SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934

                   For the fiscal year ended December 31, 2005
                                       or

[ ] TRANSITION REPORT PURSUANT TO SECTION 12 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the transition period from  ____ to ___

                         Commission File Number: 0-21475

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

      Nevada                                            93-1215401
--------------------------------------------------------------------------------
(State of jurisdiction of                            (I.R.S. Employee
 incorporation or organization)                    Identification Number)

932 Grand Central Avenue
Glendale, California                                            91201
--------------------------------------------------------------------------------
(Address of principal executive offices)                      (Zip Code)

Registrant's telephone number, including area code:         (818) 240-8250
                                                            --------------

Securities registered pursuant to Section 12 (b) of the Act:  None


Securities  registered pursuant to Section 12 (g) of the Act: Common Stock, $.04
Par Value

Check whether the Registrant is not required to file reports pursuant to Section
13 or 15(d) of the Exchange Act. [ ]

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 if disclosure  of  delinquent  filers in response to Item
405 of Regulation S-B is not contained in this form,  and no disclosure  will be
contained,  to the  best of  Registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in part III of this Form 10-KSB
or any amendment to this Form 10-KSB [ ].

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

State Issuer's revenues for its most recent fiscal year: $12,479,263

As of  March  29,  2006,  the  number  of  shares  held  by  non-affiliates  was
approximately  2,000,000 shares.  The approximate market value based on the last
sale (i.e.  $2.60 per share as of March 29, 2006) of the Company's  Common Stock
was approximately $5,200,000.

The number of shares  outstanding of the Registrant's  Common Stock, as of March
29, 2006, was 5,452,610.


<PAGE>
                           FORWARD-LOOKING STATEMENTS

     We believe this annual report contains "forward-looking  statements" within
the  meaning of the  Private  Securities  Litigation  Reform Act of 1995.  These
statements are subject to risks and  uncertainties  and are based on the beliefs
and assumptions of our management,  based on information  currently available to
our management.  When we use words such as "believes," "expects," "anticipates,"
"intends," "plans," "estimates,"  "should," "likely" or similar expressions,  we
are  making  forward-looking  statements.   Forward-looking  statements  include
information  concerning our possible or assumed future results of operations set
forth under "Business" and/or "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

     Forward-looking statements are not guarantees of performance.  They involve
risks, uncertainties and assumptions.  Our future results and stockholder values
may differ  materially from those expressed in the  forward-looking  statements.
Many of the factors that will determine  these results and values are beyond our
ability to control  or  predict.  Stockholders  are  cautioned  not to put undue
reliance on any forward-looking  statements.  For those statements, we claim the
protection of the safe harbor for  forward-looking  statements  contained in the
Private  Securities  Litigation  Reform Act of 1995. For a discussion of some of
the  factors  that may cause  actual  results  to differ  materially  from those
suggested  by  the  forward-looking   statements,   please  read  carefully  the
information  under "Risk  Factors."  In  addition to the Risk  Factors and other
important  factors  discussed  elsewhere  in  this  annual  report,  you  should
understand that other risks and uncertainties  and our public  announcements and
SEC filings  could affect our future  results and could cause  results to differ
materially from those suggested by the forward-looking statements.


                                       2
<PAGE>

                                     PART I
Item 1.  Description of Business
--------------------------------

THE COMPANY
-----------

     Emergent  Group  Inc.  ("Emergent")  is the parent  company of PRI  Medical
Technologies,  Inc.,  ("PRI  Medical"),  its  wholly  owned  and only  operating
subsidiary.  Emergent  acquired  PRI  Medical in July 2001 and merged its wholly
owned  subsidiary,  Physiologic Reps ("PRI"),  into PRI Medical.  Emergent,  PRI
Medical and PRI are referred to  collectively  hereinafter as the "Company." PRI
Medical  is a provider  of  surgical  equipment  on a fee for  service  basis to
hospitals,  surgical care centers and other health care  providers.  PRI Medical
serves  both  large and small  health  care  providers,  including:  1)  smaller
independent hospitals and physicians who cannot afford to buy surgical equipment
because of budget constraints or cannot justify buying due to limited usage; and
2) larger,  well-financed  hospitals that may be able to purchase  equipment for
use in their  own  facility  but may  choose  not to  because  reimbursement  or
utilization  rates for certain  procedures do not warrant a capital  commitment.
Additionally,  infrequent  utilization  may not justify the cost of training and
retention of technicians to operate such equipment.  PRI Medical is also able to
provide its technicians to support  hospital-owned  surgical  equipment on a fee
for  service  basis,  thus  improving  efficiency  and  reducing  costs  for the
hospital.  Reduced  operating  costs and improved  flexibility for hospitals are
elements of the PRI Medical value proposition to its customers.

     PRI Medical makes mobile  surgical  services  available to its customers by
providing mobile lasers and other surgical equipment on a per procedure basis to
hospitals,   outpatient  surgery  centers,  and  physician  offices  along  with
technical support required to ensure the equipment is working correctly.

     PRI Medical's  mobile  surgical  services  focus on two areas of the health
care industry:  surgical care and cosmetic  surgery.  In the surgical care area,
physicians  can perform  surgery at hospitals or surgery  centers by renting PRI
Medical's laser or other equipment.  For cosmetic  surgery,  physicians  benefit
from having  different laser  technologies  available to offer to their patients
without a significant  capital  investment.  In both  instances,  physicians and
hospitals receive PRI Medical's technical support and expertise that is provided
with the  equipment,  allowing the staff to  concentrate  on their  patient care
duties without the distraction of setup and running of the equipment.

     PRI Medical has over 600 active  surgical  service  accounts in California,
Utah,  Colorado,  Nevada,  New York and Arizona and  experiences  a high rate of
repeat business from the hospitals,  surgery  centers and doctors we serve.  The
market  encompasses  many  disciplines  including   plastic/cosmetics   surgery,
dermatology,   orthopedic   surgery,   otolaryngology,    urology,   obstetrics,
gynecology,   ophthalmology,   general   surgery  and  podiatry.   Equipment  is
increasingly  becoming more  specialized  to specific  medical  procedures,  and
technical  training  of the  physician  regarding  the  use of  equipment  is an
integral part of PRI Medical's business.

     PRI Medical's healthcare distribution network allows physicians,  hospitals
and healthcare facilities access to new medical equipment without the expense of
acquisition.  PRI Medical is able to help  manufacturers  bring advanced medical
technologies to market by using its distribution  channels and its relationships
with  doctors,   hospitals  and  healthcare  facilities  to  introduce  selected
additional  surgical products and services to end users on a `fee per procedure'
model. PRI Medical had revenues of approximately $12.5 million and $11.0 million
in 2005 and  2004,  respectively,  and  assisted  in over  14,000  surgical  and
cosmetic  procedures.  By making new  technologies  available to physicians  PRI
Medical  hopes to become a provider  of  innovative  medical  device and support
services to the healthcare community early in a product's life cycle.

                                       3
<PAGE>
PRODUCTS AND SERVICES
---------------------

     PRI Medical's  technicians provide surgical equipment and related technical
services  support  to  physicians  and  operating  room  ("O.R.")  personnel  in
hospitals,  surgical  care  centers  and other  health-related  facilities  on a
per-procedure  basis.  Mobile  surgical  services  are ordered  from 24 hours to
several months in advance of surgery, and re-confirmed with the customer the day
before the  medical  procedure  by PRI  Medical's  scheduling  department.  Upon
arrival at the customer  site,  PRI Medical's  technician  set up the equipment,
posts required warning notices outside the O.R.,  issues safety equipment to the
O.R. staff,  provides any disposable  materials needed,  and supplies  equipment
certifications  and/or  documentation  required  for  hospital  record  keeping.
Technician-only services are made available to hospitals and surgery facilities,
especially those with fluctuating occupancy levels. Customers sometime find that
outsourcing  of  trained   technicians   without  renting   equipment  to  be  a
cost-effective alternative to training and staffing their own personnel.

     PRI Medical's laser equipment encompasses CO2, Greenlight PV, Nd:YAG, Pulse
Dye,  KTP/YAG,  and Holmium YAG laser  technology.  PRI Medical has  established
working  relationships  with  leading  laser  manufacturers  and is sometimes an
introducer of laser technology in its markets.  PRI Medical reviews developments
in the medical  field to stay  abreast of new and emerging  technologies  and to
obtain new  surgical  medical  equipment.  In this  regard,  PRI Medical has, in
recent  years,   added   equipment  to  provide  for  services  in  cryosurgery,
transmyocardial    revascularization,    advanced   visualization    technology,
lithotripsy,  microwave therapy,  and prostrate surgery.  The Company strives to
develop and expand strategic relationships in order to enhance its product lines
and improve its access to new medical devices.

     PRI Medical also provides its customers  with  disposable  products  and/or
attachments  that are needed for a given  medical  procedure.  These  disposable
products are primarily  related to laser  equipment  rentals  requiring  fibers,
tubing, laser drapes and masks. Customers may benefit from this added service by
lowering their inventory levels of infrequently used products.

     In prior years PRI Medical offered general medical rental  equipment to its
customers. However, in late 2001 the Company decided to discontinue this area of
business  in order to focus on its core  mobile  surgical  equipment  rental and
services  business.  Thus,  revenues from rentals of general  medical  equipment
decreased  to $41,069 in 2005  compared to $102,237 in 2004.  "See  Management's
Discussion and Analysis of Financial Condition and Results of Operations."

MARKETING AND SALES
-------------------

     PRI Medical  markets its mobile  surgical  equipment and services  business
largely  through  the  efforts  of its  direct  sales  force,  which  focuses on
providing  high-quality  service and products to customers  and on obtaining new
customer accounts.  In conjunction with its sales efforts,  PRI Medical sponsors
educational  seminars on new laser and other  surgical  equipment  technologies,
which are  attended by its current and  prospective  customers.  These  seminars
allow PRI  Medical's  direct  sales  force to  introduce  new  technologies  and
procedures to its customer base early in the product's life cycle.

                                       4
<PAGE>
     PRI Medical's sales representatives  attend national and regional physician
medical seminars and trade shows to present PRI Medical's services and products.
PRI Medical also markets its products and services through direct mail marketing
of literature and promotional  materials,  which describe PRI Medical's complete
range of surgical  equipment  and  services to  hospitals,  surgery  centers and
physicians.


PURCHASE OF CERTAIN OPERATING ASSETS OF ADVANTAGE MEDICAL SERVICES, LLC
-----------------------------------------------------------------------

     On  November11,  2005 PRI Medical  entered into an agreement with Advantage
Medical  Services,  LLC ("Seller") to acquire  certain  operating  assets of the
Seller including laser equipment and customer lists. In addition, the Seller and
certain of its principals entered in a five year non-compete  agreement with PRI
Medical. The purchase agreement provided for the assumption of certain equipment
lease obligations in the amount of approximately  $308,000,  issuance of 324,000
shares of the Company's common stock, and cash  consideration of $475,000.  With
regard to the cash  consideration,  PRI  Medical  paid  $100,000  in cash to the
Seller on November  14,  2005 with the  balance of $375,000  payable in 12 equal
quarterly  installments  from  the  closing  date.  The  common  stock  and cash
consideration may be reduced if certain net service revenues,  as defined,  from
customers  noted on the  customer  list,  are not  achieved  during the 12-month
period following the closing date. The total purchase price was allocated to the
assets acquired and to goodwill. In connection with this transaction,  Mr. Bruce
J. Haber,  the  Company's  Chairman  and Chief  Executive  Officer,  received an
irrevocable proxy to vote the aforementioned  324,000 shares until the time that
the shares are transferred to a non-affiliated party.

MARKETS
-------

     PRI Medical  currently  serves  customers in  California,  Colorado,  Utah,
Nevada,  New  York  and  Arizona.   Each  location  is  staffed  with  full-time
technicians and sales representatives.  During the years ended December 31, 2005
and 2004, no customer accounted for more than 10% of PRI Medical's total sales.

Hospital Mobile Laser/Surgical Services
---------------------------------------

     PRI Medical  provides mobile  laser/surgical  services to customers in each
market served.  Each location is staffed with full-time trained  technicians and
sales  representatives,  and is equipped with a variety of surgical equipment to
meet customer needs.  During each of the years ended December 31, 2005 and 2004,
PRI Medical  performed over 14,000  procedures  company-wide.  Revenues from our
surgical mobile medical equipment and services business comprised  approximately
90% and 87%, of our total  revenues for 2005 and 2004  respectively.  We believe
that revenue from our surgical  related  services  will continue to comprise the
majority of our revenues in the foreseeable future.

Cosmetic Mobile Laser/Surgical Services
---------------------------------------

     The cosmetic  laser  business is primarily  physician  office  based.  This
market  is  characterized  by  rapid  changes  in  specific  techniques  as  new
technology emerges. Recently,  cosmetic laser skin resurfacing surgery has shown
significant  growth,  however,  price  competition is a constant  challenge from
smaller  start-up  companies.  For the years  ended  December  31, 2005 and 2004
revenues from our cosmetic laser business  comprised  approximately  10% and 12%
respectively, of our total revenues.

                                       5
<PAGE>
INVESTMENTS
-----------

Investments In 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. PRI Medical helped to form and acquired minority equity interests in
various LLCs in Colorado and California and currently holds minority interest in
four LLCs as of December 31, 2005.  During 2005,  PRI Medical helped to form two
new LLCs,  which  subsequently  raised total capital of $200,000 from investors.
Such LLCs acquired two surgical lasers in 2005 and in January 2006 financed such
equipment  through  lease  financing in the  aggregate  amount of $600,000.  The
investors  in  each  LLC  provided  the   financing   company  with   individual
proportionate lease guarantees based on their respective  ownership  percentages
in the LLCs.  In addition,  PRI Medical  provided  corporate  guarantees  to the
financing company in connection with such lease financing. The investors in each
LLC  agreed to  indemnify  PRI  Medical  against  losses,  if any,  incurred  in
connection with its guarantees.

     For the years  ended  December  31,  2005 and 2004 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.  "See Management's
Discussion and Analysis of Financial Condition and Results of Operations."

Other Investments
-----------------

     As discussed herein, prior to Emergent's acquisition of PRI Medical in July
2001 it acted as a merchant  banking firm seeking  opportunities  and sources of
funding and, with  investors'  money and/or  Emergent's  own capital,  financing
expected growth of its clients or facilitating transactions for them. During the
course of these activities  Emergent's largest investment of $2 million was made
in March 2000 in the securities of Stonepath Group Inc. ("Stonepath")  (formerly
Net Value Holdings Inc.),  an investment made on Emergent's  behalf by a related
party.  In 2004, the Company  settled a lawsuit  against  Stonepath and received
$37,546,  net of  related  legal  fees  and  other  costs  of  $12,454.  The net
settlement  amount of $37,546 is  included in other  income in the  accompanying
statement of operations as of December 31, 2004.

GOVERNMENT REGULATION
---------------------

     The  healthcare   industry  is  subject  to  extensive  federal  and  state
regulation.  Promulgation  of  new  laws  and  regulations,  or  changes  in  or
re-interpretations of existing laws or regulations, may significantly affect the
Company's business, operating results or financial condition. The Company is not
currently  subject to regulation,  however,  a court or governmental  body could
make a  determination  that the  Company's  business  should be  regulated.  The
Company's  operations  might be  negatively  impacted  if it had to comply  with
government  regulations.  Furthermore,  the  manufacturers of medical  equipment

                                       6
<PAGE>
utilized by the Company are subject to extensive regulation by the Food and Drug
Administration  ("FDA").  Failure  of such  manufacturers  to  comply  with  FDA
regulations  could  result in the loss of  approval  by the FDA of such  medical
equipment,  which could  adversely  affect the  Company's  operating  results or
financial  condition.  In addition,  certain of our customers are subject to the
Medicare  reimbursement  rules and  regulations  as well as similar  state-level
regulations.  Our business  could be negatively  impacted if such customers were
found to be  non-compliant  with such  regulations  and/or  ineligible  for such
reimbursements.  As consolidation  among physician groups continues and provider
networks continue to be created,  purchasing decisions may shift to persons with
whom the Company has not had prior  contact.  The Company cannot be certain that
it  will  be  able  to  maintain  its  physician,   vendor  and/or  manufacturer
relationships under such circumstances.

POTENTIAL EXPOSURE TO LIABILITY
-------------------------------

     Physicians,  hospitals and other  providers in the healthcare  industry are
subject to lawsuits,  which may allege medical malpractice or other claims. Many
of  these  lawsuits  result  in  substantial  defense  costs  and  judgments  or
settlements.  The Company does not engage in the practice of medicine,  nor does
it control the  practice of medicine by  physicians  utilizing  its  services or
their  compliance  with  regulatory  requirements  directly  applicable  to such
physicians or physician  groups.  However,  the services the Company provides to
physicians, including actions by its technicians, its establishment of protocols
and its training programs,  could give rise to liability claims. The Company may
become  involved in material  litigation in the future and it is possible that a
claim or  claims  arising  from  such  litigation  might  exceed  the  Company's
insurance coverage. Currently, the Company's current product liability insurance
coverage expires in April 2006. In the future,  depending on market  conditions,
there can be no assurances that the Company can maintain such insurance coverage
or obtain new coverage from a different insurance carrier should the need arise.

COMPETITION
-----------

     The  market  for  PRI  Medical's   mobile   surgical   services  is  highly
competitive.  Companies,  particularly  in the  laser  surgery  industry,  often
compete by price,  thereby  impacting profit margins.  In addition,  PRI Medical
faces many existing and future  competitors  of various size and scale.  Some of
our competitors have  significantly  greater financial and management  resources
than the Company.  Competitors in our market include  Healthtronics,  a publicly
held  company,  and two  privately  held  companies  by the name of Mobile  Med,
Incorporated and Southland Surgical.  In spite of such competition,  the Company
believes that it can compete successfully but can give no assurances with regard
to its ability to compete. The Company's business could be adversely affected if
our  customers  elect  to  purchase   surgical   equipment   directly  from  the
manufacturers and hire their own technicians.

EMPLOYEES
---------

     As of March 20, 2006, the Company employed 81 full-time persons  (including
three  executive  officers),  57 of whom were involved in operations  activities
(most of these were active as field  technicians),  13 of whom were  involved in
sales and marketing, and 11 of whom were involved in administration, information
technology,  and accounting.  In addition,  the Company may employ part-time and
occasional employees as technicians to handle overload  situations.  None of our
employees are represented by collective bargaining  agreements.  We believe that
our relationship with our employees is good.

