--------------------------------------------------------------------------------
                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549


                                    FORM 10-Q

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(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, 2006

                                       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, Suite 600, 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 mark whether the registrant is a large  accelerated  filer, an
accelerated  filer, or a  non-accelerated  filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.).

Large Accelerated Filer [ ]    Accelerated Filer [ ]   Non-Accelerated Filer [X]

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



--------------------------------------------------------------------------------
  On March 31, 2006, there were 18,918,847 shares of Common Stock outstanding.
--------------------------------------------------------------------------------


<PAGE>


                                SPAR GROUP, INC.

                                      Index

PART I:   FINANCIAL INFORMATION

Item 1:         Financial Statements

                Consolidated Balance Sheets

                as of March 31, 2006, and December 31, 2005....................3

                Consolidated Statements of Operations for the three
                months ended March 31, 2006, and 2005..........................4

                Consolidated Statements of Cash Flows for the

                three months ended March 31, 2006, and 2005................... 5

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

Item 2:         Management's Discussion and Analysis of Financial

                Condition and Results of Operations...........................16

Item 3:         Quantitative and Qualitative Disclosures about Market Risk....23

Item 4:         Controls and Procedures.......................................24


PART II:  OTHER INFORMATION

Item 1:         Legal Proceedings.............................................25

Item 1A:        Risk Factors..................................................25

Item 2:         Unregistered Sales of Equity Securities and Use of Proceeds...25

Item 3:         Defaults upon Senior Securities...............................25

Item 4:         Submission of Matters to a Vote of Security Holders...........25

Item 5:         Other Information.............................................26

Item 6:         Exhibits  ....................................................26

SIGNATURES....................................................................27





                                       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,
                                                                       2006                  2005
                                                                   -------------         -------------
                                                                    (Unaudited)             (Note)

<S>                                                                <C>                   <C>
 ASSETS
 Current assets:
    Cash and cash equivalents                                      $       1,312         $       1,914
    Accounts receivable, net                                              11,577                10,656
    Prepaid expenses and other current assets                                565                   702
                                                                   -------------         -------------
 Total current assets                                                     13,454                13,272

 Property and equipment, net                                               1,018                 1,131
 Goodwill                                                                    798                   798
 Other assets                                                                172                   216
                                                                   -------------         -------------
 Total assets                                                      $      15,442         $      15,417
                                                                   =============         =============

 LIABILITIES AND STOCKHOLDERS' EQUITY
 Current liabilities:
    Accounts payable                                               $       1,697         $       1,597
    Accrued expenses and other current liabilities                         2,368                 2,639
    Accrued expenses due to affiliates                                     1,630                 1,190
    Restructuring charges                                                     99                    99
    Customer deposits                                                        798                 1,658
    Lines of credit                                                        2,687                 2,969
                                                                   -------------         -------------
 Total current liabilities                                                 9,279                10,152

 Other long-term liabilities                                                  10                    10
 Minority interest                                                           421                   405
                                                                   -------------         -------------
 Total liabilities                                                         9,710                10,567

 Commitments and contingencies (Note - 11)
 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 -
        18,918,847- March 31, 2006
        18,916,847 - December 31, 2005                                       189                   189
    Treasury stock                                                            (1)                   (1)
    Accumulated other comprehensive (loss) gain                              (19)                   17
    Additional paid-in capital                                            11,200                11,059
    Accumulated deficit                                                   (5,637)               (6,414)
                                                                   -------------         -------------
 Total stockholders' equity                                                5,732                 4,850
                                                                   -------------         -------------
 Total liabilities and stockholders' equity                        $      15,442         $      15,417
                                                                   =============         =============
</TABLE>


Note:    The Balance  Sheet at December 31, 2005, is an excerpt 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,
                                                  ------------------------------
                                                     2006               2005
                                                  -----------        -----------

Net revenue                                       $    15,850        $    14,521
Cost of revenue                                         9,854              8,651
                                                  -----------        -----------
Gross profit                                            5,996              5,870
Selling, general and administrative expenses            5,071              4,256
Depreciation and amortization                             213                279
                                                  -----------        -----------
Operating income                                          712              1,335
Interest expense                                           51                 40
Other income                                              178                  -
                                                  -----------        -----------
Income before provision for income taxes and
minority interest                                         839              1,295
Provision for income taxes                                 45                 15
                                                  -----------        -----------
Income before minority interest                           794              1,280
Minority interest                                          17                111
                                                  -----------        -----------
Net Income                                        $       777        $     1,169
                                                  ===========        ===========

Basic/diluted net income per common share:

  Net income- basic/diluted                       $     0.04         $      0.06
                                                  ===========        ===========

Weighted average common shares - basic                 18,918             18,859
                                                  ===========        ===========

Weighted average common shares - diluted               19,071             19,004
                                                  ===========        ===========

See accompanying notes.



                                       4
<PAGE>


                                SPAR GROUP, INC.
                      Consolidated Statements of Cash Flows
                           (in thousands) (unaudited)

<TABLE>
<CAPTION>
                                                                  THREE MONTHS ENDED MARCH 31,
                                                                 ------------------------------
                                                                    2006                2005
                                                                 ----------          ----------
<S>                                                              <C>                 <C>
OPERATING ACTIVITIES
Net cash (used in) provided by operating activities                   (184)              2,455

INVESTING ACTIVITIES
Purchases of property and equipment                                   (100)               (106)
                                                                 ----------          ----------
Net cash used in investing activities                                 (100)               (106)

FINANCING ACTIVITIES
Net payments on lines of credit                                       (282)             (2,832)
Other long-term liabilities                                              -                 (97)
Proceeds from employee stock purchase plan and exercised
   options                                                               -                  30
                                                                 ----------          ----------
Net cash used in financing activities                                 (282)             (2,899)

Translation loss                                                       (36)                (60)


Net change in cash and cash equivalents                               (602)               (610)
Cash and cash equivalents at beginning of period                     1,914                 887
                                                                 ----------          ----------
Cash and cash equivalents at end of period                       $   1,312           $     277
                                                                 ==========          ==========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid                                                    $      44           $      48
</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  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 the
Company's  Annual  Report for 2005 on Form 10-K for the year ended  December 31,
2005, as filed with the Securities and Exchange Commission on April 3, 2006 (the
"Company's  Annual  Report for 2005 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.      BUSINESS AND ORGANIZATION

        The Company is a supplier of merchandising and other marketing  services
throughout  the United  States and  internationally.  The Company also  provides
in-store  event  staffing,  product  sampling,  radio  frequency  identification
("RFID") services, technology services and marketing research.

        The Company's  operations are divided into two  divisions:  the Domestic
Merchandising  Services  Division and the International  Merchandising  Services
Division.  The Domestic  Merchandising  Services Division provides merchandising
and  marketing  services,   in-store  event  staffing,  product  sampling,  RFID
services,  technology  services  and  marketing  research to  manufacturers  and
retailers in the United States. The various services are primarily  performed in
mass merchandisers, electronics store chains, drug store chains, and convenience
and  grocery  stores.   The  International   Merchandising   Services  Division,
established in July 2000, currently provides similar merchandising and marketing
services  through a wholly owned  subsidiary in Canada,  through 51% owned joint
venture  subsidiaries in Turkey, South Africa, India and Romania and through 50%
owned  joint  ventures  in Japan and  China.  In  September  2005,  the  Company
established  a 51% owned joint  venture  subsidiary  in  Lithuania,  which began
operations  in April  2006.  In April  2006,  the  Company  also  announced  the
establishment  of a 51% owned joint venture  subsidiary  in Australia,  which is
projected  to begin  operations  in the  second  quarter  of 2006.  The  Company
continues  to  focus on  expanding  its  merchandising  and  marketing  services
business throughout the world.

