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

                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                       -----------------------------------
                                   FORM 10-QSB
                       -----------------------------------
             Quarterly Report Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934
                For the Quarterly Period Ended September 30, 2006
                         Commission File Number: 0-21475

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


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

                             932 Grand Central Ave.
                               Glendale, CA 91201
                    (Address of principal executive offices)
                                 (818) 240-8250
                         (Registrant's telephone number)
                                 Not Applicable
      (Former name, address and fiscal year, if changed since last report)

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

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

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

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

     As of November 13, 2006, the registrant had a total of 5,460,789  shares of
Common Stock outstanding.



<PAGE>
                               EMERGENT GROUP INC.

                          FORM 10-QSB Quarterly Report

                                Table of Contents
<TABLE>
<CAPTION>


                                                                                                         Page

PART I.  FINANCIAL INFORMATION

<S>     <C>
   Item 1.    Financial Statements

              Condensed Consolidated Balance Sheet as of September 30, 2006 (unaudited)                    3

              Condensed Consolidated Statements of Income for the Three and Nine Months
                 Ended September 30, 2006 and 2005 (unaudited)                                             4

              Condensed Consolidated Statements of Cash Flows for the Nine Months
                 Ended September 30, 2006 and 2005 (unaudited)                                             5

              Notes to Condensed Consolidated Financial Statements                                         6

   Item 2.    Management's Discussion and Analysis of Financial Condition
                 and Results of Operations                                                                11

   Item 3.    Controls and Procedures                                                                     16

PART II.  OTHER INFORMATION

   Item 1.    Legal Proceedings                                                                           17

   Item 2.    Changes in Securities                                                                       17

   Item 3.    Defaults Upon Senior Securities                                                             17

   Item 4.    Submissions of Matters to a Vote of Security Holders                                        17

   Item 5.    Other Information                                                                           17

   Item 6.    Exhibits                                                                                    17


Signatures                                                                                                18
</TABLE>

                                       2
<PAGE>

                          PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements

                      Emergent Group Inc. and Subsidiaries
                      Condensed Consolidated Balance Sheet
<TABLE>
<CAPTION>
                                                                              September 30,
                                                                                  2006
                                                                            ----------------
                                   ASSETS                                      (unaudited)

<S>                                                                              <C>
Current assets
     Cash                                                                        $ 1,029,979
     Accounts receivable, net of allowance for doubtful
        accounts of $22,225                                                        2,263,544
     Inventory, net of reserves of $77,207                                           728,799
     Prepaid expenses                                                                162,820
                                                                            ----------------

           Total current assets                                                    4,185,142

Property and equipment, net of accumulated depreciation and
        amortization of $4,259,004                                                 3,893,452
Deposits and other assets                                                            134,774
Goodwill                                                                           1,192,027
Other intangible assets, net of accumulated amortization
        of $100,430                                                                  165,855
                                                                            ----------------

Total assets                                                                     $ 9,571,250
                                                                            ================

                    LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
     Current portion of capital lease obligations                                  $ 937,528
     Current portion of notes payable                                                338,620
     Accounts payable                                                                733,297
     Accrued liabilities and expenses                                              1,488,665
                                                                            ----------------
           Total current liabilities                                               3,498,110

Capital lease obligations, net of current portion                                  1,554,450
Notes payable, net of current portion                                                156,250
                                                                            ----------------

           Total liabilities                                                       5,208,810

Minority interest                                                                    453,741

Shareholders' equity
     Preferred stock, $0.001 par value, non-voting 10,000,000
        shares authorized, no shares issued and outstanding                                -
     Common stock, $0.04 par value, 100,000,000 shares authorized
        5,460,789 shares issued and outstanding                                      218,392
     Additional paid-in capital                                                   14,877,448
     Deferred compensation, net of accumulated amortization of $90,850              (135,204)
     Accumulated deficit                                                         (11,051,937)
                                                                            ----------------

           Total shareholders' equity                                              3,908,699
                                                                            ----------------

 Total liabilities and shareholders' equity                                      $ 9,571,250
                                                                            ================
</TABLE>
              The accompanying notes are an integral part of these
                        condensed financial statements.

                                       3
<PAGE>
                      Emergent Group Inc. and Subsidiaries
                   Condensed Consolidated Statements of Income
                                   (unaudited)
<TABLE>
<CAPTION>

                                                    Three Months Ended            Nine Months Ended
                                                       September 30,                September 30,
                                                 -------------------------- ------------------------------
                                                     2006         2005           2006           2005
                                                 -------------------------- --------------- --------------
<S>                                              <C>            <C>         <C>             <C>
Revenue                                          $  3,997,933   $3,181,811  $   11,981,961  $   9,052,744
Cost of goods sold                                  2,416,331    1,965,207       7,218,280      5,865,060
                                                 ------------   ----------  --------------  -------------

Gross profit                                        1,581,602    1,216,604       4,763,681      3,187,684

Selling, general, and administrative expenses       1,021,690      797,598       2,984,110      2,469,660
                                                 ------------   ----------  --------------  -------------

Income from operations                                559,912      419,006       1,779,571        718,024

Other income (expense)
     Interest expense                                 (39,466)     (36,036)       (128,710)      (102,108)
     Gain on disposal of property and equipment        15,502        2,056          18,192         51,002
     Other income, net                                 32,401       32,748         108,641         60,043
                                                 ------------   ----------  --------------  -------------

            Total other income (expense)                8,437       (1,232)         (1,877)         8,937
                                                 ------------   ----------  --------------  -------------

Income before provision for income taxes
     and minority interest                            568,349      417,774       1,777,694        726,961
Provision for income taxes                            (14,692)           -         (48,528)             -
                                                 ------------   ----------  --------------  -------------

Income before minority interest                       553,657      417,774       1,729,166        726,961

Minority interest in income of consolidated
     limited liability companies                     (107,892)     (16,447)       (269,599)       (95,077)
                                                 ------------   ----------  --------------  -------------

Net income                                       $    445,765   $  401,327  $    1,459,567  $     631,884
                                                 ============   ==========  ==============  =============

Basic earnings per share                         $       0.08   $     0.08          $ 0.27  $        0.13
                                                 ============   ==========  ==============  =============

Diluted earnings per share                       $       0.08   $     0.08          $ 0.25  $        0.13
                                                 ============   ==========  ==============  =============

Basic weighted average shares outstanding           5,460,789    5,004,551       5,457,704      4,856,271
                                                 ============   ==========  ==============  =============

Diluted weighted-average shares outstanding         5,822,186    5,071,024       5,809,343      4,921,764
                                                 ============   ==========  ==============  =============
</TABLE>
              The accompanying notes are an integral part of these
                        condensed financial statements.