                                       7
<PAGE>
RISK FACTORS
------------

WE HAVE INCURRED LOSSES IN THE PAST AND MAY INCUR LOSSES IN THE FUTURE.

     For the years ended  December 31, 2005 and  December 31, 2004,  we reported
net income of $966,252  and $23,280,  respectively.  However,  we have  incurred
operating  losses in the years preceding 2004. Our ability to generate  positive
operating results are dependent upon many factors and variables including market
conditions  for our  products and  services,  changing  technologies  within the
medical equipment industry, and competition.  Although we have shown improvement
in our net operating results over the last two years, there can be no assurances
that we will continue to achieve positive operating results in future periods.

OUR CORE BUSINESS IN MOBILE SURGICAL SERVICES HAS BEEN VERY PRICE COMPETITIVE.

     The  market  for  our  services  and   equipment  is  highly   competitive.
Competitors often compete by lowering prices,  thus impacting profit margins. We
can provide no assurances  that we will be successful  (profitable)  in a highly
competitive market.

WE MAY NEED SUBSTANTIAL ADDITIONAL FINANCING TO ACHIEVE OUR STRATEGIC GOALS.

     Much of our future growth and our ability to meet existing debt,  lease and
vendor  obligations  depend upon our ability to expand our customer  base and on
our ability to acquire new technologies  related to medical surgical  equipment.
Such endeavors may require additional capital resources in addition to cash from
operations.  These  initiatives  may  require  us to raise  significant  sums of
additional  capital,  which may or may not be  available.  In addition,  raising
additional capital may result in substantial dilution to existing  shareholders.
We can provide no assurances  that such financing will be available to us in the
future on satisfactory terms, if at all.

OUR BUSINESS IS SUBJECT TO ADVERSE CHANGES IN GOVERNMENT REGULATION.

     Many aspects of our business in delivering  surgical  equipment and related
services may be impacted by changes in federal and state  regulations.  We could
encounter   difficulties  in  meeting  the   requirements  of  new  or  changing
regulations.  In addition,  certain of our customers are subject to the Medicare
reimbursement rules and regulations as well as similar state-level  regulations.
Our business  could be negatively  impacted if such  customers  were found to be
non-compliant with such regulations and/or ineligible for such reimbursements.

WE MAY HAVE DIFFICULTIES IN ESTABLISHING  SERVICE  CAPABILITIES WITH NEW MEDICAL
DEVICES UNRELATED TO OUR CURRENT BUSINESS.

     Establishing  a market  presence  with new  technologies  may require us to
build a new sales and support infrastructure.  We may have difficulty hiring the
appropriate  personnel and  establishing the necessary  relationships  for us to
successfully penetrate any new market.

                                       8
<PAGE>
THERE IS NO ESTABLISHED TRADING MARKET FOR OUR STOCK.

     In the past and  currently,  there  has been an  irregular  and  relatively
illiquid public market for our common stock.  There can be no assurances that an
established public market for our Common Stock will develop in the future.  This
may make it difficult for you to sell your shares of our common stock.

THE PRICE OF OUR STOCK MAY FLUCTUATE

     The market price of our common stock may be as highly volatile, or more so,
as the stock  market  in  general  or,  for that of micro  cap  stocks,  and the
technology sector more  specifically.  Stockholders may have difficulty  selling
their  common stock  following  periods of such  volatility  due to the market's
adverse  reaction  to such  volatility.  Many  of the  factors  leading  to such
volatility are well beyond our control and could include:

     o    conditions and trends in our industry;

     o    changes in the market valuation of companies similar to us;

     o    actual or expected variations in our operating results;

     o    announcements  by us or  our  competitors  of the  development  of new
          products or technologies or strategic alliances or acquisitions; and

     o    changes in members of our senior management or other key employees.

     These and other factors may adversely affect the price of our common stock,
regardless  of its future  operating  results and we cannot  assure you that our
common  stock will trade at prices  similar to the stock of our  competitors  or
other similar companies.

WE MAY EXPERIENCE  QUARTERLY AND ANNUAL FLUCTUATIONS IN OUR OPERATING RESULTS IN
THE FUTURE, WHICH MAKES OUR PAST PERFORMANCE AN UNRELIABLE  INDICATION OF FUTURE
PERFORMANCE.

     Our operating  results may vary  significantly  from quarter to quarter and
from year to year in the future. A number of factors,  many of which are outside
of our control, may cause these variations, including:

     o    fluctuations in demand for our products and services;

     o    the  introduction  of  new  products,   services  or  technologies  by
          competitors,  entry of new  competitors,  pricing  pressures and other
          competitive factors;

     o    our ability to obtain and introduce new surgical  equipment  products,
          services and technologies in a timely manner;

     o    the rate of market acceptance of any new surgical  equipment  products
          or services that we offer;

     o    delays or reductions  in customer  orders of our products and services
          in  anticipation of the  introduction of new or enhanced  products and
          services by our competitors or us;

                                       9
<PAGE>
     o    our ability to control expenses;

     o    the  timing of  regulatory  approvals  and  changes  in  domestic  and
          regulatory environments;

     o    the level of capital spending of our customers;

     o    costs related to acquisitions or alliances, if any; and

     o    general economic conditions.

     Due to these and other  factors,  we believe that our operating  results in
future quarters and years may differ from expectations,  and  quarter-to-quarter
and  year-to-year   comparisons  of  our  past  operating  results  may  not  be
meaningful.  You should not rely on our  results  for any  quarter or year as an
indication of future performance.

OUR INDUSTRY IS UNPREDICTABLE AND CHARACTERIZED BY RAPID  TECHNOLOGICAL  CHANGES
AND EVOLVING  STANDARDS,  AND, IF WE FAIL TO ADDRESS CHANGING MARKET CONDITIONS,
OUR BUSINESS AND OPERATING RESULTS WILL BE HARMED.

     Our industry is characterized by rapid technological  change,  frequent new
product  introductions,  changes in customer  requirements and evolving industry
standards.  Our equipment could quickly become obsolete due to new technological
developments  in medical  devices.  This could lead to a  significant  financial
impact  since  most of our  equipment  is  generally  financed  over a period of
several years.  Because this market is subject to rapid change,  it is difficult
to predict our potential  size or future growth rate.  Our success in generating
revenues in this market will depend on, among other things:

     o    maintaining and enhancing our relationships with customers;

     o    the  education  of  potential  customers  about  the  benefits  of our
          products and services; and

     o    our ability to accurately  predict and obtain new  products,  services
          and technologies to meet industry standards.

     We cannot  assure  you that our  expenditures  for the  acquisition  of new
products and technologies will result in their introduction or, if such products
or technologies  are introduced,  that they or the related services will achieve
sufficient market  acceptance.  We may need to expend  significant  resources to
acquire new products and services in the future,  which may adversely impact our
profitability.  However,  the failure to make such expenditures to address rapid
technological changes in the industry could adversely affect our business.

                                       10
<PAGE>
FAILURE TO SUCCESSFULLY  COMPLETE AND MANAGE GROWTH  STRATEGIES  COULD ADVERSELY
AFFECT OUR BUSINESS, PROFITABILITY AND GROWTH PROSPECTS.

     Part  of  our  growth  strategy  may  include  acquisitions  and  alliances
involving complementary products,  services,  technologies and businesses. If we
are unable to overcome the potential problems and inherent risks related to such
acquisitions  and alliances,  our business,  profitability  and growth prospects
could  suffer.  Our  ability to expand  successfully  through  acquisitions  and
alliances depends on many factors, including our ability to identify appropriate
prospects and negotiate and close  transactions.  Even if future acquisitions or
alliances are completed:

     o    we could fail to select the best acquisition or alliance partners;

     o    we could fail to effectively  plan and manage  acquisition or alliance
          strategies;

     o    management's attention could be diverted from other business concerns;

     o    we  could  encounter  problems  integrating  the  acquired  or  allied
          operations, technologies or products; and

     o    the acquisition or alliance could have adverse effects on our existing
          business relationships with suppliers and/or customers.

     Many companies  compete for acquisition and alliance  opportunities  in our
industry.  Some of our competitors are companies that have significantly greater
financial and management  resources than us. This may reduce the likelihood that
we will be successful in completing alliances necessary to the future success of
our business.

     Anticipated  growth in the number of employees and in sales,  combined with
the  challenges of managing  geographically  dispersed  operations,  may place a
significant  strain on our management  systems and resources.  We expect that we
will need to continue to improve our information  technology systems,  financial
and  managerial  controls,  reporting  systems and  procedures  and  continue to
expand,  train and manage our work  force.  The  failure to  effectively  manage
growth could disrupt our business and adversely affect our operating results.

IF WE LOSE SENIOR  MANAGEMENT AND KEY EMPLOYEES ON WHOM WE DEPEND,  OUR BUSINESS
COULD SUFFER.

     We have  employment  contracts with Bruce J. Haber and Louis Buther who are
key employees and officers of the Company. We currently do not have "key-person"
life  insurance  policies to cover the lives of Messrs.  Haber and Buther or any
other key  employees.  The  ability to  continue  to attract  and retain  highly
skilled  personnel will be a critical  factor in determining our future success.
Competition for highly skilled personnel is intense and we may not be successful
in attracting,  assimilating or retaining qualified personnel to fulfill current
or future needs. If we cannot recruit,  train, retain and effectively manage key
employees, our business, profitability and growth prospects could suffer.

SOME OF OUR PRODUCTS ARE COMPLEX IN DESIGN AND MAY CONTAIN  DEFECTS THAT ARE NOT
DETECTED UNTIL DEPLOYED BY CUSTOMERS,  WHICH COULD INCREASE OUR COSTS AND REDUCE
OUR REVENUES.

     Many of our products are inherently  complex in design and require  ongoing
regular  maintenance.  As a result of the technical  complexity of the equipment
and  certain  fibers  used  in the  delivery  of our  services,  changes  in our
suppliers'  manufacturing  processes  or the  inadvertent  use of  defective  or
contaminated  materials by such  suppliers  could  result in a material  adverse
effect on our ability to achieve acceptable product  reliability.  To the extent
that such product reliability is not achieved, we could experience,  among other
things:

                                       11
<PAGE>
     o    damage to our business reputation;

     o    loss of customers;

     o    failure to attract new customers or achieve market acceptance;

     o    diversion of resources; and

     o    legal actions by customers.

     The occurrence of any one or more of the foregoing  factors could seriously
harm our business, our financial condition and results of operations.

WE FACE INTENSE COMPETITION.
----------------------------

     The surgical equipment rental and services industry is highly  competitive.
Our operations  compete with services  provided by numerous local,  regional and
national  equipment  and service  providers.  Certain of these  competitors  are
larger or have greater  financial  resources  than us. There can be no assurance
that we will not encounter  increased  competition,  which could have a negative
impact on our business, results of operations or financial condition.

Item 2.  Description of Property
--------------------------------

     The Company  leases  approximately  14,400 square feet of  office/warehouse
space for its operations and  headquarters  in Glendale,  California.  The lease
agreement  currently  provides for monthly rent of approximately  $14,500,  plus
reimbursements  for  property  taxes and  insurance,  and is  subject  to annual
increases based on increases in the Consumer Price Index.  This lease expires in
July 2006; however, the Company is currently in discussions with the landlord to
renew the lease  for  another  five year  period.  We  believe  that we can find
suitable  alternative  office/warehouse  space at competitive lease rates in the
event the existing lease is not renewed. The Company also leases an aggregate of
approximately  4,000 square feet of space for its field and sales  offices under
operating  lease  agreements  that expire on various  dates  through May 2007 in
Northern  California,  Colorado and Utah. We believe our present  facilities are
adequate for our reasonably foreseeable needs.

Item 3. Legal Proceedings
-------------------------

     From time to time,  we may become  involved  in  litigation  arising out of
operations in the normal course of business.  As of the filing date of this Form
10-KSB, we are not a party to any pending legal proceedings, except as follows:

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").

                                       12
<PAGE>
     The civil  lawsuit,  which was signed by the clerk on February 2, 2005,  is
brought in the United States District Court,  Southern  District of New York, is
an action 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 35-page 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 is vigorously defending this lawsuit.

Item 4.  Submission of Matters to a Vote of Security Holders.
-------------------------------------------------------------

     No matters were  submitted to a vote of security  holders during the fourth
quarter of fiscal 2005.

                                     PART II

Item 5.  Market for Common Equity and Related Stockholder Matters.
------------------------------------------------------------------

     Our common  stock  trades on the OTC  Electronic  Bulletin  Board under the
symbol "EMGP." The following  table sets forth the range of high and low closing
prices of our Common Stock for the periods indicated.

      Quarters Ended                                     High      Low
      -----------------------------------------------------------------
      March 31, 2004.................................... 0.66      0.11
      June 30, 2004..................................... 0.66      0.66
      September 30, 2004................................ 0.70      0.66
      December 31, 2004................................. 2.25      1.30
      March 31, 2005.................................... 2.50      0.85
      June 30, 2005..................................... 1.00      0.62
      September 30, 2005................................ 1.01      0.51
      December 31, 2005................................. 2.55      0.69

     All  quotations  reflect  inter-dealer  prices,   without  retail  mark-up,
markdown or commissions, and may not necessarily represent actual transactions.

     As of March 29, 2006, there were approximately 673 holders of record of our
common  stock,  although  we  believe  that  there  are  other  persons  who are
beneficial  owners of our  common  stock  held in  street  name.  The  Company's
transfer agent is American  Stock Transfer & Trust Company,  59 Maiden Lane, New
York, NY 10038.

Dividend Policy
---------------

     On January 5, 2006,  we paid a $0.10 per share cash  dividend to our common
stockholders of record on December 14, 2005. Previously,  we have never paid any
cash or  other  dividends  to our  stockholders.  Our  Board of  Directors  will
determine our future dividend policy on the basis of various factors,  including
our  results  of  operations,  financial  condition,  capital  requirements  and
investment opportunities. We can give no assurances that cash or other dividends
will be declared and paid in future operating periods.

                                       13
<PAGE>
Recent Sales of Unregistered Securities
---------------------------------------

     During  the year ended  December  31,  2005,  the  Company  had no sales or
issuances of unregistered Common Stock, except as follows:

First Quarter Sales: None

Second               Quarter Sales: An aggregate of 260,000 shares of our Common
                     Stock were sold to executive  officers and directors of our
                     Company in connection with certain loan  guarantees.  There
                     were no commissions paid in connection with the issuance of
                     these shares  which were exempt  under  section 4(2) of the
                     Securities Act of 1933, as amended.

Third                Quarter  Sales:  Options to  purchase  15,000  shares at an
                     exercise price of $.40 per share were granted to a director
                     of our company and were subsequently exercised.  There were
                     no  commissions  paid in  connection  with the  issuance of
                     these shares  which were exempt  under  section 4(2) of the
                     Securities Act of 1933, as amended.

Fourth               Quarter  Sales:  An aggregate of 105,000 shares were issued
                     as  restricted  stock  awards  to  executive  officers  and
                     directors of our Company,  subject to vesting in five equal
                     annual  installments  commencing  November  2, 2006 and the
                     forfeiture  of the  non-vested  portion  in the event  that
                     recipient is no longer serving as an officer or director of
                     our Company at the time of vesting,  subject to the Board's
                     right to waive the  forfeiture  provisions.  There  were no
                     commissions  paid in connection  with the issuance of these
                     shares  which  were  exempt  under   section  4(2)  of  the
                     Securities Act of 1933, as amended.

                     An aggregate of 324,000 shares were issued  pursuant to the
                     Company's  agreement to acquire certain assets of Advantage
                     Medical Services, LLC and certain individuals entering into
                     a non-compete agreement.  There were no commissions paid in
                     connection  with the  issuance of these  shares  which were
                     exempt under section 4(2) of the Securities Act of 1933, as
                     amended.


Recent Purchases of Securities
------------------------------

     During the year ended  December 31, 2005, the Company had no repurchases of
its Common Stock.

Item 6. Management's  Discussion and Analysis of Financial Condition and Results
of Operations
--------------------------------------------------------------------------------

     The  following   discussion   should  be  read  in  conjunction   with  our
consolidated  financial  statements and the notes thereto appearing elsewhere in
this Form 10-KSB. All statements contained herein that are not historical facts,
including,  but not limited to, statements regarding  anticipated future capital
requirements,  our future plan of operations, our ability to obtain debt, equity
or other financing, and our ability to generate cash from operations,  are based
on current  expectations.  These  statements are  forward-looking  in nature and
involve a number of risks and uncertainties  that may cause the Company's actual
results in future periods to differ materially from forecasted results.

                                       14
<PAGE>
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 require management to make estimates and
disclosures on the date of the financial  statements.  On an on-going  basis, we
evaluate our estimates  including,  but not limited to, those related to revenue
recognition.  We use  authoritative  pronouncements,  historical  experience and
other assumptions as the basis for making judgments. Actual results could differ
from those estimates. We believe that the following critical accounting policies
affect our more  significant  judgments and estimates in the  preparation of our
financial statements.

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

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

     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.

Overview
--------

     PRI  Medical  is a  provider  of mobile  surgical  equipment,  on a fee for
service  basis,  to  hospitals,  surgical  care  centers  and other  health care
providers.  PRI Medical  serves both large and small health care  providers  and
makes mobile  surgical  services  available to its  customers by providing  this
equipment on a per procedure basis to hospitals,  out patient  surgery  centers,
and physician  offices.  PRI Medical  provides  mobile lasers and other surgical
equipment  with  technical  support  required to ensure the equipment is working
correctly.

                                       15
<PAGE>
Results of Operations
---------------------

     The following  table sets forth  certain  selected  condensed  consolidated
statement of operations data for the periods indicated:
<TABLE>
<CAPTION>
Statement of Operations Data
----------------------------
                                                       December 31,
                                             ---------------------------------
                                                 2005        %       2004        %

                                              ------------    -- -------------    --
<S>                                           <C>           <C>  <C>            <C>
Revenue                                       $ 12,479,263  100% $  10,967,369  100%
Cost of goods sold                               7,937,656   64%     7,703,124   70%
                                              ------------    -- -------------    --

Gross profit                                     4,541,607   36%     3,264,245   30%

Selling, general, and administrative expenses    3,399,359   27%     3,152,409   29%
                                              ------------    -- -------------    --

Income from operations                           1,142,248    9%       111,836    1%

Other income, net                                    9,539    0%        67,953    1%
                                              ------------    -- -------------    --

Income before provision for income
    taxes and minority interest                  1,151,787    9%       179,789    2%
Provision for income taxes                          27,007    0%            -     0%
                                              ------------    -- -------------    --

Net income before minority interest              1,124,780    9%       179,789    2%
                                                              --                  --

Minority interest in income of consolidated
    limited liability companies                   (158,528)  -1%      (156,509)  -1%
                                              ------------    -- -------------    --
Net income                                    $    966,252    8% $      23,280    0%
                                              ============    == =============    ==

</TABLE>
     The consolidated  financial statements of the Company for the periods ended
December  31,  2005 and  2004  reflect  net  income  of  $966,252  and  $23,280,
respectively, on net revenues of $12,479,263 and $10,967,369, respectively.

