UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    Form 10-Q


(Mark One)

 X   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
---  ACT OF 1934 for the first quarterly period ended March 31, 2004

                                       OR

     TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
---  EXCHANGE  ACT OF 1934  for  the  transition  period  from  ____________  to
     _____________


                         Commission file number: 0-27824


                                SPAR Group, Inc.
             (Exact name of registrant as specified in its charter)

         Delaware                                       33-0684451
 State of Incorporation                       IRS Employer Identification No.

                580 White Plains Road, Tarrytown, New York, 10591
          (Address of principal executive offices, including zip code)

       Registrant's telephone number, including area code: (914) 332-4100


Indicate by check whether the registrant  (1) has filed all reports  required to
be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days: [ X ] Yes [ ] No

Indicate by check whether the registrant is an accelerated  filer (as defined in
Rule 12b-2 of the Exchange Act): [ ] Yes [ X ] No



  On March 31, 2004, there were 18,858,972 shares of Common Stock outstanding.

<PAGE>

                                SPAR Group, Inc.

                                      Index

<TABLE>
<CAPTION>
<S>            <C>                                                                                     <C>
PART I:         FINANCIAL INFORMATION

Item 1:               Financial Statements

                      Consolidated Balance Sheets
                      as of March 31, 2004 and December 31, 2003.......................................3

                      Consolidated Statements of Operations for the three
                      months ended March 31, 2004 and 2003.............................................4

                      Consolidated Statements of Cash Flows for the
                      three months ended March 31, 2004 and 2003.......................................5

                      Notes to Consolidated Financial Statements.......................................6

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

Item 1:               Legal Proceedings...............................................................23

Item 2:               Changes in Securities and Use of Proceeds.......................................23

Item 3:               Defaults upon Senior Securities.................................................23

Item 4:               Submission of Matters to a Vote of Security Holders.............................23

Item 5:               Other Information...............................................................23

Item 6:               Exhibits and Reports on Form 8-K................................................24

SIGNATURES............................................................................................25
</TABLE>


                                       2
<PAGE>

PART I: FINANCIAL INFORMATION

Item 1:  Financial Statements


                                SPAR Group, Inc.

                           Consolidated Balance Sheets
                 (In thousands, except share and per share data)

<TABLE>
<CAPTION>
                                                            March 31,    December 31,
                                                              2004           2003
                                                            --------       --------
                                                           (Unaudited)      (Note)
<S>                                                         <C>           <C>
     Assets
     Current assets:
        Cash and cash equivalents                           $      -       $      -
        Accounts receivable, net                              11,401         13,942
        Prepaid expenses and other current assets                964            415
        Deferred income taxes                                  1,873          1,305
                                                            --------       --------
     Total current assets                                     14,238         15,662

     Property and equipment, net                               2,038          2,099
     Goodwill                                                  9,201          8,749
     Deferred income taxes                                       434            434
     Other assets                                                630            926
                                                            --------       --------
     Total assets                                           $ 26,541       $ 27,870
                                                            ========       ========

     Liabilities and stockholders' equity
     Current liabilities:
        Accounts payable                                    $  2,596       $  1,445
        Accrued expenses and other current liabilities         2,220          4,367
        Accrued expenses, due to affiliates                    1,576            996
        Restructuring charges, current                           685            685
        Line of credit, short-term                             3,889          4,084
                                                            --------       --------
     Total current liabilities                                10,966         11,577

     Other long-term liabilities                                 275            270

     Commitments and contingencies

     Stockholders' equity:
        Preferred stock, $.01 par value:
          Authorized shares - 3,000,000
          Issued and outstanding shares - none                     -              -
        Common stock, $.01 par value:
          Authorized shares - 47,000,000
          Issued and outstanding shares -
            18,858,972 - March 31, 2004 and
                         December 31, 2003                       189            189
        Treasury stock                                          (242)          (384)
        Accumulated other comprehensive loss                      (8)            (7)
        Additional paid-in capital                            11,175         11,249
        Retained earnings                                      4,186          4,976
                                                            --------       --------
     Total stockholders' equity                               15,300         16,023
                                                            --------       --------
     Total liabilities and stockholders' equity             $ 26,541       $ 27,870
                                                            ========       ========
</TABLE>

Note:    The Balance  Sheet at December  31,  2003,  has been  derived  from the
         audited  financial  statements at that date but does not include any of
         the  information  and  footnotes  required  by  accounting   principles
         generally   accepted  in  the  United  States  for  complete  financial
         statements.

See accompanying notes.

                                       3
<PAGE>

                                SPAR Group, Inc.
                      Consolidated Statements of Operations
                                   (unaudited)
                      (In thousands, except per share data)


                                                     Three Months Ended
                                                    --------------------
                                                    March 31,   March 31,
                                                      2004        2003
                                                    --------    --------

Net revenues                                        $ 12,803    $ 18,739
Cost of revenues                                       8,694      11,251
                                                    --------    --------
Gross profit                                           4,109       7,488

Selling, general and administrative expenses           4,967       4,943
Depreciation and amortization                            362         378
                                                    --------    --------
Operating (loss) income                               (1,220)      2,167

Interest expense                                          34          68
Other expense                                              1          38
                                                    --------    --------
(Loss) income before income taxes                     (1,255)      2,061

(Benefit) provision for income taxes                    (465)        783
                                                    --------    --------

Net (loss) income                                   $   (790)   $  1,278
                                                    ========    ========

Basic/diluted net (loss) income per common share:

  Net (loss) income - basic/diluted                 $  (0.04)   $   0.07
                                                    ========    ========

Weighted average common shares - basic                18,859      18,841
                                                    ========    ========

Weighted average common shares - diluted              18,859      19,443
                                                    ========    ========

See accompanying notes.


                                       4
<PAGE>

                                SPAR Group, Inc.

                      Consolidated Statements of Cash Flows
                           (unaudited) (In thousands)

<TABLE>
<CAPTION>
                                                                   Three Months Ended
                                                                   ------------------
                                                                   March 31,  March 31,
                                                                     2004       2003
                                                                   -------    -------
<S>                                                                <C>        <C>
Operating activities
Net (loss) income                                                  $  (790)   $ 1,278
Adjustments to reconcile net (loss) income to net cash provided
   by operating activities:
     Depreciation                                                      362        378

     Share of loss in joint venture                                      1         38
     Changes in operating assets and liabilities:
       Accounts receivable                                           2,541     (1,590)
       Prepaid expenses, other assets and deferred taxes              (821)      (418)
       Accounts payable, accrued expenses and other current
         liabilities                                                  (996)     1,175
       Accrued expenses due to affiliates                              580          -
       Restructuring charges                                             -       (816)
       Other long-term liabilities                                       5          -
                                                                   -------    -------
Net cash provided by operating activities                              882         45

Investing activities
Purchases of property and equipment                                   (301)      (421)
Acquisition of businesses                                             (453)       (38)
                                                                   -------    -------
Net cash used in investing activities                                 (754)      (459)

Financing activities
Net (payments) borrowings on line of credit                           (195)     3,469
Proceeds from employee stock purchase plan and exercised options        68         23
Payments to certain stockholders                                         -     (3,000)
Purchase of treasury stock                                               -        (78)
Translation (loss)                                                      (1)         -
                                                                   -------    -------
Net cash (used in) provided by financing activities                   (128)       414

Net change in cash                                                       -          -
Cash at beginning of period                                              -          -
                                                                   -------    -------
Cash at end of period                                              $     -    $     -
                                                                   =======    =======

Supplemental disclosure of cash flow information
Interest paid                                                      $    35    $    56
</TABLE>

See accompanying notes.

