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, 2004
                   -------------------------------------------
                         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
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(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

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 [ ].

     As of March 15,  2005,  the  number of shares  held by  non-affiliates  was
approximately  1,212,000 shares.  Due to the limited and sporadic trading of the
Company's Common Stock in the  over-the-counter  market, no estimate is provided
of the value of the  Company's  Common Stock held by  non-affiliates  since such
information would not be meaningful.

     The number of shares  outstanding of the  Registrant's  Common Stock, as of
March 15, 2005, was 4,745,530.
<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  "Management's  Discussion and Analysis of Financial Condition
and Results of  Operations--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.


                                RECAPITALIZATION



     On August 29, 2003, the Registrant's  reverse stock split became effective.
All  stockholders  of record at the close of  business  on August 28,  2003 were
requested to exchange every 40 shares of Common Stock,  $.001 par value, for one
new share of Common  Stock,  $.04 par value.  All per share amounts in this Form
10-KSB have been  retroactively  adjusted  to give  effect to the  one-for-forty
reverse stock split, except as otherwise noted.

                                       3
<PAGE>



                                     PART I

Item 1.  Description of Business

THE COMPANY

     Emergent  Group  Inc.  ("Emergent")  is the parent  company of PRI  Medical
Technologies, Inc., formerly Medical Resources Management, Inc. ("PRI Medical"),
its wholly owned and only operating subsidiary. Emergent acquired PRI Medical in
July 2001. PRI Medical primarily  conducts its business through its wholly owned
subsidiary  Physiologic Reps ("PRI");  however,  we intend to merge PRI into PRI
Medical  in  early  2005 in an  effort  to  simplify  our  corporate  structure.
Emergent,  PRI Medical and PRI are referred to  collectively  hereinafter as the
"Company." PRI is a provider of surgical equipment on a fee for service basis to
hospitals,  surgical  care centers and other health care  providers.  PRI 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  many  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 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
value proposition to its customers.

     PRI makes mobile surgical services  available to its customers by providing
surgical  equipment on a per procedure  basis to hospitals,  outpatient  surgery
centers,  and physician  offices.  PRI provides mobile lasers and other surgical
equipment  to  customers  along with  technical  support  required to ensure the
equipment  is  working  correctly.   PRI  also  provides  a  limited  amount  of
non-surgical  medical  equipment  on a rental  basis to  hospitals  and  surgery
centers.  This  non-surgical  equipment is used  throughout  such  facilities to
supplement their in-house resources.


     PRI'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 minimally  invasive surgery at hospitals by renting PRI'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'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 equipment.


                                       4
<PAGE>
     PRI has over 600 active  surgical  service  accounts in  California,  Utah,
Colorado  and Nevada and  experiences  a high rate of repeat  business  from the
hospitals,  surgery centers and doctors it serves.  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's business.

     PRI's  healthcare  distribution  network allows  physicians,  hospitals and
healthcare  facilities  access to new medical  equipment  without the expense of
acquisition.   PRI  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 had  revenues  of  approximately  $11.0  million in 2004,  including
general  medical   equipment  rental  revenues  of  $102,237,   which  is  being
discontinued,  and assisted in over 14,000 surgical and cosmetic procedures.  By
making  new  technologies   available  to  physicians  PRI  hopes  to  become  a
distributor of innovative  medical device and support services to the healthcare
community early in a product's life cycle.


PRODUCTS AND SERVICES


     PRI'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's scheduling  department.  Upon arrival at the customer
site, PRI's  technician 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.  The  technician  is  responsible  for setting the  physician's
requested power settings on rented  equipment and for helping to maintain a safe
environment with regard to the rental  equipment during the surgical  procedure.
Technician-only services are made available to hospitals and surgery facilities,
especially  those  with  fluctuating  occupancy  levels.   Customers  find  that
outsourcing  of  trained   technicians   without  renting   equipment  to  be  a
cost-effective alternative to training and staffing their own personnel.

     PRI's laser equipment  encompasses CO2,  Greenlight PV, Nd:YAG,  Pulse Dye,
KTP/YAG,  and  Holmium  YAG  laser  technology.   PRI  has  established  working
relationships with leading laser manufacturers and is sometimes an introducer of
laser technology in its markets.  PRI 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 has in recent years added equipment to
provide for  services in  cryosurgery,  advanced  visualization  technology  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.

                                       5
<PAGE>
     PRI 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  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 $102,237 in 2004  compared to $168,082 in 2003.  "See  Management's
Discussion and Analysis of Financial Condition and Results of Operations."

MARKETING AND SALES

     PRI 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  sponsors  educational
seminars  on new laser  and other  surgical  equipment  technologies,  which are
attended by its current and  prospective  customers.  These seminars allow PRI's
direct sales force to introduce new  technologies and procedures to its customer
base early in the product's life cycle.

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

MARKETS

     PRI currently  serves customers in California,  Colorado,  Utah and Nevada.
Each location is staffed with full-time  technicians and sales  representatives.
During the years ended  December 31, 2004 and 2003,  no customer  accounted  for
more than 10% of PRI's total sales.

                                       6
<PAGE>
Hospital Mobile Laser/Surgical Services


     PRI  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, 2004 and 2003, PRI
performed  approximately  14,000  procedures  company-wide.  Revenues  from  our
surgical mobile medical equipment and services business comprised  approximately
87% and 85%, of our total revenues for 2004 and 2003,  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.  Recent  legislation  in California and some other
states  restricting  anesthesia in doctor  offices has  redirected  some of this
cosmetic  surgery  to  hospitals  and  surgery  centers  where PRI has  existing
customer  relationships  and the ability to compete  more  effectively.  For the
years  ended  December  31,  2004 and 2003,  revenues  from our  cosmetic  laser
business  comprised  approximately  12%  and  14%,  respectively,  of our  total
revenues.


General Medical Equipment, Rentals


     PRI entered the general equipment rental market in the 1990's. However, due
to lower  margins and increased  competition  and its focus on the higher margin
mobile surgical services  business,  PRI Medical started phasing out its general
equipment  rental  business  in late  2001  and had sold  most of its  remaining
general medical rental equipment assets by the end of 2003.

                                       7
<PAGE>
INVESTMENTS


Investments In Limited Liability Companies


     In  connection  with  expanding  its  business  in certain  commercial  and
geographic  areas,  PRI 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 acquired  certain  equipment for use in
their  respective  business  activities  which  generally  focus on cosmetic and
surgical  procedures.  In prior years, PRI helped to form and acquired  minority
equity  interests in various LLCs in Colorado and  California and holds minority
interest in two LLCs as of December 31, 2004. During 2003, PRI withdrew from and
dissolved  four of its LLCs,  and resigned as the manager for one LLC, which was
assumed by other third party partners.  For the year ended December 31, 2003, in
connection  with the dissolution of four LLCs, PRI wrote-off a total of $124,336
against its allowance for uncollectible balances.

     For the years  ended  December  31,  2004 and 2003 in  accordance  with the
Financial Accounting  Standards Board  Interpretation No. 46,  "Consolidation of
Variable Interest  Entities" the Company accounted for its equity investments in
its two remaining LLCs under the full consolidation  method whereby transactions
between the Company and LLCs have been  eliminated  through  consolidation.  The
Company previously  utilized the equity method of accounting for its investments
in such LLCs. "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
utilized by the Company are subject to extensive regulation by the Food and Drug


                                       8
<PAGE>
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 2005. 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'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 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 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.

                                       9
<PAGE>
EMPLOYEES

     As of March 15, 2005, the Company employed 79 full-time persons  (including
three  executive  officers),  54 of whom were involved in operations  activities
(most of these were active as field  technicians),  12 of whom were  involved in
sales and marketing, and 13 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.

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 $14,300, plus
reimbursements for property taxes and insurance, and is subject to annual
increases based on increases in the Consumer Price Index. The lease expires in
July 2006 and provides for an option to renew for an additional five years. The
Company also leases an aggregate of approximately 4,000 square feet of space for
its field and sales office under operating lease agreements that expire on
various dates through May 2007 in Northern California, Colorado and Utah. We
believe our present facilities will be 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").


                                       10
<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 intends to deny the Plaintiff's  allegations
against the Company and to vigorously defend 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 2004.

                                       11
<PAGE>
                                     PART II

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

     Our common  stock was  traded on the OTC  Bulletin  Board  under the symbol
"EMGR"  before being  removed from listing in May 2002 due to the late filing of
our Form 10-K for the year ended  December 31, 2001.  In 2003, we obtained a new
listing of our  Common  Stock on the OTC  Bulletin  Board,  currently  under the
symbol  "EMGP." Our Common Stock  trades on a limited and sporadic  basis on the
Bulletin Board in the  Over-the-Counter  Market.  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, 2003............................ N/A          N/A
           June 30, 2003............................. N/A          N/A
           September 30, 2003........................ N/A          N/A
           December 31, 2003......................... .11          .11
           March 31, 2004............................ .66          .66
           June 30, 2004............................. .66          .66
           September 30, 2004........................ .70          .70
           December 31, 2004........................ 2.50         2.50

                                   ----------

           N/A - Not available due to a lack of trading in our Common Stock.

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

                                       12
<PAGE>
     All  quotations  reflect  inter-dealer  prices,   without  retail  mark-up,
markdown or commissions, and may not necessarily represent actual transactions.


     As of March 15, 2005, there were  approximately  1,500 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

     We have never  paid any cash  dividends  and  intend,  for the  foreseeable
future,  to retain any future earnings for the development of our business.  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.


Recent Sales of Unregistered Securities

     During  the year ended  December  31,  2004,  the  Company  had no sales or
issuances of unregistered Common Stock.


Recent Purchases of Securities

     During the year ended  December 31, 2004, the Company had no repurchases of
its Common Stock.

                                       13
<PAGE>

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.

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

     Revenue Recognition.  We are required to make judgments based on historical
experience  and  future  expectations,  as to the  realizability  of  goods  and
services  billed to our  customers.  These  judgments are required to assess the
propriety  of the  recognition  of revenue  based on Staff  Accounting  Bulletin
("SAB") No. 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.


                                       14
<PAGE>
Overview

     Emergent Group Inc.  ("Emergent") is the parent company of PRI Medical, its
wholly owned and only operating  subsidiary.  PRI Medical primarily conducts its
business through its wholly owned subsidiary, PRI, which will be merged into PRI
Medical in early 2005 to simplify our corporate structure. Emergent, PRI Medical
and PRI are referred to  collectively  hereinafter  as the  "Company."  PRI is a
provider of mobile surgical equipment, on a fee for service basis, to hospitals,
surgical care centers and other health care providers. PRI 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 provides mobile lasers and
other surgical equipment with technical support required to ensure the equipment
is working correctly. PRI also provides a limited amount of general equipment on
a rental basis to hospitals and surgery centers, although PRI began winding down
this  area of  business  in late  2001 in order  to  focus on its core  surgical
equipment  rental/services  business.   Revenues  from  the  rental  of  general
equipment  was $102,237  and $168,082 for the years ended  December 31, 2004 and
2003,  respectively.  Revenues  from this  activity will continue to decrease in
future periods.


