<PAGE>

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

                       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 June 30, 2003

                         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.)


                             932 Grand Central Ave.
                               Glendale, CA 91201
--------------------------------------------------------------------------------
                    (Address of principal executive offices)

                                 (818) 240-8250
--------------------------------------------------------------------------------
                         (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 / /

     As of August 11, 2003, the  registrant had a total of 67,357,827  shares of
Common  Stock  outstanding  without  giving  effect  to a  reverse  stock  split
effective August 29, 2003.


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

<PAGE>

                               EMERGENT GROUP INC.

                          FORM 10-QSB Quarterly Report

                                Table of Contents


<TABLE>
<CAPTION>
                                                                                                         Page
                                                                                                         ----

<S>                                                                                                      <C>
PART I.  FINANCIAL INFORMATION

   Item 1. Financial Statements

              Condensed Consolidated Balance Sheets as of June 30, 2003
                 and December 31, 2002                                                                      3

              Unaudited Condensed Consolidated Statements of Operations for the Three
                 and Six Months Ended June 30, 2003 and 2002                                                4

              Unaudited Condensed Consolidated Statements of Cash Flows for the
                 Six Months Ended June 30, 2003 and 2002                                                    5

              Notes to the Condensed Consolidated Financial Statements                                      6

   Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations        12

   Item 3.    Controls and Procedures                                                                      17

PART II.  OTHER INFORMATION

   Item 1.    Legal Proceedings                                                                            18

   Item 2.    Changes in Securities                                                                        18

   Item 3.    Defaults Upon Senior Securities                                                              19

   Item 4.    Submissions of Matters to a Vote of Security Holders                                         19

   Item 5.    Other Information                                                                            19

   Item 6.    Exhibits and Reports on Form 8-K                                                             22


Signatures                                                                                                 22
</TABLE>

<PAGE>



                          PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS
-----------------------------
                               EMERGENT GROUP INC. AND SUBSIDIARIES
                              CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                      JUNE 30,       DECEMBER 31,
                                                                        2003             2002
                                                                   ---------------- ---------------
                              ASSETS
<S>                                                                <C>               <C>

CURRENT ASSETS
     Cash                                                              $ 1,281,238     $   957,242
     Accounts receivable, net                                            1,142,569       1,306,055
     Due from related parties, net                                          61,803         121,543
     Inventory, net                                                        365,072         295,069
     Prepaid expenses                                                      267,424         265,062
     Income tax receivable                                                      --           4,830
                                                                   ---------------- ---------------
           Total current assets                                          3,118,106       2,949,801

EQUITY INVESTMENT IN LIMITED LIABILITY COMPANIES                            14,988          31,134
PROPERTY AND EQUIPMENT, NET                                              1,713,075       1,888,688
GOODWILL, NET                                                              779,127         779,127
DEPOSITS AND OTHER ASSETS, NET                                             155,176         133,022
                                                                   ---------------- ---------------
TOTAL ASSETS                                                           $ 5,780,472     $ 5,781,772
                                                                   ================ ===============

               LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
     Line of credit                                                    $ 1,000,000     $ 1,108,700
     Current portion of capital lease obligations                          437,695         677,973
     Current portion of notes payable                                      671,573         807,908
     Accounts payable                                                      565,096         544,835
     Accrued expenses                                                      655,614       1,053,243
                                                                   ---------------- ---------------
        Total current liabilities                                        3,329,978       4,192,659

CONVERTIBLE SUBORDINATED NOTES PAYABLE - RELATED PARTIES                   700,000              --
CONVERTIBLE SUBORDINATED NOTES PAYABLE                                     300,000              --
CAPITAL LEASE OBLIGATIONS, net of current portion                          253,158         368,618
NOTES PAYABLE, net of current portion                                      578,692         657,833
                                                                   ---------------- ---------------
           Total liabilities                                             5,161,828       5,219,110

SHAREHOLDERS' EQUITY
     Preferred stock, $0.001 par value, non-voting 10,000,000
        shares authorized, no shares issued and outstanding                     --              --
     Common stock, $0.001 par value, 100,000,000 shares authorized
        67,357,815 and 64,917,791 shares issued and outstanding             67,357          64,918
     Committed stock, 2,440,024 shares                                          --           2,440
     Additional paid-in capital                                         13,541,786      13,541,784
     Accumulated deficit                                               (12,990,499)    (13,046,480)
                                                                   ---------------- ---------------
              Total shareholders' equity                                   618,644         562,662
                                                                   ---------------- ---------------
 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                            $ 5,780,472     $ 5,781,772
                                                                   ================ ===============
</TABLE>

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

                                       3
<PAGE>

                      EMERGENT GROUP INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                         THREE MONTHS ENDED                SIX MONTHS ENDED
                                                     ----------------------------    ----------------------------
                                                              JUNE 30,                         JUNE 30,
                                                          2003           2002            2003            2002
                                                     ------------    ------------    ------------    ------------
<S>                                                  <C>             <C>             <C>             <C>
Revenue                                              $  2,345,865    $  2,197,824    $  4,486,685    $  4,700,345
COST OF GOODS SOLD                                      1,519,510       1,391,662       2,835,447       2,806,195
                                                     ------------    ------------    ------------    ------------


GROSS PROFIT                                              826,355         806,162       1,651,238       1,894,150

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES             785,764         844,863       1,617,987       1,715,557
                                                     ------------    ------------    ------------    ------------

INCOME (LOSS) FROM OPERATIONS                              40,591         (38,701)         33,251         178,593

OTHER INCOME (EXPENSE)
     Realized (loss) gain on investment securities             --      (1,732,573)             --      (1,732,573)
     Interest expense                                     (54,112)       (128,812)       (106,628)       (282,560)
     Equity in net earnings (losses) of investment
        in limited liability companies                     (2,335)         (1,048)        (16,146)          6,174
     Gain on disposal of property and equipment             6,184         131,554          32,451         212,822
     Other income (expense), net                           10,971           5,800           8,234          92,363
                                                     ------------    ------------    ------------    ------------

           Total other income (expense)                   (39,292)     (1,725,079)        (82,089)     (1,703,774)
                                                     ------------    ------------    ------------    ------------
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES
     AND EXTRAORDINARY ITEM                                 1,299      (1,763,780)        (48,838)     (1,525,181)
PROVISION FOR INCOME TAXES                                     --              --              --              --
                                                     ------------    ------------    ------------    -----------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM                     1,299      (1,763,780)        (48,838)     (1,525,181)
EXTRAORDINARY ITEM
     Gain on forgiveness of debt, net of tax                1,289         823,866         104,819       1,050,382
                                                     ------------    ------------    ------------    ------------
NET INCOME (LOSS)                                    $      2,588    $   (939,914)   $     55,981    $   (474,799)
                                                     ============    ============    ============    ============

INCOME (LOSS) PER SHARE DATA:
     Before extraordinary item                       $       0.00    $     (0.033)   $      (0.00)   $     (0.029)
     Extraordinary item                                      0.00           0.016            0.00           0.020
                                                     ------------    ------------    ------------    ------------

BASIC AND DILUTED INCOME PER SHARE                   $       0.00    $      (0.02)   $       0.00    $      (0.01)
                                                     ============    ============    ============    ============

WEIGHTED-AVERAGE SHARES OUTSTANDING                    67,357,815      53,044,821      67,357,815      53,044,821
                                                     ============    ============    ============    ============
</TABLE>


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

                                        4

<PAGE>

                                      EMERGENT GROUP INC. AND SUBSIDIARIES
                                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                     Six Months Ended
                                                                                         June 30,
                                                                                  --------------------------
                                                                                     2003           2002
                                                                                  -----------    -----------
<S>                                                                               <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net income (loss)                                                            $    55,981    $  (474,799)
                                                                                  -----------    -----------
     Adjustments to reconcile net loss to net cash
     provided by (used in) operating activities:
         Gain on disposal of property and equipment                                   (32,451)      (212,822)
         Gain on forgiveness of debt                                                 (104,818)    (1,050,382)
         Realized loss on investment securities                                            --      1,732,573
         Depreciation and amortization                                                377,476        312,902
         Write-off of loan fees, net                                                       --         76,063
         Equity in net (gain) loss of investment in limited liability companies        16,146         (6,174)
         Provision for doubtful accounts                                               (4,272)         5,444
         (Increase) decrease in
            Accounts receivable                                                     1,041,693      1,099,244
            Inventory                                                                 (70,003)        75,282
            Due from related party                                                   (742,157)      (588,743)
            Prepaid expenses                                                           (2,362)        23,213
            Deposits and other assets                                                   8,693          4,734
         Increase (decrease) in
            Accounts payable                                                            5,190       (430,814)
            Accrued expenses                                                         (290,260)       223,750
                                                                                  -----------    -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES                                             258,856        789,471
                                                                                  -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES
     Cash paid to limited liability companies                                         (56,968)       (25,801)
     Purchase of property and equipment                                              (183,561)       (24,911)
     Proceeds from the sale of property and equipment                                  35,583        267,837
     Purchase of customer list and covenant not-to-compete                            (50,000)          --
     Proceeds from the sale of securities, net                                           --          267,427
                                                                                  -----------    -----------
Net cash provided by (used in) investing activities                                  (254,946)       484,552
                                                                                  -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES
     Proceeds from private placement of subordinated notes                          1,000,000           --
     Payments on capital lease obligations                                           (355,738)      (225,279)
     Payments on line of credit                                                      (108,700)          --
     Payments on notes payable                                                       (215,476)      (199,034)
     Net change in book overdraft                                                        --         (145,518)
                                                                                  -----------    -----------
Net cash provided by (used in) financing activities                                   320,086       (569,831)
                                                                                  -----------    -----------

NET INCREASE IN CASH                                                                  323,996        704,192
CASH, BEGINNING OF PERIOD                                                             957,242        482,165
                                                                                  -----------    -----------

CASH, END OF PERIOD                                                               $ 1,281,238    $ 1,186,357
                                                                                  ===========    ===========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

     INTEREST PAID                                                                $    46,802    $    50,568
                                                                                  ===========    ===========
</TABLE>


SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES -

During the six months ended June 30, 2003 and 2002 the Company  billed  $500,905
and $523,803, respectively, to a related party for management fees. The Company
also incurred expenses on behalf of the related party.


