<PAGE>

================================================================================

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

                                   FORM 10-K/A

(MARK ONE)

   [X]            ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                    FOR THE FISCAL YEAR ENDED MARCH 31, 2004

                                       or

   [ ]          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
             FOR THE TRANSITION PERIOD FROM ---------- TO ---------

                         COMMISSION FILE NUMBER 1-12282

                             CORRPRO COMPANIES, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                  OHIO                                   34-1422570
                  ----                                   ----------
     (STATE OR OTHER JURISDICTION OF                  (I.R.S. EMPLOYER
     INCORPORATION OR ORGANIZATION)                  IDENTIFICATION NO.)

   1090 ENTERPRISE DRIVE, MEDINA, OHIO                     44256
   -----------------------------------                     -----
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                 (ZIP CODE)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (330) 723-5082

     SECURITIES REGISTERED PURSUANT           SECURITIES REGISTERED PURSUANT TO
      TO SECTION 12(b) OF THE ACT:                SECTION 12(g) OF THE ACT:

     COMMON SHARES WITHOUT PAR VALUE                        NONE
     -------------------------------                        ----
            (TITLE OF CLASS)                          (TITLE OF CLASS)

                             AMERICAN STOCK EXCHANGE
                             -----------------------
                   (NAME OF EACH EXCHANGE ON WHICH REGISTERED)

         Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                  YES [X]                                    NO [ ]

         Indicate by check mark whether the Registrant is an accelerated filer
(as defined in Exchange Act Rule 12b-2).

                  YES [ ]                                    NO [X]

         The aggregate market value of Common Shares held by nonaffiliates of
the Registrant was approximately $15,160,097 at September 30, 2003. For purposes
of this calculation, the Registrant deems the Common Shares held by its
Directors, executive officers and holders of 10% or more of its Common Shares to
be Common Shares held by affiliates.

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K/A or any
amendment to this Form 10-K/A. [X]

                                    8,450,442
                                    ---------
           (Number of Common Shares outstanding as of August 11, 2004.)

                       DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the Registrant's Proxy Statement to be filed with the
Securities and Exchange Commission in connection with its 2004 Annual Meeting of
Shareholders are incorporated by reference in Part III of this Annual Report on
Form 10-K/A.

================================================================================

                                                                               1
<PAGE>

                                EXPLANATORY NOTE

         This Amendment No. 1 (this "Amendment") to our Annual Report on Form
10-K for the fiscal year ended March 31, 2004 (the "Originally Filed 10-K") is
being filed to restate our consolidated balance sheet as of March 31, 2004 and
our consolidated statement of cash flows for the year ended March 31, 2004.

         As part of our recapitalization and refinancing, we issued Series B
Cumulative Redeemable Voting Preferred Stock and a warrant for $13 million and
Senior Secured Subordinated Notes and a warrant for $14 million on March 30,
2004. In the Originally Filed 10-K, the proceeds from these issuances were
allocated between the Series B Preferred Stock and the warrant and the senior
secured subordinated notes and the warrant, respectively, based on a calculation
of the fair value of the warrants that included a "blockage" discount. During
the preparation of our June 30, 2004 consolidated financial statements, it was
determined that the value of these warrants should not include a "blockage"
discount factor. See Note 1 - - Summary of Significant Accounting Policies,
Notes to Consolidated Financial Statements included in this Amendment. Based on
this determination, we are restating our consolidated balance sheet to reflect
an increase in the allocation of the proceeds to the warrants, a corresponding
decrease in the allocation of the proceeds to the Series B Preferred Stock and
senior secured subordinated notes, and conforming changes as of March 31, 2004.
We are also restating our consolidated statement of cash flows for the year
ended March 31, 2004 to reflect related changes in the allocations to "Net
proceeds from issuance of Preferred Shares and warrants" and "Payment of
financing costs." The changes contained in this restatement are a non-cash
event, do not affect our consolidated statements of operations and shareholders'
equity (deficit), and do not affect the financial covenants included in our
financing arrangements.

         This Amendment amends and restates Item 1, Item 6, Item 7, Item 8 and
Item 9A (solely to indicate that management believes that the restatement
contained in this Amendment was not reflective of any weakness in our disclosure
controls and procedures, and that such controls were operating effectively
throughout the period covered by this Amendment) of the Originally Filed 10-K,
and Exhibits 23.1, 31.1, 31.2, 32.1 and 32.2 of Item 15 of the Originally Filed
10-K.

                                                                               2
<PAGE>

                             CORRPRO COMPANIES, INC.
                          ANNUAL REPORT ON FORM 10-K/A

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                      PAGE
                                                                                                      ----
<S>                                                                                                   <C>
                                                  PART I

Item 1:   Business..................................................................................    4

                                                 PART II

Item 6:   Selected Financial Data...................................................................   18
Item 7:   Management's Discussion and Analysis of Financial Condition and Results of Operations.....   19
Item 8:   Consolidated Financial Statements and Supplementary Data..................................   30
Item 9A:  Controls and Procedures...................................................................   61

                                                 PART IV

Item 15:  Exhibits, Consolidated Financial Statement Schedules and Reports on Form 8-K..............   63
          Signatures................................................................................   71
</TABLE>

                                                                               3
<PAGE>

                                     PART I

ITEM 1. BUSINESS

GENERAL

         Corrpro Companies, Inc. was founded in 1984 and is organized under the
laws of the State of Ohio. As used in this report, the terms "we," "us," "our,"
"Corrpro" and the "Company" mean Corrpro Companies, Inc. and its consolidated
subsidiaries unless the context indicates otherwise.

RECENT EVENTS

         On March 30, 2004, we completed a refinancing and recapitalization,
pursuant to which CorrPro Investments, LLC ("CPI"), an affiliate of Wingate
Partners III, L.P. ("Wingate Partners"), purchased 13,000 shares of our Series B
Cumulative Redeemable Voting Preferred Stock, no par value ("Series B Preferred
Stock"), and warrants to acquire approximately 12.1 million of our common shares
at a nominal exercise price for aggregate consideration of $13.0 million. We
also entered into a new $40.0 million senior secured credit facility with
CapitalSource Finance LLC ("CapitalSource"). The facility consists of a
revolving credit line, a term loan with a five-year maturity and a letter of
credit sub-facility. In addition, we issued $14.0 million in senior secured
subordinated notes to American Capital Strategies, Ltd. ("American Capital") as
well as warrants to acquire approximately 3.9 million of our common shares at a
nominal exercise price. As part of the refinancing and recapitalization, we
repaid and terminated our prior revolving credit facility due March 31, 2004 and
our outstanding senior notes due January 15, 2008.

         In connection with the refinancing and recapitalization, we increased
the size of our Board of Directors from seven to nine. Messrs. Jay I. Applebaum,
James A. Johnson, and Jason H. Reed, executives affiliated with Wingate
Partners, were appointed to the Board, with Mr. Johnson serving as Chairman of
the Board. Messrs. C. Richard Lynham, Harry W. Millis, Neal R. Restivo, Joseph
W. Rog, and Dr. Warren F. Rogers continue to serve on the Board. American
Capital has the right to designate a director to serve on the Board of
Directors. In May 2004, Joseph P. Lahey was named Chief Executive Officer and
President of Corrpro and was elected to serve on Corrpro's Board of Directors.

PRODUCTS AND SERVICES

         We provide corrosion control related services, systems, equipment and
materials to the infrastructure, environmental and energy markets. Our products
and services include:

         -        corrosion control engineering services, systems and equipment
                  ("corrosion control");

         -        coatings services ("coatings"); and

         -        pipeline integrity and risk assessment services.

         CORROSION CONTROL. Our specialty in the corrosion control market is
cathodic protection. We offer a comprehensive range of services in this area,
which includes the design, manufacture, installation, maintenance and monitoring
of cathodic protection systems. Cathodic protection is an electrochemical
process that prevents corrosion for new structures and stops the corrosion
process for existing structures. It can provide a cost-effective alternative to
the replacement of corroding structures. In order to understand how cathodic
protection works, it is helpful to first understand the corrosion process.
Steel, the most common metal protected by cathodic protection, is produced from
iron ore. To produce steel, iron ore is subjected to a refining process that
adds energy. Once steel is put back into the environment, it begins to revert
back to its original state (i.e., iron ore) by releasing the added energy back
into the surrounding environment. This process of dispersing energy is called
corrosion. Cathodic protection electrodes, called anodes, are placed near, and
connected to, the structure to be protected (i.e., the cathode). Anodes are
typically made from cast iron, graphite, aluminum, zinc or magnesium. A cathodic
protection system works by passing an electrical

                                                                               4
<PAGE>

current from the anode to the cathode. This process maintains the energy level
on the cathode, thus stopping it from corroding. Instead, the anode corrodes,
sacrificing itself to maintain the integrity of the structure. In order for the
electrical current to pass from the anode to the cathode, they both must be in a
common environment. Therefore, cathodic protection can only be used to protect
structures that are buried in soil, submerged in water or encased in concrete.
Structures commonly protected against corrosion by the cathodic protection
process include oil and gas pipelines, offshore platforms, above and underground
storage tanks, ships, electric power plants, bridges, parking garages, transit
systems and water and wastewater treatment equipment.

         In addition to cathodic protection, our corrosion control services
include corrosion engineering, material selection, inspection services, advanced
corrosion research and testing. We also sell a variety of materials and
equipment used in cathodic protection and corrosion monitoring systems,
including anodes, rectifiers and corrosion monitoring probes. Corrosion control
revenues as a percentage of our total revenues were approximately 81% for fiscal
year 2004, 82% for fiscal year 2003 and 68% for fiscal year 2002.

         COATINGS. We offer a wide variety of coatings-related services designed
to provide our customers with longer coatings life, reduced corrosion, improved
aesthetics and lower life-cycle costs for their coated structures. Coatings
services include research, testing, evaluation and application of coatings. In
addition, we provide project management services for coatings maintenance
programs, including condition surveys, failure analysis, selection of site
surface preparation methods and selection and application of coatings. We also
provide specialized coatings application services for structures with aggressive
corrosion conditions such as the inside and outside of storage tanks and
pipelines. Coatings revenues as a percentage of our total revenues were
approximately 15% for fiscal year 2004, 14% for fiscal year 2003 and 28% for
fiscal year 2002.

         PIPELINE INTEGRITY AND RISK ASSESSMENT SERVICES. We offer a
comprehensive line of pipeline integrity, risk assessment and inspection
services, including assessment, surveys, inspection, analysis, repairs and
ongoing maintenance. By offering a wide range of services, we are able to
provide pipeline owners with one-stop shopping for the preservation of their
pipeline systems. Pipeline integrity and risk assessment services represented
approximately 4% of our revenues in each of fiscal years 2004, 2003 and 2002.

DISPOSITIONS

         In July 2002, our Board of Directors approved a formal business
restructuring plan. The multi-year plan included a series of initiatives to
improve operating income and reduce debt by selling non-core business units. We
engaged outside professionals to assist in the disposition of our domestic and
international non-core business units. Prior to the quarter ended September 30,
2002, our non-core domestic and international units were reported as the Other
Operations and International Operations reporting segments. Effective as of the
quarter ended September 30, 2002, the Other Operations and the International
Operations reporting segments were eliminated and the non-core domestic and
international units were reported as discontinued operations. Prior-year
financial statements were reclassified to reflect these non-core units as
discontinued operations, which were also referred to as "assets and liabilities
held for sale."

         In the second quarter of fiscal 2004, our Board of Directors removed
our European Operations from discontinued operations. The Board concluded that
our value would be enhanced by maintaining our European presence rather than by
selling the European Operations at this time, based in part on the strength of
the local management team, the similar characteristics of the served markets,
and the favorable prospects for this business. Therefore, effective in the
second quarter of fiscal 2004, we reported quarterly and annual results of our
European Operations in our continuing operations, and prior-year financial
statements have been reclassified to reflect our European Operations as
continuing operations.

         During fiscal 2004, we substantially completed the sales of our Middle
East subsidiaries, and we recorded impairment charges relating to our Middle
East Operations of $3.5 million. During the first quarter of fiscal 2004, we
sold our Asia Pacific Operations for a net loss of $46,000 after taking into
account an impairment charge on net assets that was recorded during the fourth
quarter of fiscal 2003 totaling $1.6 million. During fiscal 2003, we disposed of
four non-strategic business units. First, in March 2003, we sold our Bass-Trigon
Software business unit for $3.2 million and recognized a gain of $0.2 million.
Also, in March 2003, we sold our Rohrback Cosasco Systems subsidiary and
recorded

                                                                               5
<PAGE>

a note receivable for $6.2 million, which we collected during fiscal 2004 and
recognized a gain of $1.8 million. We also disposed of two smaller international
offices resulting in a net gain of $0.1 million during fiscal 2003. The net
proceeds from these dispositions were used to reduce our then outstanding debt.
For further information about our discontinued operations see Note 2, Assets and
Liabilities Held for Sale, Notes to Consolidated Financial Statements included
in Item 8 of this Annual Report on Form 10-K/A.

SEGMENTS

         We have organized our operations into three business segments by
geographic region: Domestic Core Operations, Canadian Operations and European
Operations. Our former non-core domestic, Middle East and Asia Pacific
operations are reported as discontinued operations. Our business segments and a
description of the products and services they provide are described below:

         DOMESTIC CORE OPERATIONS. Our Domestic Core Operations segment provides
products and services, which include corrosion control, coatings and pipeline
integrity and risk assessment. We provide these products and services to a
wide-range of customers in the United States in a number of industries,
including energy, utilities, water and wastewater treatment, chemical and
petrochemical, pipelines, defense and municipalities. In addition, this segment
provides coatings services to customers in the entertainment, aerospace,
transportation, petrochemical and electric power industries, as well as the
United States military. Finally, the Domestic Core Operations segment includes a
production facility in the United States that assembles and distributes cathodic
protection products, such as anodes, primarily to the United States market.
Revenues relating to this segment totaled $92.9 million (or 72% of consolidated
revenues) for fiscal year 2004, $85.0 million (or 72% of consolidated revenues)
for fiscal year 2003 and $101.8 million (or 76% of consolidated revenues) for
fiscal 2002.

         CANADIAN OPERATIONS. Our Canadian Operations segment provides corrosion
control, pipeline integrity and risk assessment services to customers in Canada
that are primarily in the oil and gas industry. These customers include pipeline
operators and petrochemical plants and refineries. The Canadian Operations
segment has a production facility that assembles products such as anodes and
rectifiers. Revenues relating to this segment totaled $24.1 million (or 18% of
consolidated revenues) for fiscal year 2004, $19.3 million (or 17% of
consolidated revenues) for fiscal year 2003 and $21.3 million (or 16% of
consolidated revenues) for fiscal year 2002.

         EUROPEAN OPERATIONS. Our European Operations segment provides corrosion
control products and services to customers in the petroleum, utility,
industrial, marine and offshore markets, as well as to governmental entities in
connection with their infrastructure assets. Revenues relating to this segment
totaled $13.1 million (or 10% of consolidated revenues) for fiscal year 2004,
$13.4 million (or 11% of consolidated revenues) for fiscal year 2003 and $11.7
million (or 8% of consolidated revenues) for fiscal year 2002.

         Further information about our business segments is included in Note 10,
Business Segments, Notes to Consolidated Financial Statements included in Item 8
of this Annual Report on Form 10-K/A.

SALES AND MARKETING

         We market our products and services in the United States, Canada and
Europe primarily through our sales personnel. The technical nature of our
products and services requires a highly trained, professional sales force, and,
as a result, many of our sales personnel have engineering or technical expertise
and experience. Due to the problem solving experience of our engineering staff,
potential and existing customers regularly seek out advice from our technical
personnel, which can result in business opportunities on an ongoing basis.

                                                                               6
<PAGE>

SOURCES AND AVAILABILITY OF RAW MATERIALS

         With regard to our corrosion control services, we assemble components
of cathodic protection systems, which include aluminum, zinc, magnesium and
other metallic anodes. With regard to our coatings-related services, we
manufacture, develop and apply coatings. We do not believe that we are dependent
upon any single outside vendor as a source of supply and we believe that
sufficient alternative sources of supply for the same, similar or alternative
products are available. The prices paid for our raw materials may be affected
by, among other things, energy, petroleum, steel and other commodity prices,
tariffs and duties on imported materials, and foreign currency and exchange
rates. We may experience higher energy, petroleum and steel prices in fiscal
year 2005 than we experienced in fiscal year 2004, based on increasing prices
for such commodities.

INTELLECTUAL PROPERTY

         Through internal development programs and strategic acquisitions, we
have assembled an extensive array of technologies protected by a significant
number of trade and service marks, patents, trade secrets and other proprietary
rights. As of March 31, 2004, we were the licensee of certain patents and held a
significant number of patents and pending patent applications. Expiration dates
of such patents range from 2004 to 2021. In addition, we maintain a significant
number of trade and service marks and trade secrets. Although we believe that
our intellectual property has value, we consider the quality and timely delivery
of our products, the service we provide to our customers and the technical
knowledge and skills of our personnel to be more important in our ability to
compete. While our intellectual property rights may be of importance to
individual components of our operations, our business as a whole is not
materially dependent on any single intellectual property right or such
intellectual property rights as a group.

RESEARCH AND DEVELOPMENT

         Our engineering and product development activities are primarily
directed toward designing new products and services to meet the specific
requirements of our customers. Product development costs were minimal in fiscal
2004, 2003 and 2002. While we stress the importance of our research and
development programs, the expense and market uncertainties associated with the
development and successful introduction of new products are such that there can
be no assurance that we will realize future revenues from new products.

SEASONAL TRENDS

         Each of our segments is subject to seasonal fluctuations that may
affect our operating performance. A large portion of our service activity is
performed in the field. Therefore, adverse climatic conditions, such as cold
weather, snow, heavy or sustained rainfall, hurricanes and typhoons, may reduce
the level of our service activity or result in work stoppages. Since a large
portion of our business can be adversely impacted by inclement weather, we
usually experience a reduction in sales during our fourth fiscal quarter
reflecting the effect of the winter season in our principal markets in North
America and Europe. For these reasons, our revenues during the fourth quarter of
our fiscal year typically have been lower than revenues during each of the other
three fiscal quarters.