                                       15
<PAGE>
Results of Operations


     The following  table sets forth  certain  selected  condensed  consolidated
statement of operations data for the periods indicated:

Statement of Operations Data

<TABLE>
<CAPTION>
                                                               Year Ended
                                                              December 31,
                                                -----------------------------------------
                                                      2004         %         2003           %
                                                -----------------  --- ------------------  ----
<S>                                                 <C>           <C>        <C>           <C>
Revenue                                             $ 10,967,369  100%       $ 9,978,440   100%
Cost of goods sold                                     7,703,124   70%         6,415,704    64%

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

Gross profit                                           3,264,245   30%         3,562,736    36%

Selling, general, and administrative expenses          3,152,409   29%         3,389,415    34%
                                                -----------------  --- ------------------  ----

Income from operations                                   111,836    1%           173,321     2%

Other income (expense)                                    67,953    1%          (150,825)   -2%
                                                -----------------  --- ------------------  ----

Income before provision for income taxes,
    minority interest and extraordinary item             179,789    2%            22,496     0%
Provision for income taxes                                    -     0%                -      0%
                                                -----------------  --- ------------------  ----
Net income before minority interest
    and extraordinary item                               179,789    2%            22,496     0%
                                                                    --                       --

Minority interest in net income of consolidated
    limited liability companies                         156,509     1%          108,590      1%
                                                -----------------  --- ------------------  ----
Income before extraordinary item                         23,280                  (86,094)
                                                -----------------      ------------------
Extraordinary item
    Gain on forgiveness of debt, net of tax                   -     0%           144,399     1%
                                                -----------------  --- ------------------  ----
Net income                                             $ 23,280     2%         $ 58,305      2%
                                                =================  === ==================  ====
</TABLE>



     The consolidated  financial statements of the Company for the periods ended
December  31,  2004  and  2003  reflect  net  income  of  $23,280  and  $58,305,
respectively,  on net revenues of $10,967,369 and $9,978,440,  respectively.  In
addition,  in late 2001 the  Company  decided to  discontinue  rental of general
medical equipment to hospitals and physicians, which accounted for approximately
1% and 2% for  the  years  ended  December  31,  2004  and  2003,  respectively.



Year Ended December 31, 2004 Compared to the Year Ended December 31, 2003



     The  Company  generated   revenues  of  $10,967,369  in  2004  compared  to
$9,978,440  in 2003.  The  increase in revenues in 2004 of  $988,929,  or 10% is
primarily  due to a net  increase in revenues  from our surgical  procedures  of
$1,088,914  offset by decreases  in revenues  from our  cosmetic  procedures  of
$55,204 and general equipment  rentals of $65,845.  The general equipment rental
business is being phased out. Total revenues from surgical and cosmetic services
represented approximately 87% and 12%, respectively,  of total revenues for 2004
and 85% and 14% for 2003,  respectively.  In addition,  the increase in revenues
includes net revenues of $227,382 and $209,085 for 2004 and 2003,  respectively,
from two consolidated limited liability companies.  Approximately 87% and 85% of
revenues  for  2004 and  2003,  respectively,  were  generated  from our  mobile
surgical equipment  services with the balance primarily  generated from cosmetic
services and non-surgical equipment rentals.

                                       16
<PAGE>
     Cost of goods sold of was  $7,703,124  in 2004  compared to  $6,415,704  in
2003. The increase in cost of goods sold of $1,287,420 or 20% for 2003 is due to
increases in  disposable  costs,  payroll and related  costs,  and  depreciation
expense.  Disposable  costs  increased  as a result  of a  change  in the mix of
surgical procedures rendered to customers whereby a greater number of procedures
were performed in 2004 compared to 2003 that required more expensive  disposable
items. In addition,  depreciation and  amortization  expense included in cost of
goods sold  increased by $385,767 in 2004 compared to 2003 primarily as a result
of  increased  capital  expenditures  in 2004 and the second half of 2003.  Such
increases  were  partially  offset  by  decreases  in  vehicle  rent and  repair
expenses, and worker's compensation insurance, among others, as a result of cost
control  efforts.  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 such services.


     Gross profit from  operations was $3,264,245 in 2004 compared to $3,562,736
in 2003.  Gross profit as a percentage  of revenues was 30% in 2004  compared to
36% for 2003. The decrease in our gross profit margins  primarily  relatedto the
mix of surgical  procedures  performed,  higher  depreciation  and  amortization
expense in 2004  compared  to 2003,  and due to a decrease  of $65,845 in higher
margin revenues from general medical equipment rentals,  due to the winding down
of this area of our business. Profit margins, net of disposable costs, are lower
on certain surgical procedures due to higher per unit costs for disposables.  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 2004 is not
necessarily indicative of the margins that may be realized in future periods.


     Selling,  general  and  administrative  expenses  were  $3,152,409  in 2004
compared to $3,389,414 in 2003.  The decrease of $237,005 or 6% in such expenses
primarily  relate to  decreases of $43,375 for bonuses for sales  personnel  and
$151,371 for consulting services. The decrease in consulting expenses in 2004 is
related  to the fact  that we did not make use of such  services  in 2004 to the
same  extent as in 2003.  Selling,  general  and  administrative  expenses  as a
percent of revenue was 29% in 2004 compared to 34% in 2003.

     Other income was $67,953 in 2004  compared to other  expense of $150,825 in
2003.  For 2004  other  income  includes  $85,000  from  the sale of  investment
securities  written-off  in prior  years,  $50,000  from the  settlement  of the
Stonepath   litigation  as  discussed   elsewhere  in  this  Form  10-KSB,   and
approximately $49,395 from the settlement of old payable balances.  Other income
was offset by net interest  expense of $122,217 and a net loss of $14,082 on the
sale of assets.  For 2003 other expense of $150,825  primarily included interest
expense  of  $177,123  offset by a gain on the sale of assets  of  $40,918.  The
decrease in net interest  expense of $54,906 in 2004 compared to 2003 relates to
lower overall debt  balances in 2004  compared to 2003 and a slight  decrease in
the interest rate on our line of credit and term loan.


                                       17
<PAGE>
     The  minority  interest in net income of limited  liability  companies  was
$156,509  in 2004  compared to  $108,590  in 2003.  Minority  interest in income
relates  to the  consolidation  of two  entities  in  which  we hold  an  equity
investment  interest.  As of December 31, 2004 and 2003 in  accordance  with the
Financial Accounting  Standards Board  Interpretation No. 46,  "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  recognized  a gain on  forgiveness  of debt,  net of tax,  of
$144,399 in 2003 in  connection  with debt  restructuring  efforts  commenced in
2002.  Such  gain is  presented  as an  extraordinary  item in the  accompanying
consolidated  statement of operations  for the year ended  December 31, 2003. No
such gains were recorded in 2004.

     The  Company's  net income was $23,280 in 2004 compared to $58,305 in 2003.
The net  income  per share  was $-0- and $0.02 for 2004 and 2003,  respectively.
Basic and fully diluted shares outstanding were 4,744,551 and 2,684,339 for 2004
and 2003,  respectively.  No provision  for income taxes is provided for in 2004
and 2003 due to the availability of net operating loss carryforwards.


Recently Issued Accounting Pronouncements


     During November and December 2004 the Financial  Accounting Standards Board
("FASB")  issued SFAS No.151  through  SFAS No.153 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.


Liquidity and Capital Resources

     At December 31, 2004 we have a bank loan (the "Bank Term Loan") outstanding
in the amount of  $199,775,  which is included  in the current  portion of notes
payable in the  accompanying  balance  sheet.  The loan  agreement  provided for
monthly principal payments of $16,667, plus interest at the prime rate (5.25% at
December 31, 2004) plus 2.00% through  January 31, 2005. In March 2005, the Bank
Term Loan was amended whereby the principal  balance  outstanding as of March 3,
2005 is due and payable on May 31, 2005 with interest only payments at the prime
rate plus 2.00% due

                                       18

<PAGE>
monthly until maturity.  In addition, we have an outstanding bank line of credit
(the "Bank Line of Credit") with the same lender with an outstanding  balance of
$650,000 at December  31,  2004.  The Bank Line of Credit was due and payable on
January 31, 2005;  however,  in March 2005 the Bank Line of Credit agreement was
amended  whereby the due date of the loan was  extended to May 31, 2005 at which
time the  outstanding  balance,  plus accrued  interest is due and  payable.  In
addition, the credit line is not available for additional borrowings.  The other
terms and conditions of the credit agreement remain unchanged.  The Bank Line of
Credit is  collateralized  by accounts  receivable  and a blanket  lien on other
unencumbered  assets  of the  Company.  The Bank Line of  Credit  agreement,  as
amended, provides for interest at the prime rate, plus 2.00%. We intend to enter
into a new lending relationship on or before May 31, 2005 in order to repay both
the Bank  Term Loan and Bank Line of Credit  and to  establish  a new  revolving
credit facility to meet our on-going working capital needs.

     The Bank Term Loan and Bank Line of Credit agreements  prohibit the payment
of cash dividends and require us to maintain  certain levels of net worth and to
generate  certain  ratios of cash  flows to debt  service.  Notwithstanding  the
modified terms and conditions of these credit facilities as discussed herein, as
of March 3, 2005 we were not in compliance with certain covenants and provisions
of the original loan  agreements,  however,  the lender has provided waivers for
such  non-compliance up to and including the maturity date of May 31, 2005. Both
the Bank Term Loan and Bank Line of Credit are classified as current liabilities
in  the  accompanying  consolidated  balance  sheet  as of  December  31,  2004.


     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,  2004  our  outstanding
restructured  debt and lease  obligations  amounted  to $480,701  and  $157,773,
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, 2004 and the filing date of this Annual
Report on Form 10-KSB,  we were in compliance  with the terms and  conditions of
our renegotiated debt and lease agreements.

     In June 2003,  the Company  raised  proceeds of  $951,611,  net of offering
costs of $48,389,  from the private  placement of its  Subordinated  Convertible
Promissory Notes (the "Notes").  Such Notes were generally sold in increments of
$20,000 (50 units)  each.  Certain  officers  and  directors  of the Company and
members of law firms who have acted in a legal capacity to the Company purchased
Notes  totaling  $700,000.  Notes  totaling  $300,000  were  purchased  by other
accredited investors. The Notes provided for interest at 6% per annum payable at
the earlier of the maturity  date of December 31, 2003,  or upon  conversion  or
redemption.  Pursuant to the terms and  conditions of the Notes,  the Notes were
automatically  converted into 2,500,000  shares of the Company's common stock on
August 29, 2003,  concurrent  with the effective date of a one for forty reverse
split of the  Company's  common stock.  An additional  25,000 common shares were
issued to note  holders in  satisfaction  of $10,000 of accrued  interest on the
Notes at $.40 per share.


                                       19
<PAGE>
     In  October  2003,  BJH  Management,  LLC,  which is owned by an  executive
officer  of the  company,  exercised  its  anti-dilution  rights  under  a Stock
Issuance Agreement entered into in December 2002. Pursuant to the agreement, the
Company issued 535,606 common shares to BJH as a result of the private placement
transaction discussed in the preceding paragraph. BJH concurrently assigned such
shares to its sole  shareholder  and one  associate  who now serve as  executive
officers of the Company. In lieu of payment for the exercise, the Company issued
such  shares  to BJH in  return  for its  agreement  to  terminate  any  further
anti-dilution  rights over the remaining term of the Stock  Issuance  Agreement.
The  exercise  price for such shares of  $107,121  is  recorded as  compensation
expense for the year ended December 31, 2003 and is included in selling, general
and  administrative  expense  in  the  accompanying  consolidated  statement  of
operations.

     In May  2003,  the  Company  entered  into  an  agreement  with  the  owner
("Seller")  of a small mobile  cosmetic  laser  company to purchase its customer
list as well as to enter into a covenant  not-to-compete.  The purchase price of
$50,000 was paid in June 2003 of which  $40,000 was  allocated  to the  customer
list and $10,000 was allocated to the covenant  not-to-compete both of which are
being  amortized  on a  straight-line  basis over five years.  The Company  also
agreed to make additional payments to the Seller for a period of eighteen months
based on future revenues  resulting from the acquired customer list. The Company
incurred  additional  costs of $32,324 and $27,005 under this  agreement for the
years ended  December 31, 2004 and 2003.  Such amounts are being  amortized over
the remaining life of the customer list and non-compete agreements. Amortization
expense for the covenant  not-to-compete  and customer  list amounted to $20,655
and $8,832 for the years ended December 31, 2004 and 2003, respectively.

     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.


