U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  For the 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 ____________


                    CONSORTIUM SERVICE MANAGEMENT GROUP, INC.
             (Exact name of registrant as specified in its charter)

    Texas                              0-27359                      74-2653437
    -----                              -------                      ----------
  (state of                    (Commission File Number)            (IRS Employer
incorporation)                                                      I.D. Number)

                   501 North Shoreline Drive, Suite 701 North
                            Corpus Christi, TX 78471
                                 (301) 887-7546
              ----------------------------------------------------
             (Address and telephone number of registrant's principal
               executive offices and principal place of business)

       Securities registered under Section 12(b) of the Exchange Act: None

         Securities registered under Section 12(g) of the Exchange Act:
                         Common Stock, $0.001 par value
                         ------------------------------
                                (Title of Class)

         Check whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act of 1934  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 [ ]

         As of May 8, 2006, the Company had  29,468,581  shares of its $.001 par
value common stock issued and outstanding.

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

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




<PAGE>

                                TABLE OF CONTENTS
                                                                            Page
                                                                            ----

PART I - FINANCIAL INFORMATION                                              3

Item 1.  Financial Statements                                               3

Item 2.  Management's Discussion and Analysis or Plan of Operation          11

Item 3.  Controls and Procedures                                            16

PART II - OTHER INFORMATION                                                 16

Item 1.  Legal Proceedings                                                  16

Item 2.  Unregistered Sales of Securities                                   18

Item 6.  Exhibits and Reports on Form 8-K                                   18

SIGNATURES                                                                  22












                                       2
<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

                                                                            Page
                                                                            ----

         Consolidated Balance Sheets March 31, 2006 (Unaudited)
                  and December 31, 2005                                    4
         Consolidated Statement of Operations (Unaudited)
                  March 31, 2006 and 2005                                  6
         Consolidated Statement of Cash Flows (Unaudited)
                  March 31, 2006 and 2005                                  7
         Notes to the Financial Statements                                 9

















                                       3
<PAGE>

                    CONSORTIUM SERVICE MANAGEMENT GROUP, INC.
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS

                                                    Unaudited
                                                   Mar 31, 2006    Dec 31, 2005
                                                   ------------    ------------

Current Assets
--------------
  Cash                                             $     12,044    $       --
                                                   ------------    ------------
              Total Current Assets                       12,044            --


Fixed Assets
------------
  Furniture and Equipment                                63,335          61,409
    Less Accumulated Depreciation                       (61,505)        (61,409)
                                                   ------------    ------------
              Total Fixed Assets                          1,830            --


Other Assets
------------
  Investment - United Engineering Company               113,522         136,236
  CO2 Equipment Patent                                    8,000           8,000
  Tissue Bonding Patent                                 543,209         530,170
    Less Accumulated Amortization                       (69,866)        (61,866)
                                                   ------------    ------------
              Total Other Assets                   $    594,865    $    612,540


              Total Assets                         $    608,739    $    612,540
                                                   ============    ============








The  accompanying  notes  are  an  integral  part  of  these  interim  financial
statements.

                                       4
<PAGE>
<TABLE>
<CAPTION>

                    CONSORTIUM SERVICE MANAGEMENT GROUP, INC.
                                AND SUBSIDIARIES

                     CONSOLIDATED BALANCE SHEETS (CONTINUED)

                                   LIABILITIES
                                                            Unaudited
                                                           Mar 31, 2006    Dec 31, 2005
                                                           ------------    ------------
<S>                                                        <C>             <C>
Current Liabilities
-------------------
  Deficit in bank                                          $       --      $      1,534
  Accounts Payable                                              682,898         820,788
  Interest Payable                                            1,393,191       1,394,017
  Payroll Taxes Payable                                          80,149          90,968
  Notes Payable to Stockholders                               4,024,227       3,903,828
  CO2 Equipment Payable                                         206,749         206,749
  Accrued CO2 expenses                                          134,833            --
                                                           ------------    ------------
              Total Current Liabilities                       6,522,047       6,417,884


Long Term Liabilities
---------------------
  Long Term Contract IAW                                        300,000         300,000
  Fee Debenture Payable                                            --              --
                                                           ------------    ------------
              Total Long-Term Liabilities                       300,000         300,000


              Total Liabilities                               6,822,047       6,717,884


Minority Interest in Consolidated Subsidiary                    206,000         206,000


                              STOCKHOLDERS' EQUITY

Common stock $.001 par value, 40,000,000 shares
  authorized; 29,468,581 shares issued, 29,055,571
  shares outstanding, 332,297 shares subscribed
  at March 31, 2006; and 26,756,072 shares issued,
  25,736,546 shares outstanding, 938,813 shares
  subscribed at December 31, 2005                                29,469          26,056
Additional Paid in Capital                                    7,838,908       7,548,050
  Less - Common Stock Subscriptions Receivable                     (332)           (939)
Accumulated Other Comprehensive (Loss)                         (334,472)       (339,454)
Accumulated (Deficit)                                       (13,920,596)    (13,512,772)
Treasury Stock                                                  (32,285)        (32,285)
                                                           ------------    ------------
              Total Stockholders' Equity                     (6,419,308)     (6,311,344)


              Total Liabilities and Stockholders' Equity   $    608,739    $    612,540
                                                           ============    ============
</TABLE>



The  accompanying  notes  are  an  integral  part  of  these  interim  financial
statements.

