<PAGE>

================================================================================

                    U. S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

                   FOR THE FISCAL YEAR ENDED OCTOBER 31, 2000

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

                         COMMISSION FILE NUMBER 1-13009

                       MEDICAL RESOURCES MANAGEMENT, INC.
           -----------------------------------------------------------
           (Name of small business issuer as specified in its charter)

              NEVADA                                       95-4607643
    -------------------------------                    -------------------
    (State or other jurisdiction of                     (I.R.S. Employer
     incorporation or organization)                    Identification No.)

  932 GRAND CENTRAL AVENUE GLENDALE, CALIFORNIA                91201
  ---------------------------------------------             ----------
    (Address of principal executive offices)                (Zip Code)

                                 (818) 240-8250
              ----------------------------------------------------
              (Registrant's telephone number, including area code)

       Securities registered under Section 12(b) of the Exchange Act:
       --------------------------------------------------------------
                                  None

         Securities registered under Section 12(g) of the Exchange Act:
         --------------------------------------------------------------
                     Common Stock, par value $.001 per share

Check whether the Registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the Registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
 Yes __X__    No ______

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ X ]

The Registrant's revenues for the fiscal year ended October 31, 2000 were $
11,102,650.

As of February 8, 2001, the aggregate market value of the voting stock held by
non-affiliates of the Registrant (based upon the average of the closing bid and
asked prices on such date) was approximately $ 1,048,000.

Documents incorporated by reference: Certain responses to Part III are
incorporated herein by reference to information contained in the Registrant's
proxy statement for its 2001 Annual Meeting of Stockholders to be filed with the
Securities and Exchange Commission on or before February 28, 2001.

================================================================================

<PAGE>
                                     PART I

FORWARD-LOOKING STATEMENTS

     This Report on Form 10-KSB includes certain statements that may be deemed
to be "forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. The sections of this Report on Form 10-KSB
containing such forward-looking statements include "Description of Business,"
"Historical Background," "Growth," "Acquisitions," "Products and Services,"
"Marketing and Sales," "Markets," "Government Regulations," Potential Exposure
to Liability" and "Competition" under Item 1 below, and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" under Item 6
below. Statements in this Form 10-KSB which address activities, events or
developments that we expect or anticipate will or may occur in the future,
including such topics as future issuances of shares, future capital expenditures
(including the amount and nature thereof), expansion and other development and
technological trends of industry segments in which the registrant is active,
business strategy, expansion and growth of the registrant's and its competitors'
business and operations and other such matters are forward-looking statements.
Although we believe the expectations expressed in such forward-looking
statements are based on reasonable assumptions within the bounds of our
knowledge of our business, a number of factors could cause actual results to
differ materially from those expressed in any forward-looking statements,
whether oral or written, made by or on our behalf.

     Our operations are subject to factors outside our control. Any one, or a
combination, of these factors could materially affect the results of our
operations. These factors include: (a) changes in levels of competition from
current competitors and potential new competition; (b) loss of some significant
customers; and (c) changes in availability or terms of working capital financing
from vendors and lending institutions. The foregoing should not be construed as
an exhaustive list of all factors that could cause actual results to differ
materially from those expressed in forward-looking statements made by us.
Forward-looking statements made by or on our behalf are based on a knowledge of
our business and the environment in which we operate, but because of the factors
listed above, actual results may differ from those anticipated results described
in these forward-looking statements. Consequently, all of the forward-looking
statements made are qualified by these cautionary statements and it is possible
that the actual results or developments anticipated by us will not be realized
or, even if substantially realized, that they will not have the expected
consequences to or effects on our business or operations.

ITEM 1. DESCRIPTION OF BUSINESS

     Medical Resources Management, Inc. makes mobile laser/surgical services
available to our customers by providing this equipment on a per procedure basis
to hospitals, out patient surgery centers, and physicians' offices. We provide
these mobile lasers with technical support to ensure the lasers are working
correctly for the physicians. We also provide other medical equipment on a
rental basis to hospitals and surgery centers. This equipment is used throughout
such facilities to supplement their requirement for certain medical equipment.
The combination of mobile laser/surgical services and medical equipment rental
illustrates our overall strategy and focus on diversification.

     Our laser/surgical services focus on two of the most rapidly growing areas
of the health care industry: managed care and cosmetic surgery. For managed
care, minimally invasive procedures can be performed by physicians at hospitals
who rent our laser equipment. The hospitals that are our customers find the
investment in the latest laser surgery equipment and trained technicians to be
uneconomical. For cosmetic surgery, by renting our equipment, the physicians
benefit from having a multitude of different laser technologies available to
offer to their patients without the burden of investing a significant amount of
money. In both instances, physicians and hospitals receive technical support and
expertise which is provided with the equipment, which allows the staff to
concentrate on their duties without the additional tasks of running a laser.


                                       2

<PAGE>

     We have approximately 600 active surgical service accounts in California,
Arizona, Utah, Colorado and Nevada and experience a high rate of repeat business
from the hospitals, surgery centers and doctors that we serve. The market
encompasses many disciplines including plastic/cosmetic surgery, dermatology,
orthopedic surgery, otolaryngology, urology, obstetrics, gynecology,
ophthalmology, general surgery, podiatry and dentistry. Equipment is becoming
more specialized to the medical procedures involved, and technical training of
the physician, regarding the use of equipment, is a significant part of our
business.

     Physiologic Reps, Inc. ("PRI") operates as our largest wholly owned
subsidiary. Throughout this document, we are referencing our business, and our
subsidiaries, including PRI, in the historical context. We are headquartered at
932 Grand Central Ave., Glendale, California.

HISTORICAL BACKGROUND

     Medical Resources Management, Inc. was incorporated in Nevada in 1991.
Our largest wholly owned operating subsidiary, PRI, was incorporated in
California in 1973 and moved to its present headquarters building in 1994,
located in Glendale, California. PRI also has sales and service offices in
Dublin, CA, Englewood, CO, Salt Lake City, UT, Las Vegas, NV and Tempe, AZ.
PRI produced approximately 82% and 75% of our consolidated revenues during
the fiscal years ended October 31, 2000 and 1999, respectively.

     We entered the hospital equipment rental market in 1974, the mobile
laser/surgical services market in 1987, cosmetic skin resurfacing in 1994 and
leg vein treatment and tattoo removal in 1997. We began to expand our mobile
laser/surgical services to doctors' offices and their clinics in 1995. This
business is complementary to our existing laser/surgical services which we
provide to hospitals. In 1997, we made the decision to expand our cosmetic
services to include specialized lasers for treatment of vascular lesions,
pigmented lesions and tattoo removal.

     During the past few years, revenue from our mobile laser/surgical services
business has exceeded revenue from our medical equipment rental business.
However, we have a large array of general medical equipment which we rent,
primarily to hospitals, and have acquired substantial additional general medical
equipment since fiscal 1997. Our inventory of medical equipment includes an
extensive variety of medical devices, serving a broad range of hospital
departments or needs. This wide array of medical rental equipment, delivered to
customers on very short notice, was our primary business until about 1987, when
we developed the mobile surgical laser business.

GROWTH

     We have historically focused on providing rental and other services to our
clients on an as needed basis. As a result, we have established long-term
relationships with a number of physicians, hospitals and other medical care
providers. We believe that such relationships provide an opportunity to
introduce additional products to these customers by expanding our product lines
beyond laser/surgical services and medical equipment rentals.

     Our strategic plan is to grow through (1) internal expansion, (2) the
acquisition of or combination with other companies in the medical services
business to take advantage of current opportunities in the market place and
(3) the formation of limited liability partnerships with physicians.
Opportunities for growth are created because a wider range of new surgical
laser equipment is coming to market with features oriented toward a wider
variety of medical specialties. This is increasing the number of surgical
laser procedures performed. Another factor favoring growth of surgical laser
rentals by hospitals is the effort by managed care to reduce costs through
less invasive procedures. The managed care effort has also reduced funds
available for investment in new equipment and training.

                                       3
<PAGE>

ACQUISITIONS

     On March 31, 1997, we acquired 100% of the issued and outstanding capital
stock of Pulse Medical Products, Inc. ("Pulse"), then headquartered in Boise,
ID, in exchange for 325,000 shares of our common stock. As a result, Pulse
became our wholly owned subsidiary. Pulse rents medical equipment and sells
related equipment and supplies, and conducts its business in Colorado. Pulse has
continued to operate as our wholly owned subsidiary, with its headquarters in
Englewood, CO. In April 2000, we discontinued Pulse's operations in Boise, ID.

     On June 30, 1997, we acquired 100% of the issued and outstanding capital
stock of Laser Medical, Inc. ("Laser Medical"), headquartered in Salt Lake City,
UT, in exchange for 190,000 shares of our common stock. As a result, Laser
Medical became our wholly owned subsidiary. In addition, we obtained a
non-compete agreement from the principal former shareholder of Laser Medical in
consideration of the payment of $80,000 in cash. Laser Medical provides mobile
laser/surgical services to hospitals, out patient surgery centers, and
physicians' offices. Laser Medical operates its business in Utah and Colorado.
Since the date of its acquisition, Laser Medical has operated as our wholly
owned subsidiary, with its headquarters in Salt Lake City, UT. We plan to
dissolve Laser Medical in 2001 and to absorb its business into PRI.

     Also on June 30, 1997, we acquired 100% of the issued and outstanding
capital stock of MedSurg Specialties, Inc. ("MedSurg"), located in Brea, CA, in
exchange for 214,667 shares of our common stock. As a result, MedSurg became our
wholly owned subsidiary. In addition, we obtained a non-compete agreement from
the principal former shareholder of MedSurg in consideration of the payment of
$138,000 in cash ($50,000 in July 1997, with the balance paid $50,000 in fiscal
year 1998 and $38,000 in fiscal year 1999). MedSurg's operations, which were
conducted primarily in the Southern California area, were absorbed into PRI at
the time of the acquisition.