Year Ended December 31, 2005 Compared to the Year Ended December 31, 2004

     The  Company  generated   revenues  of  $12,479,263  in  2005  compared  to
$10,967,369 in 2004.  The increase in revenues in 2005 of $1,511,894,  or 14% is
related to an increase in revenues from our higher-priced  surgical  procedures,
the inclusion of revenues from  consolidated  limited  liability  companies,  to
revenues  generated from  customers  acquired from a competitor in November 2005
and to price  increases  implemented  in late 2004 and early 2005.  Revenues for
2005  include  revenues of $906,365  from four  consolidated  limited  liability
companies while 2004 includes  revenues of $833,093 from two such companies.  In
addition,  we  acquired  certain  operating  assets  and  customer  lists from a
competitor during November 2005, which also contributed to the increase revenues
for  2005.  Revenues  from our  surgical  and  cosmetic  procedures  represented
approximately  90% and 10% of total  revenues for 2005 and 87% and 12% for 2004,
respectively.

     Cost of goods sold of was  $7,937,656  in 2005  compared to  $7,703,124  in
2004. 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  increase  in cost of goods  sold of  $234,532  or 3% for 2004 is
generally  due to increases in  disposable  costs and payroll and related  costs
offset by a decrease in  depreciation  expense and a reduction of $50,000 in our
reserve for excess/obsolete  inventory in 2005.  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 2005 compared to 2004
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 2005.  Depreciation and amortization  expense  decreased due to the
fact that certain assets became fully depreciated in mid-2005 and such decreases
in depreciation  were not entirely  offset by  depreciation  from newly acquired
assets.  The net change in other cost categories  included in cost of goods sold
remained relatively unchanged in 2005 compared to 2004.

                                       16
<PAGE>
     Gross profit from  operations was $4,541,607 in 2005 compared to $3,264,245
in 2004.  Gross profit as a percentage  of revenues was 36% in 2005  compared to
30% for 2004.  The  improvement  in our gross profit margin in 2005 is primarily
due to per procedure price increases implemented in late 2004 and early 2005 for
various surgical and cosmetic procedures,  the mix of surgical procedures and to
a reduction  of $50,000 in our reserve for  excess/obsolete  inventory  in 2005.
Profit  margins,  net of 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 2005 is not  necessarily  indicative of the margins that may be
realized in future periods.

     Selling,  general  and  administrative  expenses  were  $3,399,359  in 2005
compared to $3,152,409 in 2004. The increases of $246,950 or 8% in such expenses
primarily  relate to increases in payroll costs for sales  personnel,  including
commissions,  and to an  increase in accrued  bonus  incentives  for  management
personnel.  Selling, general and administrative expenses as a percent of revenue
was 27% in 2005 compared to 29% in 2004.

     Other income was $9,539 in 2005  compared to $67,953 in 2004.  Other income
includes  interest  expense,  gains and losses on the  disposal of property  and
equipment and other non-recurring income (loss) items. The net decrease in other
income of $58,414 in 2005 is due to an increase  in interest  expense of $18,334
primarily related to minimum borrowing costs incurred in connection with our new
revolving line of credit agreement,  a decrease in other non-recurring income of
$135,000  related  to the  sale  of  investment  securities  and  from  a  legal
settlement in 2004 while no such items were recognized in 2005,  offset by a net
increase of $66,084 in gains from the  disposable  of property and  equipment in
2005.

     The  minority  interest in net income of limited  liability  companies  was
$158,528  in 2005  compared to  $156,509  in 2004.  Minority  interest in income
relates to the  consolidation  of four entities in 2005 and two entities in 2004
in which we hold an equity investment interest. As of December 31, 2005 and 2004
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. The Company previously utilized the equity method of accounting for such
investments.

     The  Company's net income was $966,252 in 2005 compared to $23,280 in 2004.
Basis net income  per share for 2005 and 2004 was $0.20 and $-0-,  respectively,
while  fully  diluted net income per share for 2005 and 2004 was $0.19 and $-0-,
respectively. Basic and fully diluted shares outstanding for 2005 were 4,934,430
and 5,189,648,  respectively, and 4,744,551 for 2004. The provision for taxes of
$27,007 represent  Alternative Minimum Tax (AMT) for the year ended December 31,
2005.  Due to the  availability  of net operating loss  carryforwards,  no other
taxes are due.

Recently Issued Accounting Pronouncements
-----------------------------------------

     During  2004 to 2006 the  Financial  Accounting  Standards  Board  ("FASB")
issued  SFAS No.154  through  SFAS No.155 and an  amendment  to SFAS 123.  These
pronouncements  and any anticipated  effect on us are described in Note 2 in the
notes to our consolidated financial statements, which are incorporated herein by
reference to Item 7.

                                       17
<PAGE>
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  eligible  receivables,  as
defined.  Borrowings under the Revolver and Term Note bear interest at the prime
rate,  plus 2%. The  Credit  Facility  also  provides  for  payment of a monthly
collateral  management  fee equal to 20 basis points (0.2%) 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 payoff  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 December 31,
2005 total borrowings outstanding under the Credit Facility amounted to $146,220
all of which is due under the Term Note.  The Company has  $853,780 of borrowing
availability under the Credit Facility as of December 31, 2005.

     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 200,500 were issued to the executive officers, and 64,000 shares to
one  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 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
guarantee period of 24 months.  Deferred  compensation  amortization expense was
$32,329 for the year ended December 31, 2005.

     On November 11, 2005 PRI Medical  entered into an agreement  with Advantage
Medical  Services,  LLC ("Seller") to acquire  certain  operating  assets of the
Seller  including  laser and other  surgical  equipment and customer  lists.  In
addition,  the  Seller  and  certain  of its  principals  entered in a five year
non-compete  agreement with PRI Medical. The purchase agreement provides for the
assumption of certain equipment lease obligations in the amount of approximately
$320,000,  issuance of 324,000  shares of the Company's  common stock,  and cash
consideration of $475,000.  With regard to the cash  consideration,  PRI Medical
paid  $100,000  in cash to the Seller on  November  14, 2005 with the balance of
$375,000  payable in eight equal quarterly  installments  from the closing date.
The common  stock and cash  consideration  may be reduced if certain net service
revenues,  as defined, are not achieved during the 12-month period following the
closing date. The total purchase price was allocated to the assets  acquired and
to goodwill.  In  connection  with this  transaction,  Mr.  Bruce J. Haber,  the
Company's Chairman and Chief Executive Officer, received an irrevocable proxy to
vote the  aforementioned  324,000  shares  until  the time that the  shares  are
transferred to a non-affiliated party.

                                       18
<PAGE>
     On January 5, 2006,  we paid a $0.10 per share cash  dividend to our common
stockholders of record on December 14, 2005. Previously,  we have never paid any
cash or  other  dividends  to our  stockholders.  Our  Board of  Directors  will
determine our future dividend policy on the basis of various factors,  including
our  results  of  operations,  financial  condition,  capital  requirements  and
investment opportunities. We can give no assurances that cash or other dividends
will be declared and paid in future operating periods.

     In 2002 we renegotiated substantially all of our outstanding debt and lease
obligations with our key creditors.  The restructured  debt and lease agreements
provided for, in some cases, the return of equipment used to collateralize  such
obligations,  and certain  periodic  and monthly  installment  payments  for the
balance  of  such   obligations.   As  of  December  31,  2005  our  outstanding
restructured  debt and lease  obligations  amounted  to  $291,227  and  $72,497,
respectively.  In  the  event  of  default  by  the  Company  all  amounts  then
outstanding are accelerated and become immediately due and payable. In addition,
in the event of default,  certain restructured debt and lease agreements provide
for the payment of  additional  principal  amounts of up to $187,500,  excluding
collection  costs.  As of December 31, 2005 and the filing of this Annual Report
on Form  10-KSB  we were in  compliance  with the terms  and  conditions  of our
renegotiated debt and lease agreements.

     The Company had cash and cash equivalents of $585,377 at December 31, 2005.
Cash provided by operating  activities  for the year ended December 31, 2005 was
$1,821,326.  Such  amount  includes  net income of  $966,252,  depreciation  and
amortization of $1,072,891,  minority  interest in net income of $158,528 and an
increase  in accrued  expenses  of  $333,852  offset by  increases  in  accounts
receivable  of $456,620,  inventory of $244,852 and gain on disposal of property
and equipment and other of $82,002.  Cash used in investing  activities amounted
to $356,969 due to the purchase of property and equipment of $346,786, cash paid
to members of limited liability  companies of $201,035,  and a cash down payment
of $100,000 in connection with the acquisition of certain  operating assets of a
competitor,  offset by  proceeds  from the sale of  property  and  equipment  of
$90,852 and capital  contributions  of $200,000  from new members in two limited
liability companies formed during 2005 for which we serve as manager.  Cash used
in financing activities of $1,230,575,  was primarily the result of the pay down
of debt and lease  obligations  of $561,023 and  borrowings  and  repayments  of
$7,827,616 and $8,477,616, respectively, under our revolving line of credit.

     The Company had cash and cash equivalents of $351,595 at December 31, 2004.
Cash provided by operating  activities  for the year ended December 31, 2004 was
$1,178,262.  Such amount  primarily  related to the  inclusion  in net income of
certain  non-cash items  including,  depreciation and amortization of $1,195,130
and minority  interest in net income of $156,512 offset by increases in accounts
receivable  and  inventory  totaling  $122,561  and a net  decrease  in accounts
payable and  accrued  expenses of  $66,305.  Cash used in  investing  activities
amounted to $850,426 due to the  purchase of property and  equipment of $717,624
and cash paid to limited liability companies of $189,639 offset by proceeds form
the sale of property  and  equipment  of $19,337 and  capital  contributions  of
$37,500 from new members in one limited  liability company for which we serve as
manager. Cash used by financing activities of $666,572, was primarily the result
of the pay down of debt and lease  obligations  of $566,572 and  borrowings  and
repayments of $50,000 and $150,000, respectively, under our bank line of credit.

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

                                       19
<PAGE>
Forward-Looking Statements
--------------------------

     The Private  Securities  Litigation Reform Act of 1995 (the Act) provides a
safe harbor for forward-looking  statements made by or on behalf of our Company.
Our Company and its representatives may from time to time make written or verbal
forward-looking  statements,  including  statements contained in this report and
other Company  filings with the  Securities  and Exchange  Commission and in our
reports  to  stockholders.   Statements  that  relate  to  other  than  strictly
historical  facts,  such as statements  about the Company's plans and strategies
and expectations for future financial performance are forward-looking statements
within  the  meaning  of the Act.  Generally,  the  words  "believe,"  "expect,"
"intend,"  "estimate,"   "anticipate,"  "will"  and  other  similar  expressions
identify forward-looking statements. The forward-looking statements are and will
be based on  management's  then current views and assumptions  regarding  future
events and operating performance,  and speak only as of their dates. The Company
undertakes  no  obligation  to  publicly  update or revise  any  forward-looking
statements, whether as a result of new information,  future events or otherwise.
See "Risk  Factors"  for a  discussion  of events and  circumstances  that could
affect our financial  performance or cause actual  results to differ  materially
from estimates contained in or underlying our forward-looking statements.

Item 7.  Financial Statements
-----------------------------

Financial Statements
--------------------

     The report of the Independent  Registered Public Accounting Firm, Financial
Statements  and  Schedules  are set forth  beginning  on page F-1 of this Annual
Report on Form 10-KSB following this page.


                                       20
<PAGE>

                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                               CONSOLIDATED FINANCIAL STATEMENTS
                                  FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004









                                       21
<PAGE>




                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                                                        CONTENTS
                                                               December 31, 2005

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


                                                                          Page

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                 F1 - F2

CONSOLIDATED FINANCIAL STATEMENTS

       Consolidated Balance Sheets                                           F3

       Consolidated Statements of Operations                                 F4

       Consolidated Statements of Shareholders' Equity                       F5

       Consolidated Statements of Cash Flows                                 F6

       Notes to Consolidated Financial Statements                    F-8 - F-22


                                       22
<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM








Board of Directors and Shareholders
Emergent Group Inc. and subsidiaries

We have  audited  the  consolidated  balance  sheet of Emergent  Group Inc.  and
subsidiaries as of December 31, 2005 and the related consolidated  statements of
operations,  shareholders' equity, and cash flows for the year then ended. These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted  our audit in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the financial position of Emergent Group Inc.
and subsidiaries as of December 31, 2005 and the results of their operations and
their  cash  flows  for the  year  then  ended  in  conformity  with  accounting
principles generally accepted in the United States of America.


/S/ ROSE, SNYDER & JACOBS


Encino, California
March 17, 2006



                                      F-1
<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





Board of Directors and Shareholders
Emergent Group Inc. and subsidiaries
Glendale, California

We have  audited  the  consolidated  balance  sheet of Emergent  Group Inc.  and
subsidiaries as of December 31, 2004 and the related consolidated  statements of
operations,  shareholders' equity, and cash flows for the year then ended. These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted  our audit in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the financial position of Emergent Group Inc.
and subsidiaries as of December 31, 2004 and the results of their operations and
their  cash  flows  for the  year  then  ended  in  conformity  with  accounting
principles generally accepted in the United States of America.


/S/ SINGER LEWAK GREENBAUM & GOLDSTEIN LLP


Los Angeles, California
March 8, 2005


                                      F-2
<PAGE>
                      Emergent Group Inc. and Subsidiaries
                           Consolidated Balance Sheets
<TABLE>
<CAPTION>
                                                                                    December 31,
                                                                          --------------------------------
                                                                                2005            2004
                                                                          --------------- ----------------
<S>                                                                       <C>             <C>
                                  ASSETS


Current assets
     Cash                                                                 $       585,377 $        351,595
     Accounts receivable, net of allowance for doubtful
        accounts of $20,487 and $26,125                                         1,891,413        1,429,155
     Inventory, net of reserves of $80,148 and $141,916                           617,596          372,744
     Prepaid expenses                                                             157,526          128,968
                                                                          --------------- ----------------

           Total current assets                                                 3,251,912        2,282,462

Property and equipment, net of accumulated depreciation and
        amortization of $3,878,680 and $2,931,943                               2,467,923        1,896,309
Goodwill                                                                        1,195,035          779,127
Other intangible assets, net of accumulated amortization
        of $56,901 and $29,487                                                    209,384           76,798
Deposits and other assets                                                         106,177           56,892
                                                                          --------------- ----------------

Total assets                                                              $     7,230,431 $      5,091,588
                                                                          =============== ================

                   LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
     Current portion of capital lease obligations                               $ 490,061 $        347,558
     Current portion of notes payable                                             434,309          389,247
     Dividend payable to shareholders                                             512,861                -
     Line of credit                                                                     -          650,000
     Accounts payable                                                           1,238,296          565,136
     Accrued expenses                                                             992,578          684,244
                                                                          --------------- ----------------

           Total current liabilities                                            3,668,105        2,636,185

Capital lease obligations, net of current portion                                 454,155          269,269
Notes payable, net of current portion                                             378,139          291,229
                                                                          --------------- ----------------

           Total liabilities                                                    4,500,399        3,196,683

Minority interest                                                                 339,421          181,928

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
        5,451,631 and 4,744,551 shares issued and outstanding                     218,065          189,782
     Additional paid-in capital                                                14,815,571       14,488,090
     Deferred compensation, net of accumulated amortiziation of $32,329          (131,521)               -
     Accumulated deficit                                                      (12,511,504)     (12,964,895)
                                                                          --------------- ----------------

           Total shareholders' equity                                           2,390,611        1,712,977
                                                                          --------------- ----------------
 Total liabilities and shareholders' equity                               $     7,230,431 $      5,091,588
                                                                          =============== ================

                 The accompanying notes are an integral part of
                           these financial statements.
</TABLE>

                                      F-3
<PAGE>

                      Emergent Group Inc. and Subsidiaries
                      Consolidated Statements of Operations

<TABLE>
<CAPTION>
                                                               Year Ended December 31,
                                                           ---------------------------------
                                                                2005             2004
                                                           ---------------- ----------------
<S>                                                        <C>              <C>
Revenue                                                    $     12,479,263 $     10,967,369
Cost of goods sold                                                7,937,656        7,703,124
                                                           ---------------- ----------------

Gross profit                                                      4,541,607        3,264,245

Selling, general, and administrative expenses                     3,399,359        3,152,409
                                                           ---------------- ----------------

Income from operations                                            1,142,248          111,836

Other income (expense)
     Interest expense                                              (140,551)        (122,217)
     Gain (loss) on disposal of property and equipment               52,002          (14,082)
     Other income, net                                               98,088          204,252
                                                           ---------------- ----------------

            Total other income (expense)                              9,539           67,953
                                                           ---------------- ----------------

Income before provision for income taxes
     and minority interest                                        1,151,787          179,789
Provision for income taxes                                           27,007                -
                                                           ---------------- ----------------

Income before minority interest                                   1,124,780          179,789

Minority interest in income of consolidated
     limited liability companies                                   (158,528)        (156,509)
                                                           ---------------- ----------------

Net income                                                 $        966,252 $         23,280
                                                           ================ ================

Basic earnings per share                                   $           0.20 $           0.00
                                                           ================ ================

Diluted earnings per share                                 $           0.19 $           0.00
                                                           ================ ================

Basic weighted average shares outstanding                         4,934,430        4,744,551
                                                           ================ ================

Diluted weighted-average shares outstanding                       5,189,648        4,744,551
                                                           ================ ================

</TABLE>
                 The accompanying notes are an integral part of
                           these financial statements.