                                       4
<PAGE>

                      Emergent Group Inc. and Subsidiaries
                 Condensed Consolidated Statements of Cash Flows
                                   (unaudited)
<TABLE>
<CAPTION>
                                                                                                    September 30,
                                                                                     ---------------------------------------------
                                                                                              2006                   2005
                                                                                    ------------------------ --------------------
<S>                                                                                 <C>                      <C>
Cash flows from operating activities
  Net income                                                                        $              1,459,567 $            631,884
  Adjustments to reconcile net income to net cash
  provided by operating activities:
             Depreciation and amortization                                                           855,521              801,568
             Amortization of finance fees                                                              7,772                    -
             (Gain) loss on disposal of property and equipment                                       (18,192)             (51,002)
             Provision for doubtful accounts                                                           1,738               (2,960)
             Minority interest in income                                                             269,603               95,077
             Other income - non-cash                                                                 (66,095)                   -
             (Increase) decrease in
                       Accounts receivable                                                          (373,869)            (185,898)
                       Inventory                                                                     (53,240)              24,106
                       Prepaid expenses                                                               (9,294)             (39,101)
                       Deposits and other assets                                                     (12,837)               4,267
             Increase (decrease) in
                       Accounts payable                                                               95,001              696,151
                       Accrued expenses                                                              113,953               64,767
                                                                                    ------------------------ --------------------

Net cash provided by operating activities                                                          2,269,628            2,038,859
                                                                                    ------------------------ --------------------

Cash flows from investing activities
  Purchase of property and equipment                                                                (367,268)            (184,875)
  Purchase of property and equipment for consolidated LLCs                                                 -             (650,000)
  Cash paid to members of limited liability companies                                               (245,283)            (146,239)
  Contributions from new members to limited liability companies                                       90,000              200,000
  Proceeds from the sale of property and equipment                                                    21,988               59,752

                                                                                    ------------------------ --------------------
Net cash used in investing activities                                                               (500,563)            (721,362)
                                                                                    ------------------------ --------------------

Cash flows from financing activities
  Payments on capital lease obligations                                                             (494,024)            (210,009)
  Payment of dividends on common stock                                                              (512,861)                   -
  Borrowings under line of credit                                                                 11,585,633            4,207,042
  Repayments on line of credit                                                                   (11,585,633)          (4,857,042)
  Payments on notes payable, net                                                                    (317,578)            (368,654)
  Borrowings under note payable                                                                            -              190,000
  Payment of loan fees                                                                                     -              (26,785)

                                                                                    ------------------------ --------------------
Net cash used in financing activities                                                             (1,324,463)          (1,065,448)
                                                                                    ------------------------ --------------------

Net increase in cash                                                                                 444,602              252,049

Cash, beginning of period                                                                            585,377              351,595
                                                                                    ------------------------ --------------------

Cash, end of period                                                                 $              1,029,979 $            603,644
                                                                                    ======================== ====================

Supplemental disclosures of cash flow information:
  Interest paid                                                                     $                142,544 $            106,992
                                                                                    ======================== ====================

  Income taxes paid                                                                 $                 54,531 $                  -
                                                                                    ======================== ====================

Supplemental schedule of noncash investing and financing activities:

During the nine months ended  September 30, 2006, the Company  incurred  capital
lease obligations of $2,108,932 for the purchase of medical equipment.
</TABLE>

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

                                       5
<PAGE>

                               EMERGENT GROUP INC
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.   BUSINESS

     Emergent  Group  Inc.  ("Emergent")  is the parent  company of PRI  Medical
     Technologies,  Inc.,  its wholly owned and only operating  subsidiary.  PRI
     Medical  Technologies,  Inc.  primarily  conducted its business through its
     wholly owned subsidiary  Physiologic Reps ("PRI") until March 2005 at which
     time PRI was merged into PRI Medical  Technologies,  Inc. ("PRI  Medical").
     Emergent and PRI Medical are referred to  collectively  hereinafter  as the
     "Company." PRI Medical provides mobile laser/surgical  services, along with
     technical  support,  on a per  procedure  basis to  hospitals,  out-patient
     surgery centers, and physicians' offices.

2.   BASIS OF PRESENTATION

     The accompanying  unaudited condensed  consolidated financial statements of
     Emergent have been  prepared  pursuant to the rules of the  Securities  and
     Exchange Commission ("SEC").  Certain information and footnote  disclosures
     normally  included in  financial  statements  prepared in  accordance  with
     accounting  principles  generally  accepted in the United  States have been
     condensed  or  omitted  pursuant  to  such  rules  and  regulations.  These
     unaudited  condensed  consolidated  financial  statements should be read in
     conjunction with the audited  consolidated  financial  statements and notes
     thereto included in the Company's Annual Report on Form 10-KSB for the year
     ended  December 31, 2005. 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 nine months  ended
     September  30,  2006 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 Nos. 46 and 46R,  "Consolidation
     of Variable  Interest  Entities"  the Company has  accounted for its equity
     investments in six limited liability companies under the full consolidation
     method. All significant  inter-company  transactions and balances have been
     eliminated through consolidation.

