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, 2003

                         Commission File Number: 0-21475

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

       Nevada                                             93-1215401
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(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 February 29, 2004,  the number of shares held by  non-affiliates  was
approximately  1,106,000 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 19, 2004, was 4,744,551.

<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 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.

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                                     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.  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 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  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.

     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  $10.0  million in 2003,  including
general  medical   equipment  rental  revenues  of  $168,082,   which  is  being
discontinued,  and assisted in  approximately  14,000

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surgical  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,  Nd:YAG,  Pulse  Dye,  KTP/YAG,
Greenlight  PV 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.

     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 $168,082 in 2003  compared to $580,090 in 2002.  "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

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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, 2003 and 2002,  no customer  accounted  for
more than 10% of PRI's total sales.

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, 2003 and 2002, PRI
performed  approximately  14,000  procedures  company-wide.  Revenues  from  our
surgical mobile medical equipment and services business comprised  approximately
85% and 75%, of our total revenues for 2003 and 2002,  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,  2003 and 2002,  revenues  from our  cosmetic  laser
business  comprised  approximately  14%  and  18%,  respectively,  of our  total
revenues.

General Medical Equipment, Rentals

     PRI entered the general equipment rental market several years ago. 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.

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  physicians  and other  qualified  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 three LLCs as of December 31, 2003.
PRI helped to form one new LLC during the year ended  December  31, 2002 whereby
the LLC raised  $198,800 in total capital of which PRI contributed  $26,250.  In
addition, PRI sold certain medical equipment to the LLC for $145,000, plus sales

                                       5
<PAGE>
tax and  recorded a net gain on the sale of $118,734 in 2002,  which is included
in the gain on sale of  assets  in the  accompanying  statement  of  operations.
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.  In
connection  with the dissolution of four LLCs, PRI wrote-off a total of $124,336
against its allowance for uncollectible balances.

     As of  December  31,  2003 in  accordance  with  the  Financial  Accounting
Standards  Board  Interpretation  No. 46,  "Consolidation  of Variable  Interest
Entitites" the Company accounted for its equity investments in its two remaining
LLCs under the full consolidation  method whereby  transactions  between the the
Company  and LLCs  have  been  eliminated  through  consolidation.  The  Company
previously  utilized the equity method of accounting for its investments in such
LLCs. For the year ended December 31, 2002 the Company recorded equity in losses
of  $(5,508)  from its  ownership  interest  in such  LLCs.  For the year  ended
December 31, 2002 the Company earned fees for management,  operational and other
services of $1,191,280 and billed such LLCs $208,341 for reimbursable  operating
expenses incurred during the year ended December 31, 2002.  Amounts due from the
LLC's at December  31,  2002 was  $121,543,  which is  recorded  under "due from
related  parties"  in  the  accompanying   consolidated   balance  sheets.  "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 $2,000,000 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. As of December 31, 2003 and 2002, the Company  recognized a realized loss
on this  investment of $-0- and  $(1,732,573),  respectively.  See "Item 13" for
disclosure of a legal proceeding commenced by the Company against Stonepath.

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
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.

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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  product  liability  insurance
coverage  expires in April 2005.  In the future,  the Company may not be able to
maintain such insurance coverage or obtain new coverage in the future.

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.

EMPLOYEES

     As of  February  29,  2004,  the  Company  employed  78  full-time  persons
(including  three  executive  officers),  52 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 14 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.  The
Company believes that its employee relations are good.

Item 2.  Description of Properties
----------------------------------

     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 $13,541,  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
---------------------------

Stonepath Group, Inc.

     In October 2000, a related party of Emergent (the "plaintiff") commenced an
action  on behalf of  Emergent  against  Stonepath  Group,  Inc.  and two of its
officers in the United States  District  Court for the Southern  District of New
York. The action was for negligence and fraud under the federal  securities laws

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and common law to recover its  investment in Stonepath.  On April 15, 2002,  the
court  dismissed  the  plaintiff's  amended  Complaint  without  leave to amend.
Emergent  filed an appeal of the court's  decision and on September 4, 2003, the
United  States  Court of Appeals  for the Second  Circuit  affirmed  in part and
reversed in part the dismissal by the District Court of the action  commenced by
Emergent  against  Stonepath.  The Court of Appeals  reversed the  dismissal and
reinstated  that part of the complaint  which was based upon the alleged failure
to disclose the  relationship  between  Stonepath  and its former  President and
Chief Executive Officer,  with an individual who had been barred for life by the
NASD. However, the Court of Appeals affirmed and let stand the dismissal of that
part of Emergent's  complaint  which alleged that Stonepath  misrepresented  the
value of its  assets.  Discovery  is  presently  proceeding  in the  portion  of
Emergent's action which was reinstated by the Court of Appeals.

Citicorp Vendor Finance, Inc.

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

General Electric

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

     In addition to the matters  noted above,  from time to time,  we may become
involved  in  litigation  arising  out of  operations  in the  normal  course of
business.  As of the filing date of this Form 10-KSB,  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.

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 2003.

                                     PART II

Item 5.  Market for Common Equity and Related Stockholder Matters.
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           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, 2002..................................     .06              .01
   June 30, 2002...................................     .035             .005
   September 30, 2002..............................     .03              .0001
   December 31, 2002...............................     .01              .0001
   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
   ----------
   N/A - Not available due to a lack of trading in our Common Stock.

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

     As of February 29, 2004,  there were 1,501  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.

                                       9
<PAGE>
Recent Sales of Unregistered Securities

     During the year ended  December  31,  2003,  the Company  made the sales or
issuances of  unregistered  securities  listed in the table below.  It should be
noted that in April 2003, the Company filed a Form S-8 Registration Statement to
register the  issuance of shares of Common  Stock  pursuant to its 2002 and 2001
Employee Benefit Plans.  Further,  the 61,001 shares issued in the first quarter
of 2003 to BJH  Management,  LLC which is  reported  in the  table  below was to
correct a  typographical  error in an agreement  dated December 30, 2002 and was
previously  reported  in Item 5 of the  Company's  Form 10-K for the fiscal year
ended December 31, 2002 as part of the overall issuance of 348,575 shares.
<TABLE>
<CAPTION>
                                                  Consideration Received
                                                  and Description of
                                                  Underwriting or Other                        If Option, Warrant
                                                  Discounts to Market                          or Convertible
                                                  Price or Convertible    Exemption from       Security, terms of
Date of Sale   Title of Security  Number Sold     Security, Afforded to   Registration         exercise or
                                                  Purchasers              Claimed              conversion
-------------- ------------------ -------------- ------------------------- -------------------- ----------------------
<S>                 <C>               <C>                  <C>                    <C>                     <C>
02/27/03       Common Stock       61,001 shares  Services rendered; no     Section 4(2)         Not applicable.
                                                 commissions paid
-------------- ------------------ -------------- ------------------------- -------------------- ----------------------
02/03/03       Common Stock       6,250          Stock Option Plan; no     This stock option    10-year Options were
                                  shares         cash received; no         plan was             granted to
                                                 commissions paid          registered on a      employees, directors
                                                                           Form S-8             and consultants and
                                                                           Registration         at $.40 per share;
                                                                           Statement in April   Options generally
                                                                           2003.                vest in five equal
                                                                                                annual installments
                                                                                                commencing on the
                                                                                                date of grant expire
                                                                                                ten  years from date
                                                                                                of grant.
-------------- ------------------ -------------- ------------------------- -------------------- ----------------------
06/27/03       Subordinated       $1,000,000     $1,000,000 paid by        Section 4(2),        Principal of Notes
               Notes                             lenders; no commissions   Rule 506             and accrued interest
                                                 paid                                           automatically
                                                                                                converted into
                                                                                                2,525,000 shares on
                                                                                                8/29/03.
-------------- ------------------ -------------- ------------------------- -------------------- ----------------------
08/29/03       Common Stock       2,525,000      Conversion of Notes and   Section 3(a)(9)      Not applicable
                                  shares         interest totaling
                                                 $1,010,000; no
                                                 commissions paid
-------------- ------------------ -------------- ------------------------- -------------------- ----------------------
</TABLE>

                                       10
<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.

                                       11
<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. 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 $168,082  and $580,090 for the years ended  December 31, 2003 and
2002,  respectively.  Revenues  from this  activity will continue to decrease in
future periods. In connection with an independent valuation of its goodwill, the
Company recognized a write-down of $-0- and $2,100,955 of goodwill for the years
ended December 31, 2003 and 2002, respectively,  due to impairment. The goodwill
was initially recorded in connection with Emergent's  acquisition of PRI Medical
in July 2001.

                                       12
<PAGE>
Results of Operations

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

                                       13
<PAGE>
Statement of Operations Data
<TABLE>
<CAPTION>
                                                                             Year Ended December 31,
                                                                ---------------------------------------------------
                                                                     2003           %          2002             %
                                                                ----------------   ----  ------------------   ----
<S>                                                                  <C>           <C>        <C>             <C>
Revenue                                                              $9,978,440    100%      $  9,096,967     100%
Cost of goods sold                                                    6,415,704     64%         5,434,923      60%
                                                                ----------------   ----  ------------------   ----
Gross profit                                                          3,562,736     36%         3,662,044      40%

Selling, general, and administrative expenses                         3,389,415     34%         3,826,334      42%
Impairment of goodwill                                                        -      0%         2,100,955      23%
                                                                ----------------   ----  ------------------   ----
Income (loss) from operations                                           173,321      2%        (2,265,245)    -25%

Other (expense)                                                        (150,825)    -2%        (1,961,948)    -22%
                                                                ----------------   ----  ------------------   ----
Income (loss) before provision for income taxes,
    minority interest and extraordinary item                             22,496      0%        (4,227,193)    -46%
Provision for income taxes                                                    -      0%                 -       0%
                                                                ----------------   ----  ------------------   ----
Income (loss) before minority interest and
    extraordinary item                                                   22,496      0%        (4,227,193)    -46%
                                                                ----------------   ----  ------------------   ----
Minority interest in net income of consolidated
    limited liability companies                                         108,590      1%                 -       0%
                                                                ----------------   ----  ------------------   ----
Net income (loss) before extraordinary item
Extraordinary item                                                      (86,094)    -1%        (4,227,193)    -46%
     Gain on forgiveness of debt, net of tax                            144,399      1%         2,468,754      27%
                                                                ----------------   ----  ------------------   ----
Net income (loss)                                                     $  58,305      1%      $ (1,758,439)    -19%
                                                                ================   ====  ==================   ====
</TABLE>

     The  condensed  consolidated  financial  statements  of the Company for the
periods ended December 31, 2003 and 2002 reflect net income  (losses) of $58,305
and  $(1,758,439),  respectively,  on net revenues of $9,978,440 and $9,096,967,
respectively.  In  addition,  in late 2001 the  Company  decided to  discontinue
rental of general medical equipment to hospitals and physicians, which accounted
for  approximately  2% and 6% the  years  ended  December  31,  2003  and  2002,
respectively.

Year Ended December 31, 2003 Compared to the Year Ended December 31, 2002

     The Company generated revenues of $9,978,440 in 2003 compared to $9,096,967
in 2002. The increase in revenues in 2003 of $881,473,  or 9.7% is primarily due
to a net  increase  in  revenues  from our various  advanced  and base  surgical
procedures. In addition, we consolidated two limited liability companies for the
year ended  December 31, 2003  resulting in additional net revenues of $209,085.
The increase in revenues was offset by a decease of $412,008 in revenue from our
general  medical   equipment  rental  activities  which  is  being  phased  out.
Approximately  85% and 75% of  revenues  for 2003 and 2002,  respectively,  were
generated from our mobile surgical equipment services with the balance primarily
generated from cosmetic services and non-surgical equipment rentals.

     Cost of goods sold of was  $6,415,704  in 2003  compared to  $5,434,923  in
2002. The increase in cost of goods sold of $980,781 or 18.0% for 2003 is due to
increases in disposable costs,  maintenance and repair of equipment and vehicles
and depreciation expense.  Disposable costs increased as a result of a change in

                                       14
<PAGE>
the mix of surgical procedures rendered to customers whereby a greater number of
advanced  technology  procedures  were  performed in 2003 compared to 2002.  The
disposable  items used in these procedures such as fibers and kits have a higher
per unit cost compared to older laser  technologies.  In addition,  depreciation
and amortization expense included in cost of goods sold increased by $164,568 in
2003 compared to 2002 primarily as a result of increased capital expenditures in
2003.  Such increases were partially  offset by decreases in payroll and related
costs and property  taxes,  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 $3,562,736 in 2003 compared to $3,662,044
in 2002.  Gross profit as a percentage  of revenues was 36% in 2003  compared to
40% for 2002. The decrease of 4% in our gross profit margins  primarily  related
to  the  mix  of  surgical   procedures   performed,   higher  depreciation  and
amortization expense in 2003 compared to 2002, and due to a decrease of $412,008
in higher margin revenues from general  medical  equipment  rentals,  due to the
winding  down of this  area of our  business.  The  gross  margins  on  advanced
technology  surgical  procedures  are generally  lower than the margins on older
technology due to higher per unit costs for disposables. Gross margin rates will
vary from period to period depending upon various factors  including product and
services mix, pricing  considerations,  and equipment and technician utilization
rates.  The gross margin for 2003 is not  necessarily  indicative of the margins
that may be realized in future periods.

