note 1)                                          $   867,000            $ 3,093,000
     Marketable securities (Note 8)                                                        0              2,644,000
     Accounts receivable, net (Note 1)                                             4,502,000              1,488,000
     Loan to EMCO Recycling Corp.                                                         --              1,000,000
     Inventories (Note 7)                                                          1,549,000              1,359,000
     Prepaid expenses                                                              1,655,000                 58,000
     Refundable income taxes                                                               0                 70,000
     Deposits for Purchase of MacLeod (Note 9)                                     1,001,000                     --
     Deferred charges (Note 9)                                                     1,102,000                     --
                                                                                 -----------            -----------
     Total current assets                                                         10,676,000              9,712,000
                                                                                 -----------
Marketable securities (Note 8)                                                             0                115,000

Property and equipment, net                                                        9,122,000                 44,000
Goodwill and other intangibles, net (Note 3)                                      11,115,000                478,000
                                                                                 -----------            -----------
     Total Assets                                                                $30,913,000            $10,349,000
                                                                                 ===========            ===========

LIABILITIES AND SHAREHOLDERS EQUITY:
Current Liabilities:
     Operating line of credit                                                    $ 2,539,000            $        --
     Accounts payable (Note 1)                                                     3,447,000                282,000           
     Income tax payable                                                              183,000                     --
     Other accrued liabilities                                                       424,000                459,000
     Current portion of long term debt                                             1,093,000                     --
                                                                                 -----------            -----------
     Total current liabilities                                                     7,686,000                741,000
Long term debt, less current portion                                               4,480,000                     --
Other liabilities                                                                  1,465,000                     --
                                                                                 -----------            -----------
     Total Liabilities                                                            13,631,000                741,000
Stockholders' equity
     Common stock                                                                     99,000                 53,000
     Additional paid-in-capital                                                   12,705,000              3,325,000
     Retained earnings (Note 1)                                                    4,478,000              6,230,000
                                                                                 -----------            -----------
</TABLE>
    




                                      -3-
<PAGE>   4
   
<TABLE>
<S>                                                                               <C>                    <C> 
Total equity                                                                      17,282,000              9,608,000
                                                                                 -----------            -----------
Total Liabilities and equity
                                                                                  30,913,000             10,349,000
                                                                                 ===========            ===========
</TABLE>
    


                           See Accompanying Footnotes























                                      -4-
<PAGE>   5
                             METAL MANAGEMENT, INC.
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)

   
<TABLE>
<CAPTION>
                                                METAL MANAGEMENT, INC.            
                                              FOR THE THREE MONTHS ENDED          EMCO RECYCLING CORP.   PRO FORMA COMBINED  
                                            ----------------------------          FOR THE THREE MONTHS  FOR THE THREE MONTHS
                                            DECEMBER 31,       JANUARY 31,         ENDED DECEMBER 31,    ENDED JANUARY 31,
                                                1996             1996                     1995             1996 (NOTE 1)
                                            -----------      -----------              -----------           -----------
 <S>                                        <C>              <C>                      <C>                   <C>
 Net sales                                  $10,402,000      $         0              $18,435,000           $18,435,000
 Cost of sales                               10,020,000                0               17,793,000            17,793,000
                                            -----------      -----------              -----------           -----------
 Gross profit                                   382,000                0                  642,000               642,000

 Operating expenses
  Marketing and sales                           143,000                0                   70,000                70,000
  General & Administrative                    1,336,000          411,000                1,464,000             1,978,000
                                            -----------      -----------              -----------           -----------
 Total operating expenses                     1,479,000          411,000                1,534,000             2,048,000
                                            -----------      -----------              -----------           -----------
 Loss from continued operations              (1,097,000)        (411,000)                (892,000)           (1,406,000)
 Interest expense                               224,000                0                  393,000               393,000
 Other (income) expense                         (42,000)         (83,000)                (251,000)             (334,000)
                                            -----------      -----------              -----------           -----------

 Loss from continuing operations before
  income tax and discontinued
  operations                                 (1,279,000)        (328,000)              (1,034,000)           (1,465,000)
 Provision (benefit) for income tax            (119,000)               0                 (415,000)             (440,000)
                                            -----------      -----------              -----------           -----------
 Loss from continuing operations             (1,160,000)        (328,000)                (619,000)           (1,025,000)
 Discontinued Operations (Note 4)
  Income from operations of
  discontinued Spectra*Star Products
  Division, net of income taxes              
  (benefit) of $0 in 1996                        25,000          376,000                        0               376,000
                                            -----------      -----------              -----------           -----------
 Net income (loss)                          $(1,135,000)     $    48,000              $  (619,000)          $  (649,000)
                                            ===========      ===========              ===========           ===========



 Net income (loss) per share for:
  Continuing operations                           (0.13)           (0.06)                     n/a                  (.11)
  Discontinued operations                          0.00              .07                      n/a                  0.04

 Weighted average number of shares
 outstanding                                  8,949,000        5,327,000                      n/a             8,949,000
</TABLE>
    





                                      -5-
<PAGE>   6

                          See Accompanying Footnotes.
                             METAL MANAGEMENT, INC.
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)

   
<TABLE>
<CAPTION>
                                         METAL MANAGEMENT, INC. 
                                       FOR THE NINE MONTHS ENDED        EMCO RECYCLING CORP.   PRO FORMA COMBINED
                                      ----------------------------      FOR THE NINE MONTHS    FOR THE NINE MONTHS
                                      DECEMBER 31,     JANUARY 31,       ENDED DECEMBER 31,     ENDED JANUARY 31,
                                          1996            1996                 1995              1996 (NOTE 1)
                                      -----------     -----------       -------------------    -------------------
 <S>                                   <C>            <C>                    <C>                    <C>
 Net sales                             40,344,000               0             52,625,000             52,625,000
 Cost of sales (NOTE 1)                37,138,000               0             47,665,000             47,665,000
                                      -----------     -----------            -----------            -----------
 Gross profit                           3,206,000               0              4,960,000              4,960,000
 Operating expenses
  Marketing and sales                     436,000               0                287,000                287,000
  General & Administrative              4,691,000       1,125,000              3,275,000              4,814,000
                                      -----------     -----------            -----------            -----------
 Total operating expenses               5,127,000       1,125,000              3,562,000              5,101,000

 Income (loss) from continued
  operations                           (1,921,000)     (1,125,000)             1,398,000               (141,000)
 Interest expense                         674,000               0              1,174,000              1,174,000
 Other (income) expense                  (151,000)       (245,000)              (269,000)              (514,000)
                                      -----------     -----------            -----------            -----------
 Income (loss) from continuing
  operations before income tax
  and discontinued operations          (2,444,000)       (880,000)               493,000               (801,000)
 Provision (benefit) for income tax      (373,000)       (381,000)               200,000               (284,000)
                                      -----------     -----------            -----------            -----------
 Income (loss) from continuing
 operations                            (2,071,000)       (499,000)               293,000               (517,000)
 Discontinued Operations (Note 4)

  Income (loss) from operations
  of discontinued Spectra*Star
  Products Division, net of
  income taxes (benefit) of $381          319,000      (1,893,000)                     0             (1,893,000)
  in 1996                             -----------     -----------            -----------            -----------
 Net income (loss)                    $(1,752,000)    $(2,392,000)           $   293,000            $(2,410,000)
                                      ===========     ===========            ===========            ===========

 Net income (loss) per share for:

  Continuing operations                     (0.23)          (0.09)                   n/a                   (.06)

  Discontinued operations                     .04            (.36)                   n/a                   (.21)

 Weighted average number of shares
 outstanding                            8,949,000       5,327,000                    n/a              8,949,000
</TABLE>
    

                           See Accompanying Footnotes





                                      -6-
<PAGE>   7

                             METAL MANAGEMENT, INC.
                CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)

