**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 **WASHINGTON,
        D.C.   20549**


**___________________________________**





**FORM
        10-QSB**


**___________________________________**


**Quarterly
        Report Pursuant to Section 13 or 15(d) of the**
 **Securities
        Exchange Act of 1934**





**For
        the Quarterly Period Ended September 30, 2007**





**Commission
        File Number:  0-21475**





**EMERGENT
        GROUP INC.**
 (Exact
        name of registrant as specified in its charter)


**Nevada**
              **93-1215401**(State
                  of jurisdiction of Incorporation)
              (I.R.S.
                  Employer Identification No.)


**10939
        Pendleton Street**
 **Sun
        Valley, CA 91352**


(Address
        of principal executive offices)





**(818)
        394-2800**


(Registrant’s
        telephone number)





**Not
        Applicable**


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





Indicate
        by check mark whether the registrant (1) has filed all reports required to
        be
        filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
        the
        preceding 12 months (or for such shorter 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 [  ]





Indicate
        by check mark whether the
        registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange
        Act).Yes [  ] No [X]


Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Exchange Act).Yes [  ] No [X]


As
        of November 12, 2007, the registrant
        had a total of 5,570,989 shares of Common Stock outstanding.




**EMERGENT
      GROUP INC.**





**FORM
      10-QSB Quarterly Report**





**Table
      of Contents**













**PART
      I.  FINANCIAL INFORMATION**


**Page**Item
                1. Financial
                StatementsCondensed
                Consolidated Balance Sheet as of September 30, 2007
                (unaudited)
            3Condensed
                Consolidated Statements of Income for the Three and Nine Months 
                Ended
                September 30, 2007 and 2006 (unaudited)
            4Condensed
                Consolidated Statements of Cash Flows for the Nine Months Ended
                September 30, 2007 and 2006 (unaudited)
            5Notes
                to Condensed Consolidated Financial Statements
            6Item
                2. Management’s
                Discussion and Analysis of Financial Condition and
                Results of Operations
            11Item
                3. Controls
                and Procedures
            15**PART
              II.  OTHER INFORMATION**Item
                1.  Legal
                Proceedings
            15Item
                2. Changes
                in Securities
            15Item
                3. Defaults
                Upon Senior Securities
            16Item
                4. Submissions
                of Matters to a Vote of Security olders
            16Item
                5. Other
                Information
            16Item
                6. Exhibits
            16**Signatures**
            17




2




**PART
      I.  FINANCIAL INFORMATION**





**Item
      1.  Financial Statements**


**Emergent
        Group Inc. and Subsidiaries**
 **Condensed
          Consolidated Balance Sheet**


**September
                  30,****2007****ASSETS**
              
              
              (Unaudited)**Current
                  assets**Cash
              
              
              $
              1,942,322Accounts
                  receivable, net
              
              
              
              2,282,471Inventory
              
              
              
              475,490Prepaid
                  expenses
              
              
              
              223,807Deferred
                  tax assets
              
              
              
              905,400Total
                  current assets
              
              
              
              5,829,490**Property
                  and equipment, net of accumulated depreciation
                  and****amortization
                  of $5,577,501**
              
              
              
              4,392,797**Goodwill**
              
              
              
              1,120,058**Other
                  intangible assets, net of accumulated amortization
                  of****$****158,470**
              
              
              
              107,816**Deposits
                  and other assets**
              
              
              
              109,066**Total
                  assets**
              
              
              $
              11,559,227**LIABILITIES
                  AND SHAREHOLDERS' EQUITY****Current
                  liabilities**Current
                  portion of capital lease obligations
              
              
              $
              1,009,878Current
                  portion of notes payable
              
              
              
              101,859Accounts
                  payable
              
              
              
              1,033,971Accrued
                  expenses and other liabilities
              
              
              
              1,235,640Total
                  current liabilities
              
              
              
              3,381,348**Capital
                  lease obligations**, net of current portion
              
              
              
              2,121,644**Notes
                  payable**, net of current portion
              
              
              
              25,222Total
                  liabilities
              
              
              
              5,528,214**Minority
                  interest**
              
              
              
              558,580**Shareholders'
                  equity**Preferred
                  stock, $0.001 par value, non-voting 10,000,000shares
                  authorized, no shares issued and outstanding
              
              
              
              -Common
                  stock, $0.04 par value, 100,000,000 shares authorized5,569,569
                  shares issued and outstanding
              
              
              
              222,799Additional
                  paid-in capital
              
              
              
              14,814,322Accumulated
                  deficit
              
              
              
              (9,564,688
              )Total
                  shareholders' equity
              
              
              
              5,472,433**Total
                  liabilities and shareholders' equity**
              
              
              $
              11,559,227




The
      accompanying notes are an integral part of these condensed financial
      statements.




3


**Emergent
        Group Inc. and Subsidiaries**


Condensed
      Consolidated Statements of
      Income


**(Unaudited)**




**Three
                  Months Ended**
              
              
              **Nine
                  Months Ended****September
                  30,**
              
              
              **September
                  30,****2007**
              
              
              **2006**
              
              
              **2007**
              
              
              **2006****Revenue**
              
              $
              4,467,011
              
              
              $
              3,997,933
              
              
              $
              13,181,307
              
              
              $
              11,981,961**Cost
                  of goods sold**
              
              
              2,685,863
              
              
              
              2,416,331
              
              
              
              7,876,615
              
              
              
              7,218,280**Gross
                  profit**
              
              
              1,781,148
              
              
              
              1,581,602
              
              
              
              5,304,692
              
              
              
              4,763,681**Selling,
                  general, and administrative expenses**
              
              
              1,036,272
              
              
              
              1,021,690
              
              
              
              3,224,372
              
              
              
              2,984,110**Income
                  from operations**
              
              
              744,876
              
              
              
              559,912
              
              
              
              2,080,320
              
              
              
              1,779,571**Other
                  income (expense)**Interest
                  expense
              
              
              (54,208
              )
              
              
              (39,466
              )
              
              
              (165,810
              )
              
              
              (128,710
              )Gain
                on disposal of property and equipment
              
              
              -
              
              
              
              15,502
              
              
              
              8,214
              
              
              
              18,192Other
                  income, net
              
              
              512
              
              
              
              32,401
              
              
              
              36,604
              
              
              
              108,641Total
                  other income (expense)
              
              
              (53,696
              )
              
              
              8,437
              
              
              
              (120,992
              )
              
              
              (1,877
              )**Income
                  before provision for income taxes****and
                  minority interest**
              
              
              691,180
              
              
              
              568,349
              
              
              
              1,959,328
              
              
              