     Selling,  general  and  administrative  expenses  were  $3,389,415  in 2003
compared to  $3,826,334  in 2002.  The decrease of $436,919 or 11.4% in selling,
general  and  administrative  expenses  are  primarily  related to a decrease in
general  and  administrative  expenses,  due  to  decreases  in  consulting  and
accounting  and audit  expenses.  The decrease in consulting  and accounting and
audit  expenses  in 2003  relate to the fact that  such  services  significantly
declined after the completion of our restructuring  activities in late 2002. The
decrease in consulting  expense was partially  offset by an increase of $272,523
in payroll and  related  costs due to the fact that two  consultants  joined our
company as executive  officers in February 2003;  therefore,  their compensation
was  classified as payroll costs in 2003 versus  consulting  expense in 2002. In
addition,  the increase in compensation expense of $272,523 includes $107,121 of
non-cash  compensation  expense to two executive officers in connection with the
issuance of 535,606  shares of common stock in  connection  with the exercise of
certain  anti-dilution  rights pursuant to an agreement entered into in December
2002. Selling,  general and administrative  expenses as a percent of revenue was
34% in 2003  compared to 42% in 2002. We  anticipate  that selling,  general and
administrative  expenses  as a  percentage  of  revenues  will  continue to show
moderate  improvement  as we continue  to monitor  and improve our cost  control
policies and procedures.

     The Company recognized  goodwill  impairment charges of $-0- and $2,100,955
for 2003 and 2002, respectively. The write-down of $2,100,955 for 2002 is due to
impairment  based on an  independent  valuation of this asset.  The Company will
continue to review the value of its tangible and intangible assets in accordance
with SFAS No. 142 in the future as events and  circumstances  warrant and it may
be required to record  additional  impairment  charges if the carrying amount of
its assets is deemed to be unrecoverable.

     Other  expenses were  $150,825 in 2003 compared to $1,961,948 in 2002.  The
decrease  primarily  relates to the fact that the Company  recognized a realized
loss on  investment  securities  of  $1,732,573  in 2002 while no such loss were
incurred in 2003. The realized loss on investment  securities in 2002 related to
the disposition of the investment in Stonepath,  which was purchased by Emergent
in 2000 as discussed  elsewhere in the Form  10-KSB.  In addition,  net interest
expense  decreased  by $278,588 in 2003 offset by a decrease in gain on the sale
of assets of $122,962. The decrease in interest expense relates to lower overall
debt balances in 2003 compared to 2002 due to our restructuring  during 2002 and
to principal  payments in 2003. The gain on sale of assets  decreased to $40,918
in 2003  compared to $163,880  in 2002.  The  decrease in gain on sale of assets

                                       15
<PAGE>
relates to wind-down of our general rental  equipment  business which started in
early 2002.  From January 1, 2002 to December 31, 2002, the Company sold general
rental equipment with an aggregate net book value of $504,044 and had recognized
net gains on such dispositions of approximately $163,880. The Company expects to
continue its disposition  activities  until all such general rental equipment is
sold.

     The  minority  interest  in net income of limited  liability  companies  of
$108,590 in 2003 relates to the  consolidation  of two entities in which we hold
an equity  investment  interest.  As of December 31, 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.  During 2003 the
Company  dissolved four of its LLCs and transferred the management of one LLC to
third party members.  For the year ended December 31, 2002 the Company  recorded
equity in losses of $(5,508) from its ownership  interest in such LLCs, which is
included in other expense in the accompany statement of operations.

     The  Company  recognized  a gain on  forgiveness  of debt,  net of tax,  of
$144,399 in 2003  compared to  $2,468,754  in 2002.  Such gains are presented as
extraordinary items in the accompanying consolidated statement of operations for
the years ended December 31, 2003 and 2002. As discussed  elsewhere in this Form
10-KSB,  in order to improve  our  financial  condition  and to avoid a possible
bankruptcy  filing,  during the first  quarter  of 2002 we began the  process of
renegotiating  substantially  all of our  outstanding  debt,  lease,  and  trade
obligations with our key creditors. The gains on forgiveness of debt is directly
related  to the  results  of  these  efforts.  As of  December  31,  2002,  such
restructuring efforts were substantially  completed.  However, a small number of
debt  renegotiations   occurred  during  2003  resulting  in  the  net  gain  on
forgiveness of debt of $144,399.

     The   Company's   net  income  (loss)  was  $58,305  in  2003  compared  to
$(1,758,439)  in 2002. The net income (loss) per share was $0.02 and $(1.32) for
2003 and 2002,  respectively.  Basic and fully diluted shares  outstanding  were
2,684,339 and 1,336,904 for 2003 and 2002, respectively. No provision for income
taxes is provided for in 2003 and 2002 due to the  availability of net operating
loss carryforwards.

Recently Issued Accounting Pronouncements

     Between  April 2002 and May l, 2003,  the  Financial  Accounting  Standards
Board ("FASB") issued SFAS No.145 through SFAS No. 150. 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

     In early 2002 we began the process of  renegotiating  substantially  all of
our outstanding  debt, lease, and trade obligations with our key creditors in an
effort to improve our  financial  condition  and to avoid a possible  bankruptcy
filing.  As of December 31, 2002,  these  efforts were  substantially  completed
whereby  we  had  renegotiated  outstanding  debt  and  lease  obligations  with
principal  balances  outstanding  as of December 31, 2001 of $5,036,449  and had
recorded net gains on forgiveness of debt of $2,104,034.  The restructured  debt
and lease  obligation  agreements  provided,  in some  cases,  for the return of
equipment  used to  collateralize  such  obligations,  and certain  periodic and
monthly installment payments for the balance of such obligations.  In connection
with our renegotiations  with creditors during 2002 we returned equipment with a
net book value of $1,530,747.  Generally, in the event of default by the Company
we are  required to repay all amounts  previously  forgiven and all amounts then
outstanding are accelerated and become immediately due and payable.

                                       16
<PAGE>
In addition,  we renegotiated  outstanding  trade debt with our major vendors in
the amount of $458,683 and have recorded  gains on forgiveness of vendor debt in
the amount of $364,720 as of December 31, 2002.  In addition,  a small number of
debt  renegotiations  with vendors occurred during 2003 resulting in the gain on
forgiveness of debt of $144,399.  As of the filing date of this Annual Report on
Form  10-KSB,  we are  in  compliance  with  the  terms  and  conditions  of our
renegotiated debt 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.

     In October 2003, BJH Management,  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 $27,005  under this  agreement for the year ended
December 31, 2003.  Such  amounts,  as incurred,  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 $8,832 for
the year ended December 31, 2003.

     At December 31, 2003 we had a bank loan (the "Bank Term Loan")  outstanding
in the amount of $399,775.  The loan agreement,  as amended  provides for, among
other things, monthly interest payments at the prime rate (4% as of December 31,
2003) plus 2%, and  monthly  principal  payments of $16,667.  In  addition,  the
amended  agreement waives  compliance with all financial  covenants  through and
including December 31, 2003. The loan was due in March 2004,  however,  in March
2004, the lender extended the maturity date of the bank loan to January 31, 2005
.. Other terms and conditions of the bank loan  agreement  remain  unchanged.  We
also have an outstanding  bank line of credit (the "Bank Line of Credit") in the
amount  of  $750,000  with the same  lender.  The line of credit  agreement,  as
amended  provides for, among other things,  monthly  interest  payments equal to
prime (4% as of December 31, 2003) plus 2% and  establishes the a borrowing base
equal to 75% of  eligible  receivables,  as  defined,  and is due and payable on
April 30, 2004. The line of credit agreement was fully drawn as of the filing of
this Form 10-KSB, therefore, is not available for use. Both the

                                       17
<PAGE>
Bank  Term Loan and the Bank Line of Credit  agreements  are  collateralized  by
accounts receivable,  inventory and a general security interest in the assets of
the Company that do not serve as collateral for other lenders. In addition,  the
amended  agreement waives  compliance with all financial  covenants  through and
including December 31, 2003. In March 2004, the lender agreed to extend the bank
line of credit for ten months to January 31, 2005. In addition, the bank line of
credit agreement, as amended, requires the pay-down of the line of credit by
$250,000 on or before  October 1, 2004.  All other terms and  conditions  of the
agreement remain unchanged.

     The Bank Line of Credit  and Bank Term Loan  prohibit  the  payment of cash
dividends and require us to maintain certain levels of net worth and to generate
certain  ratios of cash flows to debt  service.  Although the Company was not in
compliance  with certain debt convenants as of December 31, 2003, the lender has
waived such  non-compliance  through and including  December 31, 2003.  The bank
loan  facilities  are  classified  as current  liabilities  in the  accompanying
balance sheet as of December 31, 2003.

     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.

     The Company had cash and cash equivalents of $957,242 at December 31, 2002.
Cash provided by operating  activities  for the year ended December 31, 2002 was
$973,209.  Such amount primarily related to the inclusion in net loss of certain
non-cash  write-downs,  including,  write-down  of  investments  of  $1,732,573,
impairment of goodwill of $2,100,955, depreciation and amortization of $594,538,
and a net increase in working capital.  Cash provided from investing  activities
amounted  to  $470,983  due to net  proceeds  from  the sale of  investments  of
$267,427,  and the proceeds  from the sale of property and equipment of $615,603
offset by the purchase of property and  equipment  for $119,442 and cash paid to
limited liability  companies of $292,605.  Cash used by financing  activities of
$969,115,  was  primarily  the  result of the pay down of debt  obligations  and
related fees of $822,688 and the payment of a bank overdraft of $146,427.

     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 AND MAY CONTINUE TO INCUR LOSSES.

     We  incurred  net  losses  before   extraordinary  item  of  $(86,094)  and
$(4,227,193) for the years ended December 31, 2003 and 2002,  respectively.  The
net loss for 2002 was comprised of a loss from operations of $(2,265,245), and a
realized loss on the sale of investments of $1,732,573.  As discussed  elsewhere

                                       18
<PAGE>
in this Form 10-KSB,  Management  devoted  significant time and attention to the
Company's  financial  restructuring  efforts  throughout 2002 with most of these
efforts being  substantially  completed by December  2002. The operating loss in
2002 was largely  attributable  to the financial  difficulties  addressed in the
restructuring efforts. In 2003 management focused more of its time and attention
on  continuing  to  improve  sales  volume,  operational  efficiencies  and cost
controls,  which  resulted  in  large  part  to  the  improvement  in  operating
performance in 2003. Although the Company showed significant  improvement in its
operating  performance  during  2003,  there can be no  assurances  that we will
continue to achieve positive operating results in future periods.

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

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

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

THE PRICE OF OUR STOCK MAY FLUCTUATE

                                       19
<PAGE>
     The market price of our common stock may be as highly volatile, or more so,
as the stock  market  in  general  or,  for that of micro  cap  stocks,  and the
technology sector more  specifically.  Stockholders may have difficulty  selling
their  common stock  following  periods of such  volatility  due to the market's
adverse  reaction  to such  volatility.  Many  of the  factors  leading  to such
volatility are well beyond our control and could include:

     o    conditions and trends in our industry;

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

     o    actual or expected variations in our operating results;

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

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

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

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

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

     o    fluctuations in demand for our products and services;

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

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

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

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

     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

                                       20
<PAGE>
     o    general economic conditions.

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

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

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

     o    maintaining and enhancing our relationships with customers;

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

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

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

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

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

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

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

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

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

                                       21
<PAGE>
     o    the acquisition or alliance could have adverse effects on our existing
          business relationships with suppliers and/or customers.

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

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

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

     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  recently  extended by 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

     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.

                                       22
<PAGE>
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.

Item 7.  Financial Statements
-----------------------------
                                          EMERGENT GROUP INC. AND SUBSIDIARIES
                                             CONSOLIDATED FINANCIAL STATEMENTS
                                FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

<PAGE>
                                          EMERGENT GROUP INC. AND SUBSIDIARIES
                                                                      CONTENTS
                                                             December 31, 2003
------------------------------------------------------------------------------
                                                                          Page

INDEPENDENT AUDITOR'S REPORT                                                F1

CONSOLIDATED FINANCIAL STATEMENTS

       Consolidated Balance Sheets                                     F2 - F3

       Consolidated Statements of Operations                           F4 - F5

       Consolidated Statements of Shareholders' Equity                      F6

       Consolidated Statements of Cash Flows                           F7 - F9

       Notes to Consolidated Financial Statements                    F10 - F29

<PAGE>
                          INDEPENDENT AUDITOR'S REPORT

Board of Directors and Shareholders
Emergent Group Inc. and subsidiaries

We have audited the accompanying  consolidated  balance sheets of Emergent Group
Inc.  and  subsidiaries  as of  December  31,  2003 and  2002,  and the  related
consolidated statements of operations,  shareholders' equity, and cash flows for
the years then ended.  These financial  statements are the responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audits.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  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,  2003 and 2002,  and the results of their
operations  and their cash flows for the years  then  ended in  conformity  with
accounting principles generally accepted in the United States of America.