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

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

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

                                       6
<PAGE>
     Stock-Based Compensation
     ------------------------
     In December  2004, the FASB issued SFAS No.  123(R),"Share-Based  Payment".
     SFAS 123(R) amends SFAS No. 123,"Accounting for Stock-Based  Compensation",
     and APB  Opinion  25,"Accounting  for  Stock  Issued  to  Employees."  SFAS
     No.123(R)  requires  that  the  cost of  share-based  payment  transactions
     (including  those with  employees and  non-employees)  be recognized in the
     financial  statements.  SFAS No. 123(R) applies to all share-based  payment
     transactions  in which an entity  acquires goods or services by issuing (or
     offering to issue) its shares,  share options,  or other equity instruments
     (except  for  those  held by an ESOP) or by  incurring  liabilities  (1) in
     amounts  based (even in part) on the price of the entity's  shares or other
     equity instruments,  or (2) that require (or may require) settlement by the
     issuance of an entity's shares or other equity instruments.  This statement
     is effective for public companies  qualifying as SEC small business issuers
     for the fiscal year beginning after December 15, 2005.


     Effective  January 1, 2006,  we adopted  Statement of Financial  Accounting
     Standards  ("SFAS")  No.  123R,  Share-Based  Payment,  using the  modified
     prospective method. Under this method,  compensation cost recognized during
     the three and nine months ended  September 30, 2006  includes  compensation
     cost for all share-based  payments  granted prior to, but not yet vested as
     of  January  1,  2006,  based on the grant  date fair  value  estimated  in
     accordance with the original  provisions of SFAS No. 123 amortized over the
     remaining  vesting period for such options.  There were no options  granted
     during the nine months ended September 30, 2006. The  implementation of the
     provisions  of SFAS No.  123R on January  1, 2006  resulted  in  additional
     compensation  costs of $3,030 and $9,343 for the  quarter  and nine  months
     ended  September  30, 2006,  respectively.  Basic and diluted  earnings per
     share of $0.27  and  $0.25 for the  quarter  did not  change as a result of
     implementing  SFAS No. 123R. In addition,  the  implementation  of SFAS No.
     123R did not have a significant impact on our financial  position,  results
     of operations or cash flows.


     Prior to  January,  we  accounted  for  employee  stock  option  grants  in
     accordance with APB No. 25, and had adopted only the disclosure  provisions
     of SFAS No. 123, Accounting for Stock-Based Compensation.  Accordingly,  no
     stock  based  compensation  expense was  recognized  for the three and nine
     months  ended  September  30, 2005 as all options were granted with a price
     based on the fair value of such  options on the grant  date.  For the three
     and nine months ended  September  30,  2005,  had we adopted the fair value
     recognition  provisions  of SFAS No. 123 to account for our employee  stock
     options we would have recognized compensation expense of $1,342 and $4,025,
     respectively,  which  assumes  that the  fair  value  of such  options,  as
     prescribed  by SFAS No.  123,  was  amortized  to expense  over the vesting
     period of such  options.  The total  fair value of 73,000  options  granted
     during March 2005 were  estimated at $26,831 at the date of grant using the
     Black-Scholes  valuation  model  assuming  volatility  of 150%, a risk free
     interest  rate of 3.5%,  no annual  dividends  and expected  lives of seven
     years.


     The 2002 Employee Benefit and Consulting  Services  Compensation  Plan (the
     "2002 Plan") was adopted in 2002 for the purpose of providing incentives to
     key  employees,  officers,  and  consultants  of the  Company  who  provide
     significant  services to the Company.  As of September 30, 2006,  there are
     650,000 common shares  authorized  for grant under the 2002 Plan.  However,
     325,000  shares of the 650,000 shares  represent an increase  authorized by
     the Company's Board of Directors subject to shareholder  approval.  Options
     will not be  granted  for a term of more  than ten  years  from the date of
     grant. Generally, options will vest evenly over a period of five years, and
     the 2002 Plan  expires in March 2012.  Since  shareholder  approval was not
     obtained on or before April 1, 2003,  all incentive  stock options  granted
     under the 2002 Plan have automatically  become non-statutory stock options,
     and the Board is limited to granting  non-statutory stock options under the
     2002 Plan.  As of  September  30, 2006,  the number of shares  reserved for
     future awards was 225,138.

                                       7
<PAGE>
     A  summary  of  the  Company's  outstanding  options  and  activity  is  as
     follows:

                                               Number of      Weighted Average
                                                Shares         Exercise Price
                                         ---------------------------------------

     Outstanding at January 1, 2006             431,099           $ 1.45

     Options Granted                                  -           $    -
     Options Canceled                            (2,487)          $ 0.40
     Options Exercised                           (3,750)          $ 0.40
                                               --------

     Outstanding at September 30, 2006          424,862           $ 1.35
                                               ========
     Exercisable at September 30, 2006          307,851           $ 1.71
                                               ========

     The weighted-average  remaining contractual life of the options outstanding
     at September  30, 2006 is 6.84 years.  The exercise  prices for the options
     outstanding  at  September  30,  2006  ranged  from $0.40 to  $162.16,  and
     information relating to these options is as follows:
<TABLE>
<CAPTION>
                                                                     Weighted-       Weighted-
                                                                      Average         Average
                                                                      Exercise        Exercise
                                                 Weighted-Average     Price of        Price of
Range of Exercise  Stock Options Stock Options  Remaining             Options         Options
    Prices         Outstanding   Exercisable     Contractual Life     Outstanding     Exercisable
--------------------------------------------------------------------------------------------------
<S>                    <C>          <C>          <C>                 <C>            <C>
  $           0.40     411,337      294,326      6.89  years         $   0.40       $   0.40
  $    2.00 - 8.00       4,000        4,000      6.25  years         $   5.00       $   5.00
  $  20.00 - 51.00       9,354        9,354      4.89  years         $  38.66       $  38.66
  $         162.16         171          171      0.13  years         $ 162.16       $ 162.16
                     ---------    ---------
  $  0.40 - 162.16     424,862      307,851      6.84  years         $   1.35       $   1.71
                     =========    =========
</TABLE>
     As of September 30, 2006, the total  unrecognized  fair value  compensation
     cost  related  to  unvested  stock  options  was  $41,112,  which  is to be
     recognized over a remaining  weighted average period of approximately  6.84
     years.

     In addition to options  granted  under the 2002 Plan,  as of September  30,
     2006 we have 110,000 restricted award shares issued and outstanding,  which
     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 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.
     Compensation expense related to award shares was $3,605 and $12,174 for the
     three and nine months ended September 30, 2006, respectively.

