UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C.   20549


___________________________________





FORM
10-Q


___________________________________








Quarterly
Report Pursuant to Section 13 or 15(d) of the


Securities
Exchange Act of 1934




For
the Quarterly Period Ended June 30, 2009




Commission
File Number:  1-34208




EMERGENT GROUP
INC.


(Exact
name of registrant as specified in its charter)




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




10939
Pendleton Street


Sun Valley, CA
91352


(Address
of principal executive offices)





(818)
394-2800


(Registrant’s
telephone number)





Not
Applicable


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


___________________________________







Indicate
by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes  ý
  No  o




Indicate
by checkmark whether the registrant has submitted electronically and posted on
its corporate website, if any, every Interactive Data File required to be
submitted pursuant to Rule 405 of Regulation S-T during the 12 preceding months
(or such shorter period that the registrant was required to submit and post such
file). Yes [ ]  No [    ]





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.




Large
      accelerated filer o
            
            
            
            Accelerated
      filer o




Non-accelerated
      filer o
            
            (Do
      not check if a smaller reporting company)
            
            Smaller
      reporting company ý




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




As of
August 6, 2009, the registrant had a total of 6,746,506 shares of Common Stock
outstanding.















EMERGENT
GROUP INC.





FORM
10-Q Quarterly Report





Table
of Contents

















PART I.  FINANCIAL
      INFORMATION
                  PageItem
      1.
                  Financial
      StatementsCondensed
      Consolidated Balance Sheets as of June 30, 2009 (unaudited) and December
      31, 2008
                  3Condensed
      Consolidated Statements of Income for the Three and Six Months Ended June
      30, 2009 and 2008 (unaudited)
                  4Condensed
      Consolidated Statements of Cash Flows for the Six Months Ended June 30,
      2009 and 2008 (unaudited)
                  5Notes
      to Condensed Consolidated Financial Statements
                  6Item
      2.
                  Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                  14Item
      3.
                  Quantitative
      and Qualitative Disclosures and Market Risk
                  19Item
      4.
                  Controls
      and Procedures
                  19PART
      II.  OTHER INFORMATIONItem
      1.
                  Legal
      Proceedings
                  20Item1A.
                  Risk
    Factors
                  20Item
      2.
                  Changes
      in Securities
                  20Item
      3.
                  Defaults
      Upon Senior Securities
                  20Item
      4.
                  Submissions
      of Matters to a Vote of Security Holders
                  20Item
      5.
                  Other
      Information
                  20Item
      6.
                  Exhibits
                  20Signatures
                  21








2





PART
I.  FINANCIAL INFORMATION





Item 1.  Financial
Statements





Emergent
      Group Inc. and SubsidiariesCondensed
      Consolidated Balance SheetsJune
      30,
                                              
                                              
                                              December
      31,2009
                                              
                                              
                                              2008ASSETS
                                              
                                              (Unaudited)Current
      assetsCash
                                              
                                              $
                                              3,890,331
                                              
                                              
                                              $
                                              4,586,107Accounts
      receivable, net of allowance for doubtfulaccounts
      of $73,434 and $58,984
                                              
                                              
                                              4,329,541
                                              
                                              
                                              
                                              3,759,834Inventory,
      net
                                              
                                              
                                              833,863
                                              
                                              
                                              
                                              837,143Prepaid
      expenses
                                              
                                              
                                              358,835
                                              
                                              
                                              
                                              231,763Deferred
      income taxes
                                              
                                              
                                              986,000
                                              
                                              
                                              
                                              986,000Total
      current assets
                                              
                                              
                                              10,398,570
                                              
                                              
                                              
                                              10,400,847Property
      and equipment, net of accumulated depreciation andamortization
      of $8,213,809 and $7,247,482
                                              
                                              
                                              6,237,069
                                              
                                              
                                              
                                              6,070,228Goodwill
                                              
                                              
                                              1,120,058
                                              
                                              
                                              
                                              1,120,058Deferred
      income taxes
                                              
                                              
                                              478,881
                                              
                                              
                                              
                                              1,261,000Other
      intangible assets, net of accumulated amortization of$260,065
      and $226,997
                                              
                                              
                                              377,584
                                              
                                              
                                              
                                              403,152Deposits
      and other assets
                                              
                                              
                                              81,886
                                              
                                              
                                              
                                              84,934Total
      assets
                                              
                                              $
                                              18,694,048
                                              
                                              
                                              $
                                              19,340,219LIABILITIES
      AND SHAREHOLDERS' EQUITYCurrent
      liabilitiesCurrent
      portion of capital lease obligations
                                              
                                              $
                                              1,933,566
                                              
                                              
                                              $
                                              1,909,057Dividends
      payable
                                              
                                              
                                              -
                                              
                                              
                                              
                                              1,989,750Accounts
      payable
                                              
                                              
                                              1,973,129
                                              
                                              
                                              
                                              1,538,797Accrued
      expenses and other liabilities
                                              
                                              
                                              1,564,934
                                              
                                              
                                              
                                              1,997,312Total
      current liabilities
                                              
                                              
                                              5,471,629
                                              
                                              
                                              
                                              7,434,916Capital lease
      obligations, net of current portion
                                              
                                              
                                              3,017,385
                                              
                                              
                                              
                                              3,344,820Total
      liabilities
                                              
                                              
                                              8,489,014
                                              
                                              
                                              
                                              10,779,736Shareholders'
      equityPreferred
      stock, $0.001 par value, non-voting 10,000,000shares
      authorized, no shares issued and outstanding
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -Common
      stock, $0.04 par value, 100,000,000 shares authorized6,741,054
      and 6,631,576 shares issued and outstanding
                                              
                                              
                                              269,639
                                              
                                              
                                              
                                              265,260Additional
      paid-in capital
                                              
                                              
                                              16,339,098
                                              
                                              
                                              
                                              16,235,368Accumulated
      deficit
                                              
                                              
                                              (7,068,311
                                              )
                                              
                                              
                                              (8,636,575
                                              )Total
      Emergent Group equity
                                              
                                              
                                              9,540,426
                                              
                                              
                                              
                                              7,864,053Minority
      Interest
                                              
                                              
                                              664,608
                                              
                                              
                                              
                                              696,430Total
      shareholders' equity
                                              
                                              
                                              10,205,034
                                              
                                              
                                              
                                              8,560,483Total
      liabilities and shareholders' equity
                                              
                                              $
                                              18,694,048
                                              
                                              
                                              $
                                              19,340,219











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







3
  Emergent
      Group Inc. and SubsidiariesCondensed
      Consolidated Statements of Income(Unaudited)Three
      Months Ended
                                                  
                                                  
                                                  Six
      Months EndedJune
      30,
                                                  
                                                  
                                                  June
      30,2009
                                                  
                                                  
                                                  2008
                                                  
                                                  
                                                  2009
                                                  
                                                  
                                                  2008Revenue
                                                  
                                                  $
                                                  7,788,765
                                                  
                                                  
                                                  $
                                                  4,901,549
                                                  
                                                  
                                                  $
                                                  15,123,808
                                                  
                                                  
                                                  $
                                                  9,405,838Cost
      of goods sold
                                                  
                                                  
                                                  4,625,102
                                                  
                                                  
                                                  
                                                  2,690,183
                                                  
                                                  
                                                  
                                                  9,036,560
                                                  
                                                  
                                                  
                                                  5,316,017Gross
      profit
                                                  
                                                  
                                                  3,163,663
                                                  
                                                  
                                                  
                                                  2,211,366
                                                  
                                                  
                                                  
                                                  6,087,248
                                                  
                                                  
                                                  
                                                  4,089,821Selling,
      general, and administrative expenses
                                                  
                                                  
                                                  1,496,742
                                                  
                                                  
                                                  
                                                  1,131,241
                                                  
                                                  
                                                  
                                                  2,952,164
                                                  
                                                  
                                                  
                                                  2,255,094Income
      from operations
                                                  
                                                  
                                                  1,666,921
                                                  
                                                  
                                                  
                                                  1,080,125
                                                  
                                                  
                                                  
                                                  3,135,084
                                                  
                                                  
                                                  
                                                  1,834,727Other
      income (expense)Interest
      expense, net
                                                  
                                                  
                                                  (87,503
                                                  )
                                                  
                                                  
                                                  (63,704
                                                  )
                                                  
                                                  
                                                  (175,989
                                                  )
                                                  
                                                  
                                                  (126,136
                                                  )Gain on disposal of property and equipment
                                                  
                                                  
                                                  1,950
                                                  
                                                  
                                                  
                                                  28,937
                                                  
                                                  
                                                  
                                                  2,550
                                                  
                                                  
                                                  
                                                  28,937Other
      income, net
                                                  
                                                  
                                                  25,083
                                                  
                                                  
                                                  