   
<TABLE>
<CAPTION>
                                                      METAL MANAGEMENT, INC.                 EMCO RECYCLING
                                                 -------------------------------           -------------------
                                                                                           FOR THE NINE MONTHS
                                                     FOR THE NINE MONTHS ENDED                    ENDED
                                               DECEMBER 31, 1996    JANUARY 31, 1996        DECEMBER 31, 1995
                                               -----------------    ----------------        ----------------- 
 <S>                                           <C>                  <C>                     <C>
 Cash provided (used) by operating
 activities:
 Net income (loss)                               $(1,752,000)        $(2,392,000)              $   293,000
    Adjustments to reconcile net income to
      cash provided by (used in) operating
      activities:
           -
    Depreciation, amortization, deferred
      charges, and
      deferred income taxes                        1,227,000             185,000                  (118,000)
    Restructuring costs                                   --           1,437,000                        --
    Other Charges                                         --             716,000                   135,000
 Changes in assets and liabilities net of
 effects of purchase of EMCO Recycling
 Corp.:
    Accounts receivable                            2,695,000             454,000                (2,353,000)
    Inventory                                      1,641,000           1,285,000                 1,475,000
    Accounts payable                                (174,000)           (143,000)                1,105,000
    Accrued liabilities                             (458,000)              6,000                (1,128,000)
    Other, net                                    (2,612,000)           (106,000)                 (345,000)
                                                 -----------         -----------               -----------

 Net cash provided (used) by operations              567,000           1,442,000                  (936,000)

 Cash flows provided (used) by investing
 activities:
    Marketable securities                          2,644,000             776,000                         0
    Purchase of property and equipment            (1,654,000)            (19,000)               (1,350,000)
    Capitalized software development cost                 --            (147,000)                        0
    Payment for purchase of EMCO, net of            (971,000)                  0                         0
      cash acquired of $660,000                     
</TABLE>
    







                                      -7-
<PAGE>   8
   
<TABLE>
 <S>                                             <C>                   <C>              <C>

    Other investments                                     --                  --                   155,000
                                                 -----------         -----------               -----------
 Net cash provided (used) by investing                19,000             610,000                (1,195,000)
 activities

 Cash flows provided (used) by financing
 activities:
   Common stock issued under employees stock
    purchase, employee stock option plan             293,000             500,000                         0
 Payment of cash dividends                                 0            (307,000)                        0
 Borrowings on line of credit, net                (1,975,000)                 --                 3,727,000
 Repayment of borrowings, net                     (1,130,000)                  0                (1,847,000)
                                                 -----------         -----------               -----------

 Net cash provided (used) by financing            (2,812,000)            193,000                 1,880,000
 activities

 Net increase (decrease) in cash and              (2,226,000)          2,245,000                  (251,000)
 equivalents

 Cash and equivalents, beginning of period         3,093,000             963,000                   566,000
                                                 -----------         -----------               -----------

 Cash and equivalents, end of period             $   867,000         $ 3,208,000               $   315,000
                                                 ===========         ===========               ===========
</TABLE>
    




                          See Accompanying Footnotes.





                                      -8-
<PAGE>   9
                             METAL MANAGEMENT, INC.
                         NOTES TO FINANCIAL STATEMENTS

   
NOTE 1 - DESCRIPTION OF ACCOUNTING ERROR

         This Amendment Number 1 to the Quarterly Report on Form 10-Q for the
quarter ended December 31, 1996,  is being filed to restate certain financial
information contained in the original Report on Form 10-Q that was filed on
February 11, 1997.  The Consolidated Condensed Balance Sheet at December 31,
1996, and the Consolidated Condensed Statement of Operations and Consolidated
Condensed Statement of Cash Flows for the nine months ended December 31, 1996,
are being restated as a result of an accounting error that occurred during the
second quarter at the Company's EMCO subsidiary.  The accounting error occurred
as a result of system processing problems encountered by EMCO due to the
implementation of a new management information system during the second
quarter.  The error was discovered by EMCO management as it prepared for the
annual audit of its records.  The following is a comparison of third quarter
results as previously reported and as restated.

<TABLE>
<CAPTION>
                                                                                    NINE MONTHS ENDED
                                                                                    DECEMBER 31, 1996
                                                                        ---------------------------------------
                                                                          PREVIOUSLY                   AS
                  Statement of Operations                                  REPORTED                 RESTATED
---------------------------------------------------------------         --------------           --------------
 <S>                                                                    <C>                      <C>  
 Net Sales                                                              $   40,344,000           $   40,344,000
 Gross Profit                                                                3,574,000                3,206,000
 Loss from continuing operations before income tax and                      (2,076,000)              (2,444,000)
          discontinued operations
 Net loss                                                               $   (1,384,000)          $   (1,752,000)
                                                                        ==============           ==============
 Net income (loss) per share for:
          Continuing operations                                         $         (.19)          $         (.23)
                                                                        ==============           ==============
          Discontinued operations                                                  .04                      .04
                                                                        ==============           ==============
 Weighted average number of shares outstanding                               8,949,000                8,949,000
                                                                        ==============           ==============
</TABLE>




<TABLE>
<CAPTION>
                                                                                   DECEMBER 31, 1996
                                                                        ---------------------------------------

                                                                          PREVIOUSLY                   AS
                              Balance Sheet                                REPORTED                 RESTATED
---------------------------------------------------------------         --------------           --------------
 <S>                                                                    <C>                      <C>
 Current Assets                                                         $   11,136,000           $   10,676,000
 Total Assets                                                           $   31,373,000           $   30,913,000
                                                                        ==============           ==============
 Current Liabilities                                                    $    7,778,000           $    7,686,000
 Total Liabilities                                                          13,723,000               13,631,000
 Total Equity                                                               17,650,000               17,282,000
 Total Liabilities and Equity                                           $   31,373,000           $   30,913,000
                                                                        ==============           ==============

</TABLE>


NOTE  2 - BASIS OF PRESENTATION
    

         In accordance with its previously announced business strategy, the
business of Metal Management, Inc. (hereinafter referred to as "Metal
Management" or the "Company") has changed significantly during the past year.
The Company completed its first of a number of planned
acquisitions in the scrap metal recycling industry with the purchase of EMCO
Recycling Corp. ("EMCO") in April 1996 (see below); it discontinued its
Spectra*Star and consumables business during the first quarter  of





                                      -9-
<PAGE>   10
fiscal 1997 and its VideoShow product and related product lines in the fourth
quarter of fiscal 1995, and changed its fiscal year end from October 31 to
March 31, effective April 1, 1996. As a result of the above changes, no prior
year quarterly information is truly comparable to the Company's current
operating activities. In an effort to provide meaningful comparable information
for the prior year's quarter, without incurring unreasonable expense, the
Company has included three- and nine-month information for the periods ended
January 31, 1996, because it is the most comparable quarter in terms of timing.
In addition, such quarterly information is supplemented by unaudited financial
information for EMCO for the three months and nine months ended December 31,
1995, which is presented for informational purposes.  The pro forma income
statement information for the quarter and nine months ended January 31, 1996,
assumes the acquisition of EMCO was consummated as of April 1, 1995, and
includes amortization of goodwill and other intangibles ($103,000 for the three
months ended January 31, 1996, and $414,000 for the nine months ended January
31, 1996) arising from the acquisition.  The balance sheet dated March 31,
1996, includes assets, liabilities and shareholders equity with balances that
exclude EMCO Recycling Corporation, which was acquired April 11, 1996.

   
NOTE  3 - ACQUISITION OF EMCO RECYCLING CORP.
    

         On April 11, 1996, the Company completed the acquisition of EMCO, a
scrap metal recycling company based in Phoenix, Arizona, for a purchase price
of approximately $12.8 million ($2.0 million in cash, 3.5 million shares of
common stock valued at $8.8 million, 600,000 warrants at $4.48 per share,
400,000 warrants at $6.48 per share valued at $0.3 million and $1.7 million in
other long-term liabilities that bear interest at 7%). In connection with the
acquisition the Company also acquired land used in the scrap metal business
that was indirectly owned by one of the principal former owners of EMCO for
$1.1 million ($150,000 in cash and $900,000 in notes payable in three years
that bear interest at 9%). The acquisition of EMCO was accounted for using the
purchase method of accounting, and accordingly its results are included in the
consolidated financial statements from the date of purchase. The excess of the
purchase price over the fair value of the net tangible assets acquired has been
allocated to covenants-not-to-compete ($1.7 million, which is amortized over 10
years) with the remainder to goodwill ($9.6 million, which is amortized over 40
years).  Effective as of July 1, 1996, the Company changed its estimated life
for goodwill, increasing the amortization period from 15 years to 40 years.
The change in amortization period more appropriately reflects the anticipated
benefit period for acquisitions of scrap metal recycling companies.  A summary
of the tangible assets acquired and liabilities assumed is as follows:

