UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-QSB

(Mark one)

|X|  Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
     of 1934

         For the quarterly period ended June 30, 2006

| |  Transition report under Section 13 or 15(D) of the Exchange Act


                        Commission file number 000-50502

                          PREMIER ALLIANCE GROUP, INC.
                          ----------------------------
       (Exact Name of Small Business Issuer as Specified in Its Charter)

              Nevada                                        20-0443575
             -------                                        ----------
         (State or Other                    (I.R.S. Employer Identification No.)
         Jurisdiction of
         Incorporation or
          Organization)

                                4521 Sharon Road
                                    Suite 300
                         Charlotte, North Carolina 28211
                         -------------------------------
                    (Address of Principal Executive Offices)

                                 (704) 521-8077
                                 --------------
                (Issuer's Telephone Number, Including Area Code)


Check whether the issuer (1) filed all reports required to be filed by Section
     13 or 15(d) of the Exchange Act during the past 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 | |  No |X|

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

     As of August 10, 2006, 5,811,093 shares of common stock were outstanding.

Transitional Small Business Disclosure Format (check one):       Yes | |  No |X|



<PAGE>

                                Table of Contents

                                                                            Page

PART I. FINANCIAL INFORMATION

Item 1. Condensed Financial Statements

     Balance Sheet as of June 30, 2006 (Unaudited)                             3

     Statements of Operations for the Three and Six
     Months Ended June 30, 2006 (Unaudited) and
     June 30, 2005 (Unaudited)                                                 5

     Statements of Cash Flows for Six Months Ended
     June 30, 2006 (Unaudited) and June 30, 2005 (Unaudited)                   6

     Notes to Condensed Financial Statements (Unaudited)                       7

Item 2. Management's Discussion and Analysis or Plan of Operation              9

Item 3. Controls and Procedures                                               14

PART I. OTHER INFORMATION

Item 1. Legal Proceedings                                                     15

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds           15

Item 3. Defaults Upon Senior Securities                                       15

Item 4. Submission of Matters to a Vote of Security Holders                   15

Item 5. Other Information                                                     15

Item 6. Exhibits                                                              15

Signatures                                                                    16

Certifications                                                                17



<PAGE>

                          PREMIER ALLIANCE GROUP, INC.
                                  BALANCE SHEET
                                  JUNE 30, 2006
                                   (UNAUDITED)



                ASSETS
                ------
CURRENT ASSETS:
  Cash                                             $   114,995
  Accounts receivable                                1,169,716
  Marketable securities                                 12,685
  Deferred income taxes                                 38,000
                                                   -----------

     Total current assets                                              1,335,396




PROPERTY AND EQUIPMENT - at cost less
  accumulated depreciation                                                41,126


OTHER ASSETS:
  Goodwill                                           2,231,284
  Investment in equity-method investee                 235,011
  Investment in cost-method investee                   100,000
  Cash surrender value of officers' life insurance     460,269
  Deposits and other assets                              4,225
                                                   -----------
                                                                       3,030,789
                                                                     -----------





                                                                     $ 4,407,311
                                                                     ===========


                       SEE NOTES TO FINANCIAL STATEMENTS
                                       3
<PAGE>

   LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Note payable                                    $   558,078
  Accounts payable                                    234,410
  Accrued expenses                                    367,495
  Income taxes payable                                 92,611
                                                   -----------

     Total current liabilities                                         1,252,594


COMMITMENTS AND CONTINGENCIES                                                  -


STOCKHOLDERS' EQUITY:
  Class A convertible preferred stock, $.001
    par value 5,000,000 shares authorized,
    617,591 shares issued and outstanding                 618
  Common stock, $.001 par value, 45,000,000
    shares authorized, 5,811,065 shares
    issued and outstanding                              5,811
  Additional paid-in capital                        3,300,639
  Accumulated deficit                                (152,351)
                                                   -----------

                                                                       3,154,717
                                                                     -----------







                                                                     $ 4,407,311
                                                                     ===========


                       SEE NOTES TO FINANCIAL STATEMENTS
                                       4
<PAGE>

                          PREMIER ALLIANCE GROUP, INC.
                            STATEMENTS OF OPERATIONS
                THREE AND SIX MONTHS ENDED JUNE 30, 2006 AND 2005
                                   (UNAUDITED)

