Forward-Looking Statements

The information contained in this Form 10-Q and documents incorporated herein by reference are intended to update the information contained in the Company's Annual Report on Form 10-KSB for the year ended December 31, 2007 and such information presumes that readers have access to, and will have read, the "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Risk Factors" and other information contained in such Form 10-KSB and other Company filings with the Securities and Exchange Commission ("SEC").

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements involve risks and uncertainties, and actual results could be significantly different than those discussed in this Form 10-Q. Certain statements contained in Management's Discussion and Analysis, particularly in "Liquidity and Capital Resources," and elsewhere in this Form 10-Q are forward-looking statements. These statements discuss, among other things, expected growth, future revenues and future performance. Although we believe the expectations expressed in such forward-looking statements are based on reasonable assumptions within the bounds of our knowledge of our business, a number of factors could cause actual results to differ materially from those expressed in any forward-looking statements, whether oral or written, made by us or on our behalf. The forward-looking statements are subject to risks and uncertainties including, without limitation, the following: (a) changes in levels of competition from current competitors and potential new competition,
(b) possible loss of significant customer(s), (c) the Company's ability to effectively integrate new and changing medical technologies into to its product and service offerings, (d) the risk of equipment vendors not making their equipment and technologies available to equipment rental and service companies such as ours, (e) the Company's ability to meet the terms and conditions of its debt and lease obligations, and (f) changes in availability or terms of working capital financing from vendors and lending institutions. The foregoing should not be construed as an exhaustive list of all factors that could cause actual results to differ materially from those expressed in forward-looking statements made by us. All forward-looking statements included in this document are made as of the date hereof, based on information available to the Company on the date thereof, and the Company assumes no obligation to update any forward-looking statements.

Overview

Emergent Group Inc. ("Emergent") is the parent company of PRI Medical Technologies, Inc. ("PRI Medical"), its wholly owned and only operating subsidiary. Emergent and PRI Medical are referred to collectively hereinafter as the "Company." PRI Medical provides mobile laser/surgical services, along with technical support, on a per procedure basis to hospitals, out-patient surgery centers, and physicians' offices.

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

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.

Results of Operations

The following table sets forth certain selected unaudited condensed consolidated
statements of income data for the periods indicated in dollars and as a
percentage of total revenues. The following discussions relate to our results of
operations for the periods noted and are not necessarily indicative of the
results expected for any other interim period or any future fiscal year. In
addition, we note that the period-to-period comparison may not be indicative of
future performance.

                                                                March 31,
                                                   2008             %            2007             %

Revenue                                         $ 4,504,289           100 %   $ 4,382,808           100 %
Cost of goods sold                                2,625,834            58 %     2,567,105            59 %

Gross profit                                      1,878,455            42 %     1,815,703            41 %

Selling, general, and administrative expenses     1,123,853            25 %     1,088,224            24 %

Income from operations                              754,602            17 %       727,479            17 %

Other income (expense)                              (49,780 )          -1 %       (29,482 )          -1 %

Income before provision for income
taxes and minority interest                         704,822            16 %       697,997            16 %
Provision for income taxes                          (60,500 )          -1 %       (55,902 )          -1 %

Net income before minority interest                 644,322            15 %       642,095            15 %

Minority interest in income of consolidated
limited liability companies                        (212,422 )          -5 %      (124,985 )          -3 %
Net income                                      $   431,900            10 %   $   517,110            12 %

Comparison of the Three Months Ended March 31, 2008 to March 31, 2007

The Company generated revenues of $4,504,289 in 2008 compared to $4,382,808 in 2007. The increase in revenues in 2008 of $121,481 or 3% is primarily related to an increase in revenues from our surgical procedures. Revenues from our surgical and cosmetic procedures represented approximately 95% and 5% of total revenues for 2008 and 94% and 6% for 2007, respectively.

Cost of goods sold was $2,625,834 in 2008 or 58% of revenues for 2008 compared to $2,567,105 or 59% of revenues for 2007, respectively. Costs of goods sold primarily consist of payroll costs and related expenses for technicians, cost of disposables consumed, depreciation and amortization related to equipment, insurance costs and other operating costs incurred in rendering mobile medical equipment and technician services. The overall dollar increase in cost of goods sold of $58,729 or 2% for 2008 is generally due to increases in disposable costs, equipment maintenance costs, and to depreciation and amortization expense. Disposable costs increased as a result of a change in the mix of surgical procedures rendered to customers whereby a greater number of higher priced procedures were performed in 2008 compared to 2007, which required more expensive disposable items while depreciation and amortization expense increased due to equipment purchases. The net change in other cost categories included in cost of goods sold remained relatively consistent in 2008 compared to 2007.

Gross profit from operations was $1,878,455 in 2008 compared to $1,815,703 in 2007. Gross profit as a percentage of revenues was 42% in 2008 compared to 41% in 2007. Gross margins may vary from quarter to quarter depending on the type of surgical procedures performed due to the fact that certain procedures require more expensive disposable items. In addition, gross margin rates will vary from period to period depending upon other factors including pricing considerations, and equipment and technician utilization rates. The gross margin for 2008 is not necessarily indicative of the margins that may be realized in future periods.