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

     Recent Accounting Pronounments
     ------------------------------
     In May 2005, the FASB issued  Statement of Financial  Accounting  Standards
     (SFAS) No. 154, "Accounting Changes and Error Corrections", an amendment to
     Accounting  Principles Bulletin (APB) Opinion No. 20, "Accounting Changes",
     and  SFAS  No.  3,  "Reporting  Accounting  Changes  in  Interim  Financial
     Statements". Though SFAS No. 154 carries forward the guidance in APB No. 20
     and SFAS No. 3 with respect to accounting for changes in estimates, changes
     in reporting entity, and the correction of errors, SFAS No. 154 establishes
     new standards on accounting for changes in accounting  principles,  whereby
     all such changes must be accounted for by retrospective  application to the
     financial  statements of prior periods unless it is impracticable to do so.
     SFAS No. 154 is effective for accounting changes and error corrections made
     in fiscal years  beginning  after  December 15, 2005,  with early  adoption
     permitted for changes and  corrections  made in years  beginning  after May
     2005.  The Company  implemented  SFAS No. 154,  effective  January 1, 2006,
     which did not have a material impact upon the Company's financial position,
     results of operations or cash flows.

                                       8
<PAGE>
     In  February  2006,  the FASB  issued  Statement  of  Financial  Accounting
     Standards No. 155,  "Accounting for Certain Hybrid  Financial  Instruments"
     ("SFAS  155"),  which  amends SFAS No.  133,  "Accounting  for  Derivatives
     Instruments  and  Hedging  Activities"  ("SFAS  133")  and  SFAS  No.  140,
     "Accounting   for  Transfers   and   Servicing  of  Financial   Assets  and
     Extinguishment  of Liabilities"  ("SFAS 140").  SFAS 155 amends SFAS 133 to
     narrow the scope exception for interest-only and  principal-only  strips on
     debt instruments to include only such strips representing rights to receive
     a specified  portion of the  contractual  interest or principle cash flows.
     SFAS 155 also amends SFAS 140 to allow qualifying  special-purpose entities
     to hold a passive derivative financial instrument  pertaining to beneficial
     interests  that itself is a  derivative  instrument.  The Company  does not
     believe  that  SFAS  155  will  have a  material  impact  on the  Company's
     financial position, results of operations or cash flows.

     In July 2006, the FASB released FASB  Interpretation No. 48, Accounting for
     Uncertainty in Income Taxes,  an  interpretation  of FASB Statement No. 109
     (FIN 48). FIN 48 clarifies the accounting  and reporting for  uncertainties
     in income tax law. This interpretation prescribes a comprehensive model for
     the  financial  statement   recognition,   measurement,   presentation  and
     disclosure  of  uncertain  tax  positions  taken or expected to be taken in
     income tax returns.  This statement is effective for fiscal years beginning
     after  December  15,  2006.  The  Company is  currently  in the  process of
     evaluating  the expected  effect of FIN 48 on its results of operations and
     financial position.


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


3.   DEBT OBLIGATIONS

     On May 25, 2005, the Company  entered into a two-year  agreement with a new
     lender to provide a revolving  credit line (the  "Revolver")  and term note
     (the "Term Note") of up to $1,000,000 collateralized by accounts receivable
     and certain  fixed assets  (collectively  referred to herein as the "Credit
     Facility").  Advances  under the Revolver are based on 80% of each eligible
     receivable,  as defined.  Borrowings  under the Revolver and Term Note bear
     interest at the prime rate (8.25% as of September 30,  2006),  plus 2%. The
     Credit  Facility  also  provides  for  payment  of  a  monthly   collateral
     management  fee  equal to 20 basis  points  (0.02%)  on the  average  daily
     outstanding  balances under the Credit  Facility.  In addition,  the Credit
     Facility provides for an annual fee equal to 1% of the capital availability
     amount,  as defined,  upon closing and on each  anniversary  of the closing
     date. The Company  incurred loan and closing costs of $26,785 in connection
     with the  negotiation  and execution of the Credit  Facility which is being
     amortized  over the loan term of 24 months.  On May 27,  2005,  the Company
     borrowed a total of $805,218  under the Credit  Facility to pay off amounts
     owed under the Company's bank line of credit (the "Bank Line of Credit") of
     $654,184  and bank term loan (the "Bank Term  Loan") of  $151,034,  both of
     which were due on or before May 31, 2005. As of September  30, 2006,  total
     borrowings outstanding under the Credit Facility amounted to $73,109 all of
     which was  outstanding  under the Term Note.  The Company  has  $926,891 of
     borrowing availability under the Credit Facility as of September 30, 2006.

     The terms and conditions of the Credit Facility included limited guarantees
     from  three  executive  officers  and  one  director  of  the  Company.  In
     connection  with  providing  such  limited  guarantees  to the lender,  the
     guarantors  were issued an  aggregate  of 260,000  shares of the  Company's
     common stock, of which an aggregate of 196,000 were issued to the executive
     officers,  and 64,000 shares to one outside  director.  The guarantors have
     each entered  into an agreement  with the Company to return the shares that
     they received in consideration of their limited  guarantee in the event the
     guarantor on his own volition  breaches  (other than a breach that is cured
     within the terms of the limited guarantee  agreement) or terminates his own
     respective limited guarantee, prior to the payment in full of the Company's
     obligations  to the lender or to the  voluntary  release  from the  limited
     guarantee by the lender.  The Company recorded deferred  compensation costs
     of $104,000 in connection with the issuance of common stock for the limited
     guarantees,  which is being amortized to compensation expense over the loan
     term of 24 months.

                                       9
<PAGE>
     In June  2006,  the  Credit  Facility  was  amended,  whereby  the  minimum
     borrowing amount, monthly collateral management fee, early termination fees
     and limited guarantees were eliminated. The amended agreement also requires
     the Company to maintain a tangible  net worth of at least $1.5  million and
     requires  the lender to pay the  Company  interest on cash  collections  in
     excess of amounts  borrowed  under the  Revolver  at a rate of 3% below the
     prime rate.  The Company  will pay the lender a fee of $30,000,  payable in
     six equal monthly  installments  beginning July 1, 2006, in connection with
     the amended agreement.