                                       5
<PAGE>
<TABLE>
<CAPTION>

                    CONSORTIUM SERVICE MANAGEMENT GROUP, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF OPERATIONS

                                                          Unaudited       Unaudited
                                                        Jan 1, 2006-    Jan 1, 2005-
                                                        Mar 31, 2006    Mar 31, 2005
                                                        ------------    ------------
<S>                                                     <C>             <C>
Revenues                                                $       --      $       --

General and Administrative Expenses                          346,750         453,234
  Funded R & D                                                  --              --
  Cost of Funded R & D                                        33,377          47,129
  Net R & D Cost                                              33,377          47,129
                                                        ------------    ------------
              Operating (Loss)                              (380,127)       (500,363)

Interest Income                                                 --                47
Interest in Income (Loss) of Unconsolidated Companies        (27,696)        (17,314)
                                                        ------------    ------------
              (Loss) from Continuing Operations             (407,823)       (517,630)

Income Taxes                                                    --              --
              Net (Loss)                                $   (407,823)   $   (517,630)
                                                        ============    ============

Net (Loss) Per Share Common Stock                              (0.02)          (0.04)
Weighted Average Common Shares Outstanding                26,780,935      14,213,131
</TABLE>






Basic and diluted  earnings  (loss) per share are the same.  The  corporation is
reporting  a net loss for the  reporting  periods and any  potentially  dilutive
securities are antidilutive (reduce net loss) and therefore not presented.

















The  accompanying  notes  are  an  integral  part  of  these  interim  financial
statements.

                                       6
<PAGE>
<TABLE>
<CAPTION>

                    CONSORTIUM SERVICE MANAGEMENT GROUP, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                                                     Unaudited       Unaudited
                                                                    Jan 1, 2006-    Jan 1, 2005-
                                                                    Mar 31, 2006    Mar 31, 2005
                                                                    ------------    ------------
<S>                                                                 <C>             <C>
Cash Flows from Operating Activities
------------------------------------
  Net (Loss)                                                        $   (407,823)   $   (517,630)
  Equity Loss from Investee                                               27,693          17,314
  Depreciation and Amortization                                            8,096          35,742
  Pay Fee Debenture                                                         --          (275,000)
  Services for Common Stock                                                 --             6,500
  Increase (Decrease) Current Liabilities                                (14,699)         24,146
  Increase Accrued Interest                                                 --            98,086
                                                                    ------------    ------------
              Net Cash provided by (used in) Operating Activities       (386,733)       (610,842)


Cash Flows from Investing Activities
------------------------------------
  Deposits                                                                  --            (2,300)
  Purchase Equipment and Patent                                          (14,966)        (97,907)
                                                                    ------------    ------------
              Net Cash (used in) Investing Activities                    (14,966)       (100,207)


Cash Flows from Financing Activities
------------------------------------
  Increase Notes Payable                                                 120,399         563,645
  Increase Stock Issue                                                   294,878         315,707
                                                                    ------------    ------------
              Net Cash provided by Financing Activities                  415,277         879,352


Net Increase (Decrease) in Cash and Cash Equivalents                      13,578         168,303

Cash and Cash Equivalents at Beginning of Period                          (1,534)         88,908
                                                                    ------------    ------------
Cash and Cash Equivalents at End of Period                          $     12,044    $    257,211
                                                                    ============    ============
</TABLE>







The  accompanying  notes  are  an  integral  part  of  these  interim  financial
statements.


                                       7
<PAGE>
<TABLE>
<CAPTION>

                    CONSORTIUM SERVICE MANAGEMENT GROUP, INC.
                                AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                        JANUARY 1, 2006 - MARCH 31, 2006
                                    Unaudited




                                                                     Additional
                                     No. Common         Par           Paid In         Stock
Description                         Shares (Ea.)       Value          Capital       Subscribed
-----------------------------------------------------------------------------------------------
<S>                                 <C>             <C>             <C>            <C>
Balance January 1, 2006               26,056,072    $     26,056    $  7,548,049   $       (939)
Common Stock Sold                      3,412,509           3,413         290,859
Common Stock Issued for Services
Common Stock Issued for Interest
Common Stock Issued for Notes
Common Stock Escrowed                                                                       607
Net (Loss)
Other Comprehensive Income (Loss)           --              --              --             --
Foreign Exchange Gain (Loss)                --              --              --             --
-----------------------------------------------------------------------------------------------
Balance March 31, 2006                29,468,581    $     29,469    $  7,838,908   $       (332)
                                                    ===========================================
Treasury Shares                          (80,713)
Escrowed Stock                          (332,297)
                                    ------------
Shares Outstanding                    29,055,571
                                    ============


                                     Accumulated
                                        Other
                                    Comprehensive   Accumulated       Treasury
Description                         Income (Loss)     Deficit          Stock            Total
------------------------------------------------------------------------------------------------
Balance January 1, 2006             $   (339,454)   $(13,512,773)   $    (32,285)   $ (6,311,346)
Common Stock Sold                           --              --              --           294,272
Common Stock Issued for Services            --              --              --              --
Common Stock Issued for Interest            --              --              --              --
Common Stock Issued for Notes               --              --              --              --
Common Stock Escrowed                       --              --              --               607
Net (Loss)                                  --          (407,823)           --          (407,823)
Other Comprehensive Income (Loss)          4,982            --              --             4,982
Foreign Exchange Gain (Loss)                --              --              --              --
------------------------------------------------------------------------------------------------
Balance March 31, 2006              $   (334,472)   $(13,920,596)   $    (32,285)   $ (6,419,308)
================================================================================================
</TABLE>







The  accompanying  notes  are  an  integral  part  of  these  interim  financial
statements.

