UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

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

                  For the fiscal year ended September 30, 1997
                         Commission File Number 0-26488


                              R.F. MANAGEMENT CORP.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


          New York                                          22-3318886
          --------                                          ----------
(State or other jurisdiction                             (I.R.S. Employer
of incorporation or organization)                       Identification No.)

               95 Madison Avenue, Suite 301, Morristown, NJ 07960
               --------------------------------------------------
               (Address principal executive offices)   (zip code)


Registrant's telephone number, including area code  (973) 292-2833
                                                    --------------
Securities Registered Pursuant to Section 12(b) of the Act:  None

Securities Registered Pursuant to  Section 12(g) of the Act:

                                          Name of each exchange
      Title of each class                  on which registered
      -------------------                 ---------------------

Common Stock
--------------------------------------------------------------------------------
Class A Common Stock Purchase Warrant
--------------------------------------------------------------------------------
Class B Common Stock Purchase Warrant
--------------------------------------------------------------------------------

      Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 of 15(d) of the Securities and Exchange act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X|    No |_|.
                                                                 
      The number of shares outstanding of Registrant's Common Stock as of
09/30/96: 4,123,641, $.0001 par value.
<PAGE>

                                    PART I

Item 1.  BUSINESS

      R.F. Management Corp. (the "Company"), through its wholly owned
subsidiary, Northern New Jersey Medical Management, Inc. ("Northern") is engaged
in the business of administering and managing a free standing outpatient center
owned by radiologists who perform diagnostic services at such Center. In May
1995, the Company entered into a Stock Acquisition Agreement with Northern New
Jersey Medical Management, Inc. ("Northern"), incorporated in the State of New
Jersey in January 1985, wherein the Company purchased all of the issued and
outstanding shares of Common Stock of Northern. Northern is now a wholly owned
subsidiary of the Company. The Company and Northern are hereinafter collectively
referred to as the Company. The Company has no plans to expand the business
conducted by Northern. In addition, the Company contracted to establish two (2)
free standing outpatient centers performing ambulatory surgery. These Centers,
once established, will be managed by the Company and owned by physicians.
Diagnostic imaging centers managed by the Company will be owned by (i) hospitals
or (ii) radiologists actively performing diagnostic procedures at such centers.
Ambulatory surgical centers managed by the Company will be owned by (i)
hospitals or (ii) surgeons who utilize such centers to perform surgery on their
own patients. The Company will not perform any medical services.

      The past year has shown rapid expansion through acquisition of existing
diagnostic and treating centers along with the formation of a new entity.

      The Company formed a joint venture with MobilTec Management to form
MobilTec, Inc. ("MobilTec"). The Company owns 75% of MobilTec. MobilTec provides
mobile MRI facilities to physicians and hospitals. Along with MobilTec, the
Company acquired two (2) Mobile MRI's in trailers. In addition, the Company
acquired certain assets from Luther Brady & Associates, P.C. and Bucks Radiation
Oncology, Inc. The assets are used to provide radiation therapy services in New
Jersey and Pennsylvania. These assets were transferred in March of 1997 to newly
formed wholly-owned subsidiary, Brady Cancer Centers, Inc. The Company has also
expanded its diagnostic imaging business through acquisition of 65% of the
outstanding capital stock of Empire Imaging Associates, Inc. ("Empire") a New
York Corporation, acquisition of 52% of the outstanding capital stock of Atrium
Radiology Corp. ("Atrium"), and a 75% interest in open MRI and Diagnostic
Services of Tomes River, Inc. ("Open MRI") a newly formed Corporation. Empire
and Atrium both provide diagnostic imaging. Empire provides services in Yonkers,
New York, and Atrium provides services in Manalapan, New Jersey. The Company has
subsequently sold its interest in open MRI but has maintained a management and
marketing agreement with the facility.

                                      2
<PAGE>

      Additionally, the Company has entered the medical construction business 
through an acquisition of 52% of the outstanding stock of Hamilton McGregor 
International, Inc. ("Hamilton").  Hamilton through a wholly-owned subsidiary is
a general construction contractor.

      The Company focuses on obtaining patient referrals for its out-patient
surgical centers from sources such as health maintenance organizations (HMO's),
preferred provider organizations (PPO's), union contracts and hospital
contracts. The Company intends to position itself to participate in the
expanding managed healthcare market through direct solicitation of HMO's, PPO's
and physicians. See "Use of Proceeds".

      Diagnostic Centers

      Medical diagnostic imaging systems facilitate the diagnosis of disease and
disorders at an early stage, often minimizing the amount of cost and care needed
to stabilize or cure the patient and frequently obviate the need for invasive
diagnostic procedures, such as exploratory surgery. Diagnostic imaging systems
are based on the ability of energy waves to penetrate human tissue and generate
images of the body which can be displayed either on film or on a video monitor.
Imaging systems have evolved from conventional X-ray to the advance
technologies.

      The Company's diagnostic centers offer several services including X-ray
(Radiography), Ultrasonography (Ultra-sound), Mammography, Nuclear Medicine, CAT
Scan and MRI.

      Presently, the Company has no plans to expand the business conducted by
Northern.

      Pursuant to a written agreement, dated January 25, 1986, the Company is
providing administrative services for an outpatient diagnostic medical imaging
center located in Union, New Jersey. The term of the agreement is twenty (20)
years. The Company is responsible for the day-to-day managing of the center,
including hiring and selection of non-medical employees, marketing and the
responsibility of all computer operations at the site. Medical professionals
employed by the Center provide all medical and diagnostic services at the site.
The Company is not engaged in the practice of medicine at the Center.

      Ambulatory Surgery Centers

      An outpatient surgical center is a specially equipped physician's office
which is established to provide minor surgery which does not require the patient
to be admitted to a hospital.

      The Company markets its services to physicians and/or hospitals which the
Company believes are seeking outpatient

                                      3
<PAGE>

surgical centers. The Company will first review the area where the proposed site
is to be located and will review a general outline or business plan. Information
that will be considered will include other centers in the area, patient
financial class, patient demographics in the area served, and potential
subscribers to the service. In the case of a hospital, the Company will consider
the number of diagnostic or outpatient surgical procedures that the hospital can
provide. Managed care groups and HMO's will be contacted to determine if
contracts for providing services are available and to ascertain the membership
in the service area of the potential new sites. If the site is considered to be
positive, a request will be made to the equipment manufacturers for a bid on the
equipment the Company deems necessary. After all information needed by the
Company is received, the Company will determine the financial viability of the
project. Based on the criteria above, the Company will review each site to
determine if utilization and proliferation of the equipment and services is a
concern.

      The Company will not own any interest in these planned centers. For
consideration of the management fee the Company receives, the Company will
provide all startup funding necessary, including the purchase of medical and
surgical equipment, and all administrative, marketing and management functions.
See "Use of Proceeds."

      The Company will establish Centers, then service (support) these centers
by providing administrative, marketing and management functions. As part of the
Company's planned operations, the Company will purchase or lease equipment to be
utilized in the surgical centers. The cost of such equipment will be factored in
to the calculation for the management fee to be charged to the
physician/hospital who owns the Center. In addition to the cost of the
equipment, various other factors including the particular services required at a
particular center will be factored into the management fee.

      The Company offers a full range of administrative services, including
contract negotiations, site selection, equipment procurement, construction,
office personnel, office management, patient scheduling, patient billing, cash
collections, personnel management and marketing. The Company can provide either
a full or limited range of administrative services at the Centers depending upon
the needs of the Centers' owners.

      The Company has arranged for financing to lease all the equipment and
space necessary to provide a surgical suite to a physician or a group of
physicians to practice medicine in a private office. The Company offers a full
range of services to hospitals or physician clients, including the selection and
acquisition of appropriate equipment, the design and supervision of facility
construction, the provision and training of technical and support staff, patient
billing and collection and the provision of

                                      4
<PAGE>

overall marketing and management services. The equipment which the Company will
procure will include but is not limited to surgical tables, crash carts,
monitoring equipment, all diagnostic imaging equipment and surgical instruments
needed to operate a diagnostic and/or out-patient surgical center.

      The Company was incorporated in the State of New York in August 1994 and
its executive offices are located at 95 Madison Avenue, Suite 301, Morristown,
New Jersey 07960. It's telephone number is (973) 292-2833.

Range of Services

      The Company provides the full range of services discussed below. The needs
of a particular hospital or physician group determines the extent of the
services provided by the Company at a particular Center. The Company can deliver
services on a limited basis or through a full service medical center.

      Equipment and Related Services. The Company consults with a physician or
hospital to identify the equipment best suited to meet the customer's needs on a
cost-effective basis and then acquire the equipment through lease/purchase
agreement. In addition, the Company assists the physicians and their personnel
in complying with licensing and other regulatory requirements. The Company
supervises the installation and testing of the equipment and provides periodic
inspection of the equipment at the facility. The Company undertakes to maintain
the equipment which it provides and enters into agreements with equipment
manufacturers or other third parties for the delivery of maintenance services.

      Technical and Support Staffing. The Company provides non-physician
staffing who operate the equipment at the facility. The Company trains and
provide on-going safety instruction and educational programs for its staff. The
Company does not provide any medical services at the Center.

      Marketing. The Company provides its customers with marketing services,
including the design and formulation of a marketing program for each facility to
inform the physician community as to the technology and services available at
the facility.

      Patient Scheduling, Billing and Collection. At the Centers, the Company
schedules patients and prepare all patient billing and is responsible for
collection. The Company will also be responsible for related administrative and
record-keeping functions and all management information services.

      Management. The Company assumes full managerial responsibility over
facility operations, including all of the foregoing services, at each of the
future Centers.


                                      5
<PAGE>

Delivery of Services

      The Company delivers its services to its customers through either
contractual arrangements with hospitals or medical center arrangements with
physician groups.

Growth Strategy and Marketing

      The Company markets its services to physicians and hospitals through
various methods. These include direct solicitation, direct mail, sponsorship of
inservice education programs for physicians, nurses and technical staff, and
personal visits to physician offices. The Company also attends many of the
surgical seminars throughout the country.

      The Company is pursing a strategy of aggressively seeking to establish new
hospital centers with hospitals which currently have existing centers as well as
with hospitals without existing centers. In addition, the Company attempts to
educate surgeons as to the benefit of establishing their own ambulatory surgical
center, to which the Company can offer its services. The Company engages in
intensive marketing in areas of specialized physicians group, HMO's, PPO's,
union locals, municipalities and insurance companies. The Company attempts to
negotiate discounts with large suppliers of patients as allowed by law. The
Company's objective is to respond to the concerns of spiraling health costs
while maintaining quality of care to the patient. This is attainable based on
the premise that increased volume results in a reduction of cost per procedure
which is passed along to the Company's contracted clients.

      The Company applies a variety of criteria in evaluating each perspective
hospital customer. These criteria include the extent of the hospitals'
competitive environment; the site and type of hospital; the number of surgical
and orthopedic physicians; the patient volume and the nature of the payors
(private insurance programs, government reimbursement programs or other health
or medical organizations). The Company performs a similar analysis regarding
physician-owned centers.

      The Company's plan of operation is to identify and establish customers
during the remainder of this year. The Company, with its direct marketing
efforts, continues to seek clients, whether through acquisition of sites or
startups.

Equipment Sources

      The Company can obtain its medical equipment and supplies from various
manufacturers. The Company is not dependent on any one supplier of equipment.
The Company believes that equipment should be financed by the Company (typically
with terms of five years) with lenders and lessors, with equipment serving as
security for

                                      6
<PAGE>

the loans. The Company's acquisition methods (purchase or lease) depends upon
the specific circumstances of each transaction.

Licenses, Regulation and Governmental Reimbursement

      Licenses. The Company provides administrative and management services to
free-standing outpatient centers performing diagnostic imaging. The diagnostic
imaging centers are owned by radiologists who actively perform diagnostic
testing at such center. In addition, the Company has established a free-standing
outpatient center performing ambulatory surgery located in West Orange, New
Jersey. The ambulatory surgical centers will be owned by surgeons to perform
surgery on their own patients. The Company does not perform medical services.
However, government regulations do apply to the Company with respect to payment
on third party Medicare and Medicaid reimbursement. The Company will be subject
to the Anti-Kickback Laws, the "Stark Bill" as well as in New Jersey, the Health
Care Cost Reduction Act which are discussed herein. In the future, however, the
Company may be required to maintain licenses or certificates of need issued by
individual states. A number of states require hospital physicians to obtain a
Certificate-of-Need ("CON") prior to the development of the surgical centers.
The CON programs vary considerably from state to state, but all attempt to
regulate the ambulatory surgery services. Some states regulate indirectly
through rate commissions which prescribe hospital rates. The Company engages in
both diagnostic and a outpatient surgical center in New Jersey. Presently, in
the State of New Jersey, one room surgical suites are excluded from the
Certificate of Need (CON) requirements. However, if the Company were to plan for
the operation of a multi-suite center, a CON would have to be filed with the
appropriate state agency.

      Government Reimbursement. In major areas of its business, the Company may
rely for payment on third party (in large part governmental) reimbursement. Its
charges are predominantly paid by its clients which in turn receive
reimbursement from such sources.

      The Centers that the Company is affiliated with participate in many
reimbursement programs such as Medicare and Medicaid as well as other private
insurers. Under these arrangements the Center agrees to accept the approved
amount of reimbursement from each individual payor. Monthly statements are only
sent out when allowed by contractual arrangements with the insurers.

      Regulations. In order to curb the potential for fraud and abuse under the
Medicare and Medicaid programs, Congress has enacted certain laws (the
"Anti-Kickback Laws") prohibiting the payment or receipt of any remuneration in
return for the referral of patients to a healthcare provider for the furnishing
of medical services or equipment, the payment for which may be made in whole or
in part by the Medicare or Medicaid programs. New Jersey, as well as other
states, have enacted similar laws. It should be

                                      7
<PAGE>

noted that the Anti-Kickback Laws apply to both sides of the referral
relationship: the provider making the referral and the provider receiving the
referral. Violation of the Anti-Kickback Laws is a criminal felony punishable by
fines of up to $25,000 and/or up to five years imprisonment for each violation.
Federal law also permits the Department of Health and Human Services ("HHS") to
assess civil fines against violators of the Anti-Kickback Laws and to exclude
them from participation in the Medicare and Medicaid programs. These civil
sanctions can be imposed in proceedings that do not involve the same procedural
requirements and standards of proof as would be required in a criminal trial.

      The Anti-Kickback Laws are broadly drafted and judicial decisions rendered
thus far, while made in the context of overt payments explicitly in exchange for
referrals, have broadly interpreted the scope of these laws. Several federal
courts considering the issue, including the U.S. Court of Appeals, have
concluded that the Anti-Kickback Laws would be violated if "any purpose" of a
challenged economic arrangement is to induce or pay for referrals, no matter how
incidental that purpose may be or how many other legitimate purposes may exist
for the arrangement in question. Accordingly, many types of business
relationships between healthcare providers, including investments in healthcare
providers by physicians, hospitals or others who are in a position to refer
patients could be held to fall within the prohibitions of the Anti-Kickback Laws
or similar state laws.

      HHS has proposed regulations specifying "safe harbors" for various payment
practices between healthcare providers and their referral sources; that is, if a
payment practice were to come within the safe harbor, it would not be treated as
an illegal Medicare/Medicaid kickback or grounds for exclusion from the
Medicare/Medicaid programs. While failure to fall within a safe harbor does not
mean that the practice is illegal, HHS had indicated that it may give such
arrangements closer scrutiny. In their present proposed form, no safe harbor
would cover an investment interest in the Company. Congress has enacted
legislation (the "Stark Law") which generally prohibits an entity from
furnishing a service to an individual for which payment would be made by
Medicare or Medicaid if the individual's referring

                                      8
<PAGE>

physician, or an immediate family member of such referring physician, had an
ownership or other financial interest in the entity. The Company cannot predict
whether other regulatory or statutory provisions will be enacted by federal or
state authorities which would prohibit or otherwise regulate referrals by
physicians to the Company.

      In 1991, New Jersey enacted the Healthcare Cost Reduction Act, or
so-called "Codey Bill", (N.J.S.A. 45: 9-22.4 et seq.) which provided in part
that a medical practitioner shall not refer a patient, or direct one of its
employees to refer a patient, to a healthcare service in which the practitioner
and/or the practitioner's immediate family had any beneficial interest. The bill
specifically provided that for beneficial interests which were created prior to
the effective date of the Act, July 31, 1991, the practitioner could continue to
refer patients, or direct an employee to do so, if the practitioner disclosed
such interest to his patients. The disclosure must take the form of a sign
posted in a conspicuous place in the practitioner's office informing the
patients of such interest and stating that a listing of alternative health care
service providers could be found in the telephone directory.