<TABLE>
<CAPTION>
<S>                                     <C>               <C>              <C>               <C>
                                         Three months      Three months      Six months       Six months
                                             ended             ended            ended            ended
                                         June 30, 2006     June 30, 2005    June 30, 2006    June 30, 2005
                                        --------------    --------------   --------------   --------------

NET REVENUE                             $    2,274,502    $    2,713,723   $    4,802,652   $    5,428,737
                                        --------------    --------------   --------------   --------------
OPERATING EXPENSES:
  Cost of revenues                           1,663,604         1,985,090        3,562,186        4,058,609
  Selling, general and administrative          572,740           590,774        1,142,690        1,283,472
  Depreciation                                   4,546             4,424            8,985            7,795
                                        --------------    --------------   --------------   --------------
   Total operating expenses                  2,240,890         2,580,288        4,713,861        5,349,876
                                        --------------    --------------   --------------   --------------
INCOME FROM OPERATIONS                          33,612           133,435           88,791           78,861
                                        --------------    --------------   --------------   --------------


OTHER (EXPENSE) INCOME:
  Interest (expense) income, net                (6,750)           (9,439)         (13,002)         (16,383)
  Loss on marketable securities                 (4,900)           (5,043)          (2,400)          (9,419)
  Officers' life insurance                     (36,583)              (38)          (7,152)         (23,275)
  Equity in net loss of
   equity-method investee                          944            (4,866)            (292)          (6,248)
  Other income                                   6,827               387            6,925            1,610
                                        --------------    --------------   --------------   --------------
   Total other (expense) income                (40,462)          (18,999)         (15,921)         (53,715)
                                        --------------    --------------   --------------   --------------

NET (LOSS) INCOME BEFORE INCOME TAXES           (6,850)          114,436           72,870           25,146
INCOME TAX EXPENSE                              (9,042)          (45,492)         (42,036)         (12,276)
                                        --------------    --------------   --------------   --------------

NET (LOSS) INCOME                              (15,892)           68,944           30,834           12,870
PREFERRED STOCK DIVIDENDS EARNED               (47,800)          (47,800)         (47,800)         (47,800)
                                        --------------    --------------   --------------   --------------

NET (LOSS) INCOME AVAILABLE TO COMMON
  STOCKHOLDERS                          $      (63,692)   $       21,144   $      (16,966)  $      (34,930)
                                        ==============    ==============   ==============   ==============
Net (loss) income  per share, basic
  and diluted                           $        (0.01)   $         0.00            (0.00)           (0.01)
                                        ==============    ==============   ==============   ==============
Weighted average number of shares,
  basic and diluted                          5,811,093         5,811,065        5,811,093        5,811,065
                                        ==============    ==============   ==============   ==============
</TABLE>



                       SEE NOTES TO FINANCIAL STATEMENTS
                                       5
<PAGE>



                          PREMIER ALLIANCE GROUP, INC.
                            STATEMENTS OF CASH FLOWS
                     SIX MONTHS ENDED JUNE 30, 2006 AND 2005
                                   (UNAUDITED)


                                                        2006           2005
                                                    -----------    -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                        $    30,834    $    12,870
  Adjustments to reconcile net income
    to net cash provided by operating activities:
      Depreciation                                        8,986          7,795
      Increase of cash surrender value of
        officers' life insurance                        (41,689)       (15,755)
      Deferred income taxes                             (98,000)      (127,000)
      Equity in loss of equity-method investee              292          6,248
    Changes in operating assets and liabilities:
      Increase in accounts receivable                  (141,136)       (62,154)
      Decrease in marketable securities                   2,400        129,022
      Decrease in prepaid expenses                       31,572         15,985
      Increase in deposits and other assets                 275            641
      Increase in accounts payable                      (43,781)       (26,305)
      (Increase) decrease in accrued expenses            (6,317)        41,329
      Increase in income taxes payable                   74,661         93,626
                                                    -----------    -----------
    Net cash (used in) provided by operating
      activities                                       (181,903)        76,302
                                                    -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property and equipment                    (6,346)        (1,904)
                                                    -----------    -----------
     Net cash used in investing activities               (6,346)        (1,904)
                                                    -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  S Corporation distributions                               -          (62,000)
  Preferred stock dividends                                 -          (47,800)
  Proceeds from line of credit                          253,000       (198,000)
                                                    -----------    -----------
    Net cash provided by (used in)
        financing activities                            253,000       (307,800)
                                                    -----------    -----------

NET INCREASE (DECREASE) IN CASH                          64,751       (233,402)


CASH - beginning of period                               50,244        237,019
                                                    -----------    -----------