              1,777,694**Provision
                  for income taxes**
              
              
              (39,086
              )
              
              
              (14,692
              )
              
              
              (134,498
              )
              
              
              (48,528
              )**Income
                  before minority interest**
              
              
              652,094
              
              
              
              553,657
              
              
              
              1,824,830
              
              
              
              1,729,166**Minority
                  interest in income of consolidated****limited
                  liability companies**
              
              
              (221,646
              )
              
              
              (107,892
              )
              
              
              (516,066
              )
              
              
              (269,599
              )**Net
                  income**
              
              **$**
              **430,448**
              
              
              **$**
              **445,765**
              
              
              **$**
              **1,308,764**
              
              
              **$**
              **1,459,567****Basic
                  earnings per share**
              
              **$**
              **0.08**
              
              
              **$**
              **0.08**
              
              
              **$**
              **0.24**
              
              
              **$**
              **0.27****Diluted
                  earnings per share**
              
              **$**
              **0.07**
              
              
              **$**
              **0.08**
              
              
              **$**
              **0.22**
              
              
              **$**
              **0.25****Basic
                  weighted average shares outstanding**
              
              ****
              **5,566,448**
              
              
              ****
              **5,460,789**
              
              
              ****
              **5,518,920**
              
              
              ****
              **5,457,704****Diluted
                  weighted-average shares outstanding**
              
              ****
              **5,873,137**
              
              
              ****
              **5,822,186**
              
              
              ****
              **5,825,085**
              
              
              ****
              **5,809,343**




The
      accompanying notes are an integral part of these condensed financial
      statements.




4


**Emergent
          Group Inc. and Subsidiaries**
 Condensed
        Consolidated Statements of Cash
        Flows
 (Unaudited)




September
                  30,2007
              
              
              2006**Cash
                  flows from operating activities**Net
                  income
              
              $
              1,308,764
              
              
              $
              1,459,567Adjustments
                  to reconcile net income to net cashprovided
                  by operating activities:Depreciation
                  and amortization
              
              
              1,092,113
              
              
              
              797,000Amortization
                  of finance fees
              
              
              25,959
              
              
              
              7,772(Gain)
                  loss on disposal of property and equipment and other
              
              
              (8,214
              )
              
              
              (18,192
              )Provision
                  for doubtful accounts
              
              
              5,000
              
              
              
              1,738Minority
                  interest in income
              
              
              516,066
              
              
              
              269,599Stock-based
                  compensation expense
              
              
              76,785
              
              
              
              58,521Other
                  income
              
              
              -
              
              
              
              (66,095
              )(Increase)
                  decrease inAccounts
                  receivable
              
              
              120,263
              
              
              
              (373,869
              )Inventory
              
              
              344,101
              
              
              
              (53,240
              )Prepaid
                  expenses
              
              
              (71,910
              )
              
              
              (9,294
              )Deposits
                  and other assets
              
              
              31,384
              
              
              
              (12,837
              )Increase
                  (decrease) inAccounts
                  payable
              
              
              6,931
              
              
              
              95,001Accrued
                  expenses
              
              
              45,731
              
              
              
              113,957**Net
                  cash provided by operating activities**
              
              
              3,492,973
              
              
              
              2,269,628**Cash
                  flows from investing activities**Purchase
                  of property and equipment
              
              
              (312,515
              )
              
              
              (367,268
              )Cash
                  paid to members of limited liability companies
              
              
              (489,803
              )
              
              
              (245,283
              )Contributions
                  from new members to limited liability companies
              
              
              55,000
              
              
              
              90,000Proceeds
                  from the sale of property and equipment
              
              
              4,580
              
              
              
              21,988Net
                  cash used in investing activities
              
              
              (742,738
              )
              
              
              (500,563
              )**Cash
                  flows from financing activities**Payments
                  on capital lease obligations
              
              
              (814,283
              )
              
              
              (494,024
              )Payment
                  of dividends on common stock
              
              
              (1,094,249
              )
              
              
              (512,861
              )Payments
                  of loan fees
              
              
              (10,000
              )
              
              
              -Borrowings
                  under line of credit
              
              
              12,246,000
              
              
              
              11,585,633Repayments
                  on line of credit
              
              
              (12,246,000
              )
              
              
              (11,585,633
              )Payments
                  on notes payable, net
              
              
              (211,993
              )
              
              
              (317,578
              )Proceeds
                  from the exercise of common stock options
              
              
              4,000
              
              
              
              -Net
                  cash used in financing activities
              
              
              (2,126,525
              )
              
              
              (1,324,463
              )**Net
                  increase in cash**
              
              
              623,710
              
              
              
              444,602**Cash,
                  beginning of period**
              
              
              1,318,612
              
              
              
              585,377**Cash,
                  end of period**
              
              **$**
              **1,942,322**
              
              
              **$**
              **1,029,979****Supplemental
                  disclosures of cash flow information:**Interest
                  paid
              
              **$**
              **192,134**
              
              
              **$**
              **142,544**Income
                  taxes paid
              
              **$**
              **86,315**
              
              
              **$**
              **54,531****Supplemental
                  schedule of noncash investing and financing
                  activities:**




During
        the nine months ended September 30, 2007 and 2006, the Company incurred capital
        lease obligations of $1,204,532 and $2,108,932, respectively, for medical
        equipment.




The
        accompanying notes are an integral part of these condensed financial
        statements.




5




**EMERGENT
      GROUP INC and SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**





**1.**
            **BUSINESS**





Emergent
      Group Inc. (“Emergent”) is the parent company of PRI Medical Technologies, Inc.
      (“PRI Medical”), its wholly owned and only operating subsidiary. Emergent and
      PRI Medical are referred to collectively hereinafter as the “Company.” PRI
      Medical provides mobile laser/surgical services, along with technical support,
      on a per procedure basis to hospitals, out-patient surgery centers, and
      physicians' offices.





**2.**
            **BASIS
                OF PRESENTATION**





The
      accompanying unaudited condensed consolidated financial statements of Emergent
      have been prepared pursuant to the rules and regulations of the Securities
      and
      Exchange Commission ("SEC"). Certain information and footnote disclosures
      normally included in financial statements prepared in accordance with accounting
      principles generally accepted in the United States have been condensed or
      omitted pursuant to such rules and regulations. These unaudited condensed
      consolidated financial statements should be read in conjunction with the audited
      consolidated financial statements and notes thereto included in the Company’s
      Annual Report on Form 10-KSB for the year ended December 31, 2006. In the
      opinion of management, the accompanying unaudited condensed consolidated
      financial statements reflect all adjustments, which are of a normal recurring
      nature, necessary for a fair presentation of the results for the periods
      presented.