      Under the "Stark Law", a physician who has a financial relationship with
an entity may not make a referral to the entity for the furnishing of clinical
laboratory services for which payment is made under the Medicare or Medicaid
programs. The Stark Law expands the application of the Medicare ban on
self-referrals after December 31, 1994. The Stark Law also extends the
self-referral ban to physician therapy services, radiology services including
MRI and CT scans, ultrasound services, radiation therapy services and the
furnishing of durable medical equipment, the furnishing of parenteral and
enteral nutritional equipment and supplies, the furnishing of out-patient
prescription drugs, ambulance services, home infusion therapy services,
occupational therapy services and in-patient and out-patient hospital services
(including services furnished in a psychiatric or rehabilitation hospital).

      The diagnostic centers currently managed by the Company are owned by
radiologists who actively engage in the performance of diagnostic testing at the
Centers. No investment interest or financial relationship exists between the
Center and any physician who is not a radiologist administering procedures at
the Center. The Company's planned surgical centers will be owned by surgeons who
will utilize the Centers to perform surgical procedures on their own patients.
No ownership interest or financial relationship will exist between such Centers
and any physician who is not a surgeon performing operations on his/her patient
at such Centers. The Company does not and will not have any ownership or
financial interest in the outpatient surgical or diagnostic imaging centers
other than the administration and management of such centers

                                      9
<PAGE>

pursuant to written agreements. 

Competition

      The Company competes with many firms that offer similar services. This
segment of the industry is highly competitive and many of the Company's
competitors have financial, marketing and other resources substantially greater
than those of the Company. Some of the Company's competitors enjoy an additional
competitive advantage by reason of their ability to offer discounts and other
services. Accordingly, the Company seeks to address smaller markets which have a
need for free-standing or out-patient centers performing diagnostic or
outpatient ambulatory surgery. The Company has identified the State of New
Jersey as its area of operation because of its favorable legislation regarding
one room surgical and diagnostic suites.

      The medical diagnostic business is characterized by a high degree of
competition. In the Company's case, this competition comes from a number of
independent local operators specializing in one or two medical applications, and
from a few large diversified healthcare companies (primarily larger hospitals
having the resources and capability to provide mobile diagnostic services to
other healthcare facilities) which provide ultrasound and other diagnostic
services as part of their overall medical business. Although the Company
believes that it has a competitive advantage over most of the small operators
(the Company competes in its marketplace based upon its performance, marketing
and its ability to customize its contractual arrangement), the Company may be
vulnerable to competition from the larger healthcare companies, at least one of
which can be found in each of the Company's geographic markets, and all of which
are substantially larger and possess

                                      10
<PAGE>

greater financial resources than the Company.

Marketing

      The Company markets its services through direct solicitation by various
employees, as well as direct mail, independent marketing companies, medical
staff in-service programs, and personal sales visits to physicians, the primary
emphasis of which is to educate the physician about program services. In
addition, the Company will focus its marketing efforts by obtaining patient
referrals to its centers from sources such as health maintenance organizations
(HMO), preferred provider organizations (PPO), union contracts and hospital
contracts. The Company will position itself to participate in the expanding
managed healthcare market through direct solicitation of HMO's, PPO's and
physicians. The Company intends to establish joint ventures with hospitals and
physician managed ambulatory surgery centers to provide services to subscribers
at reduced rates. See "Use of Proceeds".

Insurance

      The Company carries general liability insurance with coverage of up to
$1,000,000 per claim and a commercial umbrella policy of $2,000,000. The Company
believes that such coverage will be adequate.

Employees

      As of September, 1997, the Company employed 5 persons on a full-time
basis. Of the 5 employees, 3 are in management, 1 is in sales/marketing and 1 is
clerical/administrative.

Item 2.  PROPERTIES

      The Company's offices, at present, are located at 95 Madison Avenue, Suite
301, Morristown, New Jersey 07960. These premises are leased by Northern. The
premises are utilized by Northern, the Company and other entities related to the
Company and/or the management. Expense in connection with the use of such
premises are allocated among the businesses that share the facility. At this
time, the Company does not have any proposals for new facilities for its
proposed operations.

Item 3.  LEGAL PROCEEDINGS

      In April 1997, the Company was named as co-defendant in a lawsuit against
Dr. Luther Brady, his affiliates and associates, his attorneys and an alleged
employee of the Company. The suit, filed by a former associate of Dr. Brady's,
alleges that this individual had certain prior contractual rights to acquire the
assets employed in the operation of the Company's radiation therapy center,
located in Voorhees, New Jersey. The plaintiff seeks unspecified damages against
the Company for alleged fraud, equitable fraud and tortious interference with
the contract. The Company has denied these allegations in its response.

      In June 1997, the Company filed a third-party complaint against various
Brady affiliates and their attorneys, alleging that it has no knowledge of any
pre-existing rights to acquire the assets and that failure to disclose such
rights is a breach of numerous representations and warranties contained in the
asset purchase agreement. The Company seeks contribution and indemnity, damages,
partial recession of the various agreements entered into between the Company and
the Brady affiliates, injunctive relief and the return of certain monies held in
escrow.

      In October 1997, Dr. Brady's and the Company agreed to allow Dr. Brady and
his affiliates to oversee daily operations and the related cash flows of the
three centers. Dr. Brady has submitted a schedule of the proceeds and uses
thereof, but to date there has been no full accounting. Dr. Brady alleges that
the centers have operated at a cash short fall during this period, which his
affiliates have subsidized.

      Also in October 1997, the Brady affiliates returned $1,500,000 of the
funds being held in escrow to the Company's lender. These finds are being held
in escrow by the lender pending a resolution of the various legal issues
involved.

      In addition to the aforementioned legal issues associated with the
acquisition of the "Brady" assets, the agreement called for the Company to
receive six times the weekly average of accounts receivable generated during the
period from January 1 to June 1, 1996, which the Company had previously
estimated at $350,000. The Company and Dr. Brady had been unable to arrive at an
agreed upon amount and as a result, the Company has reserved the amount in full
pending a resolution of the dispute.


                                      11
<PAGE>

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

      None.
                                    PART II

Item 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

      R.F. Management Corp.'s initial public offering closed on July 21, 1995.
Neither a cash or stock dividend has been paid or issued.

      The Company's Common Stock is traded in the NASDAQ over-the-counter market
under the symbol RFMC. It's "A Warrant" and "B Warrant" are traded under the
symbols RFMCW and RFMCZ. As quoted in the Monthly Statistical Reports of the
National Association of Securities Dealers, Inc., the approximate high and low
bid prices for the year ended September 30, 1997 are as follows:

                                 COMMON STOCK

      Date                          High                    Low
      ----                          ----                    ---

      10/96                         1 3/4                   15/16
      11/96                         1 13/16                 1 1/8
      12/96                         1 1/8                   3/4
      01/97                         1                       3/4
      02/97                         13/16                   1/2
      03/97                         3/4                     1/2
      04/97                         13/16                   11/16
      05/97                         27/32                   5/8
      06/97                         1 1/32                  3/4
      07/97                         1 3/16                  15/16
      08/97                         1 1/4                   21/32
      09/97                         1 7/16                  1 1/16

                                   A WARRANT

      Date                          High                    Low
      ----                          ----                    ---

      10/96                         7/16                    1/9
      11/96                         25/64                   3/16
      12/96                         1/4                     5/32
      01/97                         5/32                    5/32
      02/97                         5/32                    5/32
      03/97                         5/32                    1/8
      04/97                         1/16                    1/16
      05/97                         1/16                    1/64
      06/97                         1/16                    1/32
      07/97                         1/32                    1/32
      08/97                         n/a                     n/a
      09/97                         n/a                     n/a


                                      12
<PAGE>

                                   B WARRANT

      Date                          High                    Low
      ----                          ----                    ---

      10/96                         3/16                    1/16
      11/96                         1/16                    1/16
      12/96                         1/16                    1/16
      01/97                         3/32                    1/32
      02/97                         1/32                    1/32
      03/97                         1/32                    1/32
      04/97                         1/32                    1/32
      05/97                         1/32                    1/32
      06/97                         1/32                    1/32
      07/97                         1/32                    1/64
      08/97                         n/a                     n/a
      09/97                         n/a                     n/a


                                       13
<PAGE>

Item 6.  SELECTED FINANCIAL DATA

      The selected financial data presented below as of September 30, 1997,
1996, 1995, 1994, 1993 and 1992 were derived from the Company's financial
statements. The information set forth below is qualified in its entirety by
reference to, and should be read in conjunction with, the financial statements
and related notes contained elsewhere in this Form 10-K.

Selected Statement of Operations Data:

<TABLE>
<CAPTION>
                                   1997           1996           1995           1994          1993           1992
                                   ----           ----           ----           ----          ----           ----

<S>                             <C>            <C>               <C>            <C>           <C>            <C>    
Operating revenue               11,369,924        312,971        355,029        333,002       281,445        248,448

Operating expenses              13,198,711      1,579,288        458,047        331,622       299,853        220,657

Income (loss) from
 operations                     (1,828,847)    (1,170,018)       (75,012)         1,380       (18,408)        27,791

Net income (loss)               (1,624,720)      (952,214)       (50,244)         3,157       (10,394)        18,820

Earnings (loss)
 per share                            (.48)          (.29)         (0.02)           NIL           NIL            NIL

Selected Balance Sheet Data:

Working   (deficit)             (1,669,508)     2,905,272      4,513,996        102,599       151,742        151,381
 Capital

Total Assets                    16,013,081      3,876,151      4,814,154        158,096       160,113        157,721

Total Liabilities               14,359,621        697,971        683,760         98,432       105,606         92,820

Shareholders'
 Equity                          1,653,460      3,178,180      4,130,394         59,664        54,507         64,901
</TABLE>


                                      14
<PAGE>

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

Introduction

      R.F. Management Corp. (the "Company") was formed in August of 1994, for
the purpose of establishing, administrating and managing free-standing
outpatient ambulatory surgery centers. In 1995, the Company acquired 100% of the
outstanding shares of Northern New Jersey Medical Management, Inc. ("Northern")
in a business combination accounted for as a pooling of interests. Northern, a
New Jersey corporation formed in 1986, is engaged in the management of a
diagnostic imaging center located in Union, New Jersey. All references to the
Company's prior operating history relates to the operations of Northern.

      The Company presently administers and manages three outpatient diagnostic
centers. The Company is responsible for the day-to-day management of the site,
including hiring and selection of non-medical employees, marketing and the
responsibility of all computer operations at the site. Medical professionals
employed at the Center provide all medical and diagnostic services at the site.
The Company is not engaged in the practice of medicine.

      On December 27, 1995, R.F. acquired forty percent (40%) of the outstanding
shares of Mobile Medical Services Limited ("Mobile"), a privately held Company
incorporated in Ireland, and a fifty-one percent (51%) interest in the property
owned or leased by its subsidiaries for $350,000. Mobile Medical Services
Limited provides mobile MRI, CT, Lithotripsy and Cardiac Catheterization
services in the Netherlands, United Kingdom, Italy and Germany. The payment
terms call for the Company to make payments directly to designated creditors on
behalf of Mobile. As of September 30, 1996, $350,000 is reflected as an
investment in joint venture.

      On March 20, 1996 the Company formed a wholly-owned subsidiary, R.F.
Management Corp. of Toms River "RFTR", a New Jersey corporation, who in July
1996 entered into a lease and management service agreement with Surgical
Associates, PA. This agreement is to commence upon the completion of the
construction of a one room surgical suite.

      On May 30, 1996, the Company entered into a five year lease and management
service agreement with Associates in Otolaryngology of New Jersey, PA. This
agreement is to commence upon the completion of the construction of a one room
surgical suite.

      On November 15, 1996, the Company acquired a 75% interest in MobileTec,
Inc. ("MobileTec"), a newly formed entity incorporated in the State of New
Jersey. MobileTec provides mobile MRI facilities to doctors, hospitals and
medical groups for which it receives a per-test or daily rental fee. The results
of operations

                                      15
<PAGE>

from its inception are included in these consolidated financial statements.

      On December 1, 1996, the Company acquired certain assets and assumed
certain liabilities from Luther W. Brady & Associates, P.C. and Bucks Radiation
Oncology, Inc. The assets are used to provide radiation therapy services and are
located in Voorhees, New Jersey and Havertown and Langhorne, Pennsylvania. The
purchase price for these assets was $3,700,000. The Company also assumed certain
notes payable totalling approximately $837,000. The fair value of the assets
acquired aggregated approximately $3,280,000. The difference between the
purchase price and the fair value of the assets, net of liabilities assumed,
resulted in the creation of goodwill of approximately $1,257,000. In connection
with the acquisition, the Company has arranged for financing of the purchase
price aggregating $3,500,000, in the form of installment notes, payable in 60
monthly installments including interest of 11.6%, totalling approximately
$77,150 per month. Repayment of these notes commenced March 1, 1997.

      In March 1997, the Company formed a new wholly-owned subsidiary, Brady
Cancer Centers, Inc., and transferred the assets acquired from Luther W. Brady &
Associates, P.C. and Bucks Radiation Oncology, Inc. to the subsidiary.

      On December 27, 1996, the Company acquired 65% of the outstanding capital
stock of Empire State Imaging Associates, Inc. ("Empire"), a New York
corporation, from an affiliated company for a total of $250,000. Empire operates
an imaging center which provides non-claustrophobic MRI, CT scanning,
mammography, ultrasound and x-ray services. As part of the purchase price, the
Company issued an installment note, in the principal sum of $225,000, payable in
nine monthly installments plus interest at prime plus 1% on the unpaid balance.

      Payment of any of the installments may be deferred for up to one year.
Payments may also be taken in the form of common stock of the Company at
equivalent values. Both of these options are solely at the discretion of the
seller.

      On January 31, 1997, the Company acquired 52% of the outstanding capital
stock of Atrium Radiology Corp. ("Atrium") for 133,333 shares of the Company's
common stock, having a fair value of $100,000 on the date of acquisition. The
agreement also calls for the seller to receive the first $300,000 of net profits
to be earned from future operations. The acquisition resulted in the creation of
goodwill amounting to approximately $221,000. Atrium's financial position and
results of operations as and for the eight months ended September 30, 1997 have
been included in these consolidated financial statements.


                                      16
<PAGE>

      In February 1997, the Company acquired a 75% interest in Open MRI and
Diagnostic Services of Toms River, Inc. ("Open MRI"), a newly formed
corporation. On March 19, 1997, the Company and its affiliate (which owned the
remaining 25%) sold all the outstanding capital stock to Advanced Open MRI and
Diagnostic Imaging, P.A., an unrelated party, for the principal sum of
$1,000,000. The Company's share of the proceeds of $750,000 resulted in a gain
of $592,340. Of the purchase price, $75,000 was received at the signing of the
contract, $175,000 was received at the closing in April 1997 and the balance of
$750,000 is payable in 30 equal installments of $25,000 commencing 90 days after
the opening of the facility. The first installment is expected to be received on
May 1, 1998. Using the present value of the note, discounted at 11%, the Company
has recorded a gain on the sale of its stock amounting to approximately
$489,000. The note is collateralized by 52% of the common stock of Open MRI,
which is held in escrow.

Results of Operations

      Year ended September 30, 1997 compared to the year ended September 30,
1996:

      Results of operations, which presents operating data for the Company and
Northern New Jersey Medical Management, Inc. reflects total operating revenues
of $988,600 as compared to approximately $675,600 or 46%. The increase in
management fees resulted from expansion associated with efforts to establish new
and existing surgical and diagnostic centers.

      Results of operations from this medical construction business, which began
this year, reflects total revenue of $3,506,000.

      Results of operations from medical services such as diagnostic imagery
business and radiation therapy, which resulted from acquisitions and ventures in
this past year, resulted in revenues of approximately $6,875,000.

      Operating expenses for the year ended September 30, 1997 were
approximately $3,938,000, as compared to approximately $1,579,000 for the year
ended September 30, 1996, an increase of approximately $2,359,000. Management
attributes this increase to expenditures made for salaries, professional fees,
consulting expenses and travel and entertainment costs associated with efforts
to establish and manage new and existing surgical centers, cash flow for new
acquisitions and new entities.

      Interest expense for the year ended September 30, 1997 was approximately
$868,000 as compared to approximately $56,000 for the year ended September 30,
1996. This is primarily attributed to the financing of the new acquisitions and
new entities.


                                      17
<PAGE>

      Interest income aggregated approximately $122,000 for the year ended
September 30, 1997 as compared to approximately $131,000 for the year ended
September 30, 1996. This decrease of approximately $9,000 is due to the
Company's decrease in the investment balance from the proceeds of the initial
public offering.