                                      F-4
<PAGE>


                Emergent Group Inc. and Subsidiaries
           Consolidated Statements of Shareholders' Equity

<TABLE>
<CAPTION>

                                               Common Stock             Additional
                                           ----------------------        Paid-In          Deferred       Accumulated
                                           Shares       Amount           Capital         Compensation       Deficit        Total
                                          ---------    ---------       ------------      ------------   ------------    -----------
<S>                                       <C>          <C>             <C>               <C>            <C>             <C>
Balance, January 1, 2004                  4,744,551    $ 189,782       $ 14,488,090      $          -   $(12,988,175)   $ 1,689,697

   Net income                                                                                                 23,280         23,280

                                          ---------    ---------       ------------      ------------   ------------    -----------
Balance, December 31, 2004                4,744,551      189,782         14,488,090                 -    (12,964,895)     1,712,977

   Common stock issued in connection
   with loan guarantees                     260,000       10,400             93,600          (104,000)             -              -

   Common stock issued as restricted
   stock awards                             105,000        4,200             55,650           (59,850)             -              -

   Amortization of deferred
   compensation                                   -            -                  -            32,329              -         32,329

   Common stock issued to acquire
   assets                                   324,000       12,960            171,720                 -              -        184,680

   Exercise of stock options                 18,080          723              6,511                 -              -          7,234

   Dividends declared to common
   shareholders                                   -            -                  -                 -       (512,861)      (512,861)

   Net Income                                                                     -                          966,252        966,252
                                          ---------    ---------       ------------      ------------   ------------    -----------

Balance, December 31, 2005                5,451,631    $ 218,065       $ 14,815,571      $   (131,521)  $(12,511,504)   $ 2,390,611
                                          =========    =========       ============      ============   ============    ===========

</TABLE>
                 The accompanying notes are an integral part of
                           these financial statements.


                                      F-5
<PAGE>
                      Emergent Group Inc. and Subsidiaries
                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                          Year Ended December 31,
                                                                       ------------------------------
                                                                            2005           2004
                                                                       ------------------------------

<S>                                                                           <C>             <C>
Cash flows from operating activities
     Net income                                                        $      966,252  $      23,280
     Adjustments to reconcile net income to net cash
     provided by operating activities:
        Depreciation and amortization                                       1,072,891      1,195,130
        Amortization of finance fees                                            7,812         20,266
        (Gain) loss on disposal of property and equipment and other           (82,002)        14,082
        Provision for doubtful accounts                                        (5,638)        (6,477)
        Minority interest in income                                           158,528        156,512
        (Increase) decrease in
            Accounts receivable                                              (456,620)       (93,710)
            Inventory                                                        (244,852)       (28,851)
            Prepaid expenses                                                  (28,558)       (27,807)
            Deposits and other assets                                         (33,084)        (7,858)
        Increase (decrease) in
            Accounts payable                                                  158,268         36,773
            Accrued expenses                                                  308,329       (103,078)
                                                                       --------------  -------------

Net cash provided by operating activities                                   1,821,326      1,178,262
                                                                       --------------  -------------

Cash flows from investing activities
     Purchase of property and equipment                                      (346,786)      (717,624)
     Cash paid to acquire assets                                             (100,000)             -
     Cash paid to members of limited liability companies                     (201,035)      (189,639)
     Contributions from new members to limited liability companies            200,000         37,500
     Proceeds from the sale of property and equipment                          90,852         19,337
                                                                       --------------  -------------
Net cash used in investing activities                                        (356,969)      (850,426)
                                                                       --------------  -------------
Cash flows from financing activities
     Payments on capital lease obligations                                   (317,994)      (189,440)
     Borrowings under line of credit                                        7,827,616         50,000
     Repayments on line of credit                                          (8,477,616)      (150,000)
     Payments on notes payable, net                                          (243,029)      (377,132)
     Payment of loan fees                                                     (26,786)
     Proceeds from exercise of stock options                                    7,234              -
                                                                       --------------  -------------
Net cash used in financing activities                                      (1,230,575)      (666,572)
                                                                       --------------  -------------

Net increase (decrease) in cash                                               233,782       (338,736)

Cash, beginning of period                                                     351,595        690,331
                                                                       --------------  -------------

Cash, end of period                                                    $      585,377  $     351,595
                                                                       ==============  =============

Supplemental disclosures of cash flow information:
     Interest paid                                                     $      142,617  $     124,776
                                                                       ==============  =============

</TABLE>
                 The accompanying notes are an integral part of
                           these financial statements.


                                      F-6

<PAGE>


                                             EMERGENT GROUP INC AND SUBSIDIARIES
                               CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
                                          Years Ended December 31, 2005 and 2004

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

Supplemental schedule of non-cash investing and financing activities

During the year ended December 31, 2005, the Company:

     o    purchased  property  and  equipment of $675,384 through lease and note
          financing

     o    issued   324,000   shares   of   common   stock  valued at $184,680 in
          connection  with  the  acquisition  of  certain  operating assets of a
          competitor

     o    formed and consolidated two new limited  liability  companies with net
          property and equipment totaling $647,500

During the year ended December 31, 2004, the Company:

     o    purchased property and equipment of $283,369 through lease financing



                                      F-7
<PAGE>
                                             EMERGENT GROUP INC AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2005

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


NOTE 1 -  ORGANIZATION AND BUSINESS

          General
          -------
          Emergent Group Inc.  ("Emergent") is the parent company of PRI Medical
          Technologies,  Inc.,  ("PRI  Medical"),  its  wholly  owned  and  only
          operating  subsidiary.  PRI Medical previously  conducted its business
          through its wholly owned  subsidiary  Physiologic  Reps ("PRI")  until
          March 2005 at which time PRI was merged into PRI Medical. Emergent and
          PRI Medical are hereinafter  referred to as the "Company." PRI Medical
          provides  mobile  laser/surgical  services on a per procedure basis to
          hospitals,  out-patient  surgery  centers,  and  physicians'  offices.
          Medical  lasers and other  equipment  are provided to customers  along
          with  technical  support  personnel  to ensure that such  equipment is
          operating  correctly.  PRI Medical  currently  offers its  services in
          California, Nevada, Colorado, Utah, Arizona and New York.

          Purchase of Certain  Operating  Assets,  Non-Compete and Customer List
          ----------------------------------------------------------------------
          On November  11, 2005 PRI Medical  entered  into an  agreement  with a
          competitor  ("Seller")  to  acquire  certain  operating  assets of the
          Seller including laser equipment and customer lists. In addition,  the
          Seller  and  certain  of  its  principals   entered  in  a  five  year
          non-compete   agreement  with  PRI  Medical.  The  purchase  agreement
          provided for the assumption of certain  equipment lease obligations in
          the amount of $307,720,  issuance of 324,000  shares of the  Company's
          common stock, and cash  consideration of $475,000.  With regard to the
          cash consideration, PRI Medical paid $100,000 in cash to the Seller on
          November  14, 2005 with the  balance of  $375,000  payable in 12 equal
          quarterly  installments  from the closing  date.  The common stock and
          cash consideration may be reduced if certain net service revenues,  as
          defined,  from customers  noted on the customer list, are not achieved
          during the  12-month  period  following  the closing  date.  The total
          purchase price of $995,803, subject to adjustment as described herein,
          was  allocated  to equipment  and  vehicles of  $419,895,  non-compete
          agreement of $160,000, customer list of $10,000, with the remainder of
          $415,908  to  goodwill.  In  connection  with  this  transaction,  the
          Company's Chairman and Chief Executive Officer received an irrevocable
          proxy to vote the  aforementioned  324,000  shares until the time that
          the shares are transferred to a non-affiliated party.

NOTE 2 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

          Principles of Consolidation
          ---------------------------
          The consolidated financial statements include the accounts of Emergent
          and its wholly owned  subsidiaries.  In  addition,  as of December 31,
          2004 in  accordance  with the  Financial  Accounting  Standards  Board
          Interpretation  No. 46,  "Consolidation of Variable Interest Entities"
          the Company has accounted for its equity  investments  in four limited
          liability  companies under the full consolidation  method. The Company
          previously   utilized  the  equity  method  of   accounting   for  its
          investments   in  such   entities.   All   significant   inter-company
          transactions and balances have been eliminated through consolidation.

          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.


                                      F-8
<PAGE>
                                             EMERGENT GROUP INC AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2005

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


          Cash
          ----
          Cash consists of cash on hand and in banks. The Company maintains cash
          at several financial institutions. At times, such cash balances may be
          in excess of the Federal Deposit Insurance Corporation insurance limit
          of $100,000.  As of December 31, 2005 and 2004,  uninsured portions of
          balances  at  those  banks   aggregated   to  $247,422   and  $153,230
          respectively.  The Company has not experienced losses in such accounts
          and believes it is not exposed to any significant risk on cash.

          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 is stated at the lower of cost or market. Cost is determined
          by the first-in, first-out method.

          Property and Equipment
          ----------------------
          Property  and  equipment  are  recorded  at  cost,  less   accumulated
          depreciation  and  amortization.  Depreciation  and  amortization  are
          provided using the straight-line method over estimated useful lives of
          generally five years. Betterments, renewals, and extraordinary repairs
          that extend the life of the assets are capitalized;  other repairs and
          maintenance  charges are  expensed as  incurred.  The cost and related
          accumulated depreciation and amortization applicable to retired assets
          are  removed  from  the  Company's  accounts,  and the gain or loss on
          dispositions,  if any, is recognized in the consolidated statements of
          operations.

          Impairment of Long-Lived  Assets
          -------------------------------

          The Company  reviews its long-lived  assets for impairment  under SFAS
          144 annually whenever events or changes in circumstances indicate that
          the carrying amount of an asset may not be recoverable. Recoverability
          of  assets  to be held and used is  measured  by a  comparison  of the
          carrying  amount of the assets to future net cash flows expected to be
          generated by the assets.  If the assets are considered to be impaired,
          the impairment to be recognized is measured by the amount by which the
          carrying  amount exceeds the fair value of the assets.  In addition to
          goodwill,  other intangible assets include covenant  not-to-compete of
          $150,917, net of accumulated amortization of $9,083 and customer lists
          of $58,467,  net of  accumulated  amortization  of $47,818.  Covenants
          not-to-compete  and customer lists are generally  amortized over their
          estimated useful lives of five years.

          Fair Value of Financial Instruments
          -----------------------------------
          For certain of the Company's  financial  instruments,  including cash,
          accounts receivable,  prepaid expenses,  accounts payable, and accrued
          expenses,  the carrying  amounts  approximate  fair value due to their
          short maturities.

          Stock-Based Compensation
          ------------------------

          SFAS No. 123,  "Accounting  for Stock-Based  Compensation,"  defines a
          fair value based method of accounting  for  stock-based  compensation.
          However,  SFAS No.  123  allows  an  entity  to  continue  to  measure
          compensation  cost  related  to stock  and  stock  options  issued  to
          employees  using the  intrinsic  method of  accounting  prescribed  by
          Accounting  Principles  Board ("APB") Opinion No. 25,  "Accounting for
          Stock  Issued to  Employees."  Entities  electing  to remain  with the
          accounting method of APB No. 25 must make pro forma disclosures of net
          income and income per share as if the fair value method of  accounting
          defined in SFAS No. 123 had been  applied.  The Company has elected to
          account for its  stock-based  compensation  to employees under APB No.
          25.

                                      F-9
<PAGE>
                                             EMERGENT GROUP INC AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2005

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

          Advertising Expense
          -------------------
          The Company  expenses  advertising  in  the periods the  services  are
          performed. For the years ended December 31, 2005 and 2004, advertising
          expense was $31,511 and $19,338, respectively.

          Income Taxes
          ------------
          The Company  accounts  for income  taxes under the  liability  method,
          which requires the  recognition of deferred tax assets and liabilities
          for the  expected  future tax  consequences  of events  that have been
          included  in the  financial  statements  or tax  returns.  Under  this
          method,  deferred income taxes are recognized for the tax consequences
          in future  years of  differences  between  the tax bases of assets and
          liabilities and their financial  reporting  amounts at each period end
          based on enacted tax laws and  statutory  tax rates  applicable to the
          periods  in which the  differences  are  expected  to  affect  taxable
          income.  Valuation  allowances are  established,  when  necessary,  to
          reduce deferred tax assets to the amount expected to be realized.  The
          provision for income taxes, if any, represents the tax payable for the
          period and the change  during  the period in  deferred  tax assets and
          liabilities.

          Earnings Per Share
          ------------------

          The  Company  utilizes  SFAS No.  128,  "Earnings  per  Share."  Basic
          earnings per share is computed by dividing income  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 shares 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.  As of
          December 31, 2005,  common stock equivalents used in determining fully
          diluted shares outstanding  consist only of options to purchase common
          stock.

          Estimates
          ---------
          The preparation of financial  statements  requires  management to make
          estimates and assumptions  that affect the reported  amounts of assets
          and liabilities and disclosure of contingent assets and liabilities at
          the date of the  financial  statements  and the  reported  amounts  of
          revenue and expenses during the reporting period. Actual results could
          differ from those estimates.

          Reclassifications
          -----------------
          Certain amounts included in the prior years' financial statements have
          been reclassified to conform with the current year presentation.  Such
          reclassifications do not have any effect on reported net income.



                                      F-10
<PAGE>
                                             EMERGENT GROUP INC AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2005

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




          Recently Issued Accounting Pronouncements
          -----------------------------------------
          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 will  implement  SFAS No. 154 in its fiscal year beginning
          January 1, 2006.  We are currently  evaluating  the impact of this new
          standard, but believe that it will not have a material impact upon the
          Company's financial position, results of operations or cash flows.

          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  instruments.  The Company is currently  evaluating  the
          impact  of this new  Standard,  but  believes  that it will not have a
          material  impact  on the  Company's  financial  position,  results  of
          operations or cash flows.

          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.  Management is currently assessing the effect of SFAS No. 123(R)
          on the Company's financial statements.

                                      F-11
<PAGE>

                                             EMERGENT GROUP INC AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2005

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


NOTE 3 - INVENTORY

         Inventory consists of the following:
<TABLE>
<CAPTION>
                                                                                      December 31,
                                                                          -----------------------------------
                                                                                  2005                2004
                                                                          ---------------    ----------------
<S>                                                                       <C>                <C>
            Fibers and other disposables                                  $       697,744    $        514,660
            Less: reserve for excess/obsolescence inventory                       (80,148)           (141,916)
                                                                          ---------------    ----------------

                Total                                                     $       617,596    $        372,744
                                                                          ===============    ================
</TABLE>
          In 2005,  based on an analysis of inventory usage, the Company reduced
          its reserve for excess  obsolete  inventory  from $141,916 to $80,148.
          The  reduction  in the reserve is included as a reduction  in costs of
          goods sold in the  accompanying  statement of operations  for the year
          ended December 31, 2005.

NOTE 4 -  EQUITY INVESTMENT IN 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
          December 31, 2005 PRI Medical holds minority equity  interests in four
          LLCs which conduct  business in California and Colorado.  During 2005,
          PRI Medical  helped to form two new LLCs,  which  subsequently  raised
          total capital of $200,000 from  investors.  In late 2005, PRI Medical,
          on behalf of such LLCs, acquired two surgical lasers for $650,000. The
          LLCs  finalized  lease  financing  of $600,000  for such  equipment in
          January  2006.  The cost of the  equipment is included in property and
          equipment and the related  payable is included in accounts  payable in
          the accompanying  balance sheet as of December 31, 2005. The investors
          in  each  LLC  agreed  to  provide  individual   proportionate   lease
          guarantees  based on their  respective  ownership  percentages  in the
          LLCs.  PRI Medical  provided  corporate  guarantees  to the  financing
          company in  connection  with such lease  financing.  In addition,  the
          investors in each LLC agreed to indemnify PRI Medical  against losses,
          if any, incurred in connection with its guarantees.

          For the years ended December 31, 2005 and 2004 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.


                                      F-12
<PAGE>
                                             EMERGENT GROUP INC AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2005

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



NOTE 5 - PROPERTY AND EQUIPMENT

         Property and equipment consists of the following:
<TABLE>
<CAPTION>
                                                                                            December 31,
                                                                                        2005                2004
                                                                                ---------------    ----------------
<S>                                                                             <C>                <C>
                  Rental equipment                                              $     5,705,391    $      4,295,324
                  Furniture and fixtures, including computers                           166,756             143,377
                  Capitalized software cost                                             114,214             114,215
                  Transportation equipment                                              354,341             269,435
                  Leasehold improvements                                                  5,901               5,901
                                                                                ---------------    ----------------

                                                                                      6,346,603           4,828,252
                  Less accumulated depreciation and amortization                      3,878,680           2,931,943
                                                                                ---------------    ----------------

                      Total                                                     $     2,467,923    $      1,896,309
                                                                                ===============    ================
</TABLE>


          The historical cost value and net book value of property and equipment
          under lease  financing at December 31, 2005 is $962,622 and  $804,856,
          respectivly  and $431,958 and $393,473 for the year ended December 31,
          2004, respectively.


          Depreciation and  amortization  expense for property and equipment was
          $1,008,421  and  $1,186,272  for the years ended December 31, 2005 and
          2004  respectively.
NOTE 6 -  LINE OF CREDIT

          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 eligible receivables, as defined. Borrowings under the
          Revolver and Term Note bear  interest at the prime rate,  plus 2%. The
          Credit  Facility  also  provides  for payment of a monthly  collateral
          management  fee equal to 20 basis points  (0.2%) 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 payoff  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.   The  Company  has   $853,780  of  borrowing
          availability under the Credit Facility as of December 31, 2005.

          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 200,500 were
          issued to the executive  officers,  and 64,000 shares to one director.
          The guarantors have each entered into an agreement with the Company to
          return the shares that they received in consideration of their limited


                                      F-13
<PAGE>
                                             EMERGENT GROUP INC AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2005

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



          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 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  guarantee  period  of  24  months.   Deferred  compensation
          amortization expense was $32,329 for the year ended December 31, 2005.

          The Company incurred  interest expense on borrowings under its line of
          credit  agreements of $43,687 and $43,751 for the years ended December
          31, 2005 and 2004, respectively, which is included in interest expense
          in the accompanying statements of operations.