The
      results of operations presented for the three months and nine months ended
      September 30, 2007 are not necessarily indicative of the results to be expected
      for any other interim period or any future fiscal year.





*Principles
      of Consolidation*


The
      consolidated financial statements include the accounts of Emergent and its
      wholly owned subsidiaries. Also, in accordance with the Financial Accounting
      Standards Board Interpretation No. 46R, “Consolidation of Variable Interest
      Entities” the Company has accounted for its equity investments in seven limited
      liability companies under the full consolidation method. All significant
      intercompany transactions and balances have been eliminated through
      consolidation.





*Use
      of Estimates*


The
      preparation of the condensed consolidated financial statements in accordance
      with generally accepted accounting principles requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities, disclosure of contingent assets and liabilities at the date of
      the
      financial statements, and the reported amounts of income and expenses during
      the
      reporting period. Actual results could differ significantly from those
      estimates.





*Accounts
      Receivable and Concentration of Business and Credit Risks*


We
      market
      our services primarily to hospitals and out-patient centers located in
      California, Nevada, Utah, Colorado and Arizona. Our equipment rental and
      technician services are subject to competition from other similar businesses.
      Our accounts receivable represent financial instruments with potential credit
      risk. We offer credit terms and credit limits to most of our customers based
      on
      the creditworthiness of such customers. However, we retain the right to place
      such customers on credit hold should their account become delinquent. We
      maintain an allowance for doubtful accounts for estimated losses should
      customers fail to make required payments. In addition, we monitor the age of
      customer account balances, historical bad debt experience, customer
      creditworthiness, customer specific information, and changes in payment patterns
      when making estimates of the collectibility of trade receivables. Accounts
      receivable are written off when all collection attempts have failed. Our
      allowance for doubtful accounts will be increased if circumstances warrant.
      Based on the information available, management believes that our net accounts
      receivable are collectible.





*Inventory*


Inventory
      consists of finished goods primarily used in connection with the delivery of
      our
      mobile surgical equipment rental and services business. Inventory is stated
      at
      the lower of cost or market, on a first-in, first-out basis.





*Reclassifications*


Certain
      amounts presented for the prior year have been reclassified to conform to the
      current year’s presentation.




6




*Stock-Based
      Compensation*




In
      December 2004, the FASB issued SFAS No. 123(R),”Share-Based Payment”. SFAS
      123(R) amends SFAS No. 123,”Accounting for Stock-Based Compensation”, and APB
      Opinion 25,”Accounting for Stock Issued to Employees.” SFAS No.123(R) requires
      that the cost of share-based payment transactions (including those with
      employees and non-employees) be recognized in the financial statements. SFAS
      No.
      123(R) applies to all share-based payment transactions in which an entity
      acquires goods or services by issuing (or offering to issue) its shares, share
      options, or other equity instruments (except for those held by an ESOP) or
      by
      incurring liabilities (1) in amounts based (even in part) on the price of the
      entity’s shares or other equity instruments, or (2) that require (or may
      require) settlement by the issuance of an entity’s shares or other equity
      instruments. This statement is effective for public companies qualifying as
      SEC
      small business issuers for the fiscal year beginning after December 15,
      2005.




Effective
      January 1, 2006, we adopted Statement of Financial Accounting Standards (“SFAS”)
      No. 123R, Share-Based Payment, using the modified prospective method. Under
      this method, compensation cost recognized during the three and nine months
      ended
      September 30, 2007 and 2006 includes compensation cost for all share-based
      payments granted prior to, but not yet vested as of January 1, 2006, based
      on
      the grant date fair value estimated in accordance with the original provisions
      of SFAS No. 123 amortized over the remaining vesting period for such options.
      There were no options granted during the nine months ended September 30, 2007
      and 2006, respectively. Compensation costs recognized in accordance with SFAS
      No. 123R were $2,668 and $3,030 for the three months ended September 30, 2007
      and 2006, respectively, and $8,090 and $9,343 for the nine months ended
      September 30, 2007 and 2006, respectively.




The
      2002
      Employee Benefit and Consulting Services Compensation Plan (the “2002 Plan”) was
      adopted in 2002 for the purpose of providing incentives to key employees,
      officers, and consultants of the Company who provide significant services to
      the
      Company. As of September 30, 2007, there are 650,000 common shares authorized
      for grant under the 2002 Plan. The 2002 Plan originally adopted with 325,000
      shares was approved by the Company’s stockholders and the increase of 325,000
      shares was approved the Company’s Board of Directors and the Compensation
      Committee in accordance with the Plan. Options will not be granted for a term
      of
      more than ten years from the date of grant. Generally, options will vest evenly
      over a period of five years, and the 2002 Plan expires in March 2012. Since
      shareholder approval was not obtained on or before April 1, 2003, all incentive
      stock options granted under the 2002 Plan have automatically become
      non-statutory stock options, and the Board is limited to granting non-statutory
      stock options under the 2002 Plan. As of September 30, 2007, the number of
      shares reserved for future awards was 230,948.




A
      summary
      of the Company's outstanding options and activity is as follows:




Number of
                  Shares
              
              
              Weighted
                  Average Exercise PriceOutstanding
                  at January 1, 2007
              
              
              398,912
              
              
              $
              1.20Options
                  Granted
              
              
              -
              
              
              $
              -Options
                  Canceled
              
              
              (3,841
              )
              
              $
              0.40Options
                  Exercised
              
              
              (40,686
              )
              
              $
              0.48Outstanding
                  at September 30, 2007
              
              
              354,385
              
              
              $
              1.29Exercisable
                  at September 30, 2007
              
              
              277,494
              
              
              $
              1.53





The
      weighted-average remaining contractual life of the options outstanding at
      September 30, 2007 is 5.76 years. The exercise prices for the options
      outstanding at September 30, 2007 ranged from $0.40 to $162.00, and information
      relating to these options is as follows:




7




Range
                  of Exercise Prices
              
              
              Stock
                  Options Outstanding
              
              
              Stock
                  Options Exercisable
              
              
              Weighted-Average
                  Remaining Contractual Life
              
              Weighted-Average
                  Exercise Price of Options Outstanding
              
              
              Weighted-Average
                  Exercise Price of Options Exercisable$
              0.40
              
              
              
              344,536
              
              
              
              267,645
              
              
              
              5.45
              
              years
              
              $
              0.40
              
              
              $
              0.40$
              8.00
              
              
              
              2,000
              
              
              
              2,000
              
              
              
              5.25
              
              years
              
              $
              8.00
              
              
              $
              8.00$
              20.00
                  - 51.00
              
              
              
              7,844
              
              
              
              7,844
              
              
              
              3.85
              
              years
              
              $
              38.41
              
              
              $
              38.41$
              162.16
              
              
              
              5
              
              
              
              5
              
              
              
              1.65
              
              years
              
              $
              162.00
              
              
              $
              162.00$
              0.40
                  - 162.16
              
              
              
              354,385
              
              
              
              277,494
              
              
              
              5.40
              
              years
              
              $
              1.29
              
              
              $
              1.53


As
      of
      September 30, 2007, the total unrecognized fair value compensation cost related
      to unvested stock options was $30,178, which is to be recognized over a
      remaining weighted average period of approximately 2.5 years.