<TABLE>
                           <S>                                                                       <C>
                           Current assets                                                           $  8,877,000
                           Noncurrent assets                                                           7,767,000
                           Current liabilities                                                        (9,148,000)
                           Non current liabilities                                                    (5,785,000)
                                                                                                    ------------    
                                                                                                    $  1,711,000
                           Intangible assets, including goodwill of $9.6
                           million and covenants not to compete of $1.7
                           million                                                                    11,261,000
                                                                                                    ------------    
                                                                                                    $ 12,972,000
                                                                                                    ============    
</TABLE>


   
NOTE  4 - DISCONTINUED OPERATIONS: SALE OF SPECTRA*STAR PRODUCTS
          DIVISION/VIDEOSHOW PRODUCT LINE
    





                                      -10-
<PAGE>   11
         During the first quarter of fiscal 1997, management made the decision
to exit the Spectra*Star printer and consumables business. On July 16, 1996,
Mannesmann Tally ("Tally") acquired the inventory and related production
equipment for approximately $1.3 million in cash and other contingent
consideration in the form of royalties on future revenues from the sale of
Spectra*Star printers and related consumables by Tally. Consequently, the
printer and consumables business is reported as a discontinued operation for
all periods presented. The operating results of the division have been netted
and reported as a single line item in the income statement entitled "Income
(loss) from discontinued operations, net of income taxes."  The Company
recognized income net of expenses in the third quarter of fiscal 1997 of
$25,000 from discontinued operations.  A reserve was recorded in the third
quarter of $122,000 for uncollectible accounts receivable from the Spectra*Star
business, which was charged to discontinued operations.  Royalty income of
$178,000 was recognized as income from discontinued operations in the third
quarter of fiscal 1997, and $279,000 of royalty income is recognized in the
nine months ended December 31, 1996.  Additional consideration from royalty
income will be recorded when it becomes known and collected and will be
reported as income from discontinued operations.  Also reported as discontinued
operations are the VideoShow and related product lines ("VideoShow"), which
were discontinued in the fourth quarter of fiscal 1995 and were subsequently
sold in the third quarter of fiscal 1997 for consideration that was not
considered material to the Company.  VideoShow together with the Spectra*Star
printer and consumables business formed the Company's presentation products
business segment. Consequently, with the sale of the printer and consumables
business and the VideoShow, both are included in discontinued operations in the
accompanying financial statements.

   
NOTE  5 - FINANCIAL STATEMENTS
    

         The accompanying Consolidated Condensed Balance Sheets of Metal
Management, Inc. at December 31 and March 31, 1996, and the Consolidated
Condensed Statements of Operations for the three months and nine months ended
December 31, 1996, and January 31, 1996, respectively, and the Consolidated
Condensed Statements of Cash Flows for the nine months ended December 31, 1996,
and January 31, 1996, respectively, have not been audited by independent
accountants. However, in the opinion of management, all necessary adjustments,
consisting only of normal, recurring adjustments necessary for a fair statement
of the results of operations for the interim periods, have been made.

   
         The Consolidated Condensed Financial Statements included in this Form
10-Q/A should be read in conjunction with the audited Consolidated Financial
Statements and Notes thereto included in the Company's Annual Report on Form
10-K for the fiscal year ended October 31, 1995, with the Company's Definitive
Joint Proxy Statement dated March 8, 1996, the Transitional 10-Q for the five
months ended March 31, 1996, the Quarterly Report on Form 10-Q for the quarter
ended June 30, 1996, and related Forms 10-Q/A filed as of October 2, 1996, and
November 19, 1996, the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1996, and related Form 10-Q/A being filed simultaneously
herewith, the Form 8-K dated April 11, 1996, and related Form 8-K/A filed June
20, 1996, the Forms 8-K dated July 16, 1996, and August 7, 1996, the Form 8-K
dated January 1, 1997, and the two related Forms 8-K/A, filed respectively on
March 17, 1997, and simultaneously herewith, the Form 8-K dated January 7,
1997, and the two related Forms 8-K/A, filed respectively on March 17, 1997,
and simultaneously herewith, filed with the Commission.
    





                                      -11-
<PAGE>   12
   
NOTE  6 - SUPPLEMENTAL CASH FLOW INFORMATION
    

         During the first quarter of fiscal 1997, in connection with the
acquisition of  EMCO, the Company issued 3,500,000 shares of common stock,
600,000 warrants at $4.48 and 400,000 warrants at $6.48 to acquire the
Company's common stock in connection with the acquisition.  In conjunction with
the acquisition, liabilities were assumed as follows:

<TABLE>
                <S>                                                                                               <C>
                Fair value of assets acquired                                                                     $27,905,000
                Cash paid of $1.9 million, loan of $1 million and other consideration                              13,772,000
                                                                                                                  -----------
                Liabilities assumed                                                                               $14,133,000
                                                                                                                  ===========
</TABLE>


In a related transaction accomplished in April 1996, the Company issued a
$950,000 three-year note that bears interest at 9% to acquire land used by
Ellis Metals, Inc. in the scrap metal recycling business.  Ellis Metals, Inc.
is an entity principally owned by Harold Rubenstein and is a supplier of scrap
metals to EMCO.

         In the nine-month period ended December 31, 1996, and the pro forma
nine-month period ended January 31, 1996, the Company paid interest expense and
paid income taxes (collected income tax refunds) in amounts as follows
($000's):


<TABLE>
<CAPTION>
                                                                                               NINE MONTHS ENDED
                                                                               -------------------------------------------------
                                                                                                                        EMCO
                                                                                                                    ------------
                                                                               DECEMBER 31,       JANUARY 31,       DECEMBER 31,
                                                                                   1996              1996               1995
                                                                               ------------      ------------       ------------
                           <S>                                                   <C>              <C>                    <C>
                           Interest Paid                                         $     810        $       0         $     1,189
                           Income taxes paid (refunds received)                  $    (128)       $     (585)       $     1,695
</TABLE>

   
NOTE  7 - INVENTORIES
    

Inventories of EMCO consisted of ferrous, nonferrous, and other inventories as
follows ($000's):

<TABLE>
<CAPTION>
                                                                                          DECEMBER 31, 1996       MARCH 31, 1996
                                                                                          -----------------     -----------------
                           <S>                                                                   <C>                   <C>

                           Ferrous                                                              $     321            $      416
                           Non Ferrous - Processed                                                    649                   762

                           Non Ferrous - Unprocessed                                                  498                   575
                           Other                                                                       81                     0
                                                                                                ---------            ----------
                                                                                                $   1,549            $    1,753
                                                                                                =========            ==========
</TABLE>

   
NOTE  8 - MARKETABLE SECURITIES
    

         Marketable securities are stated at cost, which approximates market
value.  Marketable securities maturing within one year are classified as
current assets. The Company's marketable securities are classified in
accordance with Financial Accounting Standards Board Statement No. 115,
"Accounting for Certain Investments in Debt and Equity Securities."  Under SFAS
No. 115, management is required to determine the appropriate classification of
its securities at the time of purchase and reevaluate such









                                      -12-
<PAGE>   13

designation as of each balance sheet. Held-to-maturity securities are reported
at amortized cost. Available-for-sale securities are carried at fair value,
with unrealized gains and losses, net reported in a separate component of
shareholders' equity until disposition. Realized gains and losses and declines
in value judged to be other than temporary are included in other (income)
expense.

         The Company had none of its cash balances invested in marketable
securities as of December 31, 1996.

   
NOTE  9 - COMPLETED AND PENDING ACQUISITIONS
    

         On January 1, 1997, the Company completed the acquisition of
California Metals Recycling, Inc. ("CA Metals"), Firma, Inc. ("Firma"), MacLeod
Metals, Co. ("MacLeod Metals"), Firma Plastics Co., Inc. ("Plastics") and
Trojan Trading Co. ("Trojan Trading" and together with Firma, CA Metals,
MacLeod Metals and Plastics, the "MacLeod Companies").  The Company acquired
all of the outstanding shares of CA Metals, Firma, MacLeod Metals and Plastics
directly from Ian and Marilyn MacLeod, the former Shareholders of such
companies.  The acquisition of Trojan Trading was accomplished by means of a
merger of a wholly owned subsidiary of the Company with and into Trojan
Trading.  The acquisition of the MacLeod Companies was accomplished pursuant to
an acquisition agreement dated January 1, 1997 (the "Agreement"), among the
Company, MMI Acquisition, Inc., Metal Management Realty, Inc., the MacLeod
Companies, Ian and Marilyn MacLeod and the MacLeod Family Trust dated January
30, 1993 (the "Trust").  Pursuant to the Agreement, the Company through its
wholly owned subsidiary Metal Management Realty, Inc. purchased two parcels of
real property located in South Gate, California.