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


                                       5
<PAGE>

                               EMERGENT GROUP INC
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

1.   BUSINESS

     Emergent Group Inc. ("Emergent") is the parent company of Medical Resources
     Management,  Inc. ("MRM"), its wholly owned and only operating  subsidiary.
     Emergent  acquired  MRM in  July  2001  as per an  Agreement  and  Plan  of
     Reorganization of Merger ("Merger Agreement"),  dated January 23, 2001. MRM
     primarily  conducts  its  business  through  its  wholly  owned  subsidiary
     Physiologic   Reps  ("PRI").   Emergent,   MRM  and  PRI  are  referred  to
     collectively  hereinafter  as the  "Company."  PRI is a provider  of mobile
     surgical  equipment on a fee for service basis to hospitals,  surgical care
     centers  and other  health  care  providers.  PRI also  provides  technical
     support required to ensure the equipment is working correctly. PRI provides
     a limited amount of  non-surgical  equipment on a rental basis to hospitals
     and surgery centers,  although PRI began winding down this area of business
     in  early  2002  in  order  to  focus  on  its  core   surgical   equipment
     rental/services business.

2.   BASIS OF PRESENTATION

     The accompanying  unaudited condensed  consolidated financial statements of
     Emergent have been  prepared  pursuant to the rules 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-K for the year
     ended  December 31, 2002. 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 six months
     ended June 30, 2003 and 2002 are not necessarily  indicative of the results
     to be expected for any other interim period or any future fiscal year.

     The Company's only operating  subsidiary,  MRM, has  historically  incurred
     operating losses. The consolidated  financial statements have been prepared
     on a going-concern  basis, which contemplates the realization of assets and
     satisfaction  of liabilities  in the normal course of business.  As of June
     30, 2003 and December 31, 2002 the Company had working capital  deficits of
     $211,872  and  $1,242,858,  respectively.  Although  the  Company  achieved
     breakeven operating results before  extraordinary item for the three-months
     ended June 30, 2003, we incurred losses before  extraordinary  item for the
     six  months  ended  June 30,  2003  and year  ended  December  31,  2002 of
     $(48,838) and $(4,227,193),  respectively.  There can be no assurances that
     the Company will achieve positive operating results in future periods.  The
     financial statements do not include any adjustments to reflect the possible
     future effects on the  recoverability  and  classification of assets or the
     amounts and  classification of liabilities that may result from the outcome
     of this uncertainty.

          Principles of Consolidation
          ---------------------------

          The condensed  consolidated  financial statements include the accounts
          of  all  majority-owned  subsidiaries.  All  significant  intercompany
          transactions have been eliminated in 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 and disclosure of contingent  assets
          and  liabilities  at the  date  of the  financial  statements  and the
          reported  amounts of income  (loss) and expenses  during the reporting
          period.   Actual  results  could  differ   significantly   from  those
          estimates.



                                       6
<PAGE>

          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.

          Earnings (Loss) Per Share
          -------------------------

          The Company computes earnings (loss) per share in accordance with SFAS
          No. 128,  "Earnings Per Share." Under the  provisions of SFAS No. 128,
          basic net income  (loss) per common share ("Basic EPS") is computed by
          dividing net income  (loss) per common  share by the weighted  average
          number of common  shares  outstanding.  Diluted net income  (loss) per
          common share ("Diluted EPS") is computed by dividing net income (loss)
          by the weighted  average  number of common shares and dilutive  common
          share  equivalents  then  outstanding.   SFAS  No.  128  requires  the
          presentation  of both  Basic  EPS and  Diluted  EPS on the face of the
          condensed consolidated statements of operations.

          Reclassifications
          -----------------

          Certain amounts in the prior periods have been reclassified to conform
          to the  presentation for the three and six months ended June 30, 2003.
          The financial  information included in this quarterly report should be
          read in conjunction  with the  consolidated  financial  statements and
          related notes thereto in the Company's  Annual Report on Form 10-K for
          the year ended December 31, 2002.

     Recent Accounting Pronouncements
     --------------------------------

     In June  2002,  the  FASB  issued  SFAS  No.  146,  "Accounting  for  Costs
     Associated  with Exit or Disposal  Activities."  This  statement  addresses
     financial  accounting  and  reporting  for  costs  associated  with exit or
     disposal activities and nullifies Emerging Issues Task Force ("EITF") Issue
     No. 94-3, "Liability  Recognition for Certain Employee Termination Benefits
     and Other Costs to Exit an Activity  (including Certain Costs Incurred in a
     Restructuring)."  This  statement  requires  that  a  liability  for a cost
     associated  with  an exit or  disposal  activity  be  recognized  when  the
     liability is incurred. Under EITF Issue 94-3, a liability for an exit cost,
     as defined, was recognized at the date of an entity's commitment to an exit
     plan.  The  provisions of this statement are effective for exit or disposal
     activities  that  are  initiated  after  December  31,  2002  with  earlier
     application encouraged. This statement is not applicable to the Company.

     In October  2002,  the FASB issued SFAS No. 147,  "Acquisitions  of Certain
     Financial  Institutions."  SFAS No. 147 removes the requirement in SFAS No.
     72 and  Interpretation  9 thereto,  to recognize and amortize any excess of
     the fair value of  liabilities  assumed over the fair value of tangible and
     identifiable  intangible  assets acquired as an  unidentifiable  intangible
     asset. This statement  requires that those transactions be accounted for in
     accordance with SFAS No. 141,  "Business  Combinations,"  and SFAS No. 142,
     "Goodwill and Other Intangible Assets." In addition,  this statement amends
     SFAS No. 144,  "Accounting  for the  Impairment  or Disposal of  Long-Lived
     Assets,"  to  include  certain  financial  institution-related   intangible
     assets.  The  Company  does not expect  adoption  of SFAS No. 147 to have a
     material  impact,  if  any,  on  its  financial   position  or  results  of
     operations.

     In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
     Compensation  - Transition and  Disclosure,"  an amendment of SFAS No. 123.
     SFAS No. 148 provides  alternative  methods of  transition  for a voluntary
     change  to the fair  value  based  method  of  accounting  for  stock-based
     employee  compensation.  In  addition,  SFAS No. 148 amends the  disclosure
     requirements  of SFAS No. 123 to require more  prominent  and more frequent
     disclosures  in  financial  statements  about the  effects  of  stock-based
     compensation.  This  statement is effective  for financial  statements  for
     fiscal years ending after December 15, 2002. SFAS No. 148 will not have any
     impact on the Company's  financial  statements as management  does not have
     any intention to change the fair value method.

     In January 2003, the FASB issued FASB Interpretation No. 46, "Consolidation
     of  Variable  Interest  Entities."  FIN 46  clarifies  the  application  of
     Accounting Research Bulletin No. 51, Consolidated Financial Statements, and
     requires the consolidation of certain entities in which equity investors do
     not have the characteristics of a controlling  financial interest or do not
     have  sufficient  equity for the entity to finance its  activities  without
     additional  subordinated  financial support from other parties.  Management
     will adopt FIN 46 from July 1, 2003 with respect to its equity  investments
     in the limited liability companies shown in the consolidated  balance sheet
     at June 30,  2003.  The  Company  is  currently  evaluating  the  impact of
     consolidation  of these  entities on the Company's  financial  position and
     results of operations.



                                       7
<PAGE>

     In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
     Derivative  Instruments  and Hedging  Activities."  SFAS No. 149 amends and
     clarifies  accounting and reporting for derivative  instruments and hedging
     activities under SFAS No. 133,  "Accounting for Derivative  Instruments and
     Hedging  Activities." SFAS No. 149 is effective for derivative  instruments
     and hedging activities entered into or modified after June 30, 2003, except
     for  certain  forward  purchase  and sale  securities.  For  these  forward
     purchase and sale  securities,  SFAS No. 149 is effective  for both new and
     existing  securities  after  June 30,  2003.  Management  does  not  expect
     adoption  of  SFAS  No.  149 to have a  material  impact  on the  Company's
     financial position or results of operations.

     In May  2003,  the  FASB  issued  SFAS No.  150,  "Accounting  for  Certain
     Financial Instruments with Characteristics of both Liabilities and Equity."
     SFAS  No.  150  establishes  standards  for how an  issuer  classifies  and
     measures  in  its  statement  of  financial   position  certain   financial
     instruments  with  characteristics  of  both  liabilities  and  equity.  In
     accordance with the standard, financial instruments that embody obligations
     for the issuer are required to be classified as  liabilities.  SFAS No. 150
     will be effective for financial  instruments entered into or modified after
     May 31, 2003 and otherwise  will be effective at the beginning of the first
     interim period  beginning  after June 15, 2003. The adoption of SFAS 150 is
     not  expected  to have any impact on the  Company's  financial  position or
     results of operations.