Remaining
              
              
              WeightedNumber
              
              
              Contractual
                  Life
              
              
              AverageOutstanding
              
              
              (in
                  years)
              
              
              Exercise
                  PriceNon
                  Vested, December 31, 2006
              
              
              104,351
              
              
              
              8.00
              
              
              $
              0.40Granted
              
              
              -Forfeited
              
              
              -Vested
              
              
              27,459
              
              
              
              
              
              
              $
              0.40Non
                  Vested, September 30, 2007
              
              
              76,892
              
              
              
              7.25
              
              
              $
              0.40




In
      addition to options granted under the 2002 Plan, as of September 30, 2007 we
      have 215,000 restricted award shares issued and outstanding of which 105,000
      shares were granted to executive officers and directors in March 2007. Award
      shares generally vest in equal installments over five years from the date of
      issuance. Such award shares are issued from time to time to executive officers,
      directors and employees of the Company. Non-vested award shares are subject
      to
      forfeiture in the event that the recipient is no longer employed by the Company
      at the time of vesting, subject to the Board’s right to waive the forfeiture
      provisions. Compensation expense related to such shares is determined as of
      the
      issuance date based on the fair value of the shares issued and is amortized
      over
      the related vesting period. Total compensation expense related to the award
      shares issued in March 2007 was $341,250, which is being amortized over the
      vesting period of five years. Compensation expense related to outstanding award
      shares was $17,064 and $3,605 for the three months ended September 30, 2007
      and
      2006, respectively, and $36,330 and $12,174 for the nine months ended September
      30, 2007 and 2006, respectively.





Earnings
      Per Share


The
      Company utilizes SFAS No. 128, "Earnings per Share." Basic earnings per share
      are computed by dividing earnings available to common shareholders by the
      weighted-average number of common shares outstanding.  Diluted
      earnings per share is computed similar to basic earnings per share except that
      the denominator is increased to include the number of additional common shares
      that would have been outstanding if the potential common share equivalents
      had
      been issued and if the additional common shares were dilutive. Common equivalent
      shares are excluded from the computation if their effect is
      anti-dilutive.





*Recent
      Accounting Pronounments*


In
      July
      2006, the FASB released FASB Interpretation No. 48, *Accounting for
      Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109*
      (“FIN 48”).  FIN 48 clarifies the accounting and reporting for
      uncertainties in income tax law. This interpretation prescribes a
      comprehensive model for the financial statement recognition, measurement,
      presentation and disclosure of uncertain tax positions taken or expected to
      be
      taken in income tax returns. This statement is effective for fiscal years
      beginning after December 15, 2006. The implementation of FIN 48 has not had
      a significant impact on the Company’s results of operations or financial
      position.




In
      September 2006, the FASB issued SFAS No. 157, *Fair Value Measurements*
      (SFAS 157). SFAS 157 establishes a framework for measuring fair value in
      generally accepted accounting principles, and expands disclosures about fair
      value measurements. SFAS 157 is effective for financial statements issued
      for fiscal years beginning after November 15, 2007. The Company is required
      to adopt the provision of SFAS 157, as applicable, beginning in fiscal year
      2008.  Management does not believe the adoption of SFAS 157 will have a
      material impact on the Company's financial position or results of
      operations.




8




**3.**
            **DEBT
                OBLIGATIONS**




The
      Company maintains a revolving credit line (the “Revolver”) for $1 million, which
      is collateralized by accounts receivable and certain fixed assets. Borrowings
      under the Revolver, as amended, are based on 80% of eligible receivables, as
      defined. In addition, the Revolver provides for an annual renewal fee equal
      to
      1% of the capital availability amount, as defined. Borrowings under the Revolver
      bear interest at the prime rate (7.75% as of September 30, 2007), plus 2%.
      In
      May 2007, the Revolver automatically renewed for a one year period and the
      Company paid the lender a renewal fee of $10,000, which is being amortized
      over
      the loan term. As of September 30, 2007, no amounts were outstanding under
      the
      Revolver.





The
      Revolver, as amended, requires the Company to maintain a tangible net worth
      of
      at least $1.5 million and requires the lender to pay the Company interest on
      cash collections in excess of amounts borrowed under the Revolver at a rate
      of
      2.25% below the prime rate. As of September 30, 2007 the Company was in
      compliance with the terms of its revolving credit agreement.





In
      May
      2006 the Company entered into a master lease agreement with a bank to provide
      a
      lease line of credit of for the financing of equipment purchases. Under the
      agreement, the Company may finance equipment purchases on an installment basis
      at a rate of interest determined at each respective borrowing date. Such rates
      will generally approximate the bank’s prime rate. As of September 30, 2007, we
      had $667,775 outstanding under the lease line of credit payable in monthly
      installments over a term of 36 to 48 months.





The
      Company incurred total net interest expense of $54,208 and $39,466 for the
      three
      months ended September 30, 2007 and 2006, respectively, and $165,810 and
      $128,710 for the nine months ended September 30, 2007 and 2006,
      respectively.





**4.**
            **COMMITMENTS
                AND CONTINGENCIES**





*Legal
      Matters*


Byong
      Y.
      Kwon, Plaintiff against Daniel J. Yun, Emergent Group Inc., Emergent Capital
      Investment Management, LLC, Metedeconk Holdings, LLC, Voyager Advisors, LLC,
      Millennium Tradition Limited (f/k/a Millennium Heritage, Limited), Emergent
      Management Company, LLC, Endurance Advisors, Limited, SK Networks Co., Ltd.
      (f/k/a SK Global Co., Ltd.), Hye Min Kang, John Does 1-2 and Richard Roes 1-2
      (collectively the “Defendants”).





