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

                                   FORM 10-QSB

(Mark One)

[X]      QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934

                 For the quarterly period ended October 31, 2005

[ ]      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

             For the transition period from ________ to ___________.

                         Commission file number: 0-9483

                        SPARTA COMMERCIAL SERVICES, INC.
             (Exact name of registrant as specified in its charter)


           NEVADA                                               30-0298178
(State or other jurisdiction of                               (IRS Employer
 incorporation or organization)                            Identification No.)

                 462 Seventh Ave, 20th Floor, New York, NY 10018
                    (Address of principal executive offices)

                                 (212) 239-2666
                           (Issuer's telephone number)

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

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

As of October 31, 2005, we had 87,834,921 shares of common stock issued and
outstanding.

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

<PAGE>

                        SPARTA COMMERCIAL SERVICES, INC.

                                   FORM 10-QSB
                     FOR THE QUARTER ENDED OCTOBER 31, 2005

                                TABLE OF CONTENTS
                                                                            Page

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements (Unaudited)                                     3

         Condensed Consolidated Balance Sheets as of October 31, 2005
         and April 30, 2005                                                   3

         Condensed Consolidated Statements of Operations
         for the Three and Six Months Ended October 31, 2005 and 2004         4

         Condensed Consolidated Statements of Cash Flows
         for the Six Months Ended October 31, 2005 and 2004                   5

         Notes to Unaudited Condensed Consolidated Financial Statements       6

Item 2.  Management's Discussion and Analysis of Financial Condition,
         Results of Operations and Plan of Operation                         12

Item 3.  Controls and Procedures                                             20

PART II. OTHER INFORMATION

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds         21

Item 6.  Exhibits                                                            22

Signatures                                                                   23




                                       2
<PAGE>


PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                        SPARTA COMMERCIAL SERVICES, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                     October 31,      April 30,
                                                                        2005            2005
                                                                    ------------    ------------
                                                                     (Unaudited)
<S>                                                                 <C>             <C>
ASSETS

Current assets:
    Cash and cash equivalents                                       $     19,740    $    108,365
    Lease payments receivable, current portion                            80,486          14,764
    Prepaid expenses                                                      90,000            --
    Other current assets                                                   6,034           6,700
                                                                    ------------    ------------

Total current assets                                                     196,260         129,829

Motorcycles and other vehicles under operating leases, net of
    accumulated depreciation of $28,364 and $13,392, respectively        259,112          99,886

Property and equipment, net of accumulated depreciation and
    amortization of $33,665 and $15,378, respectively                    119,631         106,809

Lease payments receivable, net of current portion                        205,027          21,521
Deposits                                                                 155,479          48,967
                                                                    ------------    ------------

Total assets                                                        $    935,509    $    407,012
                                                                    ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
    Accounts payable and accrued expenses                           $  1,224,019    $    509,936
    Notes payable                                                         17,605         300,000
    Deferred revenue                                                      78,548          23,100
    Due to related party                                                  25,000          25,000
                                                                    ------------    ------------

Total current liabilities                                              1,345,172         858,036

Notes payable, long term portion                                          86,686            --
                                                                    ------------    ------------

Total liabilities                                                      1,431,858         858,036
                                                                    ------------    ------------

Stockholders' equity (deficit):
    Preferred stock, $0.001 par value; 10,000,000 shares
      authorized of which 35,850 shares have been designated
      as Series A convertible preferred stock, with a stated
      value of $100 per share, 35,850 and 18,100 shares
      issued and outstanding, respectively                             3,585,000       1,810,000
    Common stock, $0.001 par value; 340,000,000 shares
      authorized, 87,834,921 and 86,005,415 shares issued
      and outstanding, respectively                                       87,835          86,005
    Common stock subscribed                                              180,000            --
    Additional paid-in capital                                         7,216,915       3,930,629
    Deferred compensation                                               (355,500)           --
    Accumulated deficit                                              (11,210,599)     (6,277,658)
                                                                    ------------    ------------

Total stockholders' equity (deficit)                                    (496,349)       (451,024)
                                                                    ------------    ------------

Total liabilities and stockholders' equity (deficit)                $    935,509    $    407,012
                                                                    ============    ============
</TABLE>

    The accompanying notes are an integral part of these unaudited condensed
                       consolidated financial statements.

                                       3
<PAGE>

                        SPARTA COMMERCIAL SERVICES, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
          FOR THE THREE AND SIX MONTHS ENDED OCTOBER 31, 2005 AND 2004
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                       For The Three Months           For The Six Months
                                                         ended October 31,             ended October 31,
                                                     2005            2004            2005            2004
                                                 ------------    ------------    ------------    ------------
<S>                                              <C>             <C>             <C>             <C>

Revenue                                          $     30,295    $     21,464    $     47,621    $     21,464
                                                 ------------    ------------    ------------    ------------

Operating expenses:
    General and administrative                        910,737         371,203       1,497,469         784,620
    Depreciation and amortization                      23,654           7,631          35,887           7,659
                                                 ------------    ------------    ------------    ------------

Total operating expenses                              934,391         378,834       1,533,356         792,279

Loss from operations                                 (904,096)       (357,370)     (1,485,735)       (770,815)

Other expense:
    Interest expense and financing cost, net         (925,961)           --        (1,583,214)           --
    Loss on sale of asset                                --              --            (6,500)           --
                                                 ------------    ------------    ------------    ------------

Net loss                                           (1,830,057)       (357,370)     (3,075,449)       (770,815)

Preferred dividend                                     54,217            --         1,857,492            --
                                                 ------------    ------------    ------------    ------------

Net loss attributed to common stockholders       $ (1,884,274)   $   (357,370)   $ (4,932,941)   $   (770,815)
                                                 ============    ============    ============    ============

Basic and diluted loss per share                 $      (0.02)   $      (0.02)   $      (0.04)   $      (0.04)
                                                 ============    ============    ============    ============

Basic and diluted loss per share attributed to
    common stockholders                          $      (0.02)   $      (0.02)   $      (0.06)   $      (0.04)
                                                 ============    ============    ============    ============

Weighted average shares outstanding                87,040,454      20,000,000      86,555,857      20,000,000
</TABLE>

    The accompanying notes are an integral part of these unaudited condensed
                       consolidated financial statements.