      Net loss increased to approximately $1,625,000 or $.48 per share for the
year ended September 30, 1997 as compared to $952,000 or $.29 for the year ended
September 30, 1996, on a primary basis.

      The explanation of this increase is a direct result of the increase in
expansion associated with the efforts to establish new and existing surgical
centers, as well as emergence into new markets.

      The healthcare dollar for the past few years has been earmarked for
reductions. Although third party payors are shrinking the amount of healthcare
payments, quality care and highly technological equipment is still a priority.
With increases in the cost of highly technological equipment and the cost to
borrow money, profit margins will be reduced. It is the Company's aim to address
the effects of lower healthcare reimbursement and increased equipment costs by
handling a larger volume of patients at its newly acquired centers and at its
future centers through a managed care network.

      Year ended September 30, 1996 compared to the year ended September 30,
1995:

      Results of operations, which presents operating data for the Company and
Northern New Jersey Medical Management, Inc. reflects total operating revenues
of $313,000 as compared to approximately $355,000 in 1995, a decrease of
approximately $42,000 or 12%. The decrease in management fees resulted from a
decrease in the realization under third party reimbursement agreements at the
diagnostic imaging center it manages.

      Operating expenses for the year ended September 30, 1996 were
approximately $1,579,000, as compared to approximately $458,000 for the year
ended September 30, 1995, an increase of approximately $1,121,000. Management
attributes this increase to expenditures made for salaries, professional fees,
consulting expenses and travel and entertainment costs associated with efforts
to establish and manage new and existing surgical centers.

      Interest expense for the year ended September 30, 1996 was approximately
$56,000 as compared to approximately $14,000 for the year ended September 30,
1995. This is primarily attributed to the unpaid principal pertaining to the
acquisition of Northern on May 31, 1995 which accrues interest at the rate of
prime plus one percent. In addition, on April 30, 1996, a bank line of credit
was established bearing interest at prime plus one percent.


                                      18
<PAGE>

      Interest income aggregated approximately $175,000 for the year ended
September 30, 1996 as compared to approximately $44,000 for the year ended
September 30, 1995. This increase of approximately $131,000 is due to the
Company's investment balance from the proceeds of the initial public offering.

      Net loss increased to approximately $952,000 or $.48 per share for the
year ended September 30, 1996 as compared to $50,000 or $.02 for the year ended
September 30, 1995, on a primary basis. The explanation of this increase is a
direct result of the increase in expansion associated with the efforts to
establish new and existing surgical centers.

      The healthcare dollar for the past few years has been earmarked for
reductions. Although third party payors are shrinking the amount of healthcare
payments, quality care and highly technological equipment is still a priority.
With increases in the cost of highly technological equipment and the cost to
borrow money, profit margins will be reduced. It is the Company's aim to address
the effects of lower healthcare reimbursement and increased equipment costs by
handling a larger volume of patients at its newly acquired centers and at its
future centers through a managed care network.

Year ended September 30, 1995 compared to the year ended September 30, 1994:

      Management fees for the year ended September 30, 1995 were approximately
$335,000 as compared to approximately $333,000 for 1994, an increase of
approximately $22,000. This increase is attributable to an increase in referrals
and the number of patients handled at the center.

      Operating expenses for the year ended September 30, 1995 aggregated
approximately $458,000 as compared to approximately $331,000 in 1994, an
increase of approximately $127,000. Management attributes this increase
primarily to the establishment of a sales and marketing team and the
expenditures associated with their efforts to establish and manage new Surgical
Centers.

      Interest income aggregated approximately $44,000 for the year ended
September 30, 1995 as compared to $0 for the year ended September 30, 1994. This
increase is due to the investment income earned on the proceeds of the initial
public offering.

      Net loss for the year ended September 30, 1995 aggregated approximately
$50,000 as compared to net income of approximately $3,000 for the year ended
September 30, 1994. Explanation of this decrease can be derived from the
operational analysis provided above.


                                      19
<PAGE>

Liquidity and Capital Resources

      On December 15, 1994, the Company completed a Private Placement Offering
of its $.0001 par value Common Stock. The offering, which raised for the Company
$700,000 before expenses, called for the sale of up to 4,100,000 shares at a
price of $2.00 per share (giving effect to the 4-for-1 stock split on December
22, 1994). The Company closed the offering upon the sale of 350,000 shares
(giving effect to the 4-for-1 stock split on December 22, 1994), which raised
the Company $615,995, net of expenses.

      On July 21, 1995, the Company's Initial Public Offering was declared
effective by the United States Securities and Exchange Commission and closed on
July 27, 1995. the offering included the sale of 977,500 shares of common stock,
977,500 A Warrants and 977,500 B Warrants. The Company received proceeds of
$4,205,899, net of expenses of $1,365,851.

      The Company has a working capital surplus of $2,905,272 at September 30,
1996 when compared to a working capital surplus of $4,513,996 at September 30,
1995. This decrease is primarily the result of expenditures incurred in the
expansion and development of new business.

      The Company experienced a net decrease in cash and equivalents aggregating
approximately $2,362,000 for the year ended September 30, 1996. This decrease
results primarily from the net loss and other operating activities aggregating
approximately $1,442,000, the investments in a joint venture, certificate of
deposit and fixed assets aggregating approximately $882,000 and the repayment of
$150,000 of notes payable to stockholders less advances from a line of credit of
approximately $168,000.

      On April 30, 1996, the Company entered into a one year $400,000 line of
credit agreement with a bank which bears interest on the unpaid principal at
prime plus one percent (9.25%). The line is collateralized by a one year
certificate of deposit. As of September 30, 1996, the amount outstanding under
the line of credit aggregated approximately $168,000.

      The Company believes that it has sufficient resources to support the
operations of Northern and begin its proposed surgical center operations and it
has working capital to administer and manage the centers for the next twelve
months. The Company believes that the net proceeds from the Initial Public
Offering will be sufficient to meet its plans with respect to the management and
the administration of sites in the next twelve months and its working capital
needs for the foreseeable future. It is the belief of the Company that the
normal cash flow generated from the administration and management from the
Centers will provide excess cash (capital) which will be used for expenses and
future capital needs.


                                      20
<PAGE>

      The Company further believes that the operations of Northern will provide
sufficient capital (net of expenses) and cash flows to repay the annual
installments of $150,000 for the loan payable, plus interest due to Northern's
former shareholders. If funds from Northern's operations are not sufficient for
repayment of the annual installments, the installments will be reduced to
$100,000 if the gross annual revenues fall below $200,000 and the amount left
unpaid by reason of such adjustment shall be forfeited.

      There are no other known trends, demands, commitments or events that will
impact the Company's results of operations, liquidity and/or capital resources.

Item 8.     FINANCIAL STATEMENT AND SUPPLEMENTARY DATA

      Index to Consolidated Financial Statements of R.F. Management Corp. and
Subsidiaries as of September 30, 1997 and 1996 and for the three year period
ended September 30, 1997. 

                                                                  Page
                                                                  ----

      Independent Auditor's Report                                F-1,F-2

Consolidated Financial Statements
      Consolidated Balance Sheets                                 F-3,F-4
      Consolidated Statements of Operations                       F-5
      Consolidated Statements of Stockholder's Equity             F-6
      Consolidated Statements of Cash Flows                       F-7,F-8
      Notes to Consolidated Financial Statements                  F-9,F-16

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

Item 1. Changes in control of Registrant

                N/A

Item 2. Acquisition of Disposition

                N/A

Item 3. Bankruptcy or Receivership

                N/A

Item 4. Changes in Registrant's Certifying Accountant

      On March 9, 1998, the Company dismissed Weinick Sanders Leventhal & Co.,
LLP, located at 1515 Broadway, New York, New York 10036.

      In connection with the recent fiscal year and subsequent interim period
preceding Weinick Sanders Leventhal & Co., LLP's dismissal there were
disagreements with Weinick Sanders Leventhal & Co., LLP, on matters of auditing
scope and procedure. These disagreements include: Management has not revaluated
the carrying value of its goodwill arising from operating entities that
sustained substantial losses since their Acquisition; Audited financial
statements for a material Acquisition for the prior two (2) years are
unavailable; Assets of a material subsidiary are no longer in control by the
company; Unable to obtain independent verifications of the amount of and
existence of material receivables from a party with whom the Company is involved
in litigation. As a result of these above issues, which also limited our audit
scope, Weinick Sanders Leventhal & Co., would of had to disclaim an opinion on
the registrants' financial statement unless all such issues were resolved in an
acceptable manner. These disagreements were not resolved to the former
accountant's satisfaction.

      Weinick Sanders Leventhal & Co., LLP's report on the financial statements
for the past year did not contain an adverse opinion or disclaimer of opinion
and was not qualified or modified.

      The Company has requested that Weinick Sanders Leventhal & Co., LLP
furnish them with a letter addressed to the Securities and Exchange Commission
(the "Commission") stating whether they agree with the statements made by the
Company in response to this item, and if not, stating the respects in which they
do not agree.

      The decision to dismiss the accountants was recommended and approved by
the Board of Directors.

      The Company has filed on form 8-K the above referenced information. The
Company has engaged Vincent J. Batyr & Co., located at 27 North Broadway,
Tarrytown, New York 10591 as its new Certified Public Accountant.


                                      21
<PAGE>

                                   PART III

Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

      The executive officers and directors of the Company are listed in the
table below and brief summaries of their business experience and certain other
information with respect of them are set forth thereafter:

      Name                Age                  Position
      ----                ---                  --------

Roger Findlay              50           Chairman of the Board of
                                        Directors

Wayne P. Miller            47           President, Secretary
                                        and Director

Louis A. D'Esposito        65           Vice President, Chief
                                        Financial Officer and
                                        Director (retired 10/1/97
                                        as Vice President and Chief
                                        Financial Officer) Director

Patrick O'Connor           44           Director

      Each of the above officers and directors shall hold office until the next
annual meeting of the Company's shareholders and until a successor is selected
and qualified.

      Roger Findlay is co-founder and has been Chairman of the Board of
Directors since its inception. He resigned as President of the Company,
effective May 1997. Since June 1990, Mr. Findlay is also co-founder, President
and Chairman of the Board of Modern Medical Modalities Corporation, a public
company listed on Nasdaq Small Capital Market, that leases magnetic resonance
imaging and computerized axial tomography equipment to hospitals and physicians
("Modern Medical"). Mr. Findlay since 1989 has also been co-founder of
Technology Services, Inc. a software support company for medical offices and
commercial accounts ("Technology Services"). Mr. Findlay from 1986-1989 was
President of Advacare, Inc., a practice management and physician billing
company. He was co-founder and President of Effective Management Services, Inc.,
from 1984 to 1986, which provided facilities management and custom programming
for hospitals, universities and physician groups. Mr. Findlay from 1984 to 1986
was also co-founder and President of Medical Accounts Management Services, a
software development company. Additionally, from 1986, he has been founder and
President of Northern New Jersey Medical Management, Inc., a general partner of
a diagnostic imaging center. From 1984 to 1986, Mr. Findlay was Chief Operating
Officer of NMR of America, Inc., a publicly traded Company engaged in MRI sites.
Mr. Findlay from 1972 to 1986 was President and co-owner of Medical Billing

                                      22
<PAGE>

Services.  Mr. Findlay will devote his full time to the affairs of the Company.

      Wayne P. Miller was elected President of the Company, effective May 1997.
He has been Secretary and Director of the Company since December 1995. Mr.
Miller from December 1989 to November 1995 was employed by Modern Medical
Modalities Corp., a company that leases magnetic resonance imaging and
computerized axial tomography equipment to hospitals and physicians, and then by
its wholly owned subsidiary Medical Marketing & Management Inc. as National
Marketing/Sales Director. Since 1991 Mr. Miller has been employed by The
Physicians Network, a company that provides turnkey medical billing systems to
billing companies, hospitals and physicians. From 1991 to 1995, Mr. Miller was
an independent consultant providing billing and computerized consulting services
to physicians and hospitals. Mr. Miller from 1990 to 1991 was Vice President of
Billing for Healthnet a company engaged in the business of physician billing and
receivable management. From 1986 to 1990, Mr. Miller was Vice President of
Marketing with HealthCare Technologies, a company specializing in total turnkey
physician billing solutions. Mr. Miller from 1983 to 1986 was contracted by
Health Corp. of the Archdiocese of Newark as Vice President of PrimeMark, to
establish a hospital based collection agency for three hospitals and create a
physician fee-for-service billing company for the hospitals' billing procedures.

      Louis A. D'Esposito was Vice President, Chief Financial Officer and
Director of the Company since October 1995 and has retired September 1997. Mr.
D'Esposito is an independent director of the Company. From 1993 to 1995, Mr.
D'Esposito was the Eastern Regional Manager of DVI Financial Services, Inc., an
equipment leasing and finance company specializing in the leasing and financing
of high-tech medial equipment. Mr. D'Esposito from 1983 to 1993 was the Regional
Manager of U.S. Concord, Inc. a division of the Hong Kong and Shanghai Banking
Corporation, also specializing in the leasing and financing of medical
equipment.

      Mr. O'Connor is currently an independent director of the Company. Mr.
O'Connor is also President of Medical Martketing and Management Inc., a
wholly-owned subsidiary of Modern Medical. Mr. O'Connor joined Modern Medical in
October 1994 as Vice-President of Sales, Marketing and Project Development.
Previous experience has been in the role of acting President of Modern Medical
from 1/96 thru 7/97. Other positions held MRI Sales Specialist, Account
Executive and Account Specialist with Picker International from August 1982
until October 1994. Other positions held were Hospital Radiological
Administrator and Radiological Technician.


                                      23
<PAGE>

Executive Compensation

      The following table sets forth the executive compensation and distribution
paid to each executive officer of the Company during the Year ended September
30, 1997.

                         EXECUTIVE COMPENSATION TABLE
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
                   Annual Compensation                      Long-Term Compensation
------------------------------------------------------------------------------------------------
Name and                                                   Restricted
 Principal           Fiscal                     Other      Stock  Options/  LTIP     All Other
Other Position       Year     Salary  Bonus  Compensation  Awards  SARSs   Payouts  Compensation
--------------       ----     ------  -----  ------------  ------  -----   -------  ------------
<S>                  <C>      <C>     <C>    <C>           <C>     <C>      <C>       <C>
Roger Findlay
 Chairman and        1997    115,392   --       --          --      --       --        --
 Director

Wayne P. Miller
 President,           1997    86,183    --       --          --      --       --        --
 Secretary
 and Director

Louis A. D'Esposito
 Vice President,       1997   63,345    --       --          --      --       --        --
 Chief Financial
 Officer and Director
------------------------------------------------------------------------------------------------
</TABLE>

Employment Contracts.

      In June 1997, the Company entered into an employment agreement with Wayne
P. Miller which provides for a five year term of employment, commencing in June
1997 at a salary of $85,000 for each year. The agreement provides that Mr.
Miller is to receive an amount equal to three times his annual salary if this
contract is cancelled by the Company.


                                      24
<PAGE>

Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of this date of this
Prospectus, and as adjusted to reflect the sale of the Securities offered
hereby, based on information obtained from the persons named below, with respect
to the beneficial ownership of shares of Common Stock, by (i) each person who is
known by the Company to own beneficially more than 5% of the Company's
outstanding Common Stock; (ii) each of the Company's directors; and (iii) all
directors and officers of the Company as a group.

Name                    Amount
and Address             and Nature
of Beneficial           of Beneficial
Owner                   Ownership(1)
-------------           -------------

Roger Findlay                 236,096
95 Madison Avenue
Morristown, NJ

Wayne P. Miller                40,000
8 Fredon-Greendale Road
Newton, NJ 07860

Louis A. D'Esposito               ---
29 Glen Drive
Bardonia, NY 10954

Patrick O'Connor                  ---
255 Serpentine Drive
Bayville, NJ 08721

Officers and                  998,000
Directors
as a group
(4 Persons)

(1)   Unless otherwise noted, the Company believes that all persons named in the
      table have sole voting and investment power with respect to all shares of
      Common Stock beneficially owned by them. A person is deemed to be the
      beneficial owner of securities that can be acquired by such person within
      60 days from the date of this Prospectus upon the exercise of warrants or
      options.


                                      25
<PAGE>

Item 13. CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS

      The Company was incorporated as R.F. Management Corp. in the State of New
York on August 4, 1994, for the purpose of providing free standing or outpatient
centers performing ambulatory surgery.

      In May 1995, the Company entered into a Stock Acquisition Agreement (the
"Agreement") with Northern New Jersey Medical Management, Inc. ("Northern") a
corporation formed in the State of New Jersey in January 1986 with offices
located at 95 Madison Avenue, Morristown, New Jersey 07960. Northern administers
and manages a free standing outpatient center performing diagnostic services.
The sole officers, directors and principal shareholders of Northern were Roger
Findlay and Gregory Maccia, who are officers, directors and principal
shareholders of the Company.