                                                  11,472
                                                  
                                                  
                                                  
                                                  30,260
                                                  
                                                  
                                                  
                                                  24,124Total
      other income (expense)
                                                  
                                                  
                                                  (60,470
                                                  )
                                                  
                                                  
                                                  (23,295
                                                  )
                                                  
                                                  
                                                  (143,179
                                                  )
                                                  
                                                  
                                                  (73,075
                                                  )Income
      before provision for income taxesand
      minority interest
                                                  
                                                  
                                                  1,606,451
                                                  
                                                  
                                                  
                                                  1,056,830
                                                  
                                                  
                                                  
                                                  2,991,905
                                                  
                                                  
                                                  
                                                  1,761,652Provision
      for income taxes
                                                  
                                                  
                                                  (573,500
                                                  )
                                                  
                                                  
                                                  (75,000
                                                  )
                                                  
                                                  
                                                  (1,051,634
                                                  )
                                                  
                                                  
                                                  (135,500
                                                  )Income
      before minority interest
                                                  
                                                  
                                                  1,032,951
                                                  
                                                  
                                                  
                                                  981,830
                                                  
                                                  
                                                  
                                                  1,940,271
                                                  
                                                  
                                                  
                                                  1,626,152Minority
      interest in income of consolidatedlimited
      liability companies
                                                  
                                                  
                                                  (163,887
                                                  )
                                                  
                                                  
                                                  (270,462
                                                  )
                                                  
                                                  
                                                  (372,007
                                                  )
                                                  
                                                  
                                                  (482,884
                                                  )Net
      income
                                                  
                                                  $
                                                  869,064
                                                  
                                                  
                                                  $
                                                  711,368
                                                  
                                                  
                                                  $
                                                  1,568,264
                                                  
                                                  
                                                  $
                                                  1,143,268Basic
      earnings per share
                                                  
                                                  $
                                                  0.13
                                                  
                                                  
                                                  $
                                                  0.12
                                                  
                                                  
                                                  $
                                                  0.23
                                                  
                                                  
                                                  $
                                                  0.20Diluted
      earnings per share
                                                  
                                                  $
                                                  0.12
                                                  
                                                  
                                                  $
                                                  0.12
                                                  
                                                  
                                                  $
                                                  0.22
                                                  
                                                  
                                                  $
                                                  0.19Basic
      weighted-average shares outstanding
                                                  
                                                  
                                                  6,725,579
                                                  
                                                  
                                                  
                                                  5,725,802
                                                  
                                                  
                                                  
                                                  6,692,057
                                                  
                                                  
                                                  
                                                  5,688,150Diluted
      weighted-average shares outstanding
                                                  
                                                  
                                                  7,089,544
                                                  
                                                  
                                                  
                                                  5,981,569
                                                  
                                                  
                                                  
                                                  7,048,247
                                                  
                                                  
                                                  
                                                  5,947,420










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


4


Emergent
      Group Inc. and SubsidiariesCondensed
      Consolidated Statements of Cash Flows(Unaudited)Six
      Months EndedJune
      30,2009
                                                                      
                                                                      
                                                                      2008Cash
      flows from operating activitiesNet
      income
                                                                      
                                                                      $
                                                                      1,568,264
                                                                      
                                                                      
                                                                      $
                                                                      1,143,268Adjustments
      to reconcile net income to net cashprovided
      by operating activities:Depreciation
      and amortization
                                                                      
                                                                      
                                                                      1,051,508
                                                                      
                                                                      
                                                                      
                                                                      718,511Amortization
      of finance fees
                                                                      
                                                                      
                                                                      -
                                                                      
                                                                      
                                                                      
                                                                      4,167Gain
      on disposal of property and equipment
                                                                      
                                                                      
                                                                      (2,550
                                                                      )
                                                                      
                                                                      
                                                                      (28,937
                                                                      )Provision
      for doubtful accounts
                                                                      
                                                                      
                                                                      14,450
                                                                      
                                                                      
                                                                      
                                                                      3,000Minority
      interest in income
                                                                      
                                                                      
                                                                      372,007
                                                                      
                                                                      
                                                                      
                                                                      482,884Stock-based
      compensation expense
                                                                      
                                                                      
                                                                      107,214
                                                                      
                                                                      
                                                                      
                                                                      70,958Deferred
      income taxes
                                                                      
                                                                      
                                                                      782,119
                                                                      
                                                                      
                                                                      
                                                                      -Other
      expense - noncash
                                                                      
                                                                      
                                                                      4,708
                                                                      
                                                                      
                                                                      
                                                                      -(Increase)
      decrease inAccounts
      receivable
                                                                      
                                                                      
                                                                      (583,264
                                                                      )
                                                                      
                                                                      
                                                                      (154,519
                                                                      )Inventory
                                                                      
                                                                      
                                                                      3,280
                                                                      
                                                                      
                                                                      
                                                                      (97,039
                                                                      )Prepaid
      expenses
                                                                      
                                                                      
                                                                      (127,072
                                                                      )
                                                                      
                                                                      
                                                                      (40,889
                                                                      )Deposits
      and other assets
                                                                      
                                                                      
                                                                      (4,452
                                                                      )
                                                                      
                                                                      
                                                                      25,387Increase
      (decrease) inAccounts
      payable
                                                                      
                                                                      
                                                                      307,400
                                                                      
                                                                      
                                                                      
                                                                      92,743Accrued
      expenses and other liabilities
                                                                      
                                                                      
                                                                      (432,378
                                                                      )
                                                                      
                                                                      
                                                                      (414,744
                                                                      )Net
      cash provided by operating activities
                                                                      
                                                                      
                                                                      3,061,234
                                                                      
                                                                      
                                                                      
                                                                      1,804,790Cash
      flows from investing activitiesPurchase
      of property and equipment
                                                                      
                                                                      
                                                                      (411,821
                                                                      )
                                                                      
                                                                      
                                                                      (235,777
                                                                      )Cash
      paid to members of limited liability companies
                                                                      
                                                                      
                                                                      (491,037
                                                                      )
                                                                      
                                                                      
                                                                      (432,816
                                                                      )Contributions
      from new members to limited liability companies
                                                                      
                                                                      
                                                                      82,500
                                                                      
                                                                      
                                                                      
                                                                      69,375Proceeds
      from the sale of property and equipment
                                                                      
                                                                      
                                                                      2,550
                                                                      
                                                                      
                                                                      
                                                                      29,978Net
      cash used in investing activities
                                                                      
                                                                      
                                                                      (817,808
                                                                      )
                                                                      
                                                                      
                                                                      (569,240
                                                                      )Cash
      flows from financing activitiesPayments
      on capital lease obligations
                                                                      
                                                                      
                                                                      (984,192
                                                                      )
                                                                      
                                                                      
                                                                      (585,224
                                                                      )Payments
      on dividends declared
                                                                      
                                                                      
                                                                      (1,989,750
                                                                      )
                                                                      
                                                                      
                                                                      (1,686,095
                                                                      )Borrowings
      under line of credit
                                                                      
                                                                      
                                                                      -
                                                                      
                                                                      
                                                                      
                                                                      8,172,638Repayments
      on line of credit
                                                                      
                                                                      
                                                                      -
                                                                      
                                                                      
                                                                      
                                                                      (8,172,638
                                                                      )Payments
      on notes payable
                                                                      
                                                                      
                                                                      -
                                                                      
                                                                      
                                                                      
                                                                      (50,444
                                                                      )Proceeds
      from equipment refinancing
                                                                      
                                                                      
                                                                      34,740
                                                                      
                                                                      
                                                                      
                                                                      75,000Net
      cash used in financing activities
                                                                      
                                                                      
                                                                      (2,939,202
                                                                      )
                                                                      
                                                                      
                                                                      (2,246,763
                                                                      )Net
      decrease increase in cash
                                                                      
                                                                      
                                                                      (695,776
                                                                      )
                                                                      
                                                                      
                                                                      (1,011,213
                                                                      )Cash,
      beginning of period
                                                                      
                                                                      
                                                                      4,586,107
                                                                      
                                                                      
                                                                      
                                                                      3,043,654Cash,
      end of period
                                                                      
                                                                      $
                                                                      3,890,331
                                                                      
                                                                      
                                                                      $
                                                                      2,032,441Supplemental
      disclosures of cash flow information:Interest
      paid
                                                                      
                                                                      $
                                                                      185,884
                                                                      
                                                                      
                                                                      $
                                                                      139,723Income
      taxes paid
                                                                      
                                                                      $
                                                                      344,741
                                                                      
                                                                      
                                                                      $
                                                                      243,231Supplemental
      schedule of noncash investing and financing activities:During
      the six months ended June 30, 2009 and 2008, the Company incurred capital
      lease obligationsof
      $681,266 and $365,500 , respectively, for medical equipment. In addition,
      equipment purchasesof
      $508,750 are included in accounts payable in the accompanying balance
      sheet as of June 30, 2009for
      which the Company is arranging lease financing.