3.   DEBT OBLIGATIONS AND PLAN OF RESTRUCTURE

     During  2002 we were in default  on most of our note and lease  obligations
     due to  delinquent  principal  and  interest  payments.  In  order to avoid
     ceasing our operations or a possible  bankruptcy filing and in an effort to
     improve our financial condition,  during the first quarter of 2002 we began
     the process of  renegotiating  substantially  all of our outstanding  debt,
     lease,  and trade  obligations  with our key creditors.  As of December 31,
     2002 we had substantially  completed our debt  restructuring  efforts.  The
     restructured debt and lease obligation agreements provide in some cases for
     the  return  of  equipment  used  to  collateralize  such  obligations,  if
     applicable,  and certain periodic and monthly  installments for the balance
     of such obligations.  Generally,  in the event of default by the Company we
     are required to repay all amounts previously  forgiven and all amounts then
     outstanding  are accelerated  and become  immediately  due and payable.  In
     addition,  for the six months ended June 30, 2003 and 2002, we recorded net
     gains on  forgiveness  of debt in the amount of  $104,819  and  $1,050,382,
     respectively.  As of the  filing  date of  this  Quarterly  Report  on Form
     10-QSB,  we  are  in  compliance  with  the  terms  and  conditions  of our
     renegotiated  debt  agreements.  However,  as of June 30,  2003 the Company
     continues to be in default  under certain note and lease  obligations  with
     aggregate  principal  balances  outstanding of approximately  $162,000.  We
     intend to continue  negotiations  with these creditors until these disputes
     are resolved and satisfactory resolutions are reached. No assurances can be
     given that these  negotiations  will be completed on terms  satisfactory to
     the Company, if at all.

     At June 30. 2003 we had a bank loan (the "Bank Term Loan")  outstanding  in
     the amount of  $499,775.  The loan  agreement,  as  amended,  provides  for
     monthly  payments of  principal  of $16,667 and  interest at the prime rate
     plus 4.00%.  As of  December  31, 2002 and June 30, 2003 we were in default
     under certain provisions of the original loan agreement and as a result all
     principal  and interest were  accelerated  and became  immediately  due and
     payable. In April 2003, the lender agreed to extend the term of the loan to
     March 2004 under the same terms and conditions as described herein. We also
     have an outstanding  bank line of credit (the "Bank Line of Credit") in the
     amount  of  $1,000,000  with the same  lender.  This  Bank  Line of  Credit
     provides for interest at the prime rate, plus 2.75%,  with borrowings based
     upon eligible accounts receivable as defined.  The amount outstanding under
     the Bank Line of Credit exceeded the eligible borrowing base as of December
     31, 2002 and June 30, 2003 and the  Company  was in default  under  certain
     provisions of the original credit  agreement.  As a result this facility is
     not  available  for use as of the filing date of this  Quarterly  Report on
     Form  10-QSB.  In April  2003 the  lender  agreed to amend the Bank Line of
     Credit to provide for an extension of the due date to September  2003.  The
     amendment to the line of credit  provided  for a pay down of $108,700  upon
     execution of the  amendment.  The other terms and  condition of this credit
     facility remain the same.

     The Bank Line of Credit  and Bank Term Loan  prohibit  the  payment of cash
     dividends  and  require us to maintain  certain  levels of net worth and to
     generate certain ratios of cash flows to debt service.  Notwithstanding the
     modified terms and conditions of the Bank Line of Credit and Bank Term Loan
     as discussed  above,  as of June 30, 2003 and as of the filing date of this
     Form 10-QSB, we were not in compliance with certain financial  covenants of
     such  agreements.  As a  result,  we have  classified  all of the bank loan
     facilities as current  liabilities in the accompanying  balance sheet as of
     June 30, 2003.



                                       8
<PAGE>

4.   LEGAL PROCEEDINGS

Stonepath Group, Inc.
---------------------

     In October 2000, a related party of the Company (the "plaintiff") commenced
     an action on behalf of the Company against Stonepath Group, Inc. and two of
     its officers in the United States District Court for the Southern  District
     of New York.  The action was for  negligence  and fraud  under the  federal
     securities  laws and common law to recover its investment in Stonepath.  On
     April 15, 2002,  the court  dismissed  the  plaintiff's  amended  Complaint
     without  leave to amend.  The  Company  has filed an appeal of the  court's
     decision and this appeal is pending.

Citicorp Vendor Finance, Inc.
-----------------------------

     On April 25, 2002, Citicorp Vendor Financial,  Inc. ("Citicorp") filed suit
     against PRI and MRM for breach of contract in Superior Court of California,
     County of Los Angeles. This lawsuit seeks to recover $655,916 plus interest
     and late charges in  connection  with amounts due under  certain  equipment
     lease  agreements.  The  Company  reached a  settlement  with  Citicorp  in
     November  2002,  whereby,  the  Company  agreed to pay  Citicorp a total of
     $400,000 in full settlement of the claim in various installments,  with the
     balance  being  paid in full by March 1, 2004.  As part of the  settlement,
     Citicorp  has agreed that PRI may sell the  equipment  under the  equipment
     lease agreement but must transmit to Citicorp all proceeds from the sale in
     excess of $225,000.  In January 2003, the Company paid $175,000 to Citicorp
     from  proceeds   received  from  equipment  sales  in  December  2002.  The
     settlement  further  stipulates  in  event  of  non-payment,  Citicorp  can
     petition  the court for an entry of judgment  against  PRI.  The Company is
     current in making all required payments under the settlement agreement.

General Electric
----------------

     Beginning  in 1999,  the  Company's  subsidiaries  entered into 39 personal
     property sales contracts to purchase from General  Electric certain medical
     imaging equipment. The total amount the Company owed to General Electric as
     of May 21, 2002 was  $2,399,487.  The  Company  reached a  settlement  with
     General  Electric in June 2002 and entered into a Stipulation of Settlement
     for entry of judgment  which would be filed in Superior  Court of the State
     of  California,  County of Los Angeles only if there is a default  which is
     not cured.  Pursuant to the  settlement  agreement,  the Company  agreed to
     return certain equipment to General Electric and to make sixty (60) monthly
     payments  of $18,013  for a total of  $1,080,781.  In the event the Company
     fails to make all  required  payments  when  due,  and an event of  default
     occurs  which is not cured,  the  Company  would owe General  Electric  the
     original  amounts due at the date of  settlement  under 39  personal  sales
     contracts. The Company is current in making all required payments under the
     settlement  agreement  and  substantially  all of the  equipment  has  been
     returned.

Charlotte Taylor
----------------

     In December  2001,  Charlotte  Taylor  commenced a legal  proceeding in the
     Superior  Court of the State of California,  County of Orange,  against the
     Company,  Anaheim General  Hospital and a surgeon named Jay Shree Vyas M.D.
     alleging  compensatory  and  general  damages for  medical  negligence  and
     product  liability  in the  amount to be proved  at trial  plus  reasonable
     attorneys' fees, interest on the sum of damages awarded,  costs of suit and
     such other  amount as the Court  deems just and proper.  Plaintiff  alleges
     that while she was under anesthesia, Defendants sought to use an instrument
     called a morcelator that did not function properly and allegedly caused her
     harm. The Company reported this legal proceeding to its insurance  company,
     which  settled this matter in the second  quarter of 2003 for an immaterial
     dollar amount. The Company's loss was limited to its deductible.

Paige Amans
-----------

     On October 18,  2002,  a former  employee of the Company  commenced a legal
     proceeding  in the  Superior  Court of  California,  County of Los  Angeles
     against the Company, its subsidiaries, and a former officer of the Company.
     The Complaint  contained three causes of action as follows:  discrimination
     on the basis of her sex in violation of the California  Fair Employment and
     Housing Act (California Government Code Section 12940); breach of contract;
     and  breach  of the  implied  covenant  of good  faith  and  fair  dealing.
     Plaintiff  alleged  that she was  discriminated  against  in the  terms and
     conditions  of  her  employment,  transferred,  and  ultimately  wrongfully
     terminated  because  of her  sex  (female)  and due to  alleged  favoritism
     towards another female employee at the Company. Plaintiff also claimed that
     her termination breached an implied contract of employment to terminate her
     only for "good cause",  including violation of the implied covenant of good
     faith and fair dealing inherent in contracts.  The Plaintiff sought actual,
     incidental,  consequential,  and general damages in an unspecified  amount,
     punitive damages, costs and attorneys' fees. In the second quarter of 2003,
     the Company settled this matter for an immaterial dollar amount.



                                       9
<PAGE>

     In addition to the matters  noted above,  from time to time,  we may become
     involved in  litigation  arising out of  operations in the normal course of
     business.  As of June 30,  2003,  we are not a party to any  pending  legal
     proceedings  the adverse  outcome of which could  reasonably be expected to
     have a  material  adverse  effect on our  operating  results  or  financial
     position.

5.   PURCHASE OF GOODWILL OF BUSINESS AND COVENANT NOT-TO-COMPETE

     In May  2003,  the  Company  entered  into  an  agreement  with  the  owner
     ("Seller")  of a small mobile  cosmetic  laser  company  located in the Los
     Angeles area to purchase (the  "Agreement") its goodwill and customer lists
     as well as a covenant  not-to-compete.  The  purchase  price of $50,000 was
     paid in June  2003 and was  allocated  to the  customer  list and  covenant
     not-to-compete.  Such payment is being amortized on a  straight-line  basis
     over five years. The Company also agreed to make additional payments to the
     Seller for a period of eighteen months based on future  revenues  resulting
     from the acquired customer list. The additional  payments were not material
     during the period ended June 30, 2003.  Such amounts are being amortized on
     a straight-line basis over five years from the date of purchase.