                                       20

<PAGE>
     The Company had cash and cash equivalents of $690,331 at December 31, 2003.
Cash provided by operating  activities  for the year ended December 31, 2003 was
$911,725.  Such  amount  primarily  related  to the  inclusion  in net income of
certain non-cash items including,  depreciation and amortization of $820,726 and
a net increase in working capital. Cash used in investing activities amounted to
$844,897 due to the purchase of property and equipment of $739,021 and cash paid
to limited  liability  companies of $154,328 offset by proceeds form the sale of
property  and  equipment  of  $48,452.  Cash  used by  financing  activities  of
$333,739, was primarily the result of the pay down of debt and lease obligations
of $919,149 and payments of $358,700 on our bank line of credit.  Such  payments
were  offset  by  net  proceeds  of  $951,610  from  the  private  placement  of
convertible  promissory notes during 2003. Such notes were converted into common
stock of the Company in August 2003 as discussed herein.

     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.

RISK FACTORS

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

     We have incurred  operating  losses in the years  preceding  2003.  For the
years ended  December 31, 2004 and 2003 we incurred net income (loss) of $23,280
and $(86,094),  respectively, before extraordinary item. 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 show a
modest  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.


                                       21

<PAGE>

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


     Much of our future  growth  depends upon our ability to expand our customer
base and on our ability to acquire new technologies  related to medical surgical
equipment.   Such  endeavors  will  require  additional  capital  resources.  In
addition,  we will need to generate funds to meet our existing  debt,  lease and
vendor  obligations.  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.
Although we were  successful  in generating  net proceeds of $951,611  through a
private placement of our common stock in 2003, 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.


THERE MAY NOT BE AN ACTIVE 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.


                                       22
<PAGE>
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:


                                       23
<PAGE>

     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;

     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.

                                       24
<PAGE>
     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.

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

                                       25
<PAGE>
     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.

                                       26
<PAGE>
IF WE LOSE SENIOR  MANAGEMENT AND KEY EMPLOYEES ON WHOM WE DEPEND,  OUR BUSINESS
COULD SUFFER.


     Effective December 30, 2002, we entered into 18- month employment contracts
with Bruce J. Haber and Louis Buther who are key  employees  and officers of the
Company. Their agreements were extended by resolutions of the Board of Directors
through  the  close of  business  on June 30,  2005.  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:

     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


                                       27
<PAGE>
     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.



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.

                                       28
<PAGE>
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.

                                       29
<PAGE>


                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                               CONSOLIDATED FINANCIAL STATEMENTS
                                  FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003


<PAGE>


                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                                                        CONTENTS
                                                               December 31, 2004

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


                                                                         Page

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                    F1

CONSOLIDATED FINANCIAL STATEMENTS

       Consolidated Balance Sheets                                         F2

       Consolidated Statements of Operations                               F3

       Consolidated Statements of Shareholders' Equity                     F4

       Consolidated Statements of Cash Flows                               F5

       Notes to Consolidated Financial Statements                    F6 - F19



<PAGE>
             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


Board of Directors and Shareholders
Emergent Group Inc. and subsidiaries

We have  audited the  consolidated  balance  sheets of Emergent  Group Inc.  and
subsidiaries  as of  December  31, 2004 and 2003,  and the related  consolidated
statements of operations, shareholders' equity, and cash flows for the two years
ended December 31, 2004. 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 audits.

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  audits  provide  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 2003,  and the results of their
operations  and their cash  flows for each of the two years in the period  ended
December 31, 2004 in conformity with accounting principles generally accepted in
the United States of America.


SINGER LEWAK GREENBAUM & GOLDSTEIN LLP


Los Angeles, California
March 8, 2005


                                      F-1
<PAGE>

                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                                     Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                             December 31,       December 31,
                                                                                 2004               2003
                                                                            ----------------   ----------------
                                  ASSETS
<S>                                                                               <C>                <C>
Current assets
     Cash                                                                         $ 351,595          $ 690,331
     Accounts receivable, net of allowance for doubtful
         accounts of $26,125 and $28,780                                          1,429,155          1,328,968
     Inventory, net of reserves of $141,916                                         372,744            343,893
     Prepaid expenses                                                               128,968            102,623

                                                                            ----------------   ----------------
             Total current assets                                                 2,282,462          2,465,815

Property and equipment, net of accumulated depreciation and
         amortization of $1,186,272                                               1,896,309          2,115,823
Goodwill                                                                            779,127            779,127
Deposits and other assets                                                           133,690            152,683

                                                                            ----------------   ----------------
Total assets                                                                    $ 5,091,588        $ 5,513,448
                                                                            ================   ================

                   LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
     Line of credit                                                               $ 650,000          $ 750,000
     Current portion of capital lease obligations                                   347,558            318,827
     Current portion of notes payable                                               389,247            576,906
     Accounts payable                                                               565,136            528,363
     Accrued expenses                                                               684,244            787,328
                                                                            ----------------   ----------------

         Total current liabilities                                                2,636,185          2,961,424

Capital lease obligations, net of current portion                                   269,269            204,071
Notes payable, net of current portion                                               291,229            480,701
                                                                            ----------------   ----------------

             Total liabilities                                                    3,196,683          3,646,196

Minority Interest                                                                   181,928            177,555

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
         4,744,551 shares issued and outstanding                                    189,782            189,782
     Additional paid-in capital                                                  14,488,090         14,488,090
     Accumulated deficit                                                        (12,964,895)       (12,988,175)
                                                                            ----------------   ----------------

                Total shareholders' equity                                        1,712,977          1,689,697

                                                                            ----------------   ----------------
 Total liabilities and shareholders' equity                                     $ 5,091,588        $ 5,513,448
                                                                            ================   ================
</TABLE>
                 The accompanying notes are an integral part of
                           these financial statements.

                                      F-2
<PAGE>

                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                           Consolidated Statements of Operations
<TABLE>
<CAPTION>


                                                                             Year Ended
                                                                            December 31,
                                                                  ----------------------------------
                                                                       2004               2003
                                                                  ----------------   ---------------
<S>                                                                  <C>                <C>
Revenue                                                              $ 10,967,369       $ 9,978,440
Cost of goods sold                                                      7,703,124         6,415,704
                                                                  ----------------   ---------------

Gross profit                                                            3,264,245         3,562,736

Selling, general, and administrative expenses                           3,152,409         3,389,415
                                                                  ----------------   ---------------

Income from operations                                                    111,836           173,321

Other income (expense)
     Interest expense                                                    (122,217)         (177,123)
     Equity in net income (loss) of investment in limited
         liability companies                                                    -           (24,053)
     Gain (loss) on disposal of property and equipment                    (14,082)           40,918
     Other income (expense), net                                          204,252             9,433
                                                                  ----------------   ---------------

             Total other income (expense)                                  67,953          (150,825)
                                                                  ----------------   ---------------

Income before provision for income taxes,
     minority interest and extraordinary item                             179,789            22,496
Provision for income taxes                                                      -                 -
                                                                  ----------------   ---------------

Income before minority interest and
     extraordinary item                                                   179,789            22,496

Minority interest in net income of consolidated
     limited liability companies                                          156,509           108,590
                                                                  ----------------   ---------------

Income before extraordinary item                                           23,280           (86,094)
                                                                  ----------------   ---------------
Extraordinary item
     Gain on forgiveness of debt, net of tax                                    -           144,399
                                                                  ----------------   ---------------

Net income                                                               $ 23,280          $ 58,305
                                                                  ================   ===============

Basic and diluted earnings per share:
     Before extraordinary item                                             $ 0.00           $ (0.03)
     Extraordinary item                                                         -              0.05
                                                                  ----------------   ---------------

Basic and diluted earnings per share                                       $ 0.00            $ 0.02
                                                                  ================   ===============

Basic and diluted weighted-average shares outstanding                   4,744,551         2,684,339
                                                                  ================   ===============
</TABLE>
                 The accompanying notes are an integral part of
                           these financial statements.

                                      F-3
<PAGE>

                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                 Consolidated Statements of Shareholders' Equity
<TABLE>
<CAPTION>

                                                                             Committed     Additional
                                                     Common Stock             Common        Paid-In       Accumulated
                                                        Shares       Amount    Stock        Capital         Deficit         Total
                                                       ---------    --------   --------   -------------  -------------    ----------
<S>              <C>                                   <C>          <C>        <C>        <C>            <C>              <C>
Balance, January 1, 2003                               1,622,945    $ 64,918   $ 2,440    $ 13,541,784   $(13,046,480)    $ 562,662

    Common stock issued for services (correction to
      number of sharees issued in 2002)                   61,000       2,440    (2,440)              -              -             -

    Conversion of promissory notes to common stock     2,500,000     100,000         -         900,000              -     1,000,000

    Offering costs incurred in private placement               -           -         -         (48,390)             -       (48,390)

    Common stock issued for interest expense in
      connection with conversion of promissory
      notes to common stock                               25,000       1,000         -           9,000              -        10,000

    Anti-dilution right issued to stockholder                                                    2,176                        2,176
                                                               -                     -          (2,176)             -        (2,176)

    Common stock issued to officers for services         535,606      21,424         -          85,696              -       107,120

    Net income                                                 -           -         -               -         58,305        58,305
                                                       ---------    --------   --------   -------------  -------------    ----------
Balance, December 31, 2003                             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
                                                       =========   =========   ========   =============  =============   ===========

</TABLE>
                                     F-4

                 The accompanying notes are an integral part of
                           these financial statements.
<PAGE>
                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                           Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>

                                                                                                 Year Ended
                                                                                                 December 31,
                                                                            --------------------------------------------------
                                                                                     2004                        2003
                                                                            ----------------------     -----------------------
<S>                                                                                      <C>                         <C>
Cash flows from operating activities
     Net income                                                                          $ 23,280                    $ 58,305
     Adjustments to reconcile net income to net cash
     provided by (used in) operating activities:
         Loss (gain) on disposal of property and equipment                                 14,082                     (40,918)
         Gain on forgiveness of debt                                                            -                    (144,399)
         Depreciation and amortization                                                  1,195,130                     820,726
         Equity in net loss of investment in limited liability companies                        -                      24,053
         Amortization of finance fees                                                      20,266                      47,717
         Issuance of stock for services performed                                               -                     107,120
         Provision for doubtful accounts                                                   (6,477)                    (41,048)
         Minority interest in net income                                                  156,512                     108,590
         (Increase) decrease in
             Accounts receivable                                                          (93,710)                     18,135
             Inventory                                                                    (28,851)                    (48,824)
             Due from related party                                                             -                     147,760
             Prepaid expenses                                                             (27,807)                    163,901
             Deposits and other assets                                                     (7,858)                    (47,955)
         Increase (decrease) in
             Accounts payable                                                              36,773                      (9,559)
             Accrued expenses                                                            (103,078)                   (251,879)
                                                                            ----------------------     -----------------------

Net cash provided by operating activities                                               1,178,262                     911,725
                                                                            ----------------------     -----------------------

Cash flows from investing activities
     Purchase of property and equipment                                                  (717,624)                   (739,021)
     Proceeds from the sale of property and equipment                                      19,337                      48,452
     Cash paid to limited liability companies                                            (189,639)                   (154,328)
     Contributions from new members to limited liability companies                         37,500                           -

                                                                            ----------------------     -----------------------
Net cash used in investing activities                                                    (850,426)                   (844,897)
                                                                            ----------------------     -----------------------

Cash flows from financing activities
     Payments on notes payable                                                           (377,132)                   (408,134)
     Payments on capital lease obligations                                               (189,440)                   (511,015)
     Payments on line of credit                                                          (150,000)                   (358,700)
     Borrowings under line of credit                                                       50,000                           -
     Proceeds from convertible notes payable, net                                               -                     951,610
     Payments on loan fee                                                                       -                      (7,500)

                                                                            ----------------------     -----------------------
Net cash used in financing activities                                                    (666,572)                   (333,739)
                                                                            ----------------------     -----------------------

Net decrease in cash                                                                     (338,736)                   (266,911)

Cash, beginning of period                                                                 690,331                     957,242
                                                                            ----------------------     -----------------------
Cash, end of period                                                                     $ 351,595                   $ 690,331
                                                                            ======================     =======================
Supplemental disclosures of cash flow information:

     Interest paid                                                                      $ 124,776                   $ 185,849
                                                                            ======================     =======================
</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 (continued)
                                          Years Ended December 31, 2004 and 2003



Supplemental schedule of non-cash investing and financing activities

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

     o    purchased property and equipment of $283,369 through installment loans

During the year ended December 31, 2003, the Company:

     o    issued 25,000  shares of common stock for interest  expense of $10,000
          in connection with the private placement transaction.

     o    consolidated  two limited  liability  companies  with net property and
          equipment totaling $94,532

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





                                      F-6
<PAGE>
                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2004


NOTE 1 - ORGANIZATION AND LINE OF BUSINESS

     General

     Emergent  Group  Inc.  ("Emergent")  is the parent  company of PRI  Medical
     Technologies,  Inc.,  formerly  Medical  Resources  Management,  Inc. ("PRI
     Medical"), its wholly owned and only operating subsidiary.  PRI Medical was
     acquired by  Emergent in July 2001.  PRI  Medical  primarily  conducts  its
     business  through its wholly owned  subsidiary  Physiologic  Reps  ("PRI").
     Emergent,  PRI Medical and PRI are referred to collectively  hereinafter as
     the "Company." PRI Medical provides mobile laser/surgical services on a per
     procedure basis to hospitals,  out-patient surgery centers, and physicians'
     offices. The lasers are provided with technical support to ensure that they
     operate  correctly.  PRI Medical also provides other medical equipment on a
     limited  rental  basis to  hospitals  and  surgery  centers  although  this
     business is being phased out.