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


5


EMERGENT
GROUP INC and SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Three
and Six Months Ended June 30, 2009 and 2008





1.
            BUSINESS





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





As
further discussed herein, on August 8, 2008 the Company acquired the assets of
the Surgical Services Division (the “Services Division”) of PhotoMedex, Inc. The
operating results for the three and six months ended June 30, 2009 include the
results of operations for the Services Division. In addition, unaudited pro
forma information is presented in Note 7 below for the same periods in 2008
assuming that the acquisition of assets had occurred on the dates stated
therein.





In May
2009, the Company purchased certain medical equipment from a limited liability
company for approximately $111,000. The purchase price was satisfied through the
use of lease financing.





2.
            BASIS
      OF PRESENTATION





The
accompanying unaudited condensed consolidated financial statements of Emergent
have been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission ("SEC"). Certain information and footnote disclosures
normally included in financial statements prepared in accordance with accounting
principles generally accepted in the United States have been condensed or
omitted pursuant to such rules and regulations. These unaudited condensed
consolidated financial statements should be read in conjunction with the audited
consolidated financial statements and notes thereto included in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2008. 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 and six months ended June 30, 2009
and 2008 are not necessarily indicative of the results to be expected for any
other interim period or any future fiscal year.





Principles of
Consolidation


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





Use of
Estimates


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





Accounts Receivable and
Concentration of Business and Credit Risks


We market
our services primarily to hospitals, out-patient centers and physicians
throughout 16 states located in the Western and Eastern United States. Our
equipment rental and technician services are subject to competition from other
similar businesses. Our accounts receivable represent financial instruments with
potential credit risk. We offer credit terms and credit limits to most of our
customers based on the creditworthiness of such customers. However, we retain
the right to place such customers on credit hold should their account become
delinquent. We maintain an allowance for doubtful accounts for estimated losses
should customers fail to make required payments. In addition, we monitor the age
of customer account balances, historical bad debt experience, customer
creditworthiness, customer specific information, and changes in payment patterns
when making estimates of the collectibility of trade receivables. Accounts
receivable are written off when all collection attempts have failed. Our
allowance for doubtful accounts will be increased if circumstances warrant.
Based on the information available, management believes that our net accounts
receivable are collectible.


6


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.





Stock-Based
Compensation




Compensation
costs related to stock options are determined in accordance with SFAS
No. 123R, “Share-Based Payments”, using the modified prospective method.
Under this method, compensation cost recognized during the three and six months
ended June 30, 2009 and 2008 includes compensation cost for all share-based
payments granted prior to but not yet vested as of January 1, 2006, and all
grants subsequent to that date, based on the grant date fair value, which is
amortized over the remaining vesting period for such options. During March and
April 2009 we issued 15,500 and 14,500 stock options to various employees. Such
options generally vest in equal installments over five years and unvested
options are subject to forfeiture should the respective employee leave the
company. Compensation costs related to total stock options outstanding for the
three months ended June 30, 2009 and 2008 were $4,299 and $2,996, respectively,
and $7,562 and $5,991 for the six months ended June 30, 2009 and 2008,
respectively.




The 2002
Employee Benefit and Consulting Services Compensation Plan (the “2002 Plan”) was
adopted in 2002 for the purpose of providing incentives to key employees,
officers, directors, and consultants of the Company who provide significant
services to the Company. As of June 30, 2009, there are 650,000 common shares
authorized for grant under the 2002 Plan. Options will not be granted for a term
of more than ten years from the date of grant. Generally, options will vest
evenly over a period of five years, and the 2002 Plan expires in March 2012.
Incentive stock options granted under the 2002 Plan are non-statutory stock
options. As of June 30, 2009, the number of shares reserved for future awards
was 97,385, which is net of the 53,500 restricted award shares granted in April
2009 under the 2002 Plan, as discussed below.




On June
29, 2009 our shareholder’s approved the 2009 Employee Benefit and Consulting
Services Compensation Plan (the “2009 Plan”). The 2009 Plan was adopted for the
purpose of providing incentives to key employees, officers, directors, and
consultants of the Company who provide significant services to the Company. The
Company may issue up to 300,000 incentive stock options and common stock awards
under this plan. Options and awards granted to employees will generally vest
over five years and are subject to forfeiture if the employee terminates prior
to vesting. The 2009 Plan will terminate and no awards may be granted after June
28, 2019. As of June 30, 2009 there have been no options or awards granted under
the 2009 Plan.




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




Number of
      Shares
                                  
                                  
                                  Weighted
      Average Exercise PriceOutstanding
      at January 1, 2009
                                  
                                  
                                  336,639
                                  
                                  
                                  $
                                  1.59Options
      Granted
                                  
                                  
                                  30,000
                                  
                                  
                                  $
                                  5.68Options
      Canceled
                                  
                                  
                                  (5,532
                                  )
                                  
                                  $
                                  4.65Options
      Exercised
                                  
                                  
                                  (34,902
                                  )
                                  
                                  $
                                  0.43Outstanding
      at June 30, 2009
                                  
                                  
                                  326,205
                                  
                                  
                                  $
                                  2.03Exercisable
      at June 30, 2009
                                  
                                  
                                  254,586
                                  
                                  
                                  $
                                  1.63


7




The
weighted-average remaining contractual life of the options outstanding at June
30, 2009 is 5.09 years. The exercise prices for the options outstanding at June
30, 2009 ranged from $0.40 to $51.00, and information relating to these options
is as follows:




Weighted
                                      
                                      WeightedAverage
                                      
                                      Average
                                      
                                      Average
                                      
                                      AverageWeighted-
                                      
                                      Weighted
                                      
                                      
                                      
                                      Remaining
                                      
                                      Remaining
                                      
                                      Exercise
                                      
                                      ExerciseRange
      of
                                      
                                      Stock
                                      
                                      Stock
                                      
                                      Contractual
                                      
                                      Contractual
                                      
                                      Price
      of
                                      
                                      Price
      ofExercise
                                      
                                      Options
                                      
                                      Options
                                      
                                      Life
      of Options
                                      Life
      of Options
                                      Options
                                      
                                      OptionsPrices
                                      
                                      Oustanding
                                      
                                      Exercisable
                                      
                                      Outstanding
                                      
                                      Exercisable
                                      
                                      Outstanding
                                      
                                      Exercisable$0.40
                                      
                                      245,133
                                      
                                      235,258
                                      
                                      3.96
      years
                                      
                                      3.89
      years
                                      
                                      $            0.40
                                      
                                      $            0.40$2.15
      - 8.00
                                      
                                      74,000
                                      
                                      12,256
                                      
                                      9.10
      years
                                      
                                      8.08
      years
                                      
                                      $            3.89
                                      
                                      $            3.79$20.00
      - 51.00
                                      
                                      7,072
                                      
                                      7,072
                                      
                                      2.23
      years
                                      
                                      2.23
      years
                                      
                                      $          38.96
                                      
                                      $          38.96$0.40
      - 51.00
                                      
                                      326,205
                                      
                                      254,586
                                      
                                      5.09
      years
                                      
                                      4.05
      years
                                      
                                      $            2.03
                                      
                                      $            1.63




As of
June 30, 2009, the total unrecognized compensation cost related to unvested
stock options was $33,846, which is to be recognized over a remaining weighted
average vesting period of approximately 3.66 years.





WeightedAverage
                          
                          
                          
                          
                          
                          WeightedRemaining
                          
                          
                          Weighted
                          
                          
                          AverageNumber
                          
                          
                          Vesting
      Life
                          
                          
                          Average
                          
                          
                          Grant
      DateOutstanding
                          
                          
                          (in
      years)
                          
                          
                          Exercise
      Price
                          
                          Fair
      ValueNon
      Vested, December 31, 2008
                          
                          
                          64,411
                          
                          
                          
                          2.93
                          
                          
                          $
                          1.76
                          
                          
                          $
                          0.34Granted
                          
                          
                          30,000
                          
                          
                          
                          
                          
                          
                          $
                          5.68
                          
                          
                          $
                          0.66Forfeited
                          
                          
                          (5,532
                          )
                          
                          
                          
                          
                          
                          $
                          4.65
                          
                          
                          $
                          0.15Vested
                          
                          
                          (17,260
                          )
                          
                          
                          
                          
                          
                          $
                          0.40
                          
                          
                          $
                          0.40Non
      Vested, June 30, 2009
                          
                          
                          71,619
                          
                          
                          
                          3.66
                          
                          
                          $
                          3.41
                          
                          
                          $
                          0.47


In
addition to options granted under the 2002 Plan, as of June 30, 2009, we have
409,409 restricted award shares issued and outstanding of which 355,909 were
issued outside of the 2002 Plan and 128,100 are fully vested. We issued 53,500
restricted award shares to executive officers and directors in April 2009
pursuant to our 2002 Plan and restricted shares of 105,000 were issued to
executive officers, directors and employees in March 2008. Award shares
generally vest in equal installments over five years from the date of issuance.
Such award shares are issued from time to time to executive officers, directors
and employees of the Company. Non-vested award shares are subject to forfeiture
in the event that the recipient is no longer employed by the Company at the time
of vesting, subject to the Board’s right to waive the forfeiture provisions.
Compensation expense related to such shares is determined as of the issuance
date based on the fair value of the shares issued and is amortized over the
related vesting period. Total fair value related to the award shares issued in
April 2009 and March 2008 was $363,265 and $320,250, respectively. Compensation
costs are amortized over the vesting period of five years. Compensation expense
related to outstanding restricted award shares was $58,996 and $38,187 for the
three months ended June 30, 2009 and 2008, respectively, and $99,653 and $64,967
for the six months ended June 30, 2009 and 2008, respectively.