                                       5
<PAGE>


                                SPAR Group, Inc.
                   Notes to Consolidated Financial Statements
                                   (unaudited)


1.       Basis of Presentation

         The accompanying  unaudited,  consolidated financial statements of SPAR
Group, Inc., a Delaware  corporation  ("SGRP"),  and its subsidiaries  (together
with SGRP,  collectively,  the "Company" or the "SPAR Group") have been prepared
in accordance with accounting principles generally accepted in the United States
for interim  financial  information  and with the  instructions to Form 10-Q and
Article  10 of  Regulation  S-X.  Accordingly,  they do not  include  all of the
information and footnotes required by accounting  principles  generally accepted
in the United  States  for  complete  financial  statements.  In the  opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair  presentation have been included in these interim financial
statements.  However,  these  interim  financial  statements  should  be read in
conjunction with the annual consolidated  financial statements and notes thereto
for the Company as contained in  Company's  Annual  Report for 2003 on Form 10-K
for the year ended  December 31,  2003,  as filed with the  Securities  Exchange
Commission  on March 30,  2004 (the  "Company's  Annual  Report for 2003 on Form
10-K").  The  Company's  results of operations  for the interim  periods are not
necessarily indicative of its operating results for the entire year.

2.       Restructuring Charges

         In  1999,  the  Company's  Board  of  Directors   approved  a  plan  to
restructure  the  operations  of the PIA  Companies.  Restructuring  costs  were
composed of committed  costs  required to integrate the SPAR  Companies' and the
PIA Companies'  field  organizations  and the  consolidation  of  administrative
functions to achieve beneficial  synergies and costs savings.  (For the specific
definitions  of those  terms,  see Item 1 -  Business  -  GENERAL  -  Continuing
Operations - Merchandising  Services Division in the Company's Annual Report for
2003 on Form 10-K.)

         The  restructuring  reserve  relates  to  equipment  and  office  lease
settlements  and  remains  unchanged  from the  December  31,  2003  balance  of
$685,000.

                                       6
<PAGE>

                                SPAR Group, Inc.
                   Notes to Consolidated Financial Statements
                             (unaudited) (continued)


3.       Net (Loss) Income Per Share

         The following  table sets forth the  computations  of basic and diluted
(loss) income per share (in thousands, except per share data):

<TABLE>
<CAPTION>
                                                                         Three Months Ended
                                                               ----------------- ---------------------
                                                                  March 31,           March 31,
                                                                     2004                2003
                                                               ----------------- ---------------------
<S>                                                            <C>               <C>
            Numerator:

               Net (loss) income                               $       (790)     $      1,278

            Denominator:
               Shares used in basic (loss) income per
               share calculation                                     18,859            18,841

            Effect of diluted securities:
               Employee stock options                                     -               602
                                                               ----------------- ---------------------

               Shares used in diluted (loss) income per
               share calculation                                     18,859            19,443
                                                               ================= =====================

            Basic and diluted (loss) income per common share:

               Net (loss) income - basic                       $      (0.04)      $      0.07
                                 - diluted                     $      (0.04)      $      0.07

</TABLE>

         The computation of dilutive loss per share excluded anti-dilutive stock
options to purchase 501,000 shares as of March 31, 2004.

4.       Line of Credit and Long-Term Liabilities

         In January 2003, the Company and Webster  Business Credit  Corporation,
then known as Whitehall  Business Credit Corporation  ("Webster"),  entered into
the Third  Amended and  Restated  Revolving  Credit and Security  Agreement  (as
amended,  collectively,  the "Credit Facility").  The Credit Facility provides a
$15.0 million  revolving  credit  facility that matures on January 23, 2006. The
Credit  Facility  allows the Company to borrow up to $15.0  million based upon a
borrowing  base  formula  as  defined  in  the  agreement  (principally  85%  of
"eligible" accounts receivable). The Credit Facility bears interest at Webster's
"Alternative  Base  Rate"  plus  one-half  percent (a total of 4.5% per annum at
March 31, 2004),  or LIBOR plus three percent,  and is secured by all the assets
of the Company and its subsidiaries.


                                       7
<PAGE>
                                SPAR Group, Inc.
                   Notes to Consolidated Financial Statements
                             (unaudited) (continued)


         The Credit Facility contains certain  financial  covenants that must be
met by the  Company on a  consolidated  basis,  among  which are a minimum  "Net
Worth",  a  minimum  "Fixed  Charge  Coverage  Ratio",  a  capital   expenditure
limitation  and a minimum  EBITDA,  as such  terms  are  defined  in the  Credit
Facility.  The Company was in compliance with such financial  covenants at March
31,  2004,  except for the minimum  "Fixed  Charge  Coverage  Ratio" and minimum
EBITDA.  On May 17,  2004,  the Company  secured a waiver from Webster for these
covenant  violations.  As consideration for the waiver,  among other things, the
Company has agreed to reduce the revolving credit facility to $10.0 million from
$15.0 million.

         Because of the  requirement  to  maintain a lock box  arrangement  with
Webster and Webster's ability to invoke a subjective  acceleration clause at its
discretion,  borrowings  under the Credit  Facility are classified as current at
March 31, 2004, and December 31, 2003, in accordance with EITF 95-22.

         The revolving loan balances  outstanding under the Credit Facility were
$3.9  million  and $4.1  million  at March 31,  2004,  and  December  31,  2003,
respectively. There were letters of credit outstanding under the Credit Facility
of $0.7 million at March 31, 2004 and  December 31, 2003.  As of March 31, 2004,
the SPAR Group had unused availability under the Credit Facility of $1.1 million
out of the remaining maximum $11.1 million unused revolving line of credit after
reducing the borrowing base by the outstanding loans and letters of credit.