     In May 2006 the Company  entered into a master lease  agreement with a bank
     to  provide  a lease  line of  credit  of  $500,000  for the  financing  of
     equipment purchases. Under the agreement, the Company may finance equipment
     purchases on an installment basis at a rate of interest  determined at each
     respective borrowing date. Such rates will generally approximate the bank's
     prime rate. As of September 30, 2006, we had $424,934 outstanding under the
     credit  facility  payable in monthly  installments  over a term of 36 to 48
     months.

     As of  September  30,  2006 we have  certain  outstanding  debt  and  lease
     obligations amounting to $140,510 and $30,196, respectively,  which require
     additional  principal payments of up to $187,500,  in the event of default.
     As of September  30, 2006 and the filing date of this  Quarterly  Report on
     Form 10-QSB,  we were in compliance  with the terms and  conditions of such
     debt and lease agreements.

     The Company  incurred net  interest  expense of $39,466 and $36,036 for the
     three months ended September 30, 2006 and 2005, respectively,  and $128,710
     and  $102,108  for the nine  months  ended  September  30,  2006 and  2005,
     respectively.

4.   COMMITMENTS AND CONTINGENCIES

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

     Plaintiff's  complaint  against  the  Defendants  named  above  is a  civil
     lawsuit,  which was signed by the clerk on February 2, 2005. This action is
     brought in the United States District Court,  Southern District of New York
     by Plaintiff against the Company, a former director,  Daniel Yun, and other
     parties  to  recover   money   damages   for   alleged   fraud,   negligent
     misrepresentations  and aiding and abetting  fraud.  The Amended  Complaint
     alleges that the factual  basis  involving  the action  against the Company
     involves alleged false  representations to Plaintiff to induce him to leave
     his then  employment  in 2001 and accept the  Company's  and another  named
     Defendant's  alleged  offer of  employment.  Plaintiff  seeks  compensatory
     damages and punitive damages each in the amount of not less than $2,100,000
     together  with  interest  thereon,  reasonable  attorneys'  fees and  other
     specific relief against  Defendants other than the Company.  Management has
     denied the  Plaintiff's  allegations  against  the  Company  and intends to
     vigorously  defend this  lawsuit.  During the quarter  ended  September 30,
     2006, there were no material developments in this matter.

5.   RELATED PARTY TRANSACTIONS

     Transactions with BJH Management
     --------------------------------
     The Company's  Chairman and Chief Executive  Officer  maintains his primary
     office in New York. In this regard,  the Company reimbursed BJH Management,
     LLC ("BJH"),  a company owned by the Company's Chairman and Chief Executive
     Officer,  for office rent and related  expenses  totaling $8,134 and $7,477
     for the three months  ended  September  30, 2006 and 2005,  and $24,839 and
     $25,432  for  the  nine  months   ended   September   30,  2006  and  2005,
     respectively.

     Effective,  July 1, 2006, the services of the Company's  Chairman and Chief
     Executive Officer are contracted until June 2007 through BJH Management for
     a monthly fee of $15,167.  In June 2006,  the Company  agreed to extend Mr.
     Buther's employment contract for one year to June 2007.

6.   LIMITED LIABILITY COMPANIES

     In  connection  with  expanding  its  business  in certain  commercial  and
     geographic  areas, PRI Medical will at times help to form Limited Liability
     Companies  ("LLCs") in which it will acquire a minority  interest and offer
     the  remaining  interest to other  investors.  These LLCs  acquire  certain
     equipment for use in their respective  business  activities which generally
     focus on surgical  procedures.  As of September  30, 2006 PRI Medical holds
     minority equity interests in six LLCs, which conduct business in California
     and Colorado.  In accordance with the Financial  Accounting Standards Board
     Interpretation  No. 46R,  "Consolidation of Variable Interest Entities" the
     Company  accounted  for its equity  investments  in its LLCs under the full
     consolidation method whereby transactions between the Company and LLCs have
     been eliminated through consolidation.

                                       10
<PAGE>
Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations

Forward-Looking Statements

The information contained in this Form 10-QSB and documents  incorporated herein
by reference are intended to update the  information  contained in the Company's
Annual  Report on Form  10-KSB for the year  ended  December  31,  2005 and such
information  presumes  that  readers  have  access to,  and will have read,  the
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations," "Risk Factors" and other information  contained in such Form 10-KSB
and other Company filings with the Securities and Exchange Commission ("SEC").

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

Overview

Emergent  Group  Inc.   ("Emergent")  is  the  parent  company  of  PRI  Medical
Technologies,  Inc., its wholly owned and only operating subsidiary. PRI Medical
Technologies,  Inc.  primarily  conducted its business  through its wholly owned
subsidiary  Physiologic  Reps  ("PRI")  until  March  2005 at which time PRI was
merged into PRI Medical  Technologies,  Inc. ("PRI  Medical").  Emergent and PRI
Medical are referred to  collectively  hereinafter as the "Company." PRI Medical
provides mobile laser/surgical  services,  along with technical support on a per
procedure  basis to hospitals,  out-patient  surgery  centers,  and  physicians'
offices.

Critical Accounting Policies

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

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

                                       11
<PAGE>
Inventory  Valuation.  We are  required to make  judgments  based on  historical
experience and future expectations as to the realizability of our inventory.  We
make these assessments based on the following  factors:  (a) existing orders and
usage, (b) age of the inventory, and (c) historical experience.