     Purchase of Business and Covenant Not-To-Compete

     In May  2003,  the  Company  entered  into  an  agreement  with  the  owner
     ("Seller")  of a small  mobile  cosmetic  laser  company  to  purchase  its
     customer list as well as a covenant  not-to-compete.  The purchase price of
     $50,000  was paid in June 2003 and the  Company  allocated  $40,000  of the
     purchase price to the customer list and $10,000 to covenant not-to-compete.
     Both the customer list and covenant not-to-compete are being amortized on a
     straight-line  basis  over five  years.  The  Company  also  agreed to make
     additional  payments to the Seller for a period of eighteen months based on
     future revenues  resulting from the acquired customer list. During 2004 and
     2003 the  Company  made  additional  payments  to the Seller of $37,751 and
     $17,754,  respectively,  pursuant to the purchase  agreement.  Amortization
     expense for the  covenant  not-to-compete  and  customer  list  amounted to
     $20,655  and  $8,832  for the  year  ended  December  31,  2004  and  2003,
     respectively,   and  are  included  in  the  cost  of  goods  sold  in  the
     accompanying statement of operations.

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 two 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  reliability  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-7
<PAGE>
                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2004


     Comprehensive Income

     The Company utilizes SFAS No. 130, "Reporting  Comprehensive  Income." This
     statement establishes standards for reporting  comprehensive income and its
     components  in a  financial  statement.  Comprehensive  income  as  defined
     includes all changes in equity (net assets)  during a period from non-owner
     sources.  Examples of items to be included in comprehensive  income,  which
     are  excluded  from  net  income,   include  foreign  currency  translation
     adjustments,  minimum pension liability  adjustments,  and unrealized gains
     and losses on securities.

     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, 2004 and 2003, uninsured portions of balances
     at those banks  aggregated  to $153,230  and  $537,674,  respectively.  The
     Company has not experienced  losses in such accounts and believes it is not
     exposed to any significant risk on cash.

     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  and accelerated  methods over estimated useful lives of five
     to seven  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 amortizations 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 142
     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.

     Fair Value of Financial Instruments

     For  certain  of  the  Company's  financial  instruments,  including  cash,
     accounts  receivable,  prepaid  expenses,  assets  held for sale,  accounts
     payable, and accrued expenses,  the carrying amounts approximate fair value
     due to their short maturities.

     Stock-Based Compensation

                                      F-8
<PAGE>
                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2004


     SFAS No. 123(r),  "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 loss and  loss  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.

     Advertising Expense

     The Company expenses advertising in the periods the services were incurred.
     For the years ended  December  31, 2004 and 2003,  advertising  expense was
     $19,338 and $19,536, 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.

     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
     reclassification did not have any effect on reported net income (loss).

                                      F-9
<PAGE>
                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2004

     Recently Issued Accounting Pronouncements

     In November 2004, the FASB issued SFAS No. 151,"Inventory  Costs". SFAS No.
     151 amends the  accounting for abnormal  amounts of idle facility  expense,
     freight,  handling costs, and wasted material (spoilage) under the guidance
     in ARB No. 43, Chapter 4, "Inventory  Pricing".  Paragraph 5 of ARB No. 43,
     Chapter 4, previously  stated that ". . . under some  circumstances,  items
     such as idle facility  expense,  excessive  spoilage,  double freight,  and
     rehandling  costs may be so  abnormal  as to require  treatment  as current
     period  charges.  . . ."  This  Statement  requires  that  those  items  be
     recognized as  current-period  charges  regardless of whether they meet the
     criterion of "so  abnormal."  In addition,  this  Statement  requires  that
     allocation  of fixed  production  overheads to the costs of  conversion  be
     based on the normal capacity of the production  facilities.  This statement
     is effective for inventory  costs  incurred  during fiscal years  beginning
     after June 15, 2005. Management does not expect adoption of SFAS No. 151 to
     have a material impact on the Company's financial statements.

     In December 2004, the FASB issued SFAS No.  152,"Accounting for Real Estate
     Time-Sharing  Transactions".  The FASB issued this Statement as a result of
     the guidance provided in AICPA Statement of Position (SOP) 04-2,"Accounting
     for Real Estate  Time-Sharing  Transactions".  SOP 04-2 applies to all real
     estate  time-sharing  transactions.  Among other  items,  the SOP  provides
     guidance on the  recording  of credit  losses and the  treatment of selling
     costs,  but does not change the  revenue  recognition  guidance in SFAS No.
     66,"Accounting  for Sales of Real  Estate",  for real  estate  time-sharing
     transactions.  SFAS No.  152  amends  Statement  No.  66 to  reference  the
     guidance  provided  in SOP 04-2.  SFAS No.  152 also  amends  SFAS No.  67,
     "Accounting  for  Costs  and  Initial  Rental  Operations  of  Real  Estate
     Projects",  to state  that SOP  04-2  provides  the  relevant  guidance  on
     accounting for incidental  operations and costs related to the sale of real
     estate  time-sharing  transactions.  SFAS No.  152 is  effective  for years
     beginning  after June 15, 2005,  with  restatements  of  previously  issued
     financial  statements  prohibited.  This statement is not applicable to the
     Company.

     In December  2004, the FASB issued SFAS No.  153,"Exchanges  of Nonmonetary
     Assets,"  an  amendment  to  Opinion  No.  29,"Accounting  for  Nonmonetary
     Transactions".  Statement No. 153  eliminates  certain  differences  in the
     guidance  in  Opinion  No. 29 as  compared  to the  guidance  contained  in
     standards  issued by the  International  Accounting  Standards  Board.  The
     amendment  to  Opinion  No. 29  eliminates  the fair  value  exception  for
     nonmonetary  exchanges of similar  productive assets and replaces it with a
     general  exception  for  exchanges of  nonmonetary  assets that do not have
     commercial  substance.  Such an exchange  has  commercial  substance if the
     future cash flows of the entity are expected to change  significantly  as a
     result of the  exchange.  SFAS No. 153 is effective for  nonmonetary  asset
     exchanges  occurring  in periods  beginning  after June 15,  2005.  Earlier
     application  is  permitted  for  nonmonetary  asset  exchanges  occuring in
     periods  beginning  after  December  16, 2004.  Management  does not expect
     adoption  of  SFAS  No.  153 to have a  material  impact  on the  Company's
     financial statements.

     In December  2004, the FASB issued SFAS No.  123(R),"Share-Based  Payment".
     SFAS 123(R) amends SFAS No. 123,"Accountung 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  (1) for public  companies  qualifying  as SEC small  business
     issuers,  as of the first  interim  period or fiscal year  beginning  after
     December 15, 2005, or (2) for all other public  companies,  as of the first
     interim period or fiscal year beginning after June 15, 2005, or (3) for all
     nonpublic  entities,  as of the first fiscal year beginning  after December
     15, 2005.  Management is currently  assessing the effect of SFAS No. 123(R)
     on the Company's financial statement.

                                      F-10
<PAGE>
                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2004


NOTE 3 - INVENTORY

         Inventory at December 31, 2004 and 2003 consisted of the following:

                                                         2004          2003
                                                     ------------   ------------
             Disposables                             $   514,660    $  499,769
             Less reserve for obsolescence               141,916       155,876
                                                     ------------   ------------
                 Total                               $   372,744    $  343,893
                                                     ============   ============

NOTE 4 - EQUITY INVESTMENT IN LIMITED LIABILITY COMPANIES

     As of December 31, 2004 and 2003, the Company held investment  interests of
     15% and 3% in two limited  liabilities  companies  ("LLCs").  The LLCs were
     formed by  certain  investors  and PRI  Medical  to  provide  mobile  laser
     equipment and services to hospitals,  out-patient centers, and doctors. The
     Company provides operating and  administrative  services to the LLCs. These
     entities  have been  consolidated  as of December 31, 2004 and 2003 and are
     included in the  accompanying  consolidated  statements of  operations  and
     balance   sheets  in   accordance   with  FASB   Interpretation   No.   46,
     "Consolidation of Variable Interest  Entities." During the third and fourth
     quarter of 2003 PRI dissolved four LLCs and  transferred  the management of
     one LLC to other unaffiliated  members.  During the year ended December 31,
     2003,  the  Company  recognized  its  equity in net  losses of such LLCs of
     $(24,053).

NOTE 5 - PROPERTY AND EQUIPMENT

     Property  and  equipment  at December  31, 2004 and 2003  consisted  of the
     following:
<TABLE>
<CAPTION>
                                                                       2004             2003
                                                                 --------------   --------------
<S>                                                              <C>              <C>
         Rental equipment                                        $   3,735,200    $   3,208,306
         Accessories and eyewear                                       560,124          373,875
         Furniture and fixtures, including computers                   143,377          113,571
         Capitalized Software Cost                                     114,215          100,227
         Transportation equipment                                      269,435           93,255
         Leasehold improvements                                          5,901            5,901
                                                                 --------------   --------------
                                                                     4,828,252        3,895,135
         Less accumulated depreciation and amortization              2,931,943        1,779,312
                                                                 --------------   --------------
             Total                                               $   1,896,309    $   2,115,823
                                                                 ==============   ==============
</TABLE>
     Depreciation  and  amortization  expense for  property  and  equipment  was
     $1,186,272  and  $820,726  for the years ended  December 31, 2004 and 2003,
     respectively.

                                     F-11
<PAGE>
                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2004

NOTE 6 - LINE OF CREDIT

     At December 31, 2004 and 2003 we have a bank line of credit (the "Bank Line
     of Credit")  outstanding of $650,000 and $750,000,  respectively.  The Bank
     Line of Credit is due and  payable on January  31,  2005.  The Bank Line of
     Credit Agreement, as amended, provided for a principal pay-down of $250,000
     on or before  October 1, 2004 of which the  Company  paid  $100,000  before
     October  1,  2004.  Since  October  1,  2004 the  credit  line has not been
     available  for   additional   borrowings.   The  Bank  Line  of  Credit  is
     collateralized  by  accounts   receivable  and  a  blanket  lien  on  other
     unencumbered assets of the Company.  The Bank Line of Credit agreement,  as
     amended, provides for interest at the prime rate, plus 2.00%. In March 2005
     the Bank Line of Credit was extended to May 31, 2005 (see Note 15).