                                       8
<PAGE>

                    CONSORTIUM SERVICE MANAGEMENT GROUP, INC.
                                AND SUBSIDIARIES
                          NOTES TO FINANCIAL STATEMENTS
                        MARCH 31, 2006, DECEMBER 31, 2005

                                     NOTE 1
                              BASIS OF PRESENTATION

The accompanying  unaudited interim consolidated  financial statements have been
prepared  in  accordance  with  standards  established  by  the  Public  Company
Accounting Oversight Board (United States). Accordingly, they do not include all
of the  information  and  footnotes  required by generally  accepted  accounting
principles for complete financial statements. In the opinion of management,  all
adjustments  considered  necessary for a fair  presentation  have been included.
Operating  results  for the three  month  period  ending  March 31, 2006 are not
necessarily  indicative  of the results  that may be expected for the year ended
December  31,  2006.  For  further  information,  refer  to the  audited  annual
consolidated  financial  statements  and  footnotes  thereto  for the year ended
December 31, 2005.

                                     NOTE 2
                                  GOING CONCERN

The Company's financial statements have been presented on the basis that it is a
going concern, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company incurred a net loss
of  $(407,823)  for the three months ended March 31, 2005 and when combined with
prior year net losses raises  substantial  doubt as to the Company's  ability to
obtain debt and/or equity financing and achieve profitable operations.

The Company's  management  intends to raise  additional  operating funds through
equity and/or debt offerings and the development and marketing of  technologies.
However,  there  can  be no  assurance  management  will  be  successful  in its
endeavors.  The possible  consequences of not obtaining  additional funds either
through equity offerings,  debt offerings, or sale of technologies is that there
will not be sufficient money to fund the capital projects  required to earn long
term planned revenues of the company.

The  Company's  ability to continue as a going  concern also involves the carbon
dioxide separator  equipment which is currently  inactive but the company signed
an agreement with DuPont to purchase the landfill gas during this quarter stated
in Note 1 under Significant Accounting Policies on the December 31, 2005 audited
annual consolidated  financial statements.  The technology has been successfully
installed on similar equipment in Eastern Europe.

Although a gas  purchase  contract  was  recently  obtained  by the  Company and
litigation was recently favorably  resolved,  accounting  standard FAS 144 has a
requirement  that  because no cash flow has been  generated  as of December  31,
2005,  the CO2  equipment  had to be been  written  down to a zero value with an
impairment loss of $1,417,647  included in 2005 operating  expenses.  While this
affects the  financial  statements  of the company it does not affect the actual
value of the  equipment or the ability of the company to perform on its contract
for the sale of the gas.

We signed a contract  with DuPont on February  14, 2006 to provide up to 500,000
MMbtu  commercial  quality gas to their plant outside Mobile,  Alabama.  The gas
does not need to meet national gas pipeline  quality  specifications  to fulfill
the DuPont  contract but based on current raw gas analysis the company  believes
the gas produced will be well above the required contractual  specification.  We
are currently  negotiating  with pipeline  companies for installation of the 6.2
mile pipeline.



                                       9
<PAGE>

                                     NOTE 3
                    INCOME (LOSS) FROM UNCONSOLIDATED COMPANY

The  Company's  33%  owned  subsidiary  United  Engineering  Company,  a Ukraine
company, reported the following sales, gross profits and net (loses):


                                                   Jan 1 2006-     Jan 1, 2005-
                                                   Mar 31, 2006    Mar 31, 2005
                                                   ------------    ------------
          Sales                                    $     53,084    $     80,598
          Gross Profit (Loss)                           (23,675)           (644)
          Loss from Continuing Operations               (83,086)        (51,993)
          Net (Loss)                                    (83,086)        (51,993)
          CSMG's 1/3                                    (27,696)        (17,314)






















                                       10
<PAGE>

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

         The following  discussion  and analysis  should be read in  conjunction
with the financial  statements and the accompanying notes thereto for the period
ended March 31, 2006 and is qualified in its  entirety by the  foregoing  and by
more detailed financial information appearing elsewhere.  See "Item 1. Financial
Statements."

         Results of Operations - First Quarter of 2006 Compared to First Quarter
         -----------------------------------------------------------------------
         of 2005
         -------

         We had no revenues in either Q1 2006 or Q1 2005.

         General  and  administrative  expenses  increased  by  $106,484  or 23%
percent  during Q1 2006 as  compared  with  operating  expenses  during Q1 2005.
Operating  expenses were  $380,127 in Q1 2006 and were $500,363 in Q1 2005.  The
increase is attributable primarily to reduction in financing fees.

         We had a net loss from  operations  of $407,823  for Q1 2006,  compared
with the net loss of $517,630 for Q1 2005.

         We  accrued  a loss in Q1 2006 of  $27,696  from our joint  venture  in
Ukraine with United Engineering  Company, as compared with a net loss of $17,314
from this activity in Q1 2005.

         Altogether,  we reported a net loss in Q1 2006 of $407,823,  or $0.02 a
share, compared with a net loss in Q1 2005 of $517,630 or $0.03 a share.

         We were able to remain liquid  during this quarter  through the sale of
Rule 144 stock and additional funding from Cornell Capital Partners.

         Overview
         --------

         Live  Tissue  Bonding  Equipment.   The  E.O.  Paton  Electric  Welding
Institute of Kiev,  Ukraine developed  equipment that bonds and reconnects blood
vessels  and other soft  tissues  and organs  using  radio  frequency  fusion in
substantially less time than other technologies take and apparently leaves no or
minimal trace scar tissues after a lapse of six to seven months.

         The equipment bonds the soft biological tissue using specially designed
surgical tools. No glues, sutures, staples or other foreign matter are used. The
process  is best  described  as a  welding  process.  The scar  tissue is either
minimal  or  non-existent.  Tests  conducted  in  Louisville,  Kentucky  by U.S.
surgeons on rabbits'  stomachs  resulted in scar tissue only forty  microns wide
six months after surgery.  It appears that the Ukraine scientists have developed
a superior,  all-purpose,  seamless method of bonding soft  biological  tissues,
which method is  characterized  by simple  manipulation  applicable to different
surgical operations and the fast restoration of tissues without the formation of
coarse  scars.  Apparently  there is no need for prolonged  special  training of
surgeons and surgical personnel.