                                       4
<PAGE>

                        SPARTA COMMERCIAL SERVICES, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE SIX MONTHS ENDED OCTOBER 31, 2005 AND 2004
                                   (UNAUDITED)

                                                       2005           2004
                                                   -----------    -----------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                           $(3,075,449)   $  (770,815)
Adjustments to reconcile net loss to net cash
  used in operating activities:
    Depreciation and amortization                       35,887          7,659
    Amortization of deferred revenue                    (6,600)          --
    Amortization of deferred compensation              118,500           --
    Stock issued for services                           85,228           --
    Stock based finance cost                           973,607           --
    Loss on sale of assets                               6,500           --
Changes in operating assets and liabilities:
  (Increase) decrease in:
    Lease payments receivable                          (41,167)       (63,500)
    Prepaid expenses                                   (90,000)          --
    Other current assets                                   666        (10,695)
    Deposits                                          (106,512)          --
  Increase (decrease) in:
    Accounts payable and accrued expenses              644,371        250,342
    Deferred revenue                                    62,048         86,033
                                                   -----------    -----------

Net cash used in operating activities               (1,392,921)      (500,976)
                                                   -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of asset                             25,000           --
Cost of asset sold                                     (31,500)          --
Payments for motorcycles and other vehicles           (176,826)       (81,696)
Investment in leases                                  (208,061)          --
Purchases of property and equipment                    (31,109)       (45,894)
Net proceeds from marketable securities                   --           13,379
                                                   -----------    -----------

Net cash used by investing activities                 (422,496)      (114,211)
                                                   -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of preferred stock, net           1,592,517        585,000
Repayment of affiliate advances                           --          (23,885)
Proceeds from notes                                    104,340         75,000
Payments on notes                                     (150,049)          --
Common stock subscription                              180,000           --
Payments for fractional shares                             (16)          --
                                                   -----------    -----------

Net cash provided by financing activities            1,726,792        636,115
                                                   -----------    -----------

Net (decrease) increase in cash                        (88,625)        20,928

Cash and cash equivalents, beginning of year       $   108,365         11,973
                                                   -----------    -----------

Cash and cash equivalents, end of year             $    19,740    $    32,901
                                                   ===========    ===========

Cash paid for:
  Interest                                         $    10,424    $      --
  Income taxes                                            --             --

    The accompanying notes are an integral part of these unaudited condensed
                       consolidated financial statements.

                                       5
<PAGE>

                        SPARTA COMMERCIAL SERVICES, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                OCTOBER 31, 2005
                                   (UNAUDITED)


NOTE A - SUMMARY OF ACCOUNTING POLICIES

A summary of the significant  accounting  policies applied in the preparation of
the accompanying financial statements follows.

Basis of Presentation

The accompanying  unaudited  consolidated financial statements as of October 31,
2005 and for the six month  periods  ended  October  31, 2005 and 2004 have been
prepared by the Company  pursuant to the rules and regulations of the Securities
and  Exchange  Commission,   including  Form  10-QSB  and  Regulation  S-B.  The
information  furnished  herein  reflects all  adjustments  (consisting of normal
recurring  accruals and  adjustments),  which are, in the opinion of management,
necessary to fairly present the operating  results for the  respective  periods.
Certain  information  and  footnote   disclosures  normally  present  in  annual
financial statements prepared in accordance with accounting principles generally
accepted  in the United  States of America  have been  omitted  pursuant to such
rules and regulations.  The company  believes that the disclosures  provided are
adequate to make the  information  presented  not  misleading.  These  financial
statements should be read in conjunction with the audited  financial  statements
and  explanatory  notes for the year ended  April 30, 2005 as  disclosed  in the
Company's 10-KSB for that year as filed with the SEC, as it may be amended.

The  results  of the six  months  ended  October  31,  2005 are not  necessarily
indicative  of the  results to be expected  for the full year  ending  April 30,
2006.

The unaudited condensed  consolidated  financial statements include the accounts
of the Company and its wholly owned subsidiary, Sparta Commercial Services, LLC.
All significant  intercompany  transactions and balances have been eliminated in
the consolidated financial statements.

Estimates

The  preparation  of the  financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions that affect certain  reported amounts and disclosures.  Accordingly,
actual results could differ from those estimates.

Revenue Recognition

The Company  originates leases on new and used motorcycles and other powersports
vehicles from  motorcycle  dealers  throughout the United States.  The Company's
leases are accounted for as either operating leases or direct financing  leases.
At the inception of operating  leases,  no lease  revenue is recognized  and the
leased  motorcycles,  together with the initial direct costs of originating  the
lease, which are capitalized,  appear on the balance sheet as "motorcycles under
operating  leases-net"  The  capitalized  cost of each motorcycle is depreciated
over the lease term, on a straight-line  basis,  down to the Company's  original
estimate of the  projected  value of the  motorcycle at the end of the scheduled
lease term (the  "Residual").  Monthly lease  payments are  recognized as rental
income.  Direct  financing  leases are recorded at the gross amount of the lease
receivable,  and unearned  income at lease inception is amortized over the lease
term.

                                       6
<PAGE>

                        SPARTA COMMERCIAL SERVICES, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                OCTOBER 31, 2005
                                   (UNAUDITED)


NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)

Revenue Recognition (continued)

The  Company  realizes  gains and  losses as the  result of the  termination  of
leases, both at and prior to their scheduled termination, and the disposition of
the related  motorcycle.  The  disposal of  motorcycles,  which reach  scheduled
termination  of a  lease,  results  in a gain or loss  equal  to the  difference
between  proceeds  received from the  disposition  of the motorcycle and its net
book value.  Net book value  represents  the residual  value at scheduled  lease
termination.  Lease  terminations  that occur prior to  scheduled  maturity as a
result of the lessee's  voluntary  request to purchase the vehicle have resulted
in net gains,  equal to the excess of the price  received over the  motorcycle's
net book value.

Early lease terminations also occur because of (i) a default by the lessee, (ii)
the physical loss of the motorcycle, or (iii) the exercise of the lessee's early
termination.  In those instances,  the Company receives the proceeds from either
the resale or  release  of the  repossessed  motorcycle,  or the  payment by the
lessee's insurer.  The Company records a gain or loss for the difference between
the proceeds received and the net book value of the motorcycle.

The  Company  charges  fees to  manufacturers  and other  customers  related  to
creating a private label version of the Company's  financing  program  including
web access, processing credit applications, consumer contracts and other related
documents and  processes.  Fees received are amortized and booked as income over
the length of the  contract.  At October 31,  2005,  the  Company  had  recorded
deferred revenue related to these contracts of $16,500.

Net Loss Per Share

The Company uses SFAS No. 128,  "Earnings Per Share" for  calculating  the basic
and diluted loss per share. We compute basic loss per share by dividing net loss
and net loss attributable to common  shareholders by the weighted average number
of common  shares  outstanding.  Diluted  loss per share is computed  similar to
basic loss per share  except that the  denominator  is  increased to include the
number of  additional  common  shares  that would have been  outstanding  if the
potential  shares had been issued and if the  additional  shares were  dilutive.
Common equivalent shares are excluded from the computation of net loss per share
if their effect is anti-dilutive.

Per share  basic  and  diluted  net loss  attributable  to  common  stockholders
amounted  to $0.02 and $0.02 for the three  months  ended  October  31, 2005 and
2004,  respectively,  and $0.06 and $0.04 for the six months  ended  October 31,
2005  and  2004,  respectively.  For the six  months  ended  October  31,  2005,
37,468,324  potential  shares were  excluded  from the shares used to  calculate
diluted  earnings per share as their  inclusion would reduce net loss per share.
There were no potentially dilutive securities at October 31, 2004.

Reclassifications

Certain  reclassifications  have been made to conform to prior  periods' data to
the  current  presentation.  These  reclassifications  had no effect on reported
losses.