SINGER LEWAK GREENBAUM & GOLDSTEIN LLP

Los Angeles, California
March 2, 2004, except
 for Note 15 as to which
 the date is March 31, 2004
                                      F-1
<PAGE>
                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                                      Consolidated Balance Sheet
                                  For the Years Ended December 31, 2003 and 2002
<TABLE>
<CAPTION>

                                     ASSETS

                                                                                     2003                 2002
                                                                                ------------          ------------
Current assets
<S>                                                                                <C>                   <C>
     Cash                                                                       $   690,331           $   957,242
     Accounts receivable, net of allowance for doubtful
        accounts of $32,602 and $73,650, respectively                             1,328,968             1,306,055
     Due from related parties, net                                                        -               121,543
     Inventory, net                                                                 343,893               295,069
     Prepaid expenses                                                               102,623               265,062
     Income tax receivable                                                                -                 4,830
                                                                                ------------          ------------
            Total current assets                                                  2,465,815             2,949,801

Equity investment in limited liability companies                                          -                31,134
Property and equipment, net                                                       2,115,823             1,888,688
Goodwill, net                                                                       779,127               779,127
Deposits                                                                            132,416                72,539
Finance fees, net of accumulated amortization
        of $198,729 and $176,011, respectively                                       20,267                60,483
                                                                                ------------          ------------

Total assets                                                                    $ 5,513,448           $ 5,781,772
                                                                                ============          ============
</TABLE>
                 The accompanying notes are an integral part of
                           these financial statements.

                                       F-2
<PAGE>
                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                          Consolidated Balance Sheet (continued)
                                  For the Years Ended December 31, 2003 and 2002
<TABLE>
<CAPTION>
                 LIABILITIES AND SHAREHOLDERS' EQUITY

                                                                                     2003                 2002
                                                                                ------------          ------------
Current liabilities
<S>                                                                             <C>                   <C>
     Line of credit                                                             $   750,000           $ 1,108,700
     Current portion of capital lease obligations                                   311,292               677,973
     Current portion of notes payable                                               584,441               807,908
     Accounts payable                                                               528,363               544,835
     Accrued expenses                                                               787,328             1,053,243
                                                                                ------------          ------------
        Total current liabilities                                                 2,961,424             4,192,659

Capital lease obligations, net of current portion                                   189,002               368,618
Notes payable, net of current portion                                               495,770               657,833
                                                                                ------------          ------------
            Total liabilities                                                     3,646,196             5,219,110
                                                                                ------------          ------------

Minority Interest                                                                   177,555                     -

Shareholders' equity
     Common stock, $0.04 par value
        100,000,000 shares authorized;
        4,744,551 and 1,622,945 shares issued and
            outstanding                                                             189,782                64,918
     Committed common stock, 61,000 shares                                                -                 2,440
     Additional paid-in capital                                                  14,488,090            13,541,784
     Accumulated deficit                                                        (12,988,175)          (13,046,480)
                                                                                ------------          ------------
               Total shareholders' equity                                         1,689,697               562,662
                                                                                ------------          ------------

 Total liabilities and shareholders' equity                                     $ 5,513,448           $ 5,781,772
                                                                                ============          ============
</TABLE>
                 The accompanying notes are an integral part of
                           these financial statements.

                                      F-3
<PAGE>
                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                           Consolidated Statements of Operations


<TABLE>
<CAPTION>
                                                                    Year Ended
                                                                    December 31,
                                                         -----------------------------------
                                                              2003                2002
                                                         --------------        -------------
<S>                                                      <C>                   <C>
Revenue                                                  $   9,978,440         $  9,096,967
Cost of goods sold                                           6,415,704            5,434,923
                                                         --------------        -------------

Gross profit                                                 3,562,736            3,662,044
Selling, general, and administrative
     expenses                                                3,389,415            3,826,334
Impairment of goodwill                                               -            2,100,955
                                                         --------------        -------------

Income (Loss) from operations                                  173,321           (2,265,245)
                                                         --------------        -------------

Other income (expense)
     Interest expense                                         (177,123)            (455,711)
     Loss in net investment in limited
        liability companies                                    (24,053)              (5,508)
     Realized loss on investment securities                          -           (1,732,573)
     Gain on disposal of property and
        equipment                                               40,918              163,880
     Other income, net                                           9,433               67,964
                                                         --------------        -------------

            Total other income (expense)                      (150,825)          (1,961,948)
                                                         --------------        -------------

Income (Loss) before provision for income
     taxes, minority interest and extraordinary item            22,496           (4,227,193)
Provision for income taxes                                           -                    -
                                                         --------------        -------------

Income (Loss) before minority interest and
extraordinary item                                              22,496           (4,227,193)
</TABLE>
                 The accompanying notes are an integral part of
                           these financial statements.

                                      F-4
<PAGE>
                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                               Consolidated Statements of Operations (continued)


<TABLE>
<CAPTION>
                                                                    Year Ended
                                                                    December 31,
                                                         -----------------------------------
                                                              2003                2002
                                                         --------------        -------------
<S>                                                      <C>                   <C>
Minority interest in net income of consolidated
limited liability companies                                   (108,590)                   -
                                                         --------------        -------------

Income (loss) before extraordinary item                        (86,094)          (4,227,193)
                                                         --------------        -------------

Extraordinary item
     Gain on forgiveness of debt, net of tax                   144,399            2,468,754
                                                         --------------        -------------

Net income (loss)                                        $      58,305         $ (1,758,439)
                                                         --------------        -------------

Basic and diluted earnings (loss) per share:
        Before extraordinary item                        $       (0.03)        $      (3.16)
        Extraordinary item                                        0.05                 1.85
                                                         --------------        -------------
            Total basic and diluted earnings
               (loss) per share                          $        0.02         $      (1.32)
                                                         ==============        =============

Basic and diluted weighted-average
     shares outstanding                                      2,684,339            1,336,904
                                                         ==============        =============
</TABLE>
                 The accompanying notes are an integral part of
                           these financial statements.

                                      F-5
<PAGE>
                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                 Consolidated Statements of Shareholders' Equity
                                 For the Years Ended December 31, 2003 and 2002
<TABLE>
<CAPTION>


                               (As restated for stock split)
                                          1:40                                           Accumulated
                                --------------------------                                  Other
                                       Common Stock        Committed     Additional        Compre-
                                       ------------          Common       Paid-In          hensive        Accumulated
                                  Shares       Amount         Stock       Capital           Loss            Deficit          Total
                                -----------  -----------   ----------    -------------   --------------   -------------  -----------
<S>                               <C>         <C>              <C>           <C>           <C>           <C>              <C>
Balance, December 31, 2001       1,326,121   $   53,045    $       -     $ 13,442,154    $  (1,732,573)   $(11,288,041)  $  474,585
   Conversion of promissory
    notes to common stock            9,250          370            -           99,630                -               -      100,000
   Common stock issued for
    services                       287,574       11,503        2,440                -                -               -       13,943
   Realized loss on investment
    securities                           -            -            -                -        1,732,573               -    1,732,573
   Net loss                              -            -            -                -                -      (1,758,439)  (1,758,439)
                                -----------  -----------   ----------    -------------   --------------   -------------  -----------

Balance, December 31, 2002       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
                                ===========  ===========   ==========    =============   ==============   =============  ===========
</TABLE>
                 The accompanying notes are an integral part of
                           these financial statements.


                                      F-6
<PAGE>

                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                           Consolidated Statements of Cash Flows
                                  For the Years Ended December 31, 2003 and 2002
<TABLE>
<CAPTION>
                                                                      For the Year Ended
                                                                          December 31,
                                                                  ---------------------------
                                                                      2003           2002
                                                                  ------------  -------------
Cash flows from operating activities
<S>                                                               <C>           <C>
     Net income (loss)                                            $    58,305   $ (1,758,439)
     Adjustments to reconcile net income
         (loss) to net cash provided by operating activities:
            Gain on disposal of property and
                equipment                                             (40,918)      (163,880)
            Gain on forgiveness of debt                              (144,399)    (2,468,754)
            Minority interest in net income of limited
                liability companies                                   108,590
            Realized loss on investment
                securities                                                  -      1,732,573
            Depreciation and amortization of
                property and equipment                                820,726        594,538
            Write off of loan fees, net                                     -         63,550
            Equity in net loss on investment in
                limited liability companies                            24,053          5,508
            Amortization of finance fees                               47,717         50,052
            Impairment of goodwill                                          -      2,100,955
            Issuance of stock for services
                performed                                             107,120         13,943
            Allowance for doubtful accounts                           (41,048)        13,397

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

                                      F-7
<PAGE>
                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                               Consolidated Statements of Cash Flows (continued)
                                  For the Years Ended December 31, 2003 and 2002
<TABLE>
<CAPTION>
                                                                      For the Year Ended
                                                                          December 31,
                                                                  ---------------------------
                                                                      2003           2002
                                                                  ------------  -------------
            (Increase) decrease in
<S>                                                                    <C>         <C>
                Accounts receivable                                    18,135      1,959,323
                Due from related parties                              147,760     (1,399,625)
                Inventory                                             (48,824)       (40,098)
                Prepaid expenses                                      163,901        (58,630)
                Deposits and other assets                             (47,955)        14,135
            Increase (decrease) in
                Accounts payable                                       (9,559)      (187,141)
                Accrued expenses                                     (251,879)       501,802
                                                                  ------------  -------------

Net cash provided by operating activities                             911,725        973,209
                                                                  ------------  -------------

Cash flows from investing activities
     Purchase of property and equipment                               (739,021)     (119,442)
     Cash paid to limited liability companies                         (154,328)     (292,605)
     Proceeds from the sale of property and
         equipment                                                      48,452       615,603
     Proceeds from the sale of marketable
         securities                                                         -        267,427
                                                                  ------------  -------------

Net cash provided by (used in) investing activities                  (844,897)       470,983
                                                                  ------------  -------------
</TABLE>
                 The accompanying notes are an integral part of
                           these financial statements.

                                      F-8
<PAGE>
                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                               Consolidated Statements of Cash Flows (continued)
                                  For the Years Ended December 31, 2003 and 2002


<TABLE>
<CAPTION>
                                                                      For the Year Ended
                                                                          December 31,
                                                                  ---------------------------
                                                                      2003           2002
                                                                  ------------  -------------
Cash flows from financing activities
<S>                                                                   <C>          <C>
     Proceeds from convertible notes payable, net                     951,610              -
     Payments on notes payable                                       (408,134)      (418,703)
     Payments on capital lease obligations                           (511,015)      (403,985)
     Payments for loan fees                                            (7,500)             -
     Payments on line of credit                                      (358,700)             -
     Net change in book overdraft                                           -       (146,427)
                                                                  ------------  -------------

Net cash used in financing activities                                (333,739)      (969,115)
                                                                  ------------  -------------

Net increase (decrease) in cash                                      (266,911)       475,077

Cash, beginning of period                                             957,242        482,165
                                                                  ------------  -------------

Cash, end of period                                               $   690,331   $    957,242
                                                                  ============  =============
Supplemental disclosures of cash
     flow information
         Interest paid                                            $   185,849   $    223,178
                                                                  ============  =============

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

                                      F-9
<PAGE>
                                           EMERGENT GROUP INC AND SUBSIDIARIES
                                         CONSOLIDATED STATEMENTS OF CASH FLOWS
                                For the Years Ended December 31, 2003 and 2002
------------------------------------------------------------------------------

Supplemental schedule of non-cash investing and financing activities

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

During the year ended December 31, 2002, the Company:

     o    issued  9,250  shares of common  stock  for the  conversion  of a note
          payable of $100,000.

     o    capitalized $289,924 of accessories from inventory.

     o    sold  property  and  equipment  with a net book  value of $38,229 to a
          related party for $156,963.  The Company received $106,642 in cash and
          offset $52,321 against a balance owed to the related party.

     o    acquired a 15% interest in a limited  liability company for $26,250 in
          the form of a note  receivable.  This note  receivable has been offset
          against   management  fees  and  expenses  recharged  to  the  limited
          liability company during the year.

     o    entered into debt  re-negotiations with capital lease and note payable
          holders,  resulting  in the  forgiveness  of  $3,208,037  of debt  and
          $426,743  of  accrued  interest  charges.  In  connection  with  these
          transactions,  property  and  equipment  with  a  net  book  value  of
          $1,530,747  was returned to capital  lease and note  payable  holders,
          resulting in a net gain of  $2,104,033.  The Company also entered into
          debt re-negotiations with several vendors,  resulting in a gain on the
          forgiveness of debt of $364,721.