                                       11
<PAGE>

         In the Ukraine  clinical trial we developed a universal  tissue welding
device  prototype  that  does  more than 70 types of  procedures.  Now,  we have
started  developing and testing  specific  procedure  tissue welding devices for
specific  surgical markets so that will allow us to license  specific  procedure
uses. In the first quarter of 2006 we began developing procedure specific tissue
welding  devices  starting  with a duct and vessel  sealing  device.  The device
should be completed in June 2006 for demonstration.  The second specific purpose
device  will  be  the  device  for   reconnecting   intestine  for   end-to-end,
end-to-side, side-to-side and keyhole surgery.

         Additionally,  in 2006 we will be  marketing  the  equipment in several
countries that recognize the Ukraine Ministry of Health approval.

         E.O.  Paton  Institute  of  Electric  Welding of the  Ukraine  National
Academy of Sciences and  International  Association  of Welding "IAW" filed U.S.
and international  patent applications on the process in February 1997. Two U.S.
and one Australian patents have been issued. A European patent has been approved
and is in the process of being issued, but no other patents have been issued. We
own the  technology  and have been  assigned the  exclusive  world rights of the
patents - should  they be  issued.  See  Exhibit  10.3 filed as part of our Form
10-SB.

         Until the end of 2005 all  surgeries  were  performed  using  prototype
equipment in the Ukraine  hospitals  during  clinical  trials.  IAW has received
approval from the Ukraine Ministry of Health to commercialize the tissue bonding
products  in  Ukraine.  In late  2005 our  Ukraine  partner  received  its first
commercial  order from the  Ministry of Health in Ukraine for 10 tissue  welding
sets of surgical equipment. We will not participate in the revenues of this sale
but will benefit from the  additional  funding into the tissue  welding  project
development.

         We  have  begun  the  process  for FDA  discovery  and  developing  the
regulatory  and  commercial  equipment  models for  submission  to FDA.  We have
engaged U.S. regulatory and equipment consultants to assist in this process.

         To date we have submitted no applications,  requests or testing results
to the Federal  Drug  Administration  but plan to during the next 12 months.  We
have not marketed the bonding equipment in Ukraine or any other non-U.S. country
but we plan to market the  commercial  equipment  once  regulatory  approval  is
received.  We have continued our plans to manufacture  prototypes in Ukraine and
are continuing  clinical trials in Ukraine for comprehensive  human testing.  We
began this clinical work in May 2000. To date we have  completed more than 5,000
successful  human  surgeries  and more  than 70  procedure  types at 10  Ukraine
hospitals.  We are currently  negotiating with a group of private  investors and
international medical device companies, who are familiar with our company's need
additional development funds.

         In 2002 we formed Live Tissue  Connect,  Inc., a Delaware  corporation,
through which we will develop our Tissue Bonding  technology.  We own 86 percent
of Live Tissue Connect, Inc.

         We  estimate  that in excess of $3.5  million  have  been  expended  in
developing  the  project  and that $3.0  million  of  additional  funds  must be
expended to bring this product to market.  On March 8, 2005 Live Tissue  Connect
executed an agreement  with ConMed  Corporation  of Utica,  New York pursuant to



                                       12
<PAGE>

which ConMed was granted  exclusive  worldwide  product  licensing and marketing
rights to bring our  patented,  platform,  life-biological  tissue  bonding  and
welding technology to the U.S. and world markets.

         The agreement  expired on May 31, 2005 without  action by ConMed or us.
Until  now we  have  used a  universal  power  source  that  performs  types  of
procedures. We are now developing power sources designated for specific types of
procedures  to enable  us to  license  different  procedure  types to  different
medical device distribution  companies.  The first tested power source prototype
of this specific  procedure is for duct and vessel sealing and will be completed
early  in  the  second  quarter  2006.  The  second  prototype  for  end-to-end,
end-to-side or keyhole  reconnection  of intestines will be completed at the end
of the second  quarter  2006.  We plan to begin U.S.  FDA and  European  CE Mark
filings  during the fourth quarter 2006.  U.S. and Australian  patents have been
issued, and European patent  applications are approved and are in the process of
being issued.  Other international patent applications have been filed. In April
2006 we have  received  the European  Union  patent  approval and in May 2006 we
received our third U.S. patent.

         We successfully  demonstrated  live tissue welding on porcine models in
demonstrations  during May, June and September of 2004 for the medical community
in Louisville, Kentucky, New York, Massachusetts and Ohio.

         This  project  is still  in the  development  stage,  even  though  the
Ukrainians have created a finished  prototype product and a line of more than 70
surgical instruments.  Improvements in the instruments are possible, and testing
on live tissue of humans to U.S.  testing  standards  may be  required  for some
procedures.   Approval  of  the  process  and  equipment  by  the  Federal  Drug
Administration  is  required.  We  anticipate  that  some  applications  of  the
technology  will be approved by the F.D.A.  by 2007 and that full  approval will
follow by 2008.

         Anaerobic Farm-Waste Disposal Equipment. We have not found this product
to be marketable and are considering  discontinuance of the product.  In January
2006 we closed the Oklahoma  City  Anaerobic  Farm Waste  location and moved the
project to be under the direction of the Corpus Christi office.

         Carbon Dioxide Separator. We own the patented exclusive world rights to
the CO2 separator  technology with most of the equipment  being  manufactured in
Ukraine.  The technology  separates carbon dioxide and other impurities from the
gas  produced in  landfills.  The  equipment  converts  the  remaining  gas to a
cleaner,  up to  98-percent  pure  methane  gas for use in  internal  combustion
engines or for sale to natural gas  companies.  This equipment was developed for
us by the  Institute of Gas,  Ukraine  National  Academy of Sciences and will be
manufactured for us only by Sumy Frunze in Sumy,  Ukraine. We have installed the
first set of equipment at a landfill in Chastang (Mobile), Alabama.