     Effective November 1, 1997, we acquired 100% of the issued and outstanding
capital stock of Texas Oxygen Medical Equipment Company ("Tomec"), headquartered
in Mansfield, TX, in exchange for 40,000 shares of our own common stock. As a
result, Tomec became our wholly owned subsidiary. Tomec's operations, which were
conducted in Texas, were discontinued in April 2000.

     We intend to selectively continue the pursuit of our strategic plan of
acquiring other companies in the medical services business to take advantage of
current opportunities in the market place.

PRODUCTS AND SERVICES

     Our technicians deliver equipment and provide technical support to
physicians and operating room ("O.R.") personnel as needed. Once our technician
is at the customer site, he posts required warning notices outside the O.R.,
issues safety equipment to the O.R. staff, provides any disposable materials
needed, and supplies equipment certifications or documentation required for
hospital record-keeping. Our technician sets the physician's requested power
settings and maintains a laser safe environment during the surgical procedure.
Hospitals and surgery facilities, especially those with fluctuating occupancy
levels, find this outsourcing of trained technicians, on an as-needed basis, a
cost effective alternative to training and staffing their own personnel. More
than 60% of our revenue was generated from the rental of technician-supported
equipment (including related disposable sales) during each of the last two
fiscal years.

     Our lasers encompass the latest technology in CO2, Nd:YAG, Pulse Dye,
KTP/YAG, and Holmium YAG models. We have established an excellent working
relationship with the leading laser manufacturers and are often the first
service company to receive new laser technology in our markets. We are
constantly reviewing developments in the medical laser field to stay abreast of
the latest technology available.


                                       4

<PAGE>

     We also provide our customers with disposable products and/or attachments
that are needed for a given procedure. This applies primarily to laser related
rentals requiring laser drapes, masks, fibers, tubing, etc. The customers
benefit from this added service since they save the added costs that would be
incurred if they had to purchase a large inventory of these disposable products.

     Additionally, we offer a broad spectrum of general medical equipment to the
medical market that we serve. Our inventory of equipment includes an extensive
selection of devices, serving a broad range of hospital departments and needs,
such as adult and infant ventilators, CO2 monitors, defibrillators, feeding
pumps, PCA pumps, ECG monitors, infusion pumps, neo-natal monitors, and pulse
oximeters. Due in part to our varied inventory of equipment, we are usually
capable of offering delivery and support of rental items with only a few hours'
notice. Mobile laser/surgical services are ordered in advance and re-confirmed
with the customer the day before the procedure by the scheduling department.

MARKETING AND SALES

     The principal focus of our business is providing mobile laser/surgical
services. Additionally, we are expanding our business of renting medical
equipment to hospitals, surgery centers and physicians in their offices. Our
sales efforts are supported by a direct sales force which focuses on providing
timely service and products to our customers. In addition, we sponsor
educational seminars on new laser technology, which are attended by physicians.
This allows our direct sales force to introduce new laser technology and
procedures to our customer base as soon as new lasers are offered by
manufacturers. This method has proven to be successful in developing new
business from physicians. We benefit from the physician training which occurs at
these educational seminars because the physicians can immediately implement the
new laser technology we offer.

     Our sales representatives attend national and regional physician medical
seminars and trade shows to present our services and products. We also create
markets for our products and services through direct mailing of marketing
literature and promotional materials regarding our complete range of
laser/surgical services to hospitals, surgery centers and physicians.

MARKETS

     Our principal markets, and percent of revenue from each, during the fiscal
years ended October 31, 2000 and 1999 were as follows:

<TABLE>
<CAPTION>

                                                       FISCAL 2000   FISCAL 1999

         <S>                                           <C>           <C>
         Mobile laser/surgical services                    42%           44%
         Cosmetic mobile laser/surgical services
           (primarily physician office based)              19%           11%
         Medical equipment rentals                         26%           29%
         Disposable and equipment sales                    11%           14%
         Biomedical services and other revenues             2%            2%

</TABLE>

HOSPITAL MOBILE LASER/SURGICAL SERVICES

     The Southern California market is a mature market place and growth is
dependent on new procedures and products. The market in other parts of the
country is not as mature, providing us with greater growth opportunities in
other geographic markets.

     Mobile laser/surgical services, both hospital/surgery center based and
physician office based, provide an entry into new geographic markets with
multiple strategies. Once a facility is established in a new geographic market,
the opportunity exists to use that facility as a dispatch point for equipment
rentals and new products.


                                       5
<PAGE>

COSMETIC MOBILE LASER/SURGICAL SERVICES

     The cosmetic laser business is primarily physician office based. This
market did not emerge for us until early 1995, and has been characterized by
rapid changes in specific techniques as new technology emerges.

     In recent years, skin resurfacing cosmetic laser surgery has shown
significant growth. However, price competition is emerging in this market from
smaller start up companies. In the past few years, legislation in California and
some other states restricting anesthesia in doctors' offices has redirected some
of this cosmetic surgery to hospitals and surgery centers, where we have a
strong base. As the skin rejuvenation market matures, new markets will be
emerging for the treatment of leg veins and the removal of unwanted hair.
Because of customer inquiries, we believe that recently developed laser
technology for collapsing veins so that they are no longer visible will produce
a significant increase in the number of doctors using mobile lasers. In
addition, the anticipated introduction to the market of new lasers for unwanted
hair removal will add a companion procedure to the vein procedure.

HOSPITAL MEDICAL EQUIPMENT RENTALS

     We entered the hospital equipment rental market in 1974, and maintained
that business as our primary source of revenue until the mobile laser/surgical
services became predominate in 1987. That transition took place because of
competition from national medical rental companies and high demand for the newly
developed mobile laser/surgical services.

     We believe that we have a competitive advantage in the market, since we are
one of the few companies that provide both mobile laser/surgical services and
medical equipment rental. There are a number of synergies among the mobile
laser/surgical services and the medical equipment rental business, including:

          -    Shared facilities

          -    Shared warehouse and delivery employees

          -    Shared delivery vehicles

          -    Complimentary scheduling and booking staff

          -    Common management

          -    Shared sales staff at start up

     As the medical rental market continues to be challenged by smaller
competitors we intend to respond by offering new products, as well as
remaining competitive on current market pricing.

EQUIPMENT AND DISPOSABLE SALES

     We continue to evaluate several lines of disposable medical products to
introduce to our customers. This is a natural progression for us, since we
have a large customer base typified by repeat business and ongoing personal
contact between our sales representatives and our customers.

     Another source of revenue is the re-marketing of used equipment. As a
result of our practice of updating laser and medical rental equipment, we
occasionally sell used equipment.


                                       6

<PAGE>

GOVERNMENT REGULATIONS

     The healthcare industry is subject to extensive federal and state
regulation. Promulgation of new laws and regulations, or changes in or
re-interpretations of existing laws or regulations, may significantly affect our
business, operating results or financial condition. We are not currently subject
to regulation. However, a court or governmental body could make a determination
that our business should be regulated. Our profitability might be negatively
impacted if we had to comply with government regulations. Furthermore, the
manufacturers of medical equipment utilized by us are subject to extensive
regulation by the Food and Drug Administration ("FDA"). Failure of such
manufacturers to comply with FDA regulations could result in the loss of
approval by the FDA of such medical equipment, which could adversely affect our
operating results or financial condition. As consolidation among physician
groups continues and provider networks continue to be created, purchasing
decisions may shift to persons with whom we have not had prior contact. We
cannot be certain that we will be able to maintain our physician, payor or
manufacturer relationships under such circumstances.

POTENTIAL EXPOSURE TO LIABILITY

     Physicians, hospitals and other providers in the healthcare industry are
subject to lawsuits which may allege medical malpractice or other claims. Many
of these lawsuits result in substantial defense costs and judgments or
settlements. We do not engage in the practice of medicine, nor do we control the
practice of medicine by physicians utilizing our services or their compliance
with regulatory requirements directly applicable to such physicians or physician
groups. However, the services we provide to physicians, including actions by our
technicians, our establishment of protocols and our training programs, could
give rise to liability claims. Although we have not recently been a party to any
material litigation, including litigation relating to the practice of medicine,
we may become involved in such litigation in the future, and it is possible that
a claim or claims arising from such litigation might exceed our insurance
coverage. In addition, we may not be able to obtain such insurance coverage in
the future.

COMPETITION

     The market for our services is highly competitive. Companies, particularly
in the laser surgery industry, compete by price, thereby impacting profit
margins. In spite of such competition, we believe that we can compete
successfully, since we provide surgical laser equipment to hospitals, ambulatory
surgery centers and doctors' offices, and are able to build our business on the
interrelation of these market segments.

     Our competition for mobile laser surgery equipment rental is primarily from
a number of small companies with only a few surgical lasers each. In most cases,
these competing companies are founded by technicians who have left doctors'
offices or hospitals and sell their services to a limited number of customers.

     Major competitors in the hospital medical equipment rental market include
Universal Hospital Services and Mediq PRN. We believe that, as a specialist, we
can better satisfy the hospitals' needs for medical rental equipment at
satisfactory profit margins. We have no way to know whether we will be able to
successfully compete in the marketplace in the future.

EMPLOYEES

     As of October 31, 2000, we employed 97 full time persons, 62 of which were
involved in operations activities (most of these were active as field
technicians), 18 of which were involved in sales and marketing, and 17 of which
were involved in administration and accounting. In addition, we employ 9 part
time and occasional employees as technicians to handle overload situations. None
of these employees is represented by a union. We believe that our relationship
with our employees is good.

RECENT DEVELOPMENTS

     During November and December 2000, we issued an aggregate of $400,000 in
convertible subordinated debt to certain affiliates. These instruments bear
interest at a rate of 8% per annum, mature 3 months from date of issuance and
are convertible into shares of our common stock at a rate of one share for each
$0.10 of principal amount. This convertible subordinated debt was exempt from
registration under Section 4(2) of the Securities Act of 1933.