         The purchase price for the MacLeod Companies and the parcels of real
property was as follows.  An aggregate of 725,000 shares of common stock was
issued to Ian and Marilyn MacLeod in connection with the acquisition of Trojan
Trading.  The purchase price for the stock of the remaining MacLeod Companies
consisted of (i) $7,100,000 ($6,600,000 of which was in the form of promissory
notes) and (ii) warrants to purchase 175,000 shares of Common Stock.  The
purchase price for the parcels of real property was $3,000,000 in the form of a
promissory note issued by Metal Management Realty, Inc. and guaranteed by the
Company and $500,000 in cash.  The promissory notes issued to acquire MacLeod
and related real estate have due dates with aggregate principal amounts
maturing as follows:  $6,000,000 due on March 14, 1997, which can be extended
until May 31, 1997, and $600,000 due on or before January 1, 2001.

         On January 7, 1997, the Company acquired all of the assets of HouTex
Metals Company, Inc. ("HouTex") by means of a reverse triangular merger in
which the Company's wholly owned subsidiary MTLM Merger, Inc. ("Sub") was
merged with and into HouTex with HouTex remaining as the surviving corporation
pursuant to a merger agreement dated as of December 10, 1996 (collectively the
"Merger Agreement"), among the Company, HouTex and the beneficial owners of the
common stock of HouTex (the "Acquisition").  In the Acquisition the purchase
consideration paid to the former shareholders of HouTex consisted of an
aggregate of (i) 475,000 shares of common stock of the Company, (ii) warrants
to purchase an aggregate of an additional 250,000 shares of common stock of the
Company, (iii) promissory notes for an aggregate of $1,655,268 due on April 30,
1997, payable to certain former





                                      -13-
<PAGE>   14
shareholders of HouTex, (iv) a promissory note for $5,000,000 due on June 30,
1997, payable to a corporation indirectly controlled by the former shareholders
of HouTex, and (v) $750,000 in cash.

         The MacLeod and HouTex acquisitions will be accounted for under the
purchase method of accounting.

         The Company is also negotiating to acquire several other scrap metal
recycling companies and has retained legal, accounting and environmental
consulting firms to perform due diligence activities.  Disbursements to firms
that have performed due diligence for the Company have been capitalized as
deferred charges.  As of December 31, 1996, approximately $1,101,000 had been
recorded as deferred charges in connection with due diligence performed for the
Company and for deposits made by the Company in connection with certain
financing proposals.  In addition, the Company had deposited approximately
$1,000,000 toward the purchase of the MacLeod Companies and related real
property as of December 31, 1996.  Closing of pending acquisitions is
contingent upon execution of definitive agreements, completion of due
diligence, approvals by regulatory agencies and raising of capital to fund the
cash portions of the purchase prices.  There can be no assurance that the
Company will be able to realize any anticipated benefits of future acquisitions
that it may undertake.

   
NOTE  10 - SUBSEQUENT EVENTS
    

         On January 7, 1997, the Company and HouTex obtained a $10 million
short-term financing facility from LaSalle National Bank, Chicago, Illinois.
The credit facility consists of a $6.5 million term loan to the Company (the
"Company Loan") at an interest rate of LIBOR plus 1.75%, and a revolving credit
facility of $3.5 million to HouTex (the "HouTex Loan") at an interest rate of
the prime rate plus 1%.  Both loans are due June 30, 1997, but they may be
extended until September 30, 1997, under certain circumstances.  The HouTex
Loan was secured by a first lien on the assets of HouTex, as well as personal
guaranties by certain officers and directors of the Company.  The Company Loan
was unsecured, except for personal guaranties from certain officers and
directors of the Company.  The officers and directors guaranteeing the loans to
the Company and HouTex have received warrants to purchase an aggregate of
500,000 shares of Common Stock of the Company for a price of $4.00 per share in
consideration for making such guaranties.  In connection with the Company Loan,
the Company made available to HouTex an additional $1 million pursuant to a
Revolving Credit Note due contemporaneously with the other loans at an interest
rate of the prime rate plus 1%, and subordinated such loan to the HouTex Loan.














                                      -14-
<PAGE>   15
                                    ITEM 2.

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

         Certain matters discussed throughout this Form 10-Q filing are
forward-looking statements that are subject to risks and uncertainties that
could cause actual results to differ materially from those projected. Such
risks and uncertainties include, but are not limited to, the following:
cyclicality of the scrap metal recycling industry, price fluctuations in
commodity markets, adverse economic conditions, inability to successfully
access capital, unavailability of suitable acquisition opportunities, the risk
that announced mergers are not consummated, the risk of challenges from the
Company's competition, and the risk that the Company will face difficulties in
consolidating and controlling operations of diverse geographic locations, as
well as other risk factors discussed in "Factors Affecting Future Results"
below.

   
         On April 11, 1996, the Company acquired EMCO, an Arizona corporation,
pursuant to a Merger Agreement dated as of December 1, 1995, and as amended
through March 7, 1996. The Consolidated Condensed Financial Statements included
in this Form 10-Q should be read in conjunction with the audited Consolidated
Financial Statements and Notes thereto included in the Company's Annual Report
on Form 10-K for the fiscal year ended October 31, 1995, the Company's
Definitive Joint Proxy Statement dated March 8, 1996, the Transitional 10-Q for
the five months ended March 31, 1996, the Quarterly Report on Form 10-Q for the
quarter ended June 30, 1996 as amended by Forms 10-Q/A filed as of October 2,
1996, and November 19, 1996, the Quarterly Report on Form 10-Q for the quarter
ended September 30, 1996, as amended by the Form 10-Q/A being filed
simultaneously herewith, the Form 8-K dated April 11, 1996, as amended by the
Form 8-K/A filed June 20, 1996, the Forms 8-K dated July 16, 1996, and August
7, 1996, the Form 8-K dated January 1, 1997, as amended by the Forms 8-K/A
filed March 17, 1997, and simultaneously herewith, and the Form 8-K dated
January 7, 1997, as amended by the Forms 8-K/A filed March 17, 1997, and
simultaneously herewith, filed with the Commission.
    












                                      -15-
<PAGE>   16

                             RESULTS OF OPERATIONS

         With the acquisition of EMCO on April 11, 1996, and the sale on July
16, 1996, of the Spectra*Star Division, the operating results for the Company
during fiscal 1997 combine a closing out of the previous technology-related
business operations in the second fiscal quarter with the commencement of the
new direction of the Company into the metals recycling industry.  The Company
has provided financial results for a pro forma period that represents three
months' activity for a comparable period one year ago for comparative purposes
(Note 1).  Management believes that comparisons of financial data associated
with discontinued operations would not be meaningful or relevant and,
accordingly, the following information and comparisons are, to the extent
possible, related primarily to EMCO's operations.

         Sales for the quarter ended December 31, 1996 and 1995 are shown in
the following comparative table ($000's):

<TABLE>
<CAPTION>
                                                                 1996                                        1995
                           -----------------------------------------------------------            ------------------------
                                                              % Total                                            % Total
       Commodity             Weight              Amount        Sales           Weight               Amount         Sales
                           ----------          ----------    ----------     ----------            ----------    ----------
                           <S>                 <C>          <C>             <C>                    <C>            <C>   
       Ferrous (tons)          31,620          $    3,114            30%        42,809            $    4,777         26%
       Nonferrous          15,374,814               7,186            69%    31,136,778                13,531         73%
       (lbs.)  
       Other                       --                 102             1%            --                   127          1%
                                               ----------           ---                           ----------        ---
       Totals                                  $   10,402           100%                          $   18,435        100%
                                               ==========           ===                           ==========        ===
</TABLE>

         Total sales in the quarter ended December 31, 1996, declined by $8.0
million, or 43%, from the pro forma period as a consequence of unfavorable
market conditions that reduced the volume of ferrous and nonferrous scrap
metals processed and sold and constrained unit pricing.  The major cause of
declining revenue trends is attributable to commodity prices that have
generally declined for scrap metals for the past five fiscal quarters.  Spot
copper prices moved down from $1.27/lb at December 31, 1995, to $1.03/lb at
December 31, 1996, a 19% drop. Similarly, aluminum spot prices declined from
$.77/lb at December 31, 1995, to $.69/lb at December 31, 1996, down 10%.
Prices for ferrous scrap metals have also generally declined during calendar
1996.  In addition, the Company believes the scrap metal recycling markets
reacted negatively to the much publicized speculative trading losses sustained
by a major copper trader.  Total sales in the nine months ended December 31,
1996, declined to $40.3 million from $52.6 million in the pro forma period due
to unfavorable market conditions, as described above.