     The Bank Line of Credit  agreement  prohibits the payment of cash dividends
     and  requires  us to maintain  certain  levels of net worth and to generate
     certain  ratios of cash flows to debt service.  Although the Company is not
     in  compliance  with  certain  loan  covants,  the lender  has waived  such
     non-compliance through and including May 31, 2005.

     The  Company  incurred  interest  expense on  borrowings  under the line of
     credit of $43,751 and $71,131  for the years  ended  December  31, 2004 and
     2003,  respectively and is included in interest expense in the accompanying
     statements of operations.

NOTE 7 - NOTES PAYABLE

     Notes payable at December 31, 2004 and 2003 consisted of the following:
<TABLE>
<CAPTION>
                                                                                     2004             2003
                                                                                -------------   --------------
<S>                                                                              <C>                <C>
                  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 are due on January 31, 2005.
                      In March 2005, this note was extended for three  months
                      and is due and payable on May 31, 2005.                   $    199,775    $     399,775
                  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 the certain medical
                      equipment.                                                     480,701          657,832
                                                                                -------------   --------------
                                                                                     680,476        1,057,607
                      Less current portion                                           389,247          576,906
                                                                                -------------   --------------
                  Long-term portion                                             $    291,229    $     480,701
                                                                                =============   ==============
</TABLE>
     Future maturities of notes payable at December 31, 2004 were as follows:

                   Year Ending
                  December 31,

                      2005    $   389,248
                      2006        202,672
                      2007         88,556
                              -----------
                      Total   $   680,476
                              ===========

                                      F-12
<PAGE>
                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2004

NOTE 8 - ACCRUED EXPENSES

     Accrued expenses at December 31, 2004 and 2003 consisted of the following:
<TABLE>
<CAPTION>
                                                                       2004          2003
                                                                   ----------    ----------
<S>                                                                <C>           <C>
                  Accrued payroll and payroll related amounts      $  269,684    $  302,426
                  Accrued interest                                     16,782        16,141
                  Other                                               397,778       468,761
                                                                   ----------    ----------
                  Total                                            $  684,244    $  787,328
                                                                   ==========    ==========
</TABLE>
NOTE 9 - COMMITMENTS AND CONTINGENCIES

     Operating and Capital Leases

     The Company leases an  office/warehouse  facility in Glendale,  California,
     which also serves as an administrative  and corporate office.  The lease is
     scheduled to expire in July 2006. Total rent expense incurred for the years
     ended  December 31, 2004 and 2003 was $168,284 and $155,337,  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 $35,857 and $70,236 for the
     years ended December 31, 2004 and 2003, respectively.

     The Company leases certain of its vehicles under various  operating leases.
     The leases are scheduled to expire between December 2003 and February 2004.
     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, 2004 and 2003 was $51,788 and $155,631, respectively.

     At  December  31,  2004 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 $2,778 and terminate  through  December
     2009.

     Future  minimum  lease  payments  under  operating  and  capital  leases at
     December 31, 2004 were as follows:

             Year Ending                                Operating       Capital
            December 31,                                    Lease        Lease
            ------------                             ------------   ------------
                2005                                 $    272,273   $    379,386
                2006                                      188,558        159,471
                2007                                       78,905         92,658
                2008                                       72,112         30,467
                2009                                       72,906         18,322

                                                     ------------   ------------
           Total minimum lease payments              $    684,754        680,304
                                                     ============
           Less amounts representing interest                             63,477
                                                                    ------------
                                                                         616,827
           Less current portion                                          347,558
                                                                    ------------
           Long-term portion                                        $    269,269
                                                                    ============
     Litigation

     From time to time,  we may become  involved  in  litigation  arising out of
     operations  in the normal  course of business.  As of December 31, 2004, we
     are not a party to any pending  legal  proceedings  the adverse  outcome of
     which could reasonably be expected to have a material adverse effect on our
     operating results or financial position.

                                      F-13
<PAGE>
                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2004
NOTE 10 - SHAREHOLDERS' EQUITY

     Common Stock

     During  the year  ended  December  31,  2003,  the  Company  completed  the
     following transactions:

     o    in June 2003,  the Company  raised net  proceeds of  $951,610,  net of
          offering costs of $48,390,  in a private  placement of its Convertible
          Subordinated Promissory Notes (the "Notes"). Such Notes were generally
          sold in  increments of $20,000 (50 units) each.  Certain  officers and
          directors  of the Company and members of law firms who have acted in a
          legal capacity to the Company purchased Notes totaling $700,000. Notes
          totaling  $300,000 were purchased by other  accredited  investors.  In
          August 2003,  concurrent  with the effective date of the reverse stock
          split described  below, the Notes were converted into 2,500,000 shares
          of common stock. In addition,  the Company issued 25,000 common shares
          to the note holders as payment for accrued interest of $10,000 on such
          Notes through the date of conversion.

     o    in August 2003, a majority of the Company's  stockholders  approved an
          Amendment to the Company's Articles of Incorporation to (i) reduce the
          number of  outstanding  shares of Common  Stock  through a  one-for-40
          reverse  stock  split,  effective at the opening of business on August
          28,  2003 and (ii) a  proportionately  increase  the par  value of the
          Company's  Common  Stock  from  $.001  par value to $.04 par value per
          share.  All stockholders of record were requested to exchange every 40
          shares  of Common  Stock,  $.001 par value for one new share of Common
          Stock,  $.04 par value. The number of shares  outstanding and earnings
          (loss)  per  share  for  all  periods  presented  in the  accompanying
          financial  statements  have  been  adjusted  to  reflect  the  reverse
          stock-split.

     o    in October 2003,  the Company issued 535,606 shares of common stock to
          BJH Management, LLC ("BJH") in accordance with the exercise of certain
          anti-dilution rights as a result of the private placement transaction.
          Such shares were subsequently transferred to two executive officers of
          the Company who previously  provided services to the Company under BJH
          Management.  The Company  recorded  consulting  expense of $107,120 in
          connection with the issuance of such shares.

     o    in the first quarter of 2003,  the Company issued 61,000 shares of its
          Common Stock to BJH to correct a computational error for shares issued
          in  December  2002,  resulting  in  total  shares  issued  of  348,574
          (post-split)  shares of its  Common  Stock to BJH,  which  represented
          17.5% of the Company's  fully  diluted  shares  outstanding  as of the
          issuance date. The Company recorded  consulting  expense of $13,943 in
          connection with the issuance of such shares.

                                      F-14
<PAGE>
     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 564,786  (14,120 post split)
     shares of  Emergent's  common stock at exercise  prices  ranging from $0.68
     ($27.20 post split) to $4.05  ($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.  Options  will vest evenly over a period
     of five years, and the 2001 Plan expires December 31, 2011.

     The exercise of options  granted under the 2001 Plan are  determined by the
     Board of Directors. 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.

                                      F-15
<PAGE>
                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2004

     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,
     2004,  there are 650,000 common shares  authorized for grant under the 2002
     Plan. However,  325,000 shares of the 650,000 shares represents 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 10 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, 2004 and 2003,  the Company  issued to
     employees  options to purchase  95,000 and 213,000  shares of common  stock
     under the 2002 Plan.  Of the  options  granted to  employees  during  2003,
     75,000 options were granted to the Company's Chief Financial  Officer.  The
     options granted in 2004 and 2003 have a 10-year term and are exercisable at
     $0.40 per share.  Generally,  one-fifth  of each  issuance  vests over five
     consecutive  years.  As of  December  2004 and 2003,  options  to  purchase
     130,197 and 26,566  shares of common stock were  cancelled  due to employee
     terminations.

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

                                                             Weighted- Average
                                                 Number           Exercise
                                                of Options         Price

            Outstanding, January 1, 2003          351,936       $        0.02
               Granted                            226,701       $        0.40
               Canceled                           (30,683)      $        5.66
                                                 ---------
            Outstanding, December 31, 2003        547,954       $        0.50
               Granted                             95,000       $        0.40
               Canceled                          (228,909)      $        1.90
                                                 ---------
            Outstanding, December 31, 2004        414,045       $        1.80
                                                 =========
            Exercisable, December 31, 2004        223,902       $        2.97
                                                 =========

     The weighted-average  remaining contractual life of the options outstanding
     at December  31,  2004 is 8.4 years.  The  exercise  prices for the options
     outstanding  at  December  31,  2004  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        394,136       203,993        8.55 years    $      0.40    $      0.40
         $      2.00 - 8.00          6,500         6,500        5.05 years    $      6.15    $      6.15
         $    20.00 - 51.00         13,238        13,238        5.92 years    $     39.03    $     39.03
         $           162.16            171           171        2.43 years    $    162.16    $    162.16
                             ==============   ===========
         $    0.40 - 162.16        414,045       223,902        8.40 years    $      1.80    $      2.97
                             ==============   ===========
</TABLE>

                                      F-16
<PAGE>
                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2004


     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. If the Company had elected to recognize compensation
     expense  based upon the fair value at the grant date for awards under these
     plans consistent with the methodology prescribed by SFAS 123, the Company's
     net  income  and basic  and  diluted  loss per  share  for the years  ended
     December 31, 2004 and 2003 would be as follows:


                                                                2004      2003
                                                           ----------  ---------
        Net income (loss)
            As reported                                    $   23,280  $ 58,305
            Pro forma                                      $    5,009  $ 40,037
        Basic and diluted income (loss) per share
            As reported                                    $     0.00  $   0.02
            Pro forma                                      $     0.00  $   0.01


     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, 2004 and
     2003:  dividend yields of 0% and 0%,  respectively;  expected volatility of
     100% and 100%,  respectively;  risk-free  interest  rates of 3.3% and 2.8%,
     respectively;  and expected lives of five and five years, respectively. The
     weighted-average  fair value of all options  granted  during the year ended
     December 31, 2004 was $0.03,  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.

                                      F-17
<PAGE>
                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2004

NOTE 11 - INCOME TAXES

     The components of the income tax provision for the years ended December 31,
     2004 and 2003 are as follows:

                                                2004          2003
                                            -----------   ----------
                  Current                   $       -0-   $     -0-
                  Deferred                          -0-         -0-
                                            -----------   ----------
                    Total                   $       -0-   $     -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, 2004 and 2003:

                                                         2004             2003
                                                      -------           --------
             Income tax computed at federal
               statutory tax rate                         34%             34.0%
             State taxes, net of federal benefit           4                 8
             Other                                    (19.23)                9
             Increase in valuation allowance          (16.55)              (51)
                                                      --------          --------

               Total                                    2.22%              -0-%
                                                      ========          ========

     The tax effects of temporary  differences  that give rise to deferred taxes
     at December 31, 2004 and 2003 are as follows:
<TABLE>
<CAPTION>
                                                                2004                2003
                                                          ----------------   -----------------
<S>                                                       <C>                <C>
            Deferred tax assets
                Fixed assets                              $      (112,049)   $       (363,116)
                Capital loss carryover                          1,287,853           1,287,853
                Net operating loss carryforwards                2,008,337           2,281,300
                Other                                             300,035             307,889
                                                          ----------------   -----------------
            Total gross deferred tax assets                     3,484,176           3,513,926
            Less valuation allowance                            3,484,176           3,513,926
                                                          ----------------   -----------------
                     Net deferred tax assets              $            -0-   $             -0-
                                                          ================   =================
</TABLE>
     All other deferred tax assets were immaterial. As of December 31, 2004, the
     Company  had  approximately   $4,959,377  in  federal  net  operating  loss
     carryforwards attributable to losses incurred since the Company's inception
     that may be offset against future taxable income through 2020.

                                      F-18
<PAGE>
                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2004

NOTE 12 - EXTRAORDINARY ITEM

     In connection with debt re-negotiation efforts with several creditors,  the
     Company recorded a gain on the forgiveness of debt of $144,399 for the year
     ended December 31, 2003.  The debt  re-negotiation  efforts  started during
     early 2002 and were substantially completed by the end of the first quarter
     of 2003.


NOTE 13 - 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, 2004,  the Company  contributed
     $4,249 through the use of forfeitures and $3,995 in cash.