Plaintiff’s
      complaint against the Defendants named above is a civil lawsuit, which was
      signed by the clerk on February 2, 2005. This action is brought in the United
      States District Court, Southern District of New York by Plaintiff against the
      Company, a former director, Daniel Yun, and other parties to recover money
      damages for alleged fraud, negligent misrepresentations and aiding and abetting
      fraud. The Amended Complaint alleges that the factual basis involving the action
      against the Company involves alleged false representations to Plaintiff to
      induce him to leave his then employment in 2001 and accept the Company’s and
      another named Defendant’s alleged offer of employment. Plaintiff seeks
      compensatory damages and punitive damages each in the amount of not less than
      $2,100,000 together with interest thereon, reasonable attorneys’ fees and other
      specific relief against Defendants other than the Company. Management has denied
      the Plaintiff’s allegations against the Company and intends to vigorously defend
      this lawsuit. During the quarter ended September 30, 2007, there were no
      material developments in this matter.





**5.**
            **RELATED
                PARTY TRANSACTIONS**





*Transactions
      with BJH Management*


The
      Company’s Chairman and Chief Executive Officer maintains his primary office in
      New York. In this regard, the Company reimbursed BJH Management, LLC (“BJH”), a
      company owned by the Company’s Chairman and Chief Executive Officer, for office
      rent and other reimbursable expenses totaling $8,479 and $8,134 for the three
      months ended September 30, 2007 and 2006, respectively, and $30,063 and $24,839
      for the nine months ended September 30, 2007 and 2006,
      respectively.





Effective
      July 1, 2006, the services of the Company’s Chairman and Chief Executive Officer
      are contracted through BJH Management for a monthly fee of $15,167. In March
      2007, the services agreement with BJH Management was extended to June 30,
      2010.




9




In
      March
      2007, the Company agreed to extend Mr. Buther’s employment contract for one year
      to June 2008.





**6.**
            **LIMITED
                LIABILITY COMPANIES**





In
      connection with expanding its business in certain commercial and geographic
      areas, PRI Medical will at times help to form Limited Liability Companies
      (“LLCs”) in which it will acquire a either a minority or majority interest and
      offer the remaining interest to other investors. These LLCs acquire certain
      equipment for use in their respective business activities which generally focus
      on surgical procedures. As of September 30, 2007, PRI Medical holds minority
      equity interests in seven LLCs, which conduct business in California,
      Colorado and Nevada. In accordance with the Financial Accounting Standards
      Board
      Interpretation No. 46R, “Consolidation of Variable Interest Entities” the
      Company accounted for its equity investments in such LLCs, in which it holds
      a
      minority interest, under the full consolidation method whereby transactions
      between the Company and LLCs have been eliminated through
      consolidation.




10




**Item
      2.** **Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations**





**Forward-Looking
      Statements**





The
      information contained in this Form 10-QSB and documents incorporated herein
      by
      reference are intended to update the information contained in the Company’s
      Annual Report on Form 10-KSB for the year ended December 31, 2006 and such
      information presumes that readers have access to, and will have read, the
“Management’s Discussion and Analysis of Financial Condition and Results of
      Operations,” “Risk Factors” and other information contained in such Form 10-KSB
      and other Company filings with the Securities and Exchange Commission
      (“SEC”).





This
      Quarterly Report on Form 10-QSB contains forward-looking statements within
      the
      meaning of Section 27A of the Securities Act of 1933, as amended, and Section
      21E of the Securities Exchange Act of 1934, as amended.  These
      forward-looking statements involve risks and uncertainties, and actual results
      could be significantly different than those discussed in this Form 10-QSB.
      Certain statements contained in Management's Discussion and Analysis,
      particularly in "Liquidity and Capital Resources," and elsewhere in this Form
      10-QSB are forward-looking statements. These statements discuss, among other
      things, expected growth, future revenues and future performance. Although we
      believe the expectations expressed in such forward-looking statements are based
      on reasonable assumptions within the bounds of our knowledge of our business,
      a
      number of factors could cause actual results to differ materially from those
      expressed in any forward-looking statements, whether oral or written, made
      by us
      or on our behalf. The forward-looking statements are subject to risks and
      uncertainties including, without limitation, the following: (a) changes in
      levels of competition from current competitors and potential new competition,
      (b) possible loss of significant customer(s), (c) the Company’s ability to
      effectively integrate new and changing medical technologies into to its product
      and service offerings, (d) the Company’s ability to meet the terms and
      conditions of its debt and lease obligations, and (e) changes in availability
      or
      terms of working capital financing from vendors and lending institutions. The
      foregoing should not be construed as an exhaustive list of all factors that
      could cause actual results to differ materially from those expressed in
      forward-looking statements made by us. All forward-looking statements included
      in this document are made as of the date hereof, based on information available
      to the Company on the date thereof, and the Company assumes no obligation to
      update any forward-looking statements.





**Overview**





Emergent
      Group Inc. (“Emergent”) is the parent company of PRI Medical Technologies, Inc.
      (“PRI Medical”), its wholly owned and only operating subsidiary. Emergent and
      PRI Medical are referred to collectively hereinafter as the “Company.” PRI
      Medical provides mobile laser/surgical services, along with technical support,
      on a per procedure basis to hospitals, out-patient surgery centers, and
      physicians' offices.





**Critical
      Accounting Policies**





Our
      discussion and analysis of our financial condition and results of operations
      are
      based upon our financial statements, which have been prepared in accordance
      with
      generally accepted accounting principles in the United States. The preparation
      of financial statements requires managers to make estimates and disclosures
      on
      the date of the financial statements. On an on-going basis, we evaluate our
      estimates including, but not limited to, those related to revenue recognition,
      inventory valuation and property and equipment. We use authoritative
      pronouncements, historical experience and other assumptions as the basis for
      making judgments. Actual results could differ from those estimates. We believe
      that the following critical accounting policies affect our more significant
      judgments and estimates in the preparation of our financial
      statements.





*Revenue
      Recognition*. Revenue is recognized when the services are performed and
      billable. We are required to make judgments based on historical experience
      and
      future expectations, as to the realizability of goods and services billed to
      our
      customers. These judgments are required to assess the propriety of the
      recognition of revenue based on Staff Accounting Bulletin (“SAB”) No. 104,
“Revenue Recognition,” and related guidance. We make such assessments based on
      the following factors: (a) customer-specific information, and (b) historical
      experience for issues not yet identified.




*Inventory
      Valuation*. We are required to make judgments based on historical experience
      and future expectations as to the realizability of our inventory. We make these
      assessments based on the following factors: (a) existing orders and usage,
      (b)
      age of the inventory, and (c) historical experience.




11




*Property
      and Equipment*. We are required to make judgments based on historical
      experience and future expectations as to the realizability of our property
      and
      equipment. We made these assessments based on the following factors: (a) the
      estimated useful lives of such assets, (b) technological changes in our
      industry, and (c) the changing needs of our customers.