FOREIGN OPERATIONS

         The Company's foreign operations are subject to the usual risks of
operating in foreign jurisdictions. They include, but are not limited to,
exchange controls, currency restrictions and fluctuations, changes in local
economics and changes in political conditions.

                                                                               7
<PAGE>

CUSTOMERS

         We sell our products and services to a broad range of customers. During
the fiscal year ended March 31, 2004, no one customer accounted for more than
10% of our sales. We do not believe that the loss of any one customer would have
a material adverse effect on our business.

         We sell products and services to the U.S. government and agencies and
municipalities thereof, including the U.S. Navy. Sales to these customers as a
percentage of our net sales were approximately 9% for fiscal year 2004, 8% for
fiscal year 2003 and 10% for fiscal year 2002. Our contracts with the U.S.
government contain standard provisions permitting the government to terminate
these contracts without cause. In the event of termination, we are entitled to
receive reimbursement on the basis of the work completed (cost plus a reasonable
profit). These contracts are also subject to renegotiation of profits. In
addition, many of our contracts with the U.S. government are subject to certain
completion schedule requirements that include liquidated damages in the event
schedules are not met as the result of circumstances within our control.
Government procurement programs are also subject to budget cutbacks and policy
changes that could impact the revenue for, or alter the demand for, our products
or services. Accordingly, our future sales to the government are subject to
these budgetary and policy changes.

BACKLOG

         Backlog consists of our anticipated revenue from the uncompleted
portions of our existing contracts and contracts whose award is reasonably
assured. As of March 31, 2004, our backlog of unshipped orders was $52.5
million, compared to $49.6 million as of March 31, 2003. We believe that the
backlog figures are firm, subject to the cancellation and modification
provisions contained in various contracts. We estimate that a substantial
portion of our backlog as of March 31, 2004 will be filled during fiscal 2005.
The level of our backlog at any particular time is not necessarily indicative of
our future operating performance.

COMPETITIVE CONDITIONS

         Within the corrosion control market, we face competition from a large
number of domestic and international companies, most of which we believe are
considerably smaller than we are. Although some of our competitors offer a broad
range of corrosion control engineering services, systems and products, we do not
believe that any of our competitors offer the comprehensive range of products
and services that we provide. In the service area, we compete principally on the
basis of quality, customer service and technical expertise and capabilities, and
to some degree on price, particularly when we are providing construction and
installation services. In the product area, we typically compete on the basis of
quality, service and price.

GOVERNMENT REGULATIONS

         Other than as disclosed under "Item 3 - Legal Proceedings" of our
Annual Report on Form 10-K for the fiscal year ended March 31, 2004, we believe
that our current operations and our current use of property, plant and equipment
conform in all material respects to applicable environmental laws and
regulations, and we have not experienced, nor do we anticipate, any material
claim or material capital expenditure in connection with environmental laws and
other regulations impacting our operations. Further information about
environmental and foreign regulatory risks is included under this Item in
"Factors Influencing Future Results and Accuracy of Forward Looking
Information." Circumstances or developments that are not currently known as well
as the future cost of compliance with environmental laws and regulations could
be substantial and could have a material adverse effect on our results of
operations and financial condition.

EMPLOYEES

         As of March 31, 2004, we had 869 employees, 308 of whom were located
outside the United States. We believe that our relationship with our employees
is good.

                                                                               8
<PAGE>

FACTORS INFLUENCING FUTURE RESULTS AND ACCURACY OF FORWARD LOOKING INFORMATION

         This document includes certain statements that may be deemed
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These
forward-looking statements are based on management's expectations and beliefs
concerning future events and discuss, among other things, anticipated future
performance and revenues, expected growth and future business plans. Words such
as "anticipates," "expects," "intends," "plans," "believes," "seeks,"
"estimates" or variations of such words and similar expressions are intended to
identify such forward-looking statements. In addition, any forward-looking
statement speaks only as of the date on which such statement is made and we do
not undertake any obligation to update any forward-looking statements, whether
as a result of new information, future events or otherwise. We believe that the
following factors, among others, could affect our future performance or the
price and liquidity of our common shares and cause our actual results to differ
materially from those that are expressed or implied by forward-looking
statements, or diminish the liquidity of our common shares:

         OUR COMPLIANCE WITH THE LISTING STANDARDS AND REPORTING REQUIREMENTS OF
THE STOCK EXCHANGE ON WHICH OUR COMMON SHARES TRADE. We are required by the
American Stock Exchange to maintain certain listing standards and meet certain
reporting requirements in order for our common shares to continue trading and to
remain listed on the exchange. The exchange notified us in September 2003 that
we were not in compliance with the shareholders' equity requirement of its
continued listing requirements and that we should submit a plan to regain
compliance. In December 2003, the American Stock Exchange accepted the plan that
we submitted in accordance with its request. There can be no assurances that we
will comply with the plan, the applicable shareholders equity requirement, or
other continued listing requirements. If the exchange determines for any reason,
including non-compliance with our plan, that our common shares should be
de-listed from the exchange:

         -        the market liquidity and price of our common shares would
                  likely be negatively affected;

         -        it may be more difficult to dispose of, or to obtain accurate
                  quotations of, our common shares;

         -        we may be unable to list our shares for trading on any
                  exchange or quotation on any automated quotation system;

         -        we may be unable to remain a reporting company; and

         -        we could face difficulty raising capital necessary for our
                  continued operations.

         ADVERSE DEVELOPMENTS IN PENDING LITIGATION OR REGULATORY MATTERS COULD
NEGATIVELY IMPACT OUR BUSINESS, RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
From time to time, we are involved in litigation and regulatory proceedings,
including those disclosed in "Item 3 - - Legal Proceedings" of our Annual Report
on Form 10-K for the fiscal year ended March 31, 2004, and in our other periodic
reports filed with the Securities and Exchange Commission. There are always
significant uncertainties involved in litigation and regulatory proceedings and
we cannot guarantee the result of any particular action. Regulatory compliance
is often complex and subject to variation and unexpected changes, including
changing interpretations and enforcement agendas affecting the regulatory
community. We may need to expend significant financial resources in connection
with legal and regulatory procedures and our management may be required to
divert attention from other portions of our business. If, as a result of any
proceeding, a judgment is rendered, decree is entered or administrative action
is taken against us or our customers, it may materially and adversely affect our
business, financial condition and results of operations.

         OUR COMPLIANCE WITH THE SEC SETTLEMENT. In addition to significant
expenditures we may have to make to comply with the terms of the SEC settlement
described in "Item 3 - - Legal Proceedings - - SEC Enforcement Proceeding" of
our Annual Report on Form 10-K for the fiscal year ended March 31, 2004, we must
comply with the terms of the permanent injunction and the undertakings, which
require us to take affirmative actions to ensure compliance with the federal
securities laws. Our failure to adequately comply with the provisions of the
injunction or any of the undertakings therein may result in additional
enforcement action by the SEC, severe penalties against us and our officers and
directors,

                                                                               9
<PAGE>

and may have an impact on our business, financial condition and results of
operations. Additionally, the publicity surrounding the SEC investigation and
subsequent settlement and injunction may adversely affect our reputation with
our customers and suppliers and have an adverse impact on our revenues and
expenses.

         OUR PRINCIPAL SHAREHOLDER IS A CONTROLLING SHAREHOLDER. As of March 31,
2004, CPI beneficially owned approximately 58.9% of our common shares, assuming
the exercise of its warrant to purchase an aggregate of 12,113,744 of our common
shares. In addition, CPI has the right to vote 51% of the voting power of
Corrpro and to elect a majority of our Board of Directors through its ownership
of our Series B Preferred Stock. As a result, CPI has the ability to determine
the outcome of all matters requiring approval by our shareholders, including the
election and removal of directors and any proposed merger, consolidation or sale
of all or substantially all of our assets. In addition, CPI could dictate the
management of our business and affairs. This concentration of ownership could
have the effect of delaying, deferring, or preventing a change in control, or
impeding a merger or consolidation, takeover, or other business combination that
could be favorable to our shareholders. This significant concentration of share
ownership and voting power may adversely affect the trading price for our common
shares because investors often perceive disadvantages in owning stock in
companies with controlling shareholders.

         OUR SHAREHOLDERS ARE EXPOSED TO DILUTION AND OTHER RISKS ASSOCIATED
WITH OUR OUTSTANDING WARRANTS AND OPTIONS. As of March 31, 2004, we had
outstanding:

         -        options to purchase an aggregate of approximately 1,351,611
                  shares of our common shares that were issued pursuant to our
                  stock option plans; and

         -        warrants to purchase an aggregate of approximately 17,278,859
                  shares of our common shares, which represents approximately
                  63.8% of our common shares on a fully diluted basis, that were
                  issued in connection with financing arrangements.

         All of these warrants, which have nominal exercise prices, and many of
these options have exercise prices below the current market price of our common
shares. In addition, we may issue additional stock, warrants and/or options
pursuant to stock option plans or to raise capital in the future. Assuming the
exercise of all warrants and options, our current outstanding common shares
would represent approximately 31.2% of our common shares. The significant number
of common shares issuable upon exercise of these warrants and options could have
any or all of the following effects:

         -        the exercise of these options and warrants may have an adverse
                  effect on the market value of our common shares;

         -        the existence of these options and warrants may adversely
                  affect the terms on which we can obtain additional equity
                  financing; and

         -        to the extent the exercise prices of these options and
                  warrants are less than the net tangible book value of our
                  common shares at the time these options and warrants are
                  exercised, our shareholders will experience immediate dilution
                  in the net tangible book value of their investment.

         OUR DEBT INSTRUMENTS CONTAIN COVENANTS THAT LIMIT OUR OPERATING AND
FINANCIAL FLEXIBILITY. On March 30, 2004, we entered into a new $40.0 million
senior secured credit facility and issued $14.0 million of senior secured
subordinated notes, which replaced our previous $26.4 million revolving credit
facility and $24.4 million of senior notes. Both the new senior secured credit
facility and the new senior secured subordinated notes require us to maintain a
minimum level of earnings before interest, taxes, and depreciation/amortization,
a minimum fixed charge coverage ratio and comply with, among other things,
leverage ratios. Our ability to meet these financial ratios and tests under our
new credit agreements is affected by our results of operations and by events
beyond our control. We may be unable to satisfy these ratios and tests. If we
fail to comply with these ratios and tests, and we are unable to obtain a waiver
for such failure, no further borrowings would be available under the new senior
secured credit facility and our lenders will be entitled to, among other things,
accelerate the debt outstanding under the new credit agreements so that it is
immediately due and

                                                                              10
<PAGE>

payable and ultimately foreclose on our assets that secure the debt. Any
significant inability to draw on the new senior secured credit facility or
acceleration of the debt outstanding under the new credit agreements would have
a material adverse effect on our financial condition and operations. In
addition, our new senior secured credit facility restricts our ability and the
ability of certain of our subsidiaries to, among other things:

         -        incur additional debt and make certain investments or
                  acquisitions;

         -        incur or permit to exist certain liens;

         -        sell, lease or transfer assets; and

         -        merge or consolidate with another company.

         OUR LEVEL OF INDEBTEDNESS AND OTHER DEMANDS ON OUR CASH RESOURCES COULD
MATERIALLY AFFECT OUR OPERATIONS AND BUSINESS STRATEGY. As of March 31, 2004, we
had approximately $33.3 million of total consolidated debt, net of debt discount
of $4.1 million. In addition, we have approximately $4.5 million available under
our new senior secured credit facility. Subject to the limits contained in our
new credit agreements and our other debt agreements, our total consolidated debt
could increase due to this additional borrowing capacity. In addition to the
debt service requirements on our outstanding debt, we have other demands on our
cash resources, including, among others, capital expenditures and operating
expenses. Our level of indebtedness and the significant debt servicing costs
associated with that indebtedness could significantly impact on our operations
and business strategy. For example, they could:

         -        require us to dedicate a substantial portion of our cash flow
                  from operations to payments on our debt, thereby reducing the
                  amount of our cash flow available for working capital, capital
                  expenditures, acquisitions and other general corporate
                  purposes;

         -        limit our flexibility in planning for, or reacting to, changes
                  in the industries in which we compete;

         -        place us at a competitive disadvantage compared to our
                  competitors, some of which have lower debt service obligations
                  and greater financial resources than we do;

         -        limit our ability to borrow additional funds;

         -        increase our vulnerability to general adverse economic and
                  industry conditions; and

         -        result in our failure to satisfy the financial covenants
                  contained in our new credit agreements or in other debt
                  agreements, which, if not cured or waived, could have a
                  material adverse effect on our business, financial condition
                  or results of operations.

         WE MAY BE UNABLE TO GENERATE A SUFFICIENT AMOUNT OF CASH FLOW TO
SERVICE OUR DEBT. Our ability to make payments on and to refinance our
indebtedness and to fund planned capital expenditures will depend on our ability
to generate cash in the future. This, to a certain extent, is subject to general
economic, financial, competitive, legislative, regulatory and other factors that
are beyond our control. If we are unable to generate sufficient cash flow from
operations, achieve currently anticipated operating improvements or have access
to future borrowings, we may be unable to repay our indebtedness or to fund our
other liquidity needs. In addition, we may need to refinance all or a portion of
our indebtedness on or before maturity, and we may be unable to refinance any of
our indebtedness on commercially reasonable terms or at all.

         THE MANNER IN WHICH WE ARE REQUIRED TO ACCOUNT FOR OUR OUTSTANDING
WARRANTS COULD IMPACT OUR RESULTS OF OPERATIONS. Under applicable accounting
rules and regulations, we are required to use marked-to-market accounting to
value our outstanding warrants. This accounting treatment will result in charges
and credits to our results of operations which are based on the market price for
our common shares. If the market price for our common shares on the last day of

                                                                              11
<PAGE>

our fiscal quarter is higher than that of the previous quarter, we are required
to take a charge against our earnings for that quarter. Conversely, if the
market price for our common shares on the last day of our fiscal quarter is
lower than that of the previous quarter, we are required to make a credit to our
earnings for that quarter. Due to the large percentage of our fully diluted
common shares that is issuable upon exercise of our outstanding warrants, the
changes to our reported earnings as a result of such accounting treatment could
be significant.

         OUR OPERATIONS CAN BE ADVERSELY IMPACTED BY INCLEMENT WEATHER. A large
portion of our service activity is performed in the field. Therefore, adverse
climatic conditions, such as cold weather, snow, heavy or sustained rainfall,
hurricanes and typhoons, may reduce the level of our service activity or result
in work stoppages. Working under inclement weather conditions can also reduce
our efficiencies, which can have a negative impact on our profitability. As is
common in our industry, we typically bear the risk of delays caused by some, but
not all, adverse weather conditions. If these adverse climatic conditions
present unusual intensity, occur at abnormal periods or last longer than usual
in major geographic markets, especially during peak construction periods, we
could experience a material adverse effect on our results of operations and
profitability.

         OUR BUSINESS IS SEASONAL. Since a large portion of our business can be
adversely impacted by inclement weather, we usually experience a reduction in
sales during our fourth fiscal quarter reflecting the effect of the winter
season in our principal markets in North America and Europe. Accordingly, our
results in any one quarter are not necessarily indicative of annual results or
continuing trends.

         OUR BUSINESS IS HIGHLY DEPENDENT ON THE LEVEL OF EXPENDITURES BY ENERGY
COMPANIES. The products and services we provide to our customers in the energy
markets are, to some extent, deferrable in the event that these customers reduce
their capital and discretionary maintenance expenditures. The level of spending
on these types of expenditures can be influenced by a number of factors beyond
our control, including:

         -        current and projected oil, gas and power prices;

         -        the demand for electricity;

         -        the abilities of oil, gas and power companies to generate,
                  access and deploy capital;

         -        exploration, production and transportation costs;

         -        the discovery rate of new oil and gas reserves;

         -        the sale and expiration dates of oil and gas leases and
                  concessions;

         -        regulatory restraints on the rates that power companies may
                  charge their customers;

         -        local and international political and economic conditions;

         -        worldwide economic activity;

         -        economic and political conditions in the Middle East and other
                  oil-producing regions;

         -        coordination by the Organization of Petroleum Exporting
                  Countries, or OPEC;

         -        the ability or willingness of host country government entities
                  to fund their budgetary commitments; and

         -        technological advances.

                                                                              12
<PAGE>

         A sustained reduction in capital and discretionary maintenance
expenditures by our energy customers has in the past, and may in the future,
have a negative impact on our business and will likely result in decreased
demand for our services, low margins and lower revenues.

         OUR REVENUES HAVE BEEN DEPENDENT ON GOVERNMENT CONTRACTS IN THE PAST.
In previous years, we have derived a significant portion of our revenues from
contracts with agencies of the United States government. Our contracts with the
U.S. government expose us to various business risks, including, but not limited
to the ability of the U.S. government to unilaterally:

         -        suspend us from receiving new contracts pending resolution of
                  alleged violations of procurement laws or regulations;

         -        terminate existing contracts;

         -        reduce the value of existing contracts;

         -        audit our contract-related costs and fees, including allocated
                  indirect costs; and

         -        control and potentially prohibit the export of our products.

         Any of our U.S. government contracts can be terminated by the U.S.
government either for its convenience or if we default by failing to perform
under the contract. Termination for convenience provisions provide only for our
recovery of costs incurred or committed, settlement expenses and profit on the
work completed prior to termination. Termination for default provisions provide
for us to be liable for excess costs incurred by the U.S. government in
procuring undelivered items from another source. If our contacts with the U.S.
government are terminated, our business, results of operations and financial
condition could be materially adversely affected.