         During the current quarter and for the three previous quarters EMCO
has kept inventories at minimum working levels ($1,549,000 at December 31,
1996, and $1,753,000 as of March 31, 1996).

   
         Gross margins for the quarter were $382,000, down from $642,000 for
the pro forma period, primarily as a result of reduced sales and unfavorable
market conditions, as discussed above.  Gross margins for the nine months ended
December 31, 1996, declined from $4,960,000 in the pro forma period to
$3,206,000 in 1996 due to reduced sales and unfavorable market conditions.
    

         Selling expenses in the three months ended December 31, 1996,
increased $73,000 as compared to the pro forma period.  This increase is due to
hiring of additional purchasing and marketing staff in 1996. It is anticipated
that further increases will be reflected in future operations as increased
emphasis





                                      -16-
<PAGE>   17
is placed on business development.*  Selling expenses increased from $287,000
in the pro forma period to $436,000 for the nine months ended December 31,
1996, for the reasons described above.

         General and administrative expenses declined from $1,978,000 in the
pro forma period to $1,336,000 in 1996.  The majority of the decrease is
attributable to reduced overhead spending at EMCO in 1996 as a result of
elimination of administrative expenses that were incurred in the pro forma
period arising from the merger with the Company and elimination of costs
through reductions in administrative personnel at EMCO (page 19 - Operational
Restructuring at EMCO).  General and administrative expenses for the nine
months ended December 31, 1996, were $4,691,000 as compared to $4,814,000 for
the pro forma period.  The decrease is due to changes in the corporate
structure and reduced administrative expenses at EMCO as discussed above.

   
         Pretax loss from continuing operations improved from $(1,465,000) in
the pro forma period to $(1,279,000) for the quarter ended December 31, 1996.
The improvement in pretax loss from continuing operations in the third fiscal
quarter of 1996 is primarily due to reduced operating losses at EMCO that
primarily occurred as a consequence of reduced administrative expenses at EMCO.
Pretax loss from continuing operations increased to $(2,444,000) in the nine
months ended December 31, 1996, from $(801,000) in the pro forma period due to
unfavorable market conditions.
    

         Interest expense declined as well, from $393,000 in the pro forma
period to $224,000 in the current quarter and from $1,174,000 to $674,000 in
the nine months ended December 31, 1996.  The reduction in interest expense is
attributable to elimination of fees on a discontinued $2,000,000 stand-by line
of credit to EMCO and lesser borrowings in 1996.

         Other income declined from $334,000 in the pro forma period to $42,000
for the comparable period in 1996 and declined to $151,000 in the nine months
ended December 31, 1996, from $514,000 in the pro forma period due to lower
invested cash and marketable securities balances.

         A benefit of $119,000 for income taxes has been recorded for the
current quarter and $373,000 for the nine months ended December 31, 1996, as
compared to benefits of $440,000 and $284,000 in the pro forma periods ended
January 31, 1996.

         The income from discontinued operations recorded for the Spectra*Star
Products Division for the quarter ended December 31, 1996, was $25,000 ($.003
per share), compared to income of $376,000 ($.04 per share) in the pro forma
period.  Income from discontinued operations was $319,000 in the nine months
ended December 31, 1996, as compared to a loss of $1,893,000 ($.21 per share)
in the pro forma period.  The substantial loss from discontinued operations in
the pro forma period was a result of significant charges recorded upon the
Company's decision to terminate its electronic presentation products and a
one-time charge to restructuring costs and special charges totaling $2,153,000
($.24 per share).  The Company recognized royalty income of approximately
$178,000 in the third quarter of fiscal 1997 and $279,000 in the nine months
ended December 31, 1996.

         Net loss for the quarter ended December 31, 1996, including
discontinued operations, amounted to $(1,135,000) ($.13 per share) compared to
$(649,000) ($.07 per share) for the pro forma period.  Net





__________________________________

*     This statement is a forward-looking statement reflecting current
      expectations. There can be no assurance that the Company's actual future
      performance will meet the Company's current expectations. Stockholders 
      are strongly encouraged to review the section entitled "Factors Affecting
      Future Results" commencing on Page 18 for a discussion of factors that 
      could affect future performance.






                                      -17-
<PAGE>   18
   
loss for the nine months ended December 31, 1996, is  $(1,752,000) ($.19 per
share) as compared to a net loss of $(2,410,000) ($.27 per share) in the pro
forma period.


                        LIQUIDITY AND CAPITAL RESOURCES

         The Company's principal sources of cash are its existing cash and cash
equivalents balances, collection of outstanding accounts receivable from EMCO,
and proceeds from the loan from LaSalle National Bank (Note  10).  At December
31, 1996, the Company had $867,000 in cash and cash equivalents compared to
cash, cash equivalents, and marketable securities of $5.7 million at March 31,
1996. The reduction is primarily attributable to loans made to EMCO and
disbursements and deposits made in connection with completed and pending
acquisitions net of proceeds realized from the sale of the assets of the
Spectra*Star Products Division.  Excluding any mergers, the cash and cash
equivalents combined with proceeds from the loan from LaSalle National Bank
(Note 10) appear to be adequate to meet the Company's operating needs for the
remainder of the fiscal year ending March 31, 1997.**  In the event the Company
undertakes any mergers with a cash component, it will be required to seek
financing earlier than such time.  The Company has entered into short-term
notes payable in connection with the HouTex and MacLeod acquisitions
("Acquisition Notes").  The Acquisition Notes have principal amounts
outstanding that aggregate to approximately $16.3 million.  The Acquisition
Notes require payments in aggregate amounts of $12.7 million from March 14,
1997, through June 30, 1997.  The Company's existing cash and cash equivalents
and proceeds available under the loan from LaSalle National Bank are not
sufficient to fund the required payments under the Acquisition Notes.  The
Acquisition Notes are secured by stock pledges provided to the sellers of
HouTex and MacLeod.  The loan from LaSalle National Bank is due and payable on
June 30, 1997, but can be extended until September 30, 1997, under  certain
circumstances.

         Accounts receivable balances increased from $1.5 million as of March
31, 1996, to $4.5 million as of December 31, 1996.  The increase in accounts
receivable as of December 31, 1996, is attributable to the acquisition of EMCO
net of reductions in accounts receivable attributable to the sale of the
Spectra*Star Products Division and the subsequent collection of the accounts
receivable from that business.  As of December 31, 1996, the net book value of
accounts receivable remaining to be collected from the Spectra*Star Product
Line was approximately $21,000.  The Company increased its reserve for
uncollectible accounts from the Spectra*Star Division by $122,000 in the third
quarter of fiscal 1997. Accounts payable increased from $0.3 million as of
March 31, 1996, to $3.4 million as of December 31, 1996.  The increase in
accounts payable is primarily attributable to the acquisition of EMCO and
includes liabilities incurred with respect to professional fees incurred as
described in Note 9.
    

         The Company through its EMCO subsidiary has an operating line of
credit of up to $8 million that is based on qualifying accounts receivable and
inventories of EMCO.  As of December 31, 1996, EMCO had substantially utilized
the available capacity under the line.  The Company entered into a loan
agreement with LaSalle National Bank on January 7, 1997, that provides a
short-term financing facility for the Company.  The credit facility consists of
(1) a $6.5 million loan to the Company that will be utilized for working
capital and will also provide funds to be utilized for future acquisitions and
(2) $3.5





__________________________________

**     This statement is a forward-looking statement reflecting current
       expectations. There can be no assurance that the Company's actual future
       performance will meet the Company's current expectations. Stockholders 
       are strongly encouraged to review the section entitled "Factors 
       Affecting Future Results" commencing on Page 18 for a discussion of 
       factors that could affect future performance.