3.      PRINCIPLES OF CONSOLIDATION

        The Company  consolidates its 100% owned subsidiaries.  The Company also
consolidates  its 51% owned joint venture  subsidiaries  and its 50% owned joint
ventures  where the  Company  is the  primary  beneficiary  in  accordance  with
Financial  Accounting  Standards  Board  Interpretation  Number  46, as  revised
December 2003, Consolidation of Variable Interest Entities ("FIN 46(R)").

        During 2005,  the Japan joint venture  changed from a fiscal year ending
September 30 to a calendar  year ending  December 31. The Japan joint  ventures'
operating  results for the calendar  fourth  quarter of 2005 are included in the
three months ending March 31, 2006.

        All  significant   intercompany  accounts  and  transactions  have  been
eliminated.



                                       6
<PAGE>
                                SPAR GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (UNAUDITED) (CONTINUED)

4.      NEW ACCOUNTING STANDARDS

        In May 2005, the Financial  Accounting  Standards  Board ("FASB") issued
Statement  of  Financial  Accounting  Standards  ("SFAS")  No. 154,  "Accounting
Changes and Error Conditions, a replacement of APB No. 20 and FASB Statement No.
3 ("SFAS No. 154").  SFAS No. 154 requires  retrospective  application  to prior
periods'  financial  statements of a voluntary  change in  accounting  principle
unless it is impracticable.  APB Opinion No. 20 "Accounting Changes," previously
required that most  voluntary  changes in accounting  principle be recognized by
including  in net income of the period of the  change the  cumulative  effect of
changing to the new  accounting  principle.  This Statement is effective for the
Company as of January 1, 2006.  The Company does not expect the adoption of SFAS
No. 154 will have a  significant  impact on the manner of display of its results
of operations or financial position.

        In  December  2004,  the  FASB  issued  SFAS  No.  123(R),  "Share-Based
Payment",   which   replaces   SFAS  No.  123,   "Accounting   for   Share-based
Compensation",  and  supersedes  Accounting  Principles  Board  Opinion  No. 25,
"Accounting  for  Stock  Issued to  Employees"  ("APB No.  25").  The  Statement
requires  that  the  calculated  cost  resulting  from all  share-based  payment
transactions  be  recognized  in the financial  statements.  The Statement  also
establishes   fair  value  as  the  measurement   objective  in  accounting  for
share-based   payment   arrangements  and  requires  all  entities  to  apply  a
fair-value-based  measurement  method  in  accounting  for  share-based  payment
transactions  with  employees,  except for equity  instruments  held by employee
share  ownership  plans.  The Statement was effective for the Company  beginning
January 1, 2006. The "modified  prospective"  method was required upon adoption;
accordingly, results of prior periods have not been restated. Under the modified
prospective  method, the Statement applies to new awards and to awards modified,
repurchased or cancelled  after the effective date.  Additionally,  compensation
cost for the unvested  portion of awards as of the effective date is required to
be  recognized  after the  effective  date as the awards vest.  As of January 1,
2006, the Company  implemented SFAS No. 123(R),  with  share-based  compensation
expense now reflected in the Company's  interim  statements of  operations.  See
Note 9 - Stock-Based Compensation below for additional information regarding the
adoption of SFAS No. 123(R).

5.      RESTRUCTURING CHARGES

        In July 2004, as a result of the loss of several significant clients and
the pending sale of the Company's  largest  client,  the Company  entered into a
plan to restructure and reduce its field force, as well as its selling,  general
and  administrative  cost  structure,  to reflect its lower revenue base.  These
reductions  consisted of personnel  reductions,  personnel  related expenses and
office  closings.  At March 31,  2006,  the  Company had  approximately  $99,000
reserved for future  restructure  payments that are expected to be paid in 2006.
The  Company  records   restructure   expenses  in  the  selling,   general  and
administrative section of its consolidated operating statements.



                                       7
<PAGE>

                                SPAR GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (UNAUDITED) (CONTINUED)

6.      EARNINGS PER SHARE

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

<TABLE>
<CAPTION>
                                                                           THREE MONTHS ENDED MARCH 31,
                                                                         --------------------------------
                                                                              2006                2005
                                                                         ------------        ------------
<S>                                                                      <C>                 <C>
Numerator:
   Net income                                                            $        777        $      1,169

Denominator:
   Shares used in basic earnings per share calculation                         18,918              18,859

Effect of diluted securities:
   Employee stock options                                                         153                 145
                                                                         ------------        ------------
   Shares used in diluted earnings per share calculation                       19,071              19,004
                                                                         ============        ============
   Basic and diluted earnings per common share                           $       0.04        $       0.06
                                                                         ============        ============
</TABLE>

7.      LINES OF CREDIT

        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").

        In January 2006, the Credit  Facility was amended to extend its maturity
to January  2009 and to reset the  Minimum  Fixed  Charge  Coverage  Ratio,  and
Minimum Net Worth covenants.  It further stipulated that should the Company meet
its covenants for the year ended December 31, 2005,  which it has, Webster would
release Mr.  Robert  Brown and Mr.  William  Bartels  from their  obligation  to
provide  personal  guarantees  totaling  $1.0 million and certain  discretionary
reserves. The Credit Facility also limits certain expenditures,  including,  but
not limited to, capital expenditures and other investments.

        The  basic  interest  rate  under  the  Credit   Facility  is  Webster's
"Alternative Base Rate" plus 0.75% per annum (a total of 8.5% per annum at March
31, 2006), which automatically  changes with each change made by Webster in such
Alternate Base Rate. The Company at its option,  subject to certain  conditions,
may elect to have portions of its loans under the Credit  Facility bear interest
at various  LIBOR rates plus 3.25% per annum based on fixed periods of one, two,
three or six months.  The actual average interest rate under the Credit Facility
was 8.2% per annum for the quarter ending March 31, 2006. The Credit Facility is
secured by all of the assets of the Company and its domestic subsidiaries.

        The Company was not in violation of any covenants at March 31, 2006, and
does not expect to be in violation at future measurement dates.  However,  there
can be no  assurances  that the  Company  will not be in  violation  of  certain
covenants  in the  future.  Should  the  Company be in  violation,  there are no
assurances that Webster will issue such waivers in the future.

        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


                                       8
<PAGE>
                                SPAR GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (UNAUDITED) (CONTINUED)

March 31, 2006,  and December 31, 2005, in accordance  with EITF 95-22,  Balance
Sheet Classification of Borrowings Outstanding Under Revolving Credit Agreements
That Include Both a Subjective Acceleration Clause and a Lock-Box Agreement.

        The revolving loan balances  outstanding  under the Credit Facility were
$2.1  million  and $2.4  million  at March 31,  2006,  and  December  31,  2005,
respectively. There were letters of credit outstanding under the Credit Facility
of approximately  $552,000 at March 31, 2006, and December 31, 2005. As of March
31, 2006, the SPAR Group had unused  availability  under the Credit  Facility of
$1.7 million out of the remaining  maximum $4.3 million unused revolving line of
credit after  reducing the borrowing  base by  outstanding  loans and letters of
credit.

        In 2001, the Japanese joint venture SPAR FM Japan,  Inc.  entered into a
revolving line of credit  arrangement with Japanese banks for 300 million Yen or
$2.6 million  (based upon the  exchange  rate at March 31,  2006).  At March 31,
2006, SPAR FM Japan,  Inc. had a 70 million Yen or  approximately  $600,000 loan
balance  outstanding  under the line of credit  (based upon the exchange rate at
that date). The average interest rate at March 31, 2006 and 2005 was 1.4%.

8.      RELATED-PARTY TRANSACTIONS

        Mr.  Robert G. Brown,  a Director,  the  Chairman,  President  and Chief
Executive Officer and a major stockholder of SGRP, and Mr. William H. Bartels, a
Director,  the Vice  Chairman and a major  stockholder  of SGRP,  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").