         In addition, the U.S. government's competitive bidding process may
adversely affect our revenues. We obtain most of our U.S. government contracts
through a competitive bidding process, and competitive bidding presents a number
of risks, including, but not limited to:

         -        the need to compete against companies or teams of companies
                  that may be long-term, entrenched incumbents for a particular
                  contract for which we are competing;

         -        the need to compete on occasion to retain existing contracts
                  that may have in the past been awarded to us on a sole-source
                  basis; and

         -        the substantial costs and managerial time and effort,
                  including design, development and marketing activities,
                  necessary to prepare bids and proposals for contracts that may
                  not be awarded to us.

         If we are unable to win particular contracts that are awarded through
the competitive bidding process, we may be unable to operate in the market for
services that are provided under those contracts for a number of years. If we
are unable to consistently retain existing contracts or win new contract awards
over any extended period, our business, prospects, financial condition and
results of operations could be adversely affected.

         OUR DEPENDENCE ON FIXED-PRICE CONTRACTS COULD ADVERSELY AFFECT OUR
OPERATING RESULTS. A substantial portion of our projects are currently performed
on a fixed-price basis. Under a fixed-price contract, we agree on the price that
we will receive for the entire project, based upon a defined scope, which
includes specific assumptions and project criteria. If our estimates of our
costs to complete the project are below the actual costs that we may incur, our
margins will decrease, and we may incur a loss. The revenue, cost and gross
profit realized on a fixed-price contract will often vary from our estimates
because of unforeseen conditions or changes in job conditions and variations in
labor and equipment productivity over the term of the contract. If we are
unsuccessful in mitigating these risks, we may realize gross profits

                                                                              13
<PAGE>

that are different from those originally estimated and reduced profitability or
losses on projects. Depending on the size of a project, these variations from
estimated contract performance could significantly impact our operating results
for any quarter or year. In general, our turnkey contracts to be performed on a
fixed-price basis involve an even greater risk of significant variations from
our estimates. This is a result of the long-term nature of these contracts as
well as the interrelationship of the integrated services to be provided under
these contracts, whereby unanticipated costs or delays in performing part of the
contract can have compounding effects by increasing costs of performing other
parts of the contract.

         WE USE PERCENTAGE-OF-COMPLETION ACCOUNTING FOR CONTRACT REVENUE WHICH
MAY RESULT IN MATERIAL ADJUSTMENTS THAT WOULD AFFECT OUR OPERATING RESULTS. We
recognize contract revenue using the percentage-of-completion method. Under this
method, estimated contract revenue is accrued based generally on the percentage
that costs to date bear to total estimated costs, taking into consideration
physical completion. Estimated contract losses are recognized in full when
determined. Accordingly, contract revenue and total cost estimates are reviewed
and revised periodically as the work progresses and as change orders are
approved, and adjustments based upon the percentage of completion are reflected
in contract revenue in the period when these estimates are revised. These
estimates are based on management's reasonable assumptions and our historical
experience and are only estimates. Variations of actual results from these
assumptions or our historical experience could be material. To the extent that
these adjustments result in an increase, a reduction or an elimination of
previously reported contract revenue, we would recognize a credit or a charge
against current earnings, which could be material.

         WE ARE REQUIRED TO OBTAIN SURETY BONDS IN CONNECTION WITH OUR BUSINESS.
Government contracting agencies and some private contracting parties from time
to time require prime contractors to furnish surety bonds guaranteeing their
performance and payment to all subcontractors and suppliers of material and
equipment under the contract. Our ability to obtain surety bonds depends upon
our capitalization, working capital, past performance, management expertise and
other variable factors. Surety companies consider such factors in light of the
amount of surety bonds then outstanding in favor of us and their current
underwriting standards, which may change from time to time. Our ability to
obtain new projects may be restricted if we are unable to obtain adequate surety
bonds.

         WE ARE SUBJECT TO PRIME CONTRACTOR LIABILITIES ON PROJECTS THAT WE
UNDERTAKE. We act as prime contractor on some of the construction projects that
we undertake. As prime contractor, we are responsible for the performance of the
entire contract, including subcontract work. Thus, we are subject to risks
associated with the failure of one or more subcontractors to perform as
anticipated. Claims may be asserted against us for construction defects,
personal injury or property damage caused by subcontractors, and if successful
these claims could expose us to liability. If unforeseen events occur with
respect to our subcontractors, including bankruptcy of, or an uninsured or
under-insured loss claimed against, our subcontractors, we may be responsible
for the losses or other obligations of those subcontractors. If any of these
situations occur, our business and results of operations could be adversely
affected.

         WE ARE EXPOSED TO LIABILITIES BEYOND OUR CONTROL AS A SUBCONTRACTOR. On
projects in which we act as a subcontractor, if the general contractor or other
subcontractors fail to perform their obligations or cause delays or failures in
the project, we

         -        may not receive all or a portion of the distributions or
                  payments to which we are entitled in connection with the
                  project;

         -        the project may be terminated by the customer; and

         -        we may be exposed to litigation or other claims in connection
                  with any such delay or failure.

         OUR PROFITABILITY CAN BE IMPACTED BY OUR MIX OF PRODUCTS AND SERVICES.
Given that our selling, general and administrative costs are largely fixed in
terms of dollars, our profitability is dependent upon the amount of gross profit
that we are able to realize. We typically generate higher gross profit margins
on pure engineering service projects than on those projects that include a
material or installation component. In addition, our gross profit margins can be
negatively impacted when we utilize subcontractors. Therefore, a shift in mix
from engineering services to more construction and

                                                                              14
<PAGE>

installation type work or an increase in the amount of subcontracting costs
could have a negative impact on our operating results. In addition, certain of
the products that we sell have gross profit margins that are considerably lower
than our overall average gross profit margin. A shift in mix which results in a
greater percentage of revenues relating to these lower margin products would
also have a negative impact on our operating results.

         THE TIMING OF PROJECTS CAN IMPACT OUR PROFITABILITY. There are a number
of factors, some of which are beyond our control, that can cause our projects to
be delayed and thus negatively impact our profitability for the related period.
These factors include the availability of labor, equipment or materials,
customer scheduling issues, delays in obtaining required permits and adverse
weather conditions. In addition, when we work as a subcontractor on a project,
our portion of the project can be delayed as a result of various factors
affecting the general contractor for such project.

         THE AVAILABILITY AND VALUE OF LARGER PROJECTS CAN IMPACT OUR
PROFITABILITY. While the majority of our projects are relatively small, we can
have a number of individual contracts in excess of $1 million in progress at any
particular time. These larger contracts typically generate more gross profit
dollars than our average size projects. Therefore, the absence of larger
projects, which can result from a number of factors, including market
conditions, can have a negative impact on our operating results.

         OUR BUSINESS EXPOSES US TO SIGNIFICANT LIABILITIES UNDER ENVIRONMENTAL
AND OTHER GOVERNMENTAL REGULATIONS. We and our customers are subject to various
federal, state, local and foreign environmental, health and safety laws and
regulations. These laws and regulations affect our operations by imposing
standards for the protection of health, welfare and the environment. Significant
fines and penalties may be imposed for non-compliance with environmental laws
and regulations, and some environmental laws provide for joint and several
strict liability for remediation of releases of hazardous substances, rendering
a company liable for environmental damage, without regard to negligence or fault
on the part of such company. These laws and regulations may expose us to
liability arising out of the conduct of operations or conditions caused by
others, or for our acts which were in compliance with all applicable laws at the
time these acts were performed. We may also be subject from time to time to
legal proceedings brought by private parties or governmental authorities with
respect to environmental matters, including matters involving alleged property
damage or personal injury.

         WE MAY INCUR SIGNIFICANT COSTS OR BE REQUIRED TO ALTER THE MANNER IN
WHICH WE CONDUCT OUR BUSINESS IN RESPONSE TO CHANGES IN GOVERNMENT REGULATIONS.
Federal, state, local and foreign environmental, health and safety laws and
regulations laws are becoming increasingly complex and stringent. The risks of
substantial costs related to compliance with these laws and regulations are an
inherent part of our business, and future conditions may develop, arise or be
discovered that create substantial environmental compliance costs. Compliance
with environmental legislation and regulatory requirements may prove to be more
limiting and costly than we anticipate. New laws and regulations or stricter
enforcement of existing laws and regulations could require us to incur
significant costs or alter the manner in which we conduct our business.

         OUR INTERNATIONAL OPERATIONS ARE SUBJECT TO POLITICAL AND ECONOMIC
RISKS. A significant portion of our revenue is derived from operations outside
the United States. The scope and extent of our operations outside of the United
States means that we are exposed to the risks inherent in doing business abroad.
These risks include, but are not limited to:

         -        foreign currency restrictions, which may prevent us from
                  repatriating foreign currency received in excess of local
                  currency requirements and converting it into U.S. dollars or
                  other fungible currency;

         -        expropriation of assets, by either a recognized or
                  unrecognized foreign government, which can disrupt our
                  business activities and create delays and corresponding
                  losses;

         -        civil uprisings, riots and war, which can make it impractical
                  to continue operations, adversely affect both budgets and
                  schedules and expose us to losses;

         -        availability of suitable personnel and equipment, which can be
                  affected by government policy, or changes in policy, which
                  limit the importation of skilled craftsmen or specialized
                  equipment in areas where local resources are insufficient;

                                                                              15
<PAGE>

         -        government instability, which can cause investment in capital
                  projects by our potential customers to be withdrawn or
                  delayed, reducing or eliminating the viability of some markets
                  for our services; and

         -        decrees, laws, regulations, interpretations and court
                  decisions under legal systems, including unexpected changes in
                  taxation and environmental or other regulatory requirements,
                  which are not always fully developed and which may be
                  retroactively applied and cause us to incur unanticipated
                  and/or unrecoverable costs as well as delays which may result
                  in real or opportunity costs.

         We cannot predict the nature of foreign governmental regulations
applicable to our operations that may be enacted in the future. In many cases,
our direct or indirect customer will be a foreign government, which can increase
our exposure to these risks. U.S. government-imposed export restrictions or
trade sanctions under the Export Administration Act, the Trading with the Enemy
Act or similar legislation or regulation may also impede our ability, or the
ability of our customers, to operate or continue to operate in specific
countries. These factors could have a material adverse effect on our financial
condition and results of operation.

         THE INTERNATIONAL NATURE OF OUR BUSINESS EXPOSES US TO FOREIGN CURRENCY
FLUCTUATIONS THAT MAY AFFECT OUR ASSET VALUES, RESULTS OF OPERATIONS AND
COMPETITIVENESS. We are exposed to the risks of foreign currency exchange rate
fluctuations as a significant portion of our net sales and certain of our costs,
assets and liabilities are denominated in currencies other than the U.S. dollar.
These risks include a reduction in our asset values, net sales, operating income
and competitiveness. For those countries outside the United States where we have
significant sales, a devaluation in the local currency will reduce the value of
our local inventory as presented in our financial statements. In addition, a
stronger U.S. dollar will result in reduced revenue, operating profit and
shareholders' equity due to the impact of foreign exchange translation on our
financial statements. Lastly, fluctuations in foreign currency exchange rates
may make our products more expensive for customers to purchase or increase our
operating costs, thereby adversely affecting our competitiveness and our
profitability.

         TERRORIST ATTACKS AND MILITARY CONFLICTS MAY ADVERSELY AFFECT OUR
OPERATIONS, OUR ABILITY TO RAISE CAPITAL OR OUR FUTURE GROWTH. The continued
threat of terrorism and the impact of military and other action, including U.S.
military operations in Iraq, will likely lead to continued volatility in prices
for crude oil and natural gas and could affect the markets for our operations.
In addition, future acts of terrorism could be directed against companies
operating both outside and inside the United States. Further, the U.S.
government has issued public warnings that indicate that pipelines and other
energy assets might be specific targets of terrorist organizations. These
developments have subjected our operations to increased risks and, depending on
their ultimate magnitude, could have a material adverse effect on our business,
adversely impact our ability to raise additional capital if needed or restrict
our anticipated growth.

         WE ARE SUBJECT TO VARIOUS RISKS ASSOCIATED WITH CHANGING GLOBAL,
POLITICAL AND ECONOMIC CONDITIONS. Changing political and economic conditions
regionally or worldwide can adversely impact our business. Deteriorating
political and general economic conditions may result in customers delaying or
canceling contracts and orders for our products and services, difficulties and
inefficiencies in the performance of our services including work stoppages, and
difficulties in collecting payment from our customers. As a result, such
conditions can negatively impact our results of operations and our cash flows.

         THE LOSS OF ONE OR MORE KEY EMPLOYEES, OR FAILURE TO ATTRACT AND RETAIN
OTHER HIGHLY QUALIFIED PERSONNEL IN THE FUTURE, COULD DISRUPT OUR OPERATIONS AND
ADVERSELY AFFECT OUR FINANCIAL RESULTS. Our continued success depends on the
active participation of our key employees. The loss of our key personnel could
adversely affect our operations. We believe that our success and continued
growth are also dependent upon our ability to attract and retain skilled
personnel. We believe that our wage rates are competitive; however, a
significant increase in the wages paid by other employers could result in a
reduction in our workforce, increases in the wage rates we pay, or both. If
these events occur for any significant period of time, our revenues and
profitability could be diminished and our growth potential could be impaired.
Further, if we are unable to attract and retain skilled workers, our business
will be adversely affected. Our operations depend substantially upon our ability
to continue to retain and attract project managers, project engineers, and
skilled construction workers, and equipment operators. Our ability to expand our
operations is impacted by our ability to

                                                                              16
<PAGE>

increase our labor force. The demand for skilled workers in our industry is
currently high and the supply is limited. As a result of the cyclical nature of
the oil and gas industry as well as the physically demanding nature of the work,
skilled workers may choose to pursue employment in other fields.

         OUR BUSINESS INVOLVES HAZARDS AND OPERATIONAL RISKS, AND WE MAY FAIL TO
MAINTAIN ADEQUATE INSURANCE COVERAGE TO PROTECT US AGAINST THESE RISKS.
Insufficient insurance coverage and increased insurance costs could adversely
impact our cash flows, financial condition and results of operations. Although
we maintain insurance coverage that we believe is commercially reasonable for
our business circumstances, we are not fully insured against all risks. The
occurrence of a significant event that is not fully insured against could have a
material adverse effect on our financial condition. Our insurance does not cover
every potential risk associated with providing our products and services. We
cannot be certain that insurance coverage will be available in the future on
commercially reasonable terms or that the insurance proceeds received for any
covered loss or damage will be sufficient to restore the loss or damage without
a negative impact on our financial condition.

         WE HAVE NO PLANS TO PAY DIVIDENDS ON OUR COMMON SHARES. We have no
plans to pay dividends on our common shares in the foreseeable future. We intend
to invest our future earnings, if any, to fund our anticipated growth. In
addition, our senior secured credit facility limits the payment of cash
dividends. Any payment of future dividends on our common shares will be at the
discretion of our board of directors and will depend upon, among other things,
our earnings, financial condition, capital requirements, level of indebtedness,
contractual restrictions applying to the payment of any such dividends, and
other considerations that our board of directors deems relevant.

         DECLINES IN THE STOCK MARKET AND PREVAILING INTEREST RATES RESULT IN
REDUCTIONS IN OUR PENSION FUND ASSET VALUES IN THE UNITED KINGDOM, WHICH HAVE
CAUSED AND MAY CONTINUE TO CAUSE A SIGNIFICANT REDUCTION IN OUR NET WORTH. In
the fiscal year ended March 31, 2002, as a result of lower investment
performance caused by lower stock market returns and a decline in prevailing
interest rates, our projected pension fund asset values in the United Kingdom
decreased. The reduction in asset values required that we take a non-cash
after-tax charge to accumulated other comprehensive loss, which is a component
of shareholders' equity. Primarily as a result of a negative return on our
pension fund assets and further reductions in interest rate levels in fiscal
year 2003, we were required to further reduce shareholders' equity. We may be
required to take further charges related to pension liabilities in the future
and these charges may be significant. We continue to review our assumptions
regarding rates of return and discount rates in light of the factors mentioned
above and other relevant considerations, and our future pension expense may
further increase as a result.

                                                                              17
<PAGE>

                                     PART II

ITEM 6. SELECTED FINANCIAL DATA

         The financial data presented below for each of the five years ended
March 31, should be read in conjunction with Management's Discussion and
Analysis of Financial Condition and Results of Operations and the Consolidated
Financial Statements and Notes to Consolidated Financial Statements included
elsewhere in this Annual Report on Form 10-K/A.

                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>

                                                         2004          2003          2002          2001          2000
                                                      ----------    ----------    ----------    ----------    ----------
<S>                                                   <C>           <C>           <C>           <C>           <C>
STATEMENT OF OPERATIONS DATA:
Revenues                                              $  130,084    $  117,623    $  134,784    $  131,774    $  130,418
Operating income (loss)                                    8,530         1,960         4,313          (129)        5,289
Interest expense                                           9,565         6,725         5,878         5,244         4,288
                                                      ----------    ----------    ----------    ----------    ----------
Income (loss) before income taxes from
   continuing operations                                  (1,035)       (4,765)       (1,565)       (5,373)        1,001
Income tax provision (benefit)(1)                            576          (363)       11,155          (606)        1,270
                                                      ----------    ----------    ----------    ----------    ----------
Loss from continuing operations                           (1,611)       (4,402)      (12,720)       (4,767)         (269)
                                                      ----------    ----------    ----------    ----------    ----------
Net loss(2)                                           $   (5,479)   $  (28,825)   $  (18,217)   $   (8,281)   $   (2,668)
                                                      ==========    ==========    ==========    ==========    ==========

LOSS PER SHARE FROM
  CONTINUING OPERATIONS-
           Basic                                      $    (0.19)   $    (0.52)   $    (1.57)   $    (0.62)   $    (0.04)
           Diluted                                         (0.19)        (0.52)        (1.57)        (0.62)        (0.04)

NET LOSS-
           Basic                                      $    (0.65)   $    (3.43)   $    (2.24)   $    (1.07)   $    (0.35)
           Diluted                                         (0.65)        (3.43)        (2.24)        (1.07)        (0.35)

OTHER DATA:
Total assets (2004 as restated)                       $   73,632    $   78,540    $  109,993    $  137,200    $  140,864
Working capital, excluding net assets held for sale       16,139       (25,006)      (37,918)       30,809        30,009
Net assets held for sale                                      --         6,392        31,857        29,358        40,398
Total debt (2004 as restated)                             33,303        51,241        62,686        68,175        62,258
Shareholders' equity (deficit)                            (2,729)        1,199        23,857        41,518        54,235
</TABLE>

(1)      Includes a valuation allowance of $10,472 in fiscal 2002, related to
         our deferred tax asset. See Note 1, Summary of Significant Accounting
         Policies, Notes to Consolidated Financial Statements included in Item 8
         of this Annual Report on Form 10-K/A for further information.