         We signed a contract  with DuPont on February 14, 2006 to provide up to
500,000 MM BTU a year of commercial  quality gas to their plant outside  Mobile,
Alabama.   The  gas  does  not  need  to  meet  national  gas  pipeline  quality
specifications  to fulfill  the DuPont  contract,  but based on current  raw gas
analysis,  we  believe  the  gas  produced  will  be  well  above  the  required



                                       13
<PAGE>

contractual specification.  We are currently negotiating with pipeline companies
for installation of a 6.2-mile  pipeline.  We are working with a lender to close
the financing and expect to finalize the financing and pipeline  contract during
the current quarter of 2006.

         The status of our CO2 separator project in Chastang County,  Alabama is
that the installation  was completed  during March 2003.  Start-up and equipment
adjustment  were  delayed  while  waiting for the landfill gas owner to complete
installation  of the  end-user  pipeline  and  gas  metering  system.  This  was
installed  near the end of March  just as our  Ukraine  supervisory  team had to
return to Ukraine. In addition, the landfill gas quality was well below expected
levels and required  repairs to the gas  gathering  system to reduce air intake.
The landfill gas owner  coordinated  and completed these repairs during the next
few  weeks,  finishing  toward  the end of May.  The  Ukraine  supervisory  team
returned in early June to oversee  service,  start-up and adjust the  equipment.
Poor weather caused some delays but this was completed in about two weeks. As we
prepared to begin start-up operations and equipment adjustment, Waste Management
Inc.  ("WMI",  the  operator  of  the  landfill)  ordered  Resource   Technology
Corporation  "RTC" (the holder of the gas  ownership  contract) off the landfill
and contended that our CO2 separator  equipment  produces methane gas that fails
to meet gas quality specifications and that, therefore, the agreement to buy the
gas  is  terminated.   This   contention  was  litigated  in  RTC's  chapter  11
reorganization  proceeding.  During the court  proceedings  in February 2006 the
company learned that RTC had erroneously misstated to WMI that the equipment was
fully operational and processing the landfill gas into  commercially  usable gas
after March 2003. In fact,  CSMG had refused to bring the Ukraine  start-up team
back to the Chastang landfill until RTC properly replaced leaking well heads and
closed other air leaks in the raw landfill gas collection  system.  During March
2003 the  company  made two tests of the  processed  raw  landfill  gas during a
30-minute period to evaluate the  effectiveness of the CO2 removal  equipment at
the site for removing CO2 from the landfill  gas. At the time of testing RTC had
not  adjusted  the well heads to stop air leakage  into the system.  The raw gas
specifications  were 43% CH4 - 42% CO2 and 15% O2 and N combined.  Test 1 of the
processed gas showed CO2 to be at a 3.33% level and test 2 after minor equipment
adjustments showed CO2 at a 2.5% level. The CO2 separator removes CO2 but not O2
and N. O2 and N control is a function of tuning or managing  the gas  collection
system.  CSMG  has the  additional  technology  to  remove  the N and O2 if such
equipment  is  necessary.  In May 2003 CSMG brought the Ukraine team to Chastang
after the collection system had been repaired, but WMI filed for contract breach
against RTC after learning of the misstatement.

         On December 16, 2004 we entered into a contract with WMI to operate the
CO2 separator at Chastang,  Alabama. The agreement was approved in February 2005
by the RTC  trustee  and the U.S.  Bankruptcy  Court;  however,  the  settlement
agreement  was  appealed  by RTC insider  creditors  and on January 11, 2006 the
appeals court refused to hear the appeal.

         Outlook
         -------

         The   company's   future   results   of   operations   and  the   other
forward-looking  statements  contained in this Outlook involve a number of risks
and  uncertainties.  Among the factors that could cause actual results to differ
materially  are  the  following:  inability  of the  company  to  obtain  needed
additional  capital,  loss of personnel - particularly  Chief Executive  Officer
Donald S.  Robbins or other key  executives  as result of accident or for health




                                       14
<PAGE>

reasons,  interruptions  in the supply of equipment  from  manufacturers  of the
equipment,   the   development   of  competing   products  by   well-capitalized
competitors,  and an accident  involving life or serious bodily harm that fairly
or  unfairly  would  bring  into  question  the  safety of using  the  company's
products.

         The Cornell Capital Partners Transaction:
         -----------------------------------------

         On March 29, 2004,  we entered into an Equity Line of Credit  Agreement
with Cornell Capital  Partners.  Under this agreement,  we may issue and sell to
Cornell  Capital  Partners  common stock for a total purchase price of up to $10
million.  Subject to certain  conditions,  we are  entitled  to draw down on the
Equity  Line of Credit now that the common  stock to be issued  under the Equity
Line of Credit is registered with the Securities and Exchange Commission and the
registration statement is declared effective.  The purchase price for the shares
is equal to 95% of, or a 5% discount to, the market  price,  which is defined as
the lowest  closing bid price of the common  stock  during the five trading days
following the notice date. We have the right, but not the obligation, to require
Cornell Capital to purchase shares in the company's  common stock in amounts not
to exceed  $140,000  per draw up to a maximum of $420,000 per month with a total
of $10 million over a consecutive  24-month  period.  Cornell  Capital  Partners
received a fee  debenture of $390,000,  in the form of  convertible  debentures.
Cornell also received a $10,000 legal fee.  Cornell Capital Partners is entitled
to retain a fee of 5% of each advance. The net effect of the 5% discount and the
5% retainage of each advance is that Cornell  Capital  Partners shall pay 90.25%
of the  applicable  closing  bid price for each  share of our common  stock.  In
addition,  we have  entered  into a placement  agent  agreement  with  Newbridge
Securities,  a  registered  broker-dealer.   Pursuant  to  the  placement  agent
agreement,  we will pay a one-time placement agent fee in shares of common stock
equal to approximately $10,000 based on the stock price on the date we agreed to
engage the placement agent.