     In December 2000, we sold 1,333,333 shares of our common stock to a
strategic buyer in a private offering exempt from registration under Section
4(2) of the Securities Act of 1933. These shares were sold at a price of $0.30
per share, with no offering expenses, resulting in net proceeds of $400,000.

     In January 2001, the Company entered into an agreement with Emergent Group,
Inc. (OTC BB: EMGRE.OB) ("Emergent") for a merger of the two companies. Under
the terms of the agreement, each share of the Company's common stock will be
exchanged for 0.37 shares of Emergent stock. The Company will operate as a
wholly owned subsidiary of Emergent after the merger. Consummation of the merger
is subject, among other conditions, to approval by the shareholders of each of
the two companies.


                                       7

<PAGE>

ITEM 2. DESCRIPTION OF PROPERTY

     We lease approximately 14,400 square feet of space for our headquarters
in Glendale, California on a lease that expires in May 2001, for $10,880 per
month, with a CPI based rent escalation clause. This lease also provides an
option to rent this facility for an additional five years. We exercised this
option in February 2001. We also lease about 2,000 square feet of space for
our field and sales office in Dublin, California under a lease that expires
in March 2001, for $2,877 per month, with a CPI based rent escalation clause.

     In addition, we lease field and sales offices in Stockton, California,
Englewood, Colorado, Tempe, Arizona and Salt Lake City, Utah. Total combined
square footage is 5,180 for approximately $4,000 per month on a
month-to-month basis.

ITEM 3. LEGAL PROCEEDINGS.

     None.

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

     None.



                                       8

<PAGE>

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

MARKET INFORMATION

     Our Common Stock is traded under the symbol "MRMC" in the over-the-counter
market through the NASD's electronic OTC Bulletin Board service. The following
table sets forth the range of high and low bid prices per share of our Common
Stock for each of the periods indicated. These quotations reflect inter-dealer
prices, without retail mark-up, mark-down or commissions, and may not
necessarily represent actual transactions.

<TABLE>
<CAPTION>

                                                              Bid Prices
                                                       ------------------------
                                                          HIGH          LOW
                                                       ----------    ----------
          <S>                                          <C>           <C>
          Quarter ended
            January 31, 1999                             $0.531       $0.125
            April 30, 1999                               $0.531       $0.125
            July 31, 1999                                $2.063       $0.125
            October 31, 1999                             $1.000       $0.250

            January 31, 2000                             $0.625       $0.125
            April 30, 2000                               $0.875       $0.188
            July 31, 2000                                $0.563       $0.156
            October 31, 2000                             $0.438       $0.187

</TABLE>

HOLDERS OF COMMON STOCK

     As of October 31, 2000, the number of holders of record of our common stock
was 465.

DIVIDENDS

     To date, we have not paid any cash dividends on our common stock and do
not anticipate paying cash dividends in the foreseeable future. We anticipate
that all earnings, if any, for the foreseeable future will be retained for
development of our business. We are prohibited from paying dividends by our
bank loan agreement if we are in default of any of the loan covenants.

RECENT SALES OF UNREGISTERED SECURITIES

     During November and December 2000, we issued an aggregate of $400,000 in
convertible subordinated debt to certain affiliates. These instruments bear
interest at a rate of 8% per annum, mature 3 months from date of issuance and
are convertible into shares of our common stock at a rate of one share for each
$0.10 of principal amount. This convertible subordinated debt was exempt from
registration under Section 4(2) of the Securities Act of 1933.

     In December 2000, we sold 1,333,333 shares of our common stock to a
strategic buyer in a private offering exempt from registration under Section
4(2) of the Securities Act of 1933. These shares were sold at a price of $0.30
per share, with no offering expenses, resulting in net proceeds of $400,000.

                                       9

<PAGE>

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

     The following discussion and analysis should be read together with the
financial statements and notes thereto included elsewhere herein.


RESULTS OF OPERATIONS

     The following table sets forth, for the periods indicated, the percentage
of net sales represented by certain items included in the Statements of Income:

<TABLE>
<CAPTION>
                                                        Year ended October 31,
                                                        ----------------------
                                                          2000         1999
                                                        ---------    ---------
<S>                                                      <C>          <C>
Net revenue .......................................      100.0%         100.0%
Cost of revenue ...................................       45.6           36.5
Depreciation expense ..............................       17.3           14.4
                                                        ---------    ---------
Gross profit ......................................       37.1           49.1
Selling expenses ..................................       19.7           18.8
General and administrative expenses ...............       17.8           19.3
Restructuring and closure expenses ................        3.6             --
                                                        ---------    ---------
Operating income (loss) ...........................       (4.0)          11.0
Interest expense ..................................       10.1           10.4
                                                        ---------    ---------
Income (loss) before income taxes .................      (14.1)           0.6
Provision for income taxes ........................         --            0.2
                                                        ---------    ---------
Net income (loss) .................................      (14.1)%          0.4%
                                                        =========    =========

</TABLE>

YEAR ENDED OCTOBER 31, 2000 COMPARED TO YEAR ENDED OCTOBER 31, 1999

     For the year ended October 31, 2000, net revenue was $11.10 million,
compared to $11.73 million during the fiscal year ended October 31, 1999, a
decrease of $ 626,000, or 5.3%. The decrease in net revenue is principally
due to (1) a decrease in disposable and equipment sales of $ 483,000 and a
decrease in medical rental revenue of approximately $ 459,000, both as a
result of the closure of operations in Idaho and Texas and of lower medical
rental revenue in Southern California and (2) a decrease in biomedical
service revenue of $ 139,000, all of which decreases were offset in part by
(3) an increase in surgical and cosmetic laser services revenue of $ 404,000
attributable to a higher volume of cases in Southern California (offset in
part by lower per case revenue) and (4) an increase of $ 51,000 in other
revenue. The decreases in revenue cited above were principally the result of
the closure of facilities in Boise, Idaho and Mansfield, Texas during the
quarter ended April 30, 2000. During that quarter, the Company conducted an
intensive review of its corporate staff and of each of its operating
subsidiaries. At the conclusion of this review, a decision was made to
restructure or eliminate certain management positions. In addition, the
Company decided to close it offices in Idaho and Texas due to ongoing
operating losses and negative cash flows in these geographic areas.

     Cost of revenue (excluding depreciation expense) for the year ended October
31, 2000 totaled $5.07 million, or 45.6% of net revenue, compared to $4.28
million, or 36.5% of net revenue, in the prior fiscal year ended October 31,
1999, an increase of $ 792,000, or 18.5%. The increase in cost of revenue is
chiefly attributable to (1) an increase in the volume of laser surgical service
cases in Southern California of approximately 12% during fiscal year 2000,
resulting in higher direct costs, principally disposables and technician labor,
(2) the write-off of approximately $123,000 in inventories in conjunction with
the closure of facilities in Idaho and Texas, (3) higher cost of equipment sales
during the second and third quarters of fiscal year 2000, (4) $89,000 in costs
relating to the lithotripsy services introduced in fiscal year 2000 and (5)
higher fuel expense due to rising gasoline prices during fiscal year 2000.


                                       10
<PAGE>

     Depreciation expense directly attributable to net revenue for fiscal year
2000 was $1.92 million compared to $1.70 million for fiscal year 1999, an
increase of $ 222,000, or 13.1%. This increase in depreciation expense is
primarily the result of the addition of equipment during the latter part of
fiscal year 1999 and the first nine months of fiscal year 2000.

     Gross profit for the fiscal year ended October 31, 2000 was $4.12 million,
or 37.1% of net revenue, compared to $5.76 million, or 49.1% of net revenue, in
the prior fiscal year, a decrease of $1.64 million, or 28.5%. The decrease in
gross profit is principally the result of the factors described previously.

     For the fiscal year ended October 31, 2000, selling expenses were $2.19
million, compared to selling expenses of $2.20 million for the prior fiscal
year, a slight decrease of $ 14,000, or 0.6%. As a percentage of net revenue,
selling expenses increased somewhat to 19.7% in the year ended October 31, 2000,
compared to 18.8% in the prior fiscal year, as a result of lower revenue in
fiscal year 2000.

     General and administrative ("G&A") expenses totaled $2.00 million for the
year ended October 31, 2000, compared to $2.26 million in the year ended October
31, 1999, a decrease of $ 261,000, or 11.6%. As a percentage of net revenue, G&A
expenses decreased from 19.3% in the fiscal year 1999 to 18.0% in the fiscal
year 2000. The decrease in the amount of G&A expense is chiefly attributable to
(1) a decrease in write-off of software development costs from $ 107,000 in
fiscal year 1999 to no write-offs in fiscal year 2000, (2) a decrease of $44,000
in expenses relating to the effort to refinance debt during fiscal year 1999 and
(3) a reduction of management personnel related to the corporate restructuring
during the second quarter of fiscal year 2000, all of which decreases were
offset in part by higher compensation costs and higher professional fees during
the later half of fiscal year 2000.

     Restructuring and closure expenses for the year ended October 31, 2000
totaled approximately $398,000. There were no such expenses during the prior
fiscal year. See Note 1 to the audited financial statements filed as an exhibit
hereto.

     Operating loss for fiscal year 2000 was $474,000, or 4.3% of net revenue,
compared to operating income of $1.29 million in the year ended October 31,
1999, or 11.0% of net revenue. This decrease in operating income in fiscal year
2000 from fiscal year 1999 is attributable to all of the factors previously
cited herein.

     For the year ended October 31, 2000, interest expense totaled $1.12
million, compared to $1.22 million in the prior fiscal year, a decrease of $
93,000, or 7.7%. This decrease in interest expense is primarily the result of
capital leases which have matured in fiscal 2000.

     The loss before income taxes was $1.60 million for the year ended October
31, 2000, compared to income before taxes of $71,000 in the year ended October
31, 1999, a negative variance of $1.67 million. The loss before income taxes, as
a percentage of net revenue, was 14.4% in the year ended October 31, 2000,
compared to income before taxes equal to 0.6% of net revenue in the year ended
October 31, 1999. This variance occurred as a result of the all of the
aforementioned factors.