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

Results of Operations

The following table sets forth certain selected unaudited condensed consolidated
statements  of  income  data  for the  periods  indicated  in  dollars  and as a
percentage of total revenues.  The following  discussions relates to our results
of operations  for the periods noted and are not  necessarily  indicative of the
results  expected for any other  interim  period or any future  fiscal year.  In
addition, we note that the period-to-period  comparison may not be indicative of
future performance.
<TABLE>
<CAPTION>
                                                         Three Months Ended                       Nine Months Ended
                                                           September 30,                             September 30,
                                               -----------------------------------       -------------------------------------
                                                     2006        %       2005          %         2006      %        2005        %
                                               ---------------   -  --------------     -  --------------   -   ---------------  -
<S>                                            <C>              <C>  <C>             <C>  <C>             <C>  <C>             <C>
Revenue                                        $     3,997,933  100% $    3,181,811  100% $   11,981,961  100% $     9,052,744 100%
Cost of goods sold                                   2,416,331   60%      1,965,207   62%      7,218,280   60%       5,865,060  65%
                                               ---------------   --- --------------   --- --------------  ---  --------------- ---

Gross profit                                         1,581,602   40%      1,216,604   38%      4,763,681   40%       3,187,684  35%

Selling, general, and administrative expenses        1,021,690   26%        797,598   25%      2,984,110   25%       2,469,660  27%
                                               ---------------   --- --------------   --- --------------  ---  --------------- ---

Income from operations                                 559,912   14%        419,006   13%      1,779,571   15%         718,024   8%

Other income (expense)                                   8,437    0%         (1,232)   0%         (1,877)   0%           8,937   0%
                                               ---------------   --- --------------   --- --------------  ---  --------------- ---

Income before provision for income
    taxes and minority interest                        568,349   14%        417,774   13%      1,777,694   15%         726,961   8%
Provision for income taxes                             (14,692)   0%             -     0%        (48,528)   0%               -   0%
                                               ---------------   --- --------------   --- --------------  ---  --------------- ---

Net income before minority interest                    553,657   14%        417,774   13%      1,729,166   14%         726,961   8%
                                               ---------------   --- --------------   --- --------------  ---  --------------- ---

Minority interest in income of consolidated
    limited liability companies                       (107,892)  -3%        (16,447)  -1%       (269,599)  -2%         (95,077) -1%
                                               ---------------   --- --------------   --- --------------  ---  --------------- ---
Net income                                     $       445,765   11% $      401,327   13% $    1,459,567   12% $       631,884   7%
                                               ===============   === ==============   === ==============  ===  =============== ===

</TABLE>
                                       12
<PAGE>
Comparison of the Three Months Ended September 30, 2006 to September 30, 2005

The Company  generated  revenues of $3,997,933 in 2006 compared to $3,181,811 in
2005.  The  increase in revenues  in 2006 of  $816,122,  or 26% is related to an
increase in revenues from our surgical procedures and to revenues generated from
certain  customers  of a  competitor  from who we  acquired  certain  assets  in
November 2005.  Revenues from our surgical and cosmetic  procedures  represented
approximately  93% and 7% of total  revenues  for 2006 and 91% and 9% for  2005,
respectively.

Cost of  goods  sold  was  $2,416,331  in 2006 or 60% of  revenues  compared  to
$1,965,207 or 62% in 2005. Costs of good sold primarily consist of payroll costs
and related expenses for technicians,  cost of disposables  consumed,  insurance
costs and other operating costs incurred in rendering  mobile medical  equipment
and technician services.  The overall increase in cost of goods sold of $451,124
or 23% for 2006 is generally due to increases in disposable  costs,  payroll and
related  costs  and  an  increase  in  depreciation  expense.  Disposable  costs
increased as a result of a change in the mix of surgical  procedures rendered to
customers whereby a greater number of higher priced procedures were performed in
2006  compared  to 2005 that  required  more  expensive  disposable  items while
payroll  costs  increased  as a result of the increase in the number of surgical
and cosmetic procedures performed in 2006. Depreciation and amortization expense
increased  due to  equipment  purchases  in 2006.  The net  change in other cost
categories included in cost of goods sold remained relatively  unchanged in 2006
compared to 2005.

Gross profit from  operations  was  $1,581,602 in 2006 compared to $1,216,604 in
2005.  Gross profit as a percentage  of revenues was 40% in 2006 compared to 38%
for 2005. The improvement in our gross profit margin in 2006 is primarily due to
the mix of surgical procedures performed in 2006, whereby we performed a greater
number of higher priced surgical  procedures compared to 2005, which resulted in
higher overall margins. In addition,  profit 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. Gross margin rates
will vary from period to period depending upon various factors including product
and  service  mix,   pricing   considerations,   and  equipment  and  technician
utilization  rates.  The gross margin for 2006 is not necessarily  indicative of
the margins that may be realized in future periods.

Selling, general, and administrative expenses were $1,021,690 or 26% of revenues
in 2006  compared to $797,598  or 25% of revenues in 2005.  Such costs  include,
among others, payroll and related expenses, insurance costs and occupancy costs.
The increase in selling, general and administrative expenses of $224,092 in 2006
is primarily related to increases in incentive  compensation and to increases in
sales management and other payroll related expenses.

Other income  (expense) was $8,437 in 2006  compared to $(1,232) in 2005.  Other
income  (expense)  includes  interest  expense,  gains and losses on disposal of
property and equipment,  and other  miscellaneous  income and expense items. The
net  increase in other income  (expense)  of $9,669 is  primarily  related to an
increase in gain on disposal of property and  equipment of $13,446  offset by an
increase in interest expense of $3,430 in 2006 compared to 2005.

The minority interest in net income of limited liability  companies was $107,892
in 2006 compared to $16,447 in 2005.  Minority interest in income relates to the
consolidation of six entities in 2006 and four entities in 2005 in which we hold
an equity investment  interest.  As of September 30, 2006 and 2005 in accordance
with the Financial  Accounting  Standards Board  Interpretation Nos. 46 and 46R,
"Consolidation  of Variable  Interest  Entities"  the Company  accounted for its
equity investments in these entities under the full consolidation method.

                                       13
<PAGE>
Net income was  $445,765 in 2006  compared to  $401,327 in 2005.  Provision  for
income taxes was $14,692 in 2006  compared to $-0- in 2005.  The Company has net
operating  loss  carryforwards  for both  federal  and state tax  purposes.  The
provision  for income  taxes of  $14,692 as of  September  30,  2006  relates to
estimated  Alternative  Minimum Taxes (AMT) and to minimum state taxes  payable.
Basic net income per share for 2006 and 2005 was $0.08 and $0.08,  respectively,
while fully  diluted net income per share for 2006 and 2005 was $0.08 and $0.08,
respectively. Basic and fully diluted shares outstanding for 2006 were 5,460,789
and 5,822,186, respectively, and 5,004,551 and 5,071,024 for 2005, respectively.