NOTE 7 -  NOTES PAYABLE

          Notes payable consists of the following:
<TABLE>
<CAPTION>
                                                                                              December 31,
                                                                                   ---------------------------------
                                                                                        2005                2004
                                                                                   -------------      --------------
<S>                                                                                <C>                 <C>
         Note payable  to  a  finance  company,  interest  at 6.75% with monthly
             principal  and interest payments of $18,013 due monthly through May
             2007. The note is collateralized by certain medical equipment.        $    291,228      $      480,701

         Term note  payable  to  a  capital company, with interest and principal
             payable  monthly  at  the  prime rate (7.25% at December 31, 2005),
             plus 2%. The note  is  collateralized  by  accounts  receivable and
             equipment, unpaid principal and interest are due on May 27, 2007.          146,220                   -

         Note payable to certain principals  of  seller  in  connection with the
             purchase of certain operating  assets,  non-compete agreements  and
             customer   list.  Quarterly   principal  payments  of  $31,250  due
             beginning on February 1, 2006.                                             375,000                   -

         Note payable  to  bank,  as  amended,  provides  for  monthly  interest
             payments at  the  prime  rate (5.25% at December 31, 2004), plus 2%
             and   monthly   principal   payments   of  $16,667.  The   note  is
             collateralized  by  accounts  receivable,  inventory  and equipment.
             Principal and unpaid accrued interest due on May 31, 2005.                       -             199,775
                                                                                  -------------      --------------

                                                                                        812,448             680,476
                      Less current portion                                              434,309             389,247
                                                                                  -------------      --------------

                  Long-term portion                                               $     378,139      $      291,229
                                                                                  =============      ==============

</TABLE>
                                      F-14
<PAGE>
                                             EMERGENT GROUP INC AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2005

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


          Future  maturities  of notes  payable  at  December  31,  2005 were as
          follows:

                      Year Ending
                      December 31,
                      ------------
                      2006                   $434,309
                      2007                    253,139
                      2008                    125,000
                                             --------
                      Total                  $812,448
                                             ========

NOTE 8 - ACCRUED EXPENSES

         Accrued expenses consists of the following:
<TABLE>
<CAPTION>
                                                                                            December 31,
                                                                                        2005                2004
                                                                                ---------------    ----------------
<S>                                                                             <C>                <C>
                  Accrued payroll and payroll related amounts                   $       569,821    $        269,684
                  Accrued payable - vendors                                             107,385             136,208
                  Accrued professional fees                                              61,512              75,470
                  Accrued interest                                                       15,141              16,782
                  Taxes payable                                                         119,717              85,895
                  Other                                                                 119,002             100,205
                                                                                ---------------    ----------------
                      Total                                                     $       992,578    $        684,244
                                                                                ===============    ================
</TABLE>
NOTE 9 - COMMITMENTS AND CONTINGENCIES

          Operating and Capital Leases
          ----------------------------
          The  Company   leases  an   office/warehouse   facility  in  Glendale,
          California,  which  also  serves as the administrative  and  corporate
          office.  The lease is scheduled to expire in July 2006,  however,  the
          Company is  negotiating  with the landlord to extend the lease.  Total
          rent expense  incurred for the years ended  December 31, 2005 and 2004
          was  $174,835 and  $168,284,  respectively.  In addition,  the Company
          leases two other  office/warehouse  facilities in Northern  California
          and Colorado  with a total of 2,620  square  feet.  Total rent expense
          incurred  for these  facilities  was $26,500 and $35,857 for the years
          ended December 31, 2005 and 2004, respectively.

          The Company leases certain of its vehicles under various operating and
          financing leases. The operating leases are scheduled to expire between
          December 2006 and January 2010. Thereafter,  such leases will continue
          under a  month-to-month  lease term until such time the  vehicles  are
          either returned to the lessor or purchased.  Total rental expenses for
          vehicles  for the years ended  December  31, 2005 and 2004 was $50,431
          and $51, 788 respectively.

          At December 31, 2005 the Company is obligated  under  several  capital
          equipment  leases with various finance  companies.  The capital leases
          bear interest at rates between 6.6% and 11.69% per annum.  The monthly
          capital  lease  payments  range  between  $99 to $3,057 and  terminate
          through December 2010.

                                      F-15
<PAGE>
                                             EMERGENT GROUP INC AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2005

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



          Future minimum lease  payments  under  operating and capital leases at
          December 31, 2005 were as follows:
<TABLE>
<CAPTION>

                 Year Ending                                               Operating           Capital
                  December 31,                                              Leases              Leases
                                                                       ---------------    ----------------
<S>                   <C>                                              <C>                <C>
                      2006                                             $       198,303    $        529,624
                      2007                                                      80,033             296,487
                      2008                                                      49,284             152,713
                      2009                                                      45,127              80,387
                      2010                                                      45,923                 503
                                                                       ---------------    ----------------
                           Total minimum lease payments                $       418,670           1,059,714
                                                                       ===============
                      Less amounts representing interest                                           115,498
                                                                                          ----------------
                                                                                                   944,216
                                 Less current portion                                              490,061
                                                                                          ----------------

                                 Long-term portion                                        $        454,155
                                                                                          ================

</TABLE>
          Litigation
          ----------

          From time to time, we may become involved in litigation arising out of
          operations  in the normal  course of  business.  Except for the matter
          discussed  below,  as of December 31, 2005,  we are not a party to any
          pending  legal  proceedings  the outcome of which could  reasonably be
          expected to have a material adverse effect on our operating results or
          financial position.

          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").

          The civil lawsuit,  which was signed by the clerk on February 2, 2005,
          is brought in the United States District Court,  Southern  District of
          New York,  is an action 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. Management does not believe that this matter will
          have a  significant  impact on the  Company's  financial  position  or
          results of operations.


                                      F-16
<PAGE>
                                             EMERGENT GROUP INC AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2005

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



NOTE 10 - SHAREHOLDERS' EQUITY

          Common Stock
          ------------

          During the year ended  December 31, 2005,  the Company  completed  the
          following transactions:

          o    In March 2005 the  Company  issued  73,000  options  to  purchase
               common  stock to various  employees  under its 2002 Stock  Option
               Plan.  Such options vest in equal annual  installments  over five
               years at an exercise price of $0.40 per share. In addition, a new
               director  of the  Company  received  options to  purchase  15,000
               shares  at an  exercise  price  of  $0.40  per  share  which  are
               immediately  vested.  The value of the 15,000 options  determined
               under the Black Sholes Valuation Method is not significant.

          o    In May 2005 an  aggregate  of 260,000  shares of our Common Stock
               were issued to  executive  officers and a director of our Company
               in connection  with certain limited loan guarantees in connection
               with  the  Company's  revolving  line of  credit  and  term  loan
               agreements.   The  Company  recognized  compensation  expense  of
               $104,000 in connection with the issuance of shares which is being
               amortized over the guarantee period of two years.

          o    An  aggregate of 105,000  restricted  award shares were issued to
               executive  officers and  directors  of the  Company,  subject  to
               vesting in five equal annual installments  commencing November 2,
               2006 and the  forfeiture of the  non-vested  portion in the event
               that  recipient is no longer serving as an officer or director of
               our Company at the time of vesting,  subject to the Board's right
               to waive the forfeiture provisions.

          o    An aggregate of 324,000 shares of common stock valued at $184,680
               were  issued  pursuant  to the  Company's  agreement  to  acquire
               certain assets of a competitor  and to certain  principals of the
               Seller entering into a non-compete agreements.

          o    On November 28, 2005 the Company's Board of Directors  declared a
               cash  dividend of $0.10 per share to our common  shareholders  of
               record on December 14, 2005, which is payable on January 5, 2006.


          Stock Option Plans
          ------------------

          Pursuant to the merger  agreement  between Emergent and PRI Medical in
          July 2001,  each  outstanding  PRI Medical stock option  automatically
          converted into an option in shares of Emergent's common stock with the
          same terms and  conditions  as were  applicable  under the PRI Medical
          stock option plans. At the date of the merger, Emergent assumed all of
          the outstanding options of PRI Medical,  which allowed the purchase of
          14,120  (post  split)  shares of  Emergent's  common stock at exercise
          prices  ranging from $27.20  (post split) to $162.00  (post split) per
          share. The Company does not intend to grant any more options under the
          PRI Medical plans.

          During the year ended December 31, 2001, the Company  adopted the 2001
          Stock Option Plan (the "2001  Plan").  The purpose of the 2001 Plan is
          to provide  incentive to key employees,  officers,  and consultants of
          the Company who provide  significant  services to the  Company.  There
          were  200,000  shares  available  for grant  under the 2001 Plan,  but
          during  the year ended  December  31,  2002 the  Company  reduced  the
          authorized   shares   issuable   under  the  Plan  to  14,625   shares
          representing  the actual number of options  outstanding  at that time.
          Options  will not be granted for a term of more than 10 years from the
          date of grant. In the case of incentive stock options granted to a 10%
          shareholder,  the term of the  incentive  stock option must not exceed
          five years from the date of grant. Generally, options vest evenly over
          a period of five years, and the 2001 Plan expires December 31, 2011.

                                      F-17
<PAGE>
                                             EMERGENT GROUP INC AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2005

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


          Non-statutory  stock options may be granted at any price determined by
          the Board  even if the  exercise  price of the  options  is at a price
          below the fair market value of the Company's  common stock on the date
          of grant.  The purchase price of an incentive  stock option may not be
          less than the fair  market  value of the  common  stock at the time of
          grant,  except  in the  case  of a 10%  shareholder  who  receives  an
          incentive  stock option;  the purchase price may not be less than 110%
          of such fair market  value.  The  aggregate  fair market  value of the
          stock  for  which  incentive  stock  options  are  exercisable  by any
          employee during any calendar year must not exceed $100,000.

          Since  shareholder  approval was not obtained on or before November 1,
          2002,  all incentive  stock  options  granted under the 2001 Plan have
          automatically  become  non-statutory  stock options,  and the Board is
          limited to granting non-statutory stock options under the 2001 Plan.

          In April 2002,  the  Company  adopted  the 2002  Employee  Benefit and
          Consulting  Services  Compensation Plan (the "2002 Plan"). The purpose
          of the 2002 Plan is to provide  incentive to key employees,  officers,
          and consultants of the Company who provide significant services to the
          Company.  As of December 31,  2005,  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.

          During the years ended  December 31, 2005 and 2004, the Company issued
          to employees  options to purchase  73,000 and 95,000  shares of common
          stock under the 2002 Plan. Of the options granted to employees  during
          2005,  25,000  options were granted to the Company's  Chief  Financial
          Officer.  The options granted in 2005 and 2004 have a 10-year term and
          are  exercisable  at $0.40 per  share.  Generally,  one-fifth  of each
          issuance  vests over five  consecutive  years.  During the years ended
          December 2005 and 2004,  options to purchase 55,945 and 228,909 shares
          of common stock were cancelled due to employee terminations.




                                      F-18
<PAGE>
                                             EMERGENT GROUP INC AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2005

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



          A summary of the  Company's  outstanding  options  and  activity is as
          follows:
<TABLE>
<CAPTION>
                                                                               Weighted-
                                                                                Average
                                                            Number             Exercise
                                                          of Options             Price
                                                       ---------------    ----------------
<S>                                <C>                         <C>        <C>
              Outstanding, January 1, 2004                     547,953    $           2.28
                 Granted                                        95,000    $           0.40
                 Canceled                                     (228,909)   $           2.30
                                                       ---------------

              Outstanding, December 31, 2004                   414,044    $           1.84
                 Granted                                        88,000    $           0.40
                 Exercised                                     (18,080)   $           0.40
                 Canceled                                      (52,865)   $           3.14
                                                       ---------------

              Outstanding, December 31, 2005                   431,099    $           1.45
                                                       ===============
              Exercisable, December 31, 2005                   268,286    $           1.90
                                                       ===============
</TABLE>
               The  weighted-average  remaining  contractual life of the options
          outstanding  at December 31, 2005 is 7.80 years.  The exercise  prices
          for the options  outstanding at December 31, 2005 ranged from $0.40 to
          $162.16, and information relating to these options is as follows:
<TABLE>
<CAPTION>
                                                                                    Weighted-        Weighted-
                                                                  Weighted-          Average          Average
                                                                   Average           Exercise         Exercise
             Range of              Stock             Stock       Remaining           Price of         Price of
             Exercise            Options           Options       Contractual         Options           Options
                Prices       Outstanding        Exercisable            Life       Outstanding       Exercisable
         ------------------  ---------------   ---------------  ----------------  ---------------  ----------------
<S>      <C>                           <C>             <C>            <C>         <C>              <C>
         $             0.40          417,589           254,776        7.85 years  $          0.40  $           0.40
         $      2.00 - 8.00            4,000             4,000        7.23 years  $          5.00  $           5.00
         $    20.00 - 51.00            9,339             9,339        5.98 years  $         38.66  $          38.66
         $           162.16              171               171        1.51 years  $        162.16  $         162.16
                             ---------------   ---------------

         $    0.40 - 162.16          431,099           268,286        7.80 years  $          1.45  $           1.90
                             ===============   ===============
</TABLE>
          The Company has adopted  only the  disclosure  provisions  of SFAS No.
          123. It applies APB No. 25 and related  interpretations  in accounting
          for its  plans and does not  recognize  compensation  expense  for its
          stock-based  compensation  plans other than for  restricted  stock and
          options issued to outside third parties and to restricted stock awards
          issued to  employees  and  directors.  If the  Company  had elected to
          recognize  compensation expense based upon the fair value at the grant
          date  for  awards  under  these  option  plans   consistent  with  the
          methodology prescribed by SFAS 123, the Company's net income and basic
          and diluted  earnings per share for the years ended  December 31, 2005
          and 2004 would be as follows:



                                      F-19
<PAGE>
                                             EMERGENT GROUP INC AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2005

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                        December 31,
                                                                                       2005                2004
                                                                                   ------------        -----------
<S>                                                                             <C>               <C>
                  Net income
                      As reported                                               $       966,252   $          23,280
                      Pro forma                                                 $       921,129   $           5,009
                  Basic earnings per share
                      As reported                                               $          0.20   $            0.00
                      Pro forma                                                 $          0.19   $            0.00
                  Diluted earnings per share
                      As reported                                               $          0.19   $            0.00
                      Pro forma                                                 $          0.18   $            0.00
</TABLE>
          For purposes of computing the pro forma  disclosures  required by SFAS
          No.  123,  the fair  value of each  option  granted to  employees  and
          directors is estimated using the  Black-Scholes  option-pricing  model
          with the following  weighted-average  assumptions  for the years ended
          December   31,  2005  and  2004:   dividend   yields  of  0%  and  0%,
          respectively;  expected  volatility  of 100% and  150%,  respectively;
          risk-free interest rates of 3.9% and 3.3%, respectively;  and expected
          lives of seven and five years, respectively. The weighted-average fair
          value of all options  granted  during the year ended December 31, 2005
          was $0.38, and the weighted-average exercise price was $0.40.

          The  Black-Scholes  option  valuation  model was  developed for use in
          estimating  the fair  value of traded  options  which  have no vesting
          restrictions and are fully transferable. In addition, option valuation
          models require the input of highly  subjective  assumptions  including
          the expected stock price  volatility.  Because the Company's  employee
          stock options have characteristics  significantly different from those
          of  traded  options,  and  because  changes  in the  subjective  input
          assumptions  can  materially  affect  the  fair  value  estimate,   in
          management's opinion, the existing models do not necessarily provide a
          reliable  single  measure  of the  fair  value of its  employee  stock
          options.

NOTE 11 - INCOME TAXES

          The  components  of the  income  tax  provision  for the  years  ended
          December 31, 2005 and 2004 are as follows:

                                                   2005               2004
                                            -----------------         -------

                  Current                   $         27,007          $   -0-
                  Deferred                                -0-             -0-
                                            -----------------         -------
                    Total                   $         27,007          $   -0-
                                            =================         =======

          A  reconciliation  of the  provision  for income tax expense  with the
          expected income tax computed by applying the federal  statutory income
          tax rate to income  before  provision  for income taxes was as follows
          for the years ended December 31, 2005 and 2004:

                                      F-20
<PAGE>
                                             EMERGENT GROUP INC AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2005

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

<TABLE>
<CAPTION>
                                                                    2005              2004
                                                               ------------      --------------
<S>                                                                                       <C>
                  Income tax computed at federal
                    statutory tax rate                               34.00%               34.00%
                  State taxes, net of federal benefit                 5.50                 4.00
                  Other                                               8.87               (19.23)
                  Increase in valuation allowance                   (45.98)              (16.55)
                                                               ------------      --------------

                    Total                                             2.39%                2.22%
                                                               ============      ==============
</TABLE>
          The tax effects of  temporary  differences  that give rise to deferred
          taxes at December 31, 2005 and 2004 are as follows:
<TABLE>
<CAPTION>

                                                                                      2005                2004
                                                                                ---------------   ----------------
<S>                                                                             <C>
                  Deferred tax assets
                      Fixed assets                                              $   (126,663)     $       (112,049)
                      Capital loss carryover                                       1,358,059             1,287,853
                      Net operating loss carryforwards                             4,806,032             5,402,435
                      Other                                                          322,741               328,306
                                                                                ---------------   ----------------

                  Total gross deferred tax assets                                  6,360,169             6,906,545
                  Less valuation allowance                                         6,360,169             6,906,545
                                                                                ---------------    ---------------

                           Net deferred tax assets                              $           -0-   $             -0-
                                                                                ===============   ================

</TABLE>
          All other  deferred  tax assets were  immaterial.  As of December  31,
          2005,  the  Company  had  approximately  $13,763,035  in  federal  net
          operating  loss   carryforwards   and  $1,432,122  in  California  net
          operating loss carryforwards attributable to losses incurred since the
          Company's  inception  that may be offset against future taxable income
          through 2020 and 2010,  respectively.  Because of statutory  ownership
          changes,  the  amount of  operating  loss  carryforwards  which may be
          utilized in future years is subject to significant limitations.

NOTE 12 - BENEFIT PLAN

          The Company has a profit sharing plan  established in accordance  with
          Section 401(k) of the Employee Retirement Income Security Act of 1974,
          as  amended.  Substantially  all  full-time  employees  with  specific
          periods of service are eligible to participate. Employee contributions
          to the plan are elective.  For the year ended  December 31, 2005,  the
          Company  contributed  $2,486 through the use of forfeitures and $6,440
          in cash.

NOTE 13 - RELATED PARTY TRANSACTIONS

          The Company incurred  reimbursable  expenses of $33,097 and $30,537 to
          BJH  Management,  LLC,  which is owned by the  Company's  Chairman and
          Chief Executive Officer,  for office rent and related expenses for the
          years ended December 31, 2005 and 2004, respectively.