                                       11

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

     The consolidated financial statements have been prepared on a going-concern
basis, which contemplates the realization of assets and satisfaction of
liabilities in the normal course of our business. As of October 31, 2000, we had
a working capital deficiency of $4.5 million and for the year ended October 31,
2000 incurred a net loss of $1.6 million. Management has recently announced a
merger agreement with Emergent Group, Inc. (see Item 1 - Recent Developments).
Management intends to raise capital to fund our future operations and growth. In
addition, management is in current negotiations to extend the existing line of
credit. Until these transactions occur, there can be no assurance that we will
have sufficient liquidity to fund operations. The financial statements do not
include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and classification of
liabilities that may result from the outcome of this uncertainty.

     Our liquidity requirements arise from the funding of our working capital
needs, principally accounts receivable and inventories, as well as our capital
expenditure needs. Our primary sources for working capital have historically
been borrowings under debt facilities, leasing arrangements, trade payables and
the sale of our Common Stock.

     During the fiscal year ended October 31, 2000, net cash provided by
operating activities was $869,000, which resulted principally from net loss of
$1.60 million adjusted for (a) depreciation and amortization expense of $2.10
million, (b) the write-off of customer lists in the amount of $151,000, (c) a
provision for doubtful accounts of $32,000 and (d) a net decrease of
approximately $ 193,000 in working capital items, all of which were offset in
part by gains from sales of assets of approximately $5,000.

     Net cash used in investing activities during the fiscal year ended October
31, 2000 totaled $1.71 million, which was comprised of (a) capital expenditures
in the amount of $1.84 million, (b) an increase in other assets of $92,000 and
(c) an increase in loan fees of $15,000, all of which were offset in part by net
proceeds from the sales of assets of $ 230,000.

     During the fiscal year ended October 31, 2000, net cash provided by
financing activities totaled $898,000, consisting of (a) net proceeds in the
amount of $1.74 million from the issuance of common stock, (b) $128,000 in
proceeds from the exercise of stock options, (c) $1.84 million in borrowings
on long-term debt, (d) $ 34,000 in borrowings on capital lease refinancings,
all of which were offset in part by (e) repayments on a bank line of credit
in the amount of $ 125,000, (f) $1.88 million in principal payments on
capital lease obligations and (g) $ 851,000 in principal payments on
long-term debt.

DEBT REFINANCING

     On March 31, 1999 we entered into an agreement with a bank that provides
for a $2 million term loan (Bank Term Loan) and a $2 million line of credit
(Bank Line of Credit). The proceeds from the Bank Term Loan were used to repay
in full the then-existing term loan with Merrill Lynch, as well as for working
capital purposes, including payment of past-due lease payments. The Bank Term
Loan bears interest at a rate of prime plus 1.25%, with principal due in 60
equal monthly installments commencing in May 1999. The balance on the Bank Term
Loan as of October 31, 2000 was approximately $1.43 million.

     The proceeds from the Bank Line of Credit were used for working capital
purposes. This Bank Line of Credit bears interest at a rate of prime plus 1.00%,
with borrowings based upon eligible accounts receivable as defined. The balance
outstanding under the Bank Line of Credit as of October 31, 2000 was
approximately $918,000.

     The Bank Line of Credit and Bank Term Loan prohibit the payment of cash
dividends and require us to maintain certain levels of net worth and to
generate certain ratios of cash flows to debt service. As of October 31,
2000, we were not in compliance with certain financial covenants of the Bank
Line of Credit and Bank Term Loan. As a result, we have classified all of the
bank loan facilities as current liabilities in the balance sheet as of
October 31, 2000.

COMMITMENTS

     We had no material commitments for capital expenditures at October 31,
2000. However, although we have no present commitments or agreements to make
such capital expenditures, during the next 12 months we expect to make
substantial capital expenditures, in accordance with our historical practice.
The mobile laser/surgical services and medical equipment rental businesses
are capital intensive. We believe that funds generated from operations,
together with funds available from debt facilities, as well as additional
debt or equity offerings, will be sufficient to finance our working capital
and capital expenditure requirements for the next 12 months. However, there
can be no assurance that any additional debt or equity offerings will occur.
If we are unable to obtain such funds from additional debt or equity
offerings, we will have to curtail our capital expenditures.

                                       12

<PAGE>

ITEM 7. FINANCIAL STATEMENTS.

     See financial statements included herein.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.

     Not applicable.


                                       13

<PAGE>

                                    PART III


ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS, COMPLIANCE
     WITH SECTION 16(a) OF THE EXCHANGE ACT.

     The following table sets forth our executive officers and directors, and
their principal occupations for the past five years, as of October 31, 2000:

<TABLE>
<CAPTION>

NAME                                AGE              CURRENT POSITIONS WITH COMPANY

<S>                                 <C>              <C>
Richard A. Whitman                   50              President, CEO and Chairman of the Board

Al Guadagno                          57              Senior Vice President and CFO

Calvin Yee                           36              Chief Operating Officer

Richard M. Greenwood                 53              Director

Marc Kerner                          37              Director

Paul W. Mikus                        35              Director

Donald G. Petrie                     45              Director

Mark Waldron                         33              Director

Daniel Yun                           33              Director

</TABLE>

     RICHARD A. WHITMAN. Mr. Whitman joined our Board of Directors in November
1999, was appointed President and CEO in January 2000, and elected as Chairman
in May 2000. From 1987 to 1991, he served as founder, President and CEO of RAM
Telephone & Communications. He also founded Correctional Communications
Corporation, where he served as Chairman from 1991 to 1997. Mr. Whitman is a
graduate of the University of Southern California.

     AL GUADAGNO. Mr. Guadagno was elected to the offices of Senior Vice
President and Chief Financial Officer in August 2000. Prior to that time, he
served as Vice President, Finance for Vidfilm Services from 1994 to 2000. Mr.
Guadagno has more than 20 years of experience in accounting, finance and
operations. He is a graduate of Oklahoma University with a degree in
accounting.

     CALVIN YEE. Mr. Yee was elected to the office of Chief Operating Officer in
December 2000. Mr. Yee was appointed as a Vice President of Emergent Group, Inc.
in November 2000. He is a co-founder and partner of Pangaea Ventures Ltd., a
Canadian technology venture capital firm, founded in January 2000. Prior to that
time, he served as Vice President of National Australia Bank from 1997 to 1999,
where he was responsible for managing the bank's derivative business in North
America. Mr. Yee earned his MBA from the University of Western Ontario in
London, Canada, and received his undergraduate degree in business from the
University of Calgary.

     RICHARD M. GREENWOOD. Mr. Greenwood was elected to the Board of Directors
in July 2000. He has served as the President and CEO of Predictive Data Systems,
Inc since 1998. He previously served as the CEO of Bank Plus-Fidelity Federal
Bank from 1992 until 1998. He is a graduate from the University of Idaho and the
American Graduate School of International Management.


                                       14
<PAGE>

     MARC KERNER. Dr. Kerner, M.D., F.A.C.S., was elected to the Board of
Directors in June 2000. He is certified by the American Board of Facial
Plastic and Reconstructive Surgery and the American Board of Otolaryngology
Head and Neck Surgery. Dr. Kerner graduated with high honors from the
University of Southern California School of Medicine in 1989, and completed a
residency and postdoctoral fellowship in Otolaryngology Head and Neck Surgery
at UCLA in 1995. He is the Medical Director of Northridge Facial Plastic
Surgery Medical Group.

     PAUL W. MIKUS. Mr. Mikus was elected to the Board of Directors in
September 2000. He has served as the President, CEO and Chairman of Endocare
since June 1995. He also serves on the Board of Directors of Sanarus Medical,
Inc.

     DONALD G. PETRIE. Mr. Petrie was elected to the Board of Directors in
January 2000. He is the founder of owner of Petrie & Associates, Inc., an
insurance and financial services firm, where he has served as President since
1996. Mr. Petrie holds a law degree from the University of Missouri, and is
licensed to practice law in the state of Missouri. In addition, he is a
graduate of the University of Colorado with degrees in accounting and finance.

     MARK WALDRON. Mr. Waldron was elected to the Board of Directors in
October 2000. He is a Managing Partner of Emergent Capital, a venture capital
firm, where he has served since 1998. Previously, he served as Vice President
at J.P. Morgan from 1993 to 1998. He holds an MBA from Northwestern
University, and received an undergraduate degree from the University of
Western Ontario in London, Canada.

     DANIEL YUN. Mr. Yun was elected to the Board of Directors in October
2000. He is a Managing partner of Emergent Capital, a venture capital firm,
where he has served since 1998. Mr. Yun was formerly a Vice President at
Lehman Brothers from 1995 until 1998. He holds a BS in Mathematics and
Economics from the U. S. Military Academy at West Point.

                                       15

<PAGE>

ITEM 10. EXECUTIVE COMPENSATION

     The information contained in our definitive Proxy Statement to be filed
with the Securities and Exchange Commission on or before February 28, 2001 with
respect to executive compensation and transactions is hereby incorporated by
reference in response to this item.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information contained in our definitive Proxy Statement to be filed
with the Securities and Exchange Commission on or before February 28, 2001 with
respect to security ownership of certain beneficial owners and management is
hereby incorporated by reference in response to this item.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     On January 31, 1997, in connection with a private placement, we issued
86,400 Units to Allen Bonnifield, our [former] Chairman of the Board and Chief
Executive Officer, in exchange for a cancellation of our indebtedness owed to
him in the amount of $108,000. Each Unit consisted of one share of Common Stock,
one Class A warrant to purchase one share of Common Stock at a price of $2.50
per share, and one Class B warrant to purchase one share of Common Stock at a
price of $4.00 per share. On April 24, 1997, we issued 116,440 Units in the
above-mentioned private placement to Susan Bonnifield, the wife of Allen
Bonnifield, in exchange for a cancellation of our indebtedness owed to her in
the amount of $145,550. In both of these transactions, the Units were exchanged
at a rate of one Unit for each $1.25 of indebtedness forgiven. In addition, in
January 1997, Mr. Bonnifield purchased 16,000 Units in the above-mentioned
private placement at a price of $1.25 per unit, or an aggregate of $20,000.