**Results
      of Operations**





The
      following table sets forth certain selected unaudited condensed consolidated
      statements of income data for the periods indicated in dollars and as a
      percentage of total revenues. The following discussions relates to our results
      of operations for the periods noted and are not necessarily indicative of the
      results expected for any other interim period or any future fiscal year. In
      addition, we note that the period-to-period comparison may not be indicative
      of
      future performance.




**Three
                  Months Ended**
              
              
              
              
              
              **Nine
                  Months Ended****September
                  30,**
              
              
              
              
              
              **September
                  30,****2007**
              
              
              **%**
              
              
              **2006**
              
              
              **%**
              
              
              **2007**
              
              
              **%**
              
              
              **2006**
              
              
              **%****Revenue**
              
              $
              4,467,011
              
              
              
              100
              %
              
              $
              3,997,933
              
              
              
              100
              %
              
              $
              13,181,307
              
              
              
              100
              %
              
              $
              11,981,961
              
              
              
              100
              %**Cost
                  of goods sold**
              
              
              2,685,863
              
              
              
              60
              %
              
              
              2,416,331
              
              
              
              60
              %
              
              
              7,876,615
              
              
              
              60
              %
              
              
              7,218,280
              
              
              
              60
              %**Gross
                  profit**
              
              
              1,781,148
              
              
              
              40
              %
              
              
              1,581,602
              
              
              
              40
              %
              
              
              5,304,692
              
              
              
              40
              %
              
              
              4,763,681
              
              
              
              40
              %**Selling,
                  general, and administrative expenses**
              
              
              1,036,272
              
              
              
              23
              %
              
              
              1,021,690
              
              
              
              26
              %
              
              
              3,224,372
              
              
              
              24
              %
              
              
              2,984,110
              
              
              
              25
              %**Income
                  from operations**
              
              
              744,876
              
              
              
              17
              %
              
              
              559,912
              
              
              
              14
              %
              
              
              2,080,320
              
              
              
              16
              %
              
              
              1,779,571
              
              
              
              15
              %**Other
                  income (expense)**
              
              
              (53,696
              )
              
              
              -1
              %
              
              
              8,437
              
              
              
              0
              %
              
              
              (120,992
              )
              
              
              -1
              %
              
              
              (1,877
              )
              
              
              0
              %**Income
                  before provision for income****taxes
                  and minority interest**
              
              
              691,180
              
              
              
              15
              %
              
              
              568,349
              
              
              
              14
              %
              
              
              1,959,328
              
              
              
              15
              %
              
              
              1,777,694
              
              
              
              15
              %**Provision
                  for income taxes**
              
              
              (39,086
              )
              
              
              -1
              %
              
              
              (14,692
              )
              
              
              0
              %
              
              
              (134,498
              )
              
              
              -1
              %
              
              
              (48,528
              )
              
              
              0
              %**Net
                  income before minority interest**
              
              
              652,094
              
              
              
              15
              %
              
              
              553,657
              
              
              
              14
              %
              
              
              1,824,830
              
              
              
              14
              %
              
              
              1,729,166
              
              
              
              14
              %**Minority
                  interest in income of consolidated****limited
                  liability companies**
              
              
              (221,646
              )
              
              
              -5
              %
              
              
              (107,892
              )
              
              
              -3
              %
              
              
              (516,066
              )
              
              
              -4
              %
              
              
              (269,599
              )
              
              
              -2
              %**Net
                  income**
              
              $
              430,448
              
              
              
              10
              %
              
              $
              445,765
              
              
              
              11
              %
              
              $
              1,308,764
              
              
              
              10
              %
              
              $
              1,459,567
              
              
              
              12
              %




**Comparison
      of the Three Months Ended September 30, 2007 to September 30,
      2006**





The
      Company generated revenues of $4,467,011 in 2007 compared to $3,997,933 in
      2006.
      The increase in revenues in 2007 of $469,078 or 12% is primarily related to
      an
      increase in revenues from our surgical procedures. Revenues from our surgical
      and cosmetic procedures represented approximately 95% and 5% of total revenues
      for 2007 and 93% and 7% for 2006, respectively.





Cost
      of
      goods sold was $2,685,863 in 2007 compared to $2,416,331 2006 or 60% of revenues
      for both periods. Costs of goods sold primarily consist of payroll costs and
      related expenses for technicians, cost of disposables consumed, depreciation
      and
      amortization related to equipment, insurance costs and other operating costs
      incurred in rendering mobile medical equipment and technician services. The
      overall dollar increase in cost of goods sold of $269,532 or 11% for 2007 is
      generally due to increases in disposable costs, depreciation and amortization
      expense, and to costs related to equipment maintenance. Disposable costs
      increased as a result of a change in the mix of surgical procedures rendered
      to
      customers whereby a greater number of higher priced procedures were performed
      in
      2007 compared to 2006, which required more expensive disposable items while
      depreciation and amortization expense increased due to equipment purchases
      in
      first half of 2007 and in the second half of 2006. The net change in other
      cost
      categories included in cost of goods sold remained relatively unchanged in
      2007
      compared to 2006.





Gross
      profit from operations was $1,781,148 in 2007 compared to $1,581,602 in 2006.
      Gross profit as a percentage of revenues was 40% for both 2007 and 2006. Gross
      margins may vary from quarter to quarter depending on the type of surgical
      procedure performed due to the fact that certain procedures require more
      expensive disposable items. In addition, gross margin rates will vary from
      period to period depending upon other factors including pricing considerations,
      and equipment and technician utilization rates. The gross margin for 2007 is
      not
      necessarily indicative of the margins that may be realized in future
      periods.




12




Selling,
      general, and administrative expenses were $1,036,272 or 23% of revenues in
      2007
      compared to $1,021,690 or 26% of revenues in 2006. Such costs include, among
      others, payroll and related expenses, insurance costs and occupancy costs.
      The
      increase in selling, general and administrative expenses of $14,582 in 2007
      is
      primarily related to increases payroll expenses related to sales
      personnel.





Other
      income (expense) was $(53,696) in 2007 compared to $8,437 in 2006. Other income
      (expense) includes interest income and expense, gains and losses on disposal
      of
      property and equipment, and other miscellaneous income and expense items. The
      net increase in other income (expense) of $(62,133) is primarily related to
      an
      increase in interest expense of $14,742, a decrease of $31,889 in other income,
      and a decrease of $15,502 in gain on disposal of equipment in 2007 compared
      to
      2006. The increase in interest costs relates to new equipment leases entered
      into during the first half of 2007 and the second half of 2006.