                                      F-10
<PAGE>
                                          EMERGENT GROUP INC. AND SUBSIDIARIES
                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                             December 31, 2003


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.  Amortization
     expense for the  covenant  not-to-compete  and  customer  list  amounted to
     $8,832 for the year ended December 31, 2003 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, 2003 in
     accordance with the Financial Accounting Standards Board Interpretation No.
     46,   "Consolidation  of  Variable  Interest  Entitites"  the  Company  has
     accounted for its equity investments in its two remaining 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. 101,
     "Revenue Recognition," and related guidance. We make such assessments based
     on the  following  factors:  (a)  customer-specific  information,  and  (b)
     historical experience for issues not yet identified.

                                      F-11
<PAGE>
                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2003


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

     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, 2003 and 2002, uninsured portions of balances
     at those banks  aggregated  to $537,674  and  $909,261,  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.  During the year ended  December  31,
     2002, the Company determined that the value of the excess of cost over fair
     value of net assets  acquired  relating  to PRI Medical  was  impaired  and
     recorded a loss of  $2,100,955  as shown in the  accompanying  consolidated
     statement of operations.

     Fair Value of Financial Instruments
     For  certain  of  the  Company's  financial  instruments,  including  cash,
     accounts  receivable,  due from related parties,  prepaid expenses,  assets
     held for sale, accounts payable, and accrued expenses, the

                                      F-12
<PAGE>
                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2003




     carrying amounts approximate fair value due to their short maturities.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Stock-Based Compensation
     SFAS No. 123,  "Accounting  for Stock-Based  Compensation,"  defines a fair
     value based method of accounting  for  stock-based  compensation.  However,
     SFAS No. 123 allows an entity to  continue  to  measure  compensation  cost
     related to stock and stock options issued to employees  using the intrinsic
     method of  accounting  prescribed by  Accounting  Principles  Board ("APB")
     Opinion  No.  25,  "Accounting  for Stock  Issued to  Employees."  Entities
     electing to remain with the  accounting  method of APB No. 25 must make pro
     forma  disclosures  of net 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, 2003 and 2002,  advertising  expense was
     $19,536 and $38,824, 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 (Loss) Per Share
     The Company  utilizes SFAS No. 128,  "Earnings  per Share." Basic  earnings
     (loss) per share is computed by dividing income (loss)  available to common
     shareholders by the  weighted-average  number of common shares outstanding.
     Diluted  earnings  (loss) per share is computed  similar to basic  earnings
     (loss) 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.

                                      F-13
<PAGE>
                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2003




NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

     Recently Issued Accounting Pronouncements
     In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
     No. 4, 44, and 64,  Amendment  of FASB  Statement  No.  13,  and  Technical
     Corrections."  SFAS No. 145 updates,  clarifies,  and  simplifies  existing
     accounting  pronouncements.  This  statement  rescinds  SFAS No.  4,  which
     required all gains and losses from  extinguishment of debt to be aggregated
     and, if  material,  classified  as an  extraordinary  item,  net of related
     income tax effect. As a result, the criteria in APB No. 30 will now be used
     to classify  those gains and losses.  SFAS No. 64 amended SFAS No. 4 and is
     no longer necessary as SFAS No. 4 has been rescinded.  SFAS No. 44 has been
     rescinded as it is no longer necessary.  SFAS No. 145 amends SFAS No. 13 to
     require that certain lease modifications that have economic effects similar
     to  sale-leaseback  transactions  be  accounted  for in the same  manner as
     sale-lease transactions. This statement also makes technical corrections to
     existing  pronouncements.  While those  corrections  are not substantive in
     nature,  in  some  instances,  they  may  change  accounting  practice.  In
     connection with the  re-negotiation  of certain  capital lease  agreements,
     notes payable  agreements,  and accounts payable  liabilities,  the Company
     recorded an  extraordinary  gain on  forgiveness  of debt of  $144,399  and
     $2,468,754 in the consolidated statements of operations for the years ended
     December 31, 2003 and 2002, respectively.

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

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

                                      F-14
<PAGE>
                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2003



NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

     In January 2003 and December 2003, the FASB issued FASB  Interpretation No.
     46, and FASB No. 46R,  respectively,  "Consolidation  of Variable  Interest
     Entities,"  an  interpretation  of  Accounting  Research  Bulletin  No. 51,
     "Consolidated   Financial  Statements."  This  pronouncement  requires  the
     consolidation of variable interest entities,  as defined,  and is effective
     immediately for variable  interest entities created after January 31, 2003,
     and for  variable  interest  entities  in which an  enterprise  obtains  an
     interest  after that date. In accordance  with this  interpretation,  as of
     December 31, 2003, the Company has included two limited liability companies
     in its consolidated financial statements.

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

     In May  2003,  the  FASB  issued  SFAS No.  150,  "Accounting  for  Certain
     Financial Instruments with Characteristics of both Liabilities and Equity."
     SFAS  No.  150  establishes  standards  for how an  issuer  classifies  and
     measures  in  its  statement  of  financial   position  certain   financial
     instruments  with  characteristics  of  both  liabilities  and  equity.  In
     accordance with the standard, financial instruments that embody obligations
     for the issuer are required to be classified as  liabilities.  SFAS No. 150
     will be effective for financial  instruments entered into or modified after
     May 31, 2003 and otherwise  will be effective at the beginning of the first
     interim period  beginning after June 15, 2003. As of December 31, 2003, the
     Company does not have preferred stock as a liability.

NOTE 3 - INVENTORY

     Inventory at December 31, 2003 and 2002 consisted of the following:
<TABLE>
<CAPTION>
                                                    2003                2002
                                               ---------------    ----------------
<S>                                            <C>                <C>
     Disposables                               $      499,769     $       459,174
     Less reserve for obsolescence                    155,876             164,105
                                               ---------------    ----------------
     Total                                     $      343,893     $       295,069
                                               ===============    ================
</TABLE>

     During the years ended December 31, 2003 and 2002, the Company  capitalized
     $0 and $289,924, respectively, of accessories from inventory.

                                      F-15
<PAGE>
                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2003





NOTE 4 - EQUITY INVESTMENT IN LIMITED LIABILITY COMPANIES

     As of December 31, 2002,  the Company  held  investment  interests in seven
     limited liabilities  companies ("LLCs"),  which were formed in prior years.
     PRI  Medical's  investment  interest  ranged from 3% to 21%.  The LLCs were
     formed by  certain  physicians  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 and had
     accounted  for  its  interest  in the  LLCs  using  the  equity  method  of
     accounting.  During the third and fourth quarter of 2003 PRI dissolved four
     of the  seven  LLCs  and  transferred  the  management  of one LLC to other
     unaffiliated  members.  As December 31, 2003 PRI Medical  continues to hold
     investment  interests in two LLCs. These entities have been consolidated as
     of December  31, 2003 and are  included  in the  accompanying  consolidated
     statement  of  operations  and  balance  sheet  as  December  31,  2003  in
     accordance  with FASB  Interpretation  No. 46,  "Consolidation  of Variable
     Interest Entities."

     During the years ended December 31, 2003 and 2002,  the Company  recognized
     its equity in net losses of LLCs of $(24,053) and  $(5,508),  respectively.
     The equity in net losses for 2003 relate to the LLCs that were dissolved as
     of December 31, 2003. The Company's  total equity  investment in these LLCs
     during for the year ended December 31, 2002 was $31,134.

     During the year ended December 31, 2002, the Company earned management fees
     and recharged  expenses of $1,399,625  to the LLCs for the  performance  of
     operational, management, and other services. The balances due from the LLCs
     at December 31, 2002 was $121,543 net of provisions for doubtful receivable
     balances of $73,568,  which is recorded  under due from related  parties on
     the accompanying consolidated balance sheet.

NOTE 5 - PROPERTY AND EQUIPMENT

     Property  and  equipment  at December  31, 2003 and 2002  consisted  of the
     following:
<TABLE>
<CAPTION>
                                                                                      2003                2002
                                                                                ---------------    ----------------
<S>                                                                             <C>                <C>
                  Rental equipment                                              $    3,208,306     $     2,373,627
                  Accessories and eyewear                                              373,875             289,924
                  Furniture and fixtures, including computers                          113,571              58,087
                  Capitalized Software Cost                                            100,227                   0
                  Transportation equipment                                              93,255              14,963
                  Leasehold improvements                                                 5,901               2,101
                                                                                ---------------    ----------------
                                                                                     3,895,135           2,738,702
                  Less accumulated depreciation and amortization                     1,779,312             850,014
                                                                                ---------------    ----------------
                      Total                                                     $    2,115,823     $     1,888,688
                                                                                ===============    ================

</TABLE>
     Depreciation  and  amortization  expense for  property  and  equipment  was
     $820,726  and  $594,538  for the years  ended  December  31, 2003 and 2002,
     respectively.

                                      F-16
<PAGE>
                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2003





NOTE 6 - LINE OF CREDIT

     At  December  31,  2003 and 2002 the Company had a bank line of credit (the
     "Bank  Line  of   Credit")   outstanding   of  $750,000   and   $1,108,700,
     respectively. The line of credit agreement, as amended, provides for, among
     other things,  monthly interest  payments equal to prime (4% as of December
     31, 2003) plus 2% and establishes a borrowing base equal to 75% of eligible
     receivables, as defined, and is due and payable on April 30, 2004. The line
     of credit agreement was fully drawn as of December 31, 2003, and therefore,
     is  not  available   for  use.  The  Bank  Line  of  Credit   agreement  is
     collateralized  by accounts  receivable,  inventory and a general  security
     interest in the assets of the Company that do not serve as  collateral  for
     other lenders. The credit agreement, as amended, waives compliance with all
     financial covenants through and including December 31, 2003. In March 2004,
     the line was extended for ten months  commencing on April 1, 2004 under the
     same terms and conditions described herein.

     The  Bank  Line of  Credit,  as  amended,  prohibits  the  payment  of cash
     dividends and requires the Company 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  covenants,  the lender has
     waive such non-compliance through and including December 31, 2003.

     The  Company  incurred  interest  expense on  borrowings  under the line of
     credit of $71,131 and $95,795  for the years  ended  December  31, 2003 and
     2002,  respectively and is included in interest expense in the accompanying
     statements of operations.

                                      F-17
<PAGE>
                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2003






NOTE 7 - NOTES PAYABLE

     Notes payable at December 31, 2003 and 2002 consisted of the following:
<TABLE>
<CAPTION>
                                                                                        2003                2002
                                                                                ---------------    ----------------
<S>                                                                             <C>                <C>
          Note payable to bank, as amended, provides for monthly
              interest payments at the prime rate, 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 March 2, 2004. In
              March 2004, this note was extended for ten months
              commencing on April 1, 2004 under the same terms and
              conditions described herein.                                      $      399,775     $      599,774
          Unsecured promissory note, with interest at 12.5% per annum. This
              note was originally due in November 2002.
              The note was renegotiated with $60,000 forgiven and
              the due date was extended to March 31, 2003.                                 -0-             20,000
          Unsecured promissory note, with interest at
              10% per annum.  This note was originally due on
              April 18, 2001. During 2002, the Company renegotiated
              the amount due and $62,000 of the original amount due
              was forgiven.  The outstanding balance is due on
              or before March 31, 2003.                                                    -0-             19,000
          Thirty-nine notes payable to a finance company,
              which are collateralized by the certain medical equipment.
              The notes originally provided for interest at varying
              rates between 9% and 11% per annum and required monthly
              payments of approximately $81,000. During the year ended
              December 31, 2002, the Company renegotiated the amount due
              resulting in forgiveness of debt of $1,167,861. The notes,
              as amended, provide for monthly principal and interest
              payments of $18,013 through May 2007.                                    657,832            823,428
           Installment note payable due to a finance company with
              monthly principal payments of $628.  The Company
              entered into the note in December 2003 with a maturity
              date of December 2006.                                                    22,604                -0-
           Note payable to a bank, collateralized by medical
              equipment, with interest at 10.4% per
              annum.  The note is payable in full in July
              2003 and requires monthly payments of $521.                                  -0-              3,539
                                                                                ---------------    ----------------
                                                                                     1,080,211           1,465,741
           Less current portion                                                        584,441             807,908
                                                                                ---------------    ----------------
           Long-term portion                                                    $      495,770     $       657,833
                                                                                ===============    ================
</TABLE>

                                      F-18
<PAGE>
                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2003






NOTE 7 - NOTES PAYABLE (continued)

     Future maturities of notes payable at December 31, 2003 were as follows:

                  Year Ending
                  December 31,

                      2004         $        584,441
                      2005                  197,007
                      2006                  210,207
                      2007                   88,556
                                   -----------------
                      Total        $      1,080,211
                                   =================

NOTE 8 - ACCRUED EXPENSES

     Accrued expenses at December 31, 2003 and 2002 consisted of the following:
<TABLE>
<CAPTION>
                                                                                        2003                2002
                                                                                ---------------    ----------------
<S>                                                                             <C>                <C>
                  Accrued payroll and payroll related amounts                   $      302,426     $       240,943
                  Accrued interest                                                      16,141              16,128
                  Accrued penalties and late fees                                           -0-             45,464
                  Other                                                                468,761             750,708
                                                                                ---------------    ----------------
                      Total                                                     $      787,328     $     1,053,243
                                                                                ===============    ================
</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, 2003 and 2002 was $155,337 and $157,378, respectively.