         We received  $1,000,000  under a loan  agreement  with Cornell in July,
August and  December  2004 which is being repaid at the rate of $25,000 per week
through the Cornell Equity Line of Credit Agreement.  These funds are being used
for operations of the parent and subsidiaries. In addition we converted $390,000
of outstanding investor loans to restricted 144 stock.

         As of March 31, 2006 we have sold 13,710,382  shares of common stock to
Cornell  Capital for $1,960,000  pursuant to the Equity Line of Credit.  We have
escrowed  433,918  shares with  Cornell's  escrow  agent to use as  repayment of
current credit line balance and future credit line use.

         As of May 3, 2006 Cornell Capital  Partners,  L.P., has sold 14,074,968
shares of our common stock acquired for $2,030,000  pursuant to a Standby Equity
Distribution  Agreement with us and 1,516,638 shares of our common stock under a
convertible  debenture that we issued to Cornell  Capital for fees in connection
with the  issuance  of that  debenture.  We have  escrowed  669,307  shares with
Cornell's  escrow agent to use as  repayment of current  credit line balance and
future  credit line use.  There is still an additional  8,232,056  shares of our
common stock that are unissued  under the  registration  statement that we could
require  Cornell to purchase for our current or future  funding  pursuant to the
Standby Equity Distribution Agreement. We currently owe Cornell $460,000.



                                       15
<PAGE>

Off-Balance Sheet Arrangements

         We have a lease on our office space with twelve months  remaining until
it  expires.  Our rent is $1,100 a month,  for a total of $13,200  in  remaining
obligations.

         Other than the office  lease,  our  company  has not  entered  into any
transaction,   agreement  or  other  contractual   arrangement  with  an  entity
unconsolidated with us under which we have

o        an obligation under a guarantee contract,
o        a  retained  or  contingent  interest  in  assets  transferred  to  the
         unconsolidated  entity or similar  arrangement  that  serves as credit,
         liquidity or market risk support to such entity for such assets,
o        any  obligation,  including a contingent  obligation,  under a contract
         that would be accounted for as a derivative instrument, or
o        any  obligation,  including a contingent  obligation,  arising out of a
         variable  interest in an  unconsolidated  entity that is held by us and
         material to us where such entity provides financing,  liquidity, market
         risk or credit  risk  support  to, or  engages in  leasing,  hedging or
         research and development services with us.

Item 3.           Controls and Procedures

         Evaluation  of  disclosure  controls  and  procedures.   The  Company's
management believes internal controls are as good as practical given the limited
resources of the company.

                           PART II - OTHER INFORMATION

Item 1.           Legal Proceedings.

         The  registrant  ("CSMG")  was  sued on  February  10,  2005  by  Banco
Panamericano,  Inc.  in  the  Circuit  Court  of  Cook  County,  Illinois  Banco
Panamericano, Inc. v. Consortium Service Management Group, Inc. and CSMG Gastech
LLC,  Case  No.2005L001514.  The  complaint  alleges  that CSMG  entered  into a
short-term  promissory  note dated  February 15, 2002 ("the Note") by which CSMG
borrowed from Banco  Panamericano  $203,800 at 12% interest,  the Note being due
April 1, 2002. The complaint  alleges that the Note was secured by all of CSMG's
equipment,  inventory,  accounts,  general intangibles and other properties. The
complaint  alleges  that  the  Note  is in  default  and  that  SMG  owed  Banco
Panamericano $514,920 as of February 9, 2005.

         CSMG alleges as follows with regard to the allegations of Banco
Panamericano:

                  o        Banco  Panamericano  is  not a  bank  but a  Nebraska
                           corporation   that  is   affiliated   with   Resource
                           Technologies Corporation ("RTC"), a company that is a
                           debtor in a federal chapter 11 reorganization case.



                                       16
<PAGE>

                  o        CSMG  and  RTC  had  entered  into a  contract  ("the
                           Contract") whereby CSMG would provide equipment ("The
                           Equipment"),  at CSMG's cost, to filter  landfill gas
                           from a landfill operated by RTC located in Alabama so
                           as to provide  marketable  methane  gas.  Among RTC's
                           obligations  under the Contract  was a commitment  to
                           provide a  pipeline  hookup to the  purchaser  of the
                           gas.  CSMG and RTC would share in the  proceeds  from
                           the sale of the methane gas.

                  o        CSMG  lacked  the funds to  perform  its  obligations
                           under  the  Contract.  RTC got its  affiliate,  Banco
                           Panamericano,  to  agree  to lend  CSMG  $203,800  to
                           enable  CSMG  to  meet  these  obligations.   It  was
                           understood by CSMG, RTC and Banco  Panamericano  that
                           CSMG would  liquidate  the Note from its share of the
                           proceeds of sale of the methane gas.

                  o        CSMG installed the Equipment. But RTC never performed
                           its  obligations   under  the  Contract.   And  Banco
                           Panamericano  never loaned any funds to CSMG. Rather,
                           Banco  Panamericano  advised CSMG, from time to time,
                           that CSMG had incurred several indistinctly-described
                           financial   obligations   to  RTC  and   that   Banco
                           Panamericano  had advanced  the funds  subject to the
                           Note  to  its   affiliate,   RTC,   to   cover   such
                           obligations. Such allegations of CSMG indebtedness to
                           RTC were not true.

                  o        The intention of RC and Banco  Panamericano  from the
                           beginning  was to get  CSMG  to  execute  the  Note -
                           secured  by the  Equipment,  to cause  the Note to go
                           into  default,  and to obtain title to the  Equipment
                           through the rights of a secured creditor.

