----

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| x  | QUARTERLY                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934 |
|---------|--------------------------------------------------------------------------------------------------------------------------------------|

| ¨  | TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934 |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------|

| Texas                                                                                                     |   | 74-2008473                                                        |
|-----------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|
| (State                or other jurisdiction of incorporation                or organization)              |   | (I.R.S.                EmployerIdentification                No.) |
|        3200                  Wilcrest Drive, Suite 440, Houston, Texas |   |        77042-6039              |
| (Address                of principal executive offices)                                                   |   | (Zip                Code)                                         |

| Large                accelerated filter ¨ | Accelerated                filter ¨ | Non-accelerated                filer x |
|------------------------------------------------|------------------------------------------|----------------------------------------|

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**ACR      GROUP,      INC. AND SUBSIDIARIES**

**INDEX      TO QUARTERLY REPORT ON FORM 10-Q**

|                  |                                     |   |                                                                                                                            | Page   |
|----------------------------|------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------|--------|
|                       |                                     |   |                                                                                                                            |   |
| **PART                I**  | **FINANCIAL                INFORMATION** |   |
|                       |                                     |   |                                                                                                                            |   |
|                       | Item                1.                   |   | Unaudited                Condensed Consolidated Financial                Statements                                             |   |
|                       |                                     |   |                                                                                                                            |   |
|                       |                                     |   | Condensed                Consolidated Balance Sheets - November 30, 2006                and February 28, 2006                   | 3      |
|                       |                                     |   |                                                                                                                            |   |
|                       |                                     |   | Condensed                Consolidated Income Statements - Three and                Nine Months Ended November 30, 2006 and 2005 | 5      |
|                       |                                     |   |                                                                                                                            |   |
|                       |                                     |   | Condensed                Consolidated Statements of Cash Flows - Nine                Months Ended November 30, 2006 and 2005    | 6      |
|                       |                                     |   |                                                                                                                            |   |
|                       |                                     |   | Notes                to Condensed Consolidated Financial Statements                                                             | 7      |
|                       |                                     |   |                                                                                                                            |   |
|                       | Item                2.                   |   | Management’s                Discussion and Analysis of Financial Condition and                Results of Operations       | 13     |
|                       |                                     |   |                                                                                                                            |   |
|                       | Item                3.                   |   | Quantitative                and Qualitative Disclosures about Market Risk                                                       | 21     |
|                       |                                     |   |                                                                                                                            |   |
|                       | Item                4.                   |   | Controls                and Procedures                                                                                          | 21     |
|                       |                                     |   |                                                                                                                            |   |
| **PART                II** | **OTHER                INFORMATION**     | 22     |
|                       |                                     |   |                                                                                                                            |   |
|                       | Item                1.                   |   | Legal                Proceedings                                                                                                | 22     |
|                       |                                     |   |                                                                                                                            |   |
|                       | Item                1A.                  |   | Risk                Factors                                                                                                     | 22     |
|                       |                                     |   |                                                                                                                            |   |
|                       | Item                4.                   |   | Submission                of Matters to a Vote of Security                Holders                                               | 22     |
|                       |                                     |   |                                                                                                                            |   |
|                       | Item                5.                   |   | Other                Information                                                                                                | 22     |
|                       |                                     |
|                       | Item                6.                   |   | Exhibits                                                                                                                        | 22     |
|                       |                                     |
| **SIGNATURES **       | 22                                       |
|                       | ** **                               |
| **CERTIFICATIONS**         | 23                                       |

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**PART      I - FINANCIAL INFORMATION**