5.       Related-Party Transactions

         Mr.  Robert G. Brown,  a Director,  the  Chairman,  President and Chief
Executive  Officer and a major  stockholder  of the Company,  and Mr. William H.
Bartels,  a Director,  the Vice Chairman and a major  stockholder of the Company
(collectively,  the  "SMS  Principals"),  are  executive  officers  and the sole
stockholders  and  directors of SPAR  Marketing  Services,  Inc.  ("SMS"),  SPAR
Management Services, Inc. ("SMSI"), and SPAR Infotech, Inc. ("SIT").

         As consideration  for Webster's waiver as of March 31, 2004 (See Note 4
- Line of Credit and Long-Term  Liabilities),  the SMS Principals  have provided
personal  guarantees to Webster that the Company's  obligations  will be paid in
accordance with the terms of the Credit Facility.  However,  the guarantees from
the SMS  Principals  are limited to a maximum of $1.0  million,  with Mr.  Brown
limited to $600,000 and Mr. Bartels limited to $400,000.  These  guarantees will
remain in effect until the Company has achieved certain financial criteria.

         For the 3-month period ended March 31, 2004, SMS provided approximately
92% of the Company's field representatives  (through its independent  contractor
field  force),  and  SMSI  provided  approximately  95% of the  Company's  field
management.  Pursuant to the Amended and Restated Field Service  Agreement dated
as of January 1, 2004 (the "Field Service Agreement"), SMS provides the services
of approximately 6,000 field  representatives to the Company at its request from
time to time,  for which the Company has agreed to reimburse  SMS for all of its
costs of providing  those  services and to pay SMS a premium equal to 4% of such
costs.  Pursuant  to the terms of the  Amended  and  Restated  Field  Management
Agreement dated as of January 1, 2004 (the "Field Management  Agreement"),  SMSI
provides approximately 70 full-time national,  regional and district managers to
the Company at its request,  from time to time, for which the Company has agreed
to reimburse  SMSI for all of its costs of providing  those  services and to pay
SMSI a premium  equal to 4% of such costs,  except that for 2004 SMSI agreed (as
an accommodation to the Company) to not be paid for certain administrative costs
(which  concession  saved the  Company  approximately  $145,000  for the 3-month
period ended March 31, 2004).  The SMS Principals  were not paid any salaries as
officers of SMS or SMSI for the 3-month  period ended March 31,  2004,  so there
were no  salary  reimbursements  for them  included  in such  costs or


                                       8
<PAGE>
                                SPAR Group, Inc.
                   Notes to Consolidated Financial Statements
                             (unaudited) (continued)

premium.  However,  since SMS and SMSI are "Subchapter S" corporations,  the SMS
Principals benefit from any income of such companies allocated to them.

         SIT provided  substantially  all of the Internet  computer  programming
services to the Company for the 3-month period ended March 31, 2004. Pursuant to
the Amended and Restated  Programming and Support  Agreement dated as of January
1, 2004 (the  "Programming  and Support  Agreement"),  SIT  continues to provide
programming services to the Company at its request, from time to time, for which
the Company has agreed to pay SIT  competitive  hourly wage rates for time spent
on Company  matters and to reimburse the related  out-of-pocket  expenses of SIT
and its personnel. No hourly charges or business expenses for the SMS Principals
were  charged to the  Company  for the  3-month  period  ended  March 31,  2004.
However,  since SIT is a "Subchapter S" corporation,  the SMS Principals benefit
from any income of such company allocated to them.

         Through arrangements with the Company, SMS, SMSI and SIT participate in
various  benefit plans,  insurance  policies and similar group  purchases by the
Company,  for which the Company charges them their allocable shares of the costs
of those group  items and the actual  costs of all items paid  specifically  for
them.

         The following  transactions occurred between the SPAR Companies and the
above affiliates (in thousands):

<TABLE>
<CAPTION>
                                                                      Three Months Ended
                                                                      ------------------
                                                                      March 31,  March 31,
                                                                        2004      2003
                                                                      ------------------
<S>                                                                  <C>        <C>
               Services provided by affiliates:
                 SMS: Independent contractor field services           $6,361      $7,697
                                                                      ======      ======

                 SMSI: Field management services                      $1,354      $1,759
                                                                      ======      ======

                 SIT: Internet and computer programming services      $  381      $  406
                                                                      ======      ======


               Reimbursed costs from affiliates                       $  263      $   97
                                                                      ======      ======

              Accrued expenses due to affiliates (in thousands):
                                                                           March 31,
                                                                       2004        2003
                                                                      ------------------

               SMS                                                    $1,576      $2,030
                                                                      ======      ======
</TABLE>


                                       9
<PAGE>
                                SPAR Group, Inc.
                   Notes to Consolidated Financial Statements
                             (unaudited) (continued)

6.       Stock Options

         Statement of Financial  Accounting Standards (SFAS) No. 123, Accounting
for Stock Based  Compensation,  requires  disclosure of the fair value method of
accounting for stock options and other equity instruments.  Under the fair value
method,  compensation cost is measured at the grant date based on the fair value
of the award and is  recognized  over the service  period,  which is usually the
vesting period. The Company has chosen, under the provisions of SFAS No. 123, to
continue to account  for  employee  stock-based  transactions  under  Accounting
Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees.

         Under the  disclosure-only  provisions of SFAS No. 123,  Accounting for
Stock-Based Compensation,  as amended by SFAS 148, no compensation cost has been
recognized for the stock option grants to Company  employees.  Compensation cost
for the Company's  option grants to Company  employees has been determined based
on the fair value at the grant date  consistent  with the provisions of SFAS No.
123, the  Company's  net (loss) income and pro forma net (loss) income per share
from operations would have been reduced to the adjusted amounts  indicated below
(in thousands, except per share data):

<TABLE>
<CAPTION>
                                                                     Three Months Ended
                                                                     -------------------
                                                                    March 31,    March 31,
                                                                      2004         2003
                                                                     ------       ------
<S>                                                                  <C>          <C>
     Net (loss) income, as reported                                  $ (790)      $1,278
     Stock based employee compensation expense
       under the fair market value method                               156          315
                                                                     ------       ------
     Adjusted pro forma net (loss) income                            $ (946)      $  963


     Basic and diluted net (loss) income per share, as reported      $(0.04)      $ 0.07

     Basic and diluted adjusted pro forma net (loss) income          $(0.05)      $ 0.05
       per share, after adjustment for stock based
       employee compensation expense under the fair market
       value method
</TABLE>

         The pro forma effect on net (loss) income is not  representative of the
pro forma effect on net (loss)  income in future years  because the options vest
over several years and additional awards may be made in the future.