6.   RELATED PARTY TRANSACTIONS

     In February  2003,  the Company  entered  into a  non-exclusive  consulting
     agreement with a former  officer of MRM. The agreement  provides for a term
     of twelve months  commencing  on February 1, 2003. In connection  with this
     agreement,  the Company issued the consultant  250,000  options to purchase
     the Company's common stock. The options expire in ten years and provide for
     an exercise price of $.01 per share.  Compensation  expense  related to the
     options is not material and no compensation  expense was recognized  during
     the six months ended June 30, 2003.

     In December 2002, the Company entered into a consulting  agreement with its
     former  Chief  Executive  Officer and his  company,  JIMA  Management.  The
     agreement related to the provision of consulting services during the period
     from July 2001 to March  2002 in  exchange  for a monthly  fee of  $10,000,
     payable in 2003.  During the three and six months ended June 30, 2003,  the
     Company recorded consulting expense of $3,000 and $6,000, respectively, and
     paid $20,000 and $40,000, respectively, on amounts accrued in 2001 and 2002
     with regard to such services rendered.

     During the six months ended June 30, 2003 the Company billed  $500,905 to a
     related party for management and other fees. Such fees amounted to $523,803
     for the six months ended June 30, 2002. The Company also incurred  expenses
     on behalf of the related party.

     In November 2002, the Company entered into a settlement  agreement with the
     former Chief Executive  Officer/Chairman/President of MRM. The terms of the
     agreement provide for payments by the Company totaling $42,000. Pursuant to
     the  agreement  the Company paid $25,000 in November  2002 and made a final
     payment of $17,000  during  March 2003 in exchange  for the full release of
     all  obligations  under the January 2000  employment  agreement,  which was
     subsequently  amended in both August and November  2001. The Company has no
     further obligations under this agreement.

     TRANSACTIONS WITH BJH MANAGEMENT

     In January  2003,  the  Company  incurred  consulting  fees and  reimbursed
     expenses of $36,548 and $3,389, respectively,  for services provided by BJH
     Management,  a consulting  company  ("BJH") which is owned by the Company's
     current  Chairman and Chief  Executive  Officer who assumed this  position,
     effective  February 1, 2003.  The  Company's  Chairman and Chief  Executive
     Officer  maintains  his  office  in  New  York,  in  connection  with  this
     arrangement,  the Company  reimbursed  BJH for office and related  expenses
     totaling  $8,894 and  $14,632,  respectively,  for the three and six months
     ended June 30, 2003.

     Between December 30, 2002 and June 30, 2003, the Company issued  13,942,994
     shares of its Common Stock to BJH, which represented 17.5% of the Company's
     fully  diluted  shares  outstanding,  as  defined  in  the  Stock  Issuance
     Agreement between the Company and BJH.



                                       10
<PAGE>

     On December 30, 2002,  the Company  entered into two,  18-month  employment
     agreements  with the one officer and one  associate of BJH. The  agreements
     were to appoint a new Chairman and Chief Executive  Officer,  and President
     for annual compensations of $175,000 and $161,000, respectively,  beginning
     in January 2003.  The officer  positions  were assumed on February 1, 2003.
     The agreements also provide for milestone  bonuses up to $75,000 each, plus
     a percentage of pre-tax  profits  should  certain  targets be achieved.  No
     bonus  amounts  have  been  accrued  through  June  30,  2003  under  these
     agreements.

     Private Placement of Convertible Subordinated Promissory Notes
     --------------------------------------------------------------

     In June 2003, the Company raised  $1,000,000 from the private  placement of
     its Subordinated  Promissory Notes (the "Notes") as more fully described in
     its Form 8-K  dated  June 27,  2003.  Such  Notes  were  generally  sold in
     increments  of $20,000 (50 units) each.  Certain  officers and directors of
     the Company and members of law firms who have acted in a legal  capacity to
     the Company purchased Notes totaling $700,000. Notes totaling $300,000 were
     purchased by other accredited investors.  The Notes provide for interest at
     6% per annum payable at the earlier of maturity,  conversion or redemption.
     Pursuant  to the terms and  conditions  of the  Notes,  the Notes  shall be
     automatically  converted  into shares of the  Company's  common  stock (100
     million pre-split shares or 2,500,000 post split shares) upon the effective
     date of a one for forty reverse split of the  Company's  common stock.  The
     Company's  shareholders  have  approved  the reverse  split,  which will be
     effective on August 29, 2003 as discussed below.  Therefore,  the principal
     balance of such Notes shall be converted into 2,500,000  post-split  common
     shares,  effective August 29, 2003. An additional  25,000 post-split shares
     will be issued in lieu of accrued interest.

7.   SUBSEQUENT EVENT

     On August 5, 2003,  a majority of the  Company's  stockholders  approved an
     Amendment  to the  Company's  Articles of  Incorporation  to (i) reduce the
     number of outstanding  shares of Common Stock through a one-for-40  reverse
     stock  split,  effective  at the  opening of business on August 29, 2003 to
     record  holders  at the close of  business  on August  28,  2003 and (ii) a
     proportionately  increase the par value of the Company's  Common Stock from
     $.01 par value to $.04 par value per share. All stockholders of record will
     be requested to exchange  every 40 shares of Common Stock,  $.001 par value
     for one new share of Common Stock, $.04 par value. On the effective date of
     the reverse stock split,  the Company's Notes (principal and interest) will
     automatically  convert into a total of 2,525,000  shares of Common Stock of
     the Company at an effective conversion price of $.40 per shares.

     Pro forma earnings  (loss) per share  information is presented below giving
     effect  to the  reverse  split  as of June  30,  2003  and  2002 and of the
     conversion of the Notes as of June 30, 2003:

<TABLE>
<CAPTION>
                                                   Three Months Ended           Six Months Ended
                                                        June 30,                     June 30,
                                                   2003         2002           2003           2002
                                                ---------   -----------    -----------    -----------
<S>                                             <C>         <C>            <C>            <C>
 INCOME (LOSS) BEFORE EXTRAORDINARY ITEM        $   1,299   $(1,763,780)   $   (48,838)   $(1,525,181)

 Extraordinary item
     Gain on forgiveness of debt                    1,298       823,866        104,819      1,050,382
                                                ---------   -----------    -----------    -----------

 Net income (loss)                              $   2,597   $  (939,914)   $    55,981    $  (474,799)
                                                =========   ===========    ===========    ===========

PRO FORMA INCOME (LOSS) PER SHARE DATA:
    Before extraordinary item                   $    0.00   $     (1.33)   $     (0.01)   $    (1.150)
    Extraordinary item                               0.00          0.62           0.03           0.79
                                                ---------   -----------    -----------    -----------

BASIC AND DILUTED INCOME PER SHARE              $    0.00   $     (0.71)   $      0.01    $     (0.36)
                                                =========   ===========    ===========    ===========

PRO FORMA WEIGHTED-AVERAGE SHARES OUTSTANDING   4,208,945     1,326,121      4,183,945      1,326,121
                                                =========   ===========    ===========    ===========

</TABLE>


                                       11

<PAGE>

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-K for the year ended  December 31, 2002
     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-K 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 meet the terms and conditions of its renegotiated debt
     and lease obligations,  and (d) 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 Medical Resources
     Management,  Inc. ("MRM"), its wholly owned and only operating  subsidiary.
     MRM  primarily  conducts its business  through its wholly owned  subsidiary
     Physiologic Reps ("PRI").  Emergent Group Inc., MRM and PRI are referred to
     collectively  hereinafter  as the  "Company." All references to MRM include
     PRI unless the  context  indicates  otherwise.  PRI is a provider of mobile
     surgical equipment, on a fee for service basis to hospitals;  surgical care
     centers,  and other health care  providers.  PRI provides mobile lasers and
     other  surgical  equipment with  technical  support  required to ensure the
     equipment  is working  correctly.  PRI also  provides  a limited  amount of
     non-surgical  equipment on a rental basis to hospitals and surgery centers,
     although PRI is winding down this area of business in order to focus on its
     core surgical equipment rental/services business.

     CRITICAL ACCOUNTING POLICIES

     Our  discussion  and analysis of our  financial  conditions  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 require 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. 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.  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. 101, "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.



                                       12
<PAGE>

     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.

     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  statement  of  operations  data for the periods  indicated in
     dollars and as a percentage of total net revenues. The following discussion
     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.