The
      minority interest (ownership interests held by non-affiliates) in net income
      of
      limited liability companies was $221,646 in 2007 compared to $107,892 in 2006.
      In 2007 and 2006 we held minority interests in seven and six entities,
      respectively. As of September 30, 2007 and 2006, in accordance with the
      Financial Accounting Standards Board Interpretation No. 46R, “Consolidation of
      Variable Interest Entities”, the Company accounted for its equity investments in
      entities in which it holds a minority interest under the full consolidation
      method.





Net
      income was $430,448 in 2007 compared to $445,765 in 2006. Provision for income
      taxes was $39,086 in 2007 compared to $14,692 in 2006. The Company has net
      operating loss carryforwards for federal tax purposes. The provision for income
      taxes of as of September 30, 2007 relates to estimated state taxes and to
      Alternative Minimum Taxes (AMT). Basic and fully diluted net income per share
      for 2007 was $0.08 and $0.07, respectively, compared to basic and fully diluted
      net of income per share for 2006 of $0.08 and $0.08, respectively. Basic and
      fully diluted shares outstanding for 2007 were 5,566,448 and 5,873,137,
      respectively, and 5,460,789 and 5,822,186 for 2006, respectively.





**Comparison
      of the Nine Months Ended September 30, 2007 to September 30,
      2006**





The
      Company generated revenues of $13,181,307 in 2007 compared to $11,981,961 in
      2006. The increase in revenues in 2007 of $1,199,346, or 10% is primarily
      related to an increase in revenues from our surgical procedures. Revenues from
      our surgical and cosmetic procedures represented approximately 94% and 6% of
      total revenues for 2007 and 93% and 7% for 2006, respectively.





Cost
      of
      goods sold was $7,876,615 and $7,218,280 in 2007 and 2006, respectively, or
      60%
      of revenues for both periods. Costs of goods sold primarily consist of payroll
      costs and related expenses for technicians, cost of disposables consumed,
      depreciation and amortization related to equipment, insurance costs and other
      operating costs incurred in rendering mobile medical equipment and technician
      services. The overall increase in cost of goods sold of $658,335 or 9% for
      2007
      is generally due to increases in depreciation and amortization expenses, payroll
      and related costs and to increases in costs related to equipment maintenance.
      Depreciation and amortization expense increased due to equipment purchases
      in
      first half of 2007 and the second half of 2006. The increase in payroll costs
      relates to technician and operations personnel. The net change in other cost
      categories included in cost of goods sold remained relatively unchanged in
      2007
      compared to 2006.





Gross
      profit from operations was $5,304,692 in 2007 compared to $4,763,681 in 2006.
      Gross profit as a percentage of revenues was 40% in 2007 and 2006. Gross margins
      after disposable costs will vary depending on the type of surgical procedure
      performed due to the fact that certain procedures require more expensive
      disposable items. In addition, gross margin rates will vary from period to
      period depending upon other factors including pricing considerations, and
      equipment and technician utilization rates. The gross margin for 2007 is not
      necessarily indicative of the margins that may be realized in future
      periods.





Selling,
      general, and administrative expenses were $3,224,372 or 24% of revenues for
      2007
      compared to $2,984,110 or 25% of revenues for 2006. Such costs include, among
      others, payroll and related expenses, insurance costs and occupancy costs.
      The
      increase in selling, general and administrative expenses of $240,262 in 2007
      is
      primarily related to increases in incentive compensation to advance new product
      lines and to increases in sales management and other payroll related
      expenses.




13




Other
      income (expense) was $(120,992) in 2007 compared to $(1,877) in 2006. Other
      income (expense) includes interest income and expense, gains and losses on
      disposal of property and equipment, and other miscellaneous income and expense
      items. The net increase in other income (expense) of $(119,115) is primarily
      related to an increase in interest expense of $37,100 in 2007 compared to 2006
      and to a decrease of $72,037 in other income in 2007. The increase in interest
      costs relates to new equipment leases entered into during the first half of
      2007
      and the second half of 2006.





The
      minority interest (ownership interests held by non-affiliates) in net income
      of
      limited liability companies was $516,066 in 2007 compared to $269,599 in 2006.
      In 2007 and 2006, we held minority interest in seven and six entities,
      respectively. As of September 30, 2007 and 2006, in accordance with the
      Financial Accounting Standards Board Interpretation No. 46R, “Consolidation of
      Variable Interest Entities”, the Company accounted for its equity investments in
      entities in which it holds a minority interest under the full consolidation
      method.





Net
      income was $1,308,764 in 2007 compared to $1,459,567 in 2006. Provision for
      income taxes was $134,498 in 2007 compared to $48,528 in 2006. The Company
      has
      net operating loss carryforwards for federal tax purposes. The provision for
      income taxes of $134,498 as of September 30, 2007 is related to state taxes
      and
      to estimated Alternative Minimum Taxes (AMT). Basic net income per share for
      2007 and 2006 was $0.24 and $0.27, respectively, while fully diluted net income
      per share for 2007 and 2006 was $0.22 and $0.25, respectively. Basic and fully
      diluted shares outstanding for 2007 were 5,518,920 and 5,825,085, respectively,
      and 5,457,704 and 5,809,343 for 2006, respectively.





**Liquidity
      and Capital Resources**





The
      Company maintains a revolving credit line (the “Revolver”) for $1 million, which
      is collateralized by accounts receivable and certain fixed assets. Borrowings
      under the Revolver, as amended, are based on 80% of eligible receivables, as
      defined. In addition, the Revolver provides for an annual renewal fee equal
      to
      1% of the capital availability amount, as defined. Borrowings under the Revolver
      bear interest at the prime rate (7.75% as of September 30, 2007), plus 2%.
      In
      May 2007, the Revolver automatically renewed for a one year period and the
      Company paid the lender a renewal fee of $10,000, which is being amortized
      over
      the loan term. As of September 30, 2007, no amounts were outstanding under
      the
      Revolver.





The
      Revolver, as amended, requires the Company to maintain a tangible net worth
      of
      at least $1.5 million and requires the lender to pay the Company interest on
      cash collections in excess of amounts borrowed under the Revolver at a rate
      of
      2.25% below the prime rate. As of September 30, 2007 the Company was in
      compliance with the terms of its revolving credit agreement.





In
      May
      2006 the Company entered into a master lease agreement with a bank to provide
      a
      lease line of credit of for the financing of equipment purchases. Under the
      agreement, the Company may finance equipment purchases on an installment basis
      at a rate of interest determined at each respective borrowing date. Such rates
      will generally approximate the bank’s prime rate. As of September 30, 2007, we
      had $667,775 outstanding under the lease line of credit payable in monthly
      installments over a term of 36 to 48 months.