                                        7
<PAGE>


                        SPARTA COMMERCIAL SERVICES, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                OCTOBER 31, 2005
                                   (UNAUDITED)


NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)

Stock Based Compensation

In December  2003,  the FASB issued SFAS No. 148,  "Accounting  for  Stock-Based
Compensation-Transition and Disclosure-an amendment of SFAS 123." This statement
amends SFAS No.  123,  "Accounting  for  Stock-Based  Compensation,"  to provide
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee  compensation.  In addition,  this
statement  amends  the  disclosure  requirements  of  SFAS  No.  123 to  require
prominent  disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the effect of the
method used on reported  results.  The Company has chosen to continue to account
for stock-based  compensation using the intrinsic value method prescribed in APB
Opinion No. 25 and related  interpretations.  Accordingly,  compensation expense
for stock  Warrants is measured as the excess,  if any, of the fair market value
of the Company's  stock at the date of the grant over the exercise  price of the
related option. The Company has adopted the annual disclosure provisions of SFAS
No. 148 in its financial reports from January 1, 2003. The Company had no awards
of stock-based employee  compensation during the six month periods ended October
31, 2005 or 2004.

On December 16, 2004,  the Financial  Accounting  Standards  Board (FASB) issued
FASB  Statement  No.  123R  (revised  2004),  "Share-Based  Payment"  which is a
revision of FASB Statement No. 123,  "Accounting for Stock-Based  Compensation".
Statement 123R  supersedes APB opinion No. 25,  "Accounting  for Stock Issued to
Employees",  and amends  FASB  Statement  No.  95,  "Statement  of Cash  Flows".
Generally,  the approach in Statement 123R is similar to the approach  described
in Statement 123. However,  Statement 123R requires all share-based  payments to
employees,  including grants of employee stock options,  to be recognized in the
income statement based on their fair values.  Pro-forma  disclosure is no longer
an  alternative.  On April 14, 2005,  the SEC amended the effective  date of the
provisions of this  statement.  The effect of this  amendment by the SEC is that
the Company will have to comply with Statement 123R and use the Fair Value based
method of  accounting  no later than the third  quarter of 2006.  Management  is
assessing the implications of this revised standard, which may materially impact
the Company's results of operations in the third quarter of fiscal year 2006 and
thereafter.

NOTE B - RELATED PARTY TRANSACTIONS

The Company  entered into a purchase option  agreement with American  Motorcycle
Leasing Corp., an entity controlled by the Company's President and a significant
shareholder,  on  November  2, 2004 at a cost to Sparta  Commercial  Services of
$250,000.  This agreement  granted the Company the right, for a two year period,
to purchase  portions of a certain  portfolio of equipment  leases that American
Motorcycle  Leasing Corp.  owns.  The  portfolio is secured by a first  priority
security  interest  in favor  of  Citibank,  N.A.  or its  assigns.  The cost of
$250,000 has been charged to  operations  in fiscal  2005.  Through  October 31,
2005, payments of aggregating $104,500 have been made against this obligation.

In January 2005,  the Company  received a loan of $25,000 from an officer.  This
loan is non-interest bearing and is payable on demand.

                                        8
<PAGE>

                        SPARTA COMMERCIAL SERVICES, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                OCTOBER 31, 2005
                                   (UNAUDITED)


NOTE C - STOCKHOLDERS' EQUITY

On December 27, 2004, the Company  effected a one-for-two  hundred reverse stock
split followed by a forward split of twenty  five-for-one  of its authorized and
outstanding  shares of common  stock,  $.001 par value.  All  references  in the
financial  statements and notes to financial  statements,  numbers of shares and
share amounts have been retroactively restated to reflect the reverse split.

Common Stock

During the six months ended October 31, 2005,  the Company issued 464,745 shares
of common  stock,  valued at  $243,270,  as  additional  costs  related to loans
received by the Company.  This amount has been charged to financing  cost during
the quarter.

During August 2005, the Company issued 651,124 shares of common stock in payment
of $150,000 of principal  amount of notes payable and $12,781 of related accrued
interest.  The shares were issued at a value below  market price and the Company
has recorded a financing cost of $323,672 related to this discount.

During  September and October 2005,  the Company  issued an aggregate of 600,000
shares of common stock, pursuant to a consulting agreement. The shares have been
valued at  $474,000  and this  amount is being  amortized  over  twelve  months,
commencing August 1, 2005.  Additionally,  the company will issue 600,000 during
the second year of the agreement.

During October 2005,  the Company issued 113,637 shares of common stock,  valued
at $85,228, for services.

During October 2005, the Company  received  $180,000  pursuant to a subscription
agreement for 300,000 units of the Company's  securities.  Each unit consists of
one share of common  stock and a warrant to purchase  one share of common  stock
exercisable for three years at $0.80 per share. The price of the unit is $0.60.

The Company will issue  250,000  shares of common stock as payment of consulting
fees.  These fees have been accrued in the  financial  statements  at a value of
$85,000 as of October 31, 2005.

Preferred Stock Series A

During the three months ended July 31, 2005, the Company issued 17,750 preferred
shares at a stated  value of $100 per share and  warrants to purchase  5,689,108
shares of common  stock,  exercisable  for three years at $0.195 per share,  for
aggregate  gross  proceeds  of  $1,775,000  received  from  investors.  Costs of
$182,484  were  deducted  from the  proceeds.  In  connection  with the  private
placement,  during the three months ended July 31, 2005,  the Company  issued as
compensation  to the placement  agent warrants to purchase  1,137,822  shares of
common  stock,  exercisable  for five years at $0.172 per share.  The  warrants,
which were valued at $406,665 using the Black-Scholes option pricing model, were
recognized as an expense during the quarter.  The assumptions  used in the Black
Scholes model are as follows:  (1) dividend yield of 0%; (2) expected volatility
of 188%, (3) weighted average risk-free interest rate of 3.65%, and (4) expected
life of 2 years.

                                       9
<PAGE>

                        SPARTA COMMERCIAL SERVICES, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                OCTOBER 31, 2005
                                   (UNAUDITED)


NOTE C - STOCKHOLDERS' EQUITY (continued)

Preferred Stock Series A (continued)

In accordance  with EITF 00-27,  a portion of the proceeds were allocated to the
class 'C' warrants  based on their relative fair value,  which totaled  $931,800
using the Black Scholes option pricing model.  Further, the Company attributed a
beneficial  conversion  feature of $843,200 to the series 'A'  preferred  shares
based upon the difference  between the conversion  price of those shares and the
closing  price of the  Company's  common  shares  on the date of  issuance.  The
assumptions  used in the Black Scholes model are as follows:  (1) dividend yield
of 0%; (2) expected  volatility of 188%, (3) weighted average risk-free interest
rate of 3.65%,  and (4) expected life of 2 years as the  conversion  feature and
warrants  are  immediately  exercisable.  Both the fair  value of the  class 'C'
warrants and the beneficial  conversion  feature were recorded as a dividend and
are included in the accompanying financial statements.

In the event that a registration statement covering all of the securities issued
pursuant to the private placement of preferred shares is not declared  effective
by the Securities and Exchange Commission by July 31, 2005, the number of shares
issuable upon conversion of the preferred stock and the exercise of the warrants
will be  increased  by 0.75%  for each 30 day  period  during a six  month  term
following  July 31, 2005 that a  registration  statement  has not been  declared
effective.  There was not an  effective  registration  statement  as of July 31,
2005,  nor is there one as of October  31,  2005.  As a result,  the Company has
accrued an expense of $600,000  during the three months  ended  October 31, 2005
related to this  penalty  provision.  This  amount  will be settled  through the
issuance of equity securities. Following this initial six month term, the number
of shares  issuable upon  conversion of the preferred  stock and the exercise of
the  warrants  will be  increased  by 1.50% for each 30 day period  during a six
month term following January 31, 2006 that a registration statement has not been
declared effective.