NOTE 14 - RELATED PARTY TRANSACTIONS

     The Company  incurred  reimbursable  expenses of $30,537 and $31,389 to BJH
     for office rent and related  expenses for the years ended December 31, 2004
     and 2003, respectively.

NOTE 15 - SUBSEQUENT EVENTS

     On March 7, 2005 the Company's  primary  lender  amended the Company's term
     loan and line of credit  agreements to provide for the extension of the due
     date of such loans to May 31, 2005 at which time the  outstanding  balance,
     plus accrued interest is due and payable.  In addition,  the credit line is
     not available for additional borrowings.  All other terms and conditions of
     the credit agreement remain unchanged.

Litigation

     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 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 intends to deny the Plaintiff's  allegations against the Company
     and to vigorously defend this lawsuit.

                                      F-19

<PAGE>
Item  8.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
          Financial Disclosure.


         Not Applicable.

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
as of the end of our  2004  fiscal  year.  There  have  been no  changes  in the
Company's internal controls or in other factors that could significantly  affect
the  internal  controls  subsequent  to  the  date  the  Company  completed  its
evaluation. Therefore, no corrective actions were taken.


Item 8.B. Other Information.


         Not Applicable.

                                       29
<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         52          2003        Chairman of the Board and Chief
                                                 Executive Officer
  Louis Buther           51          2003        President and Chief Operating
                                                 Officer
  William M. McKay       50          2002        Chief Financial Officer,
                                                 Treasurer and Secretary
  Mark Waldron           37          2000        Director
  Howard Waltman         72          2001        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 are  currently  two  vacancies  on the  Company's  Board of
Directors resulting from the resignations of Daniel Yun and Matthew K. Fong, Sr.


     Bruce J.  Haber has  served as  Chairman  of the Board and Chief  Executive
Officer  since  January  31,  2003.  Mr.  Haber is  currently  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 was founder,  President
and CEO of MedConduit.com,  Inc., a healthcare e-commerce B2B from 2000 to 2001.
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 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.

                                       30
<PAGE>
     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.

     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 the California  Society 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, and
also served as  President  and Chief  Executive  Officer of the Company  between
August 2000 and January  2003.  He has served as a director of PRI Medical since
September 2000. Since January 2003 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 in 1993, and was an
Associate at Bankers Trust Company before attending business school. He received
his  undergraduate  degree from the Ivey School of Business at the University of
Western  Ontario  in  1989.  Mr.  Waldron  is a  member  of the  Foreign  Policy
Association and MENSA.

     Howard  Waltman has served as a director of the Company  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.

                                       31
<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. As a
result of the  resignation  of Daniel Yun,  there is  currently a vacancy on the
Compensation Committee. 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 in 2004  consisted of Howard
Waltman  and Matthew  Fong Sr.,  each of whom were  deemed by  Management  to be
independent directors,  but neither of whom would be deemed a "Financial Expert"
within the meaning of Sarbanes Oxley Act of 2002, as amended. As a result of the
resignation  of Mr.  Fong  from the Board of  Directors,  there is  currently  a
vacancy  on the Audit  Committee.  There can be no  assurances  given  that such
vacancy  will be filled or, if filled,  that an  independent  director  who is a
financial  expert  will be  elected  to the Board and its Audit  Committee.  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.

                                       32
<PAGE>

     Effective  May 20,  2003,  the Board has  adopted  a written  charter.  The
charter includes, among other things:

     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    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    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

                                       33
<PAGE>
     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 has been
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.


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  2004,  none of our  officers,
directors or 10% or greater stockholders filed any forms late to the best of our
knowledge,  except for a Form 4 for  December  31,  2004 which was filed late to
report the resignation of Mr. Matthew K. Fong.



                                       34
<PAGE>
Item 10.  Compensation of Directors and Executive Officers.

         The following table provides a summary compensation table with respect
to the Company's executive officers. No other executive officer of the Company
received salary and bonuses amounting to $100,000 or more in 2004. 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.

                           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
----------------------                                       Compensation   Stock        Options       Payout    Compensation
a) Principal Position                                        ($)            Award(s)                   ($)        ($)
                                                                            ($)
----------------------- -------- ------------- ------------- -------------- ------------ ------------- --------- --------------
<S>                      <C>     <C>           <C>           <C>            <C>          <C>           <C>       <C>
----------------------- -------- ------------- ------------- -------------- ------------ ------------- --------- --------------
Bruce J. Haber,          2004    $175,000      0             $0             0            0             0         0
Chairman of the Board    2003    $153,125(1)   0             $61,212 (2)    306,060 (2)  0             0         0
and Chief Executive      2002    (1)           0             $0             199,186 (2)  0             0         0
Officer
----------------------- -------- ------------- ------------- -------------- ------------ ------------- --------- --------------
Louis Buther,            2004    $161,000      $10,000       $0             0            0             0         0
President and Chief      2003    $140,875(1)   0             $45,909 (2)    229,546 (2)  0             0         0
Operating Officer        2002    (1)           0             $0             149,389 (2)  0             0         0
----------------------- -------- ------------- ------------- -------------- ------------ ------------- --------- --------------
William M. Mckay,        2004    $140,000      $10,000       $3,600         0            0             0         0
Chief Financial          2003    $140,000      0             $3,600         0            75,000 (3)    0         0
Officer                  2002    $46,667       $7,500        $1,200         0            30,000        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 as
          described  herein,  before  Mr.  Haber's  employment  contract  became
          effective on January 31, 2003. The Company paid BJH $28,000;  $439,975
          and $69,355  for  services  rendered to the Company in 2003,  2002 and
          2001,  respectively.  Such payments  received by BJH included $53,965,
          $82,000 and $18,288 for 2003, 2002 and 2001, respectively,  which were
          paid to Louis  Buther  for  consulting  services  he  provided  to the
          Company  through  BJH, it being  noted that a portion of Mr.  Buther's
          2003 payment included monies paid to BJH in 2002.

     (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
          and the balance of 229,546 shares were transferred by agreement to Mr.
          Buther.

     (3)  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.

                                       35
<PAGE>
Employment Agreements with Bruce J. Haber and Louis Buther


     Effective December 30, 2002, the Company entered into Employment Agreements
(the  "Employment  Agreements")  with  Bruce J.  Haber and Louis  Buther  for an
initial  term  of 18  months  subject  to an  automatic  annual  renewal  unless
terminated  90 days prior to the end of the term of these  Agreements.  On March
30,  2004,  the  Company's  Board of  Directors  approved  a  resolution  for an
extension of the  Employment  Agreements  of Messrs.  Haber and Buther until the
close of business on June 30, 2005, with the proviso that the automatic  renewal
provisions  shall be deemed  deleted  from  their  Agreements.  Pursuant  to the
Agreements,  effective  January 31, 2003,  Mr. Haber became the Company's  Chief
Executive Officer and was elected to the Company's Board of Directors, initially
as Chairman and Mr. Buther became its  President.  Messrs.  Haber and Buther are
each performing the duties customary for an executive of such rank with a public
company.  Messrs.  Haber  and  Buther  are  each  based  in New York and are not
required to relocate without each person's respective consent.  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.

     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 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.  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 shares,  for Messrs.  Haber and Buther
was $61,212 and $45,909,  respectively. The Company reimburses Messrs. Haber and
Buther for all ordinary and necessary  business  expenses incurred in connection
with the  performance of their duties and  responsibilities.  Messrs.  Haber and
Buther shall be entitled to indemnification for any claim or lawsuit,  which may
be  asserted  against  them when  acting in a  capacity  for the  Company or any
subsidiary  or  affiliated  business.  Messrs.  Haber and  Buther  shall also be
entitled to participate in officers and directors liability insurance maintained
by the Company and any subsidiary or affiliated business.

     The  Employment   Agreements  provide  that  all  proprietary   information
inventions and trade secret  information of the Company shall belong exclusively
to the Company, including all patents, copyrights and other rights in connection
therewith.  At all times, both during the term of the Employment  Agreements and
after termination  thereof for any reason whatsoever,  Messrs.  Haber and Buther
agree to keep in strict  confidence and trust all  proprietary  information  and
that they will not use or disclose any proprietary  information except as may be
necessary in the ordinary  course of performing  their duties under the Services
Agreements.  All inventions and invention ideas  developed by Messrs.  Haber and
Buther in  connection  with  their  Employment  Agreements  shall  belong to the
Company as its sole property and each person grants to the Company an assignment
of all right,  title and  interest  pertaining  thereto.  During the term of the
Employment  Agreements and for a period of six months thereafter,  Messrs. Haber
and Buther and BJH agree that they will not (i) directly or indirectly engage in

                                       36
<PAGE>
or become interested in any business  enterprise which is engaged in the current
business of the Company,  other than a maximum  ownership  interest of 5% of any
publicly  traded  company  that is in the  current  business  of the  rental  of
surgical  equipment  to  healthcare  providers;   (ii)  directly  or  indirectly
participate  for their own benefit in the  solicitation  of any  business of any
type  conducted  by the Company  from any person or entity which was a client or
customer of the Company  during the term of the  Services  Agreements;  or (iii)
directly or indirectly  recruit for employment,  or induce or seek to cause such
person to terminate his or her  employment  with the Company,  any person who is
then an employee  of the  Company or was an  employee of the Company  during the
preceding  six  months,  provided  that the  foregoing  shall  not  apply to the
recruiting  for  employment  of Messrs.  Haber and  Buther  and Fran  Barr.  The
Employment  Agreements provide for termination of the Agreements for cause after
giving notice to Messrs.  Haber and/or Buther or if they violate the restrictive
covenants,  they are found to have committed an act of fraud,  embezzlement,  or
theft  against the property or personnel of the Company or convicted of a felony
or other criminal conduct that would be expected to materially  adversely affect
the Company's business, prospects, results of operations or financial condition.
The  Employment  Agreements  may be  terminated by the Company upon the death or
12-month  disability  of  Messrs.  Haber or  Buther or  without  cause by giving
written notice.  Messrs. Haber and/or Buther may also terminate their respective
Employment  Agreements at any time by giving 30 days prior written notice to the
Company. In all such cases, Messrs Haber and Buther shall be entitled to receive
their  earned and unpaid base salary and Bonuses  earned and unpaid  through the
effective date of  termination.  In the case of termination  without cause,  Mr.
Haber shall be entitled  to receive an amount  equal to 50% of the then  current
annual  Haber  Base  Salary  and  reasonably   incurred   expenses  through  the
termination date. Mr. Buther shall be entitled to receive an amount equal to the
unpaid  Buther  Base  Salary  through  the  termination  date of his  Employment
Agreement.  Upon termination of the Employment  Agreement for cause, Haber shall
immediately  resign as a director of the Company unless  otherwise  agreed to by
the  Company  and Haber.  There are no change in control  provisions  in Messrs.
Haber's and Buther's employment contracts.

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, 2004,  2003, and 2002, Mr. McKay received a bonus of $10,000;  $-0-
and $7,500,  respectively.  In addition,  Mr. McKay receives Company-paid health
insurance benefits as well as an automobile  allowance of $300 per month. During
the year ended  December 31, 2003,  Mr.  McKay was granted  75,000  common stock
options at an exercise price of $0.40 per share with  two-fifths of such options
immediately  vested and the remainder vesting in annual  installments over three
years from the date of grant. 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. 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.

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 29, 2005 there were 471,134 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 expected to take place in 2005.

                                       37
<PAGE>

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.

     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.

                                       38
<PAGE>
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.