Earnings Per
Share


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





8




Three
      Months Ended June 30,
                                    
                                    
                                    Six
      Months Ended June 30,2009
                                    
                                    
                                    2008
                                    
                                    
                                    2009
                                    
                                    
                                    2008Numerator
      -Net
      income attributable to commonshareholders
                                    
                                    $
                                    869,064
                                    
                                    
                                    $
                                    711,368
                                    
                                    
                                    $
                                    1,568,264
                                    
                                    
                                    $
                                    1,143,268Denominator
      -Weighted-average
      number of commonshares
      outstanding during the period
                                    
                                    
                                    6,725,579
                                    
                                    
                                    
                                    5,725,802
                                    
                                    
                                    
                                    6,692,057
                                    
                                    
                                    
                                    5,688,150Dilutive
      effect of stock options and warrants
                                    
                                    
                                    363,965
                                    
                                    
                                    
                                    255,767
                                    
                                    
                                    
                                    356,190
                                    
                                    
                                    
                                    259,270Common
      stock and common stockequivalents
      used for diluted earnings per share
                                    
                                    
                                    7,089,544
                                    
                                    
                                    
                                    5,981,569
                                    
                                    
                                    
                                    7,048,247
                                    
                                    
                                    
                                    5,947,420




Recent Accounting
Pronounments


SFAS
No. 160 amends the accounting and reporting standards for the
noncontrolling interest in a subsidiary (formerly referred to as “minority
interest”) and for the deconsolidation of a subsidiary. Under SFAS No. 160, the
noncontrolling interest in a subsidiary is reported as equity in the parent
company’s consolidated financial statements. SFAS No. 160 also requires
that the parent company’s consolidated statement of operations include both the
parent and noncontrolling interest share of the subsidiary’s statement of
operations. Upon our adoption of SFAS No. 160, we reclassified our minority
interest liability to a separate section entitled “Minority Interests” within
total equity on our consolidated balance sheets for the periods presented
herein.





On
May 28, 2009, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standards (“SFAS”) No. 165, “Subsequent
Events,” to establish general standards of accounting and disclosure of events
that occur after the balance sheet date but before financial statements are
issued. In particular, SFAS No. 165 requires an evaluation of subsequent
events through the date the financial statements are issued and defines the
circumstances under which a subsequent event should be recognized and the
circumstances for which a subsequent event should be disclosed. SFAS
No. 165 also requires that we disclose the date through which we have
evaluated subsequent events, which was August 7, 2009. SFAS No. 165
was first effective beginning with the quarterly consolidated financial
statements ended June 30, 2009. Our adoption of SFAS No. 165 did not
have a material impact on our consolidated statement of income or consolidated
balance sheet.





In
June 2009, the FASB issued SFAS No. 167 “Amendments to FASB
Interpretation No. 46(R).” SFAS No. 167 requires an enterprise to
qualitatively assess the determination of the primary beneficiary (or
“consolidator”) of a variable interest entity (“VIE”) based on whether the
entity (1) has the power to direct matters that most significantly impact
the activities of the VIE, and (2) has the obligation to absorb losses or
the right to receive benefits of the VIE that could potentially be significant
to the VIE. SFAS No. 167 changes the consideration of kick-out rights,
which are the ability to remove the enterprise with the power to direct the
activities of a VIE, in determining if an entity is a VIE, which may cause
certain additional entities to now be considered VIEs. In contrast to prior
guidance, SFAS No. 167 requires an ongoing reconsideration of the primary
beneficiary. SFAS No. 167 also amends the events that trigger a
reassessment of whether an entity is a VIE. SFAS No. 167 is effective for
financial statements issued for fiscal years beginning after November 15,
2009. We are currently assessing the impact that SFAS No. 167 may have on
our consolidated financial statements and disclosures.





In
July 2009, the FASB issued SFAS No. 168 “The FASB Accounting Standards
CodificationTM and the Hierarchy of Generally Accepted Accounting Principles—a
replacement of FASB Statement No. 162.” The FASB Accounting Standards
CodificationTM (“Codification”) will become the sole source of authoritative U.S.
generally accepted accounting principles (“U.S. GAAP”) recognized by the FASB to
be applied by nongovernmental entities. Rules and interpretive releases of the
Securities and Exchange Commission (“SEC”) under authority of federal securities
laws are also sources of authoritative U.S. GAAP for SEC registrants. On the
effective date of SFAS No. 168, the Codification will supersede all
then-existing non-SEC accounting and reporting standards. All other
nongrandfathered non-SEC accounting literature not included in the Codification
will become nonauthoritative under U.S. GAAP. SFAS No. 168 is effective for
financial statements issued for interim and annual periods ending after
September 15, 2009. We will amend the references to U.S. GAAP in our
disclosures accordingly beginning with our interim consolidated financial
statements included in our fiscal third quarter of 2009 Form 10-Q.




9






3.
              DEBT OBLIGATIONS




The
Company entered into a new credit agreement (the “Agreement”) with a bank in
June 2008, which was amended in August 2008. The Agreement, as amended, provides
for a line of credit of $1.5 million and is collateralized by substantially all
unencumbered assets of the Company. Advances under the Agreement bear interest
at the prime rate, plus one-half of one percent (3.75% as of June 30, 2009),
with interest payable monthly. Subject to the terms of the Agreement, the
Company may request and repay advances from time to time through the expiration
date. The Agreement includes certain financial covenants that must be met
including a covenant that for a period of not less than thirty (30) consecutive
days during the loan term, that no loan amount will be outstanding under the
Agreement. The Agreement expires on August 3, 2009. As of June 30, 2009 the
Company was in compliance with the terms of its revolving credit agreement and
no amounts have been drawn under this facility.





In
connection with the acquisition of the Services Division, we entered into an
equipment lease financing loan with a bank for $1,750,000. The equipment lease
is collaterialized by the acquired assets and other assets of the Company and
provides for monthly payments of principal and interest of $46,378 commencing on
September 1, 2008 over 42 months, with interest at 6.4%. The lease financing
agreement also requires Emergent to meet certain financial covenants over the
loan term. As of June 30, 2009 the Company was in compliance with terms of this
loan agreement.





The
Company incurred total net interest expense of $87,503 and $63,704 for the three
months ended June 30, 2009 and 2008, respectively and $175,989 and $126,136 for
the six months ended June 30, 2009 and 2008, respectively.


10





4.
            COMMITMENTS
      AND CONTINGENCIES





Legal
Matters


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





Plaintiff’s
complaint against the Defendants named above is a civil lawsuit, which was
signed by the clerk on February 2, 2005. This action is brought in the United
States District Court, Southern District of New York by Plaintiff against the
Company, a former director, Daniel Yun, and other parties to recover money
damages for alleged fraud, negligent misrepresentations and aiding and abetting
fraud. The Amended Complaint alleges that the factual basis involving the action
against the Company involves alleged false representations to Plaintiff to
induce him to leave his then employment in 2001 and accept the Company’s and
another named Defendant’s alleged offer of employment. Plaintiff seeks
compensatory damages and punitive damages each in the amount of not less than
$2,100,000 together with interest thereon, reasonable attorneys’ fees and other
specific relief against Defendants other than the Company. Management has denied
the Plaintiff’s allegations against the Company and intends to vigorously defend
this lawsuit. During the quarter ended June 30, 2009 there were no material
developments in this matter.