During the six months ended October 31, 2004, the Company sold rights to acquire
securities of the Company to investors for aggregate gross proceeds of $585,000.
Pursuant  to the terms of the rights,  as the  Company  conducted a closing to a
private  placement   transaction  in  2004  utilizing  a  designated  registered
broker-dealer  as a  placement  agent,  on  January 1,  2005,  the  rights  have
automatically  converted into 5,850  preferred  shares at a stated value of $100
per share and warrants to purchase 1,875,001 shares of common stock, exercisable
for three years at $0.195 per share.

NOTE D - GOING CONCERN MATTERS

The accompanying consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of  liabilities in the normal course of business.  As shown in the  accompanying
consolidated  financial statements the Company has realized minimal revenue from
operations and has incurred significant operating losses since inception.  These
factors among others may indicate that the Company will be unable to continue as
a going concern for a reasonable period of time.

The  Company's  existence  is  dependent  upon  management's  ability to develop
profitable  operations.  Management is devoting substantially all of its efforts
to  developing  its business  and raising  capital and there can be no assurance
that the Company's  efforts will be successful.  However,  the planned principal
operations  have not commenced  and no assurance can be given that  management's
actions will result in profitable  operations or the resolution of its liquidity
problems. The accompanying  statements do not include any adjustments that might
result should the Company be unable to continue as a going concern.

In order to  improve  the  Company's  liquidity,  the  Company's  management  is
actively pursing additional equity financing through discussions with investment
bankers and private  investors.  There can be no  assurance  the Company will be
successful in its effort to secure additional equity financing.

                                       10
<PAGE>


                        SPARTA COMMERCIAL SERVICES, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                OCTOBER 31, 2005
                                   (UNAUDITED)


NOTE E - NON-CASH FINANCIAL INFORMATION

During the six months ended October 31, 2005, the Company:

      o     Recorded a dividend on preferred stock of $1,775,000  related to the
            fair value of the class 'C' warrants issued with preferred stock and
            the related beneficial conversion feature.
      o     Incurred costs of $182,483  related to the sale of preferred  stock.
            These costs were deducted from the proceeds.
      o     Issued  464,745  shares of common  stock,  valued  at  $243,270,  as
            additional costs related to loans received by the Company.
      o     Issued  651,124  shares of common  stock in payment of  $150,000  of
            principal  amount of notes  payable and  $12,781 of related  accrued
            interest.  The shares were issued at a value below  market price and
            the Company has  recorded a  financing  cost of $323,672  related to
            this discount.
      o     Issued an aggregate of 600,000 shares of common stock, pursuant to a
            consulting  agreement.  The shares have been valued at $474,000  and
            this amount is being amortized over twelve months, commencing August
            1, 2005.
      o     Issued  113,637  shares of common  stock,  valued  at  $85,228,  for
            services.

NOTE F - SUBSEQUENT EVENTS

Subsequent to October 31, 2005, the Company:

      o     Received  $20,000  pursuant to a  subscription  agreement for 33,334
            units of the Company's  securities.  Each unit consists of one share
            of common  stock and a warrant to purchase one share of common stock
            exercisable  for three  years at $0.80 per  share.  The price of the
            unit is $0.60.
      o     Received bridge loans in the amount of $175,000.  These bridge loans
            are due to be repaid in March 2006, together with simple interest at
            the rate of 10% per annum and an equity  kicker of 70,000  shares of
            the company's common stock. In the event of default on repayment, as
            penalty,  the simple interest rate on the unpaid  principal shall be
            increased  to a rate of 20% per  annum  commencing  from the date of
            default,  and the equity  kicker  shall be increased by 50% for each
            month that such default has not been cured.

                                       11
<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION,
           RESULTS OF OPERATIONS AND PLAN OF OPERATION

GENERAL

The following  discussion  of our financial  condition and results of operations
should  be  read  in  conjunction  with  (1)  our  interim  unaudited  financial
statements  and  their  explanatory  notes  included  as part of this  quarterly
report,  and (2) our annual audited  financial  statements and explanatory notes
for the year ended  April 30,  2005 as  disclosed  in our annual  report on Form
10-KSB for that year as filed with the SEC.

"FORWARD-LOOKING" INFORMATION

This report on Form 10-QSB contains certain "forward-looking  statements" within
the meaning of Section 21E of the  Securities  Exchange Act of 1934, as amended,
which  represent our  expectations  and beliefs,  including,  but not limited to
statements  concerning  the  Company's  expected  growth.  The words  "believe,"
"expect," "anticipate,"  "estimate," "project," and similar expressions identify
forward-looking  statements,  which speak only as of the date such statement was
made.   These  statements  by  their  nature  involve   substantial   risks  and
uncertainties,  certain of which are beyond our control,  and actual results may
differ materially depending on a variety of important factors.

INTRODUCTORY STATEMENT

Unless otherwise  stated,  the discussion and analysis refers to the business of
Sparta  Commercial  Services,  Inc. and does not refer to the operations for our
former business which was essentially a non-operating shell company.

The year ended April 30, 2005 was a period of  development,  as we  continued to
develop our products and market them to dealers and  manufacturers.  To date, we
have generated limited sales revenues, have incurred expenses and have sustained
losses.  Consequently,  our  operations are subject to all the risks inherent in
the  establishment  of a new  business  enterprise.  The period  from  inception
through  April 30,  2005 was a  developmental  stage  period for us,  setting up
credit procedures, setting our arrangements with vehicle distributors, obtaining
personnel,  seeking financing to support our developmental  efforts, and seeking
credit facilities.  In fiscal year 2005, we began to obtain regulatory  approval
in several states, where required, prior to commencing active operations. We are
actively signing up dealers to participate in our financing programs,  including
our private label financing  programs.  We have signed up four  manufacturers to
our private label programs, and are in negotiations with other manufacturers who
have indicated an interest in a private label program. Presently, we do not have
sufficient  operating capital to fulfill our planned business operations for the
next  twelve  months for a credit line  reserve  and for our  general  operating
expenses.  We estimate that we will need approximately  $1,500,000 in additional
funds to fully  implement  our  business  plan  during the next  twelve  months.
Although  the Company  obtained a senior  credit  facility  in July 2005,  which
allowed us to commence  our initial  active  operations,  we will need to obtain
additional  credit  facilities to fully implement our business plan. We need the
additional  credit  facilities so that we have the funding  sources to originate
leases and finance  contracts  across all credit  profiles.  Our current  credit
facility only allows for origination  across three out of five credit  profiles.
We are  presently in  discussions  with  several  institutions  about  obtaining
additional  credit  facilities,  however,  our  lack of  working  capital  could
negatively impact our ability to secure these facilities.