Awards


     During  2004,  2003 and 2002,  we granted  options to employees to purchase
95,000, 218,000 and 148,196 shares, respectively,  of our Common Stock under the
2002 Plan.  The  options  are  exercisable  at $.40 per share  (except for 2,000
options  exercisable  at $2.00 per share and 2,000 options  exercisable at $8.00
per  share),  129,942 of which  have been  terminated  as a result of  employees
terminating  their employment with the Company.  To date, no options to purchase
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, 2004 on the known
benefits provided to certain persons and group of persons under the 2002 Plan.
<TABLE>
<CAPTION>

   ----------------------------------------------------- ---------------- ---------------- ------------------------
   (1)
                                                            Number of        Range of       Value of unexercised
                                                         Shares subject   exercise price     options at Dec. 31
                                                           to Options      ($) per Share          2004 (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              105,000              .40                   (1)
   ----------------------------------------------------- ---------------- ---------------- ------------------------
   Three Executive Officers As a group                    105,000              .40                   (1)
   ----------------------------------------------------- ---------------- ---------------- ------------------------
   Two non-employee Directors and one former Director      55,000              .40                   (1)
   as a group
   ----------------------------------------------------- ---------------- ---------------- ------------------------
   Non-Executive Officer
   Employees and Consultants                             238,1324          $.40 - $8.00              (1)
   ----------------------------------------------------- ---------------- ---------------- ------------------------
----------
</TABLE>

                                       39
<PAGE>
(1)  Value is normally  calculated by multiplying (a) the difference between the
     market value per share at December 31, 2004 and the option  exercise  price
     by (b) the number of shares of Common Stock  underlying the option.  Due to
     the limited and sporadic trading of the Company's Common Stock at year-end,
     no value is given to the options as of December 31, 2004.

2001 Stock Option Plan


     On  November  1,  2001,  we adopted a 2001 Stock  Option  Plan,  subject to
stockholder approval,  similar to our 2002 Plan except that the 2001 Plan, which
covers 200,000 shares,  does not provide for the direct issuance of stock and it
has no cashless  exercise  provisions.  The Company  granted options to purchase
24,250  shares under the 2001 Plan  exercisable  at $40.00 per share,  13,750 of
which have been terminated as a result of employees terminating their employment
with the  Company.  Since  stockholder  approval  was not  obtained on or before
November  1, 2002,  all  incentive  stock  options  granted  under the Plan have
automatically  become  non-statutory  stock  options and the Board is limited to
granting  non-statutory stock options under the Plan. The Board of Directors has
no plans to issue any additional options under the 2001 Plan and on December 19,
2002, it approved a resolution  reducing the number of authorized  options under
the  Plan  to  14,625  shares  of  Common  Stock,  representing  the  number  of
outstanding  options  under the Plan as of that date.  As of  December  31, 2004
there were 10,500 employee options outstanding under the 2001 Plan.

PRI Medical Stock Option Plans


     Pursuant  to the Merger  Agreement  between  the Company and PRI Medical in
July 2001,  each  outstanding PRI Medical stock option  automatically  became an
option in shares of the Company's common stock, on the same terms and conditions
as were applicable under such PRI Medical option, to purchase the same number of
shares of the  Company's  common  stock as the holder of PRI Medical  would have
been entitled to receive  pursuant to the merger had such holder  exercised such
option in full immediately  prior to the effective time of the merger at a price
per share  (rounded  up to the nearest  whole  cent) equal to (y) the  aggregate
exercise price for the shares of PRI Medical otherwise  purchasable  pursuant to
the PRI Medical option divided by (z) the number of full shares of the Company's
common  stock  deemed  purchasable  pursuant  to  such  PRI  Medical  option  in
accordance  with the  foregoing.  At July 6,  2001,  the  effective  time of the
merger,  Emergent  assumed PRI Medical  outstanding  options to purchase  14,120
shares of  Emergent's  Common Stock at exercise  prices  ranging from $27.20 per
share  to  $162.00  per  share.  Of the  14,120  options,  1,162  are  currently
outstanding  as of December 31, 2004 and none have been  exercised.  The Company
does not  intend  to  grant  any  more  options  under  the PRI  Medical  plans.



                               OPTION GRANTS TABLE


     The  information  provided in the table  below  provides  information  with
respect  to  individual  grants  of  stock  options  during  2004 of each of the
executive  officers named in the summary  compensation  table above. The Company
did not grant any stock appreciation rights during 2004.

                                       40
<PAGE>
<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     Options/Granted      Exercise
                          Granted      to Employees in       Price         Expiration
          Name              (#)           Fiscal Year (1)    ($/Sh)           Date         5% ($)         10% ($)
          ----            -------      ---------------       -----            ----         ------         -------
<S>                           <C>             <C>                <C>             <C>         <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            -0-             -0-               N/A            N/A           N/A             N/A
</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 2004 by each of the  executive
officers named in the summary  compensation  table and the fiscal year end value
of unexercised options.

                                       41
<PAGE>
<TABLE>
<CAPTION>

          (a)                 (b)             (c)                (d)                      (e)
                                                                                         Value of
                                                                Number of              Unexercised
                                                               Unexercised              In-the-Money
                              Shares                            Options at               Options
                            Acquired 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 Mckay                    0              0              63,000/42,000               0 / 0
</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 at year-end,  no value is given to the options
          as of December 31, 2004.

PRI 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,  2004  and  2003,  the  Company
contributed   matching   contributions  to  the  Plan  of  $8,244  and  $11,701,
respectively.

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


     As of March 15,  2005,  the Company  had  outstanding  4,745,530  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.

                                       42
<PAGE>
<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                                                   407,082   (2)                      8.6
------------------------------------------------------------- ------------------------------- ------------------------
Howard Waltman
140 Deerfield
Tenafly, NJ 07670                                                    338,832   (3)                      7.0
------------------------------------------------------------- ------------------------------- ------------------------
William M. McKay
932 Grand Central Avenue
Glendale, CA 91201                                                    88,250   (4)                      1.8
------------------------------------------------------------- ------------------------------- ------------------------
Bruce J. Haber
c/o BJH Management, LLC
145 Huguenot Street, Suite 405
New Rochelle, NY  10801                                            1,010,246   (5)                     21.3
------------------------------------------------------------- ------------------------------- ------------------------
Louis Buther
932 Grand Central Avenue
South Salem, NY 10590                                                530,436   (5)                     11.2
------------------------------------------------------------- ------------------------------- ------------------------
All current and proposed  executive  officers and  directors
as a group (five) persons                                          2,374,846   (6)                     48.4
------------------------------------------------------------- ------------------------------- ------------------------

------------------------------------------------------------- ------------------------------- ------------------------
5% Stockholders
------------------------------------------------------------- ------------------------------- ------------------------
Arie Kanofsky
385 West John Street
Hicksville, NY 11801                                                 505,000                            10.6
------------------------------------------------------------- ------------------------------- ------------------------
Daniel Yun
375 Park Avenue, Suite 3607
New York, NY 10152                                                  791,509    (7)                     16.7
------------------------------------------------------------- ------------------------------- ------------------------
</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 63,000 shares.
(5)  BJH Management  LLC is a company owned by Mr. Bruce J. Haber.  BJH acquired
     348,575  shares of  Common  Stock of the  Company  pursuant  to a  services
     agreement and Mr. Haber purchased  505,000  shares.  Of the 348,575 shares,
     199,186  shares were gifted by Mr.  Haber to an  irrevocable  trust for the
     benefit of his daughter,  Jessica L. Haber with his wife, Michela I. Haber,
     as Trustee.  The remaining 149,389 shares were transferred to Louis Buther.
     BJH  Management had certain  anti-dilution  rights to maintain on behalf of
     itself, and at its option, its transferees, a minimum combined 17.5% of the
     Company's  outstanding  shares on a fully diluted basis.  Pursuant to these
     rights and in  exchange  for its  premature  cancellation  of  rights,  BJH
     received  535,606 shares of Common Stock.  Of these shares,  229,545 shares
     were  transferred  to Mr.  Buther and the  remaining  306,060  shares  were
     transferred  to Mr. Haber.  The amount of stock shown in the table as owned
     by Mr, Haber includes the shares held in his daughter's trust,  although he
     disclaims beneficial ownership of such shares.
(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.

                                       43
<PAGE>
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.

Securities Authorized for Issuance under Equity Compensation Plans.


     The following  summary  information  is as of March 29, 2005 and relates to
our 2002  Stock  Option  Plan  described  in Item 10  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)                                 471,134                     $0.44                      178,866
------------------------------- ------------------------------ ---------------------- --------------------------------
--------------------
</TABLE>
(1)  Based upon 467,134  options  exercisable  at $.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 2005.

The  following  summary  information  is as of March 29, 2005 and relates to our
2001 Stock  Option Plan  described  in Item 10 pursuant to which we have granted
options to purchase our common stock:
<TABLE>
<CAPTION>
------------------------------- ------------------------------ ---------------------- --------------------------------
                                      (a)                           (b)                      (c)
------------------------------- ------------------------------ ---------------------- --------------------------------
<S>                                    <C>                          <C>                    <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)
------------------------------- ------------------------------ ---------------------- --------------------------------
Equity compensation                        10,500                     $40.00                        -0-
Plans
------------------------------- ------------------------------ ---------------------- --------------------------------
</TABLE>
--------------------

                                       44
<PAGE>
(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.


     The following summary information is as of March 29, 2005 and relates to
our Stock Option Plans of PRI Medical described in Item 10 which were assumed by
Emergent and pursuant to which we have granted options to purchase our common
stock:
<TABLE>
<CAPTION>
------------------------------- ------------------------------ ---------------------- --------------------------------
                                     (a)                               (b)                       (c)
------------------------------- ------------------------------ ---------------------- --------------------------------
<S>                                 <C>                           <C>                     <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)
------------------------------- ------------------------------ ---------------------- --------------------------------
Equity compensation
Plans  (2)                             1,162                          $47.04                        -0-
------------------------------- ------------------------------ ---------------------- --------------------------------
--------------------
</TABLE>
(1)  Based upon 991  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.


2003 Private Placement


     On June 27,  2003,  the  Company  completed a private  placement  for gross
proceeds of $1,000,000 of  subordinated  convertible  promissory  notes.  Of the
$1,000,000 raised, $700,000 was invested by eleven persons who are officers, and
directors  of the  Company  or  members  of law firms who have  acted in a legal
capacity to the Company.  The remaining $300,000 was purchased by six accredited
investors.  Of the  $700,000,  officers,  directors and employees of the Company
invested the  following  sums of money:  $200,000 was invested by each of Daniel
Yun and Bruce J. Haber,  $60,000 was  invested by each of Mark Waldron and Louis
Buther, $100,000 was invested by Howard Waltman, $10,000 was invested by William
M. McKay and $40,000 was  invested  by Rick Frey (a former  officer).  The notes
were converted  into an aggregate of 2,525,000  shares of Common Stock on August
29,  2003,  the  effective  date of a  one-for-forty  reverse  stock  split.  In
addition,  the Company  issued  25,000  common shares as payment for interest of
$10,000 accrued on the notes as of the conversion date.


Consulting Agreement with BJH Management, LLC


     On October 15, 2001, the Company  entered into a consulting  agreement (the
"Consulting  Agreement")  with BJH  Management,  LLC  ("BJH"),  a New York based
company,  to act as a  consultant  to the  Company  for an  initial  three-month
period,  which the  parties  verbally  agreed to extend to  December  31,  2002.
Pursuant to the  Consulting  Agreement,  BJH  assigned  Bruce J. Haber and Louis
Buther  to  assist  the  Company  with  strategic   decisions,   and  day-to-day
operations. As compensation for its services, the Company paid BJH a monthly fee
of $25,000,  plus  reimbursement of reasonable and necessary  business expenses,
subject to prior  approval by the Company's  Board of Directors.  The Consulting
Agreement  provided  for a bonus in the form of a 12.5%  equity  interest in the

                                       45
<PAGE>
Company,  on a post-funding basis, if the Company raised a minimum of $1 million
in equity capital by the conclusion of the consulting  period, or if the Company
concluded  that it no longer  required  any or all such  additional  equity as a
result of a debt restructuring on terms acceptable to the Company.  Further, BJH
was entitled to receive such bonus if either of Messrs. Haber or Buther chose to
accept an executive  position with the Company after the completion of a funding
transaction or debt restructuring.  If no such positions were accepted, then the
equity  participation  would have been reduced to 7.5%. In the event the Company
was sold within a six-month  period  commencing  on October 22, 2001,  BJH would
have been entitled to a 10% equity interest.