        SMS  and  SMSI  provided  approximately  99% of the  Company's  domestic
merchandising specialists in the field (through its independent contractor field
force)  for  both  the  three  months  ended  March  31,  2006  and  2005,   and
approximately 86% and 92% of the Company's  domestic field management at a total
cost to the Company of  approximately  $5.8  million  for both the three  months
ended  March 31,  2006,  and 2005,  respectively.  Pursuant  to the terms of the
Amended and Restated  Field Service  Agreement  dated as of January 1, 2004, SMS
provides  the  services  of  SMS's  merchandising   specialist  field  force  of
approximately  5,500  independent  contractors  to the Company.  Pursuant to the
terms of the Amended and Restated Field Management Agreement dated as of January
1, 2004,  SMSI  provides  approximately  44  full-time  national,  regional  and
district managers to the Company. For those services,  the Company has agreed to
reimburse SMS and SMSI for all of their costs of providing those services and to
pay SMS and SMSI each a premium equal to 4% of their respective costs. Total net
premiums (4% of SMS and SMSI costs) paid to SMS and SMSI for  services  rendered
were  approximately  $235,000  and $220,000 for the three months ended March 31,
2006, and 2005,  respectively.  The Company has been advised that Messrs.  Brown
and Bartels  are not paid any  salaries as officers of SMS or SMSI so there were
no salary  reimbursements  for them included in such costs or premium.  However,
since SMS and SMSI are  "Subchapter  S"  corporations  and are owned by  Messrs.
Brown and Bartels,  they benefit from any income of such companies  allocated to
them.

        SIT  provided  substantially  all of the Internet  computer  programming
services purchased by the Company at a total cost of approximately  $187,000 and
$210,000 for the three months ended March 31, 2006, and 2005, respectively.  SIT
provided  approximately  6,400 and 6,700 hours of Internet computer  programming
services to the Company for the three  months  ended March 31,  2006,  and 2005,
respectively.  Pursuant  to the  Amended and  Restated  Programming  and Support
Agreement  dated as of January 1, 2004,  SIT  continues  to provide  programming
services to the Company 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. The average hourly billing rate
was $29.07  and $31.27 for the three  months  ended  March 31,  2006,  and 2005,
respectively.  The Company has been advised  that no hourly  charges or business
expenses  for Messrs.  Brown and Bartels  were charged



                                       9
<PAGE>
                                SPAR GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (UNAUDITED) (CONTINUED)

to the  Company by SIT for the three  months  ended  March 31,  2006,  and 2005,
respectively. However, since SIT is a "Subchapter S" corporation and is owned by
Messrs.  Brown  and  Bartels,  they  benefit  from any  income  of such  company
allocated to them.

        In November  2004 and January  2005,  the Company  entered into separate
operating  lease   agreements   between  SMS  and  the  Company's  wholly  owned
subsidiaries,  SPAR Marketing Force, Inc. ("SMF") and SPAR Canada Company ("SPAR
Canada"). In May 2005, the Company and SMS amended the lease agreements reducing
the total  monthly  payment.  Each lease,  as  amended,  has a 36 month term and
representations,  covenants and defaults customary for the leasing industry. The
SMF lease is for  handheld  computers to be used by field  merchandisers  in the
performance of various merchandising and marketing services in the United States
and has a monthly payment of $17,891.  These handheld  computers had an original
purchase price of $632,200. The SPAR Canada lease is also for handheld computers
to be used by field  merchandisers  in the performance of various  merchandising
and  marketing  services  in Canada and has a monthly  payment of $2,972.  These
handheld  computers  had an original  purchase  price of  $105,000.  The monthly
payments, as amended, are based upon a lease factor of 2.83%.

        In March 2005,  SMF entered into an  additional  36 month lease with SMS
for handheld  computers.  The lease  factor is 2.83% and the monthly  payment is
$2,341. These handheld computers had an original purchase price of $82,727.

        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.  All  transactions  between the Company and the above  affiliates are paid
and/or collected by the Company in the normal course of business.

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

<TABLE>
<CAPTION>
                                                                         THREE MONTHS ENDED MARCH 31,
                                                                  ----------------------------------------
                                                                        2006                   2005
                                                                  -----------------      -----------------
<S>                                                                  <C>                    <C>
  Services provided by affiliates:
    Independent contractor services (SMS)                            $    4,820             $    4,781
                                                                  =================      =================
    Field management services (SMSI)                                 $      951             $      954
                                                                  =================      =================
    Handheld computer leases (SMS)                                   $       70             $       63
                                                                  =================      =================
    Internet and software program consulting services (SIT)          $      187             $      210
                                                                  =================      =================


   Accrued expenses due to affiliates (in thousands):                 MARCH 31,             DECEMBER 31,
                                                                         2006                   2005
                                                                  -----------------      -----------------

     SPAR Marketing Services, Inc.                                   $    1,630             $    1,190
                                                                  =================      =================
</TABLE>

        In addition to the above,  through the  services of Affinity  Insurance,
Ltd. ("Affinity"), the Company purchases insurance coverage for its casualty and
property  insurance  risk.  The  Company's  Chairman/CEO  and Vice Chairman own,
through SMSI, a minority (less than 5%) equity interest in Affinity.



                                       10
<PAGE>
                                SPAR GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (UNAUDITED) (CONTINUED)

9.      STOCK-BASED COMPENSATION

        As of January 1, 2006,  SFAS No. 123(R) became  effective and applicable
to the Company's accounting for its employee options. The Company had previously
followed APB No. 25 and related  interpretations in accounting for such options.
Under APB No. 25 no  compensation  expense was  recognized  by the Company  when
employee  stock  options were  granted,  as the exercise  price of the Company's
employee stock options  equaled the market price of the underlying  stock on the
date of grant. Under SFAS No. 123(R),  compensation expense is now recognized in
the Company's  financial  statements  when  employee  stock options are granted.
Share-based  compensation  cost is measured on the grant date, based on the fair
value  of the  award  calculated  at  that  date,  and is  recognized  over  the
employee's  requisite  service period,  which generally is the options'  vesting
period.  Fair value is calculated using the Black-Scholes  option pricing model.
The Black-Scholes calculation was performed for the three months ended March 31,
2006,  utilizing the methodology  and assumptions  consistent with those used in
prior  periods  under  SFAS No.  123,  which  were  disclosed  in the  Company's
previously  filed  Annual  Report on Form 10-K for the year ended  December  31,
2005.

        Share-based  compensation expense totaled  approximately $84,000 for the
three months ended March 31, 2006. Basic and diluted earnings per share impacted
by approximately $0.004 for the three month period ended March 31, 2006.

        In  2005,  under  the  disclosure-only   provisions  of  SFAS  No.  123,
Accounting for Stock-Based Compensation, as amended by SFAS 148, no compensation
cost was  recognized  for the stock option  grants to Company  employees for the
three  months  ended March 31, 2005.  If  compensation  cost for the three month
ended March 31, 2005,  had been  recognized  by the Company under the fair value
method,  the  Company's net income and pro forma net income per share would have
been reduced to the adjusted amounts  indicated below (in thousands,  except per
share data):

                                                                THREE MONTHS
                                                               ENDED MARCH 31,
                                                            --------------------
                                                                    2005
                                                            --------------------

   Net income, as reported                                    $        1,169
   Stock based employee compensation expense
     per the fair market value method                                     25
   Pro forma net income                                     --------------------
                                                              $        1,144
                                                            ====================

   Basic and diluted net income per share, as reported        $         0.06
   Basic and diluted net income per share, pro forma          $         0.06


        Under the  provision  of SFAS No. 123 dealing  with  non-employee  stock
option grants awarded to the employees of the Company's affiliates,  the Company
recorded an expense  for the three  months  ended  March 31,  2006 and 2005,  of
approximately $57,000 and $14,000 respectively.