                                       10
<PAGE>
                                SPAR Group, Inc.
                   Notes to Consolidated Financial Statements
                             (unaudited) (continued)

         For the three months ended March 31, 2004,  there was no expense  under
the  provision of SFAS No. 123 dealing with stock options to  non-employees  for
stock  option  grants  that  were  awarded  to the  employees  of the  Company's
affiliates  resulting  from the decrease in the market  price from  December 31,
2003 to March 31,  2004.  The Company  determines  the fair value of the options
granted to non-employees  using the  Black-Scholes  valuation model and expenses
that value over the service period. Until an option is vested, the fair value of
the option continues to be updated through the vesting date. The options granted
have a ten (10) year life and vest over  four-year  periods at a rate of 25% per
year, beginning on the first anniversary of the date of grant.

7.       Treasury Stock

         As of March 31, 2004,  the Company has 48,806 shares of treasury  stock
at a cost of $242,504. During the three months ended March 31, 2004, the Company
utilized  27,250  shares of  treasury  stock for the  issuance  of common  stock
resulting  from the  exercise of stock  options.  During the three  months ended
March 31, 2003,  the Company  repurchased  22,899 shares of its common stock for
$78,327. Currently, the Company has no stock repurchase program in place.

8.       Line of Credit and Advances due from SPAR Performance  Group, Inc. (now
         called STIMULYS, Inc.); Inability to Consolidate under FIN 46

         In connection with the sale of SPAR Performance  Group, Inc.  ("SPGI"),
on June 30, 2002, the Company sold all of the stock of its subsidiary,  SPGI. In
connection  with the sale,  SPGI  entered  into a term loan  agreement  with the
Company under which SPGI borrowed $6.0 million in term loans, which due to their
speculative nature have been fully reserved.

         In  connection  with such sale,  the  Company  also agreed to provide a
discretionary  revolving  line of  credit  to SPGI not to  exceed  $2.0  million
through September 30, 2005 (the "SPGI  Revolver").  The SPGI Revolver is secured
by a  pledge  of all  the  assets  of  SPGI  and is  guarantied  by its  parent,
Performance  Holdings,  Inc. Under the SPGI Revolver terms,  SPGI is required to
deposit  all of its cash  into the  Company's  lock box with  Webster.  The SPGI
Revolver provided for advances in excess of the borrowing base through September
30, 2003.  As of October 1, 2003,  the SPGI Revolver  includes a borrowing  base
calculation  (principally 85% of "eligible" accounts  receivable).  In September
2003,  SPGI requested and the Company  agreed to provide  advances of up to $1.0
million in excess of SPGI's  borrowing  base  through  September  30,  2004.  In
December of 2003, SPAR  Performance  Group,  Inc.  changed its name to STIMULYS,
Inc.

         At March 31, 2004, there was approximately  $1.2 million advanced under
the SPGI  Revolver  and  $70,000 in  outstanding  letters  of credit,  while the
borrowing base was approximately $0.4 million.  Due to the speculative nature of
the SPGI Revolver,  the Company has a reserve of approximately  $800,000 against
the SPGI Revolver at March 31, 2004. The amount due under the SPGI Revolver, net
of the reserve, is included in other current assets.

                                       11
<PAGE>
                                SPAR Group, Inc.
                   Notes to Consolidated Financial Statements
                             (unaudited) (continued)

         In  accordance  with  FASB  Interpretation  No. 46 -  Consolidation  of
Variable Interest Entities (FIN 46), as a result of the term loans and revolving
advances,  the Company has concluded that it is the primary  beneficiary of SPGI
and is,  therefore,  required to consolidate  SPGI in its financial  statements.
However,  the Company has been unable to perform certain  accounting  procedures
necessary to include SPGI in the consolidated financial statements,  as required
by FIN 46, and has been unable to obtain the necessary  permission  from SPGI to
include that organization in the Company's consolidated financial statements. At
March  31,  2004,  the  Company's  maximum  loss  exposure  is  $470,000,  which
represents the amounts  outstanding under the revolving line of credit in excess
of the $800,000 reserve. The Company's maximum potential loss exposure resulting
from the  revolving  line of  credit  agreement  with  SPGI is  limited  to $1.2
million,  which is the $2.0 million  revolving  line of credit less the $800,000
reserve.

                                       12
<PAGE>
                                SPAR Group, Inc.


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

Forward-Looking Statements

         Statements  contained  in this  Quarterly  Report  on Form 10-Q for the
three months ended March 31, 2004 (this "Quarterly Report"), of SPAR Group, Inc.
("SGRP", and together with its subsidiaries, the "SPAR Group" or the "Company"),
include  "forward-looking  statements"  within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act, including, in particular and
without  limitation,  the  statements  contained  in the  discussions  under the
heading "Management's Discussion and Analysis of Financial Condition and Results
of  Operations".  Forward-looking  statements  involve known and unknown  risks,
uncertainties  and other factors that could cause the Company's  actual results,
performance   and   achievements,   whether   expressed   or   implied  by  such
forward-looking  statements,  to not  occur or be  realized  or to be less  than
expected. Such forward-looking statements generally are based upon the Company's
best estimates of future results, performance or achievement, current conditions
and the most recent  results of  operations.  Forward-looking  statements may be
identified  by the use of  forward-looking  terminology  such as "may",  "will",
"expect", "intend", "believe", "estimate",  "anticipate",  "continue" or similar
terms,  variations  of those terms or the  negative of those  terms.  You should
carefully consider such risks, uncertainties and other information,  disclosures
and  discussions  which  contain  cautionary  statements  identifying  important
factors that could cause actual results to differ materially from those provided
in the forward-looking statements.

         Although  the  Company   believes  that  its  plans,   intentions   and
expectations  reflected in or suggested by such  forward-looking  statements are
reasonable, it cannot assure that such plans, intentions or expectations will be
achieved  in whole or in part.  You should  carefully  review  the risk  factors
described and any other cautionary  statements contained in the Company's Annual
Report on Form 10-K for the fiscal year ended  December 31, 2003,  as filed with
the Securities and Exchange  Commission on March 30, 2004 (the "Company's Annual
Report for 2003 on Form 10-K"), and the cautionary  statements contained in this
Quarterly Report. All forward-looking  statements attributable to the Company or
persons  acting on its behalf are  expressly  qualified by the risk factors (see
Item 1 - Certain Risk Factors) and other cautionary  statements in the Company's
Annual Report for 2003 on Form 10-K and in this  Quarterly  Report.  The Company
undertakes  no  obligation  to  publicly  update or revise  any  forward-looking
statements, whether as a result of new information, future events or otherwise.

Overview

         The  Company's   operations  are  divided  into  two   divisions:   the
Merchandising   Services   Division   and  the   International   Division.   The
Merchandising  Services  Division  provides  merchandising   services,   product
demonstrations, product sampling, database marketing, teleservices and marketing
research to manufacturers and retailers with product  distribution  primarily in
mass  merchandisers,  drug chains and grocery stores in the United  States.  The
International   Division,   established   in  July  2000,   currently   provides
merchandising services in Japan, Canada, Turkey and India.