5.
            RELATED
      PARTY TRANSACTIONS





Transactions with BJH
Management


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





The
Company’s Chairman and Chief Executive Officer maintains his primary office in
New York. In this regard, the Company reimbursed BJH Management, LLC (“BJH”), a
company owned by the Company’s Chairman and Chief Executive Officer, for office
rent and other reimbursable expenses totaling $17,520 and $10,669 for the three
months ended June 30, 2009 and 2008, respectively, and $34,100 and $20,486 for
the six months ended June 30, 2009 and 2008, respectively.




6.
              LIMITED LIABILITY COMPANIES


In
connection with expanding its business, PRI Medical participates with others in
the formation of Limited Liability Companies (“LLCs”) in which it will acquire
either a minority or majority interest and the remaining interests are held by
other investors. These LLCs acquire certain medical equipment for use in their
respective business activities which generally focus on surgical procedures. As
of June 30, 2009, PRI Medical holds interests in thirteen LLCs located in
California, Colorado and New York. During 2009 and 2008 we participated in the
formation of seven LLCs. Such LLCs acquired medical equipment for rental
purposes under equipment financing leases. The third party investors in each
respective LLC generally provide the lease financing company with individual
proportionate lease guarantees based on their respective ownership percentages
in the LLCs. In addition, PRI Medical will provide such financing companies with
its corporate guarantee based on its respective ownership interest in each LLC.
In certain instances, PRI Medical has provided such financing companies with an
overall corporate guarantee in connection with equipment financing transactions.
In such instances, the individual investors in each respective LLC will
generally indemnify PRI Medical against losses, if any, incurred in connection
with its corporate guarantee.


11






7.
              ACQUISITION OF THE ASSETS OF THE SERVICES DIVISION OF PHOTOMEDEX,
      INC.


On August
2, 2008, the Company entered into an agreement to acquire the assets of the
Surgical Services Division (the “Services Division”) of PhotoMedex, Inc. The
Services Division provides mobile laser services in 11 Northeast, Middle
Atlantic and Southeast states, serving 18 individual local markets, expanding
PRI’s geographic coverage to a total of 16 states. Revenues of the Services
Division were $7,667,000 for the year ended December 31, 2007. The purchase
price for the Services Division was approximately $3,149,735, subject to certain
post closing adjustments, plus closing costs. The acquisition was closed on
August 8, 2008, at which time the purchase price was paid by the Company through
borrowings from a bank of $1,750,000 under a fully amortizing capital equipment
lease arrangement, which is collateralized by the acquired assets and other
assets of the Company, the proceeds from the private sale of our restricted
Common Stock as discussed below, with the balance paid from existing
cash.





The
purchase price for the acquired assets of $3,149,735, plus certain acquisition
costs, was allocated to accounts receivable of $761,959, inventory of $467,720,
equipment and vehicles of $1,594,670 and to customer list for $358,864.
Equipment and vehicles are being depreciated over three to five years while the
customer list is being amortized over ten years.





In
connection with the acquisition of the assets of the Services Division, on July
31, 2008, the Company received investment commitments totaling $1,130,890 from
15 investors to purchase the Company’s Common Stock. The commitments consisted
of 665,229 Units at an offering price of $1.70 per Unit. Each Unit consisted of
one share of Common Stock and a Warrant to purchase 0.6 shares of Common Stock
at an exercise price of $1.75 per whole share. The Warrants expire at the close
of business on July 31, 2013. Of the 665,229 Units, 533,825 Units (equivalent to
$907,503) were purchased by officers and directors of the Company.





We
anticipate that such acquisition will have an impact on future operating results
and the comparability of one period to another.





Unaudited
Pro Forma Results of Operations for the Three and Six Months Ended June 30,
2008





The
historical operating results for the Company include the operating results for
the Services Division from January 1, 2009 to June 30, 2009. Presented below are
the summarized pro forma operating results and earnings per share for the
Company assuming that the acquisition of assets of the Services Division had
been completed on January 1, 2008.




Pro
      Forma Results of OperationsThree
      Months
                      
                      
                      Six
      MonthsEnded
                      
                      
                      EndedJune
      30,
                      
                      
                      June
      30,2008
                      
                      
                      2008Pro
      forma revenue
                      
                      $
                      6,663,559
                      
                      
                      $
                      13,067,587Pro
      forma income from operations
                      
                      $
                      1,138,501
                      
                      
                      $
                      1,963,747Pro
      forma provision for income taxes
                      
                      $
                      (77,524
                      )
                      
                      $
                      (141,468
                      )Pro
      forma net income
                      
                      $
                      742,499
                      
                      
                      $
                      1,216,877Pro
      forma basic earnings per share
                      
                      $
                      0.12
                      
                      
                      $
                      0.19Pro
      forma diluted earnings per share
                      
                      $
                      0.11
                      
                      
                      $
                      0.18





The
unaudited pro forma condensed results of operations for 2008 include pro forma
adjustments to adjust depreciation and amortization expense based on asset
values and related depreciation and amortization periods ascribed by the
Company, interest expense incurred in connection with acquisition financing,
certain acquisition related costs, and the estimated impact on state taxes
related to the income of the Services Division. In connection with the
acquisition transaction, Emergent raised additional capital through the private
placement of its Common Stock and the issuance of Warrants to purchase Common
Stock in July 2008. The pro forma common and fully diluted shares outstanding
assume completion of this transaction on January 1, 2008 and include the effects
of this transaction in its basic and fully diluted shares outstanding. The
issuance of the Warrants resulted in compensation expense of $93,937, which is
also included in the pro forma adjustments for the six months ended June 30,
2008.


12


The
unaudited pro forma results for the periods presented above are not necessarily
indicative of what actual results would have resulted had the acquisition
transaction described herein occurred at the dates stated above nor do they
purport to indicate the results of future operations of Emergent and the
Services Division acquired from PhotoMedex, Inc. Furthermore, no effect has been
given in the unaudited pro forma condensed statements of income for synergistic
benefits that may be realized from the acquisition of the Services Division or
costs that may have been incurred in integrating operations. The unaudited
condensed pro forma combined statements of income as presented herein should be
read in conjunction with the accompanying notes, the historical financial
statements and notes to the financial statements of Emergent set forth in
Emergent’s periodic and current reports filed with the Securities and Exchange
Commission and the carve-out audited and unaudited financial statements and
notes of the Services Division as previously filed in Form 8-K.




8.
              SUBSEQUENT EVENTS


In August
2009, the Company renewed its revolving line of credit of $1.5 million through
August 3, 2010 under the terms and conditions as described in note 3
above.


13


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





Forward-Looking
Statements





The
information contained in this Form 10-Q 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, 2008 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-Q 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-Q. Certain
statements contained in Management's Discussion and Analysis, particularly in
"Liquidity and Capital Resources," and elsewhere in this Form 10-Q are
forward-looking statements. These statements discuss, among other things,
expected growth, future revenues and future performance. Although we believe the
expectations expressed in such forward-looking statements are based on
reasonable assumptions within the bounds of our knowledge of our business, a
number of factors could cause actual results to differ materially from those
expressed in any forward-looking statements, whether oral or written, made by us
or on our behalf. The forward-looking statements are subject to risks and
uncertainties including, without limitation, the following: (a) changes in
levels of competition from current competitors and potential new competition,
(b) possible loss of significant customer(s), (c) the Company’s ability to
effectively integrate into its operations the recently acquired assets and
customers of the Surgical Services Division of PhotoMedex, Inc., as discussed
elsewhere in this Form 10-Q, and its ability to integrate new and changing
medical technologies into to its product and service offerings, (d) the risk of
equipment vendors not making their equipment and technologies available to
equipment rental and service companies such as ours, (e) the Company’s ability
to meet the terms and conditions of its debt and lease obligations, (f) the
potential impact of new government rules and regulations could have a material
adverse affect on our results of our operations, and (g) changes in availability
or terms of working capital financing from vendors and lending institutions. The
foregoing should not be construed as an exhaustive list of all factors that
could cause actual results to differ materially from those expressed in
forward-looking statements made by us. All forward-looking statements included
in this document are made as of the date hereof, based on information available
to the Company on the date thereof, and the Company assumes no obligation to
update any forward-looking statements.





Overview





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





Acquisition
of the Assets of the Services Division of PhotoMedex, Inc.





On August
2, 2008, the Company entered into an agreement to acquire the assets of the
Surgical Services Division (the “Services Division”) of PhotoMedex, Inc. The
Services Division provides mobile laser services in 11 Northeast, Middle
Atlantic and Southeast states, serving 18 individual local markets expanding
PRI’s geographic coverage to a total of 16 states. Revenues of the Services
Division were $7,667,000 for the year ended December 31, 2007. The purchase
price for the Services Division was approximately $3,149,735, subject to certain
post closing adjustments, plus closing costs. The acquisition was closed on
August 8, 2008, at which time the purchase price was paid by the Company through
borrowings from a bank of $1,750,000, under a fully amortizing capital equipment
lease arrangement, which is collateralized by the acquired assets and other
assets of the Company, the proceeds from the private sale of our restricted
Common Stock as discussed elsewhere in this Form 10-Q, with the balance paid
from existing cash.