      Pursuant to the terms of the Agreement, the Company purchased all of the
issued and outstanding shares of common stock of Northern. In consideration, the
Company will pay Messrs. Findlay and Maccia an aggregate of $750,000 in
accordance with the following terms:

            $150,000 paid upon execution of the agreement; the balance of
            $600,000 will be paid in the form of a promissory note, with
            interest at prime plus 1% on the unpaid principal balance, payable
            as follows:

                  $150,000 on January 30, 1996; 
                  $150,000 on January 30, 1997;
                  $150,000 on January 30, 1998;
                  $150,000 on January 30, 1999.

      In the event that the gross annual revenue for any calendar year from
1995-1998 for Northern falls below $200,000 then the payment due on January 30
of the subsequent year will be reduced by 1/3, and the amount left unpaid by
reason of such adjustment shall be forfeited. The Company and Northern further
agreed, that all payments pursuant to the promissory note will only be
distributed from operating revenues and not from the Use of Proceeds of the
offering. The Company will not use or finance the purchase of Northern with
proceeds from the offering.

      In addition, both the Company and Northern made standard representations
and warranties with respect to their respective operations and affairs. Northern
now operates as a wholly owned subsidiary of the Company. Northern further
represented and warranted that its present contract in Union, New Jersey will
remain in full force and effect for an additional eleven years.


                                      26
<PAGE>

      As a result of the acquisition of Northern, Messrs. Findlay and Maccia
have received and will continue to receive financial benefits consisting of
aggregate cash payments totalling $750,000. The Company did not obtain a
fairness opinion in connection with the Northern purchase price. The Company
relied upon its review of historical financial information as well as projected
future operation in determining the $750,000 purchase. Accordingly, there is no
assurance that unrelated parties would not have paid less for Northern than the
Company paid. Neither Mr. Findlay nor Mr. Maccia voted with respect to the
Company's acquisition of Northern. Mr. Goldberg, who was not affiliated with
Northern, approved the Company's purchase of Northern shares.


                                      27
<PAGE>

                                    PART IV

Item 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

      (a)(1)      The financial statements for R.F. Management Corp.
                  and subsidiaries are included in Part II Item 8 -
                  See Index to Financial Statements on Page F.

      (a)(2)      The following financial statements for Union
                  Diagnostic Facilities Group, L.P. are submitted
                  herewith:
                                                                  Page
                                                                  ----
      Union Diagnostic Facilities Group, L.P.

      Independent Auditors' Report                                F-17


      Financial Statements
            Balance Sheets                                        F-18, F-19
            Statements of Income                                  F-20
            Statements of Partners' Capital                       F-21
            Statements of Cash Flows                              F-22
            Notes to Financial Statements                         F-23, F-27

      (a)(3)      The following schedules for the years ended
                  September 30, 1996, 1995 and 1994

      R.F. Management Corp.

      Schedule IV - Indebtedness of and to Related
                      Parties - Not Current                       F-28

      Union Diagnostic Facilities Group, L.P.

      Independent Auditors' Report on Accompanying
      Information                                                 F-29

      Schedule IV - Indebtedness of an to Related
                     Parties - Not Current                        F-30

      Schedule VIII -  Valuation and Qualifying
                          Accounts                                F-31

      (a)(4)      Exhibits.  Not Applicable.

      (b)  Reports on Form 8-K.  Not Applicable

      (c)   Exhibits.  Not Applicable.

                                  Item 14(a)


                                      28
<PAGE>

                                  SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

    R.F. MANAGEMENT CORP.


By  /s/Roger Findlay
    -------------------------------------
       Roger Findlay
       Chairman of the Board of Directors

Date
    -------------------------------------

      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 and on the dates indicated.


By  /s/Roger Findlay
    -------------------------------------
       Roger Findlay
       Chairman of the Board of Directors


Date
    -------------------------------------
                *     *     *


By  /s/Wayne P. Miller
    -------------------------------------
       Wayne P. Miller
       Director, President and Secretary

Date
    -------------------------------------
                *     *     *


By  /s/Louis A. D'Esposito
    -------------------------------------
       Louis A. D'Esposito
       Director

Date
     ------------------------------------


By  /s/Patrick O'Connor
    -------------------------------------
       Patrick O'Connor
       Director

                                       29
<PAGE>

To the Board of Directors and Stockholders
      of R.F. Management Corp.

      We have audited the accompanying consolidated balance sheets of R.F.
Management Corp. and Subsidiaries as of September 30, 1997 and 1996, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the three years in the period ended September 30, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We did not audit the financial statements of Northern New Jersey
Medical Management, Inc., a wholly-owned subsidiary, which statements reflected
total assets of $520,373 and $255,388, as of September 30, 1997 and 1996, ;and
total revenues of $341,292, $309,067, and $355,029 for the three year period
ended September 30, 1997. Those statements were audited by other auditors whose
report has been furnished to us, and our opinion, insofar as it relates to
amounts included for Northern New Jersey Medical Management, Inc., is based
solely on the report of the other auditors.

      We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. 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 and the report of the other auditors provide a
reasonable basis for our opinion.

      In our opinion, based on our audits and the report of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of R.F. Management Corp. and
subsidiaries as of September 30, 1997 and 1996, and the results of their
operations and their cash flows for each of the three years in the period ended
September 30, 1887 in conformity with generally accepted accounting principles.

      The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered recurring losses from operations
and has a net capital deficiency that raises substantial doubt about its ability
to continue as a going concern. Management's plans in regard to these matters
are also described in Note 2. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

                                        /s/ Vincent J. Batyr & Co.

Vincent J. Batyr & Co.
Certified Public Accountants
Tarrytown, New York
March 6, 1998


                                      F-1
<PAGE>

                    R.F. MANAGEMENT CORP. AND SUBSIDIARIES

                         CONSOLIDATED BALANCE SHEETS

                                    ASSETS

                                                             September 30,
                                                       -------------------------
                                                          1997          1996
                                                       -----------   -----------

Current assets:
      Cash and cash equivalents                        $   523,772   $ 2,258,333
      Certificates of deposit                              707,073       408,266
      Accounts receivable                                3,923,513       296,893
      Note receivable - current portion                     39,827            --
      Loans receivable - stockholders and officers          32,024            --
      Due from affiliates                                       --        19,743
      Loans receivable                                      33,367            --
      Deferred income taxes                                  5,650       218,798
      Other current assets                                 107,285       101,210
                                                       -----------   -----------

            Total current assets                         5,372,511     3,303,243
                                                       -----------   -----------

Other assets:
      Note receivable - net of current portion             441,152            --
      Equipment (net of accumulated depreciation
       of $617,821 and $24,969, respectively)            5,835,756       130,730
      Investment in a limited partnership                   10,250        11,120
      Investment in joint venture                          350,000       350,000
      Deferred consulting fees                             810,599            --
      Deposits and other assets                            245,605        80,866
      Goodwill (net of accumulated amortization of
      $149,554)                                          2,865,901            --
      Organization costs (net of accumulated
      amortization of $49,696 and $ - , respectively)       81,307           192
                                                       -----------   -----------

           Total other assets                           10,640,570       572,908
                                                       -----------   -----------

                                                       $16,013,081   $ 3,876,151
                                                       ===========   ===========

                 See Notes to Consolidated Financial Statements


                                      F-2
<PAGE>

                         CONSOLIDATED BALANCE SHEETS
                                  (Continued)

                     LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                   September 30,
                                                           ----------------------------
                                                               1997            1996
                                                           ------------    ------------
<S>                                                        <C>             <C>         
Current liabilities:
      Lines of credit                                      $    397,000    $    167,700
      Accounts payable                                        2,127,854          47,505
      Consulting fees payable - current portion                  45,591              --
      Accrued expenses and other current liabilities            905,894          32,766
      Due to affiliates                                         947,816              --
      Deferred income taxes                                      61,605              --
      Notes payable - equipment - current portion             2,099,342              --
      Notes payable - related parties - current portion         456,917         150,000
                                                           ------------    ------------
            Total current liabilities                         7,042,019         397,971
                                                           ------------    ------------

Other liabilities:
      Notes payable - equipment - net of current portion      4,756,021              --
      Notes payable - related parties -
       net of current portion                                 1,546,798         300,000
      Consulting fees payable - net of current portion          990,808              --
                                                           ------------    ------------

           Total other liabilities                            7,293,627         300,000
                                                           ------------    ------------

Minority interest in equity of subsidiaries                      23,975              --
                                                           ------------    ------------

Commitments and contingencies

Stockholders' equity:
      Common stock, $0.0001 par value,
       Authorized - 15,000,000 shares
       Issued and outstanding - 3,460,833 shares
        and 3,327,500 shares, respectively                          346             333
      Additional paid-in capital                              4,223,628       4,123,641
      Deficit                                                (2,570,514)       (985,794)
                                                           ------------    ------------

           Total stockholders' equity                         1,653,460       3,178,180
                                                           ------------    ------------

                                                           $ 16,013,081    $  3,876,151
                                                           ============    ============
</TABLE>


                 See Notes to Consolidated Financial Statements

                                      F-3
<PAGE>

                    CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                             For the Years Ended
                                                 --------------------------------------------
                                                                September 30,
                                                 --------------------------------------------
                                                     1997            1996            1995
                                                 ------------    ------------    ------------
<S>                                              <C>             <C>             <C>         
Revenues:
      Net service revenue                        $  6,875,310    $         --    $         --
      Construction revenue                          3,506,025              --              --
      Management fees                                 988,589         312,971         355,029
                                                 ------------    ------------    ------------
Total revenues                                     11,369,924         312,971         355,029
                                                 ------------    ------------    ------------

Costs and expenses
      Operating expenses                            8,937,626       1,579,288         458,047
      Construction costs                            2,722,924              --              --
      Interest                                        868,305          55,615          14,259
      Depreciation and amortization                   792,102          22,817           1,836
      Interest income                                (122,186)       (174,731)        (44,101)
                                                 ------------    ------------    ------------
Total costs and expenses                           13,198,711       1,482,989         430,041
                                                 ------------    ------------    ------------

Loss from operations                               (1,828,847)     (1,170,018)        (75,012)

Gain on sale of subsidiary                            489,228              --              --
                                                 ------------    ------------    ------------

Loss from operations
      before income tax (provisions) recovery      (1,339,619)     (1,170,018)        (75,012)

Income tax (provision) recovery                      (320,932)        217,724          23,398
                                                 ------------    ------------    ------------

Loss from operations before partnership income
(loss)                                             (1,660,551)       (952,294)        (51,614)

Income (loss) from a limited partnership -
      net of income taxes                                (515)             80           1,370
                                                 ------------    ------------    ------------

Loss before minority interest                      (1,661,066)       (952,214)        (50,244)
                                                 ------------    ------------    ------------

Minority interest in income from subsidiaries          36,346              --              --
                                                 ------------    ------------    ------------

Net loss                                         $ (1,624,720)   $   (952,214)   $    (50,244)
                                                 ============    ============    ============

Primary:
      Weighted average shares outstanding           3,415,902       3,327,500       3,123,406
                                                 ============    ============    ============
      Loss per share                             $       (.48)   $       (.29)   $       (.02)
                                                 ============    ============    ============

Fully diluted:
       Weighted average shares outstanding          5,370,902       5,282,500       5,282,500
                                                 ============    ============    ============
      Loss per share                             $       (.30)       $(.18) $            (.01)
                                                 ============    ============    ============
</TABLE>

                 See Notes to Consolidated Financial Statements

                                      F-4
<PAGE>

                    CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                         For the Years Ended
                                               -----------------------------------------
                                                             September 30,
                                               -----------------------------------------
                                                   1997           1996           1995
                                               -----------    -----------    -----------
<S>                                            <C>            <C>            <C>         
Operating activities:
      Net income (loss)                        $(1,624,720)   $  (952,214)   $   (50,244)
      Adjustments to reconcile net income
        (loss) to net cash provided by
        (used) in operating activities
         Depreciation and amortization             792,102         22,817          1,836
         Deferred income taxes                    (151,543)      (218,347)       (28,159)
         Changes in operating assets and
      liabilities
            Accounts receivable                 (3,566,971)      (206,275)        33,473
            Other current assets                    (6,075)       (84,785)       (34,284)
            Accounts payable and accrued
              expenses                           2,999,068            336         78,184
            Income taxes payable                                   (3,825)         3,825
            Other receivables                      (12,281)            --             --
            Other payables                       2,099,342             --             --
                                               -----------    -----------    -----------

                  Net cash provided by (used
                    in)operating activities        409,624     (1,442,293)         5,631
                                               -----------    -----------    -----------

Investing activities:
      Fixed asset additions                     (6,347,574)      (123,357)       (28,500)
      Investment in a limited partnership             (870)          (135)        (2,317)
      Investment in a joint venture                     --       (350,000)            --
      Investment in a certificate of deposit      (298,807)      (408,266)            --
      Acquisition of subsidiary                 (3,015,455)            --       (150,000)
      Note receivable                             (480,979)        20,000        (20,000)
      Deposits and other assets                   (164,739)       (75,836)            --
      Advances from affiliates                     947,816             --             --
                                               -----------    -----------    -----------

            Net cash used in
               investing activities             (9,360,608)      (937,594)      (200,817)
</TABLE>


                 See Notes to Consolidated Financial Statements

                                      F-5
<PAGE>

                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Continued)
<TABLE>
<CAPTION>
                                                              For the Years Ended
                                                    -----------------------------------------
                                                                  September 30,
                                                    -----------------------------------------
                                                        1997           1996           1995
                                                    -----------    -----------    -----------
<S>                                                 <C>            <C>            <C>         
Financing activities:
      Organizational expenses                       $    81,115    $        --    $      (268)
      Deferred offering costs                                --             --          1,116
      Repayment to stockholders                        (306,917)      (150,000)       (15,000)
      Sale of common stock                              100,000             --      4,824,774
      Advances from line of credit                      229,300        167,700             --
      Additions to long term debt                     6,993,627             --             --
                                                    -----------    -----------    -----------

            Net cash provided by
               financing activities                   7,097,125         17,700      4,810,622
                                                    -----------    -----------    -----------

Net increase (decrease) in cash and cash
equivalents                                          (1,734,561)    (2,362,187)     4,615,436

Cash and cash equivalents - beginning                 2,258,333      4,620,520          5,084
                                                    -----------    -----------    -----------


Cash and cash equivalents - end                     $   523,772    $ 2,258,333    $ 4,620,520
                                                    ===========    ===========    ===========

Supplemental disclosures of cash flow information

      Cash paid during year for
         Interest                                   $    49,418    $     9,672    $        --
         Income taxes                               $       600    $     3,825    $       937

      Noncash transactions
         Issuance of notes payable to
           stockholders in connection with the
           acquisition of subsidiary                               $        --    $   600,000
         Contribution of note payable -                           
           shareholders to additional paid in                     
           capital                                                 $        --    $    46,200
</TABLE>

                 See Notes to Consolidated Financial Statements

                                      F-6
<PAGE>

                     R.F. MANAGEMENT CORP. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
              FOR THE YEARS ENDED SEPTEMBER 30, 1997, 1996 AND 1995

<TABLE>
<CAPTION>
                                                                Additional                    Retained
                                    Number of      Common        Paid-In     Subscriptions    Earnings
                                     Shares         Stock        Capital      Receivable      (Deficit)        Total
                                   -----------   -----------   -----------    -----------    -----------    -----------
<S>                                <C>           <C>           <C>            <C>            <C>            <C>        
Balance at September 30, 1994      $ 2,000,000   $       200   $     5,680    $    (2,880)   $    56,664    $    59,664

Net proceeds from issuances of
  common stock - private 
  placement offering (net of 
  expenses of $84,005)                 350,000            35       615,960             --             --       615,9995

Issuance of common stock -
  collection of subscription
  receivable                                --            --            --          2,880             --          2,880

Contributions of note payable -
stockholders                                --            --        46,200             --             --         46,200

Acquisition of Northern New
  Jersey Medical Management,
  Inc. in a manner similar to
  a pooling of interests                    --            --      (750,000)            --             --       (750,000)

Net proceeds from issuance of
  common stock - initial public
  offering (net of expenses of
  $1,365,851)                          977,500            98     4.205.801             --             --      4,205,899

Net loss for the year ended
  September 30, 1995                        --            --            --             --        (50,244)       (50,244)
                                   -----------   -----------   -----------    -----------    -----------    -----------

Balance at September 30, 1996        3,327,500           333     4,123,641             --          6,420      4,130,394

Issuance of common stock for the
  acquisition of Atrium
  Radiology Corp.                      133,333            13        99,987             --             --        100,000

Net loss for the year ended
  September 30, 1997                        --            --            --             --     (1,624,720)    (1,624,720)
                                   -----------   -----------   -----------    -----------    -----------    -----------


Balance at September 30, 1997      $ 3,460,833   $       346   $ 4,223,628    $        --    $(2,570,514)   $ 1,653,460
                                   ===========   ===========   ===========    ===========    ===========    ===========
</TABLE>

                 See Notes to Consolidated Financial Statements

                                      F-7
<PAGE>

                     R.F. MANAGEMENT CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       SEPTEMBER 30, 1997, 1996, AND 1995



NOTE 1 - GENERAL AND ACCOUNTING POLICIES

      (a)   Organization:

      R.F. Management Corp. ("R.F.") was incorporated in the State of New York
      on August 4, 1994. On December 22, 1994, pursuant to an action of the
      Board of Directors, R.F. affected a 4-for-1 stock split of its $0.0001 par
      value common stock. The financial statements contained herein have been
      restated to reflect the stock split and all references to shares issued or
      outstanding in the accompanying financial statements are on a post-split
      basis.