                                       13
<PAGE>
                                SPAR Group, Inc.


Merchandising Services Division

         The  Company  provides  nationwide  merchandising  and other  marketing
services to general  merchandise,  health and beauty care,  consumer goods, home
entertainment,  PC software and food  products  companies  in drug chains,  mass
merchandisers  and retail  grocery  stores in the United  States.  Merchandising
services primarily consist of regularly  scheduled dedicated routed services and
special projects provided at the store level for a specific retailer or multiple
manufacturers  primarily  under single or  multi-year  contracts or  agreements.
Services also include stand-alone, large-scale implementations such as new store
openings, new product launches,  special seasonal or promotional  merchandising,
focused  product support and product  recalls.  These services may include sales
enhancing  activities  such as ensuring  that  client  products  authorized  for
distribution  are in  stock  and on the  shelf,  adding  new  products  that are
approved  for  distribution  but not  presently on the shelf,  setting  category
shelves in accordance with approved store  schematics,  ensuring that shelf tags
are in place, checking for the overall salability of client products and setting
new and promotional  items,  placing and/or removing point of purchase and other
related  media  advertising.  Specific  in-store  services  can be  initiated by
retailers  or  manufacturers,  and  include  new  store  openings,  new  product
launches, special seasonal or promotional merchandising, focused product support
and product recalls.  In 2003, the Company added in-store product  demonstration
and in-store product sampling services to its merchandising  service  offerings.
Marketing  services  consist of database  marketing,  teleservices and marketing
research.


International Division

         In July 2000,  the  Company  established  its  International  Division,
through a wholly owned subsidiary,  SPAR Group  International,  Inc. ("SGI"), to
focus on expanding its merchandising  services business worldwide.  In May 2001,
the  Company  entered  into a 50%  owned  joint  venture  with a large  Japanese
distributor  to provide  merchandising  services  in Japan.  In June  2003,  the
Company expanded its  merchandising  services into Canada through a wholly owned
subsidiary.  In July 2003,  the Company  established  a 51% owned joint  venture
based in Istanbul to provide merchandising services throughout Turkey.

         In April  2004,  the Company  announced  the  establishment  of a joint
venture in India.  The joint venture is  headquartered in New Delhi and is owned
51% by the Company.


Critical Accounting Policies

         The  Company's  critical  accounting  policies  have been  consistently
applied  in  all   material   respects  and  address  such  matters  as  revenue
recognition,   depreciation  methods,  asset  impairment  recognition,  business
combination  accounting,   and  discontinued  business  accounting.   While  the
estimates and judgments associated with the application of these policies may be
affected by  different  assumptions  or  conditions,  the Company  believes  the
estimates and judgments  associated with the reported amounts are appropriate in
the circumstances.  Three critical accounting policies are revenue  recognition,
allowance for doubtful  accounts and sales allowance,  and internal use software
development costs.

                                       14
<PAGE>

                                SPAR Group, Inc.


         Revenue Recognition

         The Company's  services are provided under contracts or agreements that
consist primarily of service fees and per unit fee arrangements.  Revenues under
service fee  arrangements  are  recognized  when the service is  performed.  The
Company's per unit  contracts or agreements  provide for fees to be earned based
on the retail sales of client's  products to consumers.  The Company  recognizes
per unit fees in the period such amounts become determinable and are reported to
the Company.

         Allowance for Doubtful Accounts and Sales Allowance

         The Company  continually  monitors the  collectability  of its accounts
receivable based upon current customer credit  information and other information
available.  Utilizing this information, the Company has established an allowance
for  doubtful  accounts of $531,000  and $515,000 at March 31, 2004 and December
31, 2003, respectively.  The Company also recorded a sales allowance of $788,000
and $448,000 at March 31, 2004 and December 31, 2003,  respectively,  to reflect
potential customer credits.

         Internal Use Software Development Costs

         Under  the  rules of SOP 98-1,  Accounting  for the  Costs of  Computer
Software Developed or Obtained for Internal Use, the Company capitalizes certain
costs incurred in connection with developing or obtaining internal use software.
Capitalized software development costs are amortized over three years.

         The Company  capitalized  $184,651  and  $212,896  of costs  related to
software developed for internal use in the three months ended March 31, 2004 and
2003, respectively.

                                       15
<PAGE>
                                SPAR Group, Inc.


Results of Operations

Three months ended March 31, 2004 compared to three months ended March 31, 2003

       The  following  table sets forth  selected  financial  data and data as a
percentage  of net  revenues  for the periods  indicated  (in  thousands  except
percent data).

<TABLE>
<CAPTION>
                                                                                   Three Months Ended
                                                          -----------------------------------------------------------------
                                                             March 31, 2004               March 31, 2003
                                                          ----------------------      ---------------------
                                                                                                                 (Decrease)
                                                            Amount            %        Amount           %        Increase %
                                                          --------         -----      --------        -----      ----------
<S>                                                       <C>              <C>        <C>             <C>         <C>
     Net revenues                                         $ 12,803         100.0%     $ 18,739        100.0%      (31.7)%

     Cost of revenues                                        8,694          67.9%       11,251         60.0%      (22.7)%

     Selling, general and administrative expense             4,967          38.8%        4,943         26.4%        0.5%

     Depreciation and amortization                             362           2.8%          378          2.0%       (4.2)%

     Interest expense                                           34           0.3%           68          0.4%      (50.0)%

     Other expense                                               1           0.0%           38          0.2%      (97.3)%
                                                          --------         -----      --------        -----

     (Loss) income before income taxes                      (1,255)         (9.8)%       2,061         11.0%     (160.9)%

     (Benefit) provision for income taxes                     (465)         (3.6)%         783          4.2%     (159.4)%
                                                          --------         -----      --------        -----

     Net (loss) income                                    $   (790)         (6.2)%    $  1,278          6.8%     (161.8)%
                                                          ========         =====      ========        =====
</TABLE>

         Net revenues  for the three  months  ended March 31,  2004,  were $12.8
million,  compared to $18.7 million for the three months ended March 31, 2003, a
decrease  of  31.7%.  The  decrease  in net  revenues  resulted  primarily  from
decreased  project revenue from a particular  client,  reduced business from the
Company's  second  largest  customer for whom the Company will no longer provide
service  subsequent to March 31, 2004 and reduced per unit fee revenue primarily
resulting from the loss of a certain customer.

                                       16
<PAGE>
                                SPAR Group, Inc.