     Allen Bonnifield has also executed personal guarantees for certain
leases and to a bank for the current bank loan facilities.

     In April 2000, we borrowed $100,000 each from two individuals, for an
aggregate borrowing of $200,000. These loans are in the form of a note
payable to each of the two individuals, and bear interest at a rate of 10%
per annum, with interest payable monthly and principal due in full in April
2001. In addition, each of these two individual lenders received 50,000
non-qualified stock options at the time that the loan proceeds were received
by us, which resulted in deemed compensation of $28,000 in the aggregate. One
of these individuals is Edward Whitman, the father of our Chairman, President
and CEO. The terms and conditions of these loans are believed to be the same
as would be offered to an independent third party by us.

     In January 2000, the Company entered into a 3-year employment contract with
Richard Whitman, its Chairman, President and CEO. This contract provides for an
annual base compensation of $180,000, an annual bonus based upon performance,
and the issuance of 1,009,050 non-qualified stock options at the inception of
the contract (equal to 10% of the fully diluted shares outstanding at the
inception of this contract). In addition, the contract provides that, if Mr.
Whitman is terminated prior to the end of the contract, he will then be entitled
to receive compensation through the end of the contract.

     In August 2000, the Company entered into a 2-year employment contract with
Al Guadagno, its Senior Vice President and CFO. This contract provides for an
annual base compensation of $150,000, an annual bonus based upon performance,
and the issuance of 350,000 non-qualified stock options at the inception of the
contract. In addition, the contract provides that, if Mr. Guadagno is terminated
prior to the end of the contract, he will then be entitled to receive
compensation through the end of the contract.

                                       16

<PAGE>

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

(a)  Documents filed herewith as part of this report:

<TABLE>
<CAPTION>
                                                                                             PAGE

     <S>                                                                                     <C>
     1. Financial Statements:

          Report of Independent Auditors                                                      F-1

          Consolidated Balance Sheet - October 31, 2000                                       F-2

          Consolidated Statements of Operations - Years Ended
               October 31, 2000 and 1999                                                      F-4

          Consolidated Statements of Shareholders' Equity -
               Years Ended October 31, 2000 and 1999                                          F-5

          Consolidated Statements of Cash Flows - Years Ended
               October 31, 2000 and 1999                                                      F-6

          Notes to Consolidated Financial Statements                                          F-7

       2.  Exhibits:
               See Exhibits Index. The exhibits listed in the accompanying Exhibit Index are filed or incorporated
               by reference as part of this report.
</TABLE>

(b)      Reports on Form 8-K:

         None.


                                       17

<PAGE>

                                   SIGNATURES

     In accordance with the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized in the
City of Glendale, California on the 13th day of February, 2001.

MEDICAL RESOURCES MANAGEMENT, INC.

By     /s/  RICHARD A. WHITMAN
      -------------------------------------------------------------
       Richard A. Whitman, President, CEO and Chairman of the Board

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated on the 13th day of February, 2001.

<TABLE>
<CAPTION>

         SIGNATURE                                                     TITLE

<S>   <C>                                                              <C>
By     /s/  RICHARD A. WHITMAN
      ----------------------------------------------------
       Richard A. Whitman                                              President, CEO and Chairman of the Board
                                                                       (Principal Executive Officer)
By     /s/  AL GUADAGNO
      ----------------------------------------------------
       Al Guadagno                                                     Senior Vice President and CFO
                                                                       (Principal Financial and Accounting Officer)
By     /s/  CALVIN YEE
      ----------------------------------------------------
       Calvin Yee                                                      Chief Operating Officer

By     /s/  RICHARD M. GREENWOOD
      ----------------------------------------------------
       Richard M. Greenwood                                            Director

By     /s/  MARC KERNER
      ----------------------------------------------------
       Marc Kerner                                                     Director

By     /s/  PAUL W. MIKUS
      ----------------------------------------------------
       Paul W. Mikus                                                   Director

By     /s/  DONALD G. PETRIE
      ----------------------------------------------------
       Donald G. Petrie                                                Director

By     /s/  MARK WALDRON
      ----------------------------------------------------
       Mark Waldron                                                    Director

 By     /s/  DANIEL YUN
      ----------------------------------------------------
       Daniel Yun                                                      Director

</TABLE>

                                       18
<PAGE>

                                 EXHIBITS INDEX

<TABLE>
<CAPTION>

EXHIBIT    EXHIBIT DESCRIPTION
NUMBER

<S>        <C>
3.1        Articles of Incorporation and Amendments thereto. (1)

3.2        By-Laws of the Registrant. (1)

10.1       Copy of a Warrant Agreement and Warrant issued between
           November 1996 and March 1997 to investors in the Registrant's
           Private Placement. (1)

10.2       Registrant's 1996 Stock Incentive Plan. (1)

10.3       Equipment Note Loan and Security Agreement dated April 24, 1997
           between the Registrant and LINC Capital Management, a division of
           LINC Capital, Inc. (1)

10.4       Collateral Note No. 1 dated April 28, 1997 between the Registrant
           and LINC Capital, Inc. (1)

10.5       Lease Modification Agreement dated April 24, 1997 between Pulse Medical
           Products, Inc. and LINC Capital Management, a division of LINC Capital, Inc. (1)

10.6       Warrant Purchase Agreement dated April 24, 1997 between the Registrant and
           LINC Capital Management, a division of LINC Capital, Inc. (1)

10.7       Warrant to Purchase Shares of Common Stock dated April 24, 1997 between
           the Registrant and LINC Capital Management, a division of LINC Capital, Inc. (1)

10.8       Amendment to Warrant Agreement - Class A Redeemable Warrant,
           dated September 26, 1999. (5)

10.9       Amendment to Warrant Agreement - Class B Redeemable Warrant,
           dated September 26, 1999. (5)

10.10      Loan Agreement dated March 30, 1999 between Physiologic Reps and Santa
           Monica Bank.  (5)

10.11      Promissory Note dated March 30, 1999 between Physiologic Reps and Santa
           Monica Bank (Line of Credit).  (5)

10.12      Promissory Note dated March 30,1999 between Physiologic Reps and Santa
           Monica Bank (Term Loan).   (5)

</TABLE>


                                       19

<PAGE>

<TABLE>
<CAPTION>

EXHIBIT    EXHIBIT DESCRIPTION
NUMBER

<S>        <C>
10.13      Registrant's 2000 Stock Incentive Plan.  (7)

10.14      Agreement and Plan of Reorganization and Merger among Medical
           Resources Management, Inc., Emergent Group, Inc. and MRM Acquisition,
           Inc. dated as of January 23, 2001. (6)

21.0       Subsidiaries of the Registrant.  (7)


</TABLE>

-------------------------------------
(1) Exhibit filed with Registrant's Form 10-SB on May 16, 1997 and incorporated
by reference herein.

(2) Exhibit filed with Registrant's Form 10-QSB for the quarter ended July 31,
1997 and incorporated by reference herein.

(3) Exhibit filed with Registrant's Form 10-KSB for the fiscal year ended
October 31, 1997 and incorporated by reference herein.

(4) Exhibit filed with Registrant's Form 10-QSB for the quarter ended January
31, 1998 and incorporated by reference herein.

(5) Exhibit filed with Registrant's Form 10-KSB for the fiscal year ended
October 31, 1999 and incorporated by reference herein.

(6) Exhibit filed with Registrant's Form 8-K filed on January 31, 2001.

(7) Exhibit filed herewith.


                                       20
<PAGE>

                         Report of Independent Auditors

Board of Directors and Shareholders
Medical Resources Management, Inc.

We have audited the accompanying consolidated balance sheet of Medical Resources
Management, Inc. as of October 31, 2000, and the related consolidated statements
of operations, shareholders' equity, and cash flows for each of the two years in
the period ended October 31, 2000. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Medical
Resources Management, Inc. at October 31, 2000, and the consolidated results of
its operations and its cash flows for each of the two years in the period
ended October 31, 2000, in conformity with accounting principles generally
accepted in the United States.

As discussed in Note 1 to the consolidated financial statements, the
Company's net loss, its net working capital deficiency and violation of
certain covenants of the loan with the bank raise substantial doubt about its
ability to continue as a going concern. Management's plans as to these
matters are also described in Note 1. The consolidated financial statements
as of and for the year ended October 31, 2000 do not include any adjustments
that might result from the outcome of this uncertainty.

                                                   Ernst & Young LLP

Los Angeles, California
January 26, 2001


                                                                             F-1

<PAGE>


                       Medical Resources Management, Inc.

                           Consolidated Balance Sheet

                                October 31, 2000
<TABLE>
<S>                                                                  <C>
ASSETS
Current assets:
   Cash and cash equivalents                                         $    98,578
   Accounts receivable, less allowance of $ 60,000                     1,376,840
   Inventories                                                           737,184
   Prepaid expenses                                                      172,329
                                                                     -----------
Total current assets                                                   2,384,931


Property and equipment:
   Rental equipment                                                   22,019,599
   Transportation equipment                                              905,354
   Office furniture and equipment                                        496,477
   Leasehold improvements                                                 85,573
                                                                     -----------
                                                                      23,507,003
   Less accumulated depreciation and amortization                     11,460,040
                                                                     -----------
Net property and equipment                                            12,046,963

Other assets:
   Intangible assets, net of accumulated amortization of $ 382,046       348,815
   Deposits and other assets                                             322,359
                                                                     -----------
Total other assets                                                       671,174
                                                                     -----------
Total assets                                                         $15,103,068
                                                                     ===========
</TABLE>


SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


                                                                             F-2

<PAGE>

                       Medical Resources Management, Inc.