RESULTS OF OPERATIONS

COMPARISON  OF THE THREE MONTHS ENDED OCTOBER 31, 2005 TO THE THREE MONTHS ENDED
OCTOBER 31, 2004

For the three months ended October 31, 2005 and 2004, we have generated  limited
sales  revenues,   have  incurred  significant  expenses,   and  have  sustained
significant  losses.  We believe we will begin to earn increasing  revenues from
operations in the current fiscal year.

                                       12
<PAGE>

Revenues

Revenues  totaled  $30,295  during the three  months  ended  October 31, 2005 as
compared to $21,464 during the three months ended July 31, 2004.  Current period
revenue was comprised  primarily of $24,223 in lease  revenue,  $2,772 in dealer
fees,  and $3,300 in private  label fees.  Prior  period  revenue was  comprised
primarily of $16,497 in lease revenue and $4,967 in private label fees.

Costs and Expenses

General and administrative  expenses were $910,737 during the three months ended
October 31, 2005, compared to $371,203 during the three months ended October 31,
2004, an increase of $539,534,  or 145%.  Expenses  incurred  during the current
three month period consisted primarily of the following  expenses:  Compensation
and related costs, $400,925;  Accounting, audit and professional fees, $114,008;
Consulting fees, $215,529; Rent, $44,857; and Travel and entertainment, $17,905.
Expenses incurred during the comparative three month period consisted  primarily
of the following expenses: Compensation and related costs, $178,769; Accounting,
audit and professional fees, $26,803; and Consulting fees, $20,113.

We incurred a non-cash  charge of $323,672 during the three months ended October
31,  2005  related  to shares of common  stock  issued in  connection  with debt
financing.  Additionally,  we  recorded  an expense of  $600,000  related to the
failure to have an effective  registration  statement  covering  the  underlying
shares of common stock  issuable upon  conversion of it preferred  stock and the
related  warrants.  This expense will be settled  through the issuance of shares
and  warrants.  There were no  comparable  expenses  during the six months ended
October 31, 2004.

Net Loss

We incurred a net loss before  preferred  dividends of $1,830,057  for our three
months  ended  October 31, 2005 as  compared to $357,370  for the  corresponding
interim  period in 2004.  The $1,472,687 or 412% increase in our net loss before
preferred  dividends for our three month  interim  period ended October 31, 2005
was attributable  primarily to a $539,534 increase in general and administrative
expense and an increase of $923,672 in non-cash financing costs.

We also  incurred  preferred  dividend  expense of $54,217  for our three  month
period ended October 31, 2005 with no comparable  expense for the  corresponding
interim  period  in  2004.  The  increase  in  preferred  dividend  expense  was
attributable  to the sale of  convertible  preferred  stock  that  commenced  in
December, 2004 and concluded in July 2005.

Our net loss attributable to common stockholders increased to $1,884,274 for our
three month  period  ended  October  31,  2005 as  compared to $357,370  for the
corresponding  period in 2004. The $1,526,904  increase in net loss attributable
to common stockholders for our three month period ended October 31, 2005 was due
to the $1,472,687 increase in our net loss before preferred dividends, increased
by the aforesaid $54,217 increase in preferred dividend expense.

COMPARISON  OF THE SIX MONTHS  ENDED  OCTOBER 31,  2005 TO THE SIX MONTHS  ENDED
OCTOBER 31, 2004

For the six months ended  October 31, 2005 and 2004, we have  generated  limited
sales  revenues,   have  incurred  significant  expenses,   and  have  sustained
significant  losses.  We believe we will begin to earn increasing  revenues from
operations in the current fiscal year.

                                       13
<PAGE>

Revenues

Revenues  totaled  $47,621  during  the six months  ended  October  31,  2005 as
compared to $21,464 during the six months ended October 31, 2004. Current period
revenue was comprised  primarily of $34,974 in lease  revenue,  $6,047 in dealer
fees,  and $6,600 in private  label fees.  Prior  period  revenue was  comprised
primarily of $16,497 in lease revenue and $4,967 in private label fees.

Costs and Expenses

General and administrative  expenses were $1,497,469 during the six months ended
October 31, 2005,  compared to $784,620  during the six months ended October 31,
2004, an increase of $712,849,  or 91%. Expenses incurred during the current six
month period  consisted  primarily of the following  expenses:  Compensation and
related costs,  $656,294;  Accounting,  audit and professional  fees,  $173,149;
Consulting fees, $361,587; Rent, $72,814; and Travel and entertainment, $35,331.
Expenses incurred during the comparative six month period consisted primarily of
the following expenses:  Compensation and related costs,  $322,362;  Accounting,
audit and professional  fees,  $59,657;  Consulting fees,  $59,438;  and License
fees, $150,633.

In connection with its private placement transactions,  the Company has expensed
non-cash costs of $406,665  during the six months ended October 31, 2005 related
to warrants  granted to the private  placement  agent,  with no related  expense
during the  comparative  period.  The Company also incurred a non-cash charge of
$599,642  during the six months  ended  October  31,  2005  related to shares of
common  stock  issued in  connection  with debt  financing  and has  recorded an
expense of  $600,000  related to the failure to have an  effective  registration
statement   covering  the  underlying  shares  of  common  stock  issuable  upon
conversion of it preferred stock and the related warrants.  This expense will be
settled through the issuance of shares and warrants.  . There were no comparable
expenses during the six months ended October 31, 2004.

Net Loss

We incurred a net loss before  preferred  dividends  of  $3,075,449  for our six
months  ended  October 31, 2005 as  compared to $770,815  for the  corresponding
interim  period in 2004.  The $2,304,634 or 299% increase in our net loss before
preferred  dividends for our six month interim period ended October 31, 2005 was
attributable  primarily  to a $712,849  increase in general  and  administrative
expense and an increase of $1,573,607 in non-cash financing costs.

We also incurred  preferred  dividend  expense of  $1,857,492  for our six month
period ended October 31, 2005 with no comparable  expense for the  corresponding
interim  period  in  2004.  The  increase  in  preferred  dividend  expense  was
attributable  to the sale of  convertible  preferred  stock  that  commenced  in
December,  2004 and concluded in July 2005. In addition to dividends  payable on
the  outstanding  preferred  stock,   preferred  dividend  expense  includes  an
aggregate  charge of $1,775,000  related to warrants issued with the convertible
preferred  stock  and  a  beneficial  conversion  feature  associated  with  the
preferred stock.

Our net loss attributable to common stockholders increased to $4,932,941 for our
six month  period  ended  October  31,  2005 as  compared  to  $770,815  for the
corresponding  period in 2004. The $4,162,126  increase in net loss attributable
to common  stockholders  for our six month period ended October 31, 2005 was due
to the $2,304,634 increase in our net loss before preferred dividends, increased
by the aforesaid $1,857,492 increase in preferred dividend expense.

                                       14
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

As of October 31, 2005, the Company had a working capital deficit of $1,148,912.
The Company  generated a deficit in cash flow from  operations of $1,392,921 for
the six months ended October 31, 2005. This deficit is primarily attributable to
the  Company's  net loss from  operations  of  $3,075,449,  partially  offset by
depreciation  and amortization of $35,887 and the fair value attributed to stock
and  warrants  issued of  $1,177,335,  and to changes in the balances of current
assets and  liabilities.  Accounts  payable and accrued  expenses  increased  by
$644,371, deferred revenue increased by 62,048 and prepaid expenses and deposits
increased by $196,512.