         One customer, a division of a major retailer, accounted for 44% and 28%
of the  Company's  net  revenues  for the three  months ended March 31, 2004 and
2003,  respectively.  This customer also accounted for approximately 47% and 42%
of accounts  receivable  at March 31, 2004 and 2003,  respectively.  In April of
2004, the customer's  parent company  announced that they have signed definitive
agreements  for the sale of this business.  There can be no assurances  that the
purchasers  will  continue to use the services of the Company.  The loss of this
business could have a material adverse effect on the Company's business, results
of operations and financial condition.

         For the three months ended March 31, 2003, a second customer  accounted
for 14% of net revenue as a result of a particular project. This project did not
recur in 2004 and, as a result,  this customer's net revenues were less than 10%
of total net  revenues  for the three  months  ended  March  31,  2004.  A third
customer  accounted  for 11% of the  Company's  net revenue for the three months
ended March 31, 2003.  This customer's net revenues were  significantly  reduced
and fell before 10% of total net  revenues  for the three months ended March 31,
2004.  Subsequent to March 31, 2004, the Company will no longer provide  service
to this customer.

         In addition,  approximately  15% and 16% of the  Company's net revenues
for the three months ended March 31, 2004 and 2003, respectively,  resulted from
merchandising services performed for manufacturers at Kmart retail stores. Kmart
filed for  protection  under the U.S.  Bankruptcy  Code in  January  of 2002 and
emerged from  bankruptcy in May of 2003.  During its time in  bankruptcy,  Kmart
closed a number of stores in the United  States.  While the Company's  customers
and the resultant  contractual  relationships are with various manufacturers and
not Kmart,  a significant  reduction of this  retailer's  stores or cessation of
this retailer's  business would negatively impact the Company.  As of August 31,
2003, one customer  discontinued  its  merchandising  programs with the Company.
Some,  but not all, of these  programs  were  performed  at Kmart  stores.  This
customer  accounted for 15% of the business  generated  from Kmart for the three
months ended March 31, 2003.

         Failure to attract new large customers could  significantly  impede the
growth of the Company's revenues,  which could have a material adverse effect on
the Company's future business, results of operations and financial condition.

         Cost of revenues from  operations  consists of in-store labor and field
management  wages,  related  benefits,  travel  and other  direct  labor-related
expenses.  Cost of revenues as a  percentage  of net  revenues was 67.9% for the
three months ended March 31, 2004,  compared to 60.0% for the three months ended
March 31, 2003.  The increase is primarily a result of certain fixed field costs
that did not decrease with the lower volume as well as higher cost programs.

         Approximately  89% and 84% of cost of revenues were  purchased from the
Company's  affiliate,  SMS, in the three  months  ended March 31, 2004 and 2003,
respectively,  and  substantially  all of the  field  management  services  were
purchased from the Company's  affiliate,  SMSI, during those periods (See note 5
to the Financial Statements in this Quarterly Report).

                                       17
<PAGE>
                                SPAR Group, Inc.


         Operating expenses include selling, general and administrative expenses
as well as depreciation and amortization.  Selling,  general and  administrative
expenses include corporate overhead, project management, information technology,
executive compensation,  human resource expenses, legal and accounting expenses.
The  following  table sets forth the  operating  expenses as a percentage of net
revenues for the time periods indicated (in millions except percent data):

<TABLE>
<CAPTION>
                                                                  Three Months Ended
                                              ---------------------------------------------------------
                                                                                           Increase
                                               March 31, 2004       March 31, 2003         (Decrease)
                                              ----------------     ----------------      --------------
                                              Amount        %      Amount        %             %
                                              ------      ----     ------      ----      --------------
<S>                                           <C>         <C>      <C>         <C>          <C>
     Selling, general and administrative      $  4.9      38.8%    $  4.9      26.4%          0.5%
     Depreciation and amortization            $  0.4       2.8%    $  0.4       2.0%         (4.2)%
</TABLE>

         Selling,  general and administrative expenses were $4.9 million for the
three months ended March 31, 2004 and 2003,  respectively.  For the three months
ended March 31, 2004, the Company reduced  selling,  general and  administrative
costs by $450,000  versus the same period in 2003.  These savings were offset by
the selling,  general and  administrative  costs  associated  with  acquisitions
during 2003.  As a result,  selling,  general and  administrative  costs for the
three months ending March 31, 2004 were consistent with the prior period.

Other Expense

         Other  expense  represents  the Company's  share in the Japanese  joint
venture  loss  totaling  approximately  $1,000 and $38,000 for the three  months
ended March 31, 2004 and 2003, respectively.

Income Taxes

         The income tax (benefit)  provision  represents a combined  federal and
state  income tax rate of 37% and 38% for the three  months ended March 31, 2004
and 2003, respectively.

Net Income

         The Company had a net loss of $0.8  million for the three  months ended
March 31,  2004,  or $0.04 per  diluted  share,  compared  to net income of $1.3
million, or $0.07 per diluted share, for the corresponding period last year.

Liquidity and Capital Resources

         In the three months ended March 31, 2004, the Company had a net loss of
$0.8  million.  Net cash provided by operating  activities  for the three months
ended March 31,  2004,  was $0.9  million,  compared  with net cash  provided by
operations  of $45,000  for the three  months  ended  March 31,  2003.  The cash
provided by operating  activities in 2004 was primarily a result of decreases in
accounts

                                       18
<PAGE>
                                SPAR Group, Inc.


receivable  and increases in accrued  expenses due to  affiliates  significantly
offset by net operating losses,  increases in prepaid expenses, other assets and
deferred  taxes and decreases in accounts  payable,  accrued  expenses and other
current liabilities.

         Net cash used in investing  activities for the three months ended March
31, 2004, was $0.8 million,  compared with net cash used in investing activities
of $0.5  million for the three  months  ended March 31,  2003.  The cash used in
investing  activities in 2004 resulted from the  acquisition  of businesses  and
purchases of property and equipment.

         Net cash used in financing  activities for the three months ended March
31,  2004,  was $0.1  million,  compared  with net cash  provided  by  financing
activities  of $0.4 million for the three months ended March 31, 2003.  The cash
used in financing  activities  in 2004 was primarily a result of net payments on
the line of credit.

         The above activity  resulted in no change in cash and cash  equivalents
for the three months ended March 31, 2004, as the Company  utilizes  excess cash
to pay down its line of credit.

         At March 31,  2004,  the Company had positive  working  capital of $3.3
million,  as compared to a positive  working capital of $4.1 million at December
31,  2003.  The  decrease in working  capital is due  primarily  to decreases in
accounts  receivable,  increases in accounts payable and accrued expenses due to
affiliates, partially offset by increases in prepaid expenses and deferred taxes
and decreases in accrued expenses. The Company's current ratio was 1.32 at March
31, 2004, and 1.35 at December 31, 2003.