        The  Company  determines  the  fair  value  of the  options  granted  to
employees and non-employees using the Black-Scholes valuation model and recovers
amounts previously expensed or expenses that vest 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.



                                       11
<PAGE>
                                SPAR GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (UNAUDITED) (CONTINUED)

10.     CUSTOMER DEPOSITS

        Customer  deposits  at  March  31,  2006,  were  approximately  $798,000
(approximately $405,000 from domestic operations and approximately $393,000 from
international  operations) compared to approximately  $1,658,000 at December 31,
2005  (approximately  $1,246,000  from  domestic  operations  and  approximately
$412,000 from  international  operations).  The decrease is primarily due to the
termination of a customer service agreement in March 2006.

11.     COMMITMENTS AND CONTINGENCIES

        INTERNATIONAL COMMITMENTS

        The  Company's  international  business  model is to partner  with local
merchandising  companies  and combine the  Company's  proprietary  software  and
expertise  in the  merchandising  and  marketing  services  business  with their
partner's  knowledge of the local market.  In 2001, the Company  established its
first joint  venture and has continued  this  strategy.  As of this filing,  the
Company is currently operating in Japan, Canada,  Turkey,  South Africa,  India,
Romania  and  China.   In  September   2005,  the  Company  also  announced  the
establishment  of a 51% owned joint venture  subsidiary in Lithuania which began
operations in April 2006. In April 2006, the Company announced the establishment
of a 51% owned joint  venture  subsidiary  in  Australia,  which is projected to
begin operations in the second quarter of 2006.

        Certain of these  joint  ventures  and joint  venture  subsidiaries  are
becoming profitable,  while others are either marginally profitable or operating
at a loss.  None of these  entities have excess cash  reserves.  In the event of
continued  losses,  the  Company  may be  required  to provide  additional  cash
infusions into these joint ventures and joint venture subsidiaries.

        LEGAL MATTERS

        Safeway Inc.  ("Safeway")  filed a Complaint  against PIA  Merchandising
Co., Inc. ("PIA Co."), a wholly owned subsidiary of SGRP,  Pivotal Sales Company
("Pivotal"),  a wholly owned subsidiary of PIA Co., and SGRP in Alameda Superior
Court, case no.  2001028498 on October 24, 2001,  Safeway  subsequently  amended
their Complaint twice, dropping various causes of action for breach of trust and
breach of fiduciary  duties.  Safeway's  remaining  two claims are for breach of
contract  and breach of implied  contract.  Safeway  has most  recently  alleged
monetary  damages in  principal  and  interest  of  $6,400,000  (an  increase of
$1,900,000 from the amount previously claimed) and has also demanded unspecified
costs. PIA Co. and Pivotal filed cross-claims  against Safeway on or about March
11, 2002,  and amended them on or about  October 15,  2002,  alleging  causes of
action  against  Safeway  for breach of  contract,  interference  with  economic
relationship,  unfair  trade  practices  and  unjust  enrichment  and is seeking
damages and injunctive  relief.  Mediation between the parties occurred in 2004,
but did not  result in a  settlement.  Trial  commenced  in March  2006,  and is
expected to conclude in late May or early June 2006.  PIA Co.,  Pivotal and SGRP
are vigorously  defending against Safeway's  allegations.  It is not possible at
this time to determine the  likelihood of the outcome of this lawsuit.  However,
if  Safeway  prevails  in its  claims  and PIA Co.  and  Pivotal  lose on  their
cross-claims that result could have a material adverse effect on the Company.

        In addition to the above,  the Company is a party to various other legal
actions and administrative proceedings arising in the normal course of business.
In the opinion of Company's  management,  disposition of these other matters are
not  anticipated to have a material  adverse  effect on the financial  position,
results of operations or cash flows of the Company.



                                       12
<PAGE>
                                SPAR GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (UNAUDITED) (CONTINUED)

12.     GEOGRAPHIC DATA

        A summary of the Company's net revenue,  operating income and long lived
assets by geographic  area for the three months ended March 31, 2006,  and 2005,
respectively,  and at March 31, 2006,  and December 31, 2005, are as follows (in
thousands):

<TABLE>
<CAPTION>
                                                                     THREE MONTHS ENDED MARCH 31,
                                                                -------------------------------------
                                                                     2006                    2005
                                                                -------------           -------------
<S>                                                              <C>                     <C>
   Net revenue:
   ------------
   United States                                                 $    10,818             $    10,800
   International                                                       5,032                   3,721
                                                                -------------           -------------
   Total net revenue                                             $    15,850             $    14,521
                                                                =============           =============


<CAPTION>
                                                                     THREE MONTHS ENDED MARCH 31,
                                                                -------------------------------------
                                                                     2006                    2005
                                                                -------------           -------------
<S>                                                              <C>                     <C>
   Operating income (loss):
   ------------------------
   United States                                                 $       716             $       895
   International                                                          (4)                    440
                                                                -------------           -------------
   Total operating income                                        $       712             $     1,335
                                                                =============           =============


<CAPTION>
                                                                  MARCH 31,              DECEMBER 31,
                                                                -------------           -------------
   Long lived assets:                                               2006                    2005
                                                                -------------           -------------
<S>                                                              <C>                     <C>
   United States                                                 $     1,726             $     1,799
   International                                                         262                     346
                                                                -------------           -------------
   Total long lived assets                                       $     1,988             $     2,145
                                                                =============           =============
</TABLE>

        International revenues disclosed above were based upon revenues reported
by the  Company's  100% owned  foreign  subsidiary,  its 51% owned foreign joint
venture subsidiaries and its 50% owned foreign joint ventures.  During 2005, the
Japan joint venture changed from a fiscal year ending September 30 to a calendar
year ending  December 31. Due to the change of their fiscal year,  the operating
results  reported by the Japan joint venture for the first quarter  ending March
31, 2006, included not only the operating results for the quarter,  but also the
operating  results for the calendar fourth quarter of 2005. The inclusion of the
fourth quarter  operating  results increased net revenue and operating income by
$1.3 million and $13,000,  respectively.  The joint venture in Japan contributed
17% and 9% of the  consolidated  net revenue of the Company for the three months
ended March 31, 2006, and 2005,  respectively.  For the three months ended March
31, 2006, and 2005, the wholly owned Canadian  subsidiary  contributed 7% of the
consolidated  net  revenue of the Company for both  periods.  The joint  venture
subsidiary in South Africa contributed 5% and 9% to the consolidated net revenue
of  the  Company  for  the  three  months  ended  March  31,  2006,   and  2005,
respectively.  The remaining foreign joint venture  subsidiaries  contributed 4%
and 0.5% to the consolidated net revenue for the three month period ending March
31, 2006, and 2005, respectively.