                                      F-21


<PAGE>

Item  8.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
Financial Disclosure.
--------------------------------------------------------------------------------

     The Audit Committee of the Board of Directors unanimously approved engaging
a new independent firm to audit the Company's financial  statements for the year
ended  December 31, 2005. On December 12, 2005,  the Company  notified its prior
independent auditors,  Singer Lewak Greenbaum & Goldstein LLP ("SLGG"),  that it
was no longer the Company's independent auditor.

     SLGG's report on the Company's financial statements for the last two fiscal
years ended December 31, 2004 (collectively,  the "Prior Fiscal Years"), did not
contain an  adverse  opinion  or  disclaimer  of  opinion,  nor was such  report
qualified or modified as to uncertainty, audit scope or accounting principles.

     There were no disagreements  ("Disagreements") between the Company and SLGG
during  either (i) the Prior Fiscal  Years,  or (ii) the period  January 1, 2005
through  December 12, 2005 (the  "Interim  Period") on any matter of  accounting
principles or practices,  financial statement  disclosure,  or auditing scope or
procedure,  which  Disagreement,  if not resolved to the  satisfaction  of SLGG,
would  have  caused  SLGG  to  make  reference  to  the  subject  matter  of the
Disagreement in connection with its report for the Prior Fiscal Years.

     There were no reportable  events under Item  304(a)(1) of  Regulation  S-B,
during either (i) the Prior Fiscal Years or (ii) the Interim Period.

                                       23
<PAGE>
     The Company has engaged Rose,  Snyder & Jacobs  ("RSJ") as its  independent
auditor for Registrant's fiscal year ended December 31, 2005. Registrant did not
consult RSJ with respect to either (i) the Prior Fiscal Years,  (ii) the Interim
Period with respect to either the  application  of  accounting  principles  to a
specified  transaction,  either  completed  or  proposed,  or the  type of audit
opinion that might be rendered on the Company's financial  statements,  or (iii)
any matter that was either the subject of a Disagreement or a Reportable Event.

Item 8.A.  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  fiscal year
ended December 31, 2005. 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.

Item 8.B.  Other Information.
-----------------------------

           Not Applicable.


                                       24
<PAGE>
                                    PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act.
--------------------------------------------------------------------------------

     The names, ages and principal occupations of the Company's present officers
and directors are listed below.

                               First Became Director
  Name (1)              Age       and/or Officer            Position
  --------              ---    ---------------------        --------

  Bruce J. Haber        53             2003            Chairman of the Board and
                                                       Chief Executive Officer
  Louis Buther          52             2003            President and Chief
                                                       Operating Officer
  William M. McKay      51             2002            Chief Financial Officer,
                                                       Treasurer and Secretary
  Mark Waldron          38             2000            Director
  Howard Waltman        73             2001            Director
  K. Deane Reade, Jr.   65             2005            Director
------------------

(1)  Directors are elected at the annual meeting of stockholders and hold office
     until the following annual meeting.

     The  terms of all  officers  expire  at the  annual  meeting  of  directors
following the annual stockholders meeting. Officers serve at the pleasure of the
Board  and may be  removed,  either  with or  without  cause,  by the  Board  of
Directors, and a successor elected by a majority vote of the Board of Directors,
at any time. There is currently one vacancy on the Company's Board of Directors.

     Bruce J.  Haber has  served as  Chairman  of the Board and Chief  Executive
Officer since January 31, 2003. Since 2000, Mr. Haber has served as President of
BJH Management, LLC, a management firm specializing in turnaround consulting and
private equity investments,  which served as a consultant to the Company between
October 2001 and January 2003.  From October 2001 until December 2002, Mr. Haber
served on the Board of  Directors  of EB2B  Commerce,  Inc. a computer  software
company.  From March 2002 to December  2002 Mr.  Haber served as Chairman of the
Board and as a turnaround consultant to EB2B. Mr. Haber served as Executive Vice
President and a Director of Henry Schein, Inc., an international  distributor of
healthcare  products,  as well as President of their  Medical Group from 1997 to
1999.  From 1981 to 1997,  Mr.  Haber served as  President,  CEO and Director of
Micro  Bio-Medics,  Inc., and Caligor Medical Supply  Company,  a distributor of
physician  and hospital  supplies,  which merged with Henry Schein in 1997.  Mr.
Haber also serves as a director of several  privately held companies.  Mr. Haber
holds a  Bachelor  of  Science  degree  from the City  College of New York and a
Master of Business Administration from Baruch College in New York.

     Louis Buther has served as President of the Company since January 31, 2003.
Mr.  Buther  has  served as an  independent  consultant  since  2000,  including
providing  consulting  services to the Company  between October 2001 and January
2003.  From 1997  through  2000,  Mr.  Buther was Senior Vice  President  of the
Medical  Division of Henry Schein,  Inc. From 1983 to 1997, Mr. Buther served as
Vice President of Micro  Bio-Medics,  Inc., and Caligor  Medical Supply Company,
which  merged with Henry Schein in 1997.  Mr.  Buther  holds an  Associates  Art
Science  Degree in  Chemistry  from Bronx  Community  College  and a Bachelor of
Science Degree in Pharmacy from Long Island University.

                                       25
<PAGE>
     William M. McKay has served as Chief Financial Officer of the Company since
August  2002.  From August  2000 to August  2002,  he served as Chief  Financial
Officer and as a  consultant  for EV Global  Motors  Company,  a privately  held
consumer products  company.  From December 1998 to July 2000 Mr. McKay served as
Chief Financial Officer and Secretary for Internet  Dynamics,  Inc., a privately
held software  development  company.  From  February  1998 to November  1998, he
served as Chief  Financial  Officer for Koo Koo Roo,  Inc., a publicly held food
services  company.  From May 1995 to February  1998,  Mr.  McKay served as Chief
Financial  Officer and Secretary for View Tech, Inc., a publicly held technology
company.  Mr.  McKay  also has ten years of public  accounting  experience  with
Deloitte  &  Touche,  where he last  served  as a senior  manager  in its  audit
department.  Mr. McKay is a member of the American Institute of Certified Public
Accountants  and holds a Bachelor of Science  Degree in business  administration
with an emphasis in accounting from the University of Southern  California - Los
Angeles.

     Mark Waldron has served as a director of the Company since August 2000. Mr.
Waldron  also served as  President  and Chief  Executive  Officer of the Company
between  August  2000 and  January  2003,  and has served as a  director  of PRI
Medical since September 2000. Since 1998 Mr. Waldron's principal  occupation has
been as a private  investor.  Mr.  Waldron is a former  Vice  President  of J.P.
Morgan in New York and was with the firm from 1993 to 1998. Mr. Waldron received
his MBA from Northwestern  University's Kellogg School of Management,  and prior
to attending  business  school  worked at Bankers  Trust.  He received a BA with
honors from the Richard  Ivey  School of Business at the  University  of Western
Ontario.

     Howard  Waltman has served as a director of the Company and Chairman of the
Compensation  Committee  since  2001.  Since  2000,  Mr.  Waltman has acted as a
private  investor for a family limited  liability  corporation.  Since 1986, Mr.
Waltman  serves as a director  of Express  Scripts,  Inc.  ("ESI"),  and was its
Chairman from 1986 to 2000.  ESI was formed in 1986 as a subsidiary of Sanus,  a
company formed in 1983 by Mr.  Waltman,  who served as its Chairman of the Board
from 1983 to 1987.  Sanus was  acquired  by New York Life  Insurance  Company in
1987. ESI provides mail order pharmacy  services and pharmacy claims  processing
services  and was spun out of Sanus and taken public in June 1992.  Mr.  Waltman
also  founded  Bradford  National  Corp.  in 1968,  which was sold to  McDonnell
Douglas Corporation in 1981. From 1996 to 2000, Mr. Waltman served as a director
of Computer Outsourcing Services,  Inc. Mr. Waltman is currently a director of a
number of privately held companies.

     K. Deane Reade,  Jr. has been a Director of Emergent Group since September,
2005.  He currently  serves as Chairman of the Audit  Committee.  Mr. Reade is a
founder  and,  since 1975,  has served as  President  and a director of Bangert,
Dawes, Reade, Davis & Thom, Incorporated, a private investment banking firm with
offices in New York and San  Francisco.  Between 1989 and 1996, Mr. Reade served
as Managing Director of John Hancock Capital Growth  Management,  Inc. and was a
General  Partner  of its  affiliate  Gramercy  Hills  Partners.  Mr.  Reade is a
graduate of Rutgers  University.  He is a director  of ABC  Estonian  Shares,  a
closed  end  fund  (Isle of Man,  UK);  Abakus  Management  Co.,  an  investment
management  company  (  Tallinn,  Estonia);  Myers  Industries,  Inc.  (Lincoln,
Illinois).  He  currently  serves as a Trustee  of  private  trusts,  charitable
foundations and is on the advisory board of Trail Blazers Camps, Inc. (New York,
N.Y.) a 100 year old social service  organization  with a year round educational
program for  disadvantaged  children from the Metropolitan New York - New Jersey
area.

                                       26
<PAGE>
COMMITTEES
----------

     The  Company  has no  standing  or  nominating  committees  of the Board of
Directors or committees performing similar functions.

Compensation Committee

     The Compensation  Committee consists of Bruce Haber,and Howard Waltman. The
Compensation Committee has such powers and functions as may be assigned to it by
the Board of Directors from time to time;  however,  such functions  shall, at a
minimum, include the following:

     o    to review and  approve  corporate  goals and  objectives  relevant  to
          senior executive  compensation,  evaluate senior executive performance
          in  light  of  those  goals  and  objectives,  and to set  the  senior
          executive compensation levels based on this evaluation;

     o    to approve  employment  contracts of its officers  and  employees  and
          consulting contracts of other persons;

     o    to  make  recommendations  to the  Board  with  respect  to  incentive
          compensation  plans  and  equity-based   plans,   including,   without
          limitation, the Company's stock options plans; and

     o    to administer the Company's stock option plans and grant stock options
          or other awards pursuant to such plans.

Audit Committee
---------------

     The members of the Company's audit committee  consist of Howard Waltman and
K. Deane Reade,  Jr. as its Chairman,  each of whom were deemed by Management to
be independent directors. K. Deane Reade, Jr. may be deemed a "Financial Expert"
within the meaning of Sarbanes Oxley Act of 2002, as amended.  The definition of
"independent  director"  is defined in Rule  4200(a)(14)  of the NASD's  Listing
Standards.  The  NASD's  listing  standards  define  an  "independent  director"
generally as a person, other than an officer of the Company, who does not have a
relationship with the Company that would interfere with the director's  exercise
of independent judgment.  The term "Financial Expert" is defined as a person who
has the following attributes:  an understanding of generally accepted accounting
principals  and  financial  statements;  has the  ability to assess the  general
application of such  principals in connection with the accounting for estimates,
accruals and reserves;  experience preparing,  auditing, analyzing or evaluating
financial  statements  that  present  a  breadth  and  level  of  complexity  of
accounting issues that are generally comparable to the breadth and complexity of
issues that can  reasonably be expected to be raised by the Company's  financial
statements,  or experience  actively  supervising one or more persons engaged in
such  activities;  an  understanding  of internal  controls and  procedures  for
financial reporting; and an understanding of audit committee functions.

                                       27
<PAGE>
     Effective May 20, 2003,  the Board adopted a written  charter for its Audit
Committee. The charter includes, among other things:

     o    being  directly  responsible  for the  appointment,  compensation  and
          oversight of the independent  auditor,  which shall report directly to
          the Audit Committee,  including  resolution of  disagreements  between
          management  and the auditors  regarding  financial  reporting  for the
          purpose of preparing or issuing an audit report or related work;

     o    annually  reviewing and  reassessing  the adequacy of the  committee's
          formal charter;

     o    reviewing the annual audited  financial  statements with the Company's
          management  and  its  independent  auditors  and the  adequacy  of its
          internal accounting controls;

     o    reviewing   analyses   prepared  by  the  Company's   management   and
          independent auditors concerning significant financial reporting issues
          and judgments made in connection with the preparation of its financial
          statements;

     o    reviewing the independence of the independent auditors;

     o    reviewing  the  Company's  auditing  and  accounting   principles  and
          practices with the independent auditors and reviewing major changes to
          its auditing and  accounting  principles and practices as suggested by
          the independent auditor or its management;

     o    reviewing  all  related  party  transactions  on an ongoing  basis for
          potential conflict of interest situations; and

     o    all  responsibilities  given to the Audit  Committee  by virtue of the
          Sarbanes-Oxley  Act of 2002  (which was signed  into law by  President
          George W. Bush on July 30, 2002) and all amendments thereto.

Code of Ethics
--------------

     Effective  March 3, 2003,  the  Securities & Exchange  Commission  requires
registrants  like the Company to either  adopt a code of ethics that  applies to
the Company's Chief Executive Officer and Chief Financial Officer or explain why
the Company has not adopted  such a code of ethics.  For purposes of item 406 of
Regulation  S-K,  the term "code of ethics"  means  written  standards  that are
reasonably designed to deter wrongdoing and to promote:

     o    Honest and ethical  conduct,  including the ethical handling of actual
          or apparent  conflicts of interest  between  personal and professional
          relationships;
     o    Full, fair, accurate,  timely and understandable disclosure in reports
          and  documents  that the  Company  files  with,  or  submits  to,  the
          Securities & Exchange  Commission  and in other public  communications
          made by the Company;
     o    Compliance with applicable governmental law, rules and regulations;
     o    The  prompt  internal  reporting  of  violations  of  the  code  to an
          appropriate person or persons identified in the code; and
     o    Accountability for adherence to the code.

     In this  respect,  the Company has adopted a code of ethics which was filed
as Exhibit 14.1 to the Company's 2003 Form 10-KSB. Changes to the Code of Ethics
will be filed under a Form 8-K or quarterly or annual  report under the Exchange
Act.

                                       28
<PAGE>
Compliance with Section 16(a) of the Exchange Act
-------------------------------------------------

     Section 16(a) of the Securities Exchange Act of 1934, as amended,  requires
our  officers  and  directors,  and  persons  who own more than ten percent of a
registered  class of our equity  securities,  to file reports of  ownership  and
changes  in  ownership  with  the  Securities  and  Exchange   Commission   (the
"Commission"). Officers, directors and greater than ten percent stockholders are
required  by the  Commission's  regulations  to  furnish  us with  copies of all
Section  16(a)  forms they  file.  During  fiscal  2005,  none of our  officers,
directors or 10% or greater stockholders filed any forms late to the best of our
knowledge;  however,  Howard  Waltman  filed  a Form 5 in lieu of a Form 4 for a
transaction involving out of the money options granted to him in 2001.

Item 10.  Compensation of Directors and Executive Officers.
-----------------------------------------------------------

     The following table provides a summary  compensation  table with respect to
the Company's three executive officers.  During the past three fiscal years, the
Company has not granted stock appreciation rights to its executive officers.  In
addition,  the Company does not have a defined  benefit or actuarial  plan other
than a 401(k) plan.

                           SUMMARY COMPENSATION TABLE
                           --------------------------
<TABLE>
<CAPTION>
--------------------------------------------------------------------------- ------------------------------------ --------------
                                                                                   Long Term Compensation
--------------------------------------------------------------------------- ------------------------------------ --------------
                                 Annual Compensation                        Awards                     Payouts
----------------------- -------- ------------------------------------------ -------------------------- --------- --------------
Name and                Year     Salary ($)    Bonus ($)     Other Annual   Restricted     Number of   LTIP      All Other
Principal Position                                           Compensation   Stock          Options     Payout    Compensation
                                                             ($)            Award(s) ($)               ($)        ($)
----------------------- -------- ------------- ------------- -------------- -------------- ----------- --------- --------------
<S>                      <C>     <C>           <C>           <C>            <C>     <C>      <C>         <C>       <C>
----------------------- -------- ------------- ------------- -------------- -------------- ----------- --------- --------------
Bruce J. Haber,          2005    $175,000      $95,900       $0             $22,800 (5)(6)   0           0         0
Chairman of the Board    2004    $175,000      0             $0             $0               0           0         0
and Chief Executive      2003    $153,125(1)   0             $61,212 (2)    $61,212 (2)      0           0         0
Officer

----------------------- -------- ------------- ------------- -------------- -------------- ----------- --------- --------------
Louis Buther,            2005    $161,000      $95,900       $0             $14,250 (5)(6)   0           0         0
President and Chief      2004    $161,000      $10,000       $0             $0               0           0         0
Operating Officer        2003    $140,875(1)   0             $45,909 (2)    $45,909 (2)      0           0         0


----------------------- -------- ------------- ------------- -------------- -------------- ----------- --------- --------------
William M. Mckay,        2005    $140,000      $65,000       $3,600         $8,550 (5)(6)    25,000 (3)  0         0
Chief Financial          2004    $140,000      $10,000       $3,600         $0               0           0         0
Officer                  2003    $140,000      0             $3,600         $0               75,000 (3)  0         0

----------------------- -------- ------------- ------------- -------------- -------------- ----------- --------- --------------
-----------
</TABLE>
     (1)  On October 15, 2001, the Company  retained BJH Management LLC ("BJH"),
          a company  owned by Bruce J.  Haber,  to provide  consulting  services
          before  Mr.  Haber's  and Mr.  Buther's  employment  contracts  became
          effective on January 31, 2003. Monies shown next to Messrs.  Haber and
          Buther  include  monies  paid  to BJH for the  respective  benefit  of
          Messrs.  Haber and  Buther,  it being noted that Mr.  Buther  provided
          consulting  services to the Company through BJH. However,  it does not
          include payments made by the Company to BJH which represent reimbursed
          office expenses which totaled $33,097,  $30,537 and $31,389 for fiscal
          2005, fiscal 2004 and fiscal 2003, respectively.

                                       29
<PAGE>
     (2)  On December 30, 2002, the Company entered into an agreement  described
          herein to issue an  aggregate of 348,575  shares to BJH in  connection
          with services  rendered.  An additional  535,606 shares were issued to
          BJH in  2003  in  connection  with  certain  anti-dilution  provisions
          contained  in the  agreement  and the  premature  termination  of such
          provisions.  The exercise  price for such shares of $107,121  ($61,212
          for Mr. Haber and $45,909 for Mr. Buther) was charged to  compensation
          expense for the year ended  December 31, 2003. Of the 348,575  shares,
          199,186  shares were  retained by Mr.  Haber in a family trust and are
          reflected  in the above  table.  The  remaining  149,389  shares  were
          transferred  by  agreement  to Mr.  Buther  and are shown in the table
          above.   Of  the  535,606  shares  issued  in  2003  pursuant  to  the
          anti-dilution  provisions,  306,060  shares were retained by Mr. Haber
          (before being  transferred in November 2005 to a new family trust) and
          the balance of 229,546  shares were  transferred  by  agreement to Mr.
          Buther.