CASH - end of period                                $   114,995    $     3,617
                                                    ===========    ===========


                       SEE NOTES TO FINANCIAL STATEMENTS
                                       6
<PAGE>

                          PREMIER ALLIANCE GROUP, INC.
                          NOTES TO FINANCIAL STATEMENTS
                THREE AND SIX MONTHS ENDED JUNE 30, 2006 AND 2005
                                   (UNAUDITED)



NOTE 1 - BASIS OF PRESENTATION:
-------------------------------

         The  accompanying  unaudited  interim  financial  statements of Premier
Alliance  Group,  Inc. (the  "Company")  have been  prepared in accordance  with
accounting principles generally accepted in the United States of America and the
rules of the  Securities and Exchange  Commission  ("SEC") and should be read in
conjunction with the audited financial statements and notes thereto contained in
the Company's Annual Report filed with the SEC on Form 10-KSB. In the opinion of
management,  all  adjustments,   consisting  of  normal  recurring  adjustments,
necessary  for a fair  presentation  of  financial  position  and the results of
operations for the interim  periods  presented have been reflected  herein.  The
results of operations for interim periods are not necessarily  indicative of the
results  expected for the full year.  Notes to the  financial  statements  which
would substantially  duplicate the disclosure contained in the audited financial
statements for fiscal year 2005 as reported in the 10-KSB have been omitted.



NOTE 2 - ORGANIZATION AND BUSINESS:
-----------------------------------

         Premier  Alliance  Group,  Inc. ("Old Premier") was organized under the
laws  of  North  Carolina  in  June,  1995.  Old  Premier  provided  information
technology solutions and consulting services to customers operating in a variety
of industries throughout the United States.


         On November 5, 2004,  Old Premier and its  shareholders  consummated  a
share exchange  agreement with the Company.  The Company was an inactive  public
company that was organized in Nevada in January,  2000. Pursuant to the exchange
agreement,  shareholders of Old Premier were issued  36,176,863 shares of common
stock and 4,323,157  shares of Class A convertible  preferred  stock in exchange
for all of their outstanding common stock and preferred stock in Old Premier. As
a result  of the share  exchange  agreement,  the  shareholders  of Old  Premier
acquired a majority of the issued and outstanding  common and preferred stock of
the merged company. For accounting  purposes,  the transaction was accounted for
as a reverse  merger.  Old Premier  was merged into the Company and  immediately
after the merger, the Company was renamed Premier Alliance Group, Inc.



                       SEE NOTES TO FINANCIAL STATEMENTS
                                       7
<PAGE>

NOTE 3 - ADDITIONAL PAID-IN CAPITAL:
------------------------------------

         The  Company  had  $1,057,673  of  undistributed   earnings   (retained
earnings) at the date of its conversion  (June 6, 2004) from an S Corporation to
a C Corporation.  In accordance with SEC Staff Accounting Bulletin Topic 4B, the
Company  treated  this  amount  as a  constructive  distribution  to the  owners
followed  by a  contribution  to the capital of the  corporation  by the owners.
During the six months  ended  June 30,  2005,  the  Company  made S  Corporation
distributions  of $62,000,  which was recorded as a reduction of the  additional
paid-in capital contributed by the owners.



NOTE 4 - CLASS A CONVERTIBLE PREFERRED STOCK:
---------------------------------------------

         The Class A  Convertible  Preferred  Stock  accrues 8 percent per annum
dividends on a stated "dividend value".  "Dividend value" is the amount equal to
$0.98  per  share  for  each  share  of  Class  A  Convertible  Preferred  Stock
outstanding.  The  dividends  began  accruing  June 1, 2004 and are  cumulative.
Dividends are payable annually in arrears. During 2005, the Company declared and
paid dividends of $47,800 ($0.07 per preferred share). At June 30, 2006, $47,800
of dividends have accrued on these shares.  However,  they are unrecorded on the
Company's books until declared.




                       SEE NOTES TO FINANCIAL STATEMENTS
                                       8
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

This quarterly report on Form 10-QSB may include "forward-looking statements"
within the meaning of section 27(a) of the Securities Act of 1933 and section
21(e) of the Securities Exchange Act of 1934. We intend all forward-looking
statements to be covered by the safe-harbor provisions for forward-looking
statements. All statements regarding our expected financial position and
operating results, our business strategy, our financing plans, and the outcome
of any contingencies constitute forward-looking statements. All forward-looking
statements are subject to risks and uncertainties, including without limitation
those described in "Risk Factors" in our annual report on Form 10-KSB, that
could cause actual results to differ materially from described in or implied by
any forward-looking statements.