                                       13

<PAGE>

                                SPAR GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (UNAUDITED) (CONTINUED)

13.     SUPPLEMENTAL BALANCE SHEET INFORMATION

<TABLE>
                                                                            MARCH 31,        DECEMBER 31,
                                                                          ------------       ------------
Accounts receivable, net, consists of the following (in thousands):          2006               2005
                                                                          ------------       ------------

<S>                                                                       <C>                <C>
Trade                                                                     $     7,201        $     7,666
Unbilled                                                                        4,578              3,461
Non-trade                                                                         346                145
                                                                          ------------       ------------
                                                                               12,125             11,272
Less allowance for doubtful accounts                                             (548)              (616)
                                                                          ------------       ------------
                                                                          $    11,577        $    10,656
                                                                          ============       ============


<CAPTION>
                                                                            MARCH 31,        DECEMBER 31,
                                                                          ------------       ------------
Property and equipment consists of the following (in thousands):              2006               2005
                                                                          ------------       ------------

<S>                                                                       <C>                <C>
Equipment                                                                 $     5,181        $     5,202
Furniture and fixtures                                                            594                570
Leasehold improvements                                                            568                568
Capitalized software development costs                                          1,318              1,228
                                                                          ------------       ------------
                                                                                7,661              7,568
Less accumulated depreciation and amortization                                 (6,643)            (6,437)
                                                                          ------------       ------------
                                                                          $     1,018        $     1,131
                                                                          ============       ============



<CAPTION>
Accrued expenses and other current liabilities consist of the               MARCH 31,        DECEMBER 31,
following (in thousands):                                                     2006               2005
                                                                          ------------       ------------
<S>                                                                       <C>                <C>
Accrued medical and worker compensation expenses                          $       193        $       296
Taxes payable                                                                     160                490
Accrued accounting and legal expense                                              492                286
Accrued salaries payable                                                          974                937
Other                                                                             549                630
                                                                          ------------       ------------
                                                                          $     2,368        $     2,639
                                                                          ============       ============
</TABLE>

14.     FOREIGN CURRENCY RATE FLUCTUATIONS

        The  Company  has  foreign   currency   exposure   associated  with  its
international  100% owned subsidiary,  its 51% owned joint venture  subsidiaries
and its 50% owned joint  ventures.  In the three  months  ended March 31,  2006,
these  exposures  were  primarily  concentrated  in the Canadian  dollar,  South
African Rand and Japanese Yen. At March 31, 2006,  international  assets totaled
approximately $4.2 million and international  liabilities totaled  approximately
$6.8 million. For the three months ended March 31, 2006,  international revenues
totaled $5.0 million and there was an international net loss of $44,000.



                                       14
<PAGE>
                                SPAR GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (UNAUDITED) (CONTINUED)

15.     INTEREST RATE FLUCTUATIONS

        The Company is exposed to market risk related to the  variable  interest
rates on its lines of credit. At March 31, 2006, the Company's  outstanding debt
totaled  approximately $2.7 million,  which consisted of domestic  variable-rate
(8.5% per annum at that date) debt of $2.1  million and  international  variable
rate (1.4% per annum at that date) debt of  $600,000.  Based on the three months
ending March 31, 2006, average outstanding  borrowings under variable-rate debt,
a  one-percentage  point  per  annum  increase  in  interest  rates  would  have
negatively  impacted  pre-tax earnings and cash flows for the three months ended
March 31, 2006, by approximately $7,000.



                                       15
<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, 2006 (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)  THAT ARE  BASED ON THE
COMPANY'S  BEST   ESTIMATES.   IN  PARTICULAR  AND  WITHOUT   LIMITATION,   THIS
"MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS"  CONTAINS  SUCH  FORWARD-LOOKING  STATEMENTS,  WHICH ARE INCLUDED IN
(AMONG OTHER PLACES) THE  DISCUSSIONS  RESPECTING NET REVENUES FROM  SIGNIFICANT
CLIENTS,  SIGNIFICANT CHAIN WORK AND INTERNATIONAL JOINT VENTURES, FEDERAL TAXES
AND NET OPERATING  LOSS  CARRYFORWARDS,  COMMENCEMENT  OF OPERATIONS  AND FUTURE
FUNDING  OF  INTERNATIONAL  JOINT  VENTURES,   CREDIT  FACILITIES  AND  COVENANT
COMPLIANCE,   COST   SAVINGS   INITIATIVES,   LIQUIDITY   AND  SOURCES  OF  CASH
AVAILABILITY.  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",
"LIKELY", "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  CONTAINING  CAUTIONARY  STATEMENTS OR IDENTIFYING
IMPORTANT  FACTORS THAT COULD CAUSE  ACTUAL  RESULTS TO DIFFER  MATERIALLY  FROM
THOSE PROVIDED IN THE FORWARD-LOOKING STATEMENTS.

        YOU SHOULD  CAREFULLY  REVIEW THIS  MANAGEMENT  DISCUSSION  AND ANALYSIS
TOGETHER WITH THE RISK FACTORS AND OTHER CAUTIONARY  STATEMENTS CONTAINED IN THE
COMPANY'S  ANNUAL  REPORT ON FORM 10-K FOR THE FISCAL  YEAR ENDED  DECEMBER  31,
2005, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 3, 2006 (THE
"COMPANY'S  ANNUAL  REPORT FOR 2005 ON FORM 10-K"),  INCLUDING  THE RISK FACTORS
DESCRIBED  IN ITEM 1 OF THAT  ANNUAL  REPORT  UNDER THE  CAPTION  "CERTAIN  RISK
FACTORS" AND THE CHANGES (IF ANY) IN SUCH RISK  FACTORS  DESCRIBED IN ITEM IA OF
PART II OF THIS QUARTERLY REPORT (COLLECTIVELY,  "RISK FACTORS"), AS WELL AS 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 AND OTHER CAUTIONARY  STATEMENTS IN THIS
QUARTERLY REPORT AND IN THE COMPANY'S ANNUAL REPORT FOR 2005 ON FORM 10-K, WHICH
ARE INCORPORATED BY REFERENCE INTO THIS QUARTERLY  REPORT.  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.  THE
COMPANY   UNDERTAKES   NO   OBLIGATION   TO   PUBLICLY   UPDATE  OR  REVISE  ANY
FORWARD-LOOKING  STATEMENTS, OR ANY RISK FACTORS OR OTHER CAUTIONARY STATEMENTS,
WHETHER AS A RESULT OF NEW  INFORMATION,  FUTURE EVENTS OR OTHERWISE,  EXCEPT AS
REQUIRED BY LAW.

OVERVIEW
--------

        In the United States,  the Company provides  merchandising and marketing
services  to  manufacturers  and  retailers  principally  in mass  merchandiser,
electronics,  drug store,  grocery,  and other retail trade classes  through its
Domestic Merchandising Services Division. Internationally,  the Company provides
similar  in-store  merchandising  and marketing  services through a wholly owned
subsidiary in Canada,  51% owned joint  venture  subsidiaries  in Turkey,  South
Africa,  India and Romania and 50% owned joint  ventures in Japan and China.  In
September 2005, the Company  established a 51% owned joint venture subsidiary in
Lithuania, which began operations in April 2006. In April 2006, the Company also
announced  the  establishment  of  a  51%  owned  joint  venture  subsidiary  in
Australia,



                                       16
<PAGE>
                                SPAR GROUP, INC.


which is projected to begin  operations in the second  quarter of 2006.  For the
three months  ended March 31, 2006,  the Company  consolidated  Canada,  Turkey,
South  Africa,  India,  Romania,  China and Japan into the  Company's  financial
statements.

DOMESTIC MERCHANDISING SERVICES DIVISION

       The  Company's   Domestic   Merchandising   Services   Division  provides
nationwide  merchandising  and other marketing  services  primarily on behalf of
consumer product  manufacturers and retailers at mass merchandisers,  electronic
store chains, drug store chains and grocery stores.  Included in its clients are
home entertainment,  general merchandise, health and beauty care, consumer goods
and food product companies in the United States.

       Merchandising  and  marketing  services  primarily  consist of  regularly
scheduled  dedicated routed services and special projects  provided at the store
level  for  a  specific   retailer  or  single  or  multiple   manufacturers  or
distributors.  Services also include  stand-alone  large-scale  implementations.
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 and  placing  and/or
removing  point of  purchase  and  other  related  media  advertising.  Specific
in-store   services  can  be  initiated   by  retailers  or   manufacturers   or
distributors,  and  include  new  store  openings  and  existing  store  resets,
re-merchandising,  remodels and category implementations,, new product launches,
special  seasonal or  promotional  merchandising,  focused  product  support and
product  recalls.  The Company also provides  in-store  product  demonstrations,
in-store  product  sampling and other  in-store event  staffing  services,  RFID
services, technology services and marketing research services.