Stock Issuance Agreement with BJH Management, LLC


     In December 2002, the Company  determined that BJH,  through its efforts in
renegotiating  and  restructuring  of certain of the Company's  outstanding debt
obligations  with key  creditors,  had  satisfied a  significant  portion of the
Company's  funding and liquidity  needs. In addition,  Messrs.  Haber and Buther
agreed to join the Company as executive officers as set forth in the "Employment
Agreements" between the Company and Bruce J. Haber and Louis Buther as described
below.  Therefore,  pursuant to the terms of a Stock  Issuance  Agreement and as
additional consideration for agreeing to enter into the Employment Agreements on
December 30, 2002, the Company agreed to issue to BJH 287,775 (post-split basis)
(subsequently   increased  by  61,000  shares  to  348,575  for   correction  of
computational  error) shares of common stock equal to 17.5% of the fully diluted
common shares  outstanding  (the  "Initial  Shares").  The fully diluted  common
shares  outstanding is defined as the outstanding shares of the Company plus the
number of shares issuable upon exercise of options/warrants that are exercisable
at $10.00 (post-split basis) or less.

     The Stock Issuance Agreement also provided for the following:  On or before
January 31, 2004,  provided  that (i) that the  Employment  Agreements  are then
still in full force and effect on December  31, 2003 (the  "Anniversary  Date"),
and (ii)  during  the  period  commencing  on  January 1, 2003 and ending on the
Anniversary Date (the "One-Year Period"), the Company has sold additional shares
of Common Stock or Common Stock  equivalents  (exclusive of any shares of Common
Stock  issued  pursuant to the  exercise or  conversion,  as the case may be, of
options,  warrants,  convertible debt or other derivative securities outstanding
on the date  hereof),  BJH shall have the right (the  "Anti-Dilution  Right") to
purchase from the Company,  at a purchase  price of $0.20 per share,  additional
shares of Common Stock (the "Additional  Shares"),  such that, upon the purchase
of such Additional Shares,  BJH's ownership interest in the Company,  on a fully
diluted basis, after the purchase of any such Additional Shares, when aggregated
with the Initial Shares, equals 17 1/2 % of the Company on a fully diluted basis
as of the Anniversary Date,  provided,  however,  that such Anti-Dilution  Right
shall only apply to up to $2,000,000 of actual Equity  Issuances  (meaning stock
or common stock  equivalents sold for cash  consideration in a private placement
or public  offering)  closed by the Company during the One Year Period.  For the
avoidance of doubt,  it is expressly  understood  and agreed by the parties that
the foregoing  Anti-Dilution Right only applies to the first $2,000,000 (or such
lesser amount) of Equity Issuances actually closed by the Company during the One
Year  Period.  Consequently,  in the event and to the  extent  that the  Company
affects  Equity  Issuances  during the One Year Period in excess of  $2,000,000,
BJH's ownership interest in the Company will be diluted accordingly.  Should the
Employment   Agreements  be  terminated  prior  to  the  Anniversary  Date,  any
Additional  Shares  acquired  by BJH  prior  to the  Anniversary  Date  shall be
forfeited  and BJH,  simultaneously  with  the  termination  of such  Employment
Agreements, shall be required to sell such Additional Shares back to the Company
at the same price paid for the  Additional  Shares by BJH. In October 2003,  the
Company and BJH agreed to prematurely terminate the anti-dilution  provisions in
exchange  for the  issuance  to BJH of  535,606  fully paid for shares of Common
Stock. The Company recorded  compensation expense of $107,121 in connection with
this agreement, which is included in selling, general and administrative expense
in the  accompanying  consolidated  statement of  operations  for the year ended
December 31, 2003.

                                       46
<PAGE>

     The Stock Issuance  Agreement also provided that the shares acquired by BJH
from the Company may not be sold, transferred,  assigned, pledged, encumbered or
otherwise  disposed of for a period of 12 months from December 30, 2002,  except
in the case of a change in control of the Company or to Messrs.  Haber or Buther
and/or their  immediate  family members as defined in the  Agreement.  The Stock
Issuance Agreement also provided for certain piggy-back  registration  rights to
register the shares for resale with the Securities  and Exchange  Commission and
notice  provisions  of at  least  30  days  before  the  initial  filing  of the
Registration Statement with the Commission.

     The Company  incurred  reimbursable  expenses of $30,537 and $31,389 to BJH
for office rent and related  expenses for the years ended  December 31, 2004 and
2003, respectively.

Consulting Agreement with Mark Waldron, former Chief Executive Officer


     On December 30, 2002, the Company entered into a  non-exclusive  Consulting
Agreement  (the  "Waldron  Consulting   Agreement"  or  "Agreement")  with  JIMA
Management  LLC and  Mark  Waldron  for the  period  from  January  15,  2003 to
September 15, 2003.  JIMA  Management LLC agreed to provide the Company with the
non-exclusive  services of Mr.  Waldron as may be  required by the Company  from
time-to-time during the term of the agreement. Mr. Waldron's consulting services
included  advising  the  Company  on  commercial   strategies,   management  and
operations,  and assisting the Company with  identifying  and pursuing  suitable
business opportunities.  Pursuant to the Agreement, JIMA Management LLC was paid
$10,000 per month.  Such fees also  compensated JIMA Management LLC for services
provided by Mr.  Waldron  during the term of this  agreement as well as services
provided to the Company and expensed on the Company's  books and records for the
period from July 1, 2001 to March 31, 2002 during which time Mr.  Waldron served
as the  Company's  Chief  Executive  Officer and did not  receive a salary.  The
Waldron Consulting  Agreement also provided for certain piggy-back  registration
rights to have his Common  Stock  registered  for sale with the  Securities  and
Exchange Commission and notice provisions of at least 30 days before the initial
filing of the registration statement with the Commission.

     In the first three  months of 2002,  Mr.  Waldron did not receive a salary,
but  received  payment  of his rent,  automobile  and  automobile  insurance  as
benefits from the Company.  Between April 2002 and January 2003, PRI Medical was
paying him a salary at the monthly  rate of $12,500 and  discontinued  all other
benefits described above, except a monthly auto allowance.

     The Company  expensed  fees of $70,000 and $10,000 as of December  31, 2001
and March 31, 2002, respectively, in connection with services provided under the
Waldron Consulting Agreement.  The remaining fees of $10,000 under the Agreement
were expensed during 2003.

                                       47
<PAGE>
Exhibit
Number                           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)
10.14     Consulting Agreement dated February3, 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. (10)
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. (10)
23.1      Consent of Accountants in connection with Form S-8 Registration
          Statement (10)
23.2      Consent of Accountants in connection with Form S-8 Registration
          Statement (10)
31(a)     Rule 13a-14(a) Certification - Chief Executive Officer (10)
31(b)     Rule 13a-14(a) Certification - Chief Financial Officer (10)
32(a)     Section 1350 Certification - Chief Executive Officer (10)
32(b)     Section 1350 Certification - Chief Financial Officer (10)
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)

                                       48
<PAGE>


---------

(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) Filed herewith.


                                       49
<PAGE>

     The  following  exhibits  were filed or  incorporated  by  reference in PRI
Medical's,  formerly Medical Resources  Management,  Inc.'s, Form 10-KSB or Form
10-KSB/A  for its fiscal year ended  October 31, 2000.  The exhibits  referenced
therein are incorporated by reference into the Registrant's Form 10-KSB.


Exhibit                   Exhibit Description
Number
--------------------------------------------------------------------------------
3.1       Articles of Incorporation and Amendments thereto. (1)
3.2       By-Laws of the Registrant. (1)
10.1      Copy of a Warrant Agreement and Warrant issued between November 1996
          and March 1997 to investors in the Registrant's Private Placement. (1)
10.2      Registrant's 1996 Stock Incentive Plan. (1)
10.3      Equipment Note Loan and Security Agreement dated April 24, 1997
          between the Registrant and LINC Capital Management, a division of LINC
          Capital, Inc. (1)
10.4      Collateral Note No. 1 dated April 28, 1997 between the Registrant and
          LINC Capital, Inc. (1)
10.5      Lease Modification Agreement dated April 24, 1997 between Pulse
          Medical Products, Inc. and LINC Capital Management, a division of LINC
          Capital, Inc. (1)
10.6      Warrant Purchase Agreement dated April 24, 1997 between the Registrant
          and LINC Capital Management, a division of LINC Capital, Inc. (1)
10.7      Warrant to Purchase Shares of Common Stock dated April 24, 1997
          between the Registrant and LINC Capital Management, a division of LINC
          Capital, Inc. (1)
10.8      Amendment to Warrant Agreement -- Class A Redeemable Warrant, dated
          September 26, 1999. (5)
10.9      Amendment to Warrant Agreement -- Class B Redeemable Warrant, dated
          September 26, 1999. (5)
10.10     Loan Agreement dated March 30, 1999 between Physiologic Reps and Santa
          Monica Bank. (5)
10.11     Promissory Note dated March 30, 1999 between Physiologic Reps and
          Santa Monica Bank (Line of Credit). (5)
10.12     Promissory Note dated March 30,1999 between Physiologic Reps and Santa
          Monica Bank (Term Loan). (5)
10.13     Registrant's 2000 Stock Incentive Plan. (7)
10.14     Agreement and Plan of Reorganization and Merger among Medical
          Resources Management, Inc., Emergent Group, Inc. and MRM Acquisition,
          Inc. dated as of January 23, 2001. (6)
10.15     Employment Contract between the Registrant and Richard Whitman,
          Chairman, President and CEO dated January 10, 2000. (7)
21.0      Subsidiaries of the Registrant. (7)

---------------
(1)  Exhibit filed with Registrant's Form 10-SB on May 16, 1997 and incorporated
     by reference herein.
(2)  Exhibit filed with  Registrant's Form 10-QSB for the quarter ended July 31,
     1997 and incorporated by reference herein.
(3)  Exhibit  filed with  Registrant's  Form  10-KSB  for the fiscal  year ended
     October 31, 1997 and incorporated by reference herein.
(4)  Exhibit filed with  Registrant's  Form 10-QSB for the quarter ended January
     31, 1998 and incorporated by reference herein.
(5)  Exhibit  filed with  Registrant's  Form  10-KSB  for the fiscal  year ended
     October 31, 1999 and incorporated by reference herein.
(6)  Exhibit filed with Registrant's Form 8-K filed on January 31, 2001.
(7)  Exhibit filed with Registrant's Form 10-KSB or 10-KSB/A for the fiscal year
     ended October 31, 2000 and incorporated by reference herein.

                                       50
<PAGE>
Item 14. Principal Accountant Fees and Services.


Audit Fees

     For the fiscal year ended  December 31, 2004, the aggregate fees billed for
professional  services  rendered  by Singer  Lewak  Greenbaum  &  Goldstein  LLP
("independent  auditors")  for  the  audit  of the  Company's  annual  financial
statements and the reviews of its financial statements included in the Company's
quarterly reports totaled approximately $96,851.

Financial Information Systems Design and Implementation Fees

     For the fiscal year ended December 31, 2004, there were $-0- in fees billed
for  professional  services by the Company's  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,  2004,  there was $12,606 in fees
billed  for  preparation  of  corporate  tax  returns,  tax  research  and other
professional  services  rendered  by the  Company's  independent  auditors.  The
foregoing fees exclude expense reimbursements of $12,178.


                                       51
<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 29, 2005

     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
-----------------------     Chief Executive Officer         March 29, 2005
Bruce J. Haber

/s/ William M. McKay        Chief Financial Officer
-----------------------     Secretary and Treasurer         March 29, 2005
William M. McKay

/s/ Mark Waldron            Director                        March 29, 2005
-----------------------
Mark Waldron

/s/ Howard Waltman          Director                        March 29, 2005
-----------------------
Howard Waltman


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