     The  Company  leases a 2,000  square foot  facility in Dublin,  California,
     which  serves  as  an  warehouse/administrative   office.  The  lease  term
     terminates  in March 2004.  The  Company  will enter into a new lease for a
     1,620 square foot facility in Hayward, California at the termination of the
     existing  lease.  The term for the new lease commences on April 1, 2004 and
     terminates on May 31, 2007. Total rent expense incurred for the years ended
     December 31, 2003 and 2002 was $54,880 and $52,092, 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, 2003 and 2002 was $155,631 and $169,051, respectively.

                                      F-19
<PAGE>
                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2003






NOTE 9 - COMMITMENTS AND CONTINGENCIES (continued)

     At  December  31,  2003 the  Company is  obligated  under  several  capital
     equipment  leases with various finance  companies.  The capital leases bear
     interest at rates between 7% and 10% per annum.  The monthly  capital lease
     payments  range  between $99 to $12,500 and  terminate  through April 2007.
     During the years ended December 31, 2003 and 2002, the Company renegotiated
     various capital lease obligations,  resulting in the forgiveness of debt of
     $35,283 and $1,609,114, respectively.

     Future  minimum  lease  payments  under  operating  and  capital  leases at
     December 31, 2003 were as follows:

                  Year Ending                 Operating          Capital
                  December 31,                  Lease             Lease
                 -------------             --------------    ----------------
                      2004                 $     360,817     $       335,388
                      2005                       224,997             116,503
                      2006                       141,595              56,518
                      2007                        11,378              15,979
                                           --------------    ----------------

         Total minimum lease payments      $     738,787             524,388
                                           ===============
         Less amounts representing interest                           24,094
                                                             ----------------
                                                                     500,294
         Less current portion                                        311,292
                                                             ----------------
         Long-term portion                                   $       189,002

     Litigation

     In October 2000, a related party of Emergent (the "plaintiff") commenced an
     action on behalf of Emergent against  Stonepath Group,  Inc. and two of its
     officers in the United States  District Court for the Southern  District of
     New  York.  The  action  was for  negligence  and fraud  under the  federal
     securities  laws and common law to recover its investment in Stonepath.  On
     April 15, 2002,  the court  dismissed  the  plaintiff's  amended  Complaint
     without leave to amend.  Emergent  filed an appeal of the court's  decision
     and on September 4, 2003, the United States Court of Appeals for the Second
     Circuit affirmed in part and reversed in part the dismissal by the District
     Court of the action commenced by Emergent against  Stonepath.  The Court of
     Appeals  reversed the dismissal and  reinstated  that part of the complaint
     which was based upon the  alleged  failure  to  disclose  the  relationship
     between  Stonepath and its former  President and Chief  Executive  Officer,
     with an individual who had been barred for life by the NASD.  However,  the
     Court of  Appeals  affirmed  and let  stand the  dismissal  of that part of
     Emergent's complaint which alleged that Stonepath  misrepresented the value
     of  its  assets.  Discovery  is  presently  proceeding  in the  portion  of
     Emergent's action which was reinstated by the Court of Appeals.

                                      F-20
<PAGE>
                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2003







NOTE 9 - COMMITMENTS AND CONTINGENCIES (continued)

     On April 25, 2002, Citicorp Vendor Finance,  Inc. ("Citicorp") filed a suit
     in the  Superior  Court of Los Angeles  against  PRI  Medical and PRI.  The
     complainant  sought damages of  approximately  $656,000,  plus interest and
     late  charges  and  asserts  breach  of  contract.  The  Company  reached a
     settlement  with Citicorp in November  2002,  whereby the Company agreed to
     pay Citicorp a total of $400,000 in full settlement of the claim in various
     installments, with the balance being paid in full by March 2004. As part of
     the  settlement,  Citicorp has agreed that PRI may sell the equipment under
     the equipment lease  agreement,  but must transmit to Citicorp all proceeds
     from the sale in excess of $225,000.  The settlement  further stipulates in
     event of  non-payment,  Citicorp  may  petition  the  court for an entry of
     judgment against PRI Medical and PRI. In 2003, the Company made payments to
     Citicorp totaling $375,000 in accordance with the settlement agreement.

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

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  $951,611,  net of
          offering costs of $48,389,  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.

                                      F-21
<PAGE>
                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2003






NOTE 10 - SHAREHOLDERS' EQUITY (continued)

     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  ("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.

     During  the year  ended  December  31,  2002,  the  Company  completed  the
     following transactions:

     o    issued  9,250  shares of common  stock  for the  conversion  of a note
          payable of $100,000.

     o    issued 287,574 shares of common stock valued at $11,503 to a principal
          of BJH in  connection  with his  appointment  as the  Company's  Chief
          Executive Officer. In connection with this transaction,  an additional
          61,000  shares of common stock were issued  subsequent to December 31,
          2002 valued at $2,440. This transaction has been recorded as committed
          common  stock as December  31, 2002 in the  accompanying  consolidated
          balance sheet.

     Stock Option Plans
     In September  1996, PRI Medical  adopted the 1996 Stock Incentive Plan (the
     "1996 Plan") to allow officers,  employees,  and certain  non-employees  to
     receive  certain  options to purchase  common  stock.  Under the 1996 Plan,
     regular salaried employees and directors may be granted options exercisable
     at not less than 100% of the fair market value of the shares at the date of
     grant.  The exercise price of any option granted to a person who owns stock
     possessing more than 10% of the voting power of all classes of common stock
     of PRI Medical must be 110% of the fair market value of the common stock on
     the date of grant,  and the  duration  may not exceed five  years.  Options
     generally  become  exercisable at a rate of one-third of the shares subject
     to option on each of the first,  second, and third anniversary dates of the
     grant.  The  duration  of the  options  may not exceed 10 years.  A maximum
     number of 37,500 shares of PRI Medical's  common stock were issuable  under
     the 1996 Plan.

                                      F-22
<PAGE>
                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2003







NOTE 10 - SHAREHOLDERS' EQUITY (continued)

     In February  2000, PRI Medical  adopted the 2000 Stock  Incentive Plan (the
     "2000 Plan") to allow officers,  employees,  and certain  non-employees  to
     receive  certain  options to purchase  common  stock.  Under the 2000 Plan,
     regular salaried employees and directors may be granted options exercisable
     at not less than 100% of the fair market value of the shares at the date of
     grant.  The exercise price of any option granted to a person who owns stock
     possessing more than 10% of the voting power of all classes of common stock
     of PRI Medical must be 110% of the fair market value of the common stock on
     the date of grant,  and the  duration  may not exceed five  years.  Options
     generally  become  exercisable at a rate of one-third of the shares subject
     to option on each of the first,  second, and third anniversary dates of the
     grant.  The  duration  of the  options  may not exceed 10 years.  A maximum
     number of 62,500 shares of PRI Medical common stock were issuable under the
     2000 Plan.

     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 will be 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-23
<PAGE>
                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2003







NOTE 10 - SHAREHOLDERS' EQUITY (continued)

     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,
     2003,  there are 325,000 common shares  authorized for grant under the 2002
     Plan. 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 2002 Plan  expires in March 2012.  In March 2004,  the
     Company's  Board of  Directors  authorized  an increase  of 325,000  common
     shares under the Plan.

     During the years ended  December 31, 2003 and 2002,  the Company  issued to
     employees  options to purchase  213,000 and 186,971  shares of common stock
     under the 2002 Plan.  Of the options  granted to employees  during 2003 and
     2002,  75,000  and  30,000  options,  respectively,  were  granted  to  the
     Company's  Chief  Financial  Officer.  The options granted in 2003 and 2002
     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  2003 and 2002,  options to purchase  26,566 and 34,732  shares of
     common stock were cancelled due to employee  terminations.  In addition, as
     discussed  herein,  additional  incentive stock options will not be granted
     under the plan.

     During the year ended  December 31,  2002,  the Company  issued  options to
     purchase  64,451  shares of  common  stock  under the 2002 Plan to  various
     consultants. The options are exercisable between May 2002 and December 2012
     at exercise prices ranging from $0.40 and $8.00 per share. Included in this
     issuance are options to the  Company's  former Chief  Financial  Officer to
     purchase  3,750  shares of common  stock at an exercise  price of $0.40 per
     share.  These options are  exercisable  between May 2003 and May 2012.  The
     Company has not  recorded  any charge to expense  because the impact on the
     statement of operations is not material.

     During 2002,  the Company issued options to purchase 3,750 shares of common
     stock to a former officer of PRI Medical as part of a settlement  agreement
     for the  termination of a consulting  contract  entered in January 2000 and
     subsequently amended in August 2001. In addition to the options, the former
     officer  also  received  $35,000 in exchange  for the  cancellation  of the
     contract.  The options are exercisable  between  December 2002 and December
     2012 at an exercise price of $0.40 per share.

     The Company also issued  options to purchase  12,500 shares of common stock
     to a  consultant  for  services  performed  during  2002.  The  options are
     immediately  vested with a term of 10 years at an  exercise  price of $0.40
     per share.  The Company has not recorded any charge to expense  because the
     impact on the statement of operations is not material.

                                      F-24
<PAGE>
                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2003








NOTE 10 - SHAREHOLDERS' EQUITY (continued)

     A summary of the Company's outstanding options and activity is as follows:
<TABLE>
<CAPTION>
                                                                                                       Weighted-
                                                                                                        Average
                                                                                     Number            Exercise
                                                                                   of Options            Price
<S>                                         <C> <C>                                     <C>         <C>
                      Outstanding, December 31, 2001                                    137,029     $          0.14
                         Granted                                                        267,672     $          0.01
                         Canceled                                                       (52,765)    $          0.29
                                                                                ----------------    ----------------

                      Outstanding, December 31, 2002                                    351,936     $          0.02
                         Granted                                                        226,701     $          0.40
                         Canceled                                                       (30,683)    $          5.66
                                                                                ----------------    ----------------

                      Outstanding, December 31, 2003                                    547,954     $          0.50
                                                                                ================    ================

                         Exercisable, December 31, 2003                                 232,238     $          4.20
                                                                                ================    ================
</TABLE>
     The weighted-average  remaining contractual life of the options outstanding
     at December  31, 2003 is 7.66 years.  The  exercise  prices for the options
     outstanding  at  December  31,  2003  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          477,537           165,067         8.4 years   $         0.40   $          0.40
         $     2.00 - 8.00           56,750            56,750        1.56 years   $         7.79   $          7.79
         $   20.00 - 51.00           13,496            10,248        6.87 years   $        39.04   $         38.74
         $          162.16              171               171        3.36 years   $       162.16   $        162.16
                             ---------------   ---------------

         $   0.40 - 162.16          547,954           232,238        7.66 years   $         0.50   $          4.02
                             ===============   ===============
</TABLE>
                                      F-25
<PAGE>
                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2003








NOTE 10 - SHAREHOLDERS' EQUITY (continued)

     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  (loss) and basic and diluted loss per share for the years ended
     December 31, 2003 and 2002 would be as follows:
<TABLE>
<CAPTION>
                                                                      2003                2002
                                                                 ------------        ------------
<S>                                                              <C>                 <C>
                  Net income (loss)
                      As reported                                $    58,305         $(1,758,439)
                      Pro forma                                  $    40,037         $(1,835,135)
                  Basic and diluted income (loss) per share
                      As reported                                $      0.02         $     (3.20)
                      Pro forma                                  $      0.01         $     (3.20)
</TABLE>
     For purposes of computing  the pro forma  disclosures  required by SFAS No.
     123, the fair value of each option  granted to employees  and  directors is
     estimated using the Black-Scholes  option-pricing  model with the following
     weighted-average  assumptions  for the years  ended  December  31, 2003 and
     2002:  dividend yields of 0% and 0%,  respectively;  expected volatility of
     100% and 175%,  respectively;  risk-free  interest  rates of 2.8% and 3.3%,
     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, 2003 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.