The
      Company had cash and cash equivalents of $1,942,322 at September 30, 2007.
      Cash
      provided by operating activities for the nine months ended September 30, 2007
      was $3,492,973. Cash generated from operations includes net income of
      $1,308,764, depreciation and amortization of $1,118,072, minority interest
      in
      net income of $516,066, decreases in inventory of $344,101, accounts receivable
      of $120,263, deposits and other assets of $31,384 and stock-based compensation
      expense of $76,785 and increases in accounts payable and accrued expenses of
      $52,662; offset by an increase in prepaid expenses of $71,910. Cash used in
      investing activities was $742,738 related to the purchase of property and
      equipment, net of reimbursements, of $312,515 and to cash distributions of
      $489,803 to members of limited liability companies; offset by net proceeds
      of
      $4,580 from the disposition of property and equipment and contributions from
      new
      members to limited liability companies of $55,000. Cash used for financing
      activities was $2,126,525 from payments on lease and debt obligations of
      $814,283 and $211,993, respectively, payment of loan fees of $10,000, and
      payment of dividends on common stock of $1,094,249. In addition, during the
      nine
      months ended September 30, 2007 we borrowed and repaid $12,246,000 under our
      revolving line of credit.




14




The
      Company had cash and cash equivalents of $1,029,979 at September 30, 2006.
      Cash
      provided by operating activities for the nine months ended September 30, 2006
      was $2,269,628. Cash generated from operations includes net income of
      $1,459,567, depreciation and amortization of $855,521, minority interest in
      net
      income of $269,599 and a net increase in accounts payable and accrued expenses
      of $208,958; offset by an increase in accounts receivable, prepaid expenses,
      inventory, deposits and other assets of $449,240. Cash used in investing
      activities was $500,563 related to the purchase of property and equipment of
      $367,268 and to cash distributions of $245,283 to members of limited liability
      companies, offset by contributions of $90,000 from members in two new limited
      liability companies, and net proceeds of $21,988 from the disposition of
      property and equipment. Cash used for financing activities was $1,324,463 from
      payments on lease and debt obligations of $494,024 and $317,578, respectively,
      and payment of dividends on common stock of $512,861. In addition, during the
      nine months ended September 30, 2006 we borrowed and repaid $11,585,633 under
      our line of credit.





We
      anticipate that our future liquidity requirements will arise from the need
      to
      finance our accounts receivable and inventories, and from the need to fund
      our
      current debt and lease obligations and capital expenditures. The primary sources
      of funding for such requirements will be cash generated from operations,
      borrowings under debt facilities and trade payables, and raising additional
      capital from the sale of equity or other securities. The Company believes that
      it can generate sufficient cash flow from these sources to fund its on-going
      operations for at least the next twelve months.





**Item
      3. Controls and Procedures**





The
      Company maintains disclosure controls and procedures that are designed to ensure
      that information required to be disclosed in the Company's Exchange Act reports
      is recorded, processed, summarized and reported within the time periods
      specified in the SEC's rules and forms, and that such information is accumulated
      and communicated to the Company's management, including its Chief Executive
      Officer and Chief Financial Officer, as appropriate, to allow timely decisions
      regarding required disclosure based closely on the definition of “disclosure
      controls and procedures” in Rule 13a-15(e). In designing and evaluating the
      disclosure controls and procedures, management recognized that any controls
      and
      procedures, no matter how well designed and operated, can provide only
      reasonable assurance of achieving the desired control objectives, and management
      necessarily was required to apply its judgment in evaluating the cost-benefit
      relationship of possible controls and procedures. The Company carried out an
      evaluation, under the supervision and with the participation of the Company's
      management, including the Company's Chief Executive Officer and the Company's
      Chief Financial Officer, of the effectiveness of the design and operation of
      the
      Company's disclosure controls and procedures. Based on the foregoing, the
      Company’s Chief Executive Officer and Chief Financial Officer concluded that the
      Company's disclosure controls and procedures were effective at the reasonable
      assurance level at the end of our most recent quarter ended September 30, 2007.
      There have been no changes in the Company’s disclosure controls and procedures
      or in other factors that could affect the disclosure controls subsequent to
      the
      date the Company completed its evaluation.





Management
      has not yet completed, and is not yet required to have completed, its assessment
      of the effectiveness of internal control over financial reporting as required
      by
      Section 404 of the Sarbanes-Oxley Act of 2002, as amended.





**PART
      II.  OTHER INFORMATION**





**Item
      1.                    Legal
      Proceedings**





See
      Note
      4 to Notes to Condensed Consolidated Financial Statements included herein for
      a
      description of legal matters.




**Item
      2.                   Changes
      in Securities**





(a)
            In
                the third quarter ended September 30, 2007, there were no sales of
                unregistered securities.


(b)
            Rule
                463 of the Securities Act is not applicable to the
                Company.


(c)
            In
                the third quarter ended September 30, 2007 there were no repurchases
                by
                the Company of its Common Stock.




15




**Item
      3.                   Defaults
      Upon Senior Securities**





None.




**Item
      4.                   Submissions
      of Matters to a Vote of Security Holders**





In
      the
      third quarter ended September 30, 2007 there were no matters submitted to a
      vote
      of security holders.




**Item
      5.                   Other
      Information**





None.




**Item
      6.                    Exhibits**





Except
      for the exhibits listed below, other required exhibits have been previously
      filed with the Securities and Exchange Commission under the Securities Exchange
      Act of 1934, as amended.





Number 
      Exhibit Description


____________________________________________





11.1
            Statement
                re: computation of earnings per share.  See condensed
                consolidated statement of operations and notes
                thereto.


31.1
            Certification
                of Chief Executive Officer Pursuant to Rule 13a-14(a) under the Securities
                Exchange Act of 1934, as adopted pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002*


31.2
            Certification
                of Chief Financial Officer Pursuant to Rule 13a-14(a) under the Securities
                Exchange Act of 1934, as adopted pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002*


32.1
            Certification
                of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
                adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002*


32.2
            Certification
                of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
                adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002*


99.1
            Press
                Release*


________________________


*
      Filed
      herewith.




16




**SIGNATURES**








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






Signature
            
            Title
            
            Date/s/
                Bruce J.
                Haber
            
            Chairman
                and
                Chief Executive Officer
            
            November
                13,
                2007Bruce
                J.
                Haber,/s/
                William M.
                McKay
            
            Chief
                Financial
                Officer and Secretary
            
            November
                13,
                2007William
                M.
                McKay,




17