Comparison of the Nine Months Ended September 30, 2006 to September 30, 2005

The Company generated  revenues of $11,981,961 in 2006 compared to $9,052,744 in
2005.  The increase in revenues in 2006 of  $2,929,217,  or 32% is related to an
increase in revenues from our surgical procedures and to revenues generated from
certain  customers  of a  competitor  from who we  acquired  certain  assets  in
November 2005.  Revenues from our surgical and cosmetic  procedures  represented
approximately  93% and 7% of total  revenues  for 2006 and 89% and 11% for 2005,
respectively.

Cost of  goods  sold  was  $7,218,280  in 2006 or 60% of  revenues  compared  to
$5,865,060 or 65% in 2005. Costs of good sold primarily consist of payroll costs
and related expenses for technicians,  cost of disposables  consumed,  insurance
costs and other operating costs incurred in rendering  mobile medical  equipment
and  technician  services.  The  overall  increase  in  cost  of  goods  sold of
$1,353,220 or 23% for 2006 is generally due to increases in disposable costs and
payroll and related costs. Disposable costs increased as a result of a change in
the mix of surgical procedures rendered to customers whereby a greater number of
procedures  were performed in 2006 compared to 2005 that required more expensive
disposable  items while payroll  costs  increased as a result of the increase in
the number of surgical and cosmetic procedures performed in 2006. The net change
in other cost  categories  included  in cost of goods sold  remained  relatively
unchanged in 2006 compared to 2005.

Gross profit from  operations  was  $4,763,681 in 2006 compared to $3,187,684 in
2005.  Gross profit as a percentage  of revenues was 40% in 2006 compared to 35%
for 2005. The improvement in our gross profit margin in 2006 is primarily due to
certain  per  procedure  prince  increases  implemented  early 2005 for  various
surgical  and  cosmetic  procedures  and  to  the  mix  of  surgical  procedures
performed.  In 2006,  we performed a greater  number of higher  priced  surgical
procedures  compared to 2005, which resulted in higher overall  margins.  Profit
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 various factors  including  product and service
mix, pricing considerations, and equipment and technician utilization rates. The
gross margin for 2006 is not  necessarily  indicative of the margins that may be
realized in future periods.

Selling, general, and administrative expenses were $2,984,110 or 25% of revenues
in 2006 compared to $2,469,660 or 27% of revenues in 2005.  Such costs  include,
among others, payroll and related expenses, insurance costs and occupancy costs.
The increase in selling, general and administrative expenses of $514,450 in 2006
is primarily related to increases in incentive  compensation and to increases in
sales management and other payroll related expenses.

Other income  (expense) was $(1,877) in 2006  compared to $8,937 in 2005.  Other
income  (expense)  includes  interest  expense,  gains and losses on disposal of
property and equipment,  and other  miscellaneous  income and expense items. The
net  decrease  in other  income  (expense)  relates to an  increase  in interest
expense of $26,602,  a decrease of $32,810 in gain from the disposal of property
and  equipment,  offset by an  increase  in other  income of  $48,598  primarily
related to the write-off of certain vendor obligations.

                                       14
<PAGE>
The minority interest in net income of limited liability  companies was $269,599
in 2006 compared to $95,077 in 2005.  Minority interest in income relates to the
consolidation of six entities in 2006 and four entities in 2005 in which we hold
an equity investment  interest.  As of September 30, 2006 and 2005 in accordance
with the Financial  Accounting  Standards Board  Interpretation Nos. 46 and 46R,
"Consolidation  of Variable  Interest  Entities"  the Company  accounted for its
equity investments in these entities under the full consolidation method.

Net income was  $1,459,567 in 2006  compared to $631,884 in 2005.  Provision for
income taxes was $48,528 in 2006  compared to $-0- in 2005.  The Company has net
operating  loss  carryforwards  for both  federal  and state tax  purposes.  The
provision  for income  taxes of  $48,528 as of  September  30,  2006  relates to
estimated  Alternative  Minimum Taxes (AMT) and to minimum state taxes  payable.
Basic net income per share for 2006 and 2005 was $0.27 and $0.13,  respectively,
while fully  diluted net income per share for 2006 and 2005 was $0.25 and $0.13,
respectively. Basic and fully diluted shares outstanding for 2006 were 5,457,704
and 5,809,343, respectively, and 4,856,271 and 4,921,764 for 2005, respectively.

Liquidity and Capital Resources

On May 25, 2005, the Company entered into a two-year agreement with a new lender
to provide a  revolving  credit line (the  "Revolver")  and term note (the "Term
Note") of up to $1,000,000  collateralized  by accounts  receivable  and certain
fixed  assets  (collectively  referred  to  herein  as the  "Credit  Facility").
Advances  under the Revolver are based on 80% of each  eligible  receivable,  as
defined.  Borrowings under the Revolver and Term Note bear interest at the prime
rate  (8.25% as of  September  30,  2006),  plus 2%.  The Credit  Facility  also
provides for payment of a monthly  collateral  management  fee equal to 20 basis
points  (0.02%)  on the  average  daily  outstanding  balances  under the Credit
Facility.  In addition,  the Credit Facility provides for an annual fee equal to
1% of the capital  availability  amount,  as defined,  upon  closing and on each
anniversary of the closing date. The Company  incurred loan and closing costs of
$26,785 in connection  with the negotiation and execution of the Credit Facility
which is being  amortized over the loan term of 24 months.  On May 27, 2005, the
Company  borrowed  a total of  $805,218  under the  Credit  Facility  to pay off
amounts owed under the Company's bank line of credit (the "Bank Line of Credit")
of $654,184 and bank term loan (the "Bank Term Loan") of $151,034, both of which
were due on or before May 31, 2005. As of September 30, 2006,  total  borrowings
outstanding  under the Credit  Facility  amounted  to  $73,109  all of which was
outstanding  under  the  Term  Note.  The  Company  has  $926,891  of  borrowing
availability under the Credit Facility as of September 30, 2006.