Cash flows used in investing  activities  for the six months  ended  October 31,
2005 was  $422,496,  primarily  due to the purchase of property and equipment of
$31,109,  payments for  motorcycles  and vehicles of $176,826 and investments in
leases of $208,061.

The Company met its cash  requirements  during the period  through net  proceeds
from the  issuance of equity of  $1,592,517,  debt  financing  of $104,340 and a
subscription  for 300,000  units of our  securities,  consisting of one share of
common stock and a warrant to purchase one share of common stock exercisable for
three years at $0.80 per share,  for $180,000,  all partially offset by payments
on bridge loans of $150,000.  In November 2005, we sold 33,334  additional units
of our  securities,  at $0.60 per unit,  consisting of one share of common stock
and a warrant to purchase one share of common stock  exercisable for three years
at $0.80 per share, for gross proceeds of $20,000. During December 2005, we have
received a bridge loan in the amount of  $50,000.  This bridge loan is due to be
repaid on March 14, 2006,  together with simple  interest at the rate of 10% per
annum and an equity kicker of 20,000 shares of the  Company's  common stock.  In
the event of default on repayment,  as penalty,  the simple interest rate on the
unpaid  principal shall be increased to a rate of 20% per annum  commencing from
the date of default,  and the equity  kicker  shall be increased by 50% for each
month that such  default  has not been  cured.  Additionally,  the  Company  has
received  limited  revenues  from leasing and  financing  motorcycles  and other
vehicles,  its recently  launched private label programs and from dealer sign-up
fees.

While we have raised capital to meet our working  capital and financing needs in
the past,  additional  financing  is  required  in order to meet our current and
projected  cash flow deficits from  operations and  development.  We are seeking
financing, which may take the form of debt, convertible debt or equity, in order
to provide the necessary working capital. We have entered into negotiations with
an investment  bank to help us raise equity  capital,  but we currently  have no
commitments  for financing.  There is no guarantee that we will be successful in
raising the funds required.

We estimate that we will need  approximately  $1,500,000 in additional  funds to
fully  implement  our business  plan during the next twelve  months for a credit
line reserve and for our general operating  expenses.  There can be no assurance
that additional private or public financing, including debt or equity financing,
will be  available  as  needed,  or, if  available,  on terms  favorable  to the
Company.  Any additional  equity  financing may be dilutive to shareholders  and
such  additional  equity  securities may have rights,  preferences or privileges
that are senior to those of the Company's  existing  common or preferred  stock.
Furthermore,  debt financing, if available, will require payment of interest and
may involve restrictive covenants that could impose limitations on the operating
flexibility  of the Company.  However,  if we are not  successful  in generating
sufficient liquidity from operations or in raising sufficient capital resources,
on terms  acceptable  to us,  this could have a material  adverse  effect on our
business, results of operations,  liquidity and financial condition, and we will
have to adjust our planned operations and development on a more limited scale.

AUDITOR'S  OPINION  EXPRESSES DOUBT ABOUT THE COMPANY'S ABILITY TO CONTINUE AS A
"GOING CONCERN"

The  independent  auditors  report  on our  April  30,  2005 and 2004  financial
statements  included in the  Company's  Annual  Report states that the Company's
historical  losses and the lack of revenues raise  substantial  doubts about the
Company's ability to continue as a going concern, due to the losses incurred and
its lack of significant operations. If we are unable to develop our business, we
have to discontinue  operations or cease to exist, which would be detrimental to
the value of the  Company's  common stock.  We can make no  assurances  that our
business  operations  will  develop  and  provide  us with  significant  cash to
continue operations.

                                       15
<PAGE>

PLAN OF OPERATIONS

Addressing the Going Concern Issues

In order to  improve  the  Company's  liquidity,  the  Company's  management  is
actively  pursing  additional  financing  through  discussions  with  investment
bankers, financial institutions and private investors. There can be no assurance
the Company will be successful in its effort to secure additional financing.

We continue to  experience  net operating  losses.  Our ability to continue as a
going concern is subject to our ability to develop profitable operations. We are
devoting substantially all of our efforts to developing our business and raising
capital. Our net operating losses increases the difficulty in meeting such goals
and there can be no assurances that such methods will prove successful.

The primary issues  management will focus on in the immediate  future to address
this matter include:

    o seeking additional credit lines from institutional lenders;
    o seeking  institutional  investors  for debt or equity  investments  in our
    company; and
    o initiating  negotiations to secure short term financing through promissory
    notes or other debt instruments on an as needed basis.

To address these issues,  we are  negotiating  the potential  sale of securities
with investment  banking companies to assist us in raising capital.  We are also
presently in discussions with several  institutions  about obtaining  additional
credit facilities.

Product Research and Development

We do not anticipate incurring significant research and development expenditures
during the next twelve months.

Acquisition or Disposition of Plant and Equipment

We do not anticipate the sale of any  significant  property,  plant or equipment
during the next twelve  months.  We do not  anticipate  the  acquisition  of any
significant property, plant or equipment during the next twelve months.

Number of Employees

From our inception  through the period ended October 31, 2005, we have relied on
the  services  of outside  consultants  for  services  and  currently  have nine
employees.  In  order  for  us to  attract  and  retain  quality  personnel,  we
anticipate we will have to offer competitive salaries to future employees. If we
fully  implement  our business  plan,  we  anticipate  our  employment  base may
increase by approximately  50% during the next twelve months.  As we continue to
expand, we will incur additional cost for personnel.  This projected increase in
personnel is dependent  upon our  generating  revenues and obtaining  sources of
financing. There is no guarantee that we will be successful in raising the funds
required or generating revenues sufficient to fund the projected increase in the
number of employees.

INFLATION

The impact of inflation on the costs of the Company,  and the ability to pass on
cost increases to its customers  over time is dependent upon market  conditions.
The  Company  is not  aware  of any  inflationary  pressures  that  have had any
significant  impact on the Company's  operations over the past quarter,  and the
Company does not anticipate  that  inflationary  factors will have a significant
impact on future operations.

                                       16
<PAGE>

CRITICAL ACCOUNTING POLICIES

The  preparation of our  consolidated  financial  statements in conformity  with
accounting  principles  generally  accepted in the United States  requires us to
make  estimates  and  judgments  that affect our reported  assets,  liabilities,
revenues, and expenses, and the disclosure of contingent assets and liabilities.
We base our  estimates and  judgments on  historical  experience  and on various
other  assumptions we believe to be reasonable under the  circumstances.  Future
events,   however,  may  differ  markedly  from  our  current  expectations  and
assumptions.  While  there  are a  number  of  significant  accounting  policies
affecting  our  consolidated  financial  statements;  we believe  the  following
critical  accounting policy involves the most complex,  difficult and subjective
estimates and judgments:

Revenue Recognition

We originate leases on new and used motorcycles and other  powersports  vehicles
from motorcycle  dealers  throughout the United States. Our leases are accounted
for as either operating leases or direct financing  leases.  At the inception of
operating  leases,  no lease revenue is recognized  and the leased  motorcycles,
together  with the initial  direct  costs of  originating  the lease,  which are
capitalized,  appear  on the  balance  sheet  as  "motorcycles  under  operating
leases-net".  The capitalized  cost of each  motorcycle is depreciated  over the
lease term,  on a  straight-line  basis,  down to the  original  estimate of the
projected  value of the  motorcycle at the end of the scheduled  lease term (the
"Residual").  Monthly  lease  payments  are  recognized  as  rental  income.  An
acquisition fee classified as fee income on the financial statements is received
and recognized in income at the inception of the lease.  Direct financing leases
are recorded at the gross amount of the lease receivable, and unearned income at
lease inception is amortized over the lease term.