INTERNATIONAL MERCHANDISING SERVICES DIVISION

       In July 2000, the Company  established  its  International  Merchandising
Services  Division,  operating  through a wholly  owned  subsidiary,  SPAR Group
International,  Inc.  ("SGI"),  to  focus on  expanding  its  merchandising  and
marketing   services   business   worldwide.   The  Company  has   expanded  its
international business as follows:

                         Percent Ownership in
         Date            Subsidiary or Joint

     Established               Venture                   Location
  -------------------------------------------------------------------------
       May 2001                  50%                    Osaka, Japan
      June 2003                 100%                  Toronto, Canada
      July 2003                  51%                  Istanbul, Turkey
      April 2004                 51%                Durban, South Africa
      April 2004                 51%                  New Delhi, India
    December 2004                51%                 Bucharest, Romania
    February 2005                50%                  Hong Kong, China
    September 2005               51%                Siauliai, Lithuania

        In April 2006,  the Company also  announced the  establishment  of a 51%
owned  joint  venture  subsidiary  in  Australia,  which is  projected  to begin
operations in the second quarter of 2006.



                                       17
<PAGE>
                                SPAR GROUP, INC.


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.  Four  critical  accounting  policies are  consolidation  of
subsidiaries,  revenue  recognition,  allowance for doubtful  accounts and sales
allowances, and internal use software development costs:

        CONSOLIDATION OF SUBSIDIARIES

        The Company  consolidates its 100% owned subsidiaries.  The Company also
        consolidates its 51% owned joint venture  subsidiaries and its 50% owned
        joint  ventures  where  the  Company  is  the  primary   beneficiary  in
        accordance  with Financial  Accounting  Standards  Board  Interpretation
        Number 46, as revised December 2003,  Consolidation of Variable Interest
        Entities ("FIN 46(R)").

        REVENUE RECOGNITION

        The Company's  services are provided under contracts or agreements.  The
        Company  bills its  clients  based  upon  service  fees and per unit fee
        arrangements.  Revenues  under service fee  arrangements  are recognized
        when the service is performed.  The  Company's per unit fee  arrangement
        provides  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 ALLOWANCES

        The Company continually monitors the validity of its accounts receivable
        based upon current client credit  information  and financial  condition.
        Balances  that are  deemed to be  uncollectible  after the  Company  has
        attempted reasonable collection efforts are written off through a charge
        to the bad debt allowance and a credit to accounts receivable.  Accounts
        receivable  balances are stated at the amount that management expects to
        collect from the outstanding balances. The Company provides for probable
        uncollectible  amounts  through a charge to earnings and a credit to bad
        debt allowance based on management's assessment of the current status of
        individual  accounts.  Based on  management's  assessment,  the  Company
        established an allowance for doubtful  accounts of $548,000 and $616,000
        at March 31, 2006, and December 31, 2005, respectively.

        INTERNAL USE SOFTWARE DEVELOPMENT COSTS

        In  accordance  with SOP  98-1,  Accounting  for the  Costs of  Computer
        Software Developed or Obtained for Internal Use, the Company capitalizes
        certain  costs  associated  with  its  internally   developed  software.
        Specifically,  the  Company  capitalizes  the  costs  of  materials  and
        services  incurred in  developing  or obtaining  internal use  software.
        These  costs  include  but  are not  limited  to the  cost  to  purchase
        software,  the cost to write program code,  payroll and related benefits
        and travel expenses for those  employees who are directly  involved with
        and who devote time to its software  development  projects.  Capitalized
        software development costs are amortized over three years.

        The Company capitalized $90,000 and $97,000 of costs related to software
        developed for internal use in the three months ended March 31, 2006, and
        2005,  respectively and amortized  capitalized software of approximately
        $102,000 and  $139,000 in the three  months  ended March 31,  2006,  and
        2005, respectively.



                                       18
<PAGE>
                                SPAR GROUP, INC.


RESULTS OF OPERATIONS


THREE MONTHS ENDED MARCH 31, 2006, COMPARED TO THREE MONTHS ENDED MARCH 31, 2005
--------------------------------------------------------------------------------

        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,
                                              ----------------------------------------------------------------------
                                                                                                          Increase
                                                  2006            %            2005           %          (decrease)%
                                              ----------        ------     ----------        ------      -----------
<S>                                           <C>               <C>        <C>               <C>               <C>
Net revenues                                  $   15,850        100.0%     $   14,521        100.0%            9.2%
Cost of revenues                                   9,854         62.2           8,651         59.6            13.9
Selling, general & administrative expense          5,071         32.0           4,256         29.3            19.2
Depreciation and amortization                        213          1.3             279          1.9           (23.7)
Interest expense                                      51          0.3              40          0.3            26.1
Other income                                         178          1.1               -          -               -
                                              ----------        ------     ----------        ------
Income before income tax provision and
   minority interest                                 839          5.3           1,295          8.9           (35.2)
Provision for income taxes                            45          0.3              15          0.1           198.0
                                              ----------        ------     ----------        ------
Income before minority interest                      794          5.0           1,280          8.8           (38.0)
Minority interest                                     17          0.1             111          0.8           (84.8)
                                              ----------        ------     ----------        ------
Net income                                    $      777          4.9%     $    1,169          8.0%          (33.5)
                                              ==========        ======     ==========        ======
</TABLE>


NET REVENUES

        Net  revenues  for the three  months  ended March 31,  2006,  were $15.9
million, compared to $14.5 million for the three months ended March 31, 2005, an
increase of 9.2%.  Domestic  net revenue  for the three  months  ended March 31,
2006, was $10.9 million (including  $770,000 in non-recurring  revenues from the
termination of a service  agreement),  and was consistent with the $10.8 million
for the prior year period.  International net revenue for the three months ended
March 31, 2006, increased $1.3 million to $5.0 million from $3.7 million for the
prior year period. The increase in International net revenue of $1.3 million was
due to the  inclusion  of the  calendar  year  fourth  quarter  2005 net revenue
totaling  $1.3 million as a result of the change in the year end  reporting  for
the Japan joint venture. Changes in net revenue from the remaining international
joint  ventures were a net increase of  approximately  $2,000,  consisting of an
increase  in net  revenue in India of  approximately  $391,000,  a  decrease  of
approximately  $563,000 in South Africa due to the loss of a client in 2005, and
all other joint ventures posting an increase of $174,000.

        One  domestic  client  accounted  for 13% and 16% of the  Company's  net
revenue for the three months ended March 31, 2006, and 2005, respectively.  This
client also  accounted for  approximately  15% and 1% of accounts  receivable at
March 31, 2006, and December 31, 2005, respectively.

        A second domestic client  accounted for 12% and 17% of the Company's net
revenue for the three months ended March 31, 2006, and 2005, respectively.  This
client also  accounted for  approximately  4% and 10% of accounts  receivable at
March 31, 2006, and December 31, 2005, respectively.

        Approximately 10% of the Company's net revenue for both the three months
ended March 31, 2006, and 2005,  resulted from merchandising  services performed
for clients at a leading  domestic  electronics  chain.  Services  performed for
these clients in that electronics  chain also accounted for approximately 7% and
8%  of  accounts



                                       19
<PAGE>
                                SPAR GROUP, INC.


receivable at March 31, 2006, and December 31, 2005, respectively. The Company's
contractual  relationships  or agreements are with various  clients and not that
retail electronics chain.