(2)      Includes a cumulative effect of change in accounting principle of
         $18,238 in fiscal 2003, related to our evaluation of goodwill. See Note
         1, Summary of Significant Accounting Policies, Notes to Consolidated
         Financial Statements included in Item 8 of this Annual Report on Form
         10-K/A for further information.

                                                                              18
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

         The following discussion and analysis contains certain statements that
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. The following discussion should be
read in conjunction with the consolidated financial statements, accompanying
notes and selected financial data appearing elsewhere in this Annual Report on
Form 10-K/A and may contain certain statements that constitute "forward-looking
statements." Words such as "anticipates," "expects," "intends," believes,"
"seeks," "estimates" or variations of such words and similar expressions are
intended to identify such forward-looking statements. A number of risks,
uncertainties and other factors may cause our actual results, performance or
achievements to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Important
risks, uncertainties and other factors that may cause our actual results,
performance or achievements to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements appear elsewhere in this Annual Report on Form 10-K/A. See "Business
- - Factors Influencing Future Results and Accuracy of Forward Looking
Information."

OVERVIEW

         We provide a comprehensive range of corrosion control engineering
services, systems, equipment and materials; coatings services; and pipeline
integrity and risk assessment services to a wide variety of customers in the
North American and European infrastructure, environmental and energy markets,
including the U.S. government and its agencies.

         In July 2002, our Board of Directors approved a multi-year
restructuring plan that included a series of initiatives designed to improve our
gross margin and operating income and reduce our outstanding indebtedness. We
believe that we have been successful in implementing these initiatives to date.
Our gross margin has increased from 29.3% in fiscal 2002 to 31.8% in fiscal 2004
based in part on a number of measures that we have taken, including closing
underperforming offices, improving our material purchase program, containing
employee compensation costs and restricting nonessential travel and
entertainment.

         We also believe that we have enhanced our capital structure by
implementing initiatives designed to reduce our outstanding indebtedness. During
fiscal 2003 and fiscal 2004, we disposed of our Middle East operations, Asia
Pacific operations and four other non-strategic business units and used the
proceeds from such dispositions to reduce our outstanding indebtedness. In
addition, on March 30, 2004, we completed a refinancing and recapitalization
pursuant to which we (i) issued and sold 13,000 shares of our Series B Preferred
Stock and a warrant to purchase 12,113,744 of our common shares to CPI for
aggregate consideration of $13.0 million, (ii) issued and sold $14.0 million of
our secured subordinated notes and a warrant to purchase 3,936,967 of our common
shares to American Capital and (iii) entered into a $40.0 million senior secured
credit facility with CapitalSource, we used the proceeds therefrom to repay our
prior revolving credit facility and senior notes and for working capital
purposes. We believe that our new capital structure will be critical in our
efforts to expand our business and achieve our other business objectives.

RESTATEMENT OF 2004 FINANCIAL INFORMATION

         As part of our recapitalization and refinancing, we issued Series B
Cumulative Redeemable Voting Preferred Stock and a warrant for $13 million and
senior secured subordinated notes and a warrant for $14 million on March 30,
2004. In the Originally Filed 10-K, the proceeds from these issuances were
allocated between the Series B Preferred Stock and the warrant and the senior
secured subordinated notes and the warrant, respectively, based on a calculation
of the fair value of the warrants that included a "blockage" discount. During
the preparation of our June 30, 2004 consolidated financial statements, it was
determined that the value of these warrants should not include a "blockage"
discount factor. See Note 1 - - Summary of Significant Accounting Policies,
Notes to Consolidated Financial Statements included in this Amendment. Based on
this determination, we are restating our consolidated balance sheet to reflect
an increase in the allocation of the proceeds to the warrants, a corresponding
decrease in the allocation of the proceeds to the Series B Preferred Stock and
senior secured subordinated notes, and conforming changes as of March 31, 2004.
We are

                                                                              19
<PAGE>

also restating our consolidated statement of cash flows for the year ended March
31, 2004 to reflect related changes in the allocations to "Net proceeds from
issuance of Preferred Shares and warrants" and "Payment of financing costs." The
changes contained in this restatement are a non-cash event, do not affect our
consolidated statements of operations and shareholders' equity (deficit), and do
not affect the financial covenants included in our financing arrangements.

CRITICAL ACCOUNTING POLICIES

         The process of preparing financial statements in conformity with
accounting principles generally accepted in the United States requires
management to use assumptions and estimates, some of which are significant, to
determine certain of the reported values on our financial statements. Although
management bases its assumptions and estimates on historical experience and
other factors that management considers relevant, these assumptions and
estimates could change materially as conditions both within and beyond our
control change. The following is a discussion of our critical accounting
policies and the related management assumptions and estimates necessary in
determining certain of the reported values on our financial statements. Our
critical accounting policies, including the assumptions and estimates underlying
them, are more fully described in Note 1, Summary of Significant Accounting
Policies, Notes to Consolidated Financial Statements included in Item 8 of this
Annual Report on Form 10-K/A.

         REVENUE RECOGNITION. We record income from construction and engineering
contracts under the percentage-of-completion method, using costs incurred to
date in relation to estimated total costs of the contracts, to measure the stage
of completion. Original contract prices are adjusted for change orders and
claims when the change order or claim has been approved by the customer. Cost
budgets are revised, when necessary, in the amounts that are reasonably
estimated based on the project leaders' knowledge of the project as well as our
historical experience. The cumulative effects of changes in estimated total
contract costs and revenues are recorded in the period in which the facts
requiring such revisions become known, and are accounted for using the
percentage-of-completion method. At the time it is determined that a contract is
expected to result in a loss, the entire estimated loss is recorded. We
recognize revenue from product sales upon shipment and transfer of ownership.

         ACCOUNTS RECEIVABLE. We record estimated allowances for uncollectible
accounts receivable based upon the number of days the accounts are past due, the
current business environment, and specific information such as bankruptcy or
liquidity issues of customers. Historically, losses for uncollectible accounts
receivable have been within management's range of estimates. Corrosion control
services and products are provided to a large number of customers with no
substantial concentration in a particular industry or with an individual
customer.

         INVENTORIES. Inventories are valued at the lower of cost or market with
cost being determined on the first-in, first-out method. Management periodically
reviews inventories for excess and obsolete goods based upon a combination of
historical and forecasted usage. Additionally, discrete provisions are made when
facts and circumstances indicate that particular inventories will not be
utilized. If future market conditions are different than those estimated, a
change to the valuation of inventory may be required and would be reflected in
the period the conditions change.

         ASSET IMPAIRMENT. We periodically evaluate whether events and
circumstances have occurred that indicate the remaining estimated useful life of
any long-lived or intangible asset may warrant revision or that the remaining
balance of the asset may not be recoverable. If factors indicate that the
long-lived assets should be evaluated for possible impairment, we use an
estimate of the related asset's net undiscounted cash flows from operations over
the remaining life to determine recoverability. The measurement of the
impairment would be based on the amount by which the carrying value of the asset
exceeds its fair value.

         During fiscal 2004, we recorded an impairment charge relating to our
Middle East operations totaling $3.5 million based on the current market value
of these operations. This impairment charge was included in results from
discontinued operations. During fiscal 2003, we recorded an impairment charge
relating to our Asia Pacific operations totaling $1.6 million based on the
current market value of these operations and additionally recorded impairment
charges totaling $0.9 million based on a market value analysis for our European
and Middle East operations. The Asia Pacific and Middle East operations were
reported as discontinued operations and were sold in fiscal 2004.

                                                                              20
<PAGE>

         In July 2001, Statement of Financial Accounting Standards No. 141,
"Business Combinations" ("SFAS 141"), and Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"), were
issued by the Financial Accounting Standards Board. SFAS 141 eliminates the
pooling-of-interests method for business combinations and requires the use of
the purchase method. SFAS 142 changes the accounting for goodwill and indefinite
life intangibles from an amortization approach to a non-amortization approach,
and require periodic tests for impairment of these assets. Upon our adoption of
SFAS 142 on April 1, 2002, the provisions of SFAS 142 required the
discontinuance of amortization of goodwill and indefinite life intangibles that
had been recorded in connection with previous business combinations. We
completed impairment testing under SFAS 142 and recorded an impairment loss, as
of April 1, 2002, totaling $18.2 million of which $11.8 million related to
discontinued operations and $6.4 million related to continuing operations. The
loss was recognized as the cumulative effect of a change in accounting
principle. This impairment testing is also done annually in the fourth quarter
and such testing resulted in no additional impairment as of March 31, 2004.

         INCOME TAXES. We use the liability method whereby income taxes are
recognized during the fiscal year in which transactions enter into the
determination of financial statement income. Deferred tax assets and liabilities
are recognized for the expected future tax consequences of temporary differences
between financial statement and tax basis of assets and liabilities. We recorded
a valuation allowance for our net domestic deferred tax assets carryforwards of
$10.5 million in the fourth quarter of fiscal 2002. We maintained a valuation
allowance at March 31, 2004 and intend to maintain a full valuation allowance
for our net domestic deferred tax assets and net operating loss carryforwards
until sufficient positive evidence exists to support the reversal of the
remaining reserve. Until such time, except for foreign tax provisions, we expect
to have no reported tax provision, net of valuation allowance adjustments. In
the event we were to determine, based on the existence of sufficient positive
evidence, that we would be able to realize our deferred tax assets in the future
in excess of our net recorded amount, an adjustment to the valuation allowance
would increase income in the period such determination was made. See Note
6-Income Taxes of our consolidated financial statements for additional
information regarding income taxes.

RESULTS OF OPERATIONS

         In July 2002, our Board of Directors approved a formal business
restructuring plan. The multi-year plan included a series of initiatives to
improve operating income and reduce debt by selling non-core business units. We
engaged outside professionals to assist in the disposition of the domestic and
international non-core business units. Prior to the quarter ended September 30,
2002, our non-core domestic and international units were reported as the Other
Operations and International Operations reporting segments. Effective as of the
quarter ended September 30, 2002, the Other Operations and the International
Operations reporting segments were eliminated and the non-core domestic and
international units were reported as discontinued operations. Prior-year
financial statements were reclassified to reflect these non-core units as
discontinued operations, which were also referred to as "assets and liabilities
held for sale."

         In the second quarter of fiscal 2004, our Board of Directors removed
our European Operations from discontinued operations. The Board concluded that
our value would be enhanced by maintaining our European presence rather than by
selling our European Operations at this time, based in part on the strength of
the local management team, the similar characteristics of the served markets,
and the favorable prospects for this business. Therefore, effective in the
second quarter of fiscal 2004, we reported quarterly and annual results of the
European Operations in our continuing operations. Prior-year financial
statements have been reclassified to reflect the European Operations as
continuing operations.

YEAR ENDED MARCH 31, 2004 COMPARED TO YEAR ENDED MARCH 31, 2003

         REVENUES. Revenues from continuing operations for fiscal 2004 totaled
$130.1 million, compared with $117.6 million for fiscal 2003, an increase of
$12.5 million, or 10.6%. Revenues from the discontinued operations were $10.1
million in fiscal 2004 compared to $26.9 million in the prior fiscal year. The
decrease in discontinued operations is primarily attributable to the sale of
four non-strategic business units.

         Revenues for fiscal 2004 relating to the Domestic Core Operations
totaled $92.9 million compared to prior-year results of $85.0 million, an
increase of $7.9 million or 9.3%. The increase was primarily related to a large
well casing

                                                                              21
<PAGE>

project being run out of our Houston office that generated $5.7 million in
revenues in fiscal 2004 compared to $0.4 million in the year-earlier period. In
addition, our commercial coatings offices experienced increased revenues of $2.1
million in fiscal 2004 compared to the year-earlier period, primarily due to
increased activity levels in our Chicago and Bakersfield offices as well as
increased inspection revenues in our Lafayette office. These increases were
partially offset by decreases in several areas of our Domestic Core Operations.
Our Eastern Region offices experienced a revenue decline of $0.2 million in
fiscal 2004 compared to the year-earlier period, primarily as a result of lower
revenues from a large bridge project in fiscal 2004 compared to the year-earlier
period. Also, our Water Tank business experienced a $0.6 million revenue decline
in fiscal 2004 compared to the year-earlier period. This decrease is attributed
to the Federal EPA mandate that all municipal water systems serving 3,300 or
more customers perform and file security and vulnerability assessments with the
EPA. As a result of this mandate, municipal water systems have been deferring
infrastructure maintenance as a means of allocating funds to pay for these
assessments.

         Revenues from our Canadian Operations for fiscal 2004 totaled $24.1
million compared to $19.3 million, for fiscal 2003, an increase of $4.8 million,
or 24.9%. Approximately $2.6 million of this increase was due to the
strengthening of the Canadian dollar against the U.S. dollar in fiscal 2004
compared to fiscal 2003. The remaining increase was primarily due to increased
volume of material and rectifier sales as well as an increase in the energy
segment of our business.

         Revenues from our European Operations for fiscal 2004 totaled $13.1
million compared to $13.4 million, for fiscal 2003, a decrease of $0.3 million,
or 2.2%. This decrease was primarily due to lower revenues received from a large
contract to perform work on underground storage tanks in the United Kingdom and
was offset by approximately $2.0 million due to the strengthening of the British
pound against the U.S. dollar in fiscal 2004 compared to fiscal 2003.

         GROSS PROFIT. Consolidated gross profit margins were 31.8% for fiscal
year 2004 compared to 31.5% for the prior-year period. Gross margins continued
to benefit from the restructuring plans and cost containment programs
implemented in fiscal 2001 and 2002 as well as our Board of Directors decision
to approve a formal business restructuring plan in July 2002. The multi-year
plan included a series of initiatives to improve gross margins as well as
operating income and reduce debt. The initiatives that impacted gross margin in
fiscal 2004 included the following:

            -   Closure of underperforming offices. At the end of fiscal 2003,
                we closed one underperforming office. This office experienced a
                gross margin rate of 21.5% in fiscal 2003.

            -   Improved material purchase program. Efficiencies were achieved
                in purchasing certain corrosion control materials that are sold
                to our customers. Our Material Sales Center experienced a 23
                basis point improvement in its gross margin rate in fiscal 2004
                compared to the year-earlier period.

            -   Wage and salary freeze. We implemented a general wage and salary
                freeze for employees in fiscal 2003 in order to contain costs.
                This wage and salary freeze was not lifted until July 2003.

            -   Restrictions on travel and entertainment. Travel and
                entertainment continues to be restricted to essential, revenue
                producing ventures.

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses totaled $32.8 million (25.2% of revenues) for fiscal
year 2004 compared to $35.2 million (29.9% of revenues) for fiscal 2003.
Selling, general and administrative expenses for year ended March 31, 2004,
included $1.5 million related to professional fees associated with our lender
requirements and $1.1 million for severance and retirement benefits associated
with our former Chief Executive Officer. Fiscal year 2003 included $2.9 million
in professional fees related to lender requirements, $2.1 million of pension
expense related to our European Operations and a $0.5 million impairment charge
recorded for our European Operations. Selling, general and administrative
expenses continue to improve due to the informal cost containment and
restructuring plans mentioned above as well as the Board of Directors plan also
mentioned above. An activity-based analysis was performed to eliminate our
non-value added costs. In addition, we continue to see benefits pertaining to
the closure of underperforming offices. Also, we have reduced headcount in
corporate overhead areas.

                                                                              22
<PAGE>

Headcount was reduced in both fiscal 2002 and 2003, which resulted in annual
savings in each year of approximately $4.0 million. We continue to restrict
travel and entertainment to essential, revenue producing ventures as well as
restricting the purchase of advertising materials, catalogs, office supplies and
other discretionary overhead items. Also, we had favorable claims experience in
our health care costs in both fiscal 2004 and fiscal 2003.

         OPERATING INCOME (LOSS) FROM CONTINUING OPERATIONS. Operating income
from continuing operations totaled $8.5 million for fiscal year 2004 compared to
$2.0 million in fiscal 2003, an increase in earnings of $6.5 million. This
increase is primarily related to higher restructuring costs incurred in fiscal
2003 and improved revenues generated during the fiscal year 2004.

         INTEREST EXPENSE. Interest expense totaled $9.6 million for fiscal year
2004 compared to $6.7 million in fiscal 2003. We completed our refinancing and
recapitalization transaction in the fourth quarter of fiscal 2004. As a result
of the refinancing, we expensed deferred financing costs associated with the
previous lenders of $1.3 million in fiscal year 2004. In addition, we expensed
yield maintenance amounts required under previous debt arrangements of $2.2
million in fiscal year 2004 and $1.0 million in fiscal 2003.

         INCOME TAX PROVISION. We recorded a provision for income taxes of $0.6
million for the year ended March 31, 2004 compared to a income tax benefit of
$0.4 million recorded for the year ended March 31, 2003. Our effective tax rate
is based on the statutory rates in effect in the countries in which we operate.
We recorded a provision greater than the statutory tax rate of 34% since we have
not realized the tax benefits of losses in our Domestic Core Operations for
which a previously recorded valuation allowance has been provided. We intend to
maintain a full valuation allowance on our domestic net deferred tax assets
including net operating loss carryforwards associated with losses generated
prior to our refinancing and recapitalization transaction. The refinancing and
recapitalization transaction resulted in a change of control for income tax
purposes as defined in U.S. tax law. As such, we will be limited as to how much
of our net operating loss carryforwards will be available for use in future
periods.