**Item      1. - Condensed Consolidated Financial      Statements**

**ACR      GROUP, INC. AND SUBSIDIARIES**

**CONDENSED      CONSOLIDATED BALANCE SHEETS**

**(In      thousands)**

**(Unaudited)**

**ASSETS**

|                                            |   | November                30, |   | February                28, |   |
|-------------------------------------------------|--------|-----------------------------|--------|-----------------------------|--------|
|                                            |   | 2006                        |   | 2006                        |   |
| Current                assets:                  |   |                        |   |                        |   |
| Cash                                            |   | $                           | 1,502  |                        | $      | 1,275 |   |
| Accounts                receivable, net         |   |                        | 28,318 |                        |   | 22,380 |   |
| Inventories,                net                 |   |                        | 47,273 |                        |   | 38,264 |   |
| Prepaid                and other current assets |   |                        | 1,402  |                        |   | 1,250 |   |
| Deferred                income taxes            |   |                        | 1,503  |                        |   | 1,338 |   |
|                                            |   |                        |   |                        |   |   |   |
| Total                current assets             |   |                        | 79,998 |                        |   | 64,507 |   |
|                                            |   |                        |   |                        |   |   |   |
| Property                and equipment, net      |   |                        | 5,500  |                        |   | 4,844 |   |
| Goodwill,                net                    |   |                        | 5,408  |                        |   | 5,408 |   |
| Other                assets                     |   |                        | 982    |                        |   | 1,277 |   |
|                                            |   |                        |   |                        |   |   |   |
| Total                assets                     |   | $                           | 91,888 |                        | $      | 76,036 |   |

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**ACR      GROUP, INC. AND SUBSIDIARIES**

**CONDENSED      CONSOLIDATED BALANCE SHEETS**

**(In      thousands)**

**(Unaudited)**

**LIABILITIES      AND SHAREHOLDERS' EQUITY**

|                                                                                |   | November                  30, |    | February                  28, |   |
|-------------------------------------------------------------------------------------|--------|-------------------------------|---------|-------------------------------|--------|
|                                                                                |   | 2006                          |    | 2006                          |   |
| Current                  liabilities:                                               |   |                          |    |                          |   |
| Current                  maturities of long-term debt and capital lease obligations |   | $                             | 296     |                          | $      | 273 |   |
| Accounts                  payable                                                   |   |                          | 19,192  |                          |   | 25,002 |   |
| Accrued                  expenses and other current liabilities                     |   |                          | 7,650   |                          |   | 4,743 |   |
|                                                                                |   |                          |    |                          |   |   |   |
| Total                  current liabilities                                          |   |                          | 27,138  |                          |   | 30,018 |   |
|                                                                                |   |                          |    |                          |   |   |   |
| Long                  term obligations:                                             |   |                          |    |                          |   |   |   |
| Borrowings                  under revolving credit agreement                        |   |                          | 35,191  |                          |   | 22,940 |   |
| Long-term                  debt and capital lease obligations, net of               |   |                          |    |                          |   |   |   |
| current                  maturities                                                 |   |                          | 1,697   |                          |   | 1,592 |   |
| Other                  long-term liabilities                                        |   |                          | 533     |                          |   | 340 |   |
|                                                                                |   |                          |    |                          |   |   |   |
| Total                  long-term obligations                                        |   |                          | 37,421  |                          |   | 24,872 |   |
|                                                                                |   |                          |    |                          |   |   |   |
| Commitments                  and contingencies                                      |   |                          |    |                          |   |   |   |
|                                                                                |   |                          |    |                          |   |   |   |
| Shareholders’                  equity:                                        |   |                          |    |                          |   |   |   |
| Preferred                  stock, $.01 par value                                    |   |                          | -       |                          |   | - |   |
| Common                  stock, $.01 par value                                       |   |                          | 121     |                          |   | 120 |   |
| Paid-in                  capital                                                    |   |                          | 44,913  |                          |   | 44,413 |   |
| Unearned                  restricted stock compensation                             |   |                          | (1,758  | )                             |   | (1,612 | ) |
| Accumulated                  other comprehensive loss, net of tax                   |   |                          | (140    | )                             |   | - |   |
| Accumulated                  deficit                                                |   |                          | (15,807 | )                             |   | (21,775 | ) |
|                                                                                |   |                          |    |                          |   |   |   |
| Total                  shareholders’ equity                                   |   |                          | 27,329  |                          |   | 21,146 |   |
|                                                                                |   |                          |    |                          |   |   |   |
| Total                  liabilities and shareholders’ equity                   |   | $                             | 91,888  |                          | $      | 76,036 |   |

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**ACR      GROUP, INC. AND SUBSIDIARIES**