The following discussion should be read in conjunction with our financial
statements and the related notes included in this Form 10-QSB.

OPERATIONS

Our business consists of providing information technology, or "IT," services to
our clients. Our services typically encompass the IT business-solution software
development life cycle. The IT business-solution software development life cycle
references industry standard steps typically followed in developing or creating
software (the blueprint methodology), including phases for planning, developing,
implementing, managing, and ultimately maintaining, the IT solution. It is this
process that creates quality software while minimizing issues for customers. A
typical customer is an organization with complex information and data-processing
requirements. Technology is crucial in all industries and therefore we market
and sell to many sectors of business. We promote our services through our two
delivery channels, IT Services and IT Solutions divisions. These divisions
operate as one from an accounting and overall management perspective, however
they are differentiated from a marketing and customer presentation perspective
only. Management reviews and oversees the divisions as one combined entity,
utilizes resources across both areas, and makes operational assessments and
plans together. In light of this, Financial Accounting Standards Board (FASB)
Statement of Financial Accounting Standards (SFAS) No. 131 "Business segments"
does not require separate financial reporting and the 2 channels are
consolidated in all financial report presentations.

    o    IT Services Division--This division provides staffing and consulting
         services across a broad range of skills and expertise. It assists our
         customers by providing skilled business and technical expertise to help
         lead and train our customers, and it can provide the manpower necessary
         to supplement project efforts. In most cases our work is on a
         time-and-materials basis. Because of the type of expertise and the
         complexity of technology, customers typically commit to long-term
         contracts that are typically a minimum of 9 months in which our staff
         work on site at client facilities under the daily direction of the
         client management. It is very common that we obtain contract extensions
         with our clients for our consulting resources.

    o    IT Solutions Division--This division handles advanced technologies and
         solutions and provides expertise in project management, architecture,
         and project methodology. Its focus is to service customers on a project
         or deliverable basis. The work can be performed at customer facilities



                                       9
<PAGE>

         or at our facilities. With this type of work the customer typically
         enters into a contract with us for a fixed price bid that provides for
         delivery of a given service or delivery at a stated time. Services
         provided by this group range from helping clients assess their business
         needs and identifying the right technology solution, to helping
         customers select and implement packaged software, to designing,
         constructing, and testing new systems and integrating them with the
         customer's existing technology.

RESULTS OF OPERATIONS

Net revenue for the three months ended June 30, 2006, was $2,275,000, a decrease
of 16.2%, compared to $2,714,000 for the same period in 2005. For the 2006
year-to-date period, revenue was $4,803,000 compared to $5,429,000 for the 2005
year-to-date period, a decrease of 11.5%. The decrease was due to a major
customer reducing their total consulting workload and converting some Premier
consultants to full time employees.

Cost of revenues, defined as all costs for billable staff, were $1,664,000 or
73.1% of revenue for the three months ended June 30, 2006, as compared to
$1,985,000 or 73.2% of revenue for the same period in 2005. For the 2006
year-to-date period costs were 74.2% of revenue and for the 2005 year-to-date
period, costs were 74.8% of revenue.

General and administrative (G&A) expenses were $577,000 or 25.4% of revenue for
the three months ended in June 30, 2006, as compared to $595,000 or 21.9% for
the same period in 2005. For the 2006 year-to-date period, it was 24% as
compared to 23.8% for the 2005 year-to-date period. G&A expenses were comparable
as increases in rent and business insurance were offset by decreases in
professional fees and expenses (legal, accounting, consulting). We have
established uniform controls and automated processes and are able to perform
most general functions internally and minimize what outside agencies must do.

Operating income for the three months ended in June 30, 2006, was $34,000 as
compared to $133,000 for the same period in 2005, reflecting the decrease in
revenue. For the 2006 year-to-date period, operating income was $89,000 compared
to $79,000 for the 2005 year-to-date period.

Other income and expense, net, consisted of a loss of $40,000 for the three
months ended in June 30, 2006, compared to a loss of $19,000 for the same period
in 2005. For the 2006 year-to-date period, the loss was $16,000 compared to a
loss of $54,000 for the 2005 year-to-date period. The expense in 2006 is mostly
attributable to a net decrease in cash surrender value over premiums of variable
executive life insurance (due to market fluctuation).