         LOSS FROM CONTINUING OPERATIONS. Loss from continuing operations
totaled $1.6 million in fiscal year 2004 compared to a loss of $4.4 million in
fiscal year 2003, an improvement of $2.8 million. The fiscal 2004 improvement
was the result of improved revenue levels, improved operating efficiencies and
our overall efforts to streamline operations.

         DISCONTINUED OPERATIONS. Loss from discontinued operations, net of
income taxes, for the year ended March 31, 2004, was $3.9 million compared to a
loss, net of income taxes, of $6.2 million in fiscal year 2003, an improvement
of $2.3 million. The loss in fiscal 2004 is primarily attributable to a $3.5
million impairment charge on net assets related to our Middle East Operations,
which was recorded in the second quarter of fiscal 2004.

         CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE. During fiscal
2003, we, with the assistance of independent valuation experts, completed our
initial assessment test and concluded that certain of our goodwill was impaired.
Effective April 1, 2002, we recognized a transitional impairment charge of $18.2
million as the cumulative effect of a change in accounting principle to reduce
the carrying values of certain indefinite lived intangible assets and goodwill
to estimated fair values as required by SFAS No. 142. This is a non-cash charge
and does not impact compliance with the financial covenants contained in our
lender agreements.

         NET LOSS. Net loss totaled $5.5 million for the year ended March 31,
2004, compared to a net loss of $28.8 million in fiscal year 2003, an
improvement of $23.3 million, which was primarily attributable to $18.2 million
of non-cash goodwill impairment charges as a result of a change in accounting
principle in fiscal 2003, improved revenue levels, improved operating
efficiencies and our overall efforts to streamline operations.

         Loss per share on a fully diluted basis totaled $0.65 per share for the
year ended March 31, 2004, compared to a loss per fully diluted share of $3.43
for the year ended March 31, 2003. The weighted average number of shares used in
calculating loss per share is computed based on the number of common shares
issued and outstanding. On March 30, 2004, we completed our recapitalization
which resulted in the issuance of warrants exercisable for 16.1 million common
shares. In accordance with generally accepted accounting principles for
"Participating Securities", these warrants will be

                                                                              23
<PAGE>

included in the weighted average shares calculation only in periods in which we
generate net income available to common shareholders. Net income available to
common shareholders represents net income less the annual preferred stock
dividend.

YEAR ENDED MARCH 31, 2003 COMPARED TO YEAR ENDED MARCH 31, 2002

         REVENUES. Revenues from continuing operations for fiscal 2003 totaled
$117.6 million, compared with $134.8 million for fiscal 2002, a decrease of
12.8%.

         Our Domestic Core Operations generated revenues of $85.0 million in
fiscal 2003 compared with $101.8 million in fiscal 2002, a decrease of 16.5%.
This decrease was primarily related to our Preservation Team contracts with the
U.S. Navy. Since June 2000, we have been providing Preservation Team services to
the U.S. Navy under a demonstration contract. In calendar 2002, these contracts
were placed in the normal Navy procurement process and put out for competitive
bid. A number of these contracts were designated as small business contracts and
we did not qualify as a small business. Therefore, we were unable to compete for
these contracts as a prime contractor, although we were eventually awarded a
number of subcontracts for this work. The net result was a reduction in revenues
for this work of approximately $11.6 million in fiscal year 2003. In fiscal
2003, we also made the decision to close two offices in New Mexico and South
America, resulting in lost revenues of approximately $1.9 million. The remaining
decrease was primarily due to decreased material sales of $1.1 million and lower
revenues generated by our commercial coatings offices of $1.3 million.

         Revenues relating to our Canadian Operations segment totaled $19.3
million in fiscal year 2003, compared to $21.3 million in fiscal year 2002, a
decrease of 9.4%. The decrease was due primarily to lower material and rectifier
sales and the closure of our office in Taiwan.

         Revenues relating to our European Operations segment totaled $13.4
million in fiscal year 2003, compared to $11.7 million in fiscal year 2002, an
increase of 14.5%. The increase was primarily due to a large contract with an
energy company to provide engineering services for their underground storage
tanks.

         GROSS PROFIT. Consolidated gross profit margins for fiscal 2003 totaled
$37.1 million (31.6% of revenues) compared to $39.5 million (29.3% of revenues)
for fiscal 2002, a decrease in gross profit dollars of $2.4 million or 6.1%. The
higher gross profit as a percent to revenue (a 230 basis point increase) can be
attributed to informal restructuring plans and cost containment programs
implemented in fiscal 2001 and 2002 as well as our Board of Directors decision
to approve a formal business restructuring plan in July 2002. The multi-year
plan includes a series of initiatives to improve gross margins as well as
operating income and reduce debt. The initiatives that impacted gross margins in
fiscal 2003 included the following:

            -   Closure of underperforming offices. At the end of fiscal 2001,
                we closed five underperforming offices. Costs continued to be
                incurred in fiscal 2002 as we restructured our operations.
                Approximately $0.4 million in margin costs were incurred in
                fiscal 2002 while none were incurred in fiscal 2003. In fiscal
                2002, we closed our office in Taiwan and realized gross margin
                improvement of $0.4 million in fiscal 2003.

            -   Improved insurance programs. We moved certain insurance policies
                to deductible programs in fiscal 2003. These changes allowed us
                to reduce costs by approximately $0.7 million.

            -   Improved material purchase program. Efficiencies were achieved
                in purchasing certain corrosion control materials that are sold
                to our customers. Gross margin improvement in our Material Sales
                Center totaled $0.3 million in fiscal 2003.

            -   Wage and salary freeze. We implemented a general wage and salary
                freeze for employees in fiscal 2003 in order to contain costs.

                                                                              24
<PAGE>

            -   Restrictions on travel and entertainment. Travel and
                entertainment was restricted to essential, revenue producing
                ventures.

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses for fiscal 2003 totaled $35.2 million (29.9% of
revenues), compared with $35.2 million (26.1% of revenues) for fiscal 2002. The
fiscal 2003 amount of $35.2 million includes $2.9 million in professional fees
related to lender requirements, severance expenses totaling $0.5 million, $2.1
million of pension expense related to our European Operations and a $0.5 million
impairment charge recorded for our European Operations. The overall improvement
in the base level of selling, general and administrative expenses was achieved
in part by the implementation of informal cost containment programs and
restructuring plans in fiscal 2001 and 2002 as well as in part because of the
Board of Director's approval of a formal restructuring plan in July 2002. An
activity-based analysis was performed to eliminate our non-value added costs.
Savings were achieved through the following initiatives:

            -   Reduced headcount in corporate overhead areas. Headcount was
                reduced in both fiscal 2002 and fiscal 2003. Savings of
                approximately $4.0 million was achieved by these headcount
                reductions in fiscal 2003.

            -   Closed under performing offices. At the end of fiscal 2001, we
                closed five under performing offices. Costs continued to be
                incurred in fiscal 2002 as we restructured our operations. In
                addition, we closed our office in Taiwan in fiscal 2002. The
                total reduction in selling, general and administrative expenses
                realized by these closures was approximately $0.4 million in
                fiscal 2003.

            -   Restrictions on travel and entertainment as well as other
                discretionary overhead costs. Travel and entertainment was
                restricted to essential, revenue producing ventures. Purchase of
                advertising materials, catalogs, office supplies and other
                discretionary overhead items were also restricted. Total savings
                achieved in fiscal 2003 was approximately $0.4 million.

            -   Wage and salary freeze. We implemented a general wage and salary
                freeze for employees in fiscal 2003 in order to contain costs.
                In addition, the management incentive plan was suspended in
                fiscal 2003. The savings achieved in fiscal 2003 from the
                suspension of the management incentive plan was approximately
                $0.4 million.

         In addition to the initiatives above, we achieved a savings from
reduced employee benefit costs. In fiscal 2003, we suspended the match feature
in our 401(k) plan. In addition, we had a favorable claims experience in our
health care costs. These items resulted in savings of approximately $0.9 million
in fiscal 2003.

         OPERATING INCOME FROM CONTINUING OPERATIONS. Operating income from
continuing operations for fiscal 2003 totaled $2.0 million, compared to $4.3
million for fiscal 2002, a decrease of $2.3 million. The decrease was primarily
due to the decrease in revenue levels. The savings achieved in selling, general
and administrative expenses were offset by the additional costs outlined above.

         INTEREST EXPENSE. Interest expense for fiscal 2003 totaled $6.7
million, compared to $5.9 million for fiscal 2002. The increase was related
primarily to a provision for yield maintenance of $1.0 million in our
then-outstanding senior notes.

         INCOME TAX PROVISION. We recorded an income tax benefit of $0.4 million
for fiscal 2003, compared to an income tax provision of $11.2 million in fiscal
2002. Our effective rate is based on the statutory rates in effect in the
countries in which we operate. See Note 6, Income Taxes, Notes to Consolidated
Financial Statements included in Item 8 for a reconciliation of our effective
tax rates. Within the fiscal 2002 tax provision is an increase in valuation
allowance for our domestic deferred tax asset of $10.5 million.

                                                                              25
<PAGE>

         LOSS FROM CONTINUING OPERATIONS. As a result of the foregoing, loss
from continuing operations in fiscal 2003 totaled $4.4 million, compared with a
loss from continuing operations of $12.7 million in fiscal 2002, an improvement
of $8.3 million. The improvement was primarily attributable to the valuation
allowance for our deferred tax assets taken in fiscal 2002.

         DISCONTINUED OPERATIONS. Loss from discontinued operations, net of
income taxes totaled $6.2 million for fiscal 2003, compared with a loss from
discontinued operations, net of income taxes, of $5.5 million for fiscal 2002.
This incremental loss was mainly attributable to currency translation
adjustments and impairment charges. In fiscal 2003, four non-strategic business
units were sold for a gain, net of taxes of $2.1 million.

         CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE. During fiscal
2003, we, with the assistance of independent valuation experts, completed our
initial assessment test and concluded that certain of our goodwill was impaired.
Effective April 1, 2002, we recognized a transitional impairment charge of $18.2
million as the cumulative effect of a change in accounting principle to reduce
the carrying values of certain indefinite lived intangible assets and goodwill
to estimated fair values as required by SFAS No. 142. This is a non-cash charge
and does not impact compliance with the financial covenants contained in our
lender agreements.

         NET LOSS. The net loss for fiscal 2003 totaled $28.8 million, compared
with a net loss of $18.2 million in fiscal 2002. The net loss increase reflects
the impact of the change in accounting principle and increased losses from
discontinued operations. Diluted loss per share increased to a loss of $3.43 in
fiscal 2003 compared with a loss of $2.24 in fiscal 2002.

LIQUIDITY AND CAPITAL RESOURCES

         CASH FLOW. At March 31, 2004, we had working capital of $16.1 million,
compared to a deficit of $25.0 million at March 31, 2003, an improvement of
$41.1 million. This improvement in working capital was due to a number of
factors, the most significant of which was that we completed our refinancing and
recapitalization transaction on March 30, 2004. The refinancing and
recapitalization transaction resulted in a $45.2 million reduction in the
current portion of long-term debt in fiscal 2004. Accounts receivable increased
by $6.0 million in fiscal 2004 due to higher revenue levels in fiscal 2004. The
increase in accounts receivable was offset by a decrease in notes receivable of
$6.4 million. On March 31, 2003, we sold a non-strategic business unit and
recorded a $6.2 million note receivable, which increased working capital. This
note was collected in fiscal year 2004. Inventory levels increased approximately
$1.6 million in fiscal year 2004, primarily due to a large well casing project
being run out of our Houston office. Accounts payable and accrued liabilities
increased $2.4 million in fiscal year 2004 primarily due to higher activity
levels in fiscal year 2004.

         During fiscal 2004, cash provided by operating activities totaled $1.0
million, compared to $2.3 million in fiscal 2003. The overall decrease in cash
generated from operating activities was primarily due to the fact that we paid
$3.2 million in yield maintenance amounts required under previous debt
arrangements in fiscal 2004. We had accrued $1.0 million of this yield
maintenance in fiscal 2003, but it was actually paid in fiscal 2004.
Improvements in accounts and notes receivable and accounts payable and accrued
expenses were offset by unfavorable changes in inventory and prepaid expenses
and other. As discussed above, the change in inventory was primarily due to a
large well casing project being run out of our Houston office. The change in
prepaid expenses and other was primarily due to an increase in our prepaid
Directors and Officers insurance of approximately $0.5 million and an April 2,
2004 payroll payment of $0.7 million that we deposited with our payroll
processor on March 31, 2004.

         We believe that cash generated by operations and amounts available
under our credit facilities will be sufficient to satisfy our liquidity
requirements through at least fiscal 2005.

         SENIOR SECURED CREDIT FACILITY. On March 30, 2004, we entered into a
$40.0 million revolving credit, term loan and security agreement with
CapitalSource that expires on March 30, 2009. Initial borrowings were used to
repay existing indebtedness. The revolving credit facility provides for a
maximum principal amount of $19.5 million. Borrowings under the revolving credit
facility are limited to borrowing base amounts as defined. The interest rate on
the revolving credit facility is at prime plus 1.75%, which was 5.75% at March
31, 2004. We are also required to pay an

                                                                              26
<PAGE>

unused line fee of 0.75% on the unused portion of the revolving credit facility
and a collateral management fee of 0.50% based on the funded portion of the
revolving credit facility. The revolving credit facility includes a credit
sub-facility of $7.0 million for the issuance of standby letters of credit.
Standby letter of credit fees are 3.0% on the undrawn face amount of all
outstanding standby letters of credit. At March 31, 2004, we had $2.8 million
outstanding under the revolving credit facility and $6.1 million of outstanding
letters of credit. Total availability under the revolving credit facility at
March 31, 2004, was approximately $4.5 million, after giving consideration to
the borrowing base limitations under the revolving credit facility.

         The term loan facility provided for an original principal amount of
$20.5 million. The term loan bears interest at prime plus 3.5% subject to a
floor of 7.5%. The term loan requires us to make monthly principal payments from
inception to March 1, 2009. The amount of the monthly payments are fixed, but
the monthly amount increases each year. In addition, notwithstanding any other
provisions in the revolving credit, term loan and security agreement, we are
required to pay 50% of our excess cash flow, as defined, each year, starting
with the year ending March 31, 2005, to further pay down the term loan. At March
31, 2004, the outstanding balance on the term loan was $20.5 million.

         Borrowings under the revolving credit, term loan and security agreement
are secured by a first priority security interest in our domestic and Canadian
accounts receivable, inventories, certain intangibles, machinery and equipment
and owned real estate. We have also pledged slightly less than two-thirds of the
capital stock of two of our foreign subsidiaries. The agreement requires us to
maintain certain financial ratios and limits our ability to pay cash dividends,
incur additional indebtedness and make investments, including acquisitions, and
to take certain other actions specified therein. We were in compliance with
these covenants at March 31, 2004.

         SENIOR SECURED SUBORDINATED NOTES. On March 30, 2004, we entered into a
senior secured subordinated note and equity purchase agreement with American
Capital pursuant to which we sold $14.0 million of our senior secured
subordinated notes and a warrant to purchase 3,936,967 of our common shares to
American Capital. Initial borrowings were used to repay existing indebtedness.
The interest rate on the senior secured subordinated notes is 12.5%. The senior
secured subordinated notes do not require principal payments and the notes are
due on March 29, 2011. The senior secured subordinated notes are secured by a
lien on our domestic and Canadian accounts receivable, inventories, certain
intangibles, machinery and equipment and owned real estate subordinated in lien
priority only to the liens in favor of CapitalSource. The senior secured
subordinated note and equity purchase agreement requires us to maintain certain
financial ratios and limits our ability to pay cash dividends, incur additional
indebtedness, make investments, including acquisitions, and to take certain
other actions specified therein. We were in compliance with these covenants at
March 31, 2004.

         SERIES B CUMULATIVE REDEEMABLE VOTING PREFERRED STOCK. On March 30,
2004, we entered into a securities purchase agreement with CPI pursuant to which
we sold 13,000 shares of our Series B Preferred Stock and a warrant to purchase
12,113,744 of our common shares to CPI for aggregate consideration of $13.0
million. We used these proceeds to repay our outstanding indebtedness. The
securities purchase agreement requires us to maintain certain financial ratios
and limits our ability to incur additional indebtedness, make investments,
including acquisitions, and to take certain other actions specified therein. We
were in compliance with these covenants at March 31, 2004. In addition, the
Series B Preferred Stock is redeemable at the option of the holders of Series B
Preferred Stock upon the occurrence of certain events.

         The Series B Preferred Stock will accrue cumulative quarterly dividends
at an annual rate of 13.5%. In the event we do not maintain certain financial
covenants for the twelve months preceding any quarterly dividend payment date,
the annual dividend rate will increase to 16.5% for each subsequent calendar
quarter during which we fail to comply with such financial covenants. Dividends
on the Series B Preferred Stock are payable either (i) in cash if then permitted
under the terms of our outstanding senior secured credit facility and/or senior
secured subordinated notes or (ii) in additional shares of Series B Preferred
Stock. Dividends payable in cash would be paid when, as and if declared by the
Board of Directors out of funds legally available thereof. The terms of our
senior financing prohibit, unless approved by the lender, the payment of any
cash dividends on the Series B Preferred Stock while such debt is outstanding.