     Warrants
     During the year ended  December 31, 2002,  the Company  issued  warrants to
     purchase  750  shares  of  common  stock to a vendor  in  exchange  for the
     forgiveness of debt of $3,100.  These  warrants vest between  February 2002
     and February 2005.

NOTE 11 - INCOME TAXES

     The components of the income tax provision for the years ended December 31,
     2003 and 2002 are as follows:

                                             2003                 2002
                                      ------------------    -----------------

                  Current             $             -0-     $           -0-
                  Deferred                          -0-                 -0-
                                      ------------------    -----------------
                    Total             $             -0-     $           -0-
                                      ==================    =================

                                      F-26
<PAGE>
                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2003





NOTE 11 - INCOME TAXES (continued)

     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, 2003 and 2002:
<TABLE>
<CAPTION>
                                                                      2003             2002
                                                                ----------------  ---------------
<S>                                                                      <C>               <C>
                  Income tax computed at federal
                    statutory tax rate                                   34%               34.0%
                  State taxes, net of federal benefit                     8                 8
                  Other                                                   9                 9
                  Increase in valuation allowance                       (51)              (51)
                                                                ----------------  ---------------
                    Total                                                -0-%              -0-%
                                                                ================  ===============

     The tax effects of temporary  differences  that give rise to deferred taxes
     at December 31, 2003 and 2002 are as follows:

                                                                                      2003                2002
                                                                                ---------------    ----------------
                  Deferred tax assets
                      Fixed assets                                              $      (363,116)   $          2,598
                      Capital loss carryover                                          1,287,853           1,358,059
                      Net operating loss carryforwards                                2,281,300           1,869,352
                      Other                                                             307,889             419,010
                                                                                ---------------    ----------------

                  Total gross deferred tax assets                                     3,513,926           3,649,019
                  Less valuation allowance                                            3,513,926           3,649,019
                                                                                ---------------    ----------------

                           Net deferred tax assets                              $           -0-    $            -0-
                                                                                ===============    ================
</TABLE>
     All other deferred tax assets were immaterial. As of December 31, 2003, the
     Company  had  approximately  $  5,595,625  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.

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.

     During  the year ended  December  31,  2002,  the  Company  entered in debt
     re-negotiations  with capital lease and note payable holders,  resulting in
     the  forgiveness  of  $3,208,037  of debt and $426,743 of accrued  interest
     charges. In connection with these transactions, property and equipment with
     a net book value of  $1,530,747  was  returned  to  capital  lease and note
     payable

                                      F-27
<PAGE>
                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2003






NOTE 12 - EXTRAORDINARY ITEM (Continued)

     holders,  resulting in a net gain of  $2,104,033,  which is included in the
     gain on forgiveness of debt on the accompanying  consolidated  statement of
     operations for the year ended December 31, 2002.

     In  addition,  the Company  also  entered  into debt  re-negotiations  with
     several  vendors,  resulting in the  forgiveness of $364,721 of debt.  This
     gain  is  also  included  in  the  gain  on  forgiveness  of  debt  on  the
     accompanying  consolidated  statement  of  operations  for the  year  ended
     December 31, 2002.

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, 2003,  the Company  contributed
     $11,701 through the use of forfeitures.

NOTE 14 - RELATED PARTY TRANSACTIONS

     In January  2003,  the  Company  incurred  consulting  fees and  reimbursed
     expenses of $28,000 and $3,389, respectively,  for services provided by BJH
     Management,  a consulting  company  ("BJH") which is owned by the Company's
     current  Chairman and Chief  Executive  Officer who assumed this  position,
     effective  February 1, 2003.  The  Company's  Chairman and Chief  Executive
     Officer  maintains  his  office  in  New  York,  in  connection  with  this
     arrangement,  the Company  reimbursed  BJH for office and related  expenses
     totaling $30,131 from February to December 2003.

     In October 2003, BJH Management,  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 December 2002, the Company  issued  287,574  (subsequently  increased by
     61,000  shares  to  correct a  computational  error)  common  shares to the
     principal  officer of a consulting firm pursuant to a consulting  agreement
     entered into during October 2001. The common stock issued represented 17.5%
     of the  fully  diluted  outstanding  shares of the  Company  at the time of
     issuance with a value of $13,943.  In addition,  during  December 2002, the
     Company  also  approved a bonus of $100,000 to the  consulting  company for
     services  rendered  during 2002.  The value of shares  issued and the bonus
     payment  is  included  in  general  and   administrative   expense  in  the
     accompanying statement of operations for the year ended December 31, 2002.

                                      F-28
<PAGE>
                                            EMERGENT GROUP INC. AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2003









NOTE 14 - RELATED PARTY TRANSACTIONS (continued)

     On December 30, 2002,  the Company  entered into two,  18-month  employment
     agreements  with the one officer and one  associate of BJH. The  agreements
     were to appoint a new Chairman and Chief Executive  Officer,  and President
     for annual compensations of $175,000 and $161,000, respectively,  beginning
     in January 2003.  The officer  positions  were assumed on February 1, 2003.
     The agreements also provide for milestone  bonuses up to $75,000 each, plus
     a percentage of pre-tax  profits  should  certain  targets be achieved.  No
     bonus  amounts  have been  accrued  through  December  31, 2003 under these
     agreements.

     In November 2002, the Company entered into a settlement  agreement with Mr.
     Richard Whitman, its former Chief Executive  Officer/Chairman/President  of
     PRI Medical.  The terms of the agreement  required an immediate  payment of
     $25,000 in exchange  for the release of all  obligations  under the January
     2000 employment  agreement,  which was subsequently  amended in both August
     and  November  2001.  In  addition,  the  Company  was  required to make an
     additional  payment of $17,000 on or before March 31, 2003. If the terms of
     the  agreement are not met, the Company will be obligated to pay the former
     officer a total of $213,000,  less any payments  previously  made under the
     settlement.  The Company paid the former executive $17,000 in March 2003 in
     accordance with this agreement.

     In November  2002, the Company  entered into a settlement  agreement with a
     family   member   of   Mr.    Whitman,    the   former   Chief    Executive
     Officer/Chairman/President  of PRI Medical. Prior to the merger, the family
     member was due a $100,000  note payable  from PRI Medical.  During the year
     ended  December 31, 2002,  the terms of the note had been extended to April
     2002.  In  November  2002,  in  exchange  for the  forgiveness  of the note
     payable,  the Company  issued  9,250  shares of common  stock to the family
     member.

     In December 2002, the Company entered into a consulting  agreement with the
     ex-Chief Executive Officer and his company, JIMA Management.  The agreement
     related to the provision of consulting services during the period from July
     2001 to March 2002 in exchange  for a monthly  fee of  $10,000,  payable in
     2003.  As of December 31, 2003,  the Company has paid all amounts due under
     this agreement.

     In November 2001, the Company entered into an employment  contract with the
     former Vice President/Chief Operating Officer of the Company. The agreement
     called for a base  salary of  $125,000  per year and  options  to  purchase
     12,500 shares of the Company's common stock at $0.40 per share. The options
     expire in December  2004.  Subsequent to December 31, 2002,  this agreement
     was terminated, but the officer retained his options.

NOTE 15 - SUBSEQUENT EVENTS

     On March 31, 2004, the Company's  primary lender amended the Company's term
     loan and bank line of credit to January 31,  2005.  In  addition,  the bank
     line of credit agreement, as amended,  requires the pay-down of the line of
     credit by  $250,000  on or before  October  1,  2004.  All other  terms and
     conditions of the agreements remain unchanged.


     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.  On March 31, 2004, the Company's Board of Directors  extended
     such contracts to June 30, 2005.

                                      F-29
<PAGE>
The report of the Independent Accountants, Financial Statements and Schedules
are set forth beginning on page F-1 of this Annual Report on Form 10-KSB.

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

     On March 5, 2002  Arthur  Andersen  LLP (" AA")  notified us that AA was no
longer our independent auditor and effectively resigned from such capacity. AA's
report on our financial  statements  for the period from March 8, 2000 (the date
of inception of Emergent Ventures LLC) to December 31, 2000  (collectively,  the
"Prior  Fiscal  Year"),  did not  contain an adverse  opinion or  disclaimer  of
opinion,  nor was such report  qualified  or modified as to  uncertainty,  audit
scope or accounting principles. The decision of AA to resign was not recommended
or  approved   by  our  Board  of   Directors.   There  were  no   disagreements
("Disagreements")  between us and AA during either (i) the Prior Fiscal Year, or
(ii) the period January 1, 2001 through March 5, 2002 (the "Interim  Period") on
any  matter  of  accounting   principles  or  practices,   financial   statement
disclosure, or auditing scope or procedure, which Disagreement,  if not resolved
to the satisfaction of AA, would have caused AA to make reference to the subject
matter of the  Disagreement  in connection  with its report for the Prior Fiscal
Year.  There  were no  "Reportable  Events,"  as such  term is  defined  in Item
304(A)(1)(v)  of Regulation S-K, during either (i) the Prior Fiscal Year or (ii)
the Interim  Period.  We engaged Singer Lewak Greenbaum & Goldstein LLP ("SLGG")
as our  independent  auditor  for our fiscal  year ended  December  31, 2001 and
subsequently for the years ended December 31, 2002 and December 31, 2003. We did
not consult  SLGG with  respect to either (i) the Prior  Fiscal  Year,  (ii) the
Interim Period with respect to either the

                                       23
<PAGE>
application  of  accounting  principles  to  a  specified  transaction,   either
completed  or proposed,  or the type of audit  opinion that might be rendered on
our financial  statements,  or (iii) any matter that was either the subject of a
Disagreement or a Reportable Event.

Item 8.A.  Controls and Procedures.

     The Company maintains  disclosure controls and procedures that are designed
to ensure that  information  required to be disclosed in the Company's  Exchange
Act reports is recorded,  processed,  summarized  and  reported  within the time
periods  specified in the SEC's rules and forms,  and that such  information  is
accumulated and  communicated to the Company's  management,  including its Chief
Executive Officer and Chief Financial Officer,  as appropriate,  to allow timely
decisions  regarding  required  disclosure  based  closely on the  definition of
"disclosure  controls  and  procedures"  in Rule  13a-14(c).  In  designing  and
evaluating the disclosure  controls and procedures,  management  recognized that
any controls and  procedures,  no matter how well  designed  and  operated,  can
provide only reasonable  assurance of achieving the desired control  objectives,
and management  necessarily was required to apply its judgment in evaluating the
cost-benefit  relationship of possible  controls and procedures.  Within 90 days
prior to the date of this report,  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.  There have been no
significant  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.

                                    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.
<TABLE>
<CAPTION>
                                                   First Became Director
                   Name (1)                Age         and/or Officer           Position
                   --------                ---         --------------           --------
<S>                                        <C>             <C>                     <C>
     Bruce J. Haber                        51              2003                 Chairman of the Board and Chief
                                                                                Executive Officer
     Louis Buther                          50              2003                 President and Chief Operating Officer
     William M. McKay                      49              2002                 Chief Financial Officer, Treasurer
                                                                                and Secretary
     Daniel Yun......................      36              2000                 Director
     Mark Waldron....................      36              2000                 Director
     Howard Waltman..................      71              2001                 Director
     Mathew K. Fong Sr...............      50              2001                 Director
     ------------------
</TABLE>
                                       24
<PAGE>
     (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.

     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.

     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 B.S. in business  administration with an emphasis in accounting from the
University of Southern California - Los Angeles.

     Daniel Yun has served as a director of the Company  since August 2000.  Mr.
Yun became  Chairman  of the Board of the  Company  and served in this  capacity
between  August 2000 and January 2003.  Mr. Yun has also served as a director of
its  subsidiary,  PRI Medical,  since September 2000. Mr. Yun is Chairman of the
board of Voyager Advisors,  LLC, a Securities and Exchange Commission registered
investment  advisor.  During  approximately  the  past  five  years,  Mr.  Yun's
principal occupation has been as a private investor. He has served as Manager of
Emergent Capital Investment  Management LLC since October 1998. Between May 1994
and August 1998,  Mr. Yun served as vice  president  in charge of middle  market
derivatives at Lehman Brothers.  Before joining Lehman Brothers,  Mr. Yun was an

                                      25
<PAGE>
associate  in the fixed  income  division of  Goldman,  Sachs & Co. from 1993 to
1994. Upon graduating from the United States Military Academy at West Point with
a Bachelor  of  Science  in  Economics,  Mr.  Yun was  commissioned  as a second
lieutenant in the US Army,  and was later  appointed as a commanding  officer in
charge of 220  multinational  soldiers  in Korea.  While in the  army,  Mr.  Yun
attended the Airborne,  Air Assault and Ranger Schools, and obtained a Master in
Public  Administration  from  the  University  of  Oklahoma.   His  professional
publications  include  "Understanding  Exotic  Derivatives"  in Controlling  and
Managing  Interest Rate Risk, (ed. Robert Klein,  Prentice Hall,  1996). Mr. Yun
currently serves on the Rand Corporation Advisory Board.