         In January 2003, the Company and Webster  Business Credit  Corporation,
then known as Whitehall  Business Credit Corporation  ("Webster"),  entered into
the Third  Amended and  Restated  Revolving  Credit and Security  Agreement  (as
amended,  collectively,  the "Credit Facility").  The Credit Facility provides a
$15.0 million  revolving  credit  facility that matures on January 23, 2006. The
Credit  Facility  allows the Company to borrow up to $15.0  million based upon a
borrowing  base  formula  as  defined  in  the  agreement  (principally  85%  of
"eligible" accounts receivable). The Credit Facility bears interest at Webster's
"Alternative  Base  Rate"  plus  one-half  percent (a total of 4.5% per annum at
March 31, 2004),  or LIBOR plus three percent,  and is secured by all the assets
of the Company and its subsidiaries.

         The Credit Facility contains certain  financial  covenants that must be
met by the  Company on a  consolidated  basis,  among  which are a minimum  "Net
Worth",  a  minimum  "Fixed  Charge  Coverage  Ratio",  a  capital   expenditure
limitation  and a minimum  EBITDA,  as such  terms  are  defined  in the  Credit
Facility.  The Company was in compliance with such financial  covenants at March
31,  2004,  except for the minimum  "Fixed  Charge  Coverage  Ratio" and minimum
EBITDA.  On May 17,  2004,  the Company  secured a waiver from Webster for these
covenant  violations.  As consideration for the waiver,  among other things, the
Company has agreed to reduce the revolving credit facility to $10.0 million from
$15.0 million.

         Because of the  requirement  to  maintain a lock box  arrangement  with
Webster and Webster's ability to invoke a subjective  acceleration clause at its
discretion,  borrowings  under the Credit  Facility are classified as current at
March 31, 2004 and December 31, 2003, in accordance with EITF 95-22.

         The revolving loan balance  outstanding  under the Credit Facility were
$3.9  million  and  $4.1  million  at March  31,  2004 and  December  31,  2003,
respectively. There were letters of credit outstanding under the Credit Facility
of $0.7 million at March 31, 2004 and  December 31, 2003.  As of March 31, 2004,
the SPAR Group had unused availability under the Credit Facility of

                                       19
<PAGE>
                                SPAR Group, Inc.


$1.1 million out of the remaining maximum $11.1 million unused revolving line of
credit after  reducing the borrowing  base by  outstanding  loans and letters of
credit.

         Management  believes  that based  upon the  Company's  current  working
capital position and the existing credit facilities,  funding will be sufficient
to support ongoing  operations over the next twelve months.  However,  delays in
collection of  receivables  due from any of the Company's  major  clients,  or a
significant reduction in business from such clients, or the inability to acquire
new clients or the Company's inability to return to profitability,  could have a
material  adverse effect on the Company's cash resources and its ongoing ability
to fund operations.

         In  connection  with  the sale of SPGI on June 30,  2002,  the  Company
agreed to provide a discretionary revolving line of credit to SPGI not to exceed
$2.0 million (the "SPGI Revolver") through September 30, 2005. The SPGI Revolver
is  secured by a pledge of all the  assets of SPGI and is  guarantied  by SPGI's
parent,  Performance  Holdings,  Inc. The SPGI Revolver provided for advances in
excess of the borrowing base through  September 30, 2003. As of October 1, 2003,
the SPGI Revolver was  adjusted,  as per the  agreement,  to include a borrowing
base  calculation  (principally  85%  of  "eligible"  accounts  receivable).  In
September 2003, SPGI requested and the Company agreed to provide  advances of up
to $1.0 million in excess of the borrowing  base through  September 30, 2004. At
March 31, 2004,  there was  approximately  $1.2 million  borrowed under the SPGI
Revolver and $70,000 in outstanding letters of credit,  while the borrowing base
was approximately $0.4 million.  Under the SPGI Revolver terms, SPGI is required
to deposit all of its cash to the Company's lock box.


Certain Contractual Obligations

         The  following  table  contains a summary  of certain of the  Company's
contractual obligations by category as of March 31, 2004 (in thousands).

<TABLE>
<CAPTION>
          Contractual Obligations                                   Payments due by Period
--------------------------------------------------------------------------------------------------------------------
                                               Total       Less than 1    1-3 years     3-5 years     More than 5
                                                              year                                       years
--------------------------------------------------------------------------------------------------------------------
<S>                                             <C>           <C>        <C>              <C>             <C>
New Credit Facility                             $3,889        $3,889        $    -        $    -          $    -
--------------------------------------------------------------------------------------------------------------------
Operating Lease Obligations                      1,955           858         1,009            88               0
--------------------------------------------------------------------------------------------------------------------
Total                                           $5,844        $4,747        $1,009         $  88          $    0
--------------------------------------------------------------------------------------------------------------------
</TABLE>

         In  addition  to the above  table,  the Company had agreed to provide a
discretionary  line of  credit  to  SPGI  not to  exceed  $2.0  million  through
September 30, 2005.  Outstanding loans to SPGI under the  discretionary  line of
credit  totaled $1.2 million at March 31, 2004. The Company also had $737,337 in
outstanding Letters of Credit at March 31, 2004.

         In May 2001, the Company and Paltac, Inc. ("Paltac"),  a large Japanese
distributor, entered into a joint venture to create a Japanese company, SPAR FM.
SPAR FM  entered  into a 300  million  Yen  Revolving  Credit  Agreement  with a
Japanese bank. The bank required Paltac guarantee the outstanding balance on the
revolving credit facility. As part of the joint venture agreement, should Paltac
be required

                                       20
<PAGE>
                                SPAR Group, Inc.


to make a payment on its guarantee to the bank, then the Company has
agreed to remit to Paltac 50% of any such payment up to a maximum of 150 million
Yen or  approximately  $1.4 million.  As of March 31, 2004, SPAR FM has borrowed
100 million Yen under its Revolving Credit Agreement.  Therefore,  the Company's
current exposure to Paltac respecting  outstanding loans to SPAR FM at March 31,
2004 would be 50 million Yen or approximately $0.5 million.

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

         The Company is exposed to market risk related to the variable  interest
rate  on the  line of  credit  and the  variable  yield  on its  cash  and  cash
equivalents.  The Company's  accounting  policies for financial  instruments and
disclosures  relating  to  financial  instruments  require  that  the  Company's
consolidated  balance sheets include the following financial  instruments:  cash
and cash equivalents,  accounts receivable, accounts payable and long term debt.
The Company considers  carrying amounts of current assets and liabilities in the
consolidated financial statements to approximate their fair value because of the
relatively  short period of time between their  origination  and their  expected
realization.  The Company monitors the risks associated with interest rates. The
Company's  investment policy  objectives  require the preservation and safety of
the principal,  and the  maximization of the return on investment based upon the
safety and liquidity objectives.