We
anticipate that such acquisition will have an impact on future operating results
and the comparability of one period to another.


14


Unaudited
Pro Forma Results for the Three and Six Months Ended June 30, 2008





The
historical operating results for the Company include the operating results for
the Services Division from January 1, 2009 to June 30, 2009. Presented below are
the summarized pro forma operating results and earnings per share for the
Company assuming that the acquisition of assets of the Services Division had
been completed on January 1, 2008.






Pro
      Forma Results of OperationsThree
      Months
                  
                  
                  Six
      MonthsEnded
                  
                  
                  EndedJune
      30,
                  
                  
                  June
      30,2008
                  
                  
                  2008Pro
      forma revenue
                  
                  $
                  6,663,559
                  
                  
                  $
                  13,067,587Pro
      forma income from operations
                  
                  $
                  1,138,501
                  
                  
                  $
                  1,963,747Pro
      forma provision for income taxes
                  
                  $
                  (77,524
                  )
                  
                  $
                  (141,468
                  )Pro
      forma net income
                  
                  $
                  742,499
                  
                  
                  $
                  1,216,877Pro
      forma basic earnings per share
                  
                  $
                  0.12
                  
                  
                  $
                  0.19Pro
      forma diluted earnings per share
                  
                  $
                  0.11
                  
                  
                  $
                  0.18





The
unaudited pro forma condensed results of operations for 2008 include pro forma
adjustments to adjust depreciation and amortization expense based on asset
values and related depreciation and amortization periods ascribed by the
Company, interest expense incurred in connection with acquisition financing,
certain acquisition related costs, and the estimated impact on state taxes
related to the income of the Services Division. In connection with the
acquisition transaction Emergent raised additional capital through the private
placement of its Common Stock and the issuance of Warrants to purchase Common
Stock in July 2008. The pro forma common and fully diluted shares outstanding
assume completion of this transaction on January 1, 2008 and include the effects
of this transaction in its basic and fully diluted shares outstanding. The
issuance of the Warrants resulted in compensation expense of $93,937, which is
also included in the pro forma adjustments for the six months ended June 30,
2008.





The
unaudited pro forma results for 2008 are not necessarily indicative of what
actual results would have resulted had the acquisition transaction described
herein occurred on the dates stated above nor do they purport to indicate the
results of future operations of Emergent and the Services Division acquired from
PhotoMedex, Inc. Furthermore, no effect has been given in the unaudited pro
forma condensed statements of income for synergistic benefits that may be
realized from the acquisition of the Services Division or costs that may be
incurred in integrating operations. The unaudited condensed pro forma combined
statements of income as presented herein should be read in conjunction with the
accompanying notes, the historical financial statements and notes to the
financial statements of Emergent set forth in Emergent’s periodic and current
reports filed with the Securities and Exchange Commission and the carve-out
audited and unaudited financial statements and notes of the Services Division as
previously filed in Form 8-K.





Critical
Accounting Policies





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





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


15


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
statements of income data for the periods indicated in dollars and as a
percentage of total revenues. The following discussions relate to our results of
operations for the periods noted which include the results of operations for the
Services Division acquired on August 8, 2008, as discussed herein, for the
period from January 1, 2009 to June 30, 2009. The results of operations for the
periods noted are not necessarily indicative of the results expected for any
other interim period or any future fiscal year. In addition, we note that the
period-to-period comparison may not be indicative of future
performance.






Three
      Months Ended
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          Six
      Months EndedJune
      30,
                                                          
                                                          
                                                          
                                                          
                                                          
                                                          June
      30,2009
                                                          
                                                          
                                                          %
                                                          
                                                          
                                                          2008
                                                          
                                                          
                                                          %
                                                          
                                                          
                                                          2009
                                                          
                                                          
                                                          %
                                                          
                                                          
                                                          2008
                                                          
                                                          
                                                          %Revenue
                                                          
                                                          $
                                                          7,788,765
                                                          
                                                          
                                                          
                                                          100
                                                          %
                                                          
                                                          $
                                                          4,901,549
                                                          
                                                          
                                                          
                                                          100
                                                          %
                                                          
                                                          $
                                                          15,123,808
                                                          
                                                          
                                                          
                                                          100
                                                          %
                                                          
                                                          $
                                                          9,405,838
                                                          
                                                          
                                                          
                                                          100
                                                          %Cost
      of goods sold
                                                          
                                                          
                                                          4,625,102
                                                          
                                                          
                                                          
                                                          59
                                                          %
                                                          
                                                          
                                                          2,690,183
                                                          
                                                          
                                                          
                                                          55
                                                          %
                                                          
                                                          
                                                          9,036,560
                                                          
                                                          
                                                          
                                                          60
                                                          %
                                                          
                                                          
                                                          5,316,017
                                                          
                                                          
                                                          
                                                          57
                                                          %Gross
      profit
                                                          
                                                          
                                                          3,163,663
                                                          
                                                          
                                                          
                                                          41
                                                          %
                                                          
                                                          
                                                          2,211,366
                                                          
                                                          
                                                          
                                                          45
                                                          %
                                                          
                                                          
                                                          6,087,248
                                                          
                                                          
                                                          
                                                          40
                                                          %
                                                          
                                                          
                                                          4,089,821
                                                          
                                                          
                                                          
                                                          43
                                                          %Selling,
      general, and administrative expenses
                                                          
                                                          
                                                          1,496,742
                                                          
                                                          
                                                          
                                                          19
                                                          %
                                                          
                                                          
                                                          1,131,241
                                                          
                                                          
                                                          
                                                          23
                                                          %
                                                          
                                                          
                                                          2,952,164
                                                          
                                                          
                                                          
                                                          20
                                                          %
                                                          
                                                          
                                                          2,255,094
                                                          
                                                          
                                                          
                                                          24
                                                          %Income
      from operations
                                                          
                                                          
                                                          1,666,921
                                                          
                                                          
                                                          
                                                          22
                                                          %
                                                          
                                                          
                                                          1,080,125
                                                          
                                                          
                                                          
                                                          22
                                                          %
                                                          
                                                          
                                                          3,135,084
                                                          
                                                          
                                                          
                                                          20
                                                          %
                                                          
                                                          
                                                          1,834,727
                                                          
                                                          
                                                          
                                                          19
                                                          %Other
      income (expense)
                                                          
                                                          
                                                          (60,470
                                                          )
                                                          
                                                          
                                                          -1
                                                          %
                                                          
                                                          
                                                          (23,295
                                                          )
                                                          
                                                          
                                                          0
                                                          %
                                                          
                                                          
                                                          (143,179
                                                          )
                                                          
                                                          
                                                          -1
                                                          %
                                                          
                                                          
                                                          (73,075
                                                          )
                                                          
                                                          
                                                          -1
                                                          %Income
      before provision for incometaxes
      and minority interest
                                                          
                                                          
                                                          1,606,451
                                                          
                                                          
                                                          
                                                          21
                                                          %
                                                          
                                                          
                                                          1,056,830
                                                          
                                                          
                                                          
                                                          22
                                                          %
                                                          
                                                          
                                                          2,991,905
                                                          
                                                          
                                                          
                                                          19
                                                          %
                                                          
                                                          
                                                          1,761,652
                                                          
                                                          
                                                          
                                                          18
                                                          %Provision
      for income taxes
                                                          
                                                          
                                                          (573,500
                                                          )
                                                          
                                                          
                                                          -7
                                                          %
                                                          
                                                          
                                                          (75,000
                                                          )
                                                          
                                                          
                                                          -2
                                                          %
                                                          
                                                          
                                                          (1,051,634
                                                          )
                                                          
                                                          
                                                          -7
                                                          %
                                                          
                                                          
                                                          (135,500
                                                          )
                                                          
                                                          
                                                          -1
                                                          %Net
      income before minority interest
                                                          
                                                          
                                                          1,032,951
                                                          
                                                          
                                                          
                                                          14
                                                          %
                                                          
                                                          
                                                          981,830
                                                          
                                                          
                                                          
                                                          20
                                                          %
                                                          
                                                          
                                                          1,940,271
                                                          
                                                          
                                                          
                                                          12
                                                          %
                                                          
                                                          
                                                          1,626,152
                                                          
                                                          
                                                          
                                                          17
                                                          %Minority
      interest in income of consolidatedlimited
      liability companies
                                                          
                                                          
                                                          (163,887
                                                          )
                                                          
                                                          
                                                          -2
                                                          %
                                                          
                                                          
                                                          (270,462
                                                          )
                                                          
                                                          
                                                          -6
                                                          %
                                                          
                                                          
                                                          (372,007
                                                          )
                                                          
                                                          
                                                          -2
                                                          %
                                                          
                                                          
                                                          (482,884
                                                          )
                                                          
                                                          
                                                          -5
                                                          %Net
      income
                                                          
                                                          $
                                                          869,064
                                                          
                                                          
                                                          
                                                          12
                                                          %
                                                          
                                                          $
                                                          711,368
                                                          
                                                          
                                                          
                                                          14
                                                          %
                                                          
                                                          $
                                                          1,568,264
                                                          
                                                          
                                                          
                                                          10
                                                          %
                                                          
                                                          $
                                                          1,143,268
                                                          
                                                          
                                                          
                                                          12
                                                          %


Comparison
of the Three Months Ended June 30, 2009 to June 30, 2008





The
Company generated revenues of $7,788,765 in 2009 compared to $4,901,549 in 2008.
The increase in revenues in 2009 of $2,887,216, or 59% is primarily related to
the inclusion of revenues from the Services Division, which we acquired in
August 2008 and from an increase in revenues from our other surgical
procedures.