**CONDENSED      CONSOLIDATED INCOME STATEMENTS**

**(In      thousands, except per share amounts)**

**(Unaudited)**

|                                                            |   | Three                    Months Ended November 30, |   | Nine                    Months Ended November 30, |   |
|-----------------------------------------------------------------|--------|----------------------------------------------------|--------|---------------------------------------------------|--------|
|                                                            |   | 2006                                               |   | 2005                                              |   | 2006 |   | 2005 |   |
| Sales                                                           |   | $                                                  | 56,014 |                                              | $      | 50,013 |   | $ | 194,081 |   | $ | 158,691 |   |
| Cost                    of sales                                |   |                                               | 41,785 |                                              |   | 38,208 |   |   | 144,682 |   |   | 121,420 |   |
| Gross                    profit                                 |   |                                               | 14,229 |                                              |   | 11,805 |   |   | 49,399 |   |   | 37,271 |   |
| Selling,                    general and administrative expenses |   |                                               | 12,221 |                                              |   | 10,826 |   |   | 38,379 |   |   | 32,567 |   |
| Operating                    income                             |   |                                               | 2,008  |                                              |   | 979 |   |   | 11,020 |   |   | 4,704 |   |
| Interest                    expense                             |   |                                               | 718    |                                              |   | 388 |   |   | 1,920 |   |   | 1,066 |   |
| Interest                    derivative gain                     |   |                                               | (24    | )                                                 |   | (344 | ) |   | (84 | ) |   | (182 | ) |
| Other                    non-operating income                   |   |                                               | (192   | )                                                 |   | (162 | ) |   | (505 | ) |   | (485 | ) |
| Income                    before income taxes                   |   |                                               | 1,506  |                                              |   | 1,097 |   |   | 9,689 |   |   | 4,305 |   |
| Provision                    for income taxes                   |   |                                               | 587    |                                              |   | 443 |   |   | 3,721 |   |   | 1,635 |   |
| Net                    income                                   |   | $                                                  | 919    |                                              | $      | 654 |   | $ | 5,968 |   | $ | 2,670 |   |
|                                                            |   |                                               |   |                                              |   |   |   |   |   |   |   |   |   |
| Earnings                    per share:                          |   |                                               |   |                                              |   |   |   |   |   |   |   |   |   |
| Basic                                                           |   | $                                                  | .08    |                                              | $      | .06 |   | $ | .53 |   | $ | .24 |   |
|                                                            |   |                                               |   |                                              |   |   |   |   |   |   |   |   |   |
| Diluted                                                         |   | $                                                  | .08    |                                              | $      | .06 |   | $ | .52 |   | $ | .24 |   |
|                                                            |   |                                               |   |                                              |   |   |   |   |   |   |   |   |   |
| Weighted                    average shares outstanding:         |   |                                               |   |                                              |   |   |   |   |   |   |   |   |   |
| Basic                                                           |   |                                               | 11,231 |                                              |   | 11,054 |   |   | 11,224 |   |   | 10,990 |   |
|                                                            |   |                                               |   |                                              |   |   |   |   |   |   |   |   |   |
| Diluted                                                         |   |                                               | 11,631 |                                              |   | 11,293 |   |   | 11,590 |   |   | 11,304 |   |

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**ACR      GROUP, INC. AND SUBSIDIARIES**