                     Consolidated Balance Sheet (continued)

                                October 31, 2000


<TABLE>
<S>                                                         <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Accounts payable                                         $    587,438
   Accrued expenses                                              754,854
   Note payable to a bank                                        917,724
   Current portion of long-term debt                           2,745,954
   Current portion of obligations under capital leases         1,883,709
                                                            ------------
Total current liabilities                                      6,889,679


Long-term debt, net of current portion                         1,434,458

Obligations under capital leases, net of current portion       2,001,651

Deferred income taxes                                          1,220,016

Commitments and contingencies

Shareholders' equity:
   Common stock, $.001 par value:
      Authorized shares - 100,000,000
      Issued and outstanding shares - 13,892,155                  13,892
   Additional paid-in capital                                  3,585,035
   Accumulated deficit                                           (41,663)
                                                            ------------
Total shareholders' equity                                     3,557,264
                                                            ------------
Total liabilities and shareholders' equity                  $ 15,103,068
                                                            ============
</TABLE>


SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


                                                                             F-3


<PAGE>


                       Medical Resources Management, Inc.

                      Consolidated Statements of Operations

<TABLE>
<CAPTION>
                                                             Year Ended October 31
                                                              2000           1999
                                                         ------------    ------------
<S>                                                      <C>             <C>
Net revenue                                              $ 11,102,650    $ 11,728,537

Cost of revenue                                             5,068,584       4,276,953
Depreciation expense                                        1,918,352       1,696,356
                                                         ------------    ------------
Gross profit                                                4,115,714       5,755,228

Selling expenses                                            2,190,047       2,203,848
General and administrative expenses                         2,001,201       2,263,076
Restructuring and closure expenses                            398,395            --
                                                         ------------    ------------
Operating income (loss)                                      (473,929)      1,288,304

Interest expense                                            1,124,285       1,217,757
                                                         ------------    ------------
Income (loss) before income taxes                          (1,598,214)         70,547
Provision for income taxes                                       --            27,711
                                                         ------------    ------------
Net income (loss)                                        $ (1,598,214)   $     42,836
                                                         ============    ============

Net income (loss) per common share (basic and diluted)   $       (.20)   $        .01
                                                         ============    ============
Weighted average common shares (basic and diluted)          8,112,227       7,396,283
                                                         ============    ============
</TABLE>


SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


                                                                             F-4

<PAGE>

                       Medical Resources Management, Inc.

           Consolidated Statements of Changes in Shareholders' Equity



<TABLE>
<CAPTION>
                                                    Common Stock            Additional     Retained
                                               Shares          Amount    Paid-in Capital   Earnings        Total
                                            -----------    -----------    -----------    -----------    -----------
<S>                                         <C>            <C>            <C>            <C>            <C>
Balance at October 31, 1998                   7,385,927    $     7,386    $ 1,683,326    $ 1,513,715    $ 3,204,427
   Issuance of stock for acquisitions            21,000             21         10,479           --           10,500
   Net income for year                             --             --             --           42,836         42,836
                                            -----------    -----------    -----------    -----------    -----------
Balance at October 31, 1999                   7,406,927          7,407      1,693,805      1,556,551      3,257,763
   Issuance of stock                          5,833,332          5,833      1,738,177           --        1,744,010
   Issuance  of stock  upon  exercise  of
   stock options                                686,576            687        127,038           --          127,725
   Issuance of stock to non-employees            15,320             15                      22,965 -         22,980
   Issuance of stock options to
   non-employees                                   --             --           28,000           --           28,000
   Cancellation of stock surrendered            (50,000)           (50)       (24,950)          --          (25,000)
   Net loss for year                               --             --             --       (1,598,214)    (1,598,214)
                                            -----------    -----------    -----------    -----------    -----------
Balance at October 31, 2000                  13,892,155    $    13,892    $ 3,585,035    $   (41,663)   $ 3,557,264
                                            ===========    ===========    ===========    ===========    ===========
</TABLE>


SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


                                                                             F-5

<PAGE>

                       Medical Resources Management, Inc.

                      Consolidated Statements of Cash Flows


<TABLE>
<CAPTION>
                                                                  Year Ended October 31
                                                                   2000           1999
                                                               -----------    -----------
<S>                                                            <C>            <C>
OPERATING ACTIVITIES
Net income (loss)                                              $(1,598,214)   $    42,836
Adjustments to reconcile net income (loss) to cash provided
by operating activities:
     Depreciation and amortization of property and equipment     1,963,507      1,736,088
     Amortization of intangibles                                   132,171        141,459
     Provision for doubtful accounts                                32,129         76,215
     Deferred income taxes                                            --           25,111
    (Gain) loss on sales of assets                                  (4,875)        (2,390)
     Write off of customer list                                    151,139           --
     Changes in operating assets and liabilities:
        Accounts receivable                                        229,308        201,667
        Inventories                                                 84,430        (44,879)
        Prepaid expenses                                           (18,011)        34,374
        Income tax receivable                                       (2,430)        20,843
        Accounts payable                                          (227,940)      (480,068)
        Accrued expenses                                           128,044       (141,726)
                                                               -----------    -----------
Net cash provided by operating activities                          869,258      1,609,530

INVESTING ACTIVITIES
Purchases of property and equipment                             (1,837,438)    (1,372,434)
Net proceeds from sales of assets                                  230,366         26,900
Payments for non-compete agreements                                   --          (38,000)
Increase in deposits and other assets                             (106,831)       (54,407)
                                                               -----------    -----------
Net cash used for investing activities                          (1,713,903)    (1,437,941)

FINANCING ACTIVITIES
Net proceeds from sales of common stock                          1,744,010           --
Proceeds from exercise of stock options                            127,725           --
Borrowings (repayments) on bank line of credit                    (124,910)     1,042,634
Borrowings on long-term debt                                     1,843,925      2,899,604
Borrowings on capital lease refinancing                             34,176           --
Principal payments on long-term debt                              (850,915)    (1,997,603)
Principal payments on capital lease obligations                 (1,876,120)    (2,212,120)
                                                               -----------    -----------
Net cash (used for) provided by financing activities               923,871       (267,485)
Net increase (decrease) in cash and cash equivalents                53,246        (95,896)
Cash and cash equivalents at beginning of period                    45,332        141,228
                                                               -----------    -----------
Cash and cash equivalents at end of period                     $    98,578    $    45,332

                                                               ===========    ===========
SUPPLEMENTAL INFORMATION:
Cash paid during the period for:
   Interest                                                    $ 1,145,081    $ 1,271,140
                                                               ===========    ===========
   Taxes                                                       $     2,400    $     2,730
                                                               ===========    ===========
Capital lease obligations entered into for equipment           $   439,587    $   158,850
                                                               ===========    ===========
Common stock and stock options issued as compensation          $    50,980    $    10,500
                                                               ===========    ===========
</TABLE>


SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


                                                                             F-6

<PAGE>

                       Medical Resources Management, Inc.

                   Notes to Consolidated Financial Statements

                                October 31, 2000

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

Medical Resources Management, Inc. (MRM or the Company) engages in the
business of renting medical equipment, providing associated technical
support, and also selling related supplies. Customers of the Company are
located throughout much of the western United States. The financial
statements include MRM, the holding company, consolidated with all of its
wholly owned subsidiaries - Physiologic Reps, Inc. (acquired in fiscal year
1996), Pulse Medical Products, Inc. (Pulse), Laser Medical, Inc., MedSurg
Specialties, Inc. (all acquired in fiscal year 1997) and Texas Oxygen and
Medical Equipment Company (acquired in fiscal year 1998). All significant
intercompany accounts and transactions have been eliminated.

BASIS OF PRESENTATION

The consolidated financial statements have been prepared on a going-concern
basis, which contemplates the realization of assets and satisfaction of
liabilities in the normal course of MRM's business. As of October 31, 2000,
the Company has a working capital deficiency of $4.5 million and for the year
ended October 31, 2000 incurred a net loss of $1.6 million. Management has
recently announced a merger agreement with Emergent Group, Inc. (see Note
10). Management intends to raise capital to fund the future operations and
growth of MRM. In addition, management is in current negotiations to extend
the existing line of credit. Until these transactions occur, there can be no
assurance that the Company will have sufficient liquidity to fund operations.
The financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of assets or
the amounts and classification of liabilities that may result from the
outcome of this uncertainty.

RESTRUCTURING AND CLOSURE EXPENSES

During the quarter ended April 30, 2000, the Company conducted an intensive
review of its corporate staff and of each of its operating subsidiaries. At the
conclusion of this review, a decision was made to restructure or eliminate
certain management positions. In addition, MRM decided to close two of its
offices in Boise, Idaho and Mansfield, Texas due to ongoing operating losses and
negative cash flows in these geographic areas.

As a result of these decisions, the Company incurred certain restructuring and
closure expenses during the quarter ended April 30, 2000. These restructuring
and closure costs and expenses included (i) the write-off of customer lists and
certain other non-cash write-offs, as well as legal fees, travel expenses,
severance expense, consulting fees and employee benefit accruals, all of which
amounted to $398,395 in the aggregate, and (ii) the write-down of certain
supplies and consumables inventories in conjunction with the closures in Idaho
and Texas in the amount of $123,000 (included in cost of sales for the quarter
ended April 30, 2000).

CASH EQUIVALENTS

For purposes of the statement of cash flows, the Company considers all
investments in highly liquid debt instruments with maturities of three months
or less when purchased to be cash equivalents.

                                                                             F-7
<PAGE>

                       Medical Resources Management, Inc.

             Notes to Consolidated Financial Statements (continued)

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

INVENTORIES

Inventories, consisting primarily of supplies, are stated at the lower of cost
(first-in, first-out) or market basis.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost and depreciated using the
straight-line method over the estimated useful lives of the assets, which vary
from five to ten years. Capitalized leases and leasehold improvements are being
amortized using the straight-line method over the shorter of the lease term or
estimated useful lives. Amortization of capital leases is included in
depreciation expense. Expenditures for major renewals and betterments that
extend the useful lives of property and equipment are capitalized. Expenditures
for maintenance and repairs are charged as incurred.