Cost of
goods sold was $4,625,102 in 2009 or 59% of revenues, compared to $2,690,183 or
55% of revenues for 2008. Costs of goods sold primarily consist of payroll costs
and related expenses for technicians, cost of disposables consumed, depreciation
and amortization related to equipment, insurance costs and other operating costs
incurred in rendering mobile medical equipment and technician services. The
overall increase in cost of goods sold of $1,934,919 or 72% for 2009 is due to
the inclusion of costs for the Services Division, which we acquired in August
2008 as well as increases in disposable costs, payroll and related costs,
depreciation and amortization expenses and to increases in equipment maintenance
costs. Disposable costs increased due to increased sales volume, payroll and
payroll related costs increased due to an increase in the number of employees,
depreciation and amortization expense increased due to equipment purchases in
2009 and 2008. The net change in other cost categories included in cost of goods
sold remained relatively consistent in 2009 compared to 2008.





Gross
profit from operations was $3,163,663 in 2009, compared to $2,211,366 in 2008.
Gross profit as a percentage of revenues was 41% for 2009 compared to 45% for
2008. Gross margins after disposable costs will vary depending on the type of
surgical procedure performed due to the fact that certain procedures require
more expensive disposable items. In addition, gross margin rates will vary from
period to period depending upon other factors including pricing considerations,
and equipment and technician utilization rates. The gross margin for 2009 is not
necessarily indicative of the margins that may be realized in future
periods.





16




Selling,
general, and administrative expenses were $1,496,742 or 19% of revenues for 2009
and $1,131,241 or 23% of revenues for 2008. Such costs include, among others,
payroll and related expenses, insurance costs and occupancy costs. The increase
in selling, general and administrative expenses of $365,501 in 2009 is primarily
related to increases in performance-based incentive compensation and to
increases in sales management and other payroll related expenses.





Other
income (expense) was $(60,470) in 2009 compared to $(23,295) in 2008. Other
income (expense) includes interest income and expense, gains and losses on
disposal of property and equipment, and other miscellaneous income and expense
items. The net increase in other expense of $37,175 is primarily related to an
increase in net interest expense of $23,799 and to a net decrease in gain on
disposal of property and equipment and other income of $13,376. The net increase
in interest expense relates to new equipment leases entered into during 2008,
including the equipment financing lease incurred in connection with the
acquisition of the Services Division in August 2008. The net decrease in gain on
disposal of property and equipment and other income is related to a decrease in
such miscellaneous income items in 2009 compared to 2008.





The
minority interest (ownership interests held by third-parties) in net income of
limited liability companies was $163,887 in 2009 compared to $270,462 in 2008.
In 2009 and 2008, we held ownership interests in thirteen and eleven entities,
respectively. The decrease in the minority interest in income for 2009 is
related to lower earnings in certain of the LLCs. As of June 30, 2009 and 2008,
in accordance with the Financial Accounting Standards Board Interpretation No.
46R, “Consolidation of Variable Interest Entities”, the Company accounted for
its equity investments in entities in which it holds a minority interest under
the full consolidation method.





Net
income was $869,064 in 2009 compared to $711,368 in 2008. Provision for income
taxes was $573,500 in 2009 as compared to $75,000 in 2008. During the fourth
quarter of 2008 we recognized deferred tax benefits of $1,331,512 related to
operating losses from prior years. As required by SFAS 109, we did not reverse
the valuation allowance until it was “more likely than not” that the tax asset
would be realized. The provision for income taxes of $573,500 as of June 30,
2009 is comprised of state taxes, federal Alternative Minimum Taxes (AMT), and
the utilization of deferred income tax assets. At December 31, 2008, the Company
had net operating loss carryforwards of approximately $7.6 million for federal
tax purposes. Basic net income per share for 2009 and 2008 was $0.13 and $0.12,
respectively, while fully diluted net income per share for 2009 and 2008 was
$0.12 and $0.12, respectively. Basic and fully diluted weighted average shares
outstanding for 2009 were 6,725,579 and 7,089,544, respectively, and 5,725,802
and 5,981,569 for 2008, respectively.





Comparison
of the Six Months Ended June 30, 2009 to June 30, 2008





The
Company generated revenues of $15,123,808 in 2009 compared to $9,405,838 in
2008. The increase in revenues in 2009 of $5,717,970, or 61% is primarily
related to the inclusion of revenues from the Services Division, which we
acquired in August 2008 and from an increase in revenues from our other surgical
procedures.





Cost of
goods sold was $9,036,560 in 2009 or 60% of revenues, compared to $5,316,017 or
57% of revenues for 2008. Costs of goods sold primarily consist of payroll costs
and related expenses for technicians, cost of disposables consumed, depreciation
and amortization related to equipment, insurance costs and other operating costs
incurred in rendering mobile medical equipment and technician services. The
overall increase in cost of goods sold of $3,720,543 or 70% for 2009 is due to
the inclusion of costs for the Services Division, which we acquired in August
2008, as well as increases in disposable costs, payroll and related costs,
depreciation and amortization expenses and to increases in equipment maintenance
costs. Disposable costs increased due to increased sales volume, payroll and
payroll related costs increased due to an increase in the number of employees,
depreciation and amortization expense increased due to equipment purchases in
2009 and 2008. The net change in other cost categories included in cost of goods
sold remained relatively consistent in 2009 compared to 2008.





Gross
profit from operations was $6,087,248 in 2009 compared to $4,089,821 in 2008.
Gross profit as a percentage of revenues was 40% in 2009 compared to 43% in
2008. Gross margins after disposable costs will vary depending on the type of
surgical procedure performed due to the fact that certain procedures require
more expensive disposable items. In addition, gross margin rates will vary from
period to period depending upon other factors including pricing considerations,
and equipment and technician utilization rates. The gross margin for 2009 is not
necessarily indicative of the margins that may be realized in future
periods.





Selling,
general, and administrative expenses were $2,952,164 or 20% of revenues for 2009
and $2,255,094 or 24% of revenues for 2008. Such costs include, among others,
payroll and related expenses, insurance costs and occupancy costs. The increase
in selling, general and administrative expenses of $697,070 in 2009 is primarily
related to increases in performance-based incentive compensation and to
increases in sales management and other payroll related expenses.




17





Other
income (expense) was $(143,179) in 2009 compared to $(73,075) in 2008. Other
income (expense) includes interest income and expense, gains and losses on
disposal of property and equipment, and other miscellaneous income and expense
items. The net increase in other expense of $70,104 is primarily related to an
increase in net interest expense of $49,853 and a net decrease in gain on
disposal of property and equipment and other income of $20,251. The net increase
in interest expense relates to new equipment leases entered into during 2008,
including the equipment financing lease incurred in connection with the
acquisition of the Services Division in August 2008. The net decrease in gain on
disposal of property and equipment and other income is related to a decrease in
such miscellaneous income items in 2009 compared to 2008.





The
minority interest (ownership interests held by third-parties) in net income of
limited liability companies was $372,007 in 2009 compared to $482,884 in 2008.
In 2009 and 2008, we held ownership interests in thirteen and eleven entities,
respectively. The decrease in the minority interest in income for 2009 is
related to lower earnings in certain of the LLCs. As of June 30, 2009 and 2008,
in accordance with the Financial Accounting Standards Board Interpretation No.
46R, “Consolidation of Variable Interest Entities”, the Company accounted for
its equity investments in entities in which it holds a minority interest under
the full consolidation method.