**CONDENSED      CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(In      thousands)**

**(Unaudited)**

|                                                                                                                      |   | Nine                Months EndedNovember                30, |    |
|---------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------|---------|
|                                                                                                                      |   | 2006                                                        |    | 2005 |   |
| Operating                activities:                                                                                      |   |                                                        |    |   |   |
| Net                income                                                                                                 |   | $                                                           | 5,968   |   | $ | 2,670 |   |
| Adjustments                to reconcile net income to net cash provided by (used in) operating                activities: |   |                                                        |    |   |   |   |   |
| Depreciation                and amortization                                                                              |   |                                                        | 736     |   |   | 674 |   |
| Provision                for doubtful accounts                                                                            |   |                                                        | 608     |   |   | 507 |   |
| Loss                (gain) on sale of assets                                                                              |   |                                                        | 29      |   |   | (15 | ) |
| Gain                on change in market value of interest derivative                                                      |   |                                                        | (84     | ) |   | (182 | ) |
| (Increase)                decrease in deferred income taxes                                                               |   |                                                        | (198    | ) |   | 110 |   |
| Amortization                of unearned restricted stock compensation                                                     |   |                                                        | 380     |   |   | 303 |   |
| Tax                benefit from restricted stock compensation                                                             |   |                                                        | 103     |   |   | 81 |   |
| Changes                in operating assets and liabilities, net of                                                        |   |                                                        |    |   |   |   |   |
| business                acquisition:                                                                                      |   |                                                        |    |   |   |   |   |
| Accounts                receivable                                                                                        |   |                                                        | (6,546  | ) |   | (5,519 | ) |
| Inventories,                net                                                                                           |   |                                                        | (9,009  | ) |   | (2,417 | ) |
| Prepaids                and other assets                                                                                  |   |                                                        | (154    | ) |   | (8 | ) |
| Accounts                payable                                                                                           |   |                                                        | (5,809  | ) |   | 7,130 |   |
| Accrued                expenses and other liabilities                                                                     |   |                                                        | 2,995   |   |   | 435 |   |
| Net                cash provided by (used in) operating activities                                                        |   |                                                        | (10,981 | ) |   | 3,769 |   |
| Investing                activities:                                                                                      |   |                                                        |    |   |   |   |   |
| Purchases                of property and equipment                                                                        |   |                                                        | (1,066  | ) |   | (903 | ) |
| Business                acquisition, net of cash acquired                                                                 |   |                                                        | -       |   |   | (148 | ) |
| Receipts                (payments) on derivative instrument                                                               |   |                                                        | 382     |   |   | (121 | ) |
| Proceeds                from disposition of assets                                                                        |   |                                                        | 9       |   |   | 59 |   |
| Net                cash used in investing activities                                                                      |   |                                                        | (675    | ) |   | (1,113 | ) |
| Financing                activities:                                                                                      |   |                                                        |    |   |   |   |   |
| Net                borrowings (payments) on revolving credit agreement                                                    |   |                                                        | 12,250  |   |   | (3,419 | ) |
| Proceeds                from exercise of stock options                                                                    |   |                                                        | 35      |   |   | 172 |   |
| Payments                on long-term debt and capital lease obligations                                                   |   |                                                        | (239    | ) |   | (250 | ) |
| Acquisition                of vested restricted stock                                                                     |   |                                                        | (163    | ) |   | - |   |
| Net                cash provided by (used in) financing activities                                                        |   |                                                        | 11,883  |   |   | (3,497 | ) |
| Net                increase (decrease) in cash                                                                            |   |                                                        | 227     |   |   | (841 | ) |
| Cash                at beginning of period                                                                                |   |                                                        | 1,275   |   |   | 2,135 |   |
|                                                                                                                      |   |                                                        |    |   |   |   |   |
| Cash                at end of period                                                                                      |   | $                                                           | 1,502   |   | $ | 1,294 |   |

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**ACR      GROUP, INC. AND SUBSIDIARIES**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

|                                                |   | Three                Months Ended November                30, |   | Nine                Months EndedNovember                30, |   |
|-----------------------------------------------------|--------|---------------------------------------------------------------|--------|-------------------------------------------------------------|--------|
|                                                |   | 2006                                                          |   | 2005                                                        |   | 2006 |   | 2005 |   |
| Net                income                           |   | $                                                             | 919    |                                                        | $      | 654 |   | $ | 5,968 |   | $ | 2,670 |   |
| Other                comprehensive loss, net of tax |   |                                                          | (140   | )                                                           |   | - |   |   | (140 | ) |   | - |   |
| Comprehensive                income                 |   | $                                                             | 779    |                                                        | $      | 654 |   | $ | 5,828 |   | $ | 2,670 |   |

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|                                                               | Three                Months Ended November                30, |   | Nine                Months Ended November                30, |
|--------------------------------------------------------------------|---------------------------------------------------------------|--------|--------------------------------------------------------------|
|                                                               | 2006                                                          |   | 2005                                                         |   | 2006 |   | 2005 |
|                                                               | (In                thousands)                                 |   | (In                thousands)                                |
| Weighted-average                basic common shares outstanding    | 11,231                                                        |   | 11,054                                                       |   | 11,224 |   | 10,990 |
| Effect                of dilutive securities:                      |                                                          |   |                                                         |   |   |   |   |
| Stock                options                                       | -                                                             |   | 22                                                           |   | - |   | 28 |
| Unvested                restricted stock                           | 400                                                           |   | 217                                                          |   | 366 |   | 286 |
|                                                               |                                                          |   |                                                         |   |   |   |   |
| Weighted-average                dilutive common shares outstanding | 11,631                                                        |   | 11,293                                                       |   | 11,590 |   | 11,304 |