      (b)   Principal Business Activity:

      R.F.'s business is to provide management advisory and other services in
      connection with the establishment and operation of free standing,
      outpatient centers performing ambulatory surgery, diagnostic imaging and
      radiation therapy. R.F. offers a full range of services, including
      contract negotiations, site selection, equipment procurement,
      construction, office personnel and physician staffing, office management,
      patient scheduling, patient billing, cash collections, personnel
      management and marketing.


                                      F-8
<PAGE>

                     R.F. MANAGEMENT CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       SEPTEMBER 30, 1997, 1996, AND 1995


(c)   Summary of Significant Accounting Policies:

            (1)   Consolidation Policy:

            The consolidated financial statements include the accounts of R.F.
            Management Corp. ("R.F."), its wholly-owned subsidiaries, Northern
            New Jersey Medical Management, Inc. ("Northern"), R.F. Management
            Corp. of Toms River ("RFTR"), Brady Cancer Centers, Inc. ("BCC"),
            and Open MRI and Diagnostic Services of Toms River, Inc. ("Open
            MRI"), and its majority owned subsidiaries, Empire State Imaging
            Associates, Inc. ("Empire"), Mobiletec, Inc. "(Mobiletec"), Hamilton
            McGregor International, Inc. ("Hamilton"), and Atrium Radiology
            corp. ("Atrium"), in which R.F. has a 65%, 75%, 52% and 52%
            interest, respectively. R.F., Northern, RFTR, BCC, Open MRI, Empire,
            Mobiletec, Hamilton and Atrium are hereafter collectively referred
            to as ("the Company"). All significant intercompany transactions and
            accounts have been eliminated in consolidation.

            (2)   Cash and Cash Equivalents:

            The Company considers all highly liquid debt instruments purchased
            with a maturity of three months or less to be cash equivalents. The
            Company places its cash with high credit quality financial
            institutions which at times, may be in excess of the FDIC insurance
            limit.

            (3)   Accounts Receivable:

            Accounts receivable is stated net of contractual allowances. Based
            upon its past history, the Company estimates the amount of the
            accounts receivable it does not expect to receive. The Company
            values its uncollected accounts receivable as part of its
            determination of profit and constantly reviews the valuation. The
            continuing review and gathering of additional information, as well
            as changing reimbursement rates, may cause adjustment.


                                      F-9
<PAGE>

                     R.F. MANAGEMENT CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       SEPTEMBER 30, 1997, 1996, AND 1995


NOTE 1 - GENERAL AND ACCOUNTING POLICIES. (Continued)

      (c)   Summary of Significant Accounting Policies: (Continued)

            (4)   Equipment:

            Furniture, fixtures, equipment and leasehold improvements are stated
            at cost. Depreciation and amortization are provided for, generally
            using the straight-line method over the lease term or the estimated
            useful lives of the related asset, 5 to 7 years for office
            equipment. Expenditures which are not expected to extend the
            economic life of an asset are expensed as incurred.

            (5)   Goodwill:

            The Company has recorded goodwill relating to the acquisition of
            subsidiaries which is being amortized over a period of fifteen
            years.

            (6)   Organizational Expenses:

            Organizational expenses incurred in the set-up of the Company and
            its subsidiaries have been capitalized and will be amortized over a
            period of 5 years from the commencement of operations.

            (7)   Deferred Offering Costs:

            All deferred offering costs incurred by the Company in conjunction
            with the private placement offering and initial public offering
            (IPO) have been charged to additional paid-in capital upon the
            completion of the offering (see Note 3).


                                      F-10
<PAGE>

                     R.F. MANAGEMENT CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       SEPTEMBER 30, 1997, 1996, AND 1995


NOTE 1 - GENERAL AND ACCOUNTING POLICIES. (Continued)

      (c)   Summary of Significant Accounting Policies: (Continued)

            (8)   Revenue Recognition:

            Revenue, consisting primarily of management fees generated through
            contracting agreements between the Company and doctors or physician
            groups practicing at the Company's facilities, are recognized when
            the services are rendered. The Company is responsible for the
            operational management of the facility including non-medical
            personnel, acquiring or leasing medical equipment, leasing a
            facility procuring all necessary supplies and billing and collection
            services.

            Additionally revenue is derived from construction services rendered
            through its subsidiary, Hamilton and is recognized on an accrual
            basis under the percentage of completion method of accounting.

            (9)   Use of Estimates:

            The preparation of financial statements in conformity with generally
            accepted accounting principles requires management to make estimates
            and assumptions that affect certain reported amounts and
            disclosures. Accordingly, actual results could differ from those
            estimates.

                                      F-11
<PAGE>

                     R.F. MANAGEMENT CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       SEPTEMBER 30, 1997, 1996, AND 1995


NOTE 1 - GENERAL AND ACCOUNTING POLICIES.  (Continued)

      (c)   Summary of Significant Accounting Policies: (Continued)

            (10)  Income Taxes:

            The Company adopted Financial Accounting Standards Board (FASB)
            Statement of Financial Accounting Standards (SFAS) NO. 109,
            "Accounting for Income Taxes", for financial statements reporting
            purposes, which required a change from the deferred method (APB 11)
            to the assets and liability method of accounting for income taxes.
            The assets and liability approach requires the recognition of
            deferred tax assets and liabilities for the expected future tax
            consequences of temporary differences between the carrying amounts
            and the tax bases of assets and liabilities and the effect of future
            tax planing strategies to reduce any deferred tax liability. Under
            this method, deferred tax liabilities and assets are determined
            based on the differences between the financial statement carrying
            amounts and tax basis of assets and liabilities using enacted rates
            in effect in the years in which the differences are expected to
            reverse. The adoption of SFAS 109 did not have a material impact on
            the consolidated financial statements.

            (11)  Loss Per Share:

            Loss per share has been computed by dividing the net loss by the
            weighted average number of common shares and common equivalent
            shares outstanding during each period.

            (12)  Fair Value of Financial Instruments:

            The carrying amounts of cash and cash equivalents, contracts
            receivable, accounts payable and short-term debt approximate fair
            value due to the short maturity of the instruments and the provision
            for what management believes to be adequate reserves for potential
            losses. It was not practicable to estimate the fair value of
            long-term debt because quoted market prices do not exist and an
            estimate could not be made through other means without incurring
            excessive costs.

                                      F-12
<PAGE>

                     R.F. MANAGEMENT CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       SEPTEMBER 30, 1997, 1996, AND 1995

NOTE 2 - GOING CONCERN.

      The accompanying financial statements have been prepared in conformity
      with generally accepted accounting principles, which contemplate
      continuation of the Company as a going concern. The Company has a working
      capital deficiency of $1,669,508 as of September 30, 1997, and has
      sustained continued losses from operations, which raise substantial doubt
      about the Company's ability to continue as a going concern.

      On September 18, 1997 the Company's Board of Directors resolved to pursue
      a potential merger with Modern Medical Modalities Corp., and affiliated
      company. That plan is presently in the exploratory stage.

      The Company has also begun implementation of a restructuring plan for its
      subsidiaries and believes this plan will make the Company profitable in
      future periods. The accompanying financial statements do not include any
      adjustments relating to the recoverability and classification of
      liabilities that might result should the Company be unable to continue as
      a going concern.

      An agreement has been negotiated with the principle of Mobile Medical
      Services Ltd. to convert the stock purchase to a note receivable with the
      Company maintaining the stock and assets as collateral. The payments are
      to commence in March, 1998. The general terms call for a $20,000 payment
      in March and for quarterly payments of $10,000 increasing to $20,000.

      During August, 1998, management expects to finalize the Brady equipment
      payments which will result in an additional $45,000 in monthly net cash to
      Brady Cancer Centers, Inc.

      Additional cash will be realized from a proposed offering of Hamilton 
      McGregor International, Inc.

      The Company has also entered into a marketing agreement with an unrelated
      facility. This agreement will bring an additional $4,000 a month to the
      Company over the next nine months. In addition, the Company has been
      approached by a facility in Scranton, PA to provide management, marketing
      and billing for a monthly fee and percentage of collections.


                                      F-13
<PAGE>

                     R.F. MANAGEMENT CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       SEPTEMBER 30, 1997, 1996, AND 1995


NOTE 2 - GOING CONCERN.  (Continued)

      The Company is in the process of financing $200,000 of Union Diagnostic's
      accounts receivable which will go toward paying the Company its accrued
      management fees. The time frame is approximately the third week in March,
      1998.

      The Company's officers have voluntarily agreed to forego drawing a salary
      until cash flow is again positive. This will result in a reduction of
      approximately $12,000 of salaries per month.

      Effective March 5, 1998 the Company and its 52%-owned subsidiary,
      Hamilton-McGregor International, Inc. ("Hamilton"), restructured its note
      payable to a related party. Under the terms of the amended agreements, the
      principal amount of the not would be reduced to $200,000 in cash, payable
      over thirty-six months, plus interest calculated at prime plus 1% and a
      thirty-six month option to purchase 250,000 shares of Hamilton stock at
      $.05.

NOTE 3 - MERGERS, ACQUISITIONS AND MATERIAL DISPOSALS.

      On December 27, 1995, R.F. acquired forty percent (40%) of the outstanding
      shares of Mobile Medical Services Limited ("Mobile"), a privately held
      Company incorporated in Ireland, and a fifty one percent (51%) interest in
      the property owned or leased by its subsidiaries for $350,000. The terms
      of the agreement called for the Company to make payments directly to
      designated creditors on behalf of Mobile. As of September 30, 1997,
      $350,000 is reflected as an investment in joint venture.

      On November 15, 1996, the Company acquired seventy-five percent (75%)
      interest in Mobiletec, Inc. ("Mobiletec"), a newly formed entity
      incorporated in the State of New Jersey. Mobiletec provides mobile M.R.I.
      facilities to doctors, hospitals and medical groups for which it receives
      a per-test or daily rental fee. The results of operations from its
      inception are included in these consolidated financial statements.

                                      F-14
<PAGE>

                     R.F. MANAGEMENT CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       SEPTEMBER 30, 1997, 1996, AND 1995

NOTE 3 - MERGERS, ACQUISITIONS AND MATERIAL DISPOSALS.  (Continued)

      On December 1, 1996, the Company acquired certain assets and assumed
      certain liabilities form Luther W. Brady & Associates, P.C. and Bucks
      Radiation Oncology, Inc. The assets are used to provide radiation therapy
      services and are located in Voorhees, New Jersey and Havertown and
      Langhorne, Pennsylvania. The purchase price for these assets was
      $3,700,000. The Company also assumed certain notes payable totaling
      approximately $837,000. The fair value of the assets acquired aggregated
      approximately $3,280,000. The difference between the purchase price and
      the fair value of the assets, net of liabilities assumed, resulted in the
      creation of goodwill of approximately $1,257,000. In connection with the
      acquisition, the Company has arranged for financing of the purchase price
      aggregating $3,500,000, in the form of installment notes, payable in 60
      monthly installments including interest at 11.6%, totaling approximately
      $77,150 per month. Repayment of these notes commenced March 1, 1997.

      In March, 1997, the Company formed a new wholly-owned subsidiary, Brady
      cancer Centers, Inc. and transferred to assets acquired from Luther W.
      Brady & Associates, P.C. and Bucks Radiation Oncology, Inc. to the
      subsidiary.

      On December 27, 1996, the Company acquired 65% of the outstanding capital
      stock of Empire State Imaging Associates, Inc. ("Empire"), a New York
      corporation, from an affiliated company for a total of $250,000. Empire
      operates an imaging center which provides non-claustrophobic MRI, CT
      scanning, mammography, ultrasound and x-ray services. As part of the
      purchase price, the Company issued an installment note, in the principal
      sum of $225,000, payable in nine monthly installments plus interest at
      prime plus 1% on the unpaid balance.

      On January 1, 1997, the Company acquired 52% of the outstanding capital
      stock of Hamilton McGregor International, Inc. ("Hamilton") in a private
      transaction with a related party for a total purchase price of $750,000.
      Hamilton, through a wholly-owned subsidiary, is a general construction
      contractor. As part of the purchase price, the Company issued an
      installment note in the sum of $600,000, without interest payable in four
      annual installments on the anniversary date of the agreement. When
      discounted, assuming the Company's normal cost of funds, the purchase
      price has been recorded as approximately $615,000 and resulted in the
      creation of goodwill of approximately $350,000. Hamilton's fiscal year
      ends on June 30. Hamilton's financial position and results of operations
      as of and for the six months ended June 30, 1997 have been included in
      these consolidated financial statements.


                                      F-15
<PAGE>

                     R.F. MANAGEMENT CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       SEPTEMBER 30, 1997, 1996, AND 1995

NOTE 3 - MERGERS, ACQUISITIONS AND MATERIAL DISPOSALS.  (Continued)

      Payment of any of the installments may be deferred for up to one year.
      Payments may also be taken in the form of common stock of the Company at
      equivalent values. Both of these options are solely at the discretion of
      the seller.

      On January 31, 1997, the Company acquired 52% of the outstanding capital
      stock of Atrium Radiology Corp. ("Atrium") for 133,333 shares of the
      Company's common stock, having a fair value of $100,000 on the date of
      acquisition. The agreement also calls for the seller to receive the first
      $300,000 of net profits to be earned from future operations. The
      acquisition resulted in the creation of goodwill amounting to
      approximately $221,000. Atrium's financial position and results of
      operations as of and for the eight months ended September 30, 1997 have
      been included in these consolidated financial statements.

      In February 1997, the Company acquired a 75% interest in Open MRI and
      Diagnostic Services of Toms River, Inc. ("Open MRI"), a newly formed
      corporation. On March 19, 1997, the Company and its affiliate (which owned
      the remaining 25%) sold all the outstanding capital stock to Advanced Open
      MRI and Diagnostic Imaging, P.A., and unrelated party, for the principal
      sum of $1,000,000. The Company's share of the proceeds of $750,000
      resulted in a gain of $592, 340. Of the purchase price, $75,000 was
      received at the signing of the contract, $175,000 was received at the
      closing in April 1997 and the balance of $750,000 is payable in 30 equal
      installments of $25,000 commencing 90 days after the opening of the
      facility. The first installment is expected to be received on May 1, 1998.
      Using the present value of the note, discounted at 11%, the Company has
      recorded a gain on the sale of its stock amounting to approximately
      $489,000. The note is collateralized by 52% of the common stock of Open
      MRI, which is held in escrow.


                                      F-16
<PAGE>

                     R.F. MANAGEMENT CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       SEPTEMBER 30, 1997, 1996, AND 1995

NOTE 4 - RESTRICTED CASH.

      Restricted cash consists of two certificates of deposit in the aggregate
      principal sum of $700,000, which amounted to $707,073 including accrued
      interest at September 30, 1997. The first certificate, in the principal
      sum of $400,000, has been pledged as collateral to secure the Company's
      revolving line of credit with a bank (See Note 10) and matures on April
      30, 1998. The second certificate in the principal sum of $300,000, has
      been pledged as collateral to secure a standby letter of credit for the
      benefit of DVI Financial Services, Inc. and matures on February 20, 1998.
      The certificates of deposit earn interest at the annual rates of 5.16% and
      4.69%, respectively.

NOTE 5 - NOTE RECEIVABLE.

      In conjunction with the aforementioned sale in March 1997 of Open MRI and
      Diagnostic Services of Toms River, Inc. ("Open MRI"), the Company received
      a 75% interest in a note receivable of $750,000, payable in 30 equal
      monthly installments of $25,000. Payments under the note are to commence
      90 days after the opening of the center, which is expected to be April 1,
      1998. The note bears no stated rate of interest and has therefore been
      discounted using an interest rate of 11% (the rate at which the Company
      could presently borrow funds) to arrive at its present value.