<TABLE>
<CAPTION>

                                                    Three Months Ended                        Six Months Ended
                                                          JUNE 30,                                JUNE 30,
                                                 2003       %       2002 (1)    %        2003        %       2002(1)     %
                                             -----------   ----   -----------   ----   ----------   ----   -----------   ----

<S>                                          <C>           <C>    <C>           <C>    <C>          <C>    <C>           <C>
REVENUE                                      $ 2,345,865   100%   $ 2,197,824   100%   $4,486,685   100%   $ 4,700,345   100%
COST OF GOODS SOLD                             1,519,510    65%     1,391,662    63%    2,835,447    63%     2,806,195    60%
                                             -----------   ----   -----------   ----   ----------   ----   -----------   ----

GROSS PROFIT                                     826,355    35%       806,162    37%    1,651,238    37%     1,894,150    40%

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES    785,764    33%       844,863    38%    1,617,987    36%     1,715,557    36%
                                             -----------   ----   -----------   ----   ----------   ----   -----------   ----

INCOME (LOSS) FROM OPERATIONS                     40,591     2%       (38,701)   -2%       33,251     1%       178,593     4%

OTHER INCOME (EXPENSE)                           (39,292)   -2%    (1,725,079)  -78%      (82,089)   -2%    (1,703,774)  -36%
                                             -----------   ----   -----------   ----   ----------   ----   -----------   ----


LOSS BEFORE PROVISION FOR INCOME TAXES
   AND EXTRAORDINARY ITEM                          1,299     0%    (1,763,780)  -80%      (48,838)   -1%    (1,525,181)  -32%
PROVISION FOR INCOME TAXES                            --     0%            --     0%           --     0%            --     0%
                                             -----------   ----   -----------   ----   ----------   ----   -----------   ----

NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEM        1,299     0%    (1,763,780)  -80%      (48,838)   -1%    (1,525,181)  -32%
                                             -----------   ----   -----------   ----   ----------   ----   -----------   ----
EXTRAORDINARY ITEM
   Gain on forgiveness of debt, net of tax         1,289     0%       823,866    37%      104,819    -1%     1,050,382    22%
                                             -----------   ----   -----------   ----   ----------   ----   -----------   ----
NET INCOME (LOSS)                                $ 2,588     0%  $   (939,914)  -43%     $ 55,981   $(0)     $(474,799)  -10%
                                             ===========   ====  ============  ====    ==========   ====   ===========   ====
</TABLE>

(1)      Certain   amounts  for  the  period  ended  June  30,  2002  have  been
         reclassified to conform to the current year presentation.

COMPARISON OF THE THREE MONTHS ENDED JUNE 30, 2003 TO JUNE 30, 2002

We generated  revenues of $2,345,865 in 2003 compared to $2,197,824 in 2002. The
increase in revenues of $148,041 in 2003  compared to 2002 is primarily  related
to an increase in revenues  from our  advanced  surgical  procedures,  offset by
decreases in revenues from cosmetic services and medical rentals.  Revenues from
surgical  and  cosmetic   services   represented   approximately  83%  and  15%,
respectively, of total revenues for 2003 and 73% and 19% for 2002, respectively.
Revenues from medical  equipment  rentals  comprised  approximately 2% and 6% of
revenues for 2003 and 2002,  respectively.  Medical rental revenues, in terms of
absolute dollars and as a percentage of total revenues, are expected to continue
to decrease in future periods as we wind down this area of our business in order
to focus on our core mobile surgical equipment rental and service business.

Cost of  goods  sold was  $1,519,510  or 65% of  revenues  in 2003  compared  to
$1,391,662  or 63% of revenues in 2002.  Cost of goods sold include  payroll and
related expenses for technicians, cost of disposables used in providing surgical
and  cosmetic  services,   depreciation  and  amortization  and  other  expenses
primarily  related to  delivery  of our  mobile  surgical  equipment  rental and
technical  services.  The  increase in cost of goods sold of $127,848 in 2003 is
primarily  related to an increase  in  disposable  costs due to the  increase in
revenues from our advanced surgical procedures. The cost of disposables used for
advanced  surgical  procedures are higher in terms of absolute  dollars than the
cost of disposables for base surgical  procedures.  Such increases in costs were
primarily   offset  by  decreases  in  payroll  and  related  expenses  for  our
technicians.   Such  expenses   decreased  as  a  result  of  revisions  to  the
compensation plan for the technicians during the first quarter of 2003.



                                       13
<PAGE>

Gross margin was $826,355 in 2003 or 35% of net revenues compared to $806,162 in
2002 or 37% of revenues. Gross margins will vary period-to-period depending upon
a number of factors  including  mix of services,  pricing,  cost of  disposables
consumed in rendering our services, and contractual  agreements.  The decline in
gross  margin  during 2003 is  generally  related to the higher  overall cost of
disposables and higher depreciation charges in 2003 compared to 2002.

Selling,  general, and administrative expenses were $785,764 in 2003 compared to
$844,863 in 2002. Such costs include payroll and related expenses, insurance and
rents.  The overall  decrease of $59,099 is  generally  related to cost  control
procedures implemented during early 2003 and late 2002.

Realized loss on  investments  was  $(1,732,573)  in 2002 while no such loss was
incurred in 2003.  Emergent was essentially a merchant banking firm prior to its
acquisition of MRM in July 2001. Emergent ceased such activities concurrent with
its  acquisition of MRM in July 2001 in order to focus on MRM's mobile  surgical
equipment rental and services business. The realized loss in 2002 related to the
sale and/or write-off of several investments made by Emergent in connection with
its merchant banking activities in 2000.

Net  interest  expense of $54,112 was  incurred in 2003  compared to $128,812 in
2002.  Interest expense primarily  relates to MRM's note and lease  obligations.
The decrease in net interest expense is principally related to a decrease in our
outstanding debt and lease obligations as a result of debt restructuring efforts
initiated  in early  2002,  as  discussed  elsewhere  in this Form  10-QSB,  and
principal payments on debt and lease obligations in 2003.

The gain on disposal of property and  equipment  was $6,184 for 2003 compared to
$131,554  in 2002.  As  discussed  herein,  we began  to wind  down our  medical
equipment  rental business in late 2001 and continued these efforts through 2002
in order to focus  resources on  development  of our mobile  surgical  equipment
rental and services business.  In this regard we began to dispose of our medical
rental  equipment  2002.  As of June 30,  2003 this  activity  is  substantially
complete  and gains  from the  disposal  of  property  and  equipment  decreased
accordingly.

Other income  (expense) for 2003 was $10,971  compared to $5,800 in 2002.  Other
income   and   expense   include   such   non-recurring   items   as   insurance
proceeds/refunds,  sales tax refunds and other miscellaneous  income and expense
amounts.  Such  amounts  will  vary from  period to period as such  transactions
occur.

Gain on forgiveness of debt was $1,289 for 2003 compared to $823,866 in 2002. We
began our debt restructuring  efforts during the first quarter of 2002 resulting
in gains on  forgiveness  of debt for the quarter ended June 30, 2002. Our major
restructuring  efforts  were  substantially  completed  as of December 31, 2002;
therefore, gains from such activity decreased accordingly in 2003.

Net income was  $2,588 in 2003  compared  to a loss of  $(939,914)  in 2002.  No
provision  for  income  taxes  is  provided  for in  2003  and  2002  due to the
availability of net operating loss carryforwards.

COMPARISON OF THE SIX MONTHS ENDED JUNE 30, 2003 TO JUNE 30, 2002

We generated  revenues of $4,486,685 in 2003 compared to $4,700,345 in 2002. The
decrease in revenues of $213,660 in 2003  compared to 2002 is primarily  related
to decreases in revenue from cosmetic  services and medical  rentals of $251,096
and  $279,491,  respectively,  offset by a net  increase  in  surgical  services
revenues of $304,213.  The net  increase in our surgical  revenues is related to
our advanced surgical  procedures.  Revenues from surgical and cosmetic services
represented approximately 83% and 15%, respectively,  of total revenues for 2003
and 71% and 19% for 2002, respectively.  Revenues from medical equipment rentals
comprised  approximately 2% and 8% of revenues for 2003 and 2002,  respectively.
Medical  rental  revenues,  in terms of absolute  dollars and as a percentage of
total  revenues,  are  expected to continue to decrease in future  periods as we
wind  down  this  area of our  business  in order  to  focus on our core  mobile
surgical equipment rental and service business.

Cost of  goods  sold was  $2,835,447  or 63% of  revenues  in 2003  compared  to
$2,806,195  or 60% of revenues in 2002.  Cost of goods sold include  payroll and
related expenses for technicians, cost of disposables used in providing surgical
and  cosmetic  services,   depreciation  and  amortization  and  other  expenses
primarily  related to  delivery  of our  mobile  surgical  equipment  rental and
technical  services.  The  increase  in cost of goods sold of $29,252 in 2003 is
primarily  related to an increase  in  disposable  costs due to the  increase in
revenues from our advanced  surgical  procedures and an increase in depreciation
expense as a result of equipment  purchases during the six months ended June 30,
2003. The cost of disposables used for advanced  surgical  procedures are higher
in terms of absolute  dollars  than the cost of  disposables  for base  surgical
procedures.  Such  increases  in costs were  primarily  offset by  decreases  in
payroll and related expenses for our technicians.  Such expenses  decreased as a
result of  revisions to the  compensation  plan for the  technicians  during the
first quarter of 2003.



                                       14
<PAGE>

Gross  margin  was  $1,651,238  in  2003  or  37% of net  revenues  compared  to
$1,894,150 in 2002 or 40% of revenues.  Gross margins will vary period-to-period
depending upon a number of factors including mix of services,  pricing,  cost of
disposables consumed in rendering our services, and contractual agreements.  The
decline in gross margin during 2003 is generally  related to the higher  overall
cost of disposables and higher depreciation charges in 2003 compared to 2002. In
addition,  gross margins on the medical  equipment rental business was higher in
2002 given the equipment  impairment  write-downs in 2001 and 2002, resulting in
lower  depreciation  charges against such revenues in 2002. Revenue from medical
equipment rentals for 2003 and 2002 was $100,241 and $379,732, respectively.

Selling,  general, and administrative  expenses were $1,617,987 in 2003 compared
to  $1,715,557  in 2002.  Such  costs  include  payroll  and  related  expenses,
insurance  and rents.  The overall  decrease of $97,570 is generally  related to
cost control procedures implemented during early 2003 and late 2002 and the fact
that  certain  general  and  administrative  costs  incurred in  connection  our
restructuring efforts in 2002 were not incurred in 2003.