        Approximately  8% and 10% of the  Company's  net  revenues for the three
months ended March 31, 2006, and 2005, respectively, resulted from merchandising
services performed for domestic clients at a leading mass  merchandising  chain.
Services   performed  for  these  clients  in  that  chain  also  accounted  for
approximately  5% and 8% of accounts  receivable at March 31, 2006, and December
31, 2005,  respectively.  The Company's contractual  relationships or agreements
are with various clients and not that retail mass merchandising chain.

       The  loss  of  these  clients,   the  loss  of  the  ability  to  provide
merchandising and marketing  services in those chains, or the failure to attract
new large clients could  significantly  decrease the Company's revenues and such
decreased  revenues  could  have a  material  adverse  effect  on the  Company's
business, results of operations and financial condition.

COST OF REVENUES

        Cost of revenues  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 62.2% for the three months ended
March 31, 2006, compared to 59.6% for the three months ended March 31, 2005. For
the first quarter  domestic cost of revenues as a percentage of net revenues was
61.9%  and  59.8%  for  the  three  months  ended  March  31,  2006,  and  2005,
respectively. The increase is primarily attributable to the mix of business with
higher cost project  revenue  accounting for a greater portion of revenue in the
three  months  ended  March  31,  2006.  Cost  of  revenues  from  International
Operations  as a  percentage  of net  revenues was 62.7% and 59.0% for the three
months ended March 31, 2006, and 2005,  respectively.  The international cost of
revenue  percentage  increase  was  primarily  attributable  to an  increase  in
competitive pricing pressures, particularly within the Canadian operations.

        Approximately  59% and 66% of the Company's cost of revenue in the three
months ended March 31, 2006,  and 2005,  respectively,  resulted  from  in-store
independent   contractor  and  field  management  services  purchased  from  the
Company's affiliates, SPAR Marketing Services, Inc. ("SMS"), and SPAR Management
Services, Inc. ("SMSI"), respectively (see Note 8 - Related-Party Transactions).

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

        Selling, general and administrative expenses include corporate overhead,
project  management,   information  technology,  executive  compensation,  human
resource, legal and accounting expenses.

        Selling,  general and administrative expenses increased by approximately
$815,000,  or 19.2%,  for the three months ended March 31, 2006, to $5.1 million
compared to $4.3 million for the three  months  ended March 31,  2005.  Domestic
selling,  general and administrative expenses, while consistent at $3.2 million,
included  litigation costs of  approximately  $350,000 and $57,000 for the three
months ended March 31, 2006, and 2005  respectively.  Internationally,  selling,
general and  administrative  expenses  increased by approximately  $793,000,  or
75.2%,  to $1.9  million  for the  three  months  ended  March  31,  2006,  from
approximately  $1.1  million  for the three  months  ended March 31,  2005.  The
increase of approximately $793,000 was primarily due to the Japan joint venture;
approximately  $554,000  resulting from the additional quarter of expense due to
the change in year-end  reporting  and  approximately  $232,000  from  increased
spending  due to a change  in the  joint  ventures'  cost  structure.  All other
International operations contributed a net increase of $7,000.



                                       20
<PAGE>
                                SPAR GROUP, INC.

DEPRECIATION AND AMORTIZATION

        Depreciation and amortization charges of approximately  $213,000 for the
three months ended March 31, 2006, were consistent with  approximately  $279,000
for those charges in the same period for 2005.


OTHER INCOME

        The Company recorded other income of $175,000 for the three months ended
March 31, 2006, resulting from the favorable settlement of a vendor lawsuit.


INCOME TAXES

        The Company  recorded an income tax  provision  of $45,000 for the three
months ended March 31, 2006.  The  provision  was  primarily  for minimum  state
taxes.  There was no provision  for federal tax for the three months ended March
31, 2006, since the Company expects to utilize net operating loss carry forwards
which are available to offset any federal taxes due.

MINORITY INTEREST

        Minority  interest of approximately  $17,000 and $111,000  resulted from
the operating profits and losses of the 51% owned joint venture subsidiaries and
the 50% owned joint  ventures for the three  months  ended March 31,  2006,  and
2005, respectively.

NET INCOME

        The Company had net income of $777,000  for the three months ended March
31, 2006, or $0.04 per diluted share,  compared to a net income of $1.2 million,
or $0.06 per diluted share, for the corresponding period last year.

LIQUIDITY AND CAPITAL RESOURCES

        In the three months  ended March 31, 2006,  the Company had a net income
of $777,000.

        Net cash used by operating  activities  for the three months ended March
31, 2006, was $184,000 compared to net cash provided by operating activities for
the three months ended March 31, 2005 of $2.5 million.  The decrease in net cash
provided in operating  activities was a result of increased accounts  receivable
and  decreases in accrued  expenses and customer  deposits  partially  offset by
increases in accrued expenses due to affiliates and accounts payable.

        Net cash used in investing activities was approximately $100,000 for the
three months ended March 31, 2006, and 2005.

        Net cash used in financing  activities  for the three months ended March
31, 2006,  was  approximately  $282,000,  compared to net cash used in financing
activities  of $2.9  million  for the three  months  ended March 31,  2005.  The
decrease  of net cash used in  financing  activities  was  primarily a result of
lower net payments on lines of credit.

        The above activity  resulted in a decrease in cash and cash  equivalents
for the three months ended March 31, 2006, of approximately $602,000.

        At March 31,  2006,  the Company had  positive  working  capital of $4.2
million,  as compared to a positive  working capital of $3.1 million at December
31, 2005.  The increase in working  capital is due  primarily to  reductions  in
lines of credit, and accounts payable, as well as an increase in cash, partially
offset by reduced  accounts  receivable  and  increases in accrued  expenses and
other current  liabilities.  The  Company's  current ratio was 1.45 at March 31,
2006, and 1.31 at December 31, 2005.



                                       21
<PAGE>
                                SPAR GROUP, INC.

        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").

        In January 2006, the Credit  Facility was amended to extend its maturity
to January  2009 and to reset the  Minimum  Fixed  Charge  Coverage  Ratio,  and
Minimum Net Worth covenants.  It further stipulated that should the Company meet
its covenants for the year ended December 31, 2005,  which it has, Webster would
release Mr.  Robert  Brown and Mr.  William  Bartels  from their  obligation  to
provide  personal  guarantees  totaling  $1.0 million and certain  discretionary
reserves. The Credit Facility also limits certain expenditures,  including,  but
not limited to, capital expenditures and other investments.

        The  basic  interest  rate  under  the  Credit   Facility  is  Webster's
"Alternative Base Rate" plus 0.75% per annum (a total of 8.5% per annum at March
31, 2006), which automatically  changes with each change made by Webster in such
Alternate Base Rate. The Company at its option,  subject to certain  conditions,
may elect to have portions of its loans under the Credit  Facility bear interest
at various  LIBOR rates plus 3.25% per annum based on fixed periods of one, two,
three or six months.  The actual average interest rate under the Credit Facility
was 8.2% per annum for the quarter ending March 31, 2006. The Credit Facility is
secured by all of the assets of the Company and its domestic subsidiaries.

        The Company was not in violation of any covenants at March 31, 2006, and
does not expect to be in violation at future measurement dates.  However,  there
can be no  assurances  that the  Company  will not be in  violation  of  certain
covenants  in the  future.  Should  the  Company be in  violation,  there are no
assurances that Webster will issue such waivers in the future.

        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, 2006,  and December 31, 2005, in accordance  with EITF 95-22,  Balance
Sheet Classification of Borrowings Outstanding Under Revolving Credit Agreements
That Include Both a Subjective Acceleration Clause and a Lock-Box Agreement.

        The revolving loan balances  outstanding  under the Credit Facility were
$2.1  million  and $2.4  million  at March 31,  2006,  and  December  31,  2005,
respectively. There were letters of credit outstanding under the Credit Facility
of approximately  $552,000 at March 31, 2006, and December 31, 2005. As of March
31, 2006, the SPAR Group had unused  availability  under the Credit  Facility of
$1.7 million out of the remaining  maximum $4.3 million unused revolving line of
credit after  reducing the borrowing  base by  outstanding  loans and letters of
credit.