The effective income tax expense for the first six months of 2006 is 58%
compared to an effective income tax expense of 49% for the same period in 2005.
The change in rate is a direct result of net operating income reported in the
first quarter of 2006 as compared to that reported for the same period in 2005.

Net loss for the three months ended in June 30, 2006, was $16,000 or ($.009) per
diluted share, compared with net income of $69,000 for the same period in 2005,
or $.01 per diluted share. For the 2006 year-to-date period, net income was
$31,000 compared to net income of $13,000 for the 2005 year-to-date period.



                                       10
<PAGE>

DIVIDEND

No Dividend has been declared as of June 30, 2006.

On June 7, 2004, North Carolina Premier issued 597,500 shares of Class A
preferred stock in a private placement. The holders of shares of preferred stock
were entitled to receive an 8% annual dividend until the earlier of (1) the
third anniversary of the date of issuance or (2) automatic conversion of shares
of Class A preferred stock into shares of common stock. A dividend was declared
and distributed in June 2005 in the amount of $47,800.

Attached with each preferred share was a warrant entitling the holder to
purchase one share of common stock at an exercise price of $2.00. The warrants
were immediately exercisable and had a term of three years.

On consummation of the share exchange, holders of these shares of preferred
stock were issued in exchange shares of our Class A preferred stock having
substantially identical terms, as well as warrants with substantially identical
terms, except that the exercise price of the warrants was adjusted to $1.96.

CRITICAL ACCOUNTING POLICIES

REVENUE RECOGNITION

The Company follows the guidance of the Securities and Exchange Commission's
Staff Accounting Bulletin No. 104 for revenue recognition. In general, the
Company records revenue when persuasive evidence of any agreement exists,
services have been rendered, and collectibility is reasonably assured,
therefore, revenue is recognized when the Company invoices customers for
completed services at contracted rates and terms.

INCOME TAXES

We make certain estimates and judgments in determining income tax expense for
financial statement purposes. These estimates and judgments occur in calculating
tax credits, tax benefits, and deductions that arise from differences in the
timing of recognition of revenue and expense for tax and financial-statement
purposes.

We assess the likelihood that we will be able to recover deferred tax assets. If
recovery is unlikely, we must increase the provision for taxes by recording a
valuation allowance against the estimated deferred tax assets that will not
ultimately be recoverable. As of June 30, 2006, we believed that all of the
deferred tax assets recorded on our balance sheet would ultimately be recovered.
However, should there be a change in our ability to recover our deferred tax
assets, our tax provision would increase in the period in which we determine
that the recovery is unlikely.



                                       11
<PAGE>

FINANCIAL CONDITION AND LIQUIDITY

As of June 30, 2006, we had cash and cash equivalents of $115,000, representing
an increase of $111,000 from June 30, 2005. Net working capital at June 30,
2006, was $83,000, as compared to $39,000 on June 30, 2005. Current assets at
June 30, 2006, were $1,335,000. The increase in working capital was primarily
due to our net earnings. We had no long-term debt. Shareholders' equity as of
June 30, 2006, was $3,155,000, which represented 72% of total assets.

During the six months ended June 30, 2006, the net cash used by operating
activities was $182,000 and was primarily a result of increases in the cash
surrender value of officers' life insurance of $42,000, accounts receivable of
$141,000, accounts payable of $44,000, and accrued expenses of $6,300 and a
decrease in deferred income taxes of $98,000, offset by an increase in income
taxes payable of $75,000, and a decrease in prepaid expenses of $32,000.

Cash flows from investing activities used $6,300.

Financing activities provided $253,000 of cash for the six months ended June 30,
2006. Of that increase, $253,000 was due to borrowings on our revolving line of
credit. We borrow or repay this revolving debt as needed based upon our working
capital obligations. We believe that internally generated funds, current cash on
hand, and available borrowings under our revolving credit line will be adequate
to meet foreseeable liquidity needs.

OUTLOOK

Our business has been affected by the following major trends. First, customers
are consolidating their primary vendor lists. Second, the surge in offshore and
outsourced development work is forcing us to focus on handling earlier and later
phases of the development cycle, which in turn has increased our need for
expertise in the areas of project management, business analysis, and quality
assurance and testing. These trends are discussed in greater detail below.

Many customers working with the computer services industry are reducing the
number of primary vendors they use and are instead working with a smaller number
of pre-approved vendors. This trend could have a significant impact on the rates
we charge and the amount of business we do. We propose to address these issues
from two perspectives.