      The present value and annual maturities of the note receivable at
      September 30, 1997 is as follows:

                  Face amount of note               $  750,000
                  Less:  Discount @ 11%                108,696
                                                    ----------
                  Present value of future payments     641,304
                  Less:  Affiliate portion in note     160,326
                                                    ----------

                                                    $  480,978
                                                    ==========


                                      F-17
<PAGE>

                     R.F. MANAGEMENT CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       SEPTEMBER 30, 1997, 1996, AND 1995

NOTE 5 - NOTE RECEIVABLE.  (Continued)

                  Annual maturities are as follows:

                  Years ending
                  September 30, 1997

                  1998                              $   39,827
                  1999                                 185,648
                  2000                                 207,131

                  2001                                  48,372
                                                    ----------

                                                    $  480,978
                                                    ==========

NOTE 6 - EQUIPMENT

      Furniture, fixtures, equipment and leasehold improvements consist of the
      following:

                                                        September 30,
                                                    1997            1996

      Buildings                                 $  680,000       $       --
      
      Equipment                                  5,158,510          118,990
      
      Furniture and fixtures                       337,190           34,978
      
      Leasehold improvements                       184,588            1,731
      
      Computer equipment                           106,330               --
      
      Vehicles                                     186,209               -- 
                                                ----------       ----------
                                                 6,652,827          155,699
      
      Less:  Accumulated depreciation and
      amortization                                 817,071           24,969
                                                ----------       ----------
      
                                                $5,835,756       $  130,730
                                                ==========       ==========


                                      F-18
<PAGE>

                     R.F. MANAGEMENT CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       SEPTEMBER 30, 1997, 1996, AND 1995

NOTE 7 - INVESTMENT IN A LIMITED PARTNERSHIP.

      The Company has a one percent (1%) ownership in Union Diagnostic
      Facilities Group, L.P. the investment is recorded on the equity method
      since the Company is the only general partner. The Company's duties
      include contract negotiations, site selection, equipment procurement,
      construction, office personnel and physician staffing, office management
      and marketing. The Company records its income from the limited partnership
      monthly.

      Effective January 1, 1995, the limited partnership changes its reporting
      period from December 31 to September 30, for financial statement purposes.
      The following is a summary of condensed financial data from the audited
      financial statements of the limited partnership in which the Company has
      an investment at September 30, 1997, 1996 and 1995 and December 31, 1994,
      1993 and 1992:

                       Total         Long-Term        Total         Total
                       Assets          Debt        Liabilities     Capital
                     -----------   --------------  ------------  -----------
                     
         09/30/97    $1,173,998        $ 122,857      $ 881,091    $ 272,907
         09/30/96       821,822          102,702        402,117      419,704
         09/30/95       703,809           56,175        251,117      452,692
         12/31/94       629,545           69,004        240,138      389,407
         12/31/93       331,949               -          99,287      232,662

                                Assets                   Liabilities
                                       Non-                          Non-
                      Current         Current        Current       Current
                     -----------   --------------  -------------   ---------
                                                                
         09/30/97     $ 648,785        $ 525,213      $ 758,234    $ 122,857
         09/30/96       454,465          367,356        299,415      102,702
         09/30/95       445,849          257,960        194,942       56,175
         12/31/94       405,566          223,979        171,134       69,004
         12/31/93       214,488          117,461         99,287          -


                                      F-19
<PAGE>

                     R.F. MANAGEMENT CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       SEPTEMBER 30, 1997, 1996, AND 1995

NOTE 7 - INVESTMENT IN A LIMITED PARTNERSHIP.  (Continued)

                                                       Net        Allocation
                                        Net           Income      of Income
                                     Revenues         (Loss)        (Loss)
                                   --------------  -------------  -----------

         09/30/97                     $1,637,445       ($87,047)    ($870)
         09/30/96                      1,642,128         13,637       135
         09/30/95                      1,243,165        169,285     1,693
         12/31/94                      1,648,846        249,495     2,495
         12/31/93                      1,454,038        181,800     1,818
         12/31/92                      1,341,140        155,461     1,555

      Gross profit and income from continuing operations does not differ from
      net income. The partnership has no redeemable securities or minority
      interest.

NOTE 8 - DEFERRED CONSULTING FEES.

      In connection with the asset purchase agreement between the Company and
      Luther W. Brady & Associates, P.C. et al., as described more fully in Note
      3, the Company has entered into a consulting agreement with Dr. Brady.
      Under the terms of the agreement, Dr. Brady has agreed to make himself
      available for consultation with regard to acquisitions, design,
      operations, staffing, patient care, medical education and equipment
      acquisitions and installation for the existing and any future radiation
      treatment centers.

      The agreement is for an initial term of six years and is automatically
      renewable for one year periods thereafter. The Company is obligated to pay
      Dr. Brady whether he is called upon to render these services or not and
      regardless of any incapacity or event of death. Under the initial term of
      the agreement the Company has agreed to pay Dr. Brady $250,000 a year,
      payable in equal monthly installments of $20,833, for a total of
      $1,500,000.

      As a result of its contractual obligation to pay Dr. Brady or his
      successors, the Company has recorded the obligation on a present value
      basis and the corresponding deferred asset derived therefrom.


                                      F-20
<PAGE>

                     R.F. MANAGEMENT CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       SEPTEMBER 30, 1997, 1996, AND 1995

      NOTE 8 - DEFERRED CONSULTING FEES.  (Continued)

      As of September 30, 1997, the present value of deferred consulting fees,
      using an assumed interest rate of 11.7% amounted to $810,599. The annual
      amortization of the deferred asset is as follows:

                            Years Ending
                           September 30,
                           -------------

                                1998                $ 156,890
                                1999                  156,890
                                2000                  156,890
                                2001                  156,890
                                2002                  156,890
                                2003                   26,149

NOTE 9 - LINE OF CREDIT.

      The Company established a revolving line of credit with a bank to borrow
      up to $400,000, with interest charged on a monthly basis at the bank's
      prime rate plus 1%. The line is collateralized by a certificate of deposit
      which matures on April 30, 1998, the expiration date of the line. As of
      September 30, 1997 and 1996, amounts outstanding under this facility
      totaled $397,000 and $168,000, respectively.


                                      F-21
<PAGE>

                     R.F. MANAGEMENT CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       SEPTEMBER 30, 1997, 1996, AND 1995

NOTE 10 - NOTES PAYABLE.

       Notes payable consist of the following:

       A $200,000 note payable to a bank, bearing
       interest at prime plus 1% maturing on December
       31, 1997.  The Company and the bank
       subsequently established a monthly payment
       schedule of $20,000 of principal plus interest
       for the repayment of the note commencing on
       October 30, 1997.  If all payments are paid as
       agreed, the bank agrees to extend the maturity
       date until         .  The loan is guaranteed 
       by certain stockholders                            $   200,000

       Capital lease obligations for the acquisition 
       of equipment amounting to $9,101,243, payable 
       in monthly installments of $394 to $61,350,
       including interest at a rate varying from 9.00% 
       to 14.79% per annum.                                 6,655,362
                                                          -----------

                                                            6,855,362
       Less:  Current maturities                            2,099,341
                                                          -----------

                                                        
                                                          $ 4,756,021
                                                          ===========

       The annual principal maturities under these notes are as follows:

                        Years Ending
                        September 30,
                        -------------
                                                        
                            1998                       $ 2,099,341
                            1999                         1,826,183
                            2000                         1,335,341
                            2001                         1,032,845
                            2002                           561,652
                                                       -----------

                                                       $ 6,855,362
                                                       ===========


                                      F-22
<PAGE>

                     R.F. MANAGEMENT CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       SEPTEMBER 30, 1997, 1996, AND 1995

NOTE 11 -    NOTES PAYABLE - RELATED PARTIES.

Notes payable - related parties consists of the following:

      A $225,000 note issued in connection with the
      purchase of Empire State Imaging Associates,
      Inc., payable in 9 monthly installments of
      $25,000 plus 1% interest on the unpaid balance.    $   100,000

      A $600,000 note issued in connection with the
      purchase of Northern New Jersey Medical
      Management, Inc. payable in 4 annual installments
      of $150,000, which bears interest at prime plus
      1% per month.                                          300,000

      A $600,000 note issued in connection with the
      purchase of Hamilton McGregor International,
      Inc., payable without interest payable in 4
      annual installments of $150,000, discounted to
      its present value using an assumed interest rate
      of 11%.                                                503,760

      A $1,000,000 note issued in connection with the
      purchase of Prime Contracting Corp. See Note
      16(d)                                                1,000,000


      A $113,181 loan advanced from a stockholder,
      payable on demand bearing interest at 9.5% per
      annum.                                                  99,955
                                                         -----------

                                                         $ 2,003,715
                                                         ===========


                                      F-23
<PAGE>

                     R.F. MANAGEMENT CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       SEPTEMBER 30, 1997, 1996, AND 1995

NOTE 11 - NOTES PAYABLE - RELATED PARTIES.  (Continued)

          The annual principal maturities under these notes are as follows:

                   Years Ending
                   September 30,
                   -------------
                                            
                       1998               $   456,917
                       1999                 1,268,727
                       2000                   131,788
                       2001                   146,283
                                          -----------

                                          $ 2,003,715
                                          ===========

NOTE 12 -    NOTE PAYABLE - CONSULTING

      In conjunction with the acquisition of the "Brady" assets, the Company
      entered into a consulting agreement with Dr. Brady for an initial term of
      6 years at an annual compensation of $250,000 per year payable in monthly
      installments of $20,833, for a total of $1,500,000. The agreement is
      automatically renewable for one year increments unless either party
      provides written notice of their intent to terminate at least 180 days
      prior to the expiration of any term.

      The company is obligated to pay Dr. Brady or his designees whether or not
      he renders these services, regardless of incapacity or death. Therefore,
      the Company has recorded the liability on its books, discounted to its
      present value using an assumed interest rate of 11.6% (the rate at which
      the Company could borrow funds), which amounted to $1,036,399 at September
      30, 1997.

      The term of the agreement was due to commence on December 1, 1996, but as
      a result of the initial delay in closing on the asset purchase agreement
      and the subsequent litigation as described more fully in Note 18, the
      Company anticipates it will begin making payments under this agreement
      commencing in March 1998.


                                      F-24
<PAGE>

                     R.F. MANAGEMENT CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       SEPTEMBER 30, 1997, 1996, AND 1995

NOTE 12 - NOTE PAYABLE - CONSULTING.  (Continued)

      Future annual payments due under this agreement are as follows:

                          Years Ending
                         September 30,
                         -------------
                                                
                              1998              $  166,667
                              1999                 250,000
                              2000                 250,000
                              2001                 250,000
                              2002                 250,000
                           Thereafter              333,333
                                                ----------

                                                 1,500,000
                 Less:  Amount representing
                        interest                   463,601
                                                ----------

                                                $1,036,399
                                                ==========
NOTE 13 - INCOME TAXES.

      Loss before income taxes, income tax benefit, partnership income, income
      tax expense on partnership income and net loss are as follows:

                                             September 30,
                            ------------------------------------------------
                                 1997             1996            1995
                            ----------------  --------------  --------------

Loss before income taxes    $   (1,339,619)   $ (1,170,018)   $    (75,012)
Income tax (provision)
benefit                           (320,932)         217,724          23,398
                            --------------    ------------    ------------ 

                                (1,660,551)       (952,294)        (51,614)
                                              ------------    ------------ 

Partnership income (loss)             (870)             135           2,317
Income tax expense on
  partnership income                    355              55             947
                            --------------    ------------    ------------ 

                                      (515)              80           1,370
                            --------------    ------------    ------------ 


                                      F-25
<PAGE>

                     R.F. MANAGEMENT CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       SEPTEMBER 30, 1997, 1996, AND 1995



Net loss                    $   (1,624,720)   $   (952,214)   $    (50,244)
                            ==============    ============    ============ 


                                      F-26
<PAGE>

                     R.F. MANAGEMENT CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       SEPTEMBER 30, 1997, 1996, AND 1995

NOTE 13 - INCOME TAXES.  (Continued)

The following is a reconciliation of the U.S. federal statutory tax rate and the
apparent tax rate:

                                                          September 30,
                                               ---------------------------------
                                                  1997        1996        1995
                                               ---------   ---------   ---------

       U.S. federal tax                         (34.00%)    (34.00%)    (34.00%)
       State taxes, net of federal tax           (6.00%)      6.00%)
         benefit                                 (6.00%)     (6.00%)     (6.00%)
       Benefit from net operating loss
         (NOL) carryforward                      --          --          12.13%
       Valuation allowance                       --          20.88%      --
       Other                                      2.04%       0.51%      (3.32%)
                                                ------      ------      ------  

       Apparent tax rate                        (37.96%)    (18.61%)    (31.19%)
                                                ======      ======      ======  

NOTE 14 - STOCKHOLDERS' EQUITY 

      (a) Private Placement Offering:

      In August 1994, the Board of Directors of the Company passed a resolution
      authorizing the management of the Company to initiate steps to make a
      private placement of the Company's securities in order to raise capital.
      On December 22, 1994, the Company's common stock was split 4-for-1. The
      effect of the split is being reflected retroactively. In December of 1994,
      the Company completed an offering of its securities under an exemption
      pursuant to Regulation D - Rules Governing the Limited Offer and Sale of
      Securities Without Registration Under the Securities Act of 1933. The
      $800,000 offering was to include the sale of 400000 shares (after giving
      effect to the 4-for-1 stock split). The offering closed on December 15,
      1994, with the sale of 350,000 (shares after giving effect to the 4-for-1
      stock split on December 22, 1994) of the Company's $0.0001 par value
      voting common stock at the offering price of $2.00 per share (after giving
      effect to toe 4-for-1 stock split) that raised an aggregate of $615,995,
      net of expenses of $84,005, for the Company.


                                      F-27
<PAGE>

                     R.F. MANAGEMENT CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       SEPTEMBER 30, 1997, 1996, AND 1995

NOTE 14 - STOCKHOLDERS' EQUITY.  (Continued)

      (b)   Initial Public Offering:

      In December 1994, the Board of Directors of the Company passed a
      resolution authorizing the management of the Company to initiate steps to
      make an initial public offering (IPO) of the Company's securities in order
      to raise capital. Management was granted authority to file a registration
      statement (on Form S-1) with the United States Securities and exchange
      Commission (SEC) pursuant to the Securities Act of 1933 (as amended) and
      to register the securities in any state jurisdiction that management felt
      was required and appropriate. The initial public offering called for the
      Company to offer up to 850,000 shares (977,500 shares if the underwriter's
      over-allotment is exercised) of common stock (the "Common Stock") at $5.50
      per share, 850,000 (977,500, if the underwriter's over-allotment is
      exercised) Class A Redeemable Common Stock Purchase Warrants (the "A
      Warrants") at $0.10 per warrant and 850,000 (977,500 shares if the
      underwriter's over-allotment is exercised) Class B Redeemable Common Stock
      Purchase Warrants (the "B Warrants") at $0.10 per warrant. Each A Warrant
      entitles the holder to purchase one (1) share of common Stock for a period
      of eighteen (18) months from the effective date of the offering at a price
      of $5.50. Each B Warrant entitles the holder to purchase one (1) share of
      common Stock for a period of thirty-six (36) months from the effective
      date of the offering at a price of $7.00. The offering was declared
      effective by the United States Securities and Exchange Commission on July
      21, 1995, and closed on July 27, 1995 with the sale of 977,500 B Warrants,
      and raised an aggregate of $4,205,899, net of expenses of $1,365,851, for
      the Company.


                                      F-28
<PAGE>

                     R.F. MANAGEMENT CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       SEPTEMBER 30, 1997, 1996, AND 1995

NOTE 15 - RELATED PARTY TRANSACTIONS.

      Operating Expenses:

      The Company maintains an office at 95 Madison Avenue, Suite 301,
      Morristown, New Jersey. Expenses incurred in the operation of the
      Company's office facility including rent, telephone and office expenses
      are allocated to numerous businesses which share the facility. The
      allocations are based on usage and revenues. Management believes that the
      allocations are reasonable and proper. The expenses for the years ended
      September 30, 1997, 1996, and 1995 aggregated $75,550, $63,560, and
      $12,142, respectively. During the year ended September 30, 1996, the
      Company paid $60,000 for consulting services to an affiliated company.
      Furthermore, during the year ended September 30, 1996, the Company
      acquired software from another related party at an approximate cost of
      $35,000.

      The Company entered into an agreement with an affiliated company to
      provide marketing services to the Company. For the year ended September
      30, 1996, compensation for services totaled approximately $50,000.