Realized loss on  investments  was  $(1,732,573)  in 2002 while no such loss was
incurred in 2003.  Emergent was essentially a merchant banking firm prior to its
acquisition of MRM in July 2001. Emergent ceased such activities concurrent with
its  acquisition of MRM in July 2001 in order to focus on MRM's mobile  surgical
equipment rental and services business. The realized loss in 2002 related to the
sale and/or write-off of several investments made by Emergent in connection with
its merchant banking activities in 2000.

Net interest  expense of $106,628  was incurred in 2003  compared to $282,560 in
2002.  Interest expense primarily  relates to MRM's note and lease  obligations.
The decrease in net interest expense is principally related to a decrease in our
outstanding debt and lease obligations as a result of debt restructuring efforts
initiated  in early  2002,  as  discussed  elsewhere  in this Form  10-QSB,  and
principal payments on debt and lease obligations in 2003.

The gain on disposal of property and  equipment was $32,451 for 2003 compared to
$212,822  in 2002.  As  discussed  herein,  we began  to wind  down our  medical
equipment  rental business in late 2001 and continued these efforts through 2002
in order to focus  resources on  development  of our mobile  surgical  equipment
rental and services business.  In this regard we began to dispose of our medical
rental  equipment in 2002.  As of June 30, 2003 this  activity is  substantially
complete  and gains  from the  disposal  of  property  and  equipment  decreased
accordingly.

Other income  (expense) for 2003 was $8,234  compared to $92,363 in 2002.  Other
income   and   expense   include   such   non-recurring   items   as   insurance
proceeds/refunds,  sales tax refunds and other miscellaneous  income and expense
amounts.  Other income for 2002 included proceeds received in connection with an
insurance  settlement.  Such  amounts  will vary  from  period to period as such
transactions occur.

Gain on  forgiveness  of debt was $104,819 for 2003  compared to  $1,050,382  in
2002. We began our debt  restructuring  efforts during the first quarter of 2002
resulting  in gains on  forgiveness  of debt for the six  months  ended June 30,
2002.  Our  major  restructuring  efforts  were  substantially  completed  as of
December 31, 2002; therefore,  gains from such activity decreased accordingly in
2003.  We anticipate  that such gains,  if any, will continue to decrease in the
future.

Net income was $55,981 in 2003  compared  to a loss of  $(474,799)  in 2002.  No
provision  for  income  taxes  is  provided  for in  2003  and  2002  due to the
availability of net operating loss carryforwards.


LIQUIDITY AND CAPITAL RESOURCES

The accompanying  condensed consolidated financial statements have been prepared
on a  going-concern  basis  that  contemplates  the  realization  of assets  and
satisfaction  of  liabilities  in the normal course of our business.  During the
year ended December 31, 2002, the Company was in default on most of its note and
lease obligations due to delinquent principal and interest payments. In order to
avoid ceasing our operations or a possible  bankruptcy  filing, and in an effort
to improve our  financial  condition,  during the first quarter of 2002 we began
the process of renegotiating  substantially  all of our outstanding debt, lease,
and trade  obligations  with our key  creditors.  As of  December  31,  2002 the
restructuring efforts were substantially  completed whereby we have renegotiated
outstanding  note  and  lease   obligations   with  our  major  creditors.   The
restructured debt and lease obligation  agreements provide in some cases for the
return of equipment used to collateralize such obligations,  if applicable,  and
certain periodic and monthly  installments for the balance of such  obligations.
Generally,  in the event of default by the Company we are  required to repay all
amounts previously forgiven and all amounts then outstanding are accelerated and
become immediately due and payable. In addition, as of December 31, 2002 we have
renegotiated  outstanding trade debt with most of our major vendors. For the six
months June 30, 2003 we recorded  gains  $104,819 on forgiveness of vendor debt.
As of the  filing  date of this  Quarterly  Report  on  Form  10-QSB,  we are in
compliance with the terms and conditions of our  renegotiated  debt  agreements.

                                       15
<PAGE>

However,  as of June 30,  2003 the  Company  continues  to be in  default  under
certain note and lease obligations with aggregate principal balances outstanding
of  approximately  $162,000.  We  intend to  continue  negotiations  with  these
creditors  until these disputes are resolved and  satisfactory  resolutions  are
reached. No assurances can be given that these negotiations will be completed on
terms satisfactory to the Company, if at all.

In June 2003, the Company raised  $1,000,000  from the private  placement of its
Subordinated  Promissory Notes (the "Notes") as more fully described in its Form
8-K dated June 27, 2003. Such Notes were generally sold in increments of $20,000
(50 units) each.  Certain  officers and  directors of the Company and members of
law firms who have acted in a legal  capacity  to the  Company  purchased  Notes
totaling  $700,000.  Notes totaling  $300,000 were purchased by other accredited
investors. The Notes provide for interest at 6% per annum payable at the earlier
of maturity,  conversion or redemption.  Pursuant to the terms and conditions of
the  Notes,  the  Notes  shall be  automatically  converted  into  shares of the
Company's  common stock (100 million  pre-split  shares or 2,500,000  post split
shares)  upon  the  effective  date  of a one for  forty  reverse  split  of the
Company's  common stock.  The Company's  shareholders  have approved the reverse
split, which is effective on August 29, 2003 as discussed below. Therefore,  the
principal  balance of such Notes shall be converted  into  2,500,000  post-split
common shares,  effective  August 29, 2003 at an effective  conversion  price of
$.04 per share. An additional 25,000 post split shares will be issued in lieu of
accrued interest.

In May 2003, the Company entered into an agreement with the owner  ("Seller") of
a small  mobile  cosmetic  laser  company  located  in the Los  Angeles  area to
purchase (the "Agreement") its goodwill and customer lists as well as a covenant
not-to-compete.  The  purchase  price of  $50,000  was paid in June 2003 and was
allocated to the  customer  list and  covenant  not-to-compete.  Such payment is
being  amortized  on a  straight-line  basis over five years.  The Company  also
agreed to make additional payments to the Seller for a period of eighteen months
based  on  future  revenues  resulting  from the  acquired  customer  list.  The
additional  payments  were not  material  during the period ended June 30, 2003.
Such amounts are being amortized on a  straight-line  basis over five years from
the date of purchase.

At June 30.  2003 we had a bank loan (the "Bank Term Loan")  outstanding  in the
amount of  $499,775.  The loan  agreement,  as  amended,  provides  for  monthly
payments of principal  of $16,667 and interest at the prime rate plus 4.00%.  As
of  December  31,  2002 and  June  30,  2003 we were in  default  under  certain
provisions  of the original  loan  agreement  and as a result all  principal and
interest were accelerated and became immediately due and payable. In April 2003,
the  lender  agreed to extend  the term of the loan to March 2004 under the same
terms and conditions as described  herein. We also have an outstanding bank line
of credit (the "Bank Line of Credit") in the amount of $1,000,000  with the same
lender.  This Bank Line of Credit  provides for interest at the prime rate, plus
2.75%, with borrowings based upon eligible accounts  receivable as defined.  The
amount outstanding under the Bank Line of Credit exceeded the eligible borrowing
base as of  December  31,  2002 and June 30, 2003 and the Company was in default
under certain  provisions  of the original  credit  agreement.  As a result this
facility is not available for use as of the filing date of this Quarterly Report
on Form 10-QSB. In April 2003 the lender agreed to amend the Bank Line of Credit
to provide for an extension of the due date to September  2003. The amendment to
the line of credit  provided  for a pay down of $108,700  upon  execution of the
amendment.  The other terms and  condition  of this credit  facility  remain the
same.

The Bank  Line of  Credit  and Bank  Term  Loan  prohibit  the  payment  of cash
dividends and require us to maintain certain levels of net worth and to generate
certain ratios of cash flows to debt service. Notwithstanding the modified terms
and conditions of the Bank Line of Credit and Bank Term Loan as discussed above,
as of June 30, 2003 and as of the filing date of this Form  10-QSB,  we were not
in compliance with certain financial covenants of such agreements.  As a result,
we have classified all of the bank loan facilities as current liabilities in the
accompanying balance sheet as of June 30, 2003.



                                       16
<PAGE>

The Company had cash and cash  equivalents of $1,281,238 at June 30, 2003.  Cash
provided  by  operating  activities  for the six months  ended June 30, 2003 was
$258,856. Cash from operations includes net income of $55,981,  depreciation and
amortization  of $377,476 and a decrease in accounts  receivable of  $1,041,693,
offset  by an  increase  in due  from  related  party  of  $742,157,  a gain  on
forgiveness  of debt of $104,818  and a net  decrease  in  accounts  payable and
accrued expenses of $287,620. Cash used in investing activities was $254,946 due
to the purchase of property and equipment of $183,561, purchase of customer list
and  covenant  not-to-compete  for  $50,000  and cash paid to limited  liability
companies of $56,968, offset by proceeds from the sale of property and equipment
of $35,583. Cash provided by financing activities was $320,086, which related to
the proceeds of $1,000,000  from the private  placement of  subordinated  notes,
offset by payments of $571,214  on debt and lease  obligations  and  payments of
$108,700 on our line of credit.

The Company had cash and cash  equivalents of $1,186,357 at June 30, 2002.  Cash
provided by operating  activities was $789,471 for the six months ended June 30,
2002. Cash provided by operating activities related to the inclusion in net loss
of a realized loss on investment securities of $1,732,573 which had no effect on
cash, depreciation and amortization expense of $312,902;  offset by the net loss
of  $(474,799),  gain on disposal of property and equipment of $212,822 and gain
on forgiveness of debt of $1,050,382.  Cash provided by investing activities was
$484,552,  which  primarily  related to proceeds  of  $267,837  from the sale of
property and  equipment  and proceeds of $267,427  from the sale of  securities.
Cash used in financing activities was $569,831,  which related to the payment of
debt and lease  obligations of $424,313 and the repayment of a bank overdraft of
$145,518.