       Currently,  the Company's international  operations are not material and,
therefore, the risk related to foreign currency exchange rates is not material.

       The  Company  has  no  derivative  financial  instruments  or  derivative
commodity  instruments in its cash and cash equivalents and investments.  Excess
cash is normally used to pay down its revolving line of credit.


Item 4.  Controls and Procedures

         The  Company's  Chief  Executive  Officer and Chief  Financial  Officer
evaluated the effectiveness of the Company's  disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) as of the end of the period
covering this report. Based on this evaluation,  the Chief Executive Officer and
Chief Financial  Officer  concluded that the Company's  disclosure  controls and
procedures  are  effective  to provide  reasonable  assurance  that  information
required to be  disclosed by the Company in the reports that it files or submits
under the Exchange Act is recorded,  processed,  summarized and reported  within
the time periods specified by the Securities and Exchange Commission's rules and
forms.  There were no material  changes in the Company's  internal  control over
financial reporting during the first quarter of 2004.

                                       21
<PAGE>
                                SPAR Group, Inc.


CODES OF ETHICS

         The Company has  adopted  codes of ethics that apply to its  Directors,
Officers  and  Employees.  They are  contained in the SPAR Group Code of Ethical
Conduct for its Directors,  Senior Executives and Employees Dated (as of) May 1,
2004 (the  "Ethics  Code"),  and the SPAR Group  Statement  of Policy  Regarding
Personal  Securities  Transactions in SGRP Stock Amended Non-Public  Information
Dated,  Amended and Restated as of May 1, 2004 (the  "Securities  Policy").  The
Company has filed copies of the Ethics Code and Securities Policy as Exhibits to
its  Periodic  Report  on Form  8-K,  dated  May 1,  2004,  filed  with the U.S.
Securities and Exchange Commission on May 5, 2004.

                                       22
<PAGE>
                                SPAR Group, Inc.


PART II:  OTHER INFORMATION

Item 1.        Legal Proceedings

               No change.

Item 2:        Changes in Securities and Use of Proceeds

               Item 2(a): Not applicable

               Item 2(b): Not applicable

               Item 2(c): Not applicable

               Item 2(d): Not applicable

Item 3:        Defaults upon Senior Securities

               Item 3(a):  Defaults under Indebtedness:  None.
               Item 3(b):  Defaults under Preferred Stock:  Not Applicable.

Item 4:        Submission of Matters to a Vote of Security Holders

               Not applicable.

Item 5:        Other Information

               In February  2004,  the Company's  Audit  Committee  approved the
               Field  Service   Agreement,   Field   Management   Agreement  and
               Programming  and  Support  Agreement  effective  as of January 1,
               2004,  which  amended,   restated  and  completely  replaced  the
               predecessor  agreements  pursuant to which SMS,  SMSI and SIT had
               previously provided their respective services to the Company. The
               Company has filed copies of the Field  Service  Agreement,  Field
               Management  Agreement and  Programming  and Support  Agreement as
               Exhibits  10.1,  10.2 and 10.3,  respectively,  to this quarterly
               report on Form 10-Q for the fiscal quarter ending March 31, 2004.
               These  restated   agreements   extended  the  previous   contract
               maturities  for  four  years,  strengthened  various  contractual
               provisions and continued the basic economic terms of the previous
               agreements,  except that the restated Field Management  Agreement
               provides  for a  temporary  reduction  in SMSI's fees for 2004 by
               excluding  certain  administrative  costs as described above. The
               Company's  agreements and other  arrangements  with SMS, SMSI and
               SIT are  periodically  reviewed by the Company's Audit Committee,
               which review  includes an examination of the overall  fairness of
               the  arrangements  and the  resulting  income (if any) to the SMS
               Principals.

                                       23
<PAGE>
                                SPAR Group, Inc.


Item 6:        Exhibits And Reports On Form 8-K.

       Exhibits.

         10.1     Amended  and  Restated  Field  Service   Agreement  dated  and
                  effective as of January 1, 2004, by and between SPAR Marketing
                  Services, Inc., SPAR Marketing Force, Inc., as filed herewith.

         10.2     Amended and  Restated  Field  Management  Agreement  dated and
                  effective  as  of  January  1,  2004,   by  and  between  SPAR
                  Management Services,  Inc., and SPAR Marketing Force, Inc., as
                  filed herewith.

         10.3     Amended and Restated  Programming and Support  Agreement dated
                  and  effective  as of  January 1, 2004,  by and  between  SPAR
                  InfoTech,  Inc.,  and SPAR  Marketing  Force,  Inc.,  as filed
                  herewith.

         31.1     Certification  of the CEO  pursuant to 18 U.S.C.  Section 1350
                  adopted pursuant to Section 302 of the  Sarbanes-Oxley  Act of
                  2002, as filed herewith.

         31.2     Certification  of the CFO  pursuant to 18 U.S.C.  Section 1350
                  adopted pursuant to Section 302 of the  Sarbanes-Oxley  Act of
                  2002, as filed herewith.

         32.1     Certification  of the CEO  pursuant to 18 U.S.C.  Section 1350
                  adopted pursuant to Section 906 of the  Sarbanes-Oxley  Act of
                  2002, as filed herewith.

         32.2     Certification  of the CFO  pursuant to 18 U.S.C.  Section 1350
                  adopted pursuant to Section 906 of the  Sarbanes-Oxley  Act of
                  2002, as filed herewith.

       Reports On Form 8-K.

         1.       Periodic  Report on Form 8-K,  dated March 26, 2004 filed with
                  the U.S. Securities and Exchange Commission on March 26, 2004,
                  respecting the earnings press release for 2003.

         2.       Periodic Report on Form 8-K, dated May 1, 2004, filed with the
                  U.S.  Securities  and  Exchange  Commission  on  May 5,  2004,
                  respecting  the  adoption and filing of the SPAR Group Code of
                  Ethical  Conduct  for its  Directors,  Senior  Executives  and
                  Employees  Dated  (as of) May 1,  2004,  and  the  SPAR  Group
                  Statement of Policy Regarding Personal Securities Transactions
                  in SGRP Stock and Non-Public  Information  Dated,  Amended and
                  Restated as of May 1, 2004.

         3.       Periodic  Report on Form 8-K,  dated May 14, 2004,  filed with
                  the U.S.  Securities and Exchange  Commission on May 14, 2004,
                  respecting  the earnings  press  release for the quarter ended
                  March 31, 2004.

                                       24
<PAGE>
                                SPAR Group, Inc.


                                   SIGNATURES

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  Registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.


         Date:  May 18, 2004                SPAR Group, Inc., Registrant


                                            By: /s/ Charles Cimitile
                                                --------------------
                                                Charles Cimitile
                                                Chief Financial Officer and duly
                                                authorized signatory

                                       25