     (3)  On March 22, 2005,  Mr. McKay was granted  25,000 common stock options
          at an exercise  price of $0.40 per share.  Such  options  will vest in
          five equal annual  installments  from the date of issuance  commencing
          March 22, 2006.

     (4)  In 2003 Mr.  McKay was  granted  75,000  common  stock  options  at an
          exercise  price of $0.40 per share.  Two-fifths  of such  options were
          immediately  vested with the remainder  vesting in equal  installments
          over three years from the date of issuance.

     (5)  In  November  2005,  Messrs  Haber,  Buther  and  McKay  were  granted
          restricted   stock  award   shares  of  40,000,   25,000  and  15,000,
          respectively,  which  vest in  equal  installments  over  five  years.
          Compensation  expense  at $.57 per share  related  to such  restricted
          award shares are being amortized over the five year vesting period. At
          December  31, 2005,  the  restricted  stock  awards of 40,000  shares,
          25,000  shares and 15,000  shares were valued at $22,800,  $14,250 and
          $8,550,  respectively,  based  upon a  discounted  six-month  weighted
          average  due to the  limited  and  sporadic  market for the  Company's
          Common Stock.

     (6)  The  following  transaction  is not  included  in the table above as a
          restricted  stock award granted in connection with services  rendered:
          In May 2005, the Company issued  restricted  shares to Messrs.  Haber,
          Buther and McKay of  89,500,  64,000  and  47,000 in  connection  with
          providing  limited  guarantees  to the lender in  connection  with the
          Company's  new $1 million  credit  facility as discussed  elsewhere in
          this Form 10-KSB.  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 the voluntary release from the
          limited  guarantees by the lender.  Compensation  expense at $0.40 per
          share related to the shares issued for the limited  guarantee is being
          amortized over the loan term of 24 months. In the event that the above
          table were to reflect the value of the  restricted  shares  granted on
          the date of issuance in connection with the limited  guarantees,  then
          Mr.  Haber,  Mr.  Buther and Mr.  Mckay  would have had an  additional
          $34,200,  $25,600  and $18,800  included in the table,  for a total of
          $57,000, $39,850 and $27,350, respectively.

Employment Agreements with Bruce J. Haber and Louis Buther
----------------------------------------------------------

     Pursuant to employment  contracts which currently  expire on June 30, 2006,
Mr. Bruce J. Haber became the Company's Chief Executive  Officer and was elected
to the Company's Board of Directors,  initially as Chairman and Mr. Louis Buther
became its President.  Messrs.  Haber and Buther are each  performing the duties
customary for an executive of such rank with a public company.  Mr. Haber is not
required to devote his full-time to the Company,  but is required to devote such
time as is necessary for the performances of his duties.  Mr. Buther is required
to devote his full  business  time to the  Company.  On or before June 1 of each
year,  the  Company  must offer to extend the  Employment  Agreement  of each of
Messrs.  Haber and Buther for a period of one  additional  year on terms no less
favorable  than  the  then  existing  terms  of  Messrs.  Haber's  and  Buther's
respective  Employment  Agreements,  unless such officer(s) has been released by
the applicable  institutional  lender(s) from all personal guarantees of company
loans or the  Company  has retired  all  outstanding  indebtedness  owed to such
lender(s).

                                       30
<PAGE>
     For Mr. Haber's  services,  he is receiving an annual base  compensation of
$175,000  (the "Haber Base  Salary")  payable in  semi-monthly  installments  or
otherwise in accordance with Company  policies.  For Mr. Buther's  services,  he
will receive  annual base  compensation  of $161,000 (the "Buther Base Salary"),
payable in  semi-monthly  installments  or otherwise in accordance  with Company
policies.  In addition,  in the event that pre-tax  profits  (subject to certain
adjustments approved by the Compensation  Committee) before Management's bonuses
are at least $1,035,000 for a calendar year, then Messrs. Haber and Buther shall
receive a bonus of $50,000 each,  increasing to $75,000 each, if pre-tax profits
are $1,150,000 plus 6% each of pre-tax profits over  $1,150,000.  Such bonus, if
earned, will be paid within 30 days after the end of each fiscal year end of the
Company.  Such incentive  targets were not achieved for the years ended December
31, 2004 and 2003, however,  Mr. Buther received a bonus of $10,000 for the year
ended December 31, 2004. For the year ended December 31, 2005, Messrs. Haber and
Buther each received a bonus of $95,900,  under the incentive plan noted herein.
In addition,  for the year ended December 31, 2003 Messrs. Haber and Buther were
issued  additional fully paid common shares under the Stock Issuance  Agreement.
The value of such shares,  based on the exercise  price of $0.20 per share,  for
Messrs.  Haber and Buther was $61,212 and  $45,909,  respectively.  Reference is
made to our Form  10-KSB  for the  fiscal  year ended  December  31,  2004 for a
description  of other  material  terms of the  employment  agreements of Messrs.
Haber and Buther.

Employment Arrangement - William M. McKay
-----------------------------------------

     In August  2002,  William M. McKay  became the  Company's  Chief  Financial
Officer  ("CFO")  pursuant to an  engagement  letter.  As CFO,  he is  currently
receiving a base salary of $140,000 per annum,  and participates in an incentive
bonus  program  generally  based on  Company  performance.  For the years  ended
December 31, 2005, 2004 and 2003, Mr. McKay received a bonus of $65,000, $10,000
and $-0- , respectively.  In addition,  Mr. McKay receives  Company-paid  health
insurance  benefits as well as an automobile  allowance of $300 per month. Since
the  commencement  of his  employment in 2002,  Mr. McKay has received  ten-year
options to purchase an aggregate of 130,000 shares of the Company's Common Stock
at an exercise price of $0.40 per share with varying vesting dates. In the event
that the Company  terminates  Mr. McKay without  cause,  he shall be entitled to
receive six months severance pay.

Directors' Compensation
-----------------------

     Directors do not presently receive compensation for serving on the Board or
on its committees other than the grant of stock options and/or  restricted stock
awards.  Depending  on the  number of  meetings  and the time  required  for the
Company's operations,  the Company may decide to compensate its directors in the
future.

                                       31
<PAGE>
Restricted Stock Awards
-----------------------

     On November 2, 2005,  the Company  granted  restricted  stock awards to its
executive  officers and  directors  for services  rendered and to be rendered of
40,000 shares to Bruce J. Haber, 25,000 shares to Louis Buther, 15,000 shares to
William  McKay,  10,000  shares to each of Howard  Waltman and Mark  Waldron and
5,000 shares to K. Deane Reade, Jr. All of the aforementioned  shares shall vest
in five equal  annual  amounts  commencing  November 2, 2006 and the  non-vested
portion  is  subject  to  forfeiture  in the event  that the holder is no longer
serving as an officer or director of the Company,  subject to the Board's  right
to waive this forfeiture provision.

     In May 2005,  the  Company  entered  into an Accounts  Receivable  Purchase
Agreement and related loan  documents  with Access  Capital,  Inc. In accordance
with those agreements,  Bruce J. Haber, Louis Buther,  William M. McKay and Mark
Waldron  entered  into limited  personal  guarantees  in the form of  management
support  validity  agreements  ("AMSV").   In  consideration  of  their  limited
guarantees,  the Company issued 89,500 shares to Mr. Haber, 64,000 shares to Mr.
Buther,  47,000  shares to Mr.  McKay and  59,500  shares to Mark  Waldron.  The
Company obtained an agreement with each respective  guarantor so that all shares
issued to each  respective  guarantor  shall be  canceled  and  returned  to the
Company  in  the  event  that  the  individual  guarantor  on his  own  volition
terminates  or  breaches  his own AMSV  prior to the  earlier  of the  Company's
payment in full of its obligations to Access Capital or the voluntary release of
the guarantors from the AMSVs by Access Capital.

2002 Employee and Consulting Compensation Plan
----------------------------------------------

     On  April  1,  2002,  the  Company  established  an  Employee  Benefit  and
Consulting  Compensation  Plan (the "2002 Plan") covering 325,000 shares,  which
was approved by stockholders on August 5, 2003. Since  stockholder  approval was
not obtained by April 1, 2003, all  outstanding  Incentive Stock Options granted
under the 2002 Plan became  Non-Statutory  Stock Options and no Incentive  Stock
Options could be thereafter  granted under the 2002 Plan. On March 23, 2004, the
Board of Directors approved,  subject to stockholder  approval,  a 325,000 share
increase in the number of shares  covered by the Plan to 650,000  shares.  As of
March 17, 2006,  there were 417,589  stock  options  outstanding  under the 2002
Plan. Stockholders are expected to be asked to ratify the 325,000 share increase
in the 2002 Plan at its next stockholder meeting.

Administration
--------------

     Our  Board  of  Directors,  Compensation  Committee  or  both,  in the sole
discretion of our Board,  administer  the 2002 Plan.  The Board,  subject to the
provisions  of the 2002 Plan,  has the  authority  to  determine  and  designate
officers, employees,  directors and consultants to whom awards shall be made and
the terms, conditions and restrictions applicable to each award (including,  but
not limited to, the option price,  any  restriction or  limitation,  any vesting
schedule or acceleration  thereof, and any forfeiture  restrictions).  The Board
may, in its sole  discretion,  accelerate  the  vesting of awards.  The Board of
Directors  must  approve  all grants of Options and Stock  Awards  issued to our
officers or directors.

Types of Awards
---------------

     The  2002  Plan  is  designed  to  enable  us to  offer  certain  officers,
employees, directors and consultants of us and our subsidiaries equity interests
in us and other  incentive  awards in order to  attract,  retain and reward such
individuals   and  to  strengthen  the  mutuality  of  interests   between  such
individuals and our stockholders.  In furtherance of this purpose, the 2002 Plan
contains  provisions for granting  non-statutory  stock options (and  originally
incentive stock options which have now become  non-statutory  stock options) and
Common Stock Awards.

                                       32
<PAGE>
     Stock Options. A "stock option" is a contractual right to purchase a number
of  shares  of  Common  Stock at a price  determined  on the date the  option is
granted. The option price per share of Common Stock purchasable upon exercise of
a stock option and the time or times at which such options shall be  exercisable
shall be determined  by the Board at the time of grant.  Such option price shall
not be less than 100% of the fair market  value of the Common  Stock on the date
of grant.  The option price must be paid in cash,  money order,  check or Common
Stock of the Company.  The Options may also contain at the time of grant, at the
discretion of the Board, certain other cashless exercise provisions.

     Options  shall be  exercisable  at the times and subject to the  conditions
determined by the Board at the date of grant,  but no option may be  exercisable
more than ten years after the date it is granted.  If the Optionee  ceases to be
an  employee  of our  company  for any  reason  other  than  death,  any  option
(originally granted as an incentive stock option) exercisable on the date of the
termination  of employment may be exercised for a period of thirty days or until
the expiration of the stated term of the option, whichever period is shorter. In
the  event  of the  Optionee's  death,  any  option  (originally  granted  as an
incentive stock option) exercisable at the date of death may be exercised by the
legal heirs of the Optionee  from the date of death until the  expiration of the
stated term of the option or six months from the date of death,  whichever event
first  occurs.  In  the  event  of  disability  of  the  Optionee,  any  Options
(originally  granted as an incentive  stock  option)  shall expire on the stated
date that the Option would  otherwise have expired or 12 months from the date of
disability,  whichever event first occurs.  The termination and other provisions
of a non-statutory  stock option shall be fixed by the Board of Directors at the
date of grant of each respective option.

     Common  Stock Award.  "Common  Stock Award" are shares of Common Stock that
will be  issued  to a  recipient  at the end of a  restriction  period,  if any,
specified by the Board if he or she  continues  to be an  employee,  director or
consultant of us. If the recipient  remains an employee,  director or consultant
at the end of the restriction period, the applicable restrictions will lapse and
we will issue a stock  certificate  representing  such shares of Common Stock to
the  participant.  If  the  recipient  ceases  to be an  employee,  director  or
consultant of us for any reason  (including  death,  disability  or  retirement)
before the end of the  restriction  period  unless  otherwise  determined by the
Board, the restricted stock award will be terminated.

Eligibility
-----------

     Our officers,  employees,  directors and  consultants of Emergent Group and
our  subsidiaries  are eligible to be granted  stock  options,  and Common Stock
Awards.  Eligibility shall be determined by the Board;  however, all Options and
Stock Awards granted to officers and directors must be approved by the Board.

Termination or Amendment of the 2002 Plan
-----------------------------------------

     The Board may at any time amend, discontinue,  or terminate all or any part
of the 2002 Plan, provided,  however, that unless otherwise required by law, the
rights of a  participant  may not be impaired  without his or her  consent,  and
provided that we will seek the approval of our stockholders for any amendment if
such  approval  is  necessary  to comply  with any  applicable  federal or state
securities laws or rules or regulations.

                                       33
<PAGE>
Awards
------

     During  2005,  2004,  2003,  and 2002,  we granted  options to employees to
purchase 73,000, 95,000, 213,000 and 186,971 shares, respectively, of our Common
Stock  under the 2002  Plan.  The  options  are  exercisable  at $0.40 per share
(except  for 2,000  options  exercisable  at $2.00  per share and 2,000  options
exercisable  at $8.00 per  share),  236,615 of which have been  terminated  as a
result of employees  terminating  their  employment  with the Company.  To date,
options to purchase  18,880  common shares have been  exercised  under the Plan.
Unless  sooner  terminated,  the 2002 Plan will  expire on March 31, 2012 and no
awards may be granted after that date.

     It is not  possible  to predict the  individuals  who will  receive  future
awards  under the 2002 Plan or the number of shares of Common  Stock  covered by
any future award  because such awards are wholly  within the  discretion  of the
Board. The table below contains information as of December 31, 2005 on the known
benefits  provided to certain  persons and group of persons under the 2002 Plan.
Such table does not include options that have been exercised.
<TABLE>
<CAPTION>
   ----------------------------------------------------- ---------------- ---------------- ------------------------

                                                            Number of        Range of       Value of unexercised
                                                         Shares subject   exercise price     options at Dec. 31
                                                           to Options      ($) per Share          2005 (1)
   ----------------------------------------------------- ---------------- ---------------- ------------------------
<S>                                                             <C>            <C>                  <C>
   ----------------------------------------------------- ---------------- ---------------- ------------------------
   Bruce J. Haber, Chief Executive Officer                     -0-             $-0-                 $-0-
   ----------------------------------------------------- ---------------- ---------------- ------------------------
   Louis Buther, President                                     -0-             $-0-                 $-0-
   ----------------------------------------------------- ---------------- ---------------- ------------------------
   William M. McKay, Chief Financial Officer                 130,000          $0.40             $63,000 (1)
   ----------------------------------------------------- ---------------- ---------------- ------------------------
   Three Executive Officers as a group                       130,000          $0.40             $63,000 (1)
   ----------------------------------------------------- ---------------- ---------------- ------------------------
   Two non-employee Directors and two former Directors
   as a group                                                 55,000          $0.40             $63,250 (1)
   ----------------------------------------------------- ---------------- ---------------- ------------------------
   Non-Executive Officer
   Employees and Consultants                                 225,340       $0.40 - $8.00       $101,509 (1)
   ----------------------------------------------------- ---------------- ---------------- ------------------------
</TABLE>
----------

     (1)  Value is  calculated by  multiplying  (a) the  difference  between the
          market  value per share at December  31, 2005 and the option  exercise
          price by (b) the  number  of shares of  Common  Stock  underlying  the
          number of vested options.  Due to the limited and sporadic  trading of
          the Company's  Common Stock,  the value of  unexercised  options as of
          December 31, 2005 was  determined  using a six month  weighted-average
          price per share.

Other 2001 Stock Option Plans
-----------------------------

     The Company has established two other stock option plans,  neither of which
have any material amount of shares authorized and/or outstanding under the Plan.

                                       34
<PAGE>
                               OPTION GRANTS TABLE
                               -------------------

     The  information  provided in the table  below  provides  information  with
respect  to  individual  grants  of  stock  options  during  2005 of each of the
executive  officers named in the summary  compensation  table above. The Company
did not grant any stock  appreciation  rights during 2005.

<TABLE>
<CAPTION>
                        Option Grants in Last Fiscal Year
                        ---------------------------------
                                                                                             Potential
                                                                                         Realizable Value
                                                                                         at Assumed Annual
                                  Individual Grants                                    Rates of Stock Price
                                  -----------------
                                                                                            Appreciation
                                                                                         for Option Term (2)
                                                                                         -------------------
                                       (c)% of Total
                                      Options/Granted
                        Options       to Employees in    Exercise Price   Expiration
          Name         Granted (#)    Fiscal Year (1)        ($/Sh)          Date         5% ($)         10% ($)
          ----         ----------     ---------------       ------          ----         ------         -------
<S>                           <C>             <C>
 Bruce J. Haber              -0-             -0-               N/A            N/A           N/A             N/A
 Louis Buther                -0-             -0-               N/A            N/A           N/A             N/A
 William M. McKay          25,000            34%              $0.40         03/22/15       6,290           15,937
</TABLE>
-------------
N/A - Not Applicable.

(1)  The percentage of total options  granted to employees in the fiscal year is
     based upon options granted to officers, directors and employees.

(2)  The potential  realizable  value of each grant of options  assumes that the
     market price of the Company's  Common Stock  appreciates  in value from the
     date of grant to the end of the option term at  annualized  rates of 5% and
     10%,  respectively,  and after  subtracting  the  exercise  price  from the
     potential realizable value.

AGGREGATED  OPTION  EXERCISES  IN LAST  FISCAL  YEAR AND FISCAL  YEAR END OPTION
VALUES

     The  information  provided in the table  below  provides  information  with
respect to each  exercise of stock option  during 2005 by each of the  executive
officers named in the summary  compensation  table and the fiscal year end value
of unexercised options.