Our auditors have included an explanatory  paragraph  relating to our ability to
continue as a going  concern as of and for the year ended  December 31, 2002, in
their Report of Independent  Certified Public  Accountants which is included our
Annual Report on Form 10-K.  For the year ended  December 31, 2002 we incurred a
net loss of  $(1,758,439).  The net loss for 2002 includes an impairment  charge
for goodwill of  $2,100,955  and a realized  loss on  investment  securities  of
$1,732,573.  Our accumulated  deficit  amounted to $(13,046,480) at December 31,
2002. Our auditors considered these factors,  among others, to raise doubt about
our ability to continue as a going concern. Recovery of our assets in the normal
course of business is  dependent  upon  future  events,  the outcome of which is
indeterminable.

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  obligations and capital  expenditure  needs. The primary source of
funding  for  such  requirements  is  anticipated  to  be  cash  generated  from
operations, borrowings under debt facilities, trade payables and the sale of our
capital stock.  In June 2003,  the Company  raised  $1,000,000 in gross proceeds
from the sale of our  subordinated  promissory  notes,  the entire principal and
accrued interest of which will  automatically  convert into a total of 2,525,000
post split shares of Common Stock on August 29, 2003,  the effective date of our
one-for-40  reverse  stock split.  Additional  financing may be required for our
business operations in the future. There can be no assurances given that we will
be able to obtain  financing on terms  satisfactory to us, if at all, or that we
will have  sufficient  liquidity  to fund our future  operations  or fulfill our
restructured debt, lease and vendor obligations. The financial statements do not
include  any   adjustments  to  reflect  the  possible  future  effects  on  the
recoverability and classification of assets or the amounts and classification of
liabilities that may result from the outcome of this uncertainty.

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-14(c).  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.



                                       17
<PAGE>

                           PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings:

Reference is made to Note 4 of the Notes to Condensed Consolidated Financial
Statements for a description of certain legal proceedings and settlements that
were made to two of these proceedings. During the quarter ended June 30, 2003,
there have been no other material developments with respect to legal
proceedings, except as disclosed in Note 4.

ITEM 2. Changes in Securities.

     (a) Not applicable.

     (b) Not applicable.

     (c) Recent Sales of Unregistered Securities

During  the six  months  ended  June 30,  2003,  the  Company  made the sales or
issuances of  unregistered  securities  listed in the table below.  It should be
noted that in April 2003, the Company filed a Form S-8 Registration Statement to
register the  issuance of shares of Common  Stock  pursuant to its 2002 and 2001
Employee  Benefit  Plans.  Further,  the  2,440,024  shares  issued in the first
quarter of 2003 to BJH Management,  LLC which is reported in the table below was
to correct a typographical error in an agreement dated December 30, 2002 and was
previously  reported  in Item 5 of the  Company's  Form 10-K for the fiscal year
ended December 31, 2002 as part of the overall issuance of 13,942,994 shares.

<TABLE>
<CAPTION>
                                                 CONSIDERATION RECEIVED
                                                 AND DESCRIPTION OF
                                                 UNDERWRITING OR OTHER                          IF OPTION, WARRANT
                                                 DISCOUNTS TO MARKET                            OR CONVERTIBLE
                                                 PRICE OR CONVERTIBLE      EXEMPTION FROM       SECURITY, TERMS OF
                                                 SECURITY, AFFORDED TO     REGISTRATION         EXERCISE OR
DATE OF SALE   TITLE OF SECURITY  NUMBER SOLD    PURCHASERS                CLAIMED              CONVERSION
-------------- ------------------ -------------- ------------------------- -------------------- ----------------------
<S>            <C>                 <C>           <C>                       <C>                  <C>
02/27/03       Common Stock        2,440,024     Services rendered; no     Section 4(2)         Not applicable.
                                                 commissions paid
-------------- ------------------ -------------- ------------------------- -------------------- ----------------------
02/03/03       Common Stock          250,000     Stock Option Plan; no     This stock option    10-year Options were
                                                 cash received; no         plan was             granted to
                                                 commissions paid          registered on a      employees, directors
                                                                           Form S-8             and consultants and
                                                                           Registration         at $.01 per share;
                                                                           Statement in April   Options generally
                                                                           2003.                vest in five equal
                                                                                                annual installments
                                                                                                commencing on the
                                                                                                date of grant expire
                                                                                                ten years from date
                                                                                                of grant.
-------------- ------------------ -------------- ------------------------- -------------------- ----------------------
06/27/03       Subordinated       $1,000,000*    Cash paid by lenders;     Section 4(2),        The $1,000,000 of
               Notes                             no commissions paid       Rule 506             principal will
                                                                                                automatically convert
                                                                                                into 2,500,000 post-split
                                                                                                shares of Common Stock
                                                                                                on August 29, 2003,
                                                                                                the effective date
                                                                                                of the one-for-40
                                                                                                reverse stock split.
                                                                                                Interest will be
                                                                                                paid in cash or
                                                                                                stock at the election
                                                                                                of the note holders.
-------------- ------------------ -------------- ------------------------- -------------------- ----------------------
</TABLE>

*  See Item 5 below for additional information.

                                       18
<PAGE>

ITEM 3.   Defaults Upon Senior Securities
          -------------------------------

          Not applicable.

ITEM 4.   Submissions of Matters to a Vote of Security Holders: None
          ----------------------------------------------------------

          During the quarter  ended June 30, 2003,  no matter was submitted to a
          vote of security holders.

Item 5.   Other Information:
          -----------------

     On June 27,  2003,  Emergent  Group Inc.  completed a private  placement of
$1,000,000 of its subordinated  promissory notes (the "Notes"). The terms of the
offering and the Notes are summarized as follows:

               o    50  Units  were  offered  on a  "best  efforts"  basis  at a
                    purchase price of $20,000 per Unit with each Unit consisting
                    of a Subordinated Promissory Note in the principal amount of
                    $20,000;

               o    The Notes shall be subordinated to all institutional leasing
                    and  other  types  of  senior  indebtedness,   both  current
                    indebtedness and indebtedness incurred in the future;

               o    Interest  shall be at a rate of 6% per annum  payable at the
                    earlier of  maturity,  conversion  or  redemption.  Interest
                    would have  retroactively  increased to 12% per annum if the
                    Stockholder  Matter as  defined  below was not  approved  by
                    August 7, 2003;

               o    If the  Stockholder  Matter  was not  approved  by August 7,
                    2003, the Notes would have become  pre-payable at the option
                    of the  Corporation at 110% of the face value and a security
                    interest  in all the  assets of the  Corporation  would have
                    been given to all Note  holders to the extent  permitted  by
                    law and subject to the  priority  liens of holders of senior
                    indebtedness;

               o    The  convertibility  of the Notes was subject to stockholder
                    approval  of  a  one-for-40   Reverse   Stock  Split  and  a
                    proportionate increase in the par value of Emergent's Common
                    Stock  from  $.001  per share to a new par value of $.04 per
                    share  (collectively  herein referred to as the "Stockholder
                    Matter").

               o    As a result of the August 5, 2003  approval by  stockholders
                    of the  Stockholder  Matter,  the Notes shall  automatically
                    convert into Common  Stock on the August 29, 2003  effective
                    date of the Reverse  Stock Split at the  conversion  rate of
                    $2.00 of  principal  into five  post-split  shares of Common
                    Stock; and

               o    Interest  on the Notes  will be  payable  in cash  unless an
                    affirmative  election is made by the Note holders to receive
                    Common Stock in lieu thereof at a conversion price that will
                    be no lower than the conversion rate.

     Of the $1,000,000  raised,  $700,000 was invested by eleven persons who are
officers,  and directors of Emergent or members of law firms who have acted in a
legal  capacity  to  Emergent.  The  remaining  $300,000  was  purchased  by six
accredited investors. Of the $700,000,  officers, directors and employees of the
Company  invested the following sums of money:  $200,000 was invested by each of
Daniel Yun and Bruce J. Haber,  $60,000 was invested by each of Mark Waldron and
Louis Buther,  $100,000 was invested by Howard Waltman,  $10,000 was invested by
William M. McKay and $40,000 was invested by Richard Frey.

     Emergent  filed an  Information  Statement with the Securities and Exchange
Commission with respect to the proposals listed below. The Information Statement
was  mailed  to  stockholders  of  record  on July  15,  2003  and  stockholders
consisting  of its  officers  and  directors  holding at least a majority of the
outstanding  shares of Common Stock of Emergent  submitted  to the  Secretary of
Emergent  their  consent to the  proposals  listed below on August 5, 2003.  The
reverse  stock split will become  effective on the opening of business on August
29, 2003. The following are the proposals  approved by  stockholders by majority
consent:



                                       19
<PAGE>

     (1) The re-election of Bruce J. Haber, Mark Waldron, Howard Waltman, Daniel
Yun and Matthew K. Fong for a period of one year and until their  successors are
elected and shall qualify;

     (2) The  ratification of the Board's  selection of Singer Lewak Greenbaum &
Goldstein LLP as the Company's independent auditors for the year ending December
31, 2003;

     (3) An amendment to the Company's  Articles of Incorporation and the filing
of said  amendment  with  the  Secretary  of State of the  State of  Nevada  (a)
changing  the par value of the  Company's  Common  Stock from $.001 par value to
$.04 par value;  and (b)  reducing  the number of  outstanding  shares of Common
Stock through a one-for-40 reverse stock split, effective August 29, 2003, to be
accomplished  by all  stockholders  of record at the close of business on August
28, 2003, being requested to exchange every 40 shares of Common Stock, $.001 par
value, for one new share of Common Stock, $.04 par value;

     (4)  The  ratification  of  the  Company's  2002  Employee  and  Consulting
Compensation Plan covering 325,000 post-split shares of Common Stock; and

     (5) The  ratification  of the  Company's  2001 Stock  Option Plan  covering
14,625 post-split shares of Common Stock.