     Mark Waldron has served as a director of the Company since August 2000. Mr.
Waldron  also served as  President  and Chief  Executive  Officer of the Company
between  August 2000 and January 2003.  Mr.  Waldron has served as a director of
PRI Medical since  September 2000.  Since January 2003 (and  previously  between
1998 and  2001),  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 June 1993 to June 1998. Mr. Waldron received his MBA from
Northwestern  University's  Kellogg  School of  Management  through the School's
accelerated  one-year  program,  where he  attained  Dean's List  standing.  Mr.
Waldron was an Associate at Bankers  Trust  Company  before  attending  business
school, and received a B.A. with honors from the Richard Ivey School of Business
at the  University of Western  Ontario.  Mr.  Waldron is a member of the Foreign
Policy Association and MENSA, and is a citizen of Canada.

     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  has  served as a  director  of Express
Scripts,  Inc. ("ESI"), and as 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.

     Matthew K. Fong,  Sr. has served as a director of the  Company  since 2001.
Mr.  Fong has  served  as a senior  counsel  with  Sheppard,  Mullin,  Richter &
Hampton,  a law firm with offices in both San  Francisco  and Los Angeles  since
2000.  Since 1999,  he has served as President of  Strategic  Advisory  Group of
Industry,  CA,  a  business  strategy  consulting  company.  Mr.  Fong  was  the
Republican  candidate for the U.S. Senate in California in 1998, in which he ran
against  Democrat  Senator  Barbara  Boxer.  From 1995 to 1999, Mr. Fong was the
Treasurer  of the State of  California.  Mr.  Fong  holds a BS in  International
Affairs from the US Air Force Academy, an MBA from Pepperdine University,  and a
JD from Southwestern University.

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

                                       26
<PAGE>
     o    to review and  approve  corporate  goals and  objectives  relevant  to
          senior executive  compensation,  evaluate senior executive performance
          in  light  of  those  goals  and  objectives,  and to set  the  senior
          executive compensation levels based on this evaluation;

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

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

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

Audit Committee

     The members of the Company's audit committee  consist of Howard Waltman and
Matthew  Fong Sr.,  each of whom are  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.   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.

     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;

                                       27
<PAGE>
     o    reviewing  the  Company's  auditing  and  accounting   principles  and
          practices with the independent auditors and reviewing major changes to
          its auditing and  accounting  principles and practices as suggested by
          the independent auditor or its management;

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

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

Code of Ethics

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

          o    Honest and ethical  conduct,  including  the ethical  handling of
               actual or apparent  conflicts  of interest  between  personal and
               professional relationships;

          o    Full, fair,  accurate,  timely and  understandable  disclosure in
               reports and documents that the Company files with, or submits to,
               the  Securities  &  Exchange   Commission  and  in  other  public
               communications made by the Company;

          o    Compliance   with   applicable   governmental   law,   rules  and
               regulations;

          o    The prompt  internal  reporting of  violations  of the code to an
               appropriate person or persons identified in the code; and

          o    Accountability for adherence to the code.

     In this  respect,  the Company has adopted a code of ethics  which has been
filed as Exhibit 14.1 to this 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  2003,  none of our  officers,
directors or 10% or greater stockholders filed any forms late to the best of our
knowledge,  except that a 10% or greater stockholder failed to file a Form 3 and
filed a late  Form 5 with  respect  to the Form 3 failure  to file.  This 10% or
greater  stockholder  is not an  officer  or  director  of  the  Company  and is
identified under Item 12.

                                       28
<PAGE>
Item 10.  Compensation of Directors and Executive Officers.

     The following table provides a summary  compensation  table with respect to
Bruce J. Haber, Louis Buther,  William McKay and Mark Waldron, who served as the
Company's Chief Executive during January 2003. No other executive officer of the
Company  received  salary and  bonuses  amounting  to  $100,000 or more in 2003.
During  the  past  three  fiscal  years,  the  Company  has  not  granted  stock
appreciation rights to its executive officers. In addition, the Company does not
have a defined benefit or actuarial plan.
<TABLE>
<CAPTION>
                           SUMMARY COMPENSATION TABLE
                           -------------------------                              Long Term Compensation
----------------------- -------- ----------------------------------------- --------------------------- -------- ---------------
                                 Annual Compensation                       Awards                      Payouts
----------------------- -------- ------------- ------------- ------------- ------------- ------------- -------- ---------------
<S>                                     <C>          <C>          <C>          <C>           <C>        <C>          <C>
Name and                Year     Salary ($)    Bonus ($)     Other         Restricted    Number of     LTIP     All Other
Principal Position                                           Annual        Stock         Options       Payout   Compensation
                                                             Compensation  Award(s)                     ($)         ($)
                                                             ($)             ($)
----------------------- -------- ------------- ------------- ------------- ------------- ------------- -------- ---------------
Mark Waldron, former     2003    $14,231           0         $   700              0             0           0        0
Chief Executive          2002   $116,250 (1)       0         $22,618 (1)          0             0           0        0
Officer of the Company   2001    $70,000 (1)       0         $17,821 (1)          0             0           0        0
----------------------- -------- ------------- ------------- ------------- ------------- ------------- -------- ---------------
Bruce Haber, Chairman    2003   $153,125(2)        0         $61,212 (3)    306,060 (3)         0           0        0
of the Board and         2002    (2)               0         $   -0-        199,186 (3)         0           0        0
Chief Executive          2001    (2)               0         $   -0-              0             0           0        0
Officer
----------------------- -------- ------------- ------------- ------------- ------------- ------------- -------- ---------------
Louis Buther,            2003   $140,875(2)        0         $45,909 (3)    229,546 (3)         0           0        0
President and Chief      2002    (2)               0         $   -0-        149,389 (3)         0           0        0
Operating Officer        2001    (2)               0         $   -0-              0             0           0        0
----------------------- -------- ------------- ------------- ------------- ------------- ------------- -------- ---------------
William M. Mckay,        2003   $140,000           0         $3,600               0        75,000 (4)       0        0
Chief Financial          2002    $46,667      $7,500         $1,200               0        30,000           0        0
Officer                  2001          0           0              0               0             0           0        0
----------------------- -------- ------------- ------------- ------------- ------------- ------------- -------- ---------------
</TABLE>
     (1)  Mr. Waldron did not receive a salary during 2001. However, pursuant to
          a consulting  agreement entered into with Mr. Waldron in December 2002
          the Company allocated $70,000 of fees provided for under the agreement
          to services  performed by Mr. Waldron in 2001 as the Company's CEO for
          which he was not previously compensated. In addition, the compensation
          amount for 2002  includes  $10,000  of such fees for the  period  from
          January  1,  2002 to March 31,  2002.  Such  amounts  were paid by the
          Company in 2003.  In  addition,  the Company  reimbursed  Mr.  Waldron
          $22,618 and$17,821 for his rent, automobile, automobile insurance, and
          relocation expenses incurred during 2002 and 2001, respectively.

     (2)  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.

     (3)  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

                                       29
<PAGE>
          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.

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

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
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

                                       30
<PAGE>
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.

     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 consulting fees and reimbursable expenses to BJH
of $31,389 and $439,975, respectively, for the years ended December 31, 2003 and
2002.

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 one-year 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

                                       31
<PAGE>
$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 year
ended  December  31,  2003,  however,  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
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

                                       32
<PAGE>
the  Company  and Haber.  There are no change in control  provisions  in Messrs.
Haber's and Buther's employment contracts.

                                       33
<PAGE>
Consulting Agreement with Mark Waldron

     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.

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,  2003 and 2002,  Mr.  McKay  received a bonus of $-0- and  $7,000,
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
Plan was approved by stockholders on August 5, 2003. Since stockholder  approval
was not  obtained by April 1, 2003,  all  outstanding  Incentive  Stock  Options

                                       34
<PAGE>
granted under the 2002 Plan became  Non-Statutory Stock Options and no Incentive
Stock Options  could be  thereafter  granted under the 2002 Plan. In March 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 December 31, 2003 there were 433,076 stock options outstanding under the 2002
Plan.

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

                                       35
<PAGE>
the  participant.  If  the  recipient  ceases  to be an  employee,  director  or
consultant of us for any reason  (including  death,  disability  or  retirement)
before the end of the  restriction  period  unless  otherwise  determined by the
Board, the restricted stock award will be terminated.

Eligibility

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

Termination or Amendment of the 2002 Plan

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

Awards

     During 2003 and 2002, we granted  options to employees to purchase  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),  24,341 of
which have been terminated as a result of employees terminating their employment
with the Company.  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, 2003 on the known
benefits provided to certain persons and group of persons under the 2002 Plan.
<TABLE>
<CAPTION>
                                                            Number of        Range of       Value of unexercised
                                                         Shares subject   exercise price     options at Dec. 31
                    Name and Position                      to Options      ($) per Share           2003(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)
   ----------------------------------------------------- ---------------- ---------------- ------------------------
   Three Non-Employee Directors as a group                 55,000               .40                  (1)
   ----------------------------------------------------- ---------------- ---------------- ------------------------
   Non-Executive Officer
   Employees and Consultants                              256,826           $.40 - $8.00             (1)
   ----------------------------------------------------- ---------------- ---------------- ------------------------
</TABLE>
                                       36
<PAGE>
     (1)  Value is normally calculated by multiplying (a) the difference between
          the  market  value  per  share at  December  31,  2003 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, 2003.

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,  13,625 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, 2003
there were 10,625 options outstanding under the 2001 Plan.

PRI Medical Stock Option Plan

     In September 1996, PRI Medical adopted the 1996 Stock Incentive Plan ("1996
Plan") to allow officers, employees and certain non-employees to receive certain
options to purchase  common stock and to receive  grants of common stock subject
to  certain  restrictions.  Under  the  Plan,  regular  salaried  employees  and
directors may be granted  options  exercisable at not less than 100% of the fair
market  value of the  shares at the date of  grant.  The  exercise  price of any
option  granted to an optionee  who owns stock  possessing  more than 10% of the
voting  power of all classes of common  stock of PRI Medical must be 110% of the
fair market value of the common stock on the date of grant, and the duration may
not  exceed  five  years.  Options  generally  become  exercisable  at a rate of
one-third of the shares subject to option on each of the first, second and third
anniversary  dates of the grant.  The  duration  of  options  may not exceed ten
years.  A maximum  number of 37,500  shares of PRI  Medical's  common stock were
issuable under the Plan.

     In February 2000, PRI Medical  adopted the 2000 Stock Incentive Plan ("2000
Plan") to allow officers, employees and certain non-employees to receive certain
options to purchase  common stock and to receive  grants of common stock subject
to  certain  restrictions.  Under the 2000  Plan,  regular  salaried  employees,
including  directors,  who are  full  time  employees,  may be  granted  options
exercisable  at not less than 100% of the fair market value of the shares at the
date of grant.  The exercise price of any option granted to an optionee who owns
stock  possessing  more than 10% of the  voting  power of all  classes of common
stock of PRI Medical  must be 110% of the fair market  value of the common stock
on the date of grant,  and the  duration  may not  exceed  five  years.  Options
generally  become  exercisable  at a rate of one-third of the shares  subject to
option on each of the first,  second and third  anniversary  dates of the grant.
The  duration  of options may not exceed ten years.  A maximum  number of 62,500
shares of common stock were issuable under the 2000 Plan.

     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

                                       37
<PAGE>
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,  1,167  are  currently
outstanding  as of December 31, 2003 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  2003 of each of the
executive  officers named in the summary  compensation  table above. The Company
did not grant any stock appreciation rights during 2003.

<TABLE>
<CAPTION>
                        Option Grants in Last Fiscal Year




                                   Individual Grants                                            Potential
                                   -----------------                                       Realizable Value at
                                                                                              Assumed Annual
                                                                                           Rates of Stock Price
                                        (c)% of Total                                         Appreciation
                         Options      Options/Granted    Exercise Price                    for Option Term (2)
                         Granted       to Employees in        ($/Sh)       Expiration      -------------------
          Name              (#)        Fiscal Year (1)                        Date         5% ($)         10% ($)
          ----           -------       ---------------   --------------    ----------      -----          -------
<S>                          <C>               <C>              <C>            <C>           <C>            <C>
 Mark Waldron                -0-             -0-               N/A            N/A           N/A             N/A
 Bruce J. Haber              -0-             -0-               N/A             NA           N/A             N/A
 Louis Buther                -0-             -0-               N/A            N/A           N/A             N/A
 William M. McKay          75,000           34.4%             $0.40         8/19/13       $19,410         $51,211

-------------
N/A - Not Applicable.
</TABLE>


     (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.