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*”      *
*.*

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

**INTRODUCTION**

|                                                          | Three                  Months EndedNovember                  30, |   | Nine                  Months EndedNovember                  30, |
|---------------------------------------------------------------|------------------------------------------------------------------|--------|-----------------------------------------------------------------|
|                                                          | 2006                                                             |   | 2005                                                            |   | 2006 |   | 2005 |
| Sales                                                         |  100.0%                                                     |   | 100.0%                                                          |   | 100.0% |   | 100.0% |
| Cost                  of sales                                | 74.6                                                             |   | 76.4                                                            |   | 74.5 |   | 76.5 |
| Gross                  profit                                 | 25.4                                                             |   | 23.6                                                            |   | 25.5 |   | 23.5 |
| Selling,                  general and administrative expenses | 21.8                                                             |   | 21.6                                                            |   | 19.8 |   | 20.5 |
| Operating                  income                             | 3.6                                                              |   | 2.0                                                             |   | 5.7 |   | 3.0 |
| Interest                  expense                             | 1.3                                                              |   | 0.8                                                             |   | 1.0 |   | 0.7 |
| Interest                  derivative loss (gain)              | 0.0                                                              |   | (0.7)                                                           |   | 0.0 |   | (0.1) |
| Other                  non-operating income                   | (0.3)                                                            |   | (0.3)                                                           |   | (0.3) |   | (0.3) |
| Income                  before income taxes                   | 2.6                                                              |   | 2.2                                                             |   | 5.0 |   | 2.7 |
| Income                  taxes                                 | 1.0                                                              |   | 0.9                                                             |   | 1.9 |   | 1.0 |
| Net                  income                                   |                      1.6%                         |   | 1.3%                                                            |   | 3.1% |   | 1.7% |

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**QUARTER      ENDED NOVEMBER 30, 2006 COMPARED TO THE QUARTER ENDED NOVEMBER 30,      2005**

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**NINE      MONTHS ENDED NOVEMBER 30, 2006 COMPARED TO THE NINE MONTHS ENDED NOVEMBER 30,      2005**

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**LIQUIDITY      AND CAPITAL RESOURCES**

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**CRITICAL      ACCOUNTING POLICIES**

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| -  general                        economic conditions affecting general business spending, 
-  consumer                        spending, 
-  consumer                        debt levels, 
-  prevailing                        interest rates, 
-  seasonal                        nature of product sales 
-  changing                        rates of new housting starts, 
-  weather                        conditions, 
-  effects                        of supplier concentration, 
-  competitive                        factors within the HVAC industry, 
-  insurance                        coverage risks, 
-  viability                        of the Company's business                        strategy. |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**Item      3. - Quantitative and Qualitative Disclosures About Market      Risk**

**Item      4. - Controls and Procedures**

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**PART      II - OTHER INFORMATION**

**Item      1. - Legal Proceedings**

**Item      1A. - Risk Factors**

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

**Item      5. Other Information**

**Item      6. - Exhibits **

**(a) Exhibits**

|   | 31.1 | Certification                of Chief Executive Officer pursuant to Securities Exchange Act Rules                13a-14(a)/15d-14(a) as adopted pursuant to Section 302 of the                Sarbanes-Oxley Act of 2002. |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 31.2 | Certification                of Chief Financial Officer pursuant to Securities Exchange Act Rules                13a-14(a)/15d-14(a) as adopted pursuant to Section 302 of the                Sarbanes-Oxley Act of 2002. |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

| **(b)  ** | ** SIGNATURES** |
|---------------------|----------------------|

|                January                16, 2007 |  ACR GROUP, INC.                                                                                                |
|-----------------------------------------------------|----------------------------------------------------------------------------------------------------------------------|
| Date                                           |  /s/ Anthony R. Maresca                                                                                         |
|                                                |  Anthony              R. MarescaSenior                Vice President and Chief                Financial Officer |