                                      -18-
<PAGE>   19
   
million to be used by the Company to refinance certain liabilities of HouTex
(refer to Note 10 - Subsequent Events).
    

         The Company's Board of Directors intends to continue to cause the
Company to actively pursue acquisitions and mergers in scrap metal recycling.
Depending on the nature and size of potential acquisitions, mergers and other
transactions, if any, the Company's cash flows from operating and investing
activities, together with its cash and cash equivalents, will not be sufficient
in the future to meet future operating, investing, and financing activities
beyond March 14, 1997. Therefore the Company will have to supplement these
sources of liquidity with additional sources of funds such as borrowings or
stock offerings. Refer also to the section below titled "Factors Affecting
Future Results."


                        FACTORS AFFECTING FUTURE RESULTS

         The following factors should be considered carefully in evaluating the
Company and its business. The risk factors described below contain
forward-looking statements that involve risks and uncertainties. The Company's
and EMCO's actual results may differ materially from the results discussed in
the forward-looking statements.

RECENT MERGERS AND ACQUISITIONS, SALE AND SIGNIFICANT CHANGE IN STRATEGIC
DIRECTION

   
         In the past year, the Company has undergone a significant change in
strategic direction and emphasis. Immediately prior to April 11, 1996, the
Company's business had consisted of designing, manufacturing and marketing
color printers and related consumables, including ribbons, transparencies and
paper.  Then, on April 11, 1996, the Company acquired EMCO, an Arizona
corporation engaged in scrap metal recycling (the "Merger").  In addition, the
Company purchased two parcels of land owned directly or beneficially by Harold
M. Rubenstein, the former principal beneficial shareholder and former Chairman
of the Board of EMCO. On July 16, 1996, the Company sold to Mannesmann Tally
the inventory and related production equipment of its Spectra*Star printer and
consumables business. On January 1, 1997, and January 7, 1997, the Company
acquired the MacLeod Companies in California and HouTex Metals Company in
Texas, respectively.  Refer to Note 9 for more information regarding the
acquisitions of HouTex and MacLeod. The Company anticipates future acquisitions
of other companies in the scrap metal recycling industry and potentially also
in other industries. Reflective of the Company's overall change in emphasis is
its corporate name change on April 12, 1996, from General Parametrics
Corporation ("GPC") to Metal Management, Inc.  The ramifications of the changes
in the Company's business are discussed in greater detail below.
    

         Given the substantial changes in the Company's business in the past
year, past financial performance should not be considered a reliable indicator
of future performance. Potential purchasers should not use historical trends to
anticipate results or trends in future periods.

CYCLICALITY OF OPERATING RESULTS

         The operating results of the scrap metal recycling industry in general
and the Company's EMCO subsidiary in particular are highly cyclical in nature
as they tend to reflect and amplify the general national economic condition. In
periods of national recession or periods of minimal economic growth, the
operations of scrap metal recycling companies have been materially adversely
affected.  During recessions or periods of minimal economic growth, the
automobile and the construction industries typically experience major cutbacks
in production, resulting in decreased demand for steel, copper and aluminum
supplies. For example, from approximately 1988 to 1993, the scrap metal
recycling industry was adversely affected for a period of five years. Due in
part to this effect, the predecessors of EMCO,





                                      -19-
<PAGE>   20
Empire Metals, Inc. ("Empire") and Copperstate Metals, Inc. ("Copperstate"),
entered bankruptcy proceedings in 1990 and 1991, respectively.  Future economic
downturns may be expected to materially and adversely affect the operating
results of the Company. The ability of the Company to withstand significant
economic downturns in the future will depend in part on the amount of available
cash held by the Company. Recently, EMCO has required cash infusions from the
Company to support its working capital needs.  The Company believes that EMCO
will require additional cash infusions for at least the remainder of the fiscal
year ending March 31, 1997.  There can be no assurance, however, that liquidity
constraints will not continue or worsen.

LIMITED OPERATING HISTORY

         Prior to the EMCO merger in April 1996, the Company had no history of
operations in the scrap metal recycling industry.

SUBSTANTIAL LEVERAGE

         As a result of the April 1996 Merger and the January 1997 acquisitions
of MacLeod and HouTex, the Company has approximately $38 million in
consolidated liabilities owed either to the sellers in the Company's completed
acquisitions or to third parties. In particular, the Company issued an
aggregate of approximately $16 million principal amount in promissory notes to
the sellers of MacLeod and HouTex.  An aggregate of approximately $1.7 million
of this amount will become due and payable on April 30, 1997.  An aggregate of
$6 million will become due and payable on March 14, 1997, which due date may be
extended to April 30, 1997, if a payment of $200,000 is made by March 14, 1997,
and extended further to May 31, 1997, if a second payment of $200,000 is made
by April 30, 1997.  An aggregate of $5 million will become due and payable on
June 30, 1997. In order to pursue expansion and acquisition opportunities, the
Company expects to incur additional debt, either through bank or credit lines
or the sale of debt securities in registered or unregistered transactions, in
addition to additional equity financing it may undertake. The servicing of such
present and future debt of the Company will utilize cash either in the form of
cash on hand or cash generated by operating and financing activities.

   
         As of December 31, 1996, prior to the MacLeod and HouTex acquisitions,
the Company had a long-term debt to capitalization ratio of 32%.  The ratio of
debt to total capital is greatly increased by the acquisitions of HouTex and
MacLeod in which the Company issued promissory notes (Note 9) and assumed
liabilities.  The degree to which the Company is leveraged could have adverse
consequences to the Company including the following:  (i) the Company's ability
to obtain additional financing in the future for working capital, capital
expenditures, acquisitions, general corporate purposes or other purposes may be
impaired; (ii) a substantial portion of the Company's cash flow from operations
will be dedicated to the payment of principal and interest; and (iii) the
Company will be more vulnerable to a downturn in the scrap metal recycling
industry, which has historically been sensitive to changes in general economic
conditions.
    

IMMEDIATE AND FUTURE CAPITAL REQUIREMENTS

         Scrap metal recycling companies have substantial ongoing working
capital and capital equipment requirements in order to continue to operate and
grow. During March 1996, the Company loaned EMCO $1,000,000 for short-term
working capital requirements. Upon closing of the Merger, the Company advanced
EMCO $950,000, and EMCO paid its demand note of $950,000 to Donald F.
Moorehead, a director of the Company and EMCO. Also, subsequent to March 31,
1996, the Company loaned EMCO an additional $3.3 million for additional working
capital purposes. The Company expects that EMCO will require additional cash
infusions for at least the remainder of the fiscal year ending March 31, 1997.
In order to remain competitive, EMCO will continue to make significant
investments in capital





                                      -20-
<PAGE>   21
equipment.  The Company also expects that HouTex may require working capital
loans from the Company in support of significant inventory purchases that it
may undertake.  As a result, the Company will seek equity or debt financing to
fund future improvements and expansion of its scrap metal recycling business as
well as to make other acquisitions of scrap metal recycling facilities. There
can be no assurance that such financing will be available when needed, or that,
if available, it will be on satisfactory terms. The failure to obtain financing
would hinder the Company's ability to make continued investments in capital
equipment and pursue expansions, which could materially adversely affect
results of operations. Any such equity financing would result in dilution to
the then-existing stockholders of the Company.

PRICE FLUCTUATIONS

         EMCO's results of operations have been in the past, and the results of
operations of the overall Company are expected to be, subject to price
fluctuations that occur in the metals commodities markets.  For example, prices
of non-ferrous metals have generally declined during the past five quarters,
which adversely affected revenues and net income in the quarter ended December
31, 1996.  A further decline in commodity prices could further reduce revenues
and net income prospectively and will have a material adverse effect on the
Company's results of operations and liquidity of the Company.