        In 2001, the Japanese joint venture SPAR FM Japan,  Inc.  entered into a
revolving line of credit  arrangement with Japanese banks for 300 million Yen or
$2.6 million  (based upon the  exchange  rate at March 31,  2006).  At March 31,
2006, SPAR FM Japan,  Inc. had a 70 million Yen or  approximately  $600,000 loan
balance  outstanding  under the line of credit  (based upon the exchange rate at
that date). The average interest rate at March 31, 2006 and 2005 was 1.4%.

        The  Company's  international  business  model is to partner  with local
merchandising  companies  and combine the  Company's  proprietary  software  and
expertise  in the  merchandising  and  marketing  services  business  with their
partner's  knowledge of the local market.  In 2001, the Company  established its
first joint  venture and has continued  this  strategy.  As of this filing,  the
Company is currently operating in Japan, Canada,  Turkey,  South Africa,  India,
Romania,  China,  Lithuania and Australia.  In September  2005, the Company also
announced



                                       22
<PAGE>
                                SPAR GROUP, INC.


the  establishment  of a 51% owned joint venture  subsidiary in Lithuania  which
will begin  operations in April 2006. In April 2006,  the Company  announced the
establishment  of a 51% owned joint venture  subsidiary  in Australia,  which is
projected to begin operations in the second quarter of 2006.

        Certain of these joint  ventures and joint venture  subsidiaries  are or
are  becoming  profitable,  while  others are either  marginally  profitable  or
operating at a loss.  None of these entities have excess cash  reserves.  In the
event of  continued  losses,  the Company may be required to provide  additional
cash infusions into these joint ventures and joint venture subsidiaries.

        Management believes that based upon the results of Company's cost saving
initiatives and the existing  credit  facilities,  sources of cash  availability
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  remain
profitable,  each could have a material  adverse  effect on the  Company's  cash
resources and its ongoing ability to fund operations.

CERTAIN CONTRACTUAL OBLIGATIONS

        The  following  table  contains a summary  of  certain of the  Company's
contractual obligations by category as of March 31, 2006 (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>
Credit Facility                                 $2,687        $2,687       $     -       $     -         $     -
--------------------------------------------------------------------------------------------------------------------
Operating Lease Obligations                      1,597           858           693            46               -
--------------------------------------------------------------------------------------------------------------------
Total                                           $4,284        $3,545       $   693       $    46         $     -
--------------------------------------------------------------------------------------------------------------------
</TABLE>


        The Company also had  approximately  $552,000 in outstanding  Letters of
Credit at March 31, 2006.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        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 lines of credit.
The Company carries those current assets and liabilities at their stated or face
amounts in its consolidated financial statements,  as the Company believes those
amounts  approximate  the fair value for these items  because of the  relatively
short period of time between  origination of the instrument,  asset or liability
and their  expected  realization  or  payment.  The Company  monitors  the risks
associated  with interest  rates and financial  instrument,  asset and liability
positions.  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.

        The Company is exposed to market risk related to the  variable  interest
rates on its lines of credit. At March 31, 2006, the Company's  outstanding debt
totaled  approximately $2.7 million,  which consisted of domestic  variable-rate
(8.5% per annum at that date) debt of $2.1  million and  international  variable
rate (1.4% per annum at that date) debt of  $600,000.  Based on the three months
ending March 31, 2006, average outstanding  borrowings under variable-rate debt,
a  one-percentage  point  per  annum  increase  in  interest  rates  would  have
negatively  impacted  pre-tax earnings and cash flows for the three months ended
March 31, 2006, by approximately $7,000.



                                       23
<PAGE>
                                SPAR GROUP, INC.

        The  Company  has  foreign   currency   exposure   associated  with  its
international  100% owned subsidiary,  its 51% owned joint venture  subsidiaries
and its 50% owned joint  ventures.  In the three  months  ended March 31,  2006,
these  exposures  were  primarily  concentrated  in the Canadian  dollar,  South
African Rand and Japanese Yen. At March 31, 2006,  international  assets totaled
approximately $4.2 million and international  liabilities totaled  approximately
$6.8 million. For the three months ended March 31, 2006,  international revenues
totaled $5.0 million and there was an international net loss of $44,000.

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 significant  changes in the Company's internal controls or
in other factors that could significantly affect these controls during the three
months  covered by this  report or from the end of the  reporting  period to the
date of this Form 10-Q.

        The Company has  established a plan for its domestic  internal  controls
over financial reporting as required by Section 404 of the Sarbanes-Oxley Act of
2002 and has begun to document and test them.



                                       24
<PAGE>
                                SPAR GROUP, INC.


PART II:  OTHER INFORMATION

ITEM 1.         LEGAL PROCEEDINGS

                Safeway  Inc.   ("Safeway")   filed  a  Complaint   against  PIA
        Merchandising  Co., Inc. ("PIA Co."), a wholly owned subsidiary of SGRP,
        Pivotal Sales Company ("Pivotal"), a wholly owned subsidiary of PIA Co.,
        and SGRP in Alameda Superior Court,  case no.  2001028498 on October 24,
        2001,  Safeway  subsequently  amended their  Complaint  twice,  dropping
        various  causes of action for  breach of trust and  breach of  fiduciary
        duties.  Safeway's  remaining  two claims are for breach of contract and
        breach of implied  contract.  Safeway has most recently alleged monetary
        damages  in  principal  and  interest  of  $6,400,000  (an  increase  of
        $1,900,000  from the amount  previously  claimed) and has also  demanded
        unspecified  costs.  PIA Co.  and  Pivotal  filed  cross-claims  against
        Safeway on or about March 11, 2002, and amended them on or about October
        15,  2002,  alleging  causes of action  against  Safeway  for  breach of
        contract,   interference  with  economic   relationship,   unfair  trade
        practices and unjust  enrichment  and is seeking  damages and injunctive
        relief.  Mediation  between  the parties  occurred in 2004,  but did not
        result in a settlement.  Trial  commenced in March 2006, and is expected
        to  conclude in late May or early June 2006.  PIA Co.,  Pivotal and SGRP
        are  vigorously  defending  against  Safeway's  allegations.  It is  not
        possible at this time to determine the likelihood of the outcome of this
        lawsuit.  However,  if  Safeway  prevails  in its claims and PIA Co. and
        Pivotal  lose on their  cross-claims  that result  could have a material
        adverse effect on the Company.

                There have been no other new reportable  proceedings or material
        developments  in  previously  reported  proceedings  since the Company's
        Annual Report on Form 10-K for the fiscal year ended  December 31, 2005,
        as filed with the  Securities  and Exchange  Commission on April 3, 2006
        (the "Company's Annual Report for 2005 on Form 10-K").

ITEM 1A.        RISK FACTORS

                The  Company's  Annual  Report  for 2005 on Form 10-K  describes
        various risk factors  applicable  to the Company and its  businesses  in
        Item 1 under the caption "Certain Risk Factors",  which risk factors are
        incorporated by reference into this Quarterly Report. There have been no
        material  changes in the  Company's  risk  factors  since the  Company's
        Annual Report for 2005 on Form 10-K.

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

               Item 2(a): Not applicable
               -------------------------
               Item 2(b): Not applicable
               -------------------------
               Item 2(c): 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.



                                       25
<PAGE>
                                SPAR GROUP, INC.


ITEM 5:    OTHER INFORMATION

               Not applicable.

ITEM 6:    EXHIBITS

        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.



                                       26
<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 15, 2006               SPAR Group, Inc., Registrant


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






                                       27