Net
income was $1,568,264 in 2009 compared to $1,143,268 in 2008. Provision for
income taxes was $1,051,634 in 2009 as compared to $135,500 in 2008. During the
fourth quarter of 2008 we recognized deferred tax benefits of $1,331,512 related
to operating losses from prior years. As required by SFAS 109, we did not
reverse the valuation allowance until it was “more likely than not” that the tax
asset would be realized. The provision for income taxes of $1,051,634 as of June
30, 2009 is comprised of state taxes, federal Alternative Minimum Taxes (AMT),
and the utilization of deferred income tax assets. At December 31, 2008 the
Company had net operating loss carryforwards of approximately $7.6 million for
federal tax purposes. Basic net income per share for 2009 and 2008 was $0.23 and
$0.20, respectively, while fully diluted net income per share for 2009 and 2008
was $0.22 and $0.19, respectively. Basic and fully diluted weighted average
shares outstanding for 2009 were 6,692,057 and 7,048,247, respectively, and
5,688,150 and 5,947,420 for 2008, respectively.





Liquidity
and Capital Resources





The
Company entered into a new credit agreement (the “Agreement”) with a bank in
June 2008, which was amended in August 2008. The Agreement, as amended, provides
for a line of credit of $1.5 million and is collateralized by substantially all
assets of the Company. Advances under the Agreement bear interest at the prime
rate, plus one-half of one percent (3.75% as of June 30, 2009), with interest
payable monthly. Subject to the terms of the Agreement, the Company may request
and repay advances from time to time through the expiration date. The Agreement
includes certain financial covenants that must be met including a covenant that
for a period of not less than thirty (30) consecutive days during the loan term,
that no loan amount will be outstanding under the Agreement. The Agreement was
renewed, effective August 3, 2009, through August 3, 2010. As of the filing date
of this Form 10-Q, the Company was in compliance with the terms of its revolving
credit agreement and no amounts have been drawn under this
facility.





In
connection with the acquisition of the Services Division, we entered into an
equipment lease financing loan with a bank for $1,750,000. The equipment lease
is collaterialized by the acquired assets and other assets of the Company and
provides for monthly payments of principal and interest of $46,378 commencing on
September 1, 2008 over 42 months, with interest at 6.4%. The lease financing
agreement also requires Emergent to meet certain financial covenants over the
loan term. As of the filing date of this Form 10-Q, the Company was in
compliance with such financial covenants.





In May
2009, the Company purchased certain medical equipment from a limited liability
company for approximately $111,000. The purchase price was satisfied through the
use of lease financing.





The
Company had cash and cash equivalents of $3,890,331 at June 30, 2009. Cash
provided by operating activities for the six months ended June 30, 2009 was
$3,061,234. Cash generated from operations includes net income of $1,568,264,
depreciation and amortization of $1,051,508, deferred income taxes of $782,119,
minority interest in net income of $372,007, stock-based compensation of
$107,214, an increase in provision for doubtful accounts of $14,450, and
increases in inventory and accounts payable of $3,280 and $307,400,
respectively; and other expense-noncash of $4,708; offset by increases in
accounts receivable, prepaid expenses, deposits and other assets, and gain on
disposal of property and equipment of $583,264; $127,072; $4,452, and $2,550,
respectively, and a decrease in accrued expenses and other liabilities of
$432,378. Cash used in investing activities was $817,808 and consisted of the
purchase of property and equipment of $411,821, cash distributions of $491,037
to members of limited liability companies, offset by contributions from new
members to limited liability companies of $82,500 and proceeds from the sale of
equipment of $2,550. Cash used for financing activities was $2,939,202 and
consisted of payment of dividends on common stock of $1,989,750, and payments of
$984,192 on lease obligations; offset by proceeds of $34,740 from equipment
refinancing.




18





The
Company had cash and cash equivalents of $2,032,441 at June 30, 2008. Cash
provided by operating activities for the six months ended June 30, 2008 was
$1,804,790. Cash generated from operations includes net income of $1,143,268,
depreciation and amortization of $722,678, minority interest in net income of
$482,884, stock-based compensation of $70,958, a decrease of $25,387 in deposits
and other assets, and an increase in accounts payable of $92,743; offset by
increases in accounts receivable of $151,519, inventory of $97,039, prepaid
expenses of $40,889 and a decrease in accrued expenses and other liabilities of
$414,744, and gain on disposal of property and equipment of $28,937. Cash used
in investing activities was $569,240 and consisted of purchase of property and
equipment of $235,777, cash distributions of $432,816 to members of limited
liability companies, offset by contributions from new members to limited
liability companies of $69,375 and proceeds from the sale of equipment of
$29,978. Cash used for financing activities was $2,246,763 and consisted of
payment of dividends on common stock of $1,686,095, and payments on lease and
debt obligations of $585,224 and $50,444, respectively, offset by proceeds of
$75,000 from equipment refinancing. In addition, during the six months ended
June 30, 2008 we borrowed and repaid $8,172,638 under our previous revolving
line of credit agreement.





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





Item 3. Quantitative and
Qualitative Disclosures About  Market Risk




Market
risk is the risk of loss arising from adverse changes in market rates and
prices, such as interest rates, foreign currency exchange rates and commodity
prices. Our primary exposure to market risk is interest rate risk associated
with our short term money market investments. The Company does not have any
financial instruments held for hedging or other speculative purposes and does
not invest in derivative financial instruments, interest rate swaps or other
investments that alter interest rate exposure.





Item 4. Controls and
Procedures




We
maintain disclosure controls and procedures, which are designed to ensure that
information required to be disclosed in the reports we file or submit under the
Securities Exchange Act of 1934, as amended, is recorded, processed, summarized
and reported within the time periods specified in the Securities and Exchange
Commissions rules and forms, and that such information is accumulated and
communicated to our management, including our CEO and CFO, as appropriate, to
allow timely decisions regarding required disclosure.




Under the
supervision and with the participation of our management, including our CEO and
CFO, an evaluation was performed on the effectiveness of the design and
operation of our disclosure controls and procedures as of the end of the period
covered by this quarterly report. Based on that evaluation, our management,
including our CEO and CFO, concluded that our disclosure controls and procedures
were effective as of the end of the period covered by this report.




There
were no changes in the Company’s internal controls over financial reporting
during the most recently completed fiscal quarter that have materially affected
or are reasonably likely to materially affect the Company’s internal control
over financial reporting.




19


PART
II.  OTHER INFORMATION


.


Item
      1.
            Legal
      Proceedings





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





Item
      1A.
            Risk
      Factors





As
a  Smaller Reporting Company as defined Rule 12b-2 of the Exchange Act
and in item 10(f)(1) of Regulation S-K, we are electing scaled disclosure
reporting obligations and therefore are not required to provide the information
requested by this Item 1A.





Item
      2.
            Changes in
      Securities





None.





Item
      3.
            Defaults Upon Senior
      Securities





None.





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





In the
second quarter ended June 30, 2009 we held our annual shareholders’ meeting on
June 29, 2009 wherein our shareholders re-elected our board of directors,
reappointed Rose, Snyder & Jacobs as our independent auditors for the year
ending December 31, 2009 and approved the 2009 Employee Benefit and Consulting
Services Compensation Plan. At the meeting, 5,216,409 shares were present in
person or by proxy of the 6,717,577 shares outstanding. The voting tallies were
as follows:





DIRECTORS
      INFORMATIONDIR
      NAME
                VOTES
      FOR
                VOTES
      WITHHELDBruce
      J. Haber
                4,854,750
                361,659Mark
      Waldron
                4,657,084
                559,325Howard
      Waltman
                5,088,250
                128,159K.
      Deane Reade, Jr.
                4,996,650
                219,759


PROPOSALS
      INFORMATIONPROP
      #
                  VOTES
      FOR
                  VOTES
      AGAINST
                  VOTES
      ABSTAIN
                  BROKER
                    NON-VOTE2
                  5,183,103
                  20,145
                  13,160
                  -0-3
                  3,726,589
                  26,679
                  2,919
                  1,460,222


Item
      5.
            Other
      Information





Item
      6.
            Exhibits





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





Number
              Exhibit
            Description11.1
            Statement
      re: computation of earnings per share.  See condensed
      consolidated statement of operations and notes
  thereto.


31(a)
            Rule
      13a-14(a) Certification – Chief Executive Officer
  *


31(b)
              Rule
      13a-14(a) Certification – Chief Financial Officer
  *


32(a)
            Section
      1350 Certification – Chief Executive Officer
*


32(b)
              Section
      1350 Certification – Chief Financial Officer
*


99.1
            Press
      Release, dated August 5, 2009 Re: Quarterly
  Results*


_______________________
              * Filed
  herewith.




20


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 7,
      2009
              By:
              /s/ Bruce
      J. HaberBruce
      J. Haber,Chairman
      and Chief Executive Officer


Date: August 7, 2009
              By:
              /s/ William
      M. McKayWilliam M.
      McKay,Chief
      Financial Officer and Secretary