                                                                              27
<PAGE>

         CONTRACTUAL OBLIGATIONS. The following table summarizes our contractual
obligations at March 31, 2004:

<TABLE>
<CAPTION>
                                                       PAYMENTS DUE BY PERIOD
                                         -------------------------------------------------
                                                   LESS THAN    1 - 3     4 - 5    AFTER 5
(IN THOUSANDS)                            TOTAL    ONE YEAR     YEARS     YEARS     YEARS
                                         -------   ---------   -------   -------   -------
<S>                                      <C>       <C>         <C>       <C>       <C>
Indebtedness:
  Revolving Credit Facility, Due 2009    $ 2,779   $   2,779   $    --   $    --   $    --
  Term Loan, Due 2009                     20,500       2,500    12,000     6,000        --
  Senior Secured Subordinated Notes(1)    14,000          --        --        --    14,000
  Other Debt Obligations                     154          --       154        --        --
  Management Fee                           3,200         400     1,200       800       800
  Operating Leases                         7,424       2,475     3,842       907       200
                                         -------   ---------   -------   -------   -------

Total Contractual Cash
    Obligations                          $48,057   $   8,154   $17,196   $ 7,707   $15,000
                                         =======   =========   =======   =======   =======
</TABLE>

(1)      The Senior Secured Subordinated Notes is net of discount of $4,130 as
         reported on the consolidated financial statements.

RELATED PARTY TRANSACTIONS

         On March 30, 2004, we entered into a services agreement with Wingate
Partners, an affiliate of CPI. The services agreement provides that Wingate
Partners agrees to consult with the Board of Directors in such a manner and on
such business and financial matters as would be reasonably requested from time
to time by the Board, including financial advisory, management advisory,
strategic planning, monitoring and other related services, in exchange for which
we will pay an annual non-refundable services fee of $0.4 million payable
quarterly in advance, to such persons designated by Wingate Partners. In lieu of
paying any quarterly installment of the services fee in cash, we may, at our
option, or if we are restricted from paying any such quarterly installment in
cash under, or the Board determines that payment of such quarterly installment
in cash would result in a default under, the terms of our new senior secured
credit facility or senior secured subordinated notes, delay payment and accrue
any unpaid portion of the services fee, without interest. The services agreement
will have an initial term of eight years, which term will automatically renew
for successive one year periods thereafter unless either party notifies the
other of its desire to terminate the services agreement.

EFFECTS OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

         In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable
Interest Entities, an Interpretation of ARB No. 51." This Interpretation
addresses the consolidation by business enterprises of various interest entities
as defined in the Interpretation. We do not expect the adoption of this
Interpretation to have a material impact on our results of operations or
financial position.

         In December 2003, the FASB revised SFAS No. 132, "Employers'
Disclosures about Pensions and Other Post Retirement Benefits." This revision
requires additional disclosures to those in the original SFAS No. 132 about
assets, obligations, cash flows and the periodic benefit cost of deferred
benefit pension plans and other deferred benefit post-retirement plans. The
required information should be provided separately for pension plans and for
other post-retirement benefit plans. This statement revision is in effect for
our fiscal years ended June 14, 2004, and interim periods beginning after June
15, 2004, for foreign plans. The adoption of this revision is not expected to
have a material impact on our results of operations, financial position or
disclosures.

         In November 2003, the Emerging Issues Task Force ("EITF") issued EITF
03-06, "Participating Securities and the Two-Class Method under FASB Statement
No. 128", FASB Statement No. 128, "Earning Per Share". This EITF provides
clarification on the earning per share calculation for participating securities
as defined under FASB No. 128. The EITF is effective for the reporting period
after March 31, 2004. Prior period earnings per share amounts presented

                                                                              28
<PAGE>

for comparative purposes should be restated to conform to the guidance in the
consensus. We do not expect the adoption of this EITF to have a material effect
on our consolidated financial statements or our results from operations.

                                                                              29
<PAGE>

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

     The Board of Directors and Shareholders
         Corrpro Companies, Inc.:

We have audited the accompanying consolidated balance sheets of Corrpro
Companies, Inc. and subsidiaries (Company) as of March 31, 2004 and 2003, and
the related consolidated statements of operations, shareholders' equity
(deficit), and cash flows for each of the years in the three-year period ended
March 31, 2004. These consolidated financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.

We conducted our audits in accordance with the Standards of the Public
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Corrpro Companies,
Inc. and subsidiaries as of March 31, 2004 and 2003, and the results of their
operations and their cash flows for each of the years in the three-year period
ended March 31, 2004, in conformity with accounting principles generally
accepted in the United States of America.

As discussed in note 1, to the accompanying consolidated financial statements,
effective April 1, 2002, the Company adopted the provisions of Statement of
Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible
Assets.

As discussed in note 1, to the accompanying consolidated financial statements,
the accompanying balance sheet as of March 31, 2004, and the related statement
of cash flows for the year then ended, have been restated.

/s/ KPMG LLP
Cleveland, Ohio
June 17, 2004, except for note 1, for which the date is August 9, 2004

                                                                              30
<PAGE>

                    CORRPRO COMPANIES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                             MARCH 31, 2004 AND 2003

                                 (In Thousands)

                                     ASSETS

<TABLE>
<CAPTION>
                                                                   Restated
                                                                  See Note 1
                                                                     2004        2003
                                                                   --------    --------
<S>                                                               <C>          <C>
CURRENT ASSETS:
    Cash and cash equivalents                                      $  2,498    $  7,037
    Accounts receivable, less allowance for doubtful accounts of
        $729 and $660 at March 31, 2004 and 2003, respectively       24,139      18,156
    Note receivable                                                     768       7,192
    Inventories                                                       9,807       8,233
    Prepaid expenses and other                                        5,974       4,246
    Assets held for sale                                                 --       9,846
                                                                   --------    --------
         Total current assets                                        43,186      54,710
                                                                   --------    --------

PROPERTY, PLANT AND EQUIPMENT:

    Land                                                                548         443
    Buildings and improvements                                        6,153       4,897
    Equipment, furniture and fixtures                                17,242      15,610
                                                                   --------    --------
                                                                     23,943      20,950
    Less accumulated depreciation                                   (16,794)    (13,968)
                                                                   --------    --------
    Property, plant and equipment, net                                7,149       6,982
                                                                   --------    --------

OTHER ASSETS:
    Goodwill, net                                                    14,560      13,343
    Deferred income taxes                                               763         482
    Other assets                                                      7,974       3,023
                                                                   --------    --------
         Total other assets                                          23,297      16,848
                                                                   --------    --------

                                                                   $ 73,632    $ 78,540
                                                                   ========    ========
</TABLE>

           The accompanying Notes to Consolidated Financial Statements
                    are an integral part of these statements.

                                                                              31
<PAGE>

                    CORRPRO COMPANIES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                             MARCH 31, 2004 AND 2003

                                 (In Thousands)

                 LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
                                                                         Restated
                                                                        See Note 1
                                                                           2004        2003
                                                                         --------    --------
<S>                                                                     <C>          <C>
CURRENT LIABILITIES:
    Revolving credit facility                                            $  2,779    $ 22,192
    Current portion of long-term debt                                       2,500      28,284
    Accounts payable                                                       10,894       9,081
    Accrued liabilities and other                                          10,874      10,313
    Liabilities held for sale                                                  --       3,454
                                                                         --------    --------
         Total current liabilities                                         27,047      73,324
                                                                         --------    --------

LONG-TERM DEBT
    Long-term debt, net of current portion                                 18,154         765
    Senior secured subordinated notes, net of discount of $4,130            9,870          --
                                                                         --------    --------
             Total long-term debt                                          28,024         765
                                                                         --------    --------

OTHER LONG-TERM LIABILITIES                                                 4,186       3,252

WARRANTS                                                                   16,830          --

COMMITMENTS AND CONTINGENCIES                                                  --          --

SERIAL PREFERRED SHARES
   Serial Preferred Shares issued and outstanding 13 shares of
      Series B Cumulative Redeemable Voting Preferred Stock,
      without par value, liquidation value of $13,000, net of discount        274          --

  SHAREHOLDERS' EQUITY (DEFICIT):
  Common Shares, voting, no par value, at stated value; 40,000 shares
      authorized; 8,507 shares issued in 2004 and 2003; 8,443 and
      8,408 shares outstanding in 2004 and 2003                             2,276       2,276
    Additional paid-in capital                                             46,266      46,560
    Accumulated deficit                                                   (50,555)    (45,076)
    Accumulated other comprehensive loss                                      (95)     (1,597)
    Common Shares in treasury, at cost;
     64 and 99 shares held in 2004 and 2003                                  (621)       (964)
                                                                         --------    --------
         Total shareholders' equity (deficit)                              (2,729)      1,199
                                                                         --------    --------

                                                                         $ 73,632    $ 78,540
                                                                         ========    ========
</TABLE>

           The accompanying Notes to Consolidated Financial Statements
                    are an integral part of these statements.

                                                                              32
<PAGE>

                    CORRPRO COMPANIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                FOR THE YEARS ENDED MARCH 31, 2004, 2003 AND 2002

                      (In Thousands, Except Per Share Data)

<TABLE>
<CAPTION>
                                                                     2004          2003          2002
                                                                  ----------    ----------    ----------
<S>                                                               <C>           <C>           <C>
Revenues                                                          $  130,084    $  117,623    $  134,784

Operating costs and expenses:
  Cost of sales                                                       88,713        80,506        95,292
  Selling, general and administrative expenses                        32,841        35,157        35,179
                                                                  ----------    ----------    ----------
Operating income                                                       8,530         1,960         4,313

Interest expense                                                       9,565         6,725         5,878
                                                                  ----------    ----------    ----------
Loss from continuing operations before
  Income taxes                                                        (1,035)       (4,765)       (1,565)
Provision (benefit) for income taxes                                     576          (363)       11,155
                                                                  ----------    ----------    ----------
Loss from continuing operations                                       (1,611)       (4,402)      (12,720)
Discontinued operations:
  Loss from operations, net of income taxes                           (3,822)       (8,280)       (5,497)
  Gain (loss) on disposals, net of income taxes                          (46)        2,095            --
                                                                  ----------    ----------    ----------
Loss before Cumulative effect of change in accounting principle       (5,479)      (10,587)      (18,217)
Cumulative effect of change in accounting principle                       --       (18,238)           --
                                                                  ----------    ----------    ----------
Net Loss                                                          $   (5,479)   $  (28,825)   $  (18,217)
                                                                  ==========    ==========    ==========

Loss per share - Basic:
  Loss from continuing operations                                 $    (0.19)   $    (0.52)   $    (1.57)
  Discontinued operations:
  Loss from operations, net of income taxes                            (0.45)        (0.99)        (0.67)
  Gain (loss) on disposal, net of income taxes                         (0.01)         0.25            --
                                                                  ----------    ----------    ----------
Loss before Cumulative effect of change in accounting principle        (0.65)        (1.26)        (2.24)
Cumulative effect of change in accounting principle                       --         (2.17)           --
                                                                  ----------    ----------    ----------
Net Loss                                                          $    (0.65)   $    (3.43)   $    (2.24)
                                                                  ==========    ==========    ==========

Weighted average shares outstanding - Basic                            8,419         8,387         8,119
                                                                  ==========    ==========    ==========

Loss per share - Diluted:
  Loss from continuing operations                                 $    (0.19)   $    (0.52)   $    (1.57)
  Discontinued operations:
  Loss from operations, net of income taxes                            (0.45)        (0.99)        (0.67)
  Gain (loss) on disposal, net of income taxes                         (0.01)         0.25            --
                                                                  ----------    ----------    ----------
Loss before Cumulative effect of change in accounting principle        (0.65)        (1.26)        (2.24)
Cumulative effect of change in accounting principle                       --         (2.17)           --
                                                                  ----------    ----------    ----------
Net Loss                                                          $    (0.65)   $    (3.43)   $    (2.24)
                                                                  ==========    ==========    ==========

Weighted average shares outstanding - Diluted                          8,419         8,387         8,119
                                                                  ==========    ==========    ==========
</TABLE>

           The accompanying Notes to Consolidated Financial Statements
                    are an integral part of these statements.

                                                                              33
<PAGE>

                    CORRPRO COMPANIES, INC. AND SUBSIDIARIES

            CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
                FOR THE YEARS ENDED MARCH 31, 2004, 2003 AND 2002

                                 (In Thousands)

<TABLE>
<CAPTION>
                                                                                            ACCUMULATED
                                                                                               OTHER
                                               COMMON SHARES                                  COMPRE-       COMMON
                                              ----------------   ADDITIONAL     ACCUM-        HENSIVE       SHARES
                                                         PAR      PAID-IN       ULATED         INCOME        IN
                                              NUMBER    VALUE     CAPITAL       DEFICIT        (LOSS)      TREASURY      TOTAL
                                              ------   -------   ----------    ---------    -----------    --------    ---------
<S>                                           <C>      <C>       <C>           <C>          <C>            <C>         <C>
March 31, 2001                                 7,866   $ 2,276   $   49,979    $   1,966    $    (6,679)   $ (6,024)   $  41,518
Comprehensive Loss:
     Net loss                                     --        --           --      (18,217)            --          --      (18,217)
     Minimum pension liability, net of
       tax of $74                                 --        --           --           --           (132)         --         (132)
     Cumulative translation adjustment            --        --           --           --           (191)         --         (191)
                                                                                                                       ---------
  Total Comprehensive Loss                        --        --           --           --             --          --      (18,540)
  Issuance of 391 Treasury Shares                391        --       (2,986)          --             --       3,865          879
                                              ------   -------   ----------    ---------    -----------    --------    ---------
March 31, 2002                                 8,257     2,276       46,993      (16,251)        (7,002)     (2,159)      23,857
  Comprehensive Loss:
     Net loss                                     --        --           --      (28,825)            --          --      (28,825)
     Write-off Translation adjustment
        related to Discontinued operations        --        --           --           --          3,301          --        3,301
     Write-off of minimum pension liability
        related to Discontinued operations        --        --           --           --            498          --          498
     Cumulative translation adjustment            --        --           --           --          1,606          --        1,606
                                                                                                                       ---------
  Total Comprehensive Loss                        --        --           --           --             --          --      (23,420)

  Issuance of 934 Stock Warrants                  --        --          626           --             --          --          626
  Issuance of 151 Treasury Shares                151        --       (1,059)          --             --       1,195          136
                                              ------   -------   ----------    ---------    -----------    --------    ---------
March 31, 2003                                 8,408     2,276       46,560      (45,076)        (1,597)       (964)       1,199
  Comprehensive Loss:
     Net loss                                     --        --           --       (5,479)            --          --       (5,479)
       Minimum pension liability, net
         of tax of $66                            --        --           --           --           (155)         --         (155)
     Cumulative translation adjustment            --        --           --           --          1,657          --        1,657
                                                                                                                       ---------
  Total Comprehensive Loss                        --        --           --           --             --          --       (3,977)

  Issuance of 35 Treasury Shares                  35        --         (294)          --             --         343           49
                                              ------   -------   ----------    ---------    -----------    --------    ---------

March 31, 2004                                 8,443   $ 2,276   $   46,266    $ (50,555)   $       (95)   $   (621)   $  (2,729)
                                              ======   =======   ==========    =========    ===========    ========    =========
</TABLE>

           The accompanying Notes to Consolidated Financial Statements
                    are an integral part of these statements.

                                                                              34
<PAGE>

                    CORRPRO COMPANIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE YEARS ENDED MARCH 31, 2004, 2003 AND 2002

                                 (In Thousands)

<TABLE>
<CAPTION>
                                                                               Restated
                                                                              See Note 1
                                                                                 2004        2003        2002
                                                                               --------    --------    --------
<S>                                                                           <C>          <C>         <C>
Cash flows from operating activities:
  Net loss                                                                     $ (5,479)   $(28,825)   $(18,217)
  Adjustments to reconcile net loss
    to net cash provided by continuing operations:
    Loss on discontinued operations                                               3,868       6,185       5,497
    Depreciation and amortization                                                 3,641       3,130       4,257
    401(k) matching contributions in Treasury shares                                 --         136         841
    Minimum pension liability                                                        --         498          --
    Deferred income taxes                                                          (264)     (1,014)      7,297
    Gain (loss) on sale of assets                                                   (24)         11         (87)
    Cumulative effect of change in accounting principle                              --      18,238          --
Changes in operating assets and liabilities, net of effects of acquisitions:
        Accounts and notes receivable                                             1,196         787       4,844
        Inventories                                                              (1,138)      1,525       4,459
        Prepaid expenses and other                                               (2,426)       (990)      3,218
        Other assets                                                               (836)       (780)      3,819
        Accounts payable and accrued expenses                                     2,418       3,588      (1,158)
                                                                               --------    --------    --------
         Total adjustments                                                        6,435      31,314      32,987
                                                                               --------    --------    --------
         Net cash provided by continuing operations                                 956       2,489      14,770
                                                                               --------    --------    --------

Cash flows from investing activities:
  Additions to property, plant and equipment                                       (712)       (396)       (663)
  Proceeds from disposal of property, plant and equipment                           182         499         796
                                                                               --------    --------    --------
         Net cash provided (used) by investing activities                          (530)        103         133
                                                                               --------    --------    --------

Cash flows from financing activities:
  Net borrowing from new revolving credit facility                                2,779          --          --
  Net proceeds from issuance of Preferred Shares and warrants                    12,974          --          --
  Proceeds from senior subordinated notes and warrants                           14,000          --          --
  Proceeds from senior secured notes                                             20,500          --          --
  Payment of old senior notes                                                   (27,108)     (1,609)     (1,714)
  Payment of old revolving credit facility and other debt                       (24,500)     (9,707)     (3,699)
  Payment of financing cost                                                      (6,200)       (203)        (61)
  Net proceeds from issuance of Common Shares                                        49          --          40
                                                                               --------    --------    --------
         Net cash used by financing activities                                   (7,506)    (11,519)     (5,434)
                                                                               --------    --------    --------

Effect of changes in foreign currency exchange rates on cash                         16         154          (7)
                                                                               --------    --------    --------

Cash provided by (used for) discontinued operations                               2,525      10,994      (8,259)
                                                                               --------    --------    --------

Net increase (decrease) in cash                                                  (4,539)      2,221       1,203
Cash and cash equivalents at beginning of year                                    7,037       4,816       3,613
                                                                               --------    --------    --------
Cash and cash equivalents at end of year                                       $  2,498    $  7,037    $  4,816
                                                                               ========    ========    ========
</TABLE>

           The accompanying Notes to Consolidated Financial Statements
                    are an integral part of these statements.