We realize gains and losses as the result of the termination of leases,  both at
and prior to their  scheduled  termination,  and the  disposition of the related
motorcycle. The disposal of motorcycles,  which reach scheduled termination of a
lease,  results  in a gain or loss  equal  to the  difference  between  proceeds
received from the disposition of the motorcycle and its net book value. Net book
value  represents  the residual  value at  scheduled  lease  termination.  Lease
terminations that occur prior to scheduled  maturity as a result of the lessee's
voluntary  request to purchase the vehicle have resulted in net gains,  equal to
the excess of the price received over the motorcycle's net book value.

Early lease terminations also occur because of (i) a default by the lessee, (ii)
the physical loss of the motorcycle, or (iii) the exercise of the lessee's early
termination.  In those instances,  the Company receives the proceeds from either
the resale or  release  of the  repossessed  motorcycle,  or the  payment by the
lessee's  insurer.  We  record a gain or loss  for the  difference  between  the
proceeds received and the net book value of the motorcycle.

We charge  fees to  manufacturers  and other  customers  related  to  creating a
private label version of our financing program including web access,  processing
credit  applications,   consumer  contracts  and  other  related  documents  and
processes.  Fees  received are amortized and booked as income over the length of
the contract.

Stock-Based Compensation

In December  2003,  the FASB issued SFAS No. 148,  "Accounting  for  Stock-Based
Compensation-Transition and Disclosure-an amendment of SFAS 123." This statement
amends SFAS No.  123,  "Accounting  for  Stock-Based  Compensation,"  to provide
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee  compensation.  In addition,  this
statement  amends  the  disclosure  requirements  of  SFAS  No.  123 to  require
prominent  disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the effect of the
method used on reported  results.  The Company has chosen to continue to account
for stock-based  compensation using the intrinsic value method prescribed in APB
Opinion No. 25 and related  interpretations.  Accordingly,  compensation expense
for stock  warrants is measured as the excess,  if any, of the fair market value
of the Company's  stock at the date of the grant over the exercise  price of the
related option. The Company has adopted the annual disclosure provisions of SFAS
No. 148 in its  financial  reports for the period from  January 1, 2003  through
April  30,  2003  and will  adopt  the  interim  disclosure  provisions  for its
financial reports for the subsequent periods. The Company has stock based awards
of  compensation  to employees  of $82,500  granted and  outstanding  during the
period from October 1, 2001 (date of  inception)  through  April 30, 2005,  with
none granted during the current interim period.

                                       17
<PAGE>

On December 16, 2004,  the Financial  Accounting  Standards  Board (FASB) issued
FASB  Statement  No.  123R  (revised  2004),  "Share-Based  Payment"  which is a
revision of FASB Statement No. 123,  "Accounting for Stock-Based  Compensation".
Statement 123R  supersedes APB opinion No. 25,  "Accounting  for Stock Issued to
Employees",  and amends  FASB  Statement  No.  95,  "Statement  of Cash  Flows".
Generally,  the approach in Statement 123R is similar to the approach  described
in Statement 123. However,  Statement 123R requires all share-based  payments to
employees,  including grants of employee stock options,  to be recognized in the
income statement based on their fair values.  Pro-forma  disclosure is no longer
an  alternative.  On April 14, 2005,  the SEC amended the effective  date of the
provisions of this  statement.  The effect of this  amendment by the SEC is that
the Company will have to comply with Statement 123R and use the Fair Value based
method of  accounting  no later than the third  quarter of 2006.  Management  is
assessing the implications of this revised standard, which may materially impact
the Company's results of operations in the third quarter of fiscal year 2006 and
thereafter.

Website Development Costs

We have  incurred  costs  to  develop  a  proprietary  web-based  private  label
financing  program  for  processing  including  web  access,  processing  credit
applications,  consumer contracts and other related documents and processes. The
Company has elected to recognize the costs of developing its website and related
intellectual  property the website development costs in accordance with Emerging
Issue Task Force ("EITF") No. 00-02, "Accounting for Website Development Costs."
As such, the Company expenses all costs incurred that relate to the planning and
post implementation phases of development of its website.  Direct costs incurred
in the  development  phase are  capitalized  and  recognized  over the estimated
useful life.  Costs  associated  with repair or maintenance  for the website are
included in cost of net revenues in the current period expenses.

OFF-BALANCE SHEET ARRANGEMENTS

The  Company  does  not  maintain  off-balance  sheet  arrangements  nor does it
participate in non-exchange  traded  contracts  requiring fair value  accounting
treatment.

TRENDS, RISKS AND UNCERTAINTIES

We have sought to identify what we believe to be the most  significant  risks to
our business,  but we cannot  predict  whether,  or to what extent,  any of such
risks may be realized nor can we guarantee that we have  identified all possible
risks that might arise.  Investors  should  carefully  consider all of such risk
factors before making an investment decision with respect to our Common Stock.

CAUTIONARY FACTORS THAT MAY AFFECT FUTURE RESULTS

We have  sought  to  identify  what we  believe  are  significant  risks  to our
business,  but we cannot predict whether,  or to what extent,  any of such risks
may be realized nor can we guarantee that we have  identified all possible risks
that might arise.

Potential Fluctuations in Annual Operating Results

Our annual  operating  results may  fluctuate  significantly  in the future as a
result  of a  variety  of  factors,  most of  which  are  outside  our  control,
including:  the  demand  for our  products  and  services;  seasonal  trends  in
purchasing,  the  amount  and timing of  capital  expenditures  and other  costs
relating to the commercial and consumer financing;  price competition or pricing
changes  in the  market;  technical  difficulties  or system  downtime;  general
economic  conditions and economic  conditions specific to the consumer financing
sector.

Our  annual  results  may also be  significantly  impacted  by the impact of the
accounting treatment of acquisitions,  financing  transactions or other matters.
Particularly  at our early stage of development,  such accounting  treatment can
have a material  impact on the results  for any  quarter.  Due to the  foregoing
factors,  among others,  it is likely that our operating  results may fall below
our expectations or those of investors in some future quarter.

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<PAGE>

Dependence Upon Management

Our future  performance  and success is dependant upon the efforts and abilities
of our  Management.  To a very  significant  degree,  we are dependent  upon the
continued  services of Anthony L.  Havens,  our  President  and Chief  Executive
Officer and member of our Board of Directors.  If we lost the services of either
Mr. Havens,  or other key employees before we could get qualified  replacements,
that loss could materially adversely affect our business. We do not maintain key
man life insurance on any of our Management.