      The Company has entered into an agreement with two affiliated companies to
      finance a portion of the affiliates' accounts receivable. At September 30,
      1996, there was a total balance outstanding of approximately $111,000.

      Included in other assets, the Company has an outstanding note receivable
      from one of its officers for approximately $24,000. The conditions and
      repayment terms of the note have not yet been determined.


                                      F-29
<PAGE>

                     R.F. MANAGEMENT CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       SEPTEMBER 30, 1997, 1996, AND 1995

NOTE 16 - COMMITMENTS AND CONTINGENCIES.

      (a)   Letter of Intent and Underwriters Agreement:

      Pursuant to a signed letter of intent with Landmark Commodities, Inc.
      d/b/a Landmark International Equities ("Landmark"), the Company has
      successfully completed the sale of its securities in an initial public
      offering (IPO) (See Note 15). In addition, the Company has agreed to sell
      Landmark an option to purchase 977,500 shares of Common Stock including
      the underwriter's over-allotment, 977,500 A Warrants including the
      underwriter's over-allotment, and 977,500 B Warrants including the
      underwriter's over-allotment for a period of four (4) years at one-hundred
      and twenty percent (120%) of the offering price of $6.60, $0.12 and $0.12,
      respectively. In January 1995, the Company paid Landmark $50,000, in
      advance, for financial consulting services. The services are for the
      period from February 1, 1995 to January 31, 1996.

      (b)   Employment Agreement:

      Effective June, 1997, the Company entered into a five (5) year employment
      agreement with its president. The agreement provides for an annual salary
      of eighty thousand dollars ($80,000), plus benefits, and sets forth duties
      and non-compete clauses.

      (c)   Lease and Management Service Agreements:

            In April 1996, RFTR entered into an agreement to lease a 9,000
            square foot facility for five years with a base annual rental cost
            of $117,000. Included in the other assets at September 30, 1996 is
            approximately $19500 of rental payments, which will be expensed upon
            the opening of the facility.

      In July 1996, RFTR entered into a lease and management service agreement
      with Surgical associates, P.A. to provide space, equipment and
      non-professional services, including management and billing and collection
      functions to a newly formed Surgical Center.


                                      F-30
<PAGE>

                     R.F. MANAGEMENT CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       SEPTEMBER 30, 1997, 1996, AND 1995

NOTE 16 - COMMITMENTS AND CONTINGENCIES.  (Continued)

      (c)  Lease and Management Service Agreements:  (Continued)

      On May 30, 1996, the Company entered into a five-year lease and management
      Service Agreement with Associates in Otolaryngology of New Jersey, P.A. to
      provide management, administrative marketing, operational and related
      services to the physicians office in addition to providing the necessary
      fixtures and equipment to be utilized in the practice. The Company has
      also guaranteed the rental payments on the facility for the term of the
      management service agreement. The five year term of this agreement
      commences with the completion of the new facility construction.

      (d)   Subsequent Events:

      An agreement has been negotiated with the principle of Mobile Medical
      Services Ltd. to convert the stock purchase to a note receivable with the
      Company maintaining the stock and assets as collateral. The payments are
      to commence in March, 1998. The general terms call for a $20,000 payment
      in March and for quarterly payments of $10,000 increasing to $20,000.

      During August, 1998, management expects to finalize the Brady equipment
      payments which will result in an additional $45,000 in monthly net cash to
      Brady Cancer Centers, Inc.

      Additional cash will be realized from a proposed offering of Hamilton
      McGregor International, Inc.

      The Company has also entered into a marketing agreement with an unrelated
      facility. This agreement will bring an additional $4,000 a month to the
      Company over the next nine months. In addition, the Company has been
      approached by a facility in Scranton, PA to provide management, marketing
      and billing for a monthly fee and percentage of collections.


                                      F-31
<PAGE>

                     R.F. MANAGEMENT CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       SEPTEMBER 30, 1997, 1996, AND 1995

NOTE 16 - COMMITMENTS AND CONTINGENCIES.  (Continued)

      (d)    Subsequent Events:  (Continued)

      The Company is in the process of financing $200,000 of Union Diagnostic's
      accounts receivable which will go toward paying the Company its accrued
      management fees. The time frame is approximately the third week in March,
      1998.

      The Company's officers have voluntarily agreed to forego drawing a salary
      until cash flow is again positive. This will result in a reduction of
      approximately $12,000 of salaries per month.

      Effective March 5, 1998 the Company and its 52%-owned subsidiary,
      Hamilton-McGregor International, Inc. ("Hamilton"), restructured its note
      payable to a related party. Under the terms of the amended agreements, the
      principal amount of the note would be reduced to $200,000 in cash, payable
      over thirty-six months, plus interest calculated at prime plus 1% and a
      thirty-six month option to purchase 250,000 shares of Hamilton stock at
      $.05.

      Effective December 1, 1997, the $600,000 Note issued to a related Party
      (see Note 11) in connection with the Purchase of Hamilton McGregor 
      International, Inc. was forgiven. The related promissory note was 
      cancelled, therefore resulting in no further obligation.

NOTE 17 - LITIGATION

      In October 1995, Northern New Jersey Medical Management, Inc. the
      Company's wholly owned subsidiary, was named as a party in a lawsuit
      initiated by several of the limited partners in Union Diagnostic
      Facilities Group, L.P. The suit alleges, among other things, breach of
      fiduciary duty, mismanagement and negligence. The suit is presently in the
      discover stage and, therefore, no determination as to the possible outcome
      can be made. The Company believes the suit is without merit and intends to
      vigorously defend itself.

                                      F-32
<PAGE>

                     R.F. MANAGEMENT CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       SEPTEMBER 30, 1997, 1996, AND 1995

NOTE 17 - LITIGATION.  (Continued)

      In April 1997, the Company was named as co-defendant in a lawsuit against
      Dr. Luther Brady, his affiliates and associates, his attorneys and an
      alleged employee of the Company. The suit, filed by a former associate of
      Dr. Brady's, alleges that this individual had certain prior contractual
      rights to acquire the assets employed in the operation of the Company's
      radiation therapy center, located in Voorhees, New Jersey. The plaintiff
      seeks unspecified damages against the Company for alleged fraud, equitable
      fraud and tortious interference with the contract. The Company has denied
      these allegations in its response.

      In June 1997, the Company filed a third-party complaint against various
      Brady affiliates and their attorneys, alleging that it has no knowledge of
      any pre-existing rights to acquire the assets and that failure to disclose
      such rights is a breach of numerous representations and warranties
      contained in the asset purchase agreement. The Company seeks contribution
      and indemnity, damages, partial recession of the various agreements
      entered into between the Company and the Brady affiliates, injunctive
      relief and the return of certain monies held in escrow.

      In October 1997, Dr. Brady's and the Company agreed to allow Dr. Brady and
      his affiliates to oversee daily operations and the related cash flows of
      the three centers. Dr. Brady has submitted a schedule of the proceeds and
      uses thereof, but to date there has been no full accounting. Dr. Brady
      alleges that the centers have operated at a cash short fall during this
      period, which his affiliates have subsidized.

      Also in October 1997, the Brady affiliates returned $1,500,000 of the
      funds being held in escrow to the Company's lender. These funds are being
      held in escrow by the lender pending a resolution of the various legal
      issues involved.

      In addition to the aforementioned legal issues associated with the
      acquisition of the "Brady" assets, the agreement called for the Company to
      receive six times the weekly average of accounts receivable generated
      during the period from January 1 to June 1, 1996, which the Company had
      previously estimated at $350,000. The Company and Dr. Brady had been
      unable to arrive at an agreed upon amount and as a result, the Company has
      reserved the amount in full pending a resolution of the dispute.


                                      F-33
<PAGE>

                          Independent Auditors' Report

To the Board of Directors and Stockholders:
   Northern New Jersey Medical Management, Inc.

We have audited the accompanying balance sheets of Northern New Jersey Medical
Management, Inc. as of September 30, 1997 and 1996, and the related statements
of income, changes in stockholders' equity and cash flows for each of the three
years in the period ended September 30, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly in all
material respects the financial position of Northern New Jersey Medical
Management, Inc. as of September 30, 1997 and 1996 and the results of its
operations and its cash flows for the three year period ended September 30, 1997
in conformity with generally accepted accounting principles.


/s/ Davenprot & Associates, PA
DAVENPORT & ASSOCIATES, PA
Certified Public Accountants

Colonia, New Jersey
November 20, 1997
<PAGE>

                  NORTHERN NEW JERSEY MEDICAL MANAGEMENT, INC.
                                 Balance Sheets
                           September 30, 1997 and 1996


                                                          1997       1996
                                                        --------   --------

                              Assets

Current Assets:
  Cash and cash equivalents                             $    430   $  5,047
  Accounts receivable (Note 1)                           418,690    185,698
  Deferred income taxes (Notes 1 and 5)                   58,699     18,485
  Other current assets                                     3,600      3,100
                                                        --------   --------

      Total current assets                               481,419    212,330
                                                        --------   --------

Other Assets:
  Equipment, net of accumulated depreciation of
      $8,669 and $5,435, respectively (Notes 1 and 2)     23,674     26,908
  Investment in limited partnership (Note 3)              10,250     11,120
  Security deposits                                        5,030      5,030
                                                        --------   --------
      
      Total other assets                                  38,954     43,058
                                                        --------   --------

      Total Assets                                      $520,373   $255,388
                                                        ========   ========

See accompanying notes to financial statements.
<PAGE>

                  NORTHERN NEW JERSEY MEDICAL MANAGEMENT, INC.
                                 Balance Sheets
                           September 30, 1997 and 1996

                                                              1997        1996
                                                           --------     --------

            Liabilities and Stockholders' Equity

Current Liabilities:                           
  Accounts payable and accrued expenses                   $  20,165    $     472
  Income taxes payable (Notes 1 and 5)                         --           --
  Deferred income taxes payable (Notes 1 and 5)              61,605       43,257
  Advances from stockholder (Note 6)                        398,713      139,000
                                                           --------     --------
  
                                                            
      Total current liabilities                             480,483      182,729
                                                           
Other Liabilities:                                             
  Loan payable - stockholders (Note 6)                         --           --
                                                           --------     --------
                                                            
      Total liabilities                                     480,483      182,729
                                                           --------     --------
Commitments and contingencies (Notes 1, 6, and 8)

Stockholders' Equity:
  Capital stock:
    Common stock - No par value; 2,500 shares
       authorized; 100 shares issued and
       outstanding                                             --           --
  Additional paid-in capital                                 47,200       47,200
  Retained earnings (deficit)                                (7,310)      25,459
                                                           --------     --------
      Total Stockholders' Equity                             39,890       72,659
                                                           --------     --------

            Total Liabilities and Stockholders' Equity    $ 520,373    $ 255,388
                                                          =========    =========
See accompanying notes to financial statements
<PAGE>

                  NORTHERN NEW JERSEY MEDICAL MANAGEMENT, INC.
                              Statements of Income
              For the years ended September 30, 1997, 1996 and 1995



                                                1997         1996         1995
                                             ---------    ---------    ---------

Management fee income                        $ 341,292    $ 309,067    $ 355,029
                                             ---------    ---------    ---------

Costs and expenses:
    Salaries and consulting fees - officers
      and affiliated companies (Note 6)        300,000      300,000      270,616
    Payroll                                     35,244       13,272          269
    Payroll taxes                                5,783        1,015        9,546
    Rent                                         1,200        1,200        1,200
    Office expense                               6,063        1,774        2,908
    Professional fees                           40,940       36,204        7,921
    Travel                                       1,880        4,809       17,643
    Depreciation expense                         3,234        3,234        1,809
    Interest expense                               513          192           --
    Interest income                                 --       (2,175)          --
                                             ---------    ---------    ---------

    Total costs and expenses                   394,857      359,525      311,912
                                             ---------    ---------    ---------

Income (loss) from continuing operations
    before provision for (recovery of)
    income taxes                               (53,565)     (50,458)      43,117

Provision for (recovery of) income taxes
    (Notes 1 and 5)                            (21,311)     (19,178)      21,027
                                             ---------    ---------    ---------
Income (loss) from continuing operations
    before partnership income                  (32,254)     (31,280)      22,090

Income (loss) from limited partnership -
    net of income taxes (Notes 1, 3 and 5)        (515)          80        1,370
                                             ---------    ---------    ---------
Net income (loss)                            $ (32,769)   $ (31,200)   $  23,460
                                             =========    =========    =========

See accompanying notes to financial statements.
<PAGE>

                  NORTHERN NEW JERSEY MEDICAL MANAGEMENT, INC.
                       Statements of Stockholders' Equity
              For the years ended September 30, 1997, 1996 and 1995


<TABLE>
<CAPTION>

                                                       Additional
                                      Number    Common   Paid-In     Retained
                                     of Shares  Stock    Capital     Earnings      Total
                                     ---------  -----  ---------     --------   --------
<S>                                   <C>   <C>      <C>         <C>          <C>      
Balance at September 30, 1994           100   $   --   $   1,000   $  56,664    $  57,664

Net income for the year ended
    September 30, 1995                   --       --       --         23,460       23,460

Additions to additional paid-in
    capital for the year ended
    September 30, 1995                   --       --      46,200          --       46,200

Dividends paid during the year
    ended September 30, 1995             --       --       --        (23,465)     (23,465)
                                        ---   ------   ---------   ---------    ---------

Balance at September 30, 1995           100       --      47,200      56,659      103,859

Net loss for the year ended
    September 30, 1996                   --       --       --        (31,200)     (31,200)
                                        ---   ------   ---------   ---------    ---------

Balance at September 30, 1996           100       --      47,200      25,459       72,659

Net loss for the year ended
    September 30, 1997                   --       --       --        (32,769)     (32,769)
                                        ---   ------   ---------   ---------    ---------

Balance at September 30, 1997           100   $   --   $  47,200   $  (7,310)   $  39,890
                                        ===   ======   =========   =========    =========
</TABLE>

See accompanying notes to financial statements.
<PAGE>

                  NORTHERN NEW JERSEY MEDICAL MANAGEMENT, INC.
                            Statements of Cash Flows
              For the years ended September 30, 1997, 1996 and 1995


<TABLE>
<CAPTION>

                                                          1997         1996         1995
                                                        ---------    ---------    ---------
<S>                                                    <C>          <C>          <C>      
Cash Flows From (Note 7):
Operating activities:
  Net income (loss)                                    $ (32,769)   $ (31,200)   $  23,460
  Adjustments to reconcile net income (loss) to net
    cash provided by (used in) operating activities:
      Depreciation                                         3,234        3,234        1,809
      Deferred income taxes                              (21,866)     (19,202)      16,266
      Changes in operating assets and liabilities:
        (Increase) decrease in accounts receivable      (232,992)     (95,080)      33,473
        (Increase) decrease in other current assets         (500)      (3,100)       1,883
         Increase (decrease) in accounts payable
          and accrued expenses                            19,693       (5,359)       5,080
         Increase (decrease) in income taxes payable          --       (3,825)       3,825
                                                       ---------    ---------    ---------

Net cash provided by (used in) operating activities     (265,200)    (154,532)      85,796
                                                       ---------    ---------    ---------

Investing activities:
  Additions to fixed assets                                   --           --      (28,500)
  Investment in limited partnership                          870         (135)      (2,317)
  Addition to note receivable                                 --       (2,175)     (20,000)
  Collections on note receivable (Note 4)                     --       22,175           --
                                                       ---------    ---------    ---------

Net cash provided by (used in) investing activities          870       19,865      (50,817)
                                                       ---------    ---------    ---------

Financing activities:
  Increase (decrease) in advances from stockholder       259,713      139,000           --
  Repayment of loans payable - stockholders                   --           --      (15,000)
  Dividends paid                                              --           --      (23,465)
                                                       ---------    ---------    ---------

Net cash provided by (used in) financing activities      259,713      139,000      (38,465)
                                                       ---------    ---------    ---------
Net increase (decrease) in cash                           (4,617)       4,333       (3,486)
Cash - beginning of period                                 5,047          714        4,200
                                                       ---------    ---------    ---------
Cash - end of period                                   $     430    $   5,047    $     714
                                                       =========    =========    =========
</TABLE>

See accompanying notes to financial statements.
<PAGE>

                  NORTHERN NEW JERSEY MEDICAL MANAGEMENT, INC.
                          Notes to Financial Statements
              For the years ended September 30, 1997, 1996 and 1995

1.    Summary of Significant Accounting Policies:

The following is a summary of significant accounting policies employed in the
preparation of these financial statements. The policies conform to generally
accepted accounting principles and have been consistently applied.