                                                                              35
<PAGE>

                    CORRPRO COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                FOR THE YEARS ENDED MARCH 31, 2004, 2003 AND 2002

                      (In Thousands, Except Per Share Data)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

         As part of the recapitalization and refinancing, the Company issued
warrants associated with the Series B Preferred Stock and the senior secured
subordinated notes of 12,113,744 and 3,936,967, respectively on March 30, 2004.
As of March 31, 2004, the proceeds from these issuances were allocated between
the Series B Preferred Stock and the related warrant and the senior secured
subordinated notes and the related warrant, respectively, based on a calculation
of the fair value of the warrants that included a "blockage" discount. During
the preparation of the Company's June 30, 2004 consolidated financial
statements, it was determined that the value of these warrants should not
include a "blockage" discount factor.

         Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133"), paragraph 315,
defines the fair value as follows: `the definition of fair value in this
Statement precludes an entity from using a "blockage" factor (that is, a premium
or discount based on the relative size of the position held, such as a large
proportion of the total trading units of an instrument) in determining the fair
value of a large block of financial instruments. The definition of fair value
requires that fair value be determined as the product of the number of trading
units of an asset times a quoted market price if available.'

         Consistent with the foregoing discussion, the Company is restating its
consolidated balance sheet to reflect an increase in the allocation of the
proceeds to the warrants, a corresponding decrease in the allocation of the
proceeds to the Series B Preferred Stock and senior secured subordinated notes,
and conforming changes as of March 31, 2004. The Company is also restating its
consolidated statement of cash flows for the year ended March 31, 2004 to
reflect related changes in the allocations to "Net proceeds from issuance of
Preferred Shares and warrants" and "Payment of financing costs." The changes
contained in this restatement are a non-cash event and do not affect our
consolidated statements of operations and shareholders' equity (deficit).

                                                                              36
<PAGE>

         The following table sets forth the relevant items on the consolidated
balance sheet presentation as of March 31, 2004 as originally reported and as
restated.

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                       As of March 31, 2004
                                                                       ---------------------
                                                                           As
                                                                       Previously      As
                                                                        Reported    Restated
                                                                       ----------   --------
<S>                                                                    <C>          <C>
Other Assets:
       Other assets                                                         7,055      7,974
                                                                       ----------   --------
             Total other assets                                            22,378     23,297
                                                                       ----------   --------
Total Assets                                                           $   72,713   $ 73,632
                                                                       ==========   ========

Long-Term Debt:
       Senior secured subordinated notes, net of discount $2,932 as
       originally stated and $4,130 as restated                            11,068      9,870
                                                                       ----------   --------
             Total long-term debt                                          29,222     28,024
                                                                       ----------   --------

Warrants                                                                    8,994     16,830

Serial Preferred Shares:
       Serial Preferred Shares issued and outstanding 13 shares of
         Series B Cumulative Redeemable Voting Preferred Stock,
         without par value,
         Liquation value of $13,000                                         5,993        274

Total Liabilities and Shareholders' Equity                             $   72,713   $ 73,632
                                                                       ==========   ========
</TABLE>

         The following table sets forth the relevant items on the consolidated
statement of cash flows for the year ended March 31, 2004, as originally
reported and as restated.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                       Year Ended March 31, 2004
                                                                       -------------------------
                                                                           As
                                                                       Previously          As
                                                                        Reported        Restated
                                                                       ----------       --------
<S>                                                                    <C>              <C>
Cash flows from financing activities:
      Net proceeds from issuance of Preferred Shares and warrants          12,055         12,974
      Payment of financing costs                                           (5,281)        (6,200)
</TABLE>

CONSOLIDATION AND BASIS OF PRESENTATION

         The consolidated financial statements include the accounts of Corrpro
Companies, Inc. and its subsidiaries (the "Company"). All significant
intercompany accounts and transactions have been eliminated in consolidation.
Certain fiscal 2003 and 2002 amounts have been reclassified to conform with the
fiscal 2004 presentation.

         The Company's operations provide corrosion control engineering and
services, systems and equipment to the infrastructure, environmental and energy
markets throughout the world.

                                                                              37
<PAGE>

         In July 2002, the Company's Board of Directors approved a formal
business restructuring plan. The multi-year plan included a series of
initiatives to improve operating income and reduce debt by selling non-core
business units. The Company engaged outside professionals to assist in the
disposition of its domestic and international non-core business units. Prior to
the quarter ended September 30, 2002, the Company's non-core domestic and
international units were reported as the Other Operations and International
Operations reporting segments. Effective as of the quarter ended September 30,
2002, the Other Operations and the International Operations reporting segments
were eliminated and the non-core domestic and international units were reported
as discontinued operations. Prior-year financial statements were reclassified to
reflect these non-core units as discontinued operations, which were also
referred to as "assets and liabilities held for sale."

         In the second quarter of fiscal 2004, the Company's Board of Directors
approved a resolution to keep the European Operations and remove them from
discontinued operations. After careful deliberation, the Board concluded that
due to the strength of the local management team, the similar characteristics of
the served markets, and the favorable prospects for this business, the Company's
value would be enhanced by maintaining our European presence rather than by
selling the operations at this time. Therefore, effective in the second quarter
of fiscal 2004, the Company reported quarterly and annual results of the
European Operations in its continuing operations. Prior-year financial
statements have been reclassified to reflect the European Operations as
continuing operations.

CASH AND CASH EQUIVALENTS

         Cash and cash equivalents consist of cash and highly liquid investments
with an original maturity of three months or less.

ACCOUNTS RECEIVABLE

         The Company records estimated allowances for uncollectible accounts
receivable based upon the number of days the accounts are past due, the current
business environment and specific information such as bankruptcy or liquidity
issues of customers. Historically, losses for uncollectible accounts receivable
have been within management's estimates. Corrosion control services and products
are provided to a large number of customers with no substantial concentration in
a particular industry or with an individual customer. The Company performs
ongoing credit evaluations of its customers' financial condition.

         Accounts receivable are presented net of allowances for doubtful
accounts of $729 and $660 at March 31, 2004 and 2003, respectively. Bad debt
expense totaled $193, $467 and $617 in fiscal 2004, 2003 and 2002, respectively.
Trade receivables written off, net of recoveries of prior years write-offs,
totaled $124, $1,703 and $874 in fiscal 2004, 2003 and 2002, respectively.

INVENTORIES

         Inventories are valued at the lower of cost or market with cost being
determined on the first-in, first-out method. Inventories consist of the
following at March 31, 2004 and 2003:

<TABLE>
<CAPTION>
                                     2004     2003
                                    ------   ------
<S>                                 <C>      <C>
Component parts and raw materials   $5,156   $5,250
Finished goods                       4,651    2,983
                                    ------   ------
                                    $9,807   $8,233
                                    ======   ======
</TABLE>

         Disposals of obsolete inventory, net of proceeds, totaled $84, $149 and
$183 in fiscal 2004, 2003 and 2002, respectively.

                                                                              38
<PAGE>

PROPERTY, PLANT AND EQUIPMENT

         Property, plant and equipment are stated at cost. Major renewals and
improvements are capitalized, while maintenance and repairs are expensed when
incurred. The cost and accumulated depreciation for property, plant and
equipment sold, retired or otherwise disposed of are removed from the accounts
and resulting gains or losses are reflected in income.

         Substantially all of the Company's operations compute depreciation on
the straight-line method. Depreciation for the Company's Canadian operations
segment is computed on the declining balance method. Estimated useful lives
range from 25 to 40 years for buildings and from 4 to 10 years for equipment,
furniture and fixtures. Leasehold improvements are depreciated over the term of
the lease. For income tax reporting purposes, depreciation is computed
principally using accelerated methods.

         Depreciation expense totaled $1,485, $1,907 and $2,300 in fiscal 2004,
2003 and 2002, respectively.

GOODWILL, PATENTS AND OTHER INTANGIBLES

         In July 2001, Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets" ("SFAS 142"), were issued by the
Financial Accounting Standards Board. SFAS 142 changes the accounting for
goodwill and indefinite life intangibles from an amortization approach to a
non-amortization approach, and require periodic tests for impairment of these
assets. Upon the Company's adoption of SFAS 142 on April 1, 2002, the provisions
of SFAS 142 required the discontinuance of amortization of goodwill and
indefinite life intangibles that had been recorded in connection with previous
business combinations. The Company has completed its initial impairment testing
as of April 1, 2002 under SFAS 142 and recorded an impairment loss totaling
$18,238 of which $11,832 related to discontinued operations and $6,406 related
to continuing operations. The loss is being recognized as the cumulative effect
of a change in accounting principle. This impairment testing is also done
annually in the fourth quarter and such testing indicated no additional
impairment as of March 31, 2004 and 2003.

         The following table reflects the reconciliation of reported net loss
and net loss per share to the amounts adjusted for the exclusion of goodwill
amortization:

<TABLE>
<CAPTION>
                                                 2002
                                               --------
<S>                                            <C>
NET LOSS:
Reported Net Loss                              $(18,217)
Add back Goodwill Amortization                    1,723
                                               --------
Adjusted Net Loss                              $(16,494)
                                               ========

Income (loss) per share - Basic & Diluted:
    As reported                                $  (2.24)
    Adjusted Net Loss                          $  (2.03)
</TABLE>

         Goodwill balances as of March 31, 2004, totaled $14,560 compared to
$13,343 at March 31, 2003. The increase in goodwill was primarily the result of
Canadian foreign currency translation adjustments.

         In determining the fair value of the reporting units for SFAS 142, the
Company uses the income approach, market approach and the allocation of market
capitalization as its measures of valuation to periodically review the
impairment of goodwill.

         Included in other assets are amortizable assets consisting primarily of
patents, trademarks and covenants not to compete. Such assets, with a net book
value of $888 and $1,083 at March 31, 2004 and 2003, respectively, are amortized
on the straight-line method over their estimated useful lives ranging from 4 to
20 years. Amortization expense for such assets totaled $237, $217 and $227 in
fiscal 2004, 2003 and 2002, respectively. Amortization expense is anticipated to
be approximately $237 for each of the next five fiscal years.

                                                                              39
<PAGE>

         The Company uses an undiscounted cash flow method to periodically
review the net realizable value of other intangible assets and believes that
such assets are realizable.

FAIR VALUE OF FINANCIAL INSTRUMENTS

         The recorded value of cash and cash equivalents, receivables, payables,
accrued liabilities, short-term borrowings and assets and liabilities held for
sale approximates fair value because of the short maturity of these instruments.
The recorded value of the Company's long-term debt is considered to approximate
fair value based on the borrowing rates currently available to the Company for
loans with similar terms and maturities.

REVENUE RECOGNITION

         The Company records income from construction and engineering contracts
under the percentage-of- completion method, using costs incurred to date in
relation to estimated total costs of the contracts, to measure the stage of
completion. Original contract prices are adjusted for change orders and claims
when the change order or claim has been approved by the customer. Cost budgets
are revised, when necessary, in the amounts that are reasonably estimated based
on the Project Leaders' knowledge of the project as well as the Company's
historical experience. The cumulative effects of changes in estimated total
contract costs and revenues are recorded in the period in which the facts
requiring such revisions become known, and are accounted for using the
percentage-of-completion method. At the time it is determined that a contract is
expected to result in a loss, the entire estimated loss is recorded. Accounts
receivable includes $1,180 and $1,218 at March 31, 2004 and 2003, respectively,
of amounts billed but not paid by customers under retainage provisions of
contracts. Prepaid expenses and other includes $2,928 and $2,321 at March 31,
2004 and 2003, respectively, of amounts related to costs and estimated earnings
in excess of billings on uncompleted contracts. Accrued liabilities and other
includes $1,422 and $1,252 at March 31, 2004 and 2003, respectively, of amounts
related to billings in excess of costs and estimated earnings on uncompleted
contracts. The Company recognizes revenue from product sales upon shipment and
transfer of ownership.

PRODUCT DEVELOPMENT EXPENSES

         Expenditures for product development costs were minimal in fiscal 2004,
2003 and 2002.

WARRANTIES

         In the normal course of business, we provide warranties and
indemnifications for our products and services. We provide warranties that the
products we distribute are in compliance with prescribed specifications. In
addition, we have indemnity obligations to our customers for these products,
which have also been provided to us from our suppliers, either through express
agreement or by operation of law.

            At March 31, 2004, warranty costs were not material to the
consolidated financial statements.

INCOME TAXES

         The Company uses the liability method whereby income taxes are
recognized during the fiscal year in which transactions enter into the
determination of financial statement income. Deferred tax assets and liabilities
are recognized for the expected future tax consequences of temporary differences
between financial statement and tax basis of assets and liabilities. The Company
recorded a valuation allowance for its net domestic deferred tax assets and net
operating loss carryforwards of $10,472 in the fourth quarter of fiscal 2002.
The Company intends to maintain a full valuation allowance for its net domestic
deferred tax assets until sufficient positive evidence exists to support the
reversal of the remaining reserve. Until such time, except for foreign and state
tax provisions, the Company will have no reported tax provision, net of changes
in the valuation allowance. In the event the Company was to determine, based on
the existence of sufficient positive evidence, that it would be able to realize
its deferred tax assets in the future in excess of its net recorded amount, an
adjustment to the valuation allowance would increase income in the period such
determination was

                                                                              40
<PAGE>

made. See Note 6 of Notes to Consolidated Financial Statements of the Company
for additional information regarding income taxes.

EARNINGS PER SHARE

         Basic Earnings Per Share ("EPS") is computed by dividing net income
(loss) for the period by the weighted average number of common shares
outstanding for the period. Diluted EPS is computed by dividing net income
(loss) by the weighted average number of common shares and potential shares
outstanding for the period. Stock options and warrants are the only potential
common shares and are considered in the Company's diluted EPS calculation.
Potential common shares are computed using the treasury stock method. The effect
of the 150 and 45 incremental shares stock options in fiscal 2004 and 2003,
respectively, have been excluded from dilutive weighted average shares, as the
net loss for the year would cause the incremental shares to be antidilutive.
Moreover, the effect of the 818 and 477 weighted average incremental shares from
the issuance of stock warrants in fiscal 2004 and 2003, respectively, have been
excluded from dilutive weighted average shares, as the net loss for the year
would cause the incremental shares to be antidilutive. On March 30, 2004, the
Company completed a recapitalization that resulted in the issuance of warrants
exercisable for Common Shares. In accordance with generally accepted accounting
principles for "Participating Securities," these warrants will be included in
the weighted average shares calculation only in periods in which the Company
generates net income available to common shareholders. Net income available to
common shareholders represents net income less the annual preferred stock
dividend.

COMPREHENSIVE INCOME (LOSS)

         Accumulated other comprehensive income (loss) is reported separately
from retained earnings and additional paid-in-capital in the Consolidated
Balance Sheets. Items considered to be other comprehensive income (loss) include
adjustments made for foreign currency translation (under SFAS No. 52) and
pensions (under SFAS No. 87).

                                                                              41
<PAGE>

Components of other accumulated comprehensive income (loss) consist of the
following:

<TABLE>
<CAPTION>
                         MARCH 31,    MARCH 31,
                           2004         2003
                         ---------    ---------
<S>                      <C>          <C>
Translation adjustment   $      60    $  (1,597)
Pensions                      (155)          --
                         ---------    ---------
Ending Balance           $     (95)   $  (1,597)
                         =========    =========
</TABLE>

         Components of comprehensive income (loss) consist of the following:

<TABLE>
<CAPTION>
                                           TWELVE MONTHS ENDED MARCH 31,
                                             2004                 2003
                                           --------             --------
<S>                                        <C>                  <C>
Net loss                                   $ (5,479)            $(28,825)
OTHER COMPREHENSIVE INCOME (LOSS):
Translation adjustment                        1,657                1,606
Pensions                                       (155)                  --
Write-off translation adjustment related
    to European operations                       --                 (152)
Write-off translation adjustment related
    to discontinued operations                   --                3,453
Write-off pensions related to European
    operations                                   --                  498
                                           --------             --------
Total comprehensive loss                   $ (3,977)            $(23,420)
                                           ========             ========
</TABLE>

FOREIGN CURRENCY TRANSLATION

         The functional currency of each foreign subsidiary is the respective
local currency. Assets and liabilities are translated at the year-end exchange
rates and revenues and expenses are translated at average exchange rates for the
period. Resulting translation adjustments are recorded as a component of
shareholders' equity in other comprehensive income (loss).

FINANCIAL STATEMENT ESTIMATES

         The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect reported amounts and
related disclosures. Actual results could differ from these estimates.

STOCK-BASED COMPENSATION

         In December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation-Transition and Disclosure." SFAS No. 148 amends SFAS
No. 123, "Accounting for Stock-Based Compensation" in that it requires
additional disclosures about our stock-based compensation plans. SFAS No. 148 is
effective for periods beginning after December 15, 2002. We account for our
stock-based compensation plans using the intrinsic value method of recognition
and measurement principles under APB Opinion No. 25, "Accounting for Stock
Issued to Employees," and related interpretations. We adopted the
disclosure-only provisions of SFAS No. 123. Assuming that we had accounted for
our stock-based compensation programs using the fair value method promulgated by
SFAS No. 123, proforma net loss and net loss per share would have been as
follows (for the fiscal years ended):

                                                                              42
<PAGE>

<TABLE>
<CAPTION>
                                                          2004          2003          2002
                                                       ----------    ----------    ----------
<S>                                                    <C>           <C>           <C>
Loss from continuing operations:
     As reported                                       $   (1,611)   $   (4,402)   $  (12,720)
     Pro forma                                             (2,504)       (4,658)      (12,899)

Loss from continuing operations per share - Basic:
     As reported                                       $    (0.19)   $    (0.52)   $    (1.57)
     Pro forma                                              (0.30)        (0.56)        (1.59)

Loss from continuing operations per share - Diluted:
     As reported                                       $    (0.19)   $    (0.52)   $    (1.57)
     Pro forma                                              (0.30)        (0.56)        (1.59)
</TABLE>

         All options were granted at an exercise price equal to the market price
of the Company's common stock at the date of the grant. The weighted-average
fair value price at the date of grant for options granted during fiscal 2004,
2003 and 2002 was $1.52, $0.32 and $3.70 per option, respectively. For purposes
of this pro forma, the fair value of each option grant was estimated on the date
of grant using the Black-Scholes option-pricing model. The significant
assumptions used were risk-free interest rates ranging from 3.3% to 4.75%,
expected volatility of 118.7% for 2004, 142.0% for 2003 and 113.5% for 2002, an
expected life of 10 years and no expected dividends. As a result of the change
in control, 854 options vested.