The terms and conditions of the Credit Facility included limited guarantees from
three  executive  officers and one director of the Company.  In connection  with
providing such limited  guarantees to the lender,  the guarantors were issued an
aggregate of 260,000 shares of the Company's common stock, of which an aggregate
of 196,000  were  issued to the  executive  officers,  and 64,000  shares to one
outside  director.  The guarantors  have each entered into an agreement with the
Company  to return the  shares  that they  received  in  consideration  of their
limited guarantee in the event the guarantor on his own volition breaches (other
than a breach that is cured within the terms of the limited guarantee agreement)
or terminates his own respective limited guarantee, prior to the payment in full
of the Company's  obligations to the lender or to the voluntary release from the
limited  guarantees by the lender.  The Company recorded  deferred  compensation
costs of  $104,000  in  connection  with the  issuance  of common  stock for the
limited  guarantees,  which is being amortized to compensation  expense over the
loan term of 24 months.

In June 2006,  the Credit  Facility was amended,  whereby the minimum  borrowing
amount,  monthly  collateral  management fee, early termination fees and limited
guarantees were eliminated.  The amended  agreement also requires the Company to
maintain a tangible  net worth of at least $1.5  million and requires the lender
to pay the Company  interest on cash  collections in excess of amounts  borrowed
under the  Revolver at a rate of 3% below the prime rate.  The Company  will pay
the lender a fee of $30,000, payable in six equal monthly installments beginning
July 1, 2006, in connection with the amended agreement.

                                       15
<PAGE>
In May 2006 the Company  entered  into a master lease  agreement  with a bank to
provide a lease  line of credit  of  $500,000  for the  financing  of  equipment
purchases.  Under the agreement,  the Company may finance equipment purchases on
an  installment  basis  at a rate of  interest  determined  at  each  respective
borrowing date. Such rates will generally  approximate the bank's prime rate. As
of September 30, 2006,  we had $424,934  outstanding  under the credit  facility
payable in monthly installments over a term of 36 to 48 months.

As of September 30, 2006 we have certain  outstanding debt and lease obligations
amounting  to $140,510  and  $30,196,  respectively,  which  require  additional
principal payments of up to $187,500,  in the event of default.  As of September
30, 2006 and the filing date of this Quarterly Report on Form 10-QSB, we were in
compliance with the terms and conditions of such debt and lease agreements.

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

The Company had cash and cash  equivalents  of $603,644 at  September  30, 2005.
Cash provided by operating  activities  for the nine months ended  September 30,
2005 was  $2,038,859.  Cash  generated  from  operations  includes net income of
$631,884,  depreciation and amortization of $801,568,  minority  interest in net
income of $95,077 and an increase  in accounts  payable and accrued  expenses of
$760,918;  offset by an  increase  in accounts  receivable  of  $185,898  and an
increase in prepaid expenses of $39,101.  Cash used in investing  activities was
$721,362  related to the purchase of property and  equipment of $834,875,  which
includes  $650,000  purchased  on  behalf  of  consolidated   limited  liability
companies, and to cash distributions of $146,239 to limited liability companies,
offset by net proceeds of $59,752 from the disposition of property and equipment
and capital  contributions of $200,000 from members in two new limited liability
companies. Cash used for financing activities was $1,065,448 from net repayments
of $650,000 on our revolving line of credit,  borrowings of $190,000 under notes
payable,  payments  on lease and debt  obligations  of  $210,009  and  $368,654,
respectively, and payment of loan costs of $26,785.

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 operations
for at least the next twelve months.

Item 3. Controls and Procedures

The Company  maintains  disclosure  controls and procedures that are designed to
ensure that information  required to be disclosed in the Company's  Exchange Act
reports is recorded, processed,  summarized and reported within the time periods
specified in the SEC's rules and forms, and that such information is accumulated
and  communicated  to the Company's  management,  including its Chief  Executive
Officer and Chief Financial Officer,  as appropriate,  to allow timely decisions
regarding  required  disclosure  based closely on the  definition of "disclosure
controls and  procedures"  in Rule  13a-15(e).  In designing and  evaluating the
disclosure controls and procedures,  management recognized that any controls and
procedures,  no  matter  how  well  designed  and  operated,  can  provide  only
reasonable assurance of achieving the desired control objectives, and management
necessarily  was required to apply its judgment in evaluating  the  cost-benefit
relationship  of possible  controls and  procedures.  The Company carried out an
evaluation,  under the supervision and with the  participation  of the Company's
management,  including the Company's Chief  Executive  Officer and the Company's
Chief Financial Officer, of the effectiveness of the design and operation of the
Company's  disclosure  controls  and  procedures.  Based on the  foregoing,  the
Company's Chief Executive Officer and Chief Financial Officer concluded that the
Company's  disclosure  controls and procedures  were effective at the reasonable
assurance  level at the end of our most recent quarter ended September 30, 2006.
There have been no changes in the Company's  disclosure  controls and procedures
or in other factors that could affect the disclosure  controls subsequent to the
date the Company completed its evaluation.

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

                                       16
<PAGE>
                           PART II. OTHER INFORMATION

Item 1.   Legal Proceedings

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


Item 2.   Changes in Securities

     (a)  In the third quarter  ended  September 30, 2006 there were no sales of
          unregistered securities.
     (b)  Rule 463 of the Securities Act is not applicable to the Company.
     (c)  In  the  third  quarter  ended   September  30,  2006  there  were  no
          repurchases by the Company of its Common Stock.


Item 3.   Defaults Upon Senior Securities

          None.


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

          In the third  quarter  ended  September 30, 2006 there were no matters
          submitted to a vote of security holders.


Item 5.   Other Information

          None.


Item 6.   Exhibits

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

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

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

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

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

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

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

99.1 Press Release*

     ------------------------
     * Filed herewith.

                                       17
<PAGE>
                                   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: November 13, 2006        By: /s/ Bruce J. Haber
                               -----------------------
                               Bruce J. Haber,
                               Chairman and Chief Executive Officer



Date: November 13, 2006        By: /s/ William M. McKay
                               -------------------------
                               William M. McKay,
                               Chief Financial Officer and Secretary


                                       18