RISK OF EXPANSION STRATEGY

         The Company currently plans to continue to pursue additional
acquisitions in the scrap metal recycling industries.  There can be no
assurance that any future mergers will be consummated.  The ability of the
Company to achieve its expansion objectives and to manage its growth
effectively depends on a variety of factors, including the ability to identify
appropriate acquisition targets and to negotiate acceptable terms for their
acquisition, the integration of new businesses into the Company's operations
and the availability of capital. These difficulties will be exacerbated in the
event that the Company expands in states outside of Arizona, Texas, and
California. The inability to control or manage growth effectively or to
successfully integrate future new business into the Company's operations would
have a material adverse effect on the Company's financial condition and results
of operations. There can be no assurance that the Company will be able to
successfully expand or that growth and expansion will result in profitability.
There can be no assurance that the Company will be able to realize any of the
anticipated benefits of the Merger, the purchases of MacLeod and HouTex, or any
future acquisitions that it may undertake.

RISK OF DILUTION TO EXISTING STOCKHOLDERS

         The Company's strategy of expansion and additional acquisitions will
require it to issue additional shares of Common Stock or securities convertible
into Common Stock as consideration for additional acquisitions. Issuance of a
material amount of Common Stock or such securities would result in significant
dilution to the then-existing stockholders of the Company. The Company expects
to be required to seek equity financing to meet future capital requirements,
which would also result in additional dilution. See "Immediate and Future
Capital Requirements."

COMPETITION IN THE SCRAP METAL INDUSTRY

         The scrap metal recycling industry is highly competitive, with the
principal competitive factors being price and availability of scrap metal
supplied. Competition in the industry is intense in part because the barriers
to entry into the scrap metal collection business are relatively low.
Additionally, the Company faces competition from producers of finished steel
products, many of whom have substantially greater financial resources than the
Company, who may vertically integrate by entering the scrap metal





                                      -21-
<PAGE>   22
recycling business. The inability of the Company to compete in this environment
would have a material adverse effect on the Company's financial condition and
results of operations.

OPERATIONAL RESTRUCTURING OF EMCO

         In October 1996, the Company initiated efforts to restructure the
operations of its EMCO subsidiary.  The restructuring is expected to reduce
operating expenses by eliminating the utilization of certain leased equipment,
eliminating 25 jobs representing approximately 12% of the workforce, reducing
the cost of outside processing from certain vendors, and renegotiating
contracts for purchased services some of which are expiring.  In addition, as a
part of the restructuring program, the Company has initiated a review of the
buying and selling departments of EMCO and is continuing to evaluate EMCO's
operations in recognition of the difficult commodity markets in which scrap
metal recycling companies have been operating and are continuing to operate.
The Company is not certain whether it will be able to successfully operate EMCO
with fewer employees or effectively restructure lease and other commitments to
accomplish a successful restructuring of EMCO's business.

COMPANY MANAGEMENT FACTORS

         The Company substantially relies on the scrap metal recycling
experience of the current management teams at each of the companies it acquires
due to the limited experience of the Company's management in the scrap metal
recycling business.  While certain of the management personnel of the acquired
facilities have executed by employment agreements, there can be no assurance
that such personnel will continue to serve at the acquired businesses.  The
loss of a significant number of management personnel of the Company's acquired
businesses could have a material adverse effect on the Company's efforts to
effectively manage and integrate these operations.  In addition, the loss of
executive officers of the Company would also adversely impact the Company's
performance and ability to successfully expand the business.

         Additionally, certain members of EMCO management have been involved in
bankruptcy proceedings in the past as a result of the bankruptcy proceedings of
EMCO's predecessor companies, Copperstate and Empire.

CONTROL OF COMPANY BY MANAGEMENT AND PRINCIPAL STOCKHOLDERS

         As a result of the Merger, Messrs. Jacobs and Jennings, together with
George O. Moorehead and Donald F. Moorehead, with whom Messrs.  Jacobs and
Jennings have had substantial past business relationships, collectively own an
aggregate of approximately 19% of the outstanding Common Stock of the Company.
In addition, Harold Rubenstein, formerly the Chairman of the Board of EMCO,
owns approximately 20% of the outstanding Common Stock of the Company, while
Gerald Zack, Raymond F. Zack and David M. Zack, who are brothers, collectively
beneficially own directly and through their ownership of Copperstate an
aggregate of approximately 9% of the outstanding Common Stock of the Company.
Pursuant to demand registration rights of Copperstate, the Company registered
on Form S-3 (the "S-3 Registration Statement") the sale from time to time of
300,000 shares held by Copperstate.  The S-3 Registration Statement became
effective on August 27, 1996.  Accordingly, Messrs. Jennings and Jacobs,
together with the Mooreheads, Harold Rubenstein and the Zacks, will
collectively have sufficient voting power (approximately 48%) after the sale of
shares being registered to control the outcome of all matters (including the
election of a majority of the directors and any future merger, consolidation or
sale of assets of the Company) submitted to Company stockholders for approval
and may be deemed to have effective control over the affairs and management of
the Company. This assumes that the shares being offered by Copperstate will not
be purchased by any of the individuals in the aforementioned group. The sale of
some or all of the shares to such individuals would increase





                                      -22-
<PAGE>   23
commensurately the control of such individuals and the group over the Company.
This controlling interest in the Company may also have the effect of making
certain transactions more difficult or impossible, absent the support of
Messrs. Jennings and Jacobs and such other persons.  Such transactions could
include proxy contests, mergers involving the Company, tender offers and open
market purchase programs that could give stockholders of the Company the
opportunity to realize a premium over the then-prevailing market price of their
shares of Common Stock.

CONCENTRATION OF CUSTOMERS AND CREDIT RISK

         The Company's three largest customers for the three-month period ended
December 31, 1996, represented in the aggregate approximately 17% of the
Company's revenues for that period. The Company's results of operations are
substantially dependent upon continuing orders from such customers, and any
cancellation of or reduction in orders from such customers could have a
material adverse effect on the Company's results of operations. This risk is
exacerbated by the fact that most of the Company's customers are not bound by
long-term purchase contracts but instead do business with the Company on the
basis of short-term contracts.

         One customer accounted for $424,000, or approximately 9%, of the
Company's total accounts receivable as of December 31, 1996.

SUPPLY RELATIONSHIP WITH ELLIS METALS, INC.

         Ellis Metals, Inc. is principally owned by Harold Rubenstein and is a
significant supplier to EMCO.  Harold Rubenstein is the Company's largest
stockholder.  EMCO and Ellis Metals have a supply relationship that is defined
in a contract that requires Ellis Metals to either provide all of its inventory
to EMCO or directly to customers of EMCO through a direct ship arrangement.  In
the latter arrangement EMCO realizes a brokerage fee, which can be less than
the amount of gross profit the Company realizes when inventory is shipped to
EMCO, processed and resold.  From and after September 25, 1996, Ellis Metals
has elected to ship certain materials directly to customers of EMCO and has
indicated that it will continue to do so for the foreseeable future.  As a
result, the Company's gross margin could be adversely affected.

DEPENDENCE ON SCRAP SUPPLIERS

         EMCO's scrap recycling operations are dependent upon the supply of
scrap materials from its suppliers. Few of such suppliers are bound by
long-term supply agreements, and therefore they have no obligation to continue
to supply scrap materials to EMCO. In the event that substantial numbers of
scrap suppliers cease supplying scrap materials to EMCO, the Company's
financial condition and results of operations would be materially and adversely
affected.

ENVIRONMENTAL MATTERS

         Like many other companies in the scrap metal recycling business, the
Company is subject to comprehensive local, state and international regulatory
and statutory requirements relating to the acceptance, storage, handling and
disposal of solid waste and waste water, air emissions, soil contamination and
employee health, among others. Environmental legislation and regulations have
changed rapidly in recent years, and it is likely that the Company, and its
present and future subsidiaries will be subject to even more stringent
environmental standards in the future.

         The Company is currently aware of one ongoing environmental matter in
connection with EMCO's business. Environmental consultants to the Company
reported that an underground storage tank





                                      -23-
<PAGE>   24
located at one of EMCO's yards had not been reported to the Arizona
environmental authorities as required by law. EMCO as lessee reported the
matter to the owner of the property, and believes that such report is the
extent of its obligations with respect to this matter. However, there can be no
assurance that any failure of the owner to report will not result in liability
of or the assessment of penalties against the Company and/or EMCO.