First we are laying the foundation to diversify and enhance our business model
geographically, in increased size as well as in the way we package our services.
By servicing more geographic markets and increasing our overall size we will
more effectively maintain approved primary vendor or sub vendor status, factors
that clients have told us are important to them. The ability to service large
customers in multiple locations as well as provide more resources and capability
adds value while minimizing customer risk. To accomplish this we are looking at
organic growth as well as merger and acquisition strategies.

Secondly we are retooling our sales efforts to increase our focus on mid-level
customers. This market is not as advanced in the use of or consolidation of
primary vendor processes. Premier has typically focused on large corporate
customers and is expanding our marketing focus to include the mid-level customer
segment.



                                       12
<PAGE>

With the surge in off-shore work, we had to choose to adjust either by providing
offshore services or by focusing on that work that is less susceptible to being
sent offshore. Offshore and outsourced efforts are typically focused on the core
development (middle phases) of a software development cycle. By contract,
on-site consulting resources typically handle the early and later phases of the
development cycle. This has greatly increased the focus on the following
expertise for onsite work: project management, business analysis, quality
assurance and testing. We believe that we can be more competitive if we focus on
providing on-site consulting, and so we have focused our recruiting and sales
efforts in that area.

Our top priority is to broaden the range of services we offer and build a more
diverse client base, both geographically and in terms of industry segments
represented. We believe that achieving this goal will require a combination of
merger activity and organic growth. Whether we achieve this goal will in part
depend on continued improvement in the U.S. jobs market and our ability to
attract top talent in the IT field.

OFF-BALANCE-SHEET ARRANGEMENTS

The Class A preferred stock accrues 8% per annum dividends on a stated
"dividend value". "Dividend value" is the amount equal to $0.98 per share for
each share of Class A preferred stock outstanding. The dividends began accruing
June 1, 2004, and are cumulative. Dividends are payable annually in arrears.
During 2005, the Company declared and paid dividends of $47,800 ($.07 per
preferred share). At June 30, 2006, $47,800 of dividends have accrued on these
shares respectively. However, they are unrecorded on the Company's books until
declared.

As of June 30, 2006, and during the prior three months then ended, there were no
other transactions, agreements or other contractual arrangements to which an
unconsolidated entity was a party under which we (1) had any direct or
contingent obligation under a guarantee contract, derivative instrument, or
variable interest in the unconsolidated entity, or (2) had a retained or
contingent interest in assets transferred to the unconsolidated entity.



                                       13
<PAGE>

ITEM 3. CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our Exchange Act reports is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms and that such information
is accumulated and communicated to this company's management, including our
Chief Executive Officer and Chief Financial Officer, as appropriate, to allow
for timely decisions regarding required disclosure. In designing and evaluating
the disclosure controls and procedures, management recognizes 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
is required to apply its judgment in evaluating the cost-benefit relationship of
possible controls and procedures.

As required by Securities and Exchange Commission Rule 13a-15(b), we carried out
an evaluation, under the supervision and with the participation of the Company's
management, including our Chief Executive Officer, of the effectiveness of the
design and operation of our disclosure controls and procedures as of the end of
the quarter covered by this report. Based on the foregoing, our Chief Executive
Officer concluded that our disclosure controls and procedures are effective to
ensure the information required to be disclosed in our reports filed or
submitted under the Exchange Act is timely recorded, processed and reported
within the time periods specified in the Securities and Exchange Commission
rules and forms.

There has been no change in our internal control over financial reporting during
our most recent fiscal quarter that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.





                                       14
<PAGE>

                                     PART II
                                OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

31.1     Certification  of Principal  Executive  and  Principal  Financial
         Officer Pursuant to Section 302 of the  Sarbanes-Oxley  Act of 2002 (18
         U.S.C. Sec. 1350).

32.1     Written  Statement  of  Chief  Executive  and  Financial  Officer
         Pursuant  to Section 906 of the  Sarbanes-Oxley  Act of 2002 (18 U.S.C.
         Section 1350).





                                       15
<PAGE>

                                   SIGNATURES


In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                             PREMIER ALLIANCE GROUP, INC.
                                             (Registrant)


DATE: August 10, 2006                        By:      /s/ Mark S. Elliott
                                                     --------------------------
                                             Mark S. Elliott
                                             President (Chief Executive Officer
                                             and Acting Chief Financial Officer)



                       SEE NOTES TO FINANCIAL STATEMENTS
                                       16