     On the Effective Date of the reverse stock split,  it is  anticipated  that
there will be 4,208,946 post-split shares of Common Stock issued and outstanding
and Common  Stock  rights,  options  and  warrants  outstanding  to  purchase an
estimated  additional  932,038  post-split shares. It is expected that officers,
directors  and 5% or greater  stockholders  would have the  following  ownership
interest as detailed in the table below. (It should be noted that all references
below in the table and footnotes that follow to shares are post-split shares and
give effect to a  one-for-40  reverse  stock split and assumes  that all persons
elect to receive  interest in cash  rather than stock,  of which there can be no
assurances given.)



                                       20
<PAGE>
<TABLE>
<CAPTION>

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

          Name and Address of Beneficial Owner (1)                   Number of Common         Approximate
                                                                          Shares              Percentage
------------------------------------------------------------- ------------------------------- ------------------------
<S>                                                           <C>                             <C>
Daniel Yun
375 Park Avenue, Suite 3607
New York, NY 10152                                                     791,802 (2)                     18.8
------------------------------------------------------------- ------------------------------- ------------------------
Mark Waldron
932 Grand Central Avenue
Glendale, CA 91201                                                     407,685 (3)                      9.7
------------------------------------------------------------- ------------------------------- ------------------------
Howard Waltman
140 Deerfield
Tenafly, NJ 07670                                                      338,834 (4)                      7.9
------------------------------------------------------------- ------------------------------- ------------------------
Matthew Fong and Paula Fong
13191 Crossroads Parkway, Suite 285
Industry, CA 91746                                                      25,000 (5)                      *
------------------------------------------------------------- ------------------------------- ------------------------
William M. McKay
932 Grand Central Avenue
Glendale, CA 91201                                                      37,250 (6)                      *
------------------------------------------------------------- ------------------------------- ------------------------
Bruce J. Haber
c/o BJH Management, LLC
145 Huguenot Street, Suite 405
New Rochelle, NY  10801                                              1,010,246 (7)                     22.4
------------------------------------------------------------- ------------------------------- ------------------------
Louis Buther
205 Ridgefield Avenue
South Salem, NY 10590                                                  530,435 (7)                     12.0
------------------------------------------------------------- ------------------------------- ------------------------
All current and proposed  executive  officers and  directors
as a group (seven) persons                                           3,141,252 (8)                     64.4
------------------------------------------------------------- ------------------------------- ------------------------
</TABLE>

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

(*)  Represents less than 1% of the outstanding  shares of the Company's  Common
     Stock.
(1)  All shares are directly owned,  and the sole investment and voting power is
     held, by the persons named unless otherwise noted.
(2)  Includes  30,834 shares owned by Emergent  Capital L.P.,  which Mr. Yun has
     sole voting and disposition  power,  17,500 shares gifted to 17 persons and
     options to purchase 93 shares.
(3)  Includes options to purchase 93 shares.
(4)  Includes  11,332  shares  owned by his  family in the name of The THW Group
     LLC, over which shares Mr. Waltman exercises voting and investment  control
     and options to purchase 75,000 shares.
(5)  Includes options to purchase 25,000 shares.
(6)  Includes  options to purchase  12,000 shares of the Company's  Common Stock
     which are exercisable within 60 days of the anticipated filing date of this
     form 10-QSB.
(7)  BJH Management  LLC is a company owned by Mr. Bruce J. Haber.  BJH acquired
     348,575  shares of  Common  Stock of the  Company  pursuant  to a  services
     agreement and Mr. Haber purchased $200,000 of Notes which will convert into
     500,000 shares.  Of the 348,575  shares,  199,186 shares were gifted by Mr.
     Haber to an irrevocable  trust for the benefit of his daughter,  Jessica L.
     Haber with his wife,  Michela I. Haber, as Trustee.  The remaining  149,389
     shares  were  transferred  to Louis  Buther.  BJH  Management  has  certain
     anti-dilution  rights to maintain  on behalf of itself,  and at its option,
     its  transferees,  a minimum  combined  17.5% of the Company's  outstanding
     shares on a fully  diluted  basis.  Pursuant to these rights as a result of
     the Company's  completion of its private placement offering and anticipated
     stockholder  approval of the Stockholder Matter, BJH will receive rights to
     purchase  535,606 shares of Common Stock  exercisable at $.20 per share. Of
     these rights,  the right to purchase  229,546 shares will be transferred to
     Mr.  Buther and the  remaining  rights to purchase  306,060  shares will be
     transferred  to Mr. Haber.  The amount of stock shown in the table as owned
     by Mr, Haber includes the shares held in his daughter's trust,  although he
     disclaims beneficial ownership of such shares.
(8)  See footnotes (2) through (5) above.


                                       21
<PAGE>

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

     (a) Exhibits

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

 3.1 Amendment to Articles of Incorporation.*

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

99.1 Form of  Subordinated  Note is  hereby  incorporated  by  reference  to the
     Company's Form 8-K dated June 27, 2003.

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

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

* Filed herewith.

     (b) Reports on Form 8-K.

         Emergent  Group Inc. filed a current report on Form 8-K dated June 27,
         2003.  No other Form 8-K's were filed or  required to be filed for the
         quarter ended June 30, 2003.


                                   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.


                                        EMERGENT GROUP INC.



Date:  August 12, 2003                  By: /s/ Bruce J. Haber
                                            ------------------------------------
                                            Bruce J. Haber,
                                            Chairman and Chief Executive Officer



Date:  August 12, 2003                  By: /s/ William M. McKay
                                            ------------------------------------
                                            William M. McKay,
                                            Chief Financial Officer



                                       22
<PAGE>

                                  CERTIFICATION

     I, Bruce J. Haber, Chief Executive Officer of the Registrant, certify that:

     1. I have reviewed this  quarterly  report on Form 10-QSB of Emergent Group
Inc.;

     2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

     3.   Based on my knowledge,  the financial statements,  and other financial
          information  included in this quarterly report,  fairly present in all
          material respects the financial  condition,  results of operations and
          cash flows of the registrant as of, and for, the periods  presented in
          this quarterly report;

     4. The  registrant's  other  certifying  officers and I are responsible for
establishing  and maintaining  disclosure  control and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entitles,  particularly  during the
period in which this quarterly report is being prepared;

     b) evaluated the effectiveness of the registrant's  disclosure controls and
procedures  as of a date  within  90  days  prior  to the  filing  date  of this
quarterly report (the "Evaluation Date"); and

     c)  presented  in  this  quarterly   report  our   conclusions   about  the
effectiveness of the disclosure  controls and procedures based on our evaluation
as of the Evaluation Date;

     5. The registrant's other certifying  officers and I have disclosed,  based
on our most  recent  evaluation,  to the  registrant's  auditors  and the  audit
committee  of  registrant's  board  of  directors  (or  persons  performing  the
equivalent functions):

     a) all  significant  deficiencies  in the design or  operation  of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and have  identified  for the
registrant's auditors any material weaknesses in internal controls; and

     b) any fraud,  whether or not material,  that involves  management or other
employees who have a significant role in the registrant's internal controls; and

     6. The registrant's other certifying  officers and I have indicated in this
quarterly report whether there were significant  changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent  evaluation,  including any corrective  actions with
regard to significant deficiencies and material weaknesses.



Date:  August 12, 2003                      /s/ Bruce J. Haber
                                            ------------------------------------
                                            Bruce J. Haber,
                                            Chairman and Chief Executive Officer

                                       23
<PAGE>

                                 CERTIFICATION

     I, William M. McKay,  Chief Financial  Officer of the  Registrant,  certify
that:

     1. I have reviewed this  quarterly  report on Form 10-QSB of Emergent Group
Inc.;

     2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

     3. Based on my knowledge,  the financial  statements,  and other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

     4. The  registrant's  other  certifying  officers and I are responsible for
establishing  and maintaining  disclosure  control and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entitles,  particularly  during the
period in which this quarterly report is being prepared;

     b) evaluated the effectiveness of the registrant's  disclosure controls and
procedures  as of a date  within  90  days  prior  to the  filing  date  of this
quarterly report (the "Evaluation Date"); and

     c)  presented  in  this  quarterly   report  our   conclusions   about  the
effectiveness of the disclosure  controls and procedures based on our evaluation
as of the Evaluation Date;

     5. The registrant's other certifying  officers and I have disclosed,  based
on our most  recent  evaluation,  to the  registrant's  auditors  and the  audit
committee  of  registrant's  board  of  directors  (or  persons  performing  the
equivalent functions):

     a) all  significant  deficiencies  in the design or  operation  of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and have  identified  for the
registrant's auditors any material weaknesses in internal controls; and

     b) any fraud,  whether or not material,  that involves  management or other
employees who have a significant role in the registrant's internal controls; and

     6. The registrant's other certifying  officers and I have indicated in this
quarterly report whether there were significant  changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent  evaluation,  including any corrective  actions with
regard to significant deficiencies and material weaknesses.





Date: August 12, 2003                                /s/ William M. McKay
                                                     ---------------------------
                                                     William M. McKay,
                                                     Chief Financial Officer

                                       24