         EMCO has a policy of not knowingly accepting, handling or discharging
hazardous waste products, and the Company and EMCO are not aware of any
material concentrations of hazardous waste located on any of EMCO's properties.
However, as part of a pre-Merger review, the Company hired an environmental
consulting firm to conduct Phase I or Phase II site assessments or transaction
screen reviews (the "Pre-Merger Site Assessments") of nearly all of the sites
owned or leased by EMCO in Arizona and the sites that were purchased from
Harold Rubenstein or his affiliates in Tucson. The environmental consultants
completed certain investigations of reviewed sites and delivered all final
transaction screen assessments, Phase I and/or Phase II reports, as
appropriate, that they were requested to deliver. Certain of these reports
revealed that some soil or groundwater contamination is likely at some sites
and recommended that certain additional investigations and remediation be
conducted. Based upon its review of the reports, the Company believes that it
is likely that contamination exists at certain of the sites and that it is
likely that remediation will be required at some of the sites. Also based upon
its review of these reports, the Company believes that such contamination is
likely to include, but not be limited to: polychlorinated biphenyls (PCBs);
total petroleum hydrocarbons; volatile organic compounds (VOCs), including
perchloroethylene, trichlorofluoromethane, trichloroethylene, trichloroethane
and dichloroethylene; antimony; arsenic, cadmium; copper; lead; mercury;
silver; zinc; waste oil; toluene; meta- and para-xylenes; baghouse dust; and
aluminum dross.  The ultimate extent of contamination cannot be stated with any
certainty at this point, and there can be no assurance that the cost of
remediation will be immaterial.

         The Company has supplied the Pre-Merger Site Assessments to EMCO, and
EMCO has retained a qualified environmental and chemical consulting firm in
Arizona to review them, to examine EMCO's ongoing operations, and to recommend
to EMCO's management and Board of Directors any steps EMCO should take to
achieve and/or maintain compliance, including but not limited to any necessary
remedial measures or operational changes.  During the second quarter of the
current fiscal year, EMCO commenced action on certain of the recommendations of
the consulting firm, and subsequently EMCO established an environmental safety
fund of $15,000.  The Company believes that the environmental safety fund will
have to be increased from time to time as additional recommendations from the
consultant become available.  EMCO has also adopted the recommended procedural
program set forth by the consulting firm with respect to environmental
characteristics of any new sites to be purchased or leased.

         In regard to the MacLeod and HouTex businesses, the Company believes
that such businesses are in material compliance with currently applicable
environmental regulations.  However, the Company is continuing to evaluate
these businesses for compliance with environmental laws.  There can be no
assurance that the Company's continuing review will not disclose material
issues that might result in liabilities, expenditures, fines or penalties that
could have a material adverse effect on the Company's financial condition or
results of operations.

         Due to the nature of the scrap metal recycling business, it is
possible that inquiries or claims based upon environmental laws may be made in
the future by governmental bodies or individuals against the Company, EMCO, the
MacLeod companies, HouTex, and any other scrap metal recycling entities that
the Company may acquire. The location of the Company's facilities in large
urban areas may increase the risk of scrutiny and claims. The Company is unable
to predict whether any such future inquiries or claims will in fact arise or
the outcome of such matters. Additionally, it is not possible to





                                      -24-
<PAGE>   25
predict the total size of all capital expenditures or the amount of any
increases in operating costs or other expenses that may be incurred to comply
with any environmental requirements, or whether all such cost increases can be
passed on to customers through product price increases.  Moreover,
environmental legislation has been enacted, and may in the future be enacted,
to create liability for past actions that were lawful at the time taken but
that have been found to affect the environment and to create public rights of
action for environmental conditions and activities. As is the case with scrap
recyclers in general, if damage to persons or the environment has been caused,
or is in the future caused, by hazardous materials activities of the Company or
its subsidiaries or by hazardous substances now or hereafter located at any
subsidiaries' facilities, the Company or its subsidiaries may be fined and held
liable for such damage. In addition, the Company or its subsidiaries may be
required to remedy such conditions or change procedures.  The Company believes
that it and its subsidiaries are in material compliance with currently
applicable environmental regulations and does not anticipate any substantial
capital expenditures for new environmental control facilities during the
remainder of fiscal 1997.  There can be no assurance, however,  that potential
liabilities, expenditures, fines and penalties associated with environmental
laws and regulations will not have a material adverse effect on the Company's
financial condition or results of operations.

VOLATILITY OF STOCK PRICE

         The Company's stock price has been, and in the future is expected to
be, volatile and to experience market fluctuation as a result of a number of
factors, including, but not limited to, current and anticipated results of
operations, future product offerings by the Company or its competitors and
factors unrelated to the operating performance of the Company. The trading
price of the Company's Common Stock may also vary as a result of changes in the
business, operations, or financial results of the Company, prospects of general
market and economic conditions, additional future proposed acquisitions by the
Company and other factors. In addition, failure of revenues or earnings in any
quarter to meet the investment community's expectations, if any, could have an
adverse impact on the Company's stock price, as could sales of large amounts of
stock by existing stockholders.

FLUCTUATIONS IN OPERATING RESULTS

         The Company's future operating results could be subject to significant
volatility, particularly on a quarterly basis. The Company's revenues and
operating results have fluctuated in the past and are likely to do so in the
future. The Company's quarterly operating results may continue to fluctuate due
to numerous factors, including but not limited to the demand for scrap metal,
the health of the national economy and competition.

EFFECT OF ANTITAKEOVER PROVISIONS OF DELAWARE LAW, THE COMPANY'S CHARTER
DOCUMENTS AND EMPLOYMENT AGREEMENTS

         The Company is a corporation governed by the laws of Delaware. Certain
provisions of Delaware law and the charter documents of the Company may have
the effect of delaying, deferring or preventing changes in control or
management of the Company. Specifically, the Company's Board of Directors may
issue shares of Preferred Stock without stockholder approval on such terms as
the Board may determine. The rights of the holders of Common Stock of the
Company are subject to, and may be adversely affected by, the rights of any
Preferred Stock that may be issued in the future. The Company is subject to the
provisions of Section 203 of the Delaware General Corporation Law, which has
the effect of making changes in control of a company more difficult. In
connection with the Merger, the Company entered into employment agreements with
George O.  Moorehead, Gerard M. Jacobs and T. Benjamin Jennings. Such
agreements provide for certain payments to be made to such persons in the event
of a change of control of the Company. The effects of the antitakeover
protections of Delaware law, the





                                      -25-
<PAGE>   26
Company charter documents and these employment agreements could be to make it
more difficult for a third party to acquire, or could discourage a third party
from acquiring, a majority of the outstanding stock of Company.


                          RECENT ACCOUNTING STANDARDS

         In March 1995, the Financial Accounting Standards Board (FASB) issued
Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and For
Long-Lived Assets to be Disposed Of." The statement must be adopted for its
fiscal year beginning April 1, 1996. Based upon its preliminary review,
management believes that there will be no material impact on the results of
operations or financial condition upon adoption.

         In October 1995, the FASB issued Statement No. 123, "Accounting for
Stock-Based Compensation." The Company intends to adopt the disclosure
requirements for its fiscal year beginning April 1, 1996. Based upon its
preliminary review, management believes that there will be no material impact
on the results of operations or financial condition upon adoption.




















                                      -26-
<PAGE>   27
                           PART II  OTHER INFORMATION


                    ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

   
(a)      Exhibits

         10.1*    Employment Agreement with Robert C. Larry
         27.1     Amended Financial Data Schedule
    


(b)      The following reports on Form 8-K were filed during the quarter ended
         December 31, 1996:

         None.





   
*Previously filed as an exhibit to the registrant's quarterly report on Form
10-Q for the quarter ended December 31, 1996.
    


















                                      -27-
<PAGE>   28
   
                                   SIGNATURES
    

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

                             METAL MANAGEMENT, INC.



   
Dated:  May 1, 1997                    By  /s/  Robert C. Larry
    
                                          -------------------------------------
                                       Vice President, Finance and Chief 
                                       Financial Officer (Principal Financial 
                                       and Accounting Officer)


                                       By  /s/  Gerard M. Jacobs
                                          -------------------------------------
                                       President and CEO


                                       By  /s/  T. Benjamin Jennings
                                          -------------------------------------
                                          Chairman of the Board and Chief 
                                          Development Officer







                                      -28-
<PAGE>   29
                                 EXHIBIT INDEX


   
         10.1*    Employment Agreement with Robert C. Larry
         27.1     Amended Financial Data Schedule




*Previously filed as an exhibit to the registrant's quarterly report on Form
10-Q for the quarter ended December 31, 1996.
    





















                                      -29-