INTANGIBLE ASSETS AND LONG-LIVED ASSETS

Intangible assets consisting of the excess of purchase price over assets
acquired are being amortized over a period of 12 to 15 years. Payments for
non-compete agreements are capitalized and then amortized over the period of
the non-compete agreement. The carrying value of intangible assets and
long-lived assets is reviewed if the facts and circumstances suggest that
they may be impaired. If this review indicates that the assets will not be
recoverable, as determined based on estimated undiscounted cash flows of the
Company over the remaining amortization period, the carrying value would be
reduced by the estimated shortfall of discounted cash flows. Any impairment
is charged to expense in the period in which the impairment is incurred.

INCOME TAXES

The Company utilizes the liability method to determine the provision for income
taxes. Deferred tax assets and liabilities are determined based on differences
between the tax basis of assets and liabilities and the related financial
reporting amounts using currently enacted laws and rates.

REVENUE RECOGNITION

The Company recognizes revenue at the time that the rental service is rendered
to the customer, including the providing of technical support.

                                                                             F-8
<PAGE>


                       Medical Resources Management, Inc.

             Notes to Consolidated Financial Statements (continued)

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

STOCK-BASED COMPENSATION

The Company accounts for its stock compensation arrangements under the
provisions of Accounting Principles Board Opinion No. 25 (APB 25), "Accounting
for Stock Issued to Employees" and related interpretations, and intends to
continue doing so. Under APB 25, because the exercise price of the Company's
employee stock options equals or exceeds the market price of the underlying
stock on the date of grant, no compensation expense is recognized.

In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (SFAS 123). SFAS 123 established a fair value-based method of
accounting for compensation costs related to stock options and other forms of
stock-based compensation plans. However, SFAS 123 allows an entity to continue
to measure compensation costs using the principles of APB 25 if certain pro
forma disclosures are made. The Company provides proforma disclosures of net
income (loss) and earnings (loss) per share as if the fair value-based method
prescribed by SFAS 123 had been applied in measuring compensation expense.

The Company accounts for equity instruments issued to non-employees in exchange
for goods or services using the fair value method, and records expense based on
the values determined.

CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the Company to concentrations of
credit risk consist principally of temporary cash investments and trade
receivables. The Company places its temporary cash investments with banks.
Concentrations of credit risk with respect to trade receivables are limited due
to the Company's large number of customers primarily with small balances.
Management reviews these balances on a monthly basis and maintains reserves for
potential credit losses, which losses have historically been within management's
expectations. The Company generally sells on credit terms of 30 days and
requires no collateral.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could vary from those estimates.

EARNINGS PER SHARE

Earnings per share has been computed in accordance with Statement of Financial
Accounting Standards No. 128, "Accounting for Earnings per Share." Basic
earnings per share has been computed based on the weighted average number of
shares of common stock outstanding. Stock options and warrants for the diluted
earnings per share presentation have not been considered because the effect was
either not material or antidilutive.

                                                                             F-9
<PAGE>

                       Medical Resources Management, Inc.

             Notes to Consolidated Financial Statements (continued)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying value of financial instruments such as cash, cash equivalents,
accounts receivable, accounts payable, accrued expenses and short-term debt
approximate their fair value based on the short-term maturities of these
instruments. The carrying amount of the Company's outstanding balances under its
long-term debt instruments approximates fair value because the interest rates on
outstanding borrowings vary according to current market rates or are set to
approximate market rates.

NEW ACCOUNTING PRINCIPLES

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" (SFAS 133). This statement requires that all derivative
instruments be recorded on the balance sheet at their fair value. Changes in the
fair value of derivatives will be recorded each period in current earnings or
other comprehensive income, depending on whether a derivative is designated a
part of a hedge transaction and, if it is, the type of hedge transaction. SFAS
133 will be effective in fiscal 2001. The Company is in the process of
determining the impact of this new standard and anticipates that it will not
have a material impact on the Company's financial results when effective.

2.   INVESTMENTS

During fiscal years 2000 and 1999, the Company acquired an approximate 20%
equity interest in each of seven separate limited liability companies (LLCs).
The LLCs were formed by the Company and certain physicians for an investment by
the Company of between $5,000 and $17,500. The Company manages the LLCs and
provides operating and administrative services to the LLCs. The Company accounts
for its interests in the LLCs using the equity method of accounting. During the
fiscal years ended October 31, 2000 and 1999, the Company recognized fee
revenues of $1,118,367 and $887,851, respectively, relating to the operations,
management and other services provided to the LLCs. In addition, $15,803 and
$36,001 was recorded for the Company's equity interests in the profit of these
LLCs during fiscal years 2000 and 1999, respectively. Additionally, the Company
is a guarantor of certain debt of two of the LLCs in the aggregate amount of
$86,416.

                                                                            F-10

<PAGE>

                       Medical Resources Management, Inc.

             Notes to Consolidated Financial Statements (continued)


3.   OBLIGATIONS UNDER CAPITAL LEASES

The Company leases certain equipment under capital lease obligations which
contain purchase options. Cost and accumulated depreciation of equipment under
capital leases included in equipment as of October 31, 2000 are as follows:

<TABLE>
         <S>                             <C>
         Rental equipment                $8,812,694
         Less accumulated depreciation    2,780,615
                                         ----------
         Net book value                  $6,032,079
                                         ==========
</TABLE>

The following is a schedule by year of future minimum lease payments required
under the leases, together with their present value as of October 31, 2000:


<TABLE>
<S>                                                                <C>
2001                                                               $2,293,614
2002                                                                1,325,949
2003                                                                  722,307
2004                                                                  193,246
2005                                                                   20,229
                                                                   ----------
Total minimum lease payments                                        4,555,345
Less amount representing interest                                     669,985
                                                                   ----------
Present value of minimum lease payments due under capital leases    3,885,360
Less current portion                                                1,883,709
                                                                   ----------
Obligations under capital leases, net of current portion           $2,001,651
                                                                   ==========
</TABLE>

                                                                            F-11
<PAGE>

                       Medical Resources Management, Inc.

             Notes to Consolidated Financial Statements (continued)

4.   DEBT

In March 1999, the Company entered into a $2,000,000 revolving credit facility
with a bank that matures on March 2, 2001. This facility provides for
borrowings using a formula based upon eligible accounts receivable, as defined.
The revolving credit facility bears interest at the prime rate plus 1.00%
(10.50% at October 31, 2000). As of October 31, 2000, there was $917,724
outstanding under this facility, and there was approximately $65,000 of unused
borrowing capacity available.

Long-term debt consists of the following at October 31, 2000:

<TABLE>
    <S>                                                                                  <C>
     Note payable to a bank (term loan), payable in 60 monthly installments of
       $33,333 plus interest at the prime rate plus 1.25% (10.75% at October 31,
       2000), secured by accounts receivable, inventories, equipment and the
       personal guarantee of one shareholder.                                            $  1,433,333
     Notes payable to a finance company for a line of credit of
       $300,206 maturing April 2001, bearing interest at a rate of 12% per
       annum, interest payable monthly, secured by the accounts receivable and
       inventories of Pulse.                                                                  300,206
     Various installment notes payable to a finance company in monthly
       installments totaling $63,270 including interest varying between 8.9% and
       10.5% per annum, collateralized by rental equipment, maturing through
       September 2004.                                                                     2,089,174
     Various notes payable in monthly installments totaling $7,898
       including interest varying between  7.1% and 12.5% per annum,
       collateralized by trucks, vans and automobiles, maturing
       through January 2004.                                                                  89,270
     Other                                                                                   268,429
                                                                                     ----------------
     Total long-term debt                                                                  4,180,412
     Less current portion                                                                  2,745,954
                                                                                     ----------------
     Long-term debt, net of current portion                                             $  1,434,458
                                                                                     ================
</TABLE>

Long-term debt matures as follows during the years ending October 31:

<TABLE>
         <S>        <C>
         2001       $2,745,954
         2002          637,474
         2003          554,277
         2004          242,707
         2005             --
                    ----------
                    $4,180,412
                    ==========
</TABLE>

The revolving credit facility and term loan prohibit the payment of cash
dividends and require the Company to maintain certain levels of net worth and
to generate certain ratios of cash flows to debt service. As of October 31,
2000, the Company was not in compliance with certain financial covenants of
its revolving credit facility and term loan. As a result, we have classified
all of the bank loan facilities as current liabilities in the balance sheet
as of October 31, 2000.

                                                                            F-12

<PAGE>


                       Medical Resources Management, Inc.

             Notes to Consolidated Financial Statements (continued)

5.   PROVISION FOR INCOME TAXES

The provisions for income taxes for the years ended October 31, 2000 and 1999
consist of the following:


<TABLE>
<CAPTION>
                            Year ended October 31, 2000
                            Current   Deferred   Total
                            -------   -------   -------
          <S>               <C>       <C>       <C>
          Federal           $  --     $  --     $  --
          State                --        --        --
                            -------   -------   -------
                            $  --     $  --     $  --
                            =======   =======   =======
</TABLE>


<TABLE>
<CAPTION>
                            Year ended October 31, 1999
                            Current   Deferred   Total
                            -------   -------   -------
          <S>               <C>       <C>       <C>
          Federal           $  --     $22,067   $22,067
          State               2,730     2,914     5,644
                            =======   =======   =======
                            $ 2,730   $24,981   $27,711
                            =======   =======   =======
</TABLE>

Significant components of the Company's deferred tax assets and liabilities at
October 31, 2000 are as follows:


<TABLE>
<S>                                    <C>
Deferred tax assets:
   Net operating loss carryforwards    $ 1,232,699
   Allowance for doubtful accounts          23,568
   Other                                   182,634
                                       -----------
Total deferred assets                    1,438,901

Deferred tax liabilities:
   Depreciation                         (2,632,378)
   Other                                   (26,539)
                                       -----------
Total deferred liabilities              (2,658,917)
                                       -----------
Net deferred liabilities               $(1,220,016)
                                       ===========
</TABLE>

A reconciliation of the provision for income taxes with the amounts obtained by
applying the federal statutory tax rate is as follows:

<TABLE>
<CAPTION>
                                                                         Year ended October 31
                                                                           2000        1999
                                                                        ---------    ---------
<S>                                                                     <C>          <C>
Income tax based on federal statutory rate                              $(543,392)   $  24,084
State tax, net of federal tax benefit                                     (84,386)       3,740
Decrease in net operating loss carryforward                               627,778         --
                                                                        ---------    ---------
                                                                        $    --      $  27,824
                                                                        =========    =========
</TABLE>

At October 31, 2000, the Company had federal and state net operating loss
carryforwards for tax purposes of approximately $5.0 million and $2.4 million,
respectively, which will expire primarily in years 2017 through 2020. As a
result of ownership changes, net operating losses may be subject to limitations
under the Internal Revenue Code.