      a.    Cash and Cash Equivalents

            For purposes of the statement of cash flows, the Company considers
            all highly liquid investments with a maturity of three months or
            less at the time of purchase to be cash equivalents.

      b.    Accounts Receivable

            Accounts receivable is stated net of contractual allowances. Based
            upon its past history, the Company estimates the amount of the
            accounts receivable that it does not expect to receive. The Company
            values its uncollected accounts receivable as part of its
            determination of profit and constantly reviews the valuation. The
            continuing review and gathering of additional information, as well
            as changing reimbursement rates, may cause adjustments.

      c.    Fixed Assets

            Fixed assets are stated at cost. Depreciation is provided for over
            the estimated useful lives of the assets by the straight-line method
            for financial reporting purposes and by accelerated methods for
            income tax purposes. At the time of retirement or other disposition
            of fixed assets, the cost and accumulated depreciation are removed
            from the accounts and any gains or losses are reflected in the
            statement of income. Maintenance, repairs and minor renewals are
            charged to income as incurred except that expenditures which
            substantially increase the useful lives of the respective properties
            are capitalized.

      d.    Revenue Recognition

            Management fees are generated, through a contractual agreement
            between the Company and a limited partnership, Union Diagnostic
            Facilities Group, L.P. ("Union"), based on a percentage of revenues
            generated. The Company recognizes management fees when diagnostic
            imaging services are rendered by Union. The Company owns a minority
            interest and is the general partner and managing agent. The
            Company's responsibilities include contract negotiations, site
            selection, equipment procurement, construction, office personnel and
            physician staffing, office management, patient scheduling, patient
            billings, cash collections, personnel management and marketing.
<PAGE>

                  NORTHERN NEW JERSEY MEDICAL MANAGEMENT, INC.
                          Notes to Financial Statements
              For the years ended September 30, 1997, 1996 and 1995

1.    Summary of Significant Accounting Policies (continued):

      e.    Income Taxes

            Effective October 1, 1993, the Company has adopted Financial
            Accounting Standards Board (FASB) Statement of Financial Accounting
            Standards (SFAS) No. 109, "Accounting for Income Taxes", for
            financial statement reporting purposes, which required a change from
            the deferred method (APB 11) to the assets and liabilty method of
            accounting for income taxes. The assets and liability approach
            requires the recognition of deferred tax assets and liabilities for
            the expected future tax consequences of temporary differences
            between the carrying amounts and the tax bases of assets and
            liabilities and the affect of future tax planning strategies to
            reduce any deferred tax liability. Under this method, deferred tax
            assets and liabilities are determined based on the differences
            between the financial statement carrying amounts and tax basis of
            assets and liabilites using enacted rates in effect in the years in
            which the differences are expected to reverse. The adoption of SFAS
            109 did not have a material impact on the financial statements.

      f.    Fiscal Year

            The Company has adopted a September 30 year end.

2.    Depreciation:

The principal rates used in calculating depreciation are as follows:

                               Class                 Rates per Annum
                               -----                 ---------------

                             Equipment                    10%

Equipment and related accumulated depreciation at September 30, 1997, 1996 and
1995 consist of the following:

                                                 1997        1996         1995
                                               --------    --------     --------

Equipment                                      $32,343      $32,343      $32,343

Less:  accumulated depreciation                  8,669        5,435        2,201
                                               -------      -------      -------
Total                                          $23,674      $26,908      $30,142
                                               =======      =======      =======
<PAGE>

                  NORTHERN NEW JERSEY MEDICAL MANAGEMENT, INC.
                          Notes to Financial Statements
              For the years ended September 30, 1997, 1996 and 1995

3.    Investment in Limited Partnership:

The Company has a one (1%) percent ownership in Union Diagnostic Facilities
Group, L.P. The investment is recorded on the equity method since the Company is
the only general partner. The Company's duties include contract negotiations,
site selection, equipment procurement, construction, office personnel and
physician staffing, office management, patient scheduling, patient billing, cash
collections, personnel management and marketing. The Company records its
investment in the limited partnership and its income from the limited
partnership monthly.

Effective January 1, 1995, the limited partnership changed its reporting period
from December 31 to September 30, for financial statement purposes. The
following is a summary of condensed financial data from the audited financial
statements of the limited partnership.

                             Total       Long-Term     Total        Total
                            Assets        Debt      Liabilities    Capital
                          ----------   ----------   ----------   ----------

     September 30, 1997   $1,173,998   $  122,857   $  881,091   $  292,907
     September 30, 1996      821,821      102,702      402,117      419,704
     September 30, 1995      703,809       56,175      251,117      452,692

                           Assets                   Liabilities
                    -----------------------   ------------------------
                     Current    Non-Current   Current      Non-Current
                    ----------  -----------   ----------   -----------

September 30, 1997   $648,785   $525,213     $758,234      $122,857
September 30, 1996    454,465    367,356      299,415       102,702
September 30, 1995    445,849    257,960      194,942        56,175
                                           
                                              Net          Allocation   
                                 Gross       Income         of Income      
                                Revenues     (Loss)       (Loss) (1%)
                              ------------  -----------   -------------

          September 30, 1997   $1,637,445   $  (87,047)   $     (870)
          September 30, 1996    1,642,128       13,637           135
          September 30, 1995    1,243,165      169,285         1,693
          December 31, 1994     1,648,846      249,495         2,495

Gross profit and income from continuing operations does not differ from net
income. The partnership has no redeemable securities or minority interest.
<PAGE>

                  NORTHERN NEW JERSEY MEDICAL MANAGEMENT, INC.
                          Notes to Financial Statements
              For the years ended September 30, 1997, 1996 and 1995

4.    Note Receivable:

Note receivable consisted of a $20,000 note with interest at 9% per annum, due
on or before April 1, 2000. This note was secured by one Limited Partnership
share in Union Diagnostic Facilities Group, L.P. The note was repaid on June 25,
1996.

5.    Income Taxes:

The Company has adopted Financial Accounting Standards Board (FASB) Statement of
Financial Accounting Standards (SFAS) Number 109, "Accounting for Income Taxes",
for financial statement reporting purposes. SFAS Number 109 requires the Company
to recognize deferred tax assets and liabilities for the expected future tax
consequences of events that have been recognized in the Company's financial
statements or tax returns. Under this method, deferred tax assets and
liabilities are determined based on the differences between financial statement
carrying amounts and tax basis of the assets and liabilities using enacted rates
in effect in the years in which the differences are expected to reverse.

The Company does not report income, for tax reporting purposes, on the accrual
basis of accounting. As a result of the adoption of SFAS 109, the Company has
recorded deferred income tax assets and deferred income tax liabilities, at
September 30, 1997, 1996 and 1995 which represent temporary differences arising
primarily from the recognition of income on the cash receipts and cash
disbursements basis of accounting for income tax reporting purposes at the
statutory rates of 35% for Federal income tax purposes and 9% for state income
tax purposes, which are expected to be realized in future years. A summary of
deferred income tax assets and deferred income tax liabilities is as follows:

                                          1997      1996     1995
                                        -------   -------   -------

             Deferred tax assets        $58,699   $18,485   $ 2,382
                                        =======   =======   =======

             Deferred tax liabilities   $61,605   $43,257   $46,356
                                        =======   =======   =======
<PAGE>

                  NORTHERN NEW JERSEY MEDICAL MANAGEMENT, INC.
                          Notes to Financial Statements
              For the years ended September 30, 1997, 1996 and 1995

5.    Income Taxes (continued):

The Company has a net operating loss (NOL) carry-forward for Federal income tax
purposes of $130,038, $44,779 and $-0- at September 30, 1997, 1996 and 1995,
respectively, available to offset income taxes in future periods until the year
ended September 30, 2011. Provision for (recovery of) Federal and State income
taxes for the years ended September 30, 1997, 1996 and 1995 are as follows:

                                           1997        1996        1995
                                         -------     -------      ------
        Income taxes - current
           State                        $    200    $     79    $    966
           Federal                            --          --       4,742
                                         -------     -------      ------
        Total income taxes - current         200          79       5,708
                                         -------     -------      ------
        Income taxes - deferred
           State                          (4,724)     (4,230)      3,445
           Federal                       (17,142)    (14,972)     12,821
                                         -------     -------      ------

        Total income taxes - deferred    (21,866)    (19,202)     16,266
                                         -------     -------      ------
        Total provision for (recovery
           of) income taxes             $(21,666)   $(19,123)   $ 21,974
                                        ========    ========    ========

Income (loss) before income taxes, income tax expense (recovery), partnership
income (loss), income tax expense (recovery) on partnership income and net
income (loss) are as follows:

                                                  1997        1996        1995
                                                --------    --------    --------
Income (loss) from continuing operations
  before income taxes                           $(53,565)   $(50,458)   $ 43,117

Income tax expense (recovery)                    (21,311)    (19,178)     21,027
                                                --------    --------    --------
Income (loss) from continuing operations
  before partnership income                      (32,254)    (31,280)     22,090
                                                --------    --------    --------
Partnership income (loss)                           (870)        135       2,317

Income tax expense (recovery) on
  partnership income (loss)                         (355)         55         947
                                                --------    --------    --------

Income (loss) from limited partnership -
   net of income taxes                              (515)         80       1,370
                                                --------    --------    --------

Net income (loss)                               $(32,769)   $(31,200)   $ 23,460
                                                ========    ========    ========
<PAGE>

                  NORTHERN NEW JERSEY MEDICAL MANAGEMENT, INC.
                          Notes to Financial Statements
              For the years ended September 30, 1997, 1996 and 1995

5.    Income Taxes (continued):

The following is a reconciliation of the U.S. Federal statutory rate and the
apparent tax rate:

                                             1997     1996     1995
                                           ------    ------   ------ 
U.S. Federal tax                          (35.00)%  (35.00)%   35.00 %

State taxes, net of Federal tax benefit    (5.85)%   (5.85)%    6.00 %

Benefit from net operating loss (NOL)
   carry-forward                               - %       - %  (12.13)%

Other                                       1.05 %    2.85 %    3.90 %
                                          ------    ------    ------ 

Apparent tax rate                         (39.80)%  (38.00)%   32.77 %
                                          ======    ======     =====  

Temporary differences and carry-forwards which give rise to a significant
portion of deferred tax assets and liabilities at September 30, 1997 are as
follows:

                                                           Deferred Tax
                                          Gross    --------------------------
                                          Amount    Assets         Liabilities
                                        --------   --------        -----------

Accounts receivable                     $129,822   $    --            $ 53,032
Accumulated depreciation                  17,635        --               7,204
Investment in limited partnership          3,351        --               1,369
Accounts payable and accrued expenses     13,831      5,650                -- 
Net operating loss carry forwards        130,038     53,049                -- 
                                                   --------           --------

Subtotal                                             58,699             61,605
                                                                      
Valuation allowances                                  --                  --
                                                   --------           --------
Total deferred tax assets and liabilities          $ 58,699           $ 61,605
                                                   ========           ========
<PAGE>

                  NORTHERN NEW JERSEY MEDICAL MANAGEMENT, INC.
                          Notes to Financial Statements
              For the years ended September 30, 1997, 1996 and 1995

5.    Income Taxes (continued):

Temporary differences and carry-forwards which give rise to a significant
portion of deferred tax assets and liabilities at September 30, 1996 are as
follows:

                                                       Deferred Tax
                                         Gross    ------------------------
                                         Amount    Assets      Liabilities
                                        --------   --------    -----------

Accounts receivable                     $84,649  $     --        $ 34,579
Accumulated depreciation                 18,447        --           7,535
Investment in limited partnership         2,797        --           1,143
Accounts payable and accrued expenses       472       193              --
Net operating loss carry forwards        44,779    18,292              --
                                                 --------        --------
                                                            

Subtotal                                           18,485          43,257
                                                           
Valuation allowances                                  -                -
                                                 --------        --------
Total deferred tax assets and liabilities        $ 18,485        $ 43,257
                                                 ========        ========

Temporary differences and carry-forwards which give rise to a significant
portion of deferred tax assets and liabilities at September 30, 1995 are as
follows:

                                                       Deferred Tax
                                         Gross    ------------------------
                                         Amount    Assets      Liabilities
                                        --------  --------     -----------

Accounts receivable                     $90,618  $   --         $ 37,018
Accumulated depreciation                 18,290      --            7,471
Investment in limited partnership         4,572      --            1,867
Accounts payable and accrued expenses     5,831     2,382           --
                                                 --------       --------
Subtotal                                            2,382         46,356
                                                 --------       --------
Valuation allowances                                 -              -
                                                 --------       --------
Total deferred tax assets and liabilities        $  2,382       $ 46,356
                                                 ========       ========
<PAGE>

                  NORTHERN NEW JERSEY MEDICAL MANAGEMENT, INC.
                          Notes to Financial Statements
              For the years ended September 30, 1997, 1996 and 1995

6.    Related Party Transactions:

      a.    Advances From Stockholder

            R.F. Management Corp., the sole stockholder of the Company, made
            certain advances to the Company. These advances aggregated $398,713
            and $139,000 at September 30, 1997 and 1996, respectively, and are
            anticipated to be repaid by the Company within the next twelve
            months.

      b.    Loan Payable - Stockholders

            Certain stockholders of the Company have made advances to the
            Company. These advances aggregated $-0- at September 30, 1997, 1996
            and 1995.

      c.    Acquisition

            On May 31, 1995, Northern New Jersey Medical Management, Inc. was
            acquired by R.F. Management Corp. Two of the officers, stockholders
            and directors of R.F. Management Corp. were also officers,
            stockholders and directors of Northern New Jersey Medical
            Management, Inc. (See acquisition, Note 8 for further details).

      d.    Operating Expenses

            The Company presently maintains an office address at 95 Madison
            Avenue, Suite 301, Morristown, New Jersey, in the office of the
            Company's president. The Company utilizes an executive office which
            is approximately 120 square feet plus a common area consisting of
            copy and fax machines. Expenses incurred in the operation of the
            Company's office facility including rent, telephone and office
            expenses are allocated to numerous businesses which share the
            facility. The allocations are based on usage and revenues.
            Management believes that the allocations are reasonable and proper.
<PAGE>

                  NORTHERN NEW JERSEY MEDICAL MANAGEMENT, INC.
                          Notes to Financial Statements
              For the years ended September 30, 1997, 1996 and 1995

      7.    Statement of Cash Flows:

            The Company has adopted Financial Accounting Standards Boards (FASB)
            Statement of Financial Accounting Standards (SFAS) No. 95,
            "Statement of Cash Flows", for financial statement reporting
            purposes. The statements of cash flows are presented for the years
            ended September 30, 1997, 1996 and 1995. These statements present
            cash flow information as well as the required supplemental
            information and the effects of non-cash transactions during the
            periods presented.

            The Company has no non-cash investing or financing activity during
            the years ended September 30, 1997, 1996 and 1995.

            Supplemental disclosures of cash flow information for the years
            ended September 30, 1997, 1996 and 1995 are as follows:

                                     1997     1996     1995
                                    ------   ------   -----
                                                           
                     Interest       $  513   $  192   $ --
                                    ======   ======   =====

                     Income taxes   $   --   $2,025   $ --
                                    ======   ======   =====


8.    Acquisition:

      On May 31, 1995, R.F. Management Corp. acquired one hundred percent (100%)
      of the outstanding shares (one hundred (100) shares of no par value common
      stock) of Northern New Jersey Medical Management, Inc. The terms of the
      agreement call for a payment of one hundred-fifty thousand dollars
      ($150,000) and a six hundred thousand dollar ($600,000) note, which bears
      interest at prime plus one percent (1%) and requires principal payments of
      one hundred-fifty thousand dollars ($150,000), plus accrued interest, on
      January 30, 1996, 1997, 1998 and 1999. The annual principal payments are
      subject to a one-third ( ) reduction (to one hundred thousand dollars
      [$100,000] plus interest) in the event that the gross revenues of the
      Company fall below two hundred thousand dollars ($200,000) per annum.
      Additionally, the agreement calls for the recasting of $46,200 of notes
      from the former officers, stockholders and directors to the Company from
      stockholder loans to additional paid-in capital.


<PAGE>


           Supplement Schedule to Consolidated Financial Statements
             For the years ended September 30, 1997, 1996 and 1995

              Indebtedness of and to Related Parties - Not Current

                              R.F. MANAGEMENT CORP.


                                Balance at       Indebtedness of        Balance
    Name of person              Beginning    Additions    Deductions    at End
    --------------              ---------    ---------    ----------    ------

Stockholders

For the year ended
  Septebmer 30, 1997           $  300,000   $1,246,798    $      --   $1,546,798

For the year ended
  September 30, 1996              450,000           --      150,000      300,000

For the year ended
  September 30, 1995               61,200      450,000       61,200      450,000