Selling, general, and administrative expenses were $1,123,853 in 2008 or 25% of revenue compared to $1,088,224 in 2007 or 24% of revenue. Such costs include, among others, payroll and related expenses, insurance costs and occupancy costs. The increase in selling, general and administrative expenses of $35,629 in 2008 is primarily related to increased payroll expenses, including commissions, related to sales personnel.

Other income (expense) was $(49,780) in 2008 compared to $(29,482) in 2007. Other income (expense) includes interest income and expense, gains and losses on disposal of property and equipment, and other miscellaneous income and expense items. The net increase in other income (expense) of $(20,298) is primarily related to an increase in interest expense of $10,628, and a decrease of $9,670 in gain on disposal of property and equipment and other income in 2008 compared to 2007. The increase in interest costs relates to new equipment leases entered into during the current and prior years.

The minority interest (ownership interests held by non-affiliates) in net income of limited liability companies was $212,422 in 2008 compared to $124,985 in 2007. In 2008 and 2007 we held minority interests in ten and six entities, respectively. As of March 31, 2008 and 2007, in accordance with the Financial Accounting Standards Board Interpretation No. 46R, "Consolidation of Variable Interest Entities", the Company accounted for its equity investments in entities in which it holds a minority interest under the full consolidation method.

Net income was $431,900 in 2008 compared to $517,110 in 2007. The decrease in net income of $85,210 for 2008 compared to 2007 is attributable to the changes in revenues and expenses as discussed above. Provision for income taxes was $60,500 in 2008 compared to $55,902 in 2007. The Company has net operating loss carryforwards for federal tax purposes. The provision for income taxes of as of March 31, 2008 relates to state taxes and to federal Alternative Minimum Taxes (AMT). Basic and fully diluted net income per share for 2008 was $0.08 and $0.07, respectively, compared to basic and fully diluted net of income per share for 2007 of $0.10 and $0.09, respectively. Basic and fully diluted shares outstanding for 2008 were 5,650,498 and 5,912,217, respectively, and 5,442,961 and 5,783,891 for 2007, respectively.

Liquidity and Capital Resources

The Company maintains a revolving credit line (the "Revolver") for $1 million, which is collateralized by accounts receivable and certain fixed assets. Borrowings under the Revolver, as amended, are based on 80% of eligible receivables, as defined. In addition, the Revolver provides for an annual renewal fee equal to 1% of the capital availability amount, as defined. Borrowings under the Revolver bear interest at the prime rate (5.25% as of March 31, 2008), plus 2%. In May 2007, the Revolver automatically renewed for a one year period and the Company paid the lender a renewal fee of $10,000, which is being amortized over the loan term. As of March 31, 2008, no amounts were outstanding under the Revolver.

The Company is currently negotiating a new revolving credit agreement with a bank, which we anticipate will become effective concurrent with the expiration and/or termination of its previous credit agreement in May 2008.

The Revolver, as amended, requires the Company to maintain a tangible net worth of at least $1.5 million and requires the lender to pay the Company interest on cash collections in excess of amounts borrowed under the Revolver at a rate of 2.25% below the prime rate. As of March 31, 2008 the Company was in compliance with the terms of its revolving credit agreement.

The Company had cash and cash equivalents of $1,532,150 at March 31, 2008. Cash provided by operating activities for the three months ended March 31, 2008 was $622,385. Cash generated from operations includes net income of $431,900, depreciation and amortization of $362,873, minority interest in net income of $212,422, stock-based compensation of $29,775, decreases in accounts receivable of $21,384, deposits and other assets of $24,283 and an increase in accounts payable of $173,742; offset by increases in inventory of $39,848, prepaid expenses of $16,673 and a decrease in accrued expenses and other liabilities of $577,473. Cash used in investing activities was $212,968 and consisted of purchase of property and equipment of $52,052, cash distributions of $213,416 to members of limited liability companies, offset by contributions from new members to limited liability companies of $52,500. Cash used for financing activities was $1,920,921 and consisted of payments on lease and debt obligations of $284,604 and $25,222, respectively, and the payment of dividends on common stock of $1,686,095, offset by proceeds of $75,000 from equipment refinancing. In addition, during the three months ended March 31, 2008 we borrowed and repaid $4,500,000 under our revolving line of credit.

The Company had cash and cash equivalents of $682,989 at March 31, 2007. Cash provided by operating activities for the three months ended March 31, 2007 was $1,068,790. Cash generated from operations includes net income of $517,110, depreciation and amortization of $361,417, minority interest in net income of $124,985, decrease in inventory of $160,724, stock-based compensation expense of $21,490, decreases in deposits and other assets of $38,476, and an increase in accrued expenses of $10,229; offset by increases in accounts receivable of $90,684 and a decrease in accounts payable of $64,760. Cash used in investing activities was $244,686 related to the purchase of property and equipment of $78,831 and to cash distributions of $177,935 to members of limited liability companies; offset by net proceeds of $4,580 from the disposition of property and equipment and contributions for new members to limited liability companies of $7,500. Cash used for financing activities was $1,459,727 from payments on lease and debt obligations of $263,048 and $102,430, respectively, and payment of dividends on common stock of $1,094,249. In addition, during the three months ended March 31, 2007 we borrowed and repaid $3,928,100 under our line of credit.

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