                                                                            F-13

<PAGE>

                       Medical Resources Management, Inc.

             Notes to Consolidated Financial Statements (continued)

6.   EQUITY

During September 2000, the Company sold 5,833,332 shares of its common stock in
a private offering. These shares were sold at a price of $0.30 per share,
resulting in gross proceeds of $1,750,000 and net proceeds of $1,744,010 after
expenses.

Between November 1, 1996 and March 31, 1997, the Company sold 291,600 Units
in a private offering. These Units consisted of 291,600 shares of common
stock, as well as 291,600 Class A warrants and 291,600 Class B warrants to
purchase, in the aggregate, 583,200 shares of common stock. The Units were
sold at $1.25 per Unit, resulting in gross proceeds of $364,500 and net
proceeds of $324,480 after expenses. The Class A and Class B warrants have a
per share exercise price of $2.50 and $4.00, respectively. In September 1999,
the Company extended the expiration date of these warrants for a period of
two years from November 1, 1999 to November 1, 2001. As of October 31, 2000
no such warrants had been exercised.

During March 1997, the Company issued an additional 202,840 Units to certain
shareholders (including the then principal officer of the Company) in
exchange for $253,550 of indebtedness owed to these shareholders. These Units
consisted of 202,840 shares of common stock, as well as 202,840 Class A
warrants and 202,840 Class B warrants to purchase, in the aggregate, 405,680
shares of common stock. The Units were issued at a rate of one Unit for each
$1.25 of shareholder debt forgiven. The Class A and Class B warrants have a
per share exercise price of $2.50 and $4.00, respectively. In September 1999,
the Company extended the expiration date of these warrants for a period of
two years from November 1, 1999 to November 1, 2001. As of October 31, 2000
no such warrants had been exercised.

In April 1997, in connection with a loan from a finance company, warrants were
granted to the finance company to purchase 100,000 shares of common stock at a
price of $2.00 per share, exercisable at any time during the six years following
the date of the loan.

7.   BENEFIT PLAN

The Company has adopted a defined contribution retirement plan (Plan) which
qualifies under Section 401(k) of the Internal Revenue Code. The Plan covers
substantially all employees with over one year of service. The Company makes an
annual election to provide matching contributions of up to 50% of each
participant's deferral up to a maximum of 3% of compensation. Effective January
2000, the Company elected to suspend any matching contributions. The amounts of
matching contributions included in expense were $9,316 and $85,747 for the years
ended October 31, 2000 and 1999, respectively.


                                                                            F-14

<PAGE>

                       Medical Resources Management, Inc.

             Notes to Consolidated Financial Statements (continued)

8.   STOCK OPTIONS

In September 1996, the Company adopted the 1996 Stock Incentive Plan (Plan)
to allow officers, employees and certain non-employees to receive certain
options to purchase common stock and to receive grants of common stock
subject to certain restrictions. Under the Plan, regular salaried employees
and directors may be granted options exercisable at not less than 100 percent
of the fair market value of the shares at the date of grant. The exercise
price of any option granted to an optionee who owns stock possessing more
than ten percent of the voting power of all classes of common stock of the
Company must be 110 percent of the fair market value of the common stock on
the date of grant, and the duration may not exceed five years. Options
generally become exercisable at a rate of one-third of the shares subject to
option on each of the first, second and third anniversary dates of the grant.
The duration of options may not exceed ten years. A maximum number of
1,500,000 shares of common stock may be issued under the Plan.

In February 2000, the Company adopted the 2000 Stock Incentive Plan (Stock
Plan) to allow officers, employees and certain non-employees to receive
certain options to purchase common stock and to receive grants of common
stock subject to certain restrictions. Under the Stock Plan, regular salaried
employees and directors may be granted options exercisable at not less than
100 percent of the fair market value of the shares at the date of grant. The
exercise price of any option granted to an optionee who owns stock possessing
more than ten percent of the voting power of all classes of common stock of
the Company must be 110 percent of the fair market value of the common stock
on the date of grant, and the duration may not exceed five years. Options
generally become exercisable at a rate of one-third of the shares subject to
option on each of the first, second and third anniversary dates of the grant.
The duration of options may not exceed ten years. A maximum number of
2,500,000 shares of common stock may be issued under the Stock Plan and the
Company has reserved 2,500,000 shares of common stock for future issuance in
connection with the exercise of these options.

                                                                            F-15

<PAGE>

                       Medical Resources Management, Inc.

             Notes to Consolidated Financial Statements (continued)

8.   STOCK OPTIONS (CONTINUED)

The following table summarizes stock option activity under both plans:

<TABLE>
<CAPTION>
                                                                         Year ended October 31
                                                                 2000                             1999
                                                      ----------------------------     ----------------------------
                                                                       Weighted                         Weighted
                                                                        Average                          Average
                                                                       Exercise                         Exercise
                                                          Shares         Price             Shares         Price
                                                      --------------- ------------     --------------- ------------
<S>                                                     <C>           <C>                  <C>         <C>
Outstanding at beginning of year                        1,138,004     $   0.34             877,854     $   0.37
Granted                                                 1,802,350     $   0.21             379,500     $   0.25
Exercised                                                (686,576)    $   0.19                --            --
Forfeited or cancelled                                   (103,250)    $   0.32            (119,350)    $   0.31
                                                      --------------- ------------     --------------- ------------
Outstanding at end of year                              2,150,528     $   0.29          1,138,004      $   0.34
                                                      =============== ============     =============== ============
Options exercisable at year-end                         1,665,278     $   0.30             670,504     $   0.35
                                                      =============== ============     =============== ============
</TABLE>

The weighted average fair value of options granted during the years ended
October 31, 2000 and 1999 was $0.21 and $0.25 at October 31, 2000 and 1999,
respectively. The weighted average remaining contractual life of stock options
was 8.68 years as of October 31, 2000. The range of prices of outstanding
options under the Plan at October 31, 2000 was $0.19 to $1.50.


<TABLE>
<CAPTION>
                                                                             Year ended October 31
                                                                           2000                   1999
                                                                     ------------------       --------------
        <S>                                                          <C>                      <C>
        Net income (loss) as reported                                $  (1,598,214)           $      42,836
                                                                     ==================       ==============

        Proforma net loss                                            $  (1,948,214)           $    (40,875)
                                                                     ==================       ==============

        Net income (loss) per common share as reported               $        (.20)           $        .01
                                                                     ==================       ==============

        Proforma net loss per common share                           $        (.24)           $       (.01)
                                                                     ==================       ==============
</TABLE>

The Company utilized the Black-Scholes method to estimate the fair value of
options, which includes the weighted average calculation of the fair value using
the following assumptions: (i) a risk-free interest rate of 6%; (ii) an expected
life of 8 years; (iii) expected volatility of 4.46; and (iv) no expected
dividends.


                                                                            F-16

<PAGE>

                       Medical Resources Management, Inc.

             Notes to Consolidated Financial Statements (continued)


9.   COMMITMENTS, CONTINGENCIES AND RELATED PARTY TRANSACTIONS

The Company leases premises under non-cancelable operating leases expiring in
2001 and future minimum lease payments are $85,105. The lease on the
corporate headquarters contains provisions for cost of living increases and
certain options to renew for a period of five additional years, which the
Company intends to exercise. Other facilities are on a month-to-month basis.

Rent expense was $239,231 and $306,483 for the years ended October 31, 2000 and
1999, respectively.

In April 2000, the Company borrowed $100,000 each from two individuals, for an
aggregate borrowing of $200,000. These loans are in the form of a note payable
to each of the two individuals, and bear interest at a rate of 10% per annum,
with interest payable monthly and principal due in full in April 2001. In
addition, each of these two individual lenders received 50,000 non-qualified
stock options at the time that the loan proceeds were received by the Company,
which resulted in deemed compensation of $28,000 in the aggregate. One of these
individuals is the father of the Company's Chairman, President and CEO. The
terms and conditions of these loans are believed to be the same as would be
offered to an independent third party by the Company.


                                                                            F-17

<PAGE>

10.      SUBSEQUENT EVENTS

During November and December 2000, we issued an aggregate of $400,000 in
convertible subordinated debt to certain affiliates. These instruments bear
interest at a rate of 8% per annum, mature 3 months from date of issuance and
are convertible into shares of our common stock at a rate of one share for each
$0.10 of principal amount. This convertible subordinated debt was exempt from
registration under Section 4(2) of the Securities Act of 1933.

In December 2000, we sold 1,333,333 shares of our common stock to a strategic
buyer in a private offering exempt from registration under Section 4(2) of
the Securities Act of 1933. These shares were sold at a price of $0.30 per
share, with no offering expenses, resulting in net proceeds of $400,000.

In January 2001, the Company entered into an agreement with Emergent Group,
Inc. (OTC BB: EMGRE.OB) ("Emergent") for a merger of the two companies. Under
the terms of the agreement, each share of the Company's common stock will be
exchanged for 0.37 shares of Emergent stock. The Company will operate as a
wholly owned subsidiary of Emergent after the merger. Consummation of the
merger is subject, among other conditions, to approval by the shareholders of
each of the two companies.

                                                                            F-18