Our  officers  and  directors  are  required  to  exercise  good  faith and high
integrity in our  Management  affairs.  Our Articles of  Incorporation  provide,
however,  that  our  officers  and  directors  shall  have no  liability  to our
shareholders for losses  sustained or liabilities  incurred which arise from any
transaction in their respective managerial capacities unless they violated their
duty of loyalty, did not act in good faith, engaged in intentional misconduct or
knowingly  violated the law,  approved an improper dividend or stock repurchase,
or derived an improper  benefit from the  transaction.  Our Articles and By-Laws
also provide for the indemnification by us of the officers and directors against
any losses or liabilities they may incur as a result of the manner in which they
operate  our  business  or  conduct  the  internal  affairs,  provided  that  in
connection  with these  activities  they act in good faith and in a manner  that
they  reasonably  believe to be in, or not  opposed  to, the best  interests  of
Sparta,  and their conduct does not constitute gross  negligence,  misconduct or
breach  of  fiduciary   obligations.   To  further   implement   the   permitted
indemnification, we have entered into Indemnity Agreements with our officers and
directors.

Continued Control of Current Officers and Directors

The present  officers and directors  own  approximately  76% of the  outstanding
shares of common stock,  without giving effect to shares underlying  convertible
securities,  and  therefore  are in a position to elect all of our Directors and
otherwise control the Company,  including,  without limitation,  authorizing the
sale of equity or debt securities of Sparta,  the  appointment of officers,  and
the determination of officers' salaries.  Shareholders have no cumulative voting
rights.

Management of Growth

We may  experience  growth,  which  will  place  a  strain  on  our  managerial,
operational and financial systems resources. To accommodate our current size and
manage growth if it occurs, we must devote management attention and resources to
improve our financial  strength and our operational  systems.  Further,  we will
need to expand,  train and manage our sales and  distribution  base. There is no
guarantee that we will be able to effectively manage our existing  operations or
the growth of our  operations,  or that our facilities,  systems,  procedures or
controls  will be adequate to support any future  growth.  Our ability to manage
our  operations  and any  future  growth  will  have a  material  effect  on our
stockholders.

If we fail to remain current on our reporting requirements,  we could be removed
from the OTC Bulletin Board which would limit the ability of  broker-dealers  to
sell our securities and the ability of stockholders to sell their  securities in
the secondary market.

Companies  trading on the OTC  Bulletin  Board,  such as us,  must be  reporting
issuers under Section 12 of the Securities Exchange Act of 1934, as amended, and
must be current in their reports  under  Section 13, in order to maintain  price
quotation  privileges on the OTC Bulletin Board. If we fail to remain current on
our reporting requirements,  we could be removed from the OTC Bulletin Board. As
a result,  the market liquidity for our securities  could be severely  adversely
affected by limiting the ability of  broker-dealers  to sell our  securities and
the ability of stockholders to sell their securities in the secondary market.

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<PAGE>

ITEM 3. CONTROLS AND PROCEDURES

Our management,  with the participation of our Chief Executive  Officer,  who is
also  presently  serving  as our  Principal  Financial  Officer,  evaluated  the
effectiveness  of our  disclosure  controls and  procedures  (as defined in Rule
13a-15(e) or Rule  15a-15(e)  of the  Exchange  Act) as of the end of the period
covered by this report.  Based on that evaluation,  our Chief Executive  Officer
and Principal  Financial  Officer  concluded  that our  disclosure  controls and
procedures as of the end of the period covered by this report were effective.

There was no change in our internal control over financial reporting (as defined
in Rule  13a-15(f) of the Exchange Act) that occurred  during the fiscal quarter
to which this report  relates that has  materially  affected,  or is  reasonably
likely to materially affect, our internal control over financial reporting.


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<PAGE>


                           PART II. OTHER INFORMATION

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

During the year ended April 30, 2005,  we sold  promissory  notes with rights to
acquire common stock to accredited  investors in transaction  deemed exempt from
registration  pursuant to Section 4(2) of the Securities Act. During the quarter
ended July 31, 2005, we issued  288,464  shares of common stock  pursuant to the
terms of the notes.  In August 2005 and October  2005, we issued an aggregate of
827,406 shares of common stock pursuant to the terms of the notes.

In July 2005, in a transaction  deemed to be exempt from registration  under the
Securities  Act in reliance on Section  4(2) of the  Securities  Act, we entered
into an agreement with an individual for business consulting services for a term
of one year pursuant to which we agreed to issue 250,000  shares of common stock
as compensation. These shares have not yet been issued as of October 31, 2005.

In July 2005, in a transaction  deemed to be exempt from registration  under the
Securities  Act in reliance on Section  4(2) of the  Securities  Act, we entered
into an agreement with an individual for investor relations  consulting services
for a term of two years,  with  services  beginning in August 2005,  pursuant to
which  we  agreed  to  issue  600,000   shares  of  common  stock  per  year  as
compensation.  We issued  300,000 shares in September 2005 and 300,000 shares in
October 2005 to the consultant as compensation for the first year of services.

In October 2005, in a transaction  deemed to be exempt from  registration  under
the Securities Act in reliance on Section 4(2) of the Securities Act, we sold to
an accredited  investor  300,000 units of our  securities at $0.60 per unit, for
gross proceeds of $180,000. In November 2005, we sold to one accredited investor
an additional 33,334 units for gross proceeds of $20,000.  Each unit consists of
(i) one share of common stock and (ii) a warrant to purchase one share of common
stock,  exercisable for three years at $0.80 per share. We used the proceeds for
working capital purposes.

In December 2005, in transactions  deemed to be exempt from  registration  under
the Securities Act in reliance on Section 4(2) of the Securities Act, we entered
into  agreements for bridge loans in the amount of $175,000.  These bridge loans
mature in March  2006,  together  with  simple  interest  at the rate of 10% per
annum.  As part of the  loans,  we  agreed to issue  the  lenders,  as an equity
kicker, 70,000 shares of our common stock. In the event of default on repayment,
as penalty,  the simple interest rate on the unpaid principal shall be increased
to a rate of 20% per annum  commencing from the date of default,  and the number
of shares  issuable as an equity kicker shall be increased by 50% for each month
that such default has not been cured.

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<PAGE>

ITEM 6.      EXHIBITS

The following exhibits are filed with this report:

Exhibit Number    Description of Exhibit
--------------    ----------------------
Exhibit 11        Statement re: computation of per share earnings is hereby
                  incorporated by reference to "Financial Statements" of Part I
                  - Financial Information, Item 1 - Financial Statements,
                  contained in this Form 10-QSB.
Exhibit 31.1*     Certification of Chief Executive Officer and Principal
                  Financial Officer Pursuant to Securities Exchange Act Rule
                  13a-14(a)/15d-14(a)
Exhibit 32.1*     Certification of Chief Executive Officer and Principal
                  Financial Officer Pursuant to Securities Exchange Act Rule
                  13a-14(b) and 18 U.S.C. Section 1350
---
* Filed herewith.



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<PAGE>

                                   SIGNATURES

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

                                             SPARTA COMMERCIAL SERVICES, INC.

Date: December 19, 2005                      By:  /s/ Anthony L. Havens
                                                  ---------------------
                                                  Anthony L. Havens
                                                  Chief Executive Officer and
                                                  Principal Financial Officer






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