                                       38
<PAGE>
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 2003 by each of the  executive
officers named in the summary  compensation  table and the fiscal year end value
of unexercised options.
<TABLE>
<CAPTION>
    (a)                       (b)              (c)                  (d)                        (e)

                                                                                             Value of
                                                                 Number of                  Unexercised
                              Shares                            Unexercised                 In-the-Money
                            Acquired on                            Options at                 Options
                             Exercise         Value              FY-End (#)                 at Fy-End($)
                           (     #   )       Realized           Exercisable/                Exercisable/
                           ------------
   Name                                       ($)(1)            Unexercisable             Unexercisable(1)
   ----                                        ------           -------------             ----------------

<S>                              <C>            <C>               <C>                          <C>
Mark Waldron                     0              0                 3,700/0                       0/0

Bruce Haber                      0              0                    0                         0 / 0
Louis Buther                     0              0                    0                         0 / 0
William Mckay                    0              0              42,000/63,000                   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, 2003.

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 year ended December 31, 2003, the Company contributed $11,701
to the Plan through the use of forfeitures.

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


     As of February  29,  2004,  the Company  had  outstanding  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.

                                       39
<PAGE>
<TABLE>
<CAPTION>
          Name and Address of Beneficial Owner (1)                   Number of Common         Approximate
                                                                          Shares              Percentage
------------------------------------------------------------- ------------------------------- ------------------------
<S>                                                                        <C>                        <C>
Daniel Yun
375 Park Avenue, Suite 3607
New York, NY 10152                                                   791,801   (2)                     18.8
------------------------------------------------------------- ------------------------------- ------------------------
Mark Waldron
932 Grand Central Avenue
Glendale, CA 91201                                                   407,592   (3)                      9.7
------------------------------------------------------------- ------------------------------- ------------------------
Howard Waltman
140 Deerfield
Tenafly, NJ 07670                                                    338,832   (4)                      7.9
------------------------------------------------------------- ------------------------------- ------------------------
Matthew Fong and Paula Fong
13191 Crossroads Parkway, Suite 285
Industry, CA 91746                                                    25,000   (5)                       *
------------------------------------------------------------- ------------------------------- ------------------------
William M. McKay
932 Grand Central Avenue
Glendale, CA 91201                                                    67,250   (6)                       *
------------------------------------------------------------- ------------------------------- ------------------------
Bruce J. Haber
c/o BJH Management, LLC
145 Huguenot Street, Suite 405
New Rochelle, NY  10801                                            1,010,246   (7)                     22.3
------------------------------------------------------------- ------------------------------- ------------------------
Louis Buther
205 Ridgefield Avenue
South Salem, NY 10590                                                530,435   (7)                     11.9
------------------------------------------------------------- ------------------------------- ------------------------
Arie Kanofsky
385 West John Street
Hicksville, NY 11801
                                                                     505,000                           10.6
------------------------------------------------------------- ------------------------------- ------------------------
All current and proposed  executive  officers and  directors
as a group (seven) persons                                         3,171,156   (8)                     72.9
------------------------------------------------------------- ------------------------------- ------------------------
</TABLE>

     (*)  Represents  less than 1% of the  outstanding  shares of the  Company's
          Common Stock.

     (1)  All shares are  directly  owned,  and the sole  investment  and voting
          power is held, by the persons named unless otherwise noted.

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

     (3)  Includes options to purchase 93 shares.

     (4)  Includes  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.

     (5)  Includes  options to purchase 25,000 shares.  (6) Includes  options to
          purchase 42,000 shares.

     (7)  BJH  Management  LLC is a company  owned by Mr.  Bruce J.  Haber.  BJH
          acquired  348,575 shares of Common Stock of the Company  pursuant to a
          services  agreement and Mr. Haber  purchased  505,000  shares.  Of the
          348,575  shares,  199,186  shares  were  gifted  by  Mr.  Haber  to an

                                       40
<PAGE>
          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.

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

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 February 29, 2004 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)
------------------------------- ------------------------------ ---------------------- --------------------------------
<S>                                        <C>                         <C>                        <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)

------------------------------- ------------------------------ ---------------------- --------------------------------
Equity compensation
Plans  (2)                                 433,076                     $0.44                      216,924
------------------------------- ------------------------------ ---------------------- --------------------------------
--------------------
</TABLE>


     (1)  Based  upon  412,826  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)  Our Board of Directors has recently 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.

                                       41
<PAGE>
     The following summary information is as of February 29, 2004 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                        10,625                     $40.00                        -0-
Plans
------------------------------- ------------------------------ ---------------------- --------------------------------
</TABLE>

     (1)  All options are exercisable at $40.00 per share.

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

     The following summary information is as of February 29, 2004 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)                             1,167                          $46.97                        -0-
------------------------------- ------------------------------ ---------------------- --------------------------------
--------------------
</TABLE>

     (1) Based upon 996 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 any more
     options under the old PRI Medical Plans.

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

PRI Medical Transactions

     Reference is made to Item 13 of the Company's Form 10-K for the fiscal year
ended December 31, 2002 for a description of certain transactions  involving PRI
Medical, the Company and third parties.

Emergent Group Inc. Transactions

     Reference  is made to "Item 1" of the  Company's  Form 10-K for its  fiscal
year ended December 31, 2002 for a discussion of an equity transfer and spin-off
of assets to  Dynamic  International  Ltd.  and the former  members of  Emergent
Ventures, LLC's acquisition of control of Dynamic International Ltd.

                                       42
<PAGE>
Emergent's Acquisition of PRI Medical

     Reference  is made to "Item 1" of the  Company's  Form 10-K for its  fiscal
year  ended  December  31,  2002 for a  discussion  of the  Company's  July 2001
acquisition of PRI Medical.

Transactions with BJH Management LLC, Bruce J. Haber and Louis Buther

     Reference is made to Item 11 for a description of transactions  between the
Company, BJH, Bruce J. Haber and Louis Buther.

Consulting Agreement with Mark Waldron

     Reference is made to Item 11 for a description of the Company's  Consulting
Agreement with Mr. Waldron.

Employment Arrangement - William M. McKay

     Reference is made to Item 11 for a description of the Company's  employment
arrangement with William M. McKay.

Other Agreements -Al Guadagno and  Richard Whitman

     In August 2000, PRI Medical entered into a two-year employment  arrangement
with Al Guadagno,  its Executive Vice President and Chief Financial Officer. The
principal  terms  of  this  arrangement  were an  annual  base  compensation  of
$150,000,  an  annual  bonus  based  upon  performance,   and  the  issuance  of
non-qualified  stock options at the inception of the  arrangement.  In addition,
the arrangement provided that, if Mr. Guadagno was terminated,  he would then be
entitled to receive  severance  compensation  through  August 2002.  The Company
notified Mr. Guadagno that his contract would not be renewed in August 2002.

     In January 2000, PRI Medical entered into a three-year  employment contract
with  Richard  Whitman,  PRI  Medical's  former  Chairman,  President  and Chief
Executive  Officer.  This contract  provided for an annual base  compensation of
$180,000,  an  annual  bonus  based  upon  performance,   and  the  issuance  of
non-qualified  stock  options of PRI Medical at the  inception  of the  contract
(equal to 10% of the fully diluted  shares  outstanding at the inception of this
contract).  In  addition,  the  contract  provided  that,  if  Mr.  Whitman  was
terminated  prior to the end of the  contract,  he wouldl  then be  entitled  to
receive compensation  through the end of the contract.  Pursuant to an agreement
dated August 20, 2001, as amended  November 30, 2001. Mr.  Whitman,  the Company
and PRI Medical agreed as follows:

     o    To terminate the January 2000 Agreement;

     o    To retain Mr.  Whitman as a  non-exclusive  consultant for the Company
          and PRI Medical in the area of business development,  fund raising and
          corporate development through January 9, 2003;

     o    To pay Mr.  Whitman a salary at the annual  rate of  $187,200  between
          October 1, 2001 and  December 31, 2001 and  thereafter  at the rate of
          $8,000 per month;

     o    The Company shall pay Mr. Whitman $31,650 (in 24 equal  installments),
          which amount  represents  the  difference  between the amounts that he
          will have been paid to  September  30, 2001  pursuant to his  original
          employment  contract and the  compensation to which he was entitled to
          be paid to September 30, 2001.

                                       43
<PAGE>
     o    Reaffirm Mr. Whitman's right to receive stock options and registration
          rights in  accordance  with the January 2000  Agreement as adjusted to
          give  effect to the  conversion  ratio  applied  to other PRI  Medical
          stockholders.

     o    For Mr. Whitman to convert his $60,000 note into 237,874 shares of the
          Company's Common Stock with  registration  rights subject to a lock-up
          agreement until August 15, 2002.

     Pursuant to a Settlement  Agreement  dated  November 26, 2002,  Mr. Richard
Whitman and the Company entered into an agreement  whereby the Company agreed to
pay Mr.  Whitman  $25,000 upon the execution of this agreement and an additional
$17,000  on  or  before  March  31,  2003  (less  payroll  deductions)  in  full
satisfaction of all monies then due and owing to him. If timely payments are not
made, then the Company would owe him $213,000 less any payments made under their
Settlement  Agreement.  The  Settlement  Agreement  also included Mr.  Whitman's
waiver of registration  rights effective  immediately.  On February 3, 2003, the
Company entered into a one-year Consulting  Agreement with Mr. Whitman to retain
his  non-exclusive  services to provide  advice  upon  request  with  respect to
commercial  strategies,  management and the operational aspects of the Company's
business. As consideration for his anticipated services, the Company granted him
ten-year  options to purchase  6,250 shares of its common stock  exercisable  at
$0.40 per share.  All payments to Mr.  Whitman were made in accordance  with the
Settlement Agreement.

Loans from Shareholders to the Company and Transactions  Between the Company and
Emergent Capital Investment Management, LLC.

         Reference is made to the Company's Form 10-K for its fiscal year ended
December 31, 2002 for a description of these related party transactions.

Other Transactions

         Reference is made to Item 13 of the Company's Form 10-K for its fiscal
year ended December 31, 2002 for a description of other related party
transactions.

2003 Transactions

     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. 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.

                                       44
<PAGE>
Item 13.  Exhibits and Reports on Form 8-K.
-------------------------------------------
         (a)(1)(2)       Financial Statements and Financial Statement Schedules.

                         A list of the Financial Statements and Financial
Statement Schedules filed as a part of this Report is set
forth in Item 8, and appears at Page F-1 of this Report, which list is
incorporated herein by reference.
<TABLE>
<CAPTION>
         (a)(3)        Exhibits

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

<C>                 <S>
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)
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. (7)
23.1  Consent of Accountants in connection with Form S-8  Registration  Statement
      (7)
31(a) Rule 13a-14(a) Certification - Chief Executive Officer (7)
31(b) Rule 13a-14(a) Certification - Chief Financial Officer (7)
32(a) Section 1350 Certification - Chief Executive Officer (7)
32(b) Section 1350 Certification - Chief Financial Officer (7)
</TABLE>
                                       45
<PAGE>
99.1 2002 Stock Option Plan.(4)
99.2 2001 Stock Option Plan.(4)
99.3 Form of Subordinated Promissory Note  (9)
--------------------------------------------------------------------------------

(1)  Filed as an exhibit to the  Registrant's  Current Report on Form 8-K, dated
     January 29, 2001, and incorporated herein by reference.
(2)  Filed as an exhibit to the Registrant's Form 10-K for its fiscal year ended
     December 31, 2000.
(3)  Incorporated  by reference to the  Registrant's  Form 8-K - August 31, 2000
     (date of earliest event).
(4)  Incorporated by reference to the Registrant's Form 10-K for its fiscal year
     ended December 31, 2001.
(5)  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)  Filed herewith.
(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.

     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.

                                       46
<PAGE>
                          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.

                                       47
<PAGE>
(b)  Reports on Form 8-K.

         No Reports on Form 8-K were filed or required to be filed during the
quarter ended December 31, 2003.

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

     For the fiscal year ended  December 31, 2003, 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 $81,800.

Financial Information Systems Design and Implementation Fees

     For the fiscal year ended December 31, 2003, 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,  2003,  there was $10,907 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 $7,845.

                                       48
<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 31, 2004

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

Signatures                           Title                              Date

/s/ Bruce J. Haber            Chairman of the Board             March 31, 2004
-----------------------       Chief Executive Officer
Bruce J. Haber

/s/ William M. McKay          Chief Financial Officer           March 31, 2004
-----------------------       Secretary and Treasurer
William M. McKay

/s/ Daniel Yun                Director                          March 31, 2004
-----------------------
Daniel Yun

/s/ Mark Waldron              Director                          March 31, 2004
-----------------------
Mark Waldron

/s/ Howard Waltman            Director                          March 31, 2004
-----------------------
Howard Waltman

/s/ Matthew K. Fong           Director                          March 31, 2004
-----------------------
Matthew K. Fong

Bruce J. Haber,  Daniel Yun,  Mark Waldron,  Howard  Waltman and Matthew K. Fong
represent all the current members of the Board of Directors.


                                       49