         CSMG believes that it, not the plaintiff, is the injured party and that
this litigation  properly belongs in RTC's chapter 11 proceedings in the federal
bankruptcy court.

         On March 2, 2005,  the case was removed from the Circuit  Court of Cook
County,  Illinois to the Federal  District  Court for the  Northern  District of
Illinois.  CSMG filed its Motion to have the  proceeding  referred to the United
States  Bankruptcy  Court  for the  Northern  District  of  Illinois  where  the
bankruptcy  proceeding  of RTC  continues to pend.  The Federal  District  Court
referred the  proceeding  to the United States  Bankruptcy  Court on December 6,
2005

         The  registrant  ("CSMG") was sued on September 6, 2005 by Nature Coast
Collections,  Inc. in the Circuit Court for Hillsborough County, Florida, Nature
Coast Collections,  Inc. v. Consortium Service Management Group, Inc., Donald S.
Robbins and Gordon W. Allison,  Case No.  05-7894.  The  complaint  alleges that
Nature Coast Collections,  Inc. is the assignee of the original payee, Stonegate
Management,  ltd., a Costa Rican entity,  of four  promissory  notes executed by
CSMG,  Donald S. Robbins,  as guarantor and Gordon W. Allison as guarantor.  The
amount  claims in the suit is the  aggregate  principal  sum of  $630,000,  with
interest, costs, and attorney fees.



                                       17
<PAGE>
<TABLE>
<CAPTION>

         CSMG had the proceeding  removed to the Federal  District Court for the
Middle District of Florida.  CSMG has  subsequently  filed its motion to dismiss
the proceedings for lack of jurisdiction in Florida.  On May 2, 2006, the United
States   District  Court   dismissed  the   proceedings  for  lack  of  personal
jurisdiction over the defendants.

Item 2.           Unregistered Sales of Equity Securities

         Set forth below are  previously  unreported  sales of our common  stock
since December 31, 2005 in transactions exempt from registration pursuant to the
provisions of Regulation D, Rule 506.

         ---------- ----------------------------- --------- ---------- --------------
                                                  No. of    Price      Type of
         Date       Person                        Shares    Per Share  Consideration
         ---------- ----------------------------- --------- ---------- --------------
         <S>        <C>                           <C>       <C>     <C>
         04-04-06   Sterling FBO John Nolen IRA     20,000  $0.20      Cash
         ---------- ----------------------------- --------- ---------- --------------
         04-04-06   Sandra Allen                   250,000  $0.04      Cash
         ---------- ----------------------------- --------- ---------- --------------
         04-21-06   Robert Williams IRA             57,259  $0.36      Cash
         ---------- ----------------------------- --------- ---------- --------------
</TABLE>

         All of the  persons  purchasing  shares of common  stock  were known to
management, they were all accredited investors

Item 6.           Exhibits  and  Reports  on  Form  8-K

         (a)      Exhibits

         The following  exhibits are filed, by  incorporation  by reference,  as
part of this Form 10-QSB:

         Exhibit No.                                 Description

              3       -     Amended and Restated  Articles of  Incorporation  of
                            Consortium Service Management Group, Inc.*

              3.1     -     Bylaws of Consortium Service Management Group, Inc.*

              10      -     Founders' Agreement of United Engineering Company*

              10.1    -     Statutes (Bylaws) of United Engineering Company*

              10.2    -     Agreement  of  April  24,  1996  between  Consortium
                            Service Management Group, Inc. and The L Group, Inc.
                            concerning tissue bonding technology*  (rescinded in
                            January 2000)

              10.3    -     Agreement of July 9, 1996 between Consortium Service
                            Management  Group,  Inc. and  International  Welding
                            concerning tissue bonding technology*



                                       18
<PAGE>

              10.4    -     Agreement among Consortium Service Management Group,
                            Inc.,  United   Engineering   Company  and  Ivan  V.
                            Semenenko,  the inventor of the anaerobic farm waste
                            technology*

              10.5    -     Agreement of June 9, 1998 among  Consortium  Service
                            Management  Group,  Inc.,  The Sumy  Frunze  Machine
                            Building  Science and  Production  Association,  and
                            United Engineering  Company concerning the anaerobic
                            farm waste technology*

              10.6    -     Agreement  between   Consortium  Service  Management
                            Group,  Inc.  and  Western  Waste  Management,  Inc.
                            concerning the anaerobic farm waste technology*

              10.7    -     Agreement  between   Consortium  Service  Management
                            Group,   Inc.  and  Aardema  Dairy   concerning  the
                            anaerobic farm waste technology*

              10.8    -     Agreement  between   Consortium  Service  Management
                            Group, Inc. and John and Ruth Beukers concerning the
                            anaerobic farm waste technology*

              10.9    -     Agreement  of December  1998  between  International
                            Welding  Association of Kiev, Ukraine and Consortium
                            Service Management Group, Inc. concerning the carbon
                            dioxide separator technology*

              10.10   -     Operating   Agreement   of  June  14,  2001  between
                            Consortium   Service   Management  Group,  Inc.  and
                            Resource Technology Corporation***

              10.11   -     Contract Agreement Effective August 14, 2000 between
                            Consortium Service Management  Group/Anaerobic  Farm
                            Waste Co. and Rondeau Anaerobic***

              10.12   -     Contract    IAW-USA     002-PR-19.04.2000    between
                            International  Association  Welding,  Kiev  and E.O.
                            Paton Electric  Welding  Institute  National Academy
                            Science  Ukraine and Consortium  Service  Management
                            Group, Inc.***