<TABLE>
<CAPTION>
           (a)                 (b)            (c)                  (d)                        (e)

                                                                                         Value of
                                                               Number of                 Unexercised
                              Shares                           Unexercised               In-the-Money
                             Acquired                           Options at                Options
                               on           Value              FY-End (#)                at FY-End($)
                             Exercise      Realized            Exercisable/              Exercisable/
          Name             (     #   )      ($)(1)             Unexercisable             Unexercisable(1)
          ----             ------------      ------      -     -------------             ----------------
<S>                              <C>            <C>                  <C>                    <C>    <C>
Bruce Haber                     -0-            -0-                  -0-                     $-0- / $-0-
Louis Buther                    -0-            -0-                  -0-                     $-0- / $-0-
William M. Mckay                -0-            -0-             84,000/46,000              $63,000/$34,500

</TABLE>
(1)  The  aggregate  dollar  values  in  column  (c) and (e) are  calculated  by
     determining  the  difference  between the fair  market  value of the Common
     Stock  underlying  the  options  and the  exercise  price of the options at
     exercise or fiscal year end, respectively.  In calculating the dollar value
     realized upon  exercise,  the value of any payment of the exercise price is
     not  included.  Due to the limited and  sporadic  trading of the  Company's
     Common Stock, the value of unexercised  options as of December 31, 2005 was
     determined using a six month weighted-average price per share.

                                       35
<PAGE>
PRI Medical Deferred Contribution Plan
--------------------------------------

     PRI Medical  has  adopted a defined  contribution  retirement  plan,  which
qualifies  under Section 401(k) of the Internal  Revenue Code.  This Plan covers
substantially all employees with over one year of service. PRI Medical currently
provides  matching  contributions of 6% of each  participant's  deferral up to a
maximum of 15% of eligible contributions.  Except for PRI Medical's 401(k) Plan,
the  Company has no other  annuity,  pension,  or  retirement  benefits  for its
employees.  For the years ended  December 31, 2005,  2004 and 2003,  the Company
contributed  matching  contributions to the Plan of $8,926,  $8,244 and $11,701,
respectively.

Item 11.  Security  Ownership of Certain  Beneficial  Owners and  Management and
Related Stockholder Matters.
--------------------------------------------------------------------------------

     As of March 17,  2006,  the Company  had  outstanding  5,452,610  shares of
Common Stock.  The only persons of record who presently hold or are known to own
(or believed by the Company to own) beneficially more than 5% of the outstanding
shares of such class of stock is listed  below.  The  following  table also sets
forth certain  information  as to holdings of the Company's  Common Stock of all
officers and directors individually, and all officers and directors as a group.
<TABLE>
<CAPTION>
------------------------------------------------------------- ------------------------------- ------------------------

          Name and Address of Beneficial Owner (1)                   Number of Common         Approximate
                                                                          Shares              Percentage
------------------------------------------------------------- ------------------------------- ------------------------
Officers and Directors
------------------------------------------------------------- ------------------------------- ------------------------
<S>                                                                 <C>       <C>                      <C>
------------------------------------------------------------- ------------------------------- ------------------------
Mark Waldron
932 Grand Central Avenue
Glendale, CA 91201                                                   476,675   (2)                      8.8
------------------------------------------------------------- ------------------------------- ------------------------
Howard Waltman
140 Deerfield
Tenafly, NJ 07670                                                    348,832   (3)                      6.3
------------------------------------------------------------- ------------------------------- ------------------------
William M. McKay
932 Grand Central Avenue
Glendale, CA 91201                                                   176,250   (4)                      3.2
------------------------------------------------------------- ------------------------------- ------------------------
Bruce J. Haber
c/o BJH Management, LLC
145 Huguenot Street, Suite 405
New Rochelle, NY  10801                                            1,168,174   (5)                     21.5
------------------------------------------------------------- ------------------------------- ------------------------
Louis Buther
932 Grand Central Ave.
Glendale, CA 91201                                                   619,435   (5)                     11.4
------------------------------------------------------------- ------------------------------- ------------------------
K. Deane Reade, Jr. 605 Third Avenue
New York, NY 10158                                                    20,000                             .4
------------------------------------------------------------- ------------------------------- ------------------------

                                       36
<PAGE>
------------------------------------------------------------- ------------------------------- ------------------------
All current and proposed  executive  officers and  directors
as a group (six) persons                                           2,809,366   (6)                     51.7
------------------------------------------------------------- ------------------------------- ------------------------
5% Stockholders
------------------------------------------------------------- ------------------------------- ------------------------
Arie Kanofsky
385 West John Street
Hicksville, NY 11801                                                 505,000                            9.3
------------------------------------------------------------- ------------------------------- ------------------------
Daniel Yun                                                           791,509   (7)
375 Park Avenue, Suite 3607                                                                            14.6
New York, NY 10152
---------------
</TABLE>
     (1)  All shares are  directly  owned,  and the sole  investment  and voting
          power is held, by the persons named unless otherwise noted.

     (2)  Includes options to purchase 93 shares.

     (3)  Includes  263,832  shares  owned by his  family in the name of The THW
          Group  LLC,  over  which  shares  Mr.  Waltman  exercises  voting  and
          investment control and options to purchase 75,000 shares.

     (4)  Includes options to purchase 89,000 shares.

     (5)  Mr. Bruce J. Haber directly owns 68,428 shares of the Company's Common
          Stock.  His wife,  Michela I. Haber,  is the  trustee  over two family
          trusts which  beneficially  own an aggregate of 1,099,746 shares which
          are  included in the table above even though he  disclaims  beneficial
          ownership of such 1,099,746  shares.  Mr. Haber also holds irrevocable
          proxies to vote an aggregate  of 324,000  shares of Common Stock until
          such shares are sold to an unaffiliated  third party, which shares are
          not  reflected in the table above.

     (6)  See footnotes (2) through (5) above.

     (7)  Includes 30,834 shares owned by Emergent  Capital L.P.,  which Mr. Yun
          has sole voting and  disposition  power,  17,500  shares  gifted to 17
          persons and options to purchase 93 shares.


Voting Agreement
----------------

     During  December  2002,  the Company's  former  Chairman of the Board,  Mr.
Daniel Yun and former Chief Executive  Officer,  Mr. Mark Waldron entered into a
Voting  Agreement (the "Voting  Agreement"),  whereby they agreed to vote all of
their  common  stock in unison.  However,  to the extent  that  Messrs.  Yun and
Waldron  do not agree on any  particular  matter,  then each of them  shall vote
their shares of common stock in a manner  consistent with the  recommendation of
the  majority  of  the  Company's  Board  of  Directors.  The  Voting  Agreement
terminates  on the earlier of five years from the  effective  date,  or upon the
sale of such shares by Messrs.  Yun or Waldron to a non-related or  unaffiliated
party.

     The Company does not know of any arrangement or pledge of its securities by
persons now  considered  in control of the Company that might result in a change
of control of the Company.


                                       37
<PAGE>
Securities Authorized for Issuance under Equity Compensation Plans.
-------------------------------------------------------------------
     The following  summary  information  is as of March 17, 2006 and relates to
our 2002 Stock Option Plan pursuant to which we have granted options to purchase
our common stock:
<TABLE>
<CAPTION>
------------------------------- ------------------------------ ---------------------- --------------------------------
                                          (a)                         (b)                         (c)
------------------------------- ------------------------------ ---------------------- --------------------------------

                                                                                      Number of securities
                                                                                      remaining available for
                                Number of shares of common     Weighted average       future issuance under
                                stock to be issued upon        exercise price of      equity compensation plans
Plan category                   exercise                       outstanding            (excluding shares
                                of outstanding options         options (1)             reflected in column (a)

------------------------------- ------------------------------ ---------------------- --------------------------------
<S>    <C>                                 <C>                         <C>                    <C>
Equity compensation
Plans  (2)                                 421,589                     $0.44                  228,411
------------------------------- ------------------------------ ---------------------- --------------------------------
--------------------
</TABLE>
(1)  Based upon 417,589  options  exercisable at $0.40 per share,  2,000 options
     exercisable  at $2.00 per share and 2,000 options  exercisable at $8.00 per
     share.

(2)  In March 2004, our Board of Directors approved an increase in the number of
     shares  covered  by the 2002 Plan  from  325,000  to  650,000,  subject  to
     stockholder approval at our next annual meeting,  which is expected to take
     place in 2006.

The  following  summary  information  is as of March 17, 2006 and relates to our
2001 Stock Option Plan pursuant to which we have granted options to purchase our
common stock:
<TABLE>
<CAPTION>
------------------------------- ------------------------------ ---------------------- --------------------------------
                                         (a)                            (b)                    (c)
------------------------------- ------------------------------ ---------------------- --------------------------------
Plan category                   Number of shares of common     Weighted average       Number of securities
                                stock to be issued upon        exercise price of      remaining available for
                                exercise                       outstanding            future issuance under
                                of outstanding options         options (1)            equity compensation plans
                                                                                      (excluding shares
                                                                                       reflected in column (a)(2)
------------------------------- ------------------------------ ---------------------- --------------------------------
<S>                                         <C>                       <C>                            <C>
Equity compensation
Plans                                       8,375                     $40.00                        -0-
------------------------------- ------------------------------ ---------------------- --------------------------------
--------------------
</TABLE>
(1)  All options are exercisable at $40.00 per share.

(2)  The Board of Directors  does not intend to grant  additional  options under
     the 2001 Plan.

                                       38
<PAGE>
     The following  summary  information  is as of March 17, 2006 and relates to
our Stock  Option  Plans of PRI  Medical  which  were  assumed by  Emergent  and
pursuant to which we have granted options to purchase our common stock:
<TABLE>
<CAPTION>
------------------------------- ------------------------------ ---------------------- --------------------------------
                                       (a)                           (b)                         (c)
------------------------------- ------------------------------ ---------------------- --------------------------------
Plan category                   Number of shares of common     Weighted average       Number of securities
                                stock to be issued upon        exercise price of      remaining available for
                                exercise                       outstanding            future issuance under
                                of outstanding options         options (1)            equity compensation plans
                                                                                      (excluding shares
                                                                                      reflected in column (a)
------------------------------- ------------------------------ ---------------------- --------------------------------
<S>                                         <C>                       <C>                            <C>
Equity compensation
Plans  (2)                             1,135                          $47.51                        -0-
------------------------------- ------------------------------ ---------------------- --------------------------------
--------------------
</TABLE>
     (1) Based upon 964 options  exercisable at $27.20 per share and 171 options
exercisable at $162.00 per share.

     (2) The Board of Directors of Emergent does not intend to grant  additional
options under the old PRI Medical Plans.

Item 12.  Certain Relationships and Related Transactions.
---------------------------------------------------------

     Except  as  otherwise  described  in Items 1, 6, 7, 10 and 11 of this  Form
10-KSB, there have been no reportable  transactions with the Company's officers,
directors and/or  affiliated  persons required to be disclosed  pursuant to Item
404 of Regulation S-B.

Item 13. Exhibits
-----------------

Number
Exhibit          Description
-------          -------------
2.1     Agreement and Plan of  Reorganization  and Merger,  dated  as of January
        23, 2001, among MRM Registrant and MRM Acquisition Inc. (1)
2.2     Agreement to transfer equity dated August 10, 2000. (3)
3.1     Articles of Incorporation of Registrant. (5)
3.2     Amendment to Articles of Incorporation. (5)
3.3     2003 Amendment to Articles of Incorporation. (9)
3.43    By-laws of Registrant. (5)
9.1     Voting Trust Agreement between Daniel Yun and Mark Waldron. (4)
10.1    Consulting Agreement dated October 15, 2001 with BJH Management LLC. (4)
10.2    Stock Issuance Agreement dated  December 30, 2002  with  BJH  Management
        LLC. (4)
10.3    Employment Agreement dated December 30, 2002 with Bruce J. Haber. (4)
10.4    Employment Agreement dated December 30, 2002 with Louis Buther. (4)
10.5    Consulting Agreement dated December 30, 2002 with JIMA Management LLC
        and Mark Waldron. (4)
10.6    Consulting Agreement dated September 1, 2001 with Howard Waltman,  which
        was terminated by the Company on December 19, 2002. (4)
10.7    Consulting Agreement dated September 1, 2001 with Paula Fong, which  was
        terminated by the Company on December 19, 2002. (4)
10.8    Facility Lease - Glendale, California. (4)
10.9    Settlement Agreement with Al Guadagno. (4)
10.10   Settlement Agreement with Richard Whitman. (4)
10.11   Consulting  Agreements  and  Settlement  Agreement  with  Tahoe   Carson
        Management Consulting.(4)
10.12   Employment Agreement - Calvin Yee, approved by the board on  November 1,
        2001 (4)
10.13   Engagement Letter - William M. McKay (4)

                                       39
<PAGE>
10.14   Consulting Agreement dated February 3, 2003 - Richard Whitman (6)

10.15   Extension and Modification Agreement, dated March 7, 2005, by  and among
        U.S. Bank National Association,  successor  in interest to Santa  Monica
        Bank,  PRI  Medical  Technologies,  Inc.,   Physiologic Reps,    Medical
        Resources Financial, Inc. and Emergent Group Inc. (13)
10.16   Asset  Purchase  Agreement -  Advantage   Medical   Services,   LLC  and
        Non-Competitive, Non-disclosure and Non-Solicitation Agreement (10)
10.17   Accounts Receivable Purchase Agreement executed May 25, 2005 by and
        among Access Capital, EGI and EGI's wholly-owned subsidiary, PRI Medical
        Technologies, Inc. (11)
10.18   May  2005  Letter Agreement by and among EGI and the limited guarantors,
        Bruce J. Haber, Mark Waldron, William M. McKay and Louis Buther (11)
10.19   May 2005 Amendment to Employment Contract of Bruce Haber (11)
10.20   May 2005 Amendment of Employment Contract of Louis Buther (11)
11.1    Statement  re:  computation  of  per  share  earnings  (see consolidated
        financial statements and notes thereto).
14.1    Code of Ethics (7)
21.1    Subsidiaries  of Registrant  listing  the state or other jurisdiction of
        each subsidiary other than  subsidiaries  which  would  not constitute a
        significant subsidiary in Rule 1-02(w) of Regulation S-X. (12)
23.1    Consent of Singer, Lewak, Greenbaum & Goldstein LLP  in  connection with
        Form S-8 Registration Statement (12)
23.2    Consent   of    Rose,   Snyder   &   Jacobs  in connection with Form S-8
        Registration Statement (12)
31(a)   Rule 13a-14(a) Certification - Chief Executive Officer (12)
31(b)   Rule 13a-14(a) Certification - Chief Financial Officer (12)
32(a)   Section 1350 Certification - Chief Executive Officer (12)
32(b)   Section 1350 Certification - Chief Financial Officer (12)
99.1    2002 Stock Option Plan. (4)
99.2    2001 Stock Option Plan. (4)
99.3    Form of Subordinated Promissory Note (9)
99.4    March 23, 2004 amendment to 2002 Stock Option Plan, subject to
        stockholder approval (10)
99.5    Press Release - Results of Operations for 2005 (12)

---------

(1)  Filed as an exhibit to the  Registrant's  Current Report on Form 8-K, dated
     January 29, 2001,  and  incorporated  herein by reference.

(1)  Filed as an exhibit to the Registrant's Form 10-K for its fiscal year ended
     December 31, 2000.

(2)  Incorporated  by reference to the  Registrant's  Form 8-K - August 31, 2000
     (date of earliest event).

(3)  Incorporated by reference to the Registrant's Form 10-K for its fiscal year
     ended December 31, 2001.

(4)  Incorporated  by  reference  to  the  Registrant's  Form  S-4  Registration
     Statement filed May 8, 2001.

(6)  Incorporated by reference to the Registrant's Form 10-K for its fiscal year
     ended December 31, 2002.

(7)  Incorporated by reference to  Registrant's  Form 10-KSB for its fiscal year
     ended December 31, 2003.

(8)  Incorporated  by  reference  to the  Registrant's  Form 8-K - June 27, 2003
     (date of earliest event).

(9)  Incorporated by reference to the  Registrant's  Form 10-QSB for its quarter
     ended September 30, 2003.

(10) Incorporated by reference to the  Registrant's  Form 10-QSB for its quarter
     ended September 30, 2005.

(11) Incorporated by regerence to the  Registrant's  Form 10-QSB for its quarter
     ended June 30, 2005.

                                       37
<PAGE>
(12) Filed herewith.

(13) Incorporated  by reference to the  Registrant's  Form 10-KSB for the fiscal
     year ended December 31, 2004.

Item 14.  Principal Accountant Fees and Services.
-------------------------------------------------

Audit Fees

     During fiscal 2005,  the aggregate  fees billed for  professional  services
rendered  by Singer  Lewak  Greenbaum &  Goldstein  LLP (the "Prior  Independent
Auditors") for the 2004 audit of the Company's annual  financial  statements and
the 2005 quarterly reviews of its financial statements included in the Company's
quarterly reports totaled  approximately  $98,000. The aggregate fees billed for
professional  services  rendered by Rose,  Synder & Jacobs for the 2005 audit of
the Company's financial statements totaled approximately $50,000.

Financial Information Systems Design and Implementation Fees

     During 2005,  there were $-0- in fees billed for  professional  services by
the Company's Prior Independent  Auditors rendered in connection with,  directly
or indirectly,  operating or supervising the operation of its information system
or managing its local area network.

All Other Fees

     For the fiscal  year ended  December  31,  2005,  there was $13,000 in fees
billed  for  preparation  of  corporate  tax  returns,  tax  research  and other
professional services rendered by the Company's Prior Independent Auditors.  The
foregoing fees exclude expense reimbursements of approximately $5,400.


                                       38
<PAGE>
                                   SIGNATURES

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

                                        EMERGENT GROUP INC.

                                        By: /s/ Bruce J. Haber
                                        ----------------------
                                        Bruce J. Haber, Chairman of the
                                        Board and Chief Executive Officer


Dated:  New Rochelle, New York
March 30, 2006

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
Report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated:

Signatures                               Title                          Date

/s/ Bruce J. Haber                     Chairman of the Board      March 30, 2006
-------------------------------
Bruce J. Haber                         Chief Executive Officer

/s/ William M. McKay                   Chief Financial Officer    March 30, 2006
-----------------------------          Secretary and Treasurer
William M. McKay

/s/ Mark Waldron                       Director                   March 30, 2006
-------------------------------
Mark Waldron

/s/ Howard Waltman                     Director                   March 30, 2006
----------------------------
Howard Waltman

/s/ K. Deane Reade, Jr.                Director                   March 30, 2006
--------------------------------
K. Deane Reade, Jr.

Bruce J. Haber,  Mark Waldron,  Howard Waltman and K. Deane Reade, Jr. represent
all the current members of the Board of Directors.



                                       39