              10.13   -     Contract    IAW-USA     003-PR-19.04.2000    between
                            International  Association  Welding,  Kiev  and E.O.
                            Paton Electric  Welding  Institute  National Academy
                            Science  Ukraine and Consortium  Service  Management
                            Group, Inc.***



                                       19
<PAGE>

              10.14   -     Contract    IAW-USA     004-PR-19.04.2000    between
                            International  Association  Welding,  Kiev  and E.O.
                            Paton Electric  Welding  Institute  National Academy
                            Science  Ukraine and Consortium  Service  Management
                            Group, Inc.***

              10.15   -     Contract    IAW-USA     005-PR-19.04.2000    between
                            International  Association  Welding,  Kiev  and E.O.
                            Paton Electric  Welding  Institute  National Academy
                            Science  Ukraine and Consortium  Service  Management
                            Group, Inc.***

              10.16   -     Contract    IAW-USA     006-PR-19.04.2000    between
                            International  Association  Welding,  Kiev  and E.O.
                            Paton Electric  Welding  Institute  National Academy
                            Science  Ukraine and Consortium  Service  Management
                            Group, Inc.***

              10.17   -     Contract    IAW-USA     007-PR-19.04.2000    between
                            International  Association  Welding,  Kiev  and E.O.
                            Paton Electric  Welding  Institute  National Academy
                            Science  Ukraine and Consortium  Service  Management
                            Group, Inc.***

              10.18   -     Contract   IAW-USA  008-PR   between   International
                            Association  Welding,  Kiev,  Ukraine and Consortium
                            Service Management Group, Inc.***

              10.19   -     Natural  Gas  Purchase  Agreement  of June 20,  2000
                            between  Texas  Energy  Transfer  Company,  Ltd. and
                            Resource Technology Corp.****

              10.20   -     Agency  Agreement  between Joint Stock Company "Sumy
                            Frunze   Machine-Building   Science  and  Production
                            Association"  of  Ukraine  and  Consortium   Service
                            Management Group, Inc.+

              10.21   -     2003  Stock  Option  Plan  adopted  by the  board of
                            directors of Consortium  Service  Management  Group,
                            Inc.++

              10.22   -     Joint Development and Exclusive License Agreement of
                            March 8, 2005 between Live Tissue Connect,  Inc. and
                            ConMed Corporation.+*




                                       20
<PAGE>

              10.23   -     Standby Equity  Distribution  Agreement of March __,
                            2004  between  Cornell  Capital  Partners,   LP  and
                            Consortium Service Management Group, Inc. ++*

              10.24   -     Landfill   Gas   Sales   Agreement    between   CSMG
                            Technologies,  Inc.  and E.I.  DuPont de Nemours and
                            Co. Inc. and Shoreline Gas, Inc.++++

              14      -     Code of Ethics for the Chief  Executive  Officer and
                            Senior Financial Officers. ++*

              31      -     Certification of Chief Executive Officer pursuant to
                            18 U.S.C.  Section  1350,  as  adopted  pursuant  to
                            Section 302 of the Sarbanes-Oxley Act of 2002.

              31.1    -     Certification of Chief Financial Officer pursuant to
                            18 U.S.C.  Section  1350,  as  adopted  pursuant  to
                            Section 302 of the Sarbanes-Oxley Act of 2002.

              32      -     Certification of Chief Executive Officer pursuant to
                            18 U.S.C.  Section  1350,  as  adopted  pursuant  to
                            Section 906 of the Sarbanes-Oxley Act of 2002.

              32.1    -     Certification of Chief Financial Officer pursuant to
                            18 U.S.C.  Section  1350,  as  adopted  pursuant  to
                            Section 906 of the Sarbanes-Oxley Act of 2002.

              99      -     Ukraine  Ministry  of  Health,   State   Department,
                            Certificate of State Registration No. 1105-193***

              99.1    -     Extract  of  U.S.  Patent  No.   6,562,037  May  13,
                            2003.+++

              99.2    -     Extract  of  U.S.  Patent  No.   6,733,498  May  11,
                            2004.+++


         *Previously  filed  with  Form  10-SB;   Commission  File  No.  0-27359
         incorporated herein.

         ***Previously filed with Amendment No. 2 to Form 10-SB; Commission File
         No. 0-27359 incorporated herein.

         ****Previously filed with Amendment No. 1 to Form 10-QSB for the period
         ended  September 30, 2002;  Commission  File No.  0-27359  incorporated
         herein.

         +Previously  filed with Form  10-KSB for the year  ended  December  31,
         2002; Commission File No. 0-27359 incorporated herein.



                                       21
<PAGE>

         ++Previously filed with Amendment No. 1 to Form 10-QSB for the period
         ended March 31, 2003; Commission File No. 0-27359 incorporated herein.

         +++Previously  filed with Form  10-QSB  for the  period  ended June 30,
         2004; Commission File No. 0-27359 incorporated herein.

         +*Previously  filed with Form 8-K (Date of Report  March 8, 2005) filed
         03-09-05, Commission File No. 0-27359 incorporated herein.

         ++*Previously  filed  with Form  10-KSB  for the year  ended  12-31-04,
         Commission File No. 0-27359 incorporated herein.

         ++++Previously  filed as  Exhibit  10.1  with  Form 8-K (Date of Report
         February  14,  2006)  filed  02-21-06,  Commission  File No.  000-27359
         incorporated herein.


                                   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.

Dated:  May 15, 2006                              CONSORTIUM SERVICE MANAGEMENT
                                                  GROUP, INC.



                                                  By /s/ Donald S. Robbins
                                                    ----------------------------
                                                    Donald S. Robbins, President











                                       22