2. ASSETS AND LIABILITIES HELD FOR SALE

         In July 2002, the Company's Board of Directors approved a formal
business restructuring plan. The multi-year plan included a series of
initiatives to improve operating income and reduce debt by selling non-core
business units. The Company engaged outside professionals to assist in the
disposition of its domestic and international non-core business units. Prior to
the quarter ended September 30, 2002, the Company's non-core domestic and
international units were reported as the Other Operations and International
Operations reporting segments. Effective as of the quarter ended September 30,
2002, the Other Operations and the International Operations reporting segments
were eliminated and the non-core domestic and international units were reported
as discontinued operations. Prior-year financial statements were reclassified to
reflect these non-core units as discontinued operations, which were also
referred to as "assets and liabilities held for sale."

         In the second quarter of fiscal 2004, the Company's Board of Directors
removed our European Operations from discontinued operations. The Board
concluded that the Company's value would be enhanced by maintaining its European
presence rather than by selling the European Operations at this time, based in
part on the strength of the local management team, the similar characteristics
of the served markets, and the favorable prospects for this business. Therefore,
effective in the second quarter of fiscal 2004, the Company reported quarterly
and annual results of its European Operations in its continuing operations, and
prior-year financial statements have been reclassified to reflect its European
Operations as continuing operations.

         Assets and liabilities held for sale consisted of the following at
March 31, 2003:

<TABLE>
<S>                                  <C>
Cash                                 $ 1,296
Accounts Receivable                    4,656
Inventory                              1,394
Prepaid Expenses                       2,173
Property, plant and equipment, net        --
Goodwill and Other Assets                327
                                     -------
Assets held for sale                 $ 9,846
                                     =======
</TABLE>

                                                                              43
<PAGE>

<TABLE>
<S>                                  <C>
Current Liabilities                  $ 3,525
Deferred Taxes & Minority Interest       (71)
                                     -------
Liabilities held for sale            $ 3,454
                                     =======
</TABLE>

         Operating gains or losses have been experienced with the disposition of
the non-core assets at the time of disposal during implementation of the
restructuring plan. Statements of operations for the discontinued operations for
the years ended March 31, 2004, 2003 and 2002 are shown below.

<TABLE>
<CAPTION>
                                                         FOR THE TWELVE
                                                          MONTHS ENDED
                                                            MARCH 31,
                                                --------------------------------
                                                  2004        2003        2002
                                                --------    --------    --------
<S>                                             <C>         <C>         <C>
Revenues                                        $ 10,058    $ 26,906    $ 37,406
Operating cost and expenses:
   Cost of sales                                   7,863      17,918      26,742
   Selling, general & administrative expenses      5,651      15,549      14,584
                                                --------    --------    --------
Operating loss                                    (3,456)     (6,561)     (3,920)
(Gain) loss on disposal                               46      (2,095)         --
Interest expense                                     366       1,637       1,474
                                                --------    --------    --------
Loss from discontinued operations
   before income taxes                            (3,868)     (6,103)     (5,394)
Provision for income taxes                            --          82         103
                                                --------    --------    --------
Loss from discontinued operations               $ (3,868)   $ (6,185)   $ (5,497)
                                                ========    ========    ========
</TABLE>

         The Company allocated interest to discontinued operations of $366,
$1,637 and $1,474 for fiscal 2004, 2003 and 2002, respectively, based on
estimated proceeds from the discontinued operations dispositions that were used
to pay down the Revolving Credit Facility and Senior Notes (see Note 3 - -
Long-Term Debt). The interest rate used to calculate the interest expense
allocated was the weighted average interest rate of the Revolving Credit
Facility and Senior Notes.

         During fiscal 2004, the Company substantially completed the sale of its
Middle East subsidiaries after recording impairment charges relating to these
operations of $3,530. In March 2004, the Company recorded a remaining note
receivable for $768, which the Company collected in fiscal 2005, for its Middle
East subsidiaries. During the first quarter of fiscal 2004, the Company sold its
Asia Pacific operations for a net loss of $46 after taking into account an
impairment charge on net assets which was recorded during the fourth quarter of
fiscal 2003 totaling $1,575. During fiscal 2003, the Company disposed of four
non-strategic business units. First, in March 2003, the Company sold its
Bass-Trigon Software business unit for $3,150 and recognized a gain of $194.
Also, in March 2003, the Company recorded a note receivable for $6,232, which
the Company collected in fiscal 2004, for its Rohrback Cosasco Systems
subsidiary and recognized a gain of $1,809. The Company also disposed of two
smaller international offices resulting in a net gain of $92 during fiscal 2003.
The net proceeds from dispositions were used to pay down debt.

         During fiscal 2003, the Company recorded an impairment charge relating
to its Asia Pacific operations totaling $1,575 based on current market value of
these operations and additionally recorded an impairment charge totaling $450
based on market value analysis of its Middle East operations. Additionally, an
impairment charge totaling $450, based on a market value analysis, was recorded
for its European operations which is now reported in continuing operations in
fiscal 2003. Also during fiscal 2003, discontinued operations recorded charges
to selling, general and administrative expenses totaling $3,813 related to
currency translation.

                                                                              44
<PAGE>

3. LONG-TERM DEBT:

         Long-term debt at March 31, 2004 and 2003 consisted of the following:

<TABLE>
<CAPTION>
                                         (RESTATED)
                                            2004       2003
                                         ---------   -------
<S>                                      <C>         <C>
New Term Loan,                           $  20,500   $     --
New Senior Secured Subordinated Notes,
   due 2011, net of discount $4,130          9,870         --
New Revolving Credit Facility                2,779         --
Old Senior Notes, due 2008                      --     26,824
Old Revolving Credit Facility                   --     22,192
Other                                          154      2,225
                                         ---------   --------
                                            33,303     51,241
Less: current portion                        5,279     50,476
                                         ---------   --------
                                         $  28,024   $    765
                                         =========   ========
</TABLE>

         On March 30, 2004, the Company entered into a $40.0 million revolving
credit, term loan and security agreement that expires on March 30, 2009. Initial
borrowings were used to repay existing indebtedness. The revolving credit
facility provides for a maximum principal amount of $19.5 million. Borrowings
under the revolving credit facility are limited to borrowing base amounts as
defined. The interest rate on the revolving credit facility is at prime plus
1.75%, which was 5.75% at March 31, 2004. The Company is also required to pay an
unused line fee of 0.75% on the unused portion of the revolving credit facility
and a collateral management fee of 0.50% based on the funded portion of the
revolving credit facility. The revolving credit facility includes a credit
sub-facility of $7.0 million for the issuance of standby letters of credit.
Standby letter of credit fees are 3.0% on the undrawn face amount of all
outstanding standby letters of credit. At March 31, 2004, the Company had $2.8
million outstanding under the revolving credit facility. The Company also had
$6.1 million of outstanding letters of credit as of March 31, 2004. Total
availability under the revolving credit facility at March 31, 2004, was
approximately $4.5 million, after giving consideration to the borrowing base
limitations under the revolving credit facility. The Company paid $3,084 in
deferred financing costs, which is classified in other assets on the
Consolidated Balance Sheets. This amount will be amortized over the life of the
debt.

         The term loan facility provided for an original principal amount of
$20.5 million. The term loan bears interest at prime plus 3.5% subject to a
floor of 7.5%. The term loan requires the Company to make monthly principal
payments from inception to March 1, 2009. The amount of the monthly payments are
fixed, but the monthly amount increases each year. In addition, notwithstanding
any other provisions in the revolving credit, term loan and security agreement,
the Company is required to pay 50% of its excess cash flow, as defined, each
year, starting with the year ending March 31, 2005, to further pay down the term
loan. At March 31, 2004, the outstanding balance on the term loan was $20.5
million. The following represents the Company's commitment under the agreement
for each of the years ended March 31: $2.5 million 2005, $3.5 million 2006, $4.0
million 2007, $4.5 million 2008 and $6.0 million 2009.

         Borrowings under the revolving credit, term loan and security agreement
are secured by a first priority security interest in the Company's domestic and
Canadian accounts receivable, inventories, certain intangibles, machinery and
equipment and owned real estate. The Company has also pledged slightly less than
two-thirds of the capital stock of two of its foreign subsidiaries. The
agreement requires the Company to maintain certain financial ratios and places
limitations on its ability to pay cash dividends, incur additional indebtedness,
make investments, including acquisitions, and take certain other actions. The
Company was in compliance with these covenants at March 31, 2004.

         On March 30, 2004, the Company entered into a $14.0 million senior
secured subordinated note and equity purchase agreement. Initial borrowings were
used to repay existing indebtedness. The interest rate on the senior secured
subordinated notes is 12.5%. The notes do not require principal payments and are
due on March 29, 2011. The senior secured subordinated notes are secured by a
lien on the Company's domestic and Canadian accounts receivable,

                                                                              45
<PAGE>

inventories, certain intangibles, machinery and equipment and owned real estate
subordinated in lien priority only to the liens in favor of the senior lender.
In addition, the holder of the senior secured subordinated notes received a
warrant to purchase 3.9 million shares of the Company's Common Shares at an
exercise price of $.001. A valuation was performed to determine the fair market
value of the warrants at March 31, 2004, which was determined to be $4,130. This
value was recorded as a liability on the Company's balance sheet and the debt
balance was recorded at a discount. The amount of the discount will be amortized
using the effective interest method over the life of the senior secured
subordinated debt agreement. The fair market value of warrant is required to be
updated on a quarterly basis. The primary input into this valuation is the
market price of the Common Shares. As the Company's stock price increases, the
value of the warrant will increase and as the stock price decreases, the value
of the warrant decreases. The change in the value of the warrant will be
recorded as income or expense in future period quarterly results. This has the
potential to cause volatility in reported results in future periods. In
addition, the warrant agreement provides for the warrant to participate in
dividend distributions, even if the warrant has not been exercised. However, the
warrant is not required to participate in losses. Therefore, the warrant is
considered to be a "Participating Security" by Financial Accounting Standards
No. 128 for Earnings Per Share (EPS) calculations. This means that the warrant
is included in the weighted average share calculation only in periods in which
the Company generates net income available to common shareholders. As such, the
Company's EPS calculations also have the potential to be volatile. The senior
secured subordinated note and equity purchase agreement requires the Company to
maintain certain financial ratios and places limitations on its ability to pay
cash dividends, incur additional indebtedness, make investments, including
acquisitions, and take certain other actions. The Company was in compliance with
these covenants at March 31, 2004. The Company paid $1,342 in deferred financing
costs, which is classified in other assets on the Consolidated Balance Sheets.
This amount will be amortized over the life of the debt, using the effective
interest rate method.

         On March 30, 2004, the Company entered into a securities purchase
agreement with a purchaser providing for a $13.0 million private equity
investment. The proceeds were used to repay existing indebtedness. Under the
terms of the securities purchase agreement, the Company issued 13,000 shares of
newly-created Series B Preferred Stock. In addition, the purchaser received a
warrant to purchase 12.1 million shares of Common Shares at an exercise price of
$.001. A valuation was performed to determine the fair market value of the
warrants at March 31, 2004, which was determined to be $12,700. This value was
recorded as a liability on the Company's balance sheet and the Series B
Preferred Stock was recorded net of the value of the warrant. The fair market
value of warrant is required to be updated on a quarterly basis. The primary
input into this valuation is the market price of the Common Shares. As the
Company's stock price increases, the value of the warrant will increase and as
the stock price decreases, the value of the warrant decreases. The change in the
value of the warrant will be recorded as income or expense in future period
quarterly results. This has the potential to cause volatility in reported
results in future periods. In addition, the warrant agreement provides for the
warrant to participate in dividend distributions, even if the warrant has not
been exercised. However, the warrant is not required to participate in losses.
Therefore, the warrant is considered to be a "Participating Security" by
Financial Accounting Standards No. 128 for Earnings Per Share (EPS)
calculations. This means that the warrant is included in the weighted average
share calculation only in periods in which the Company generates net income
available to common shareholders. As such, the Company's EPS calculations also
have the potential to be volatile. The securities purchase agreement requires
the Company to maintain certain financial ratios and places limitations on its
ability to incur additional indebtedness, make investments, including
acquisitions, and take certain other actions. The Company was in compliance with
these covenants at March 31, 2004.

         Previous Revolving Credit Facility. In March 1999, the Company entered
into an $80 million revolving credit facility that originally expired on April
30, 2002 (the "Revolving Credit Facility"). Initial borrowings were used to
repay existing domestic bank indebtedness. Through a series of subsequent
amendments, the size of the Revolving Credit Facility was reduced to $26.4
million and the expiration date was extended to March 31, 2004. Borrowings under
the Revolving Credit Facility were limited to borrowing base amounts as defined.
The Revolving Credit Facility provided for interest on borrowings at prime plus
5.0% and required the Company to pay a facility fee of 1.0% on the commitment
amount. The Revolving Credit Facility was repaid on March 30, 2004. The Company
expensed deferred financing costs of $0.2 million for the twelve months ended
March 31, 2004.

         Senior Notes. In January 1998, the Company issued, through a private
placement, $30 million of Senior Notes that were due 2008 (the "Senior Notes").
Through a series of subsequent amendments, the terms and conditions of the

                                                                              46
<PAGE>

Senior Notes were modified to, among other things, change the interest rate
payable on the Senior Notes and to defer certain principal payments thereunder.
The Senior Notes, as amended, provided for interest at 11.35% until March 31,
2004. The Senior Notes were repaid on March 30, 2004. The Company expensed
deferred financing costs of $1.1 million for the twelve months ended March 31,
2004.

         Within the Senior Notes Agreement was a yield maintenance amount
provision, which ensured that the lender was paid the entire interest amount of
the Senior Notes. The yield maintenance amount provisions applied to certain
optional prepayments of principal under the Senior Notes and provided that the
Senior Notes were subject to prepayment, in whole at any time or from time to
time in part, at the option of the Company, at 100% of the principal amount so
prepaid plus interest thereon to the prepayment date and the yield maintenance
amount, if any, with respect to each Senior Note. Any partial prepayment of the
Senior Notes, which met certain criteria, were applied against the principal
amount of the Senior Notes scheduled to become due in the inverse order of
maturity thereof. The Company paid and expensed yield maintenance amounts of
$2.2 million for the twelve months ended March 31, 2004 as interest expense on
the Consolidated Statement of Operations.

         The Company believes that cash generated by operations and amounts
available under its credit facilities will be sufficient to satisfy its
liquidity requirements through at least fiscal 2005.

         Cash paid for interest totaled $4,996, $6,083 and $6,636 for fiscal
years 2004, 2003, and 2002, respectively.

4. SERIAL PREFERRED SHARES:

         The Series B Preferred Stock will accrue cumulative quarterly dividends
at an annual rate of 13.5%. In the event the Company does not maintain certain
financial covenants for the twelve months preceding any quarterly dividend
payment date, the annual dividend rate will increase to 16.5% for each
subsequent calendar quarter during which the Company fails to comply with such
financial covenants.

         Dividends on the Series B Preferred Stock are payable either (i) in
cash if then permitted under the terms of the outstanding senior indebtedness
and/or subordinated indebtedness or (ii) in additional shares of Series B
Preferred Stock. Dividends payable in cash would be paid when, as and if
declared by the Board of Directors out of funds legally available thereof. The
terms of the senior financing prohibit, unless approved by the lender, the
payment of any cash dividends on the Series B Preferred Stock while such debt is
outstanding.

         The Series B Preferred Stock will rank, with respect to the payment of
dividends and rights upon liquidation, dissolution or winding up of the Company,
senior to the Common Stock and each other class or series of capital stock of
the Company the terms of which do not expressly provide that such class or
series shall rank equal or senior to the Series B Preferred Stock with respect
to the payment of dividends or rights upon liquidation, dissolution or winding
up (collectively, "Junior Stock").

         The liquidation preference of each share of Series B Preferred Stock is
$1,000 per share, plus any accrued and unpaid dividends thereon. In the event of
any voluntary or involuntary liquidation, dissolution or winding up of the
Company, the holders of Series B Preferred Stock will be entitled to receive the
liquidation preference per share of Series B Preferred Stock in effect on the
date of such liquidation, dissolution or winding up, plus an amount equal to any
accrued but unpaid dividends thereon as of such date before any distribution or
payment is made to the holders of Junior Stock.

         Under the terms of the Series B Preferred Stock, a liquidation,
dissolution or winding up of the Company shall be deemed to include any sale,
conveyance, exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the capital stock or assets of the
Company or a merger, consolidation or other transaction or series of related
transactions in which the Company's shareholders immediately prior to such
transaction do not retain a majority of the voting power in the surviving
entity, unless the holders of a majority of the then-outstanding shares of
Series B Preferred Stock affirmatively vote or consent in writing that any such
transaction shall not be treated as a liquidation, dissolution or winding up.

                                                                              47
<PAGE>

         The Series B Preferred Stock is redeemable at the option of the holders
of a majority of the outstanding Series B Preferred Stock upon the occurrence of
any of the following events with respect to the Company:

            -   the occurrence of any change in beneficial ownership, merger,
                consolidation, sale or other disposition of assets, or other
                similar type event that constitutes a "change of control" or
                similar-termed event, or a breach or other triggering event,
                under the terms of our senior indebtedness and/or subordinated
                indebtedness;

            -   the acceleration of any amounts due under the senior
                indebtedness and/or subordinated indebtedness;

            -   any issuance or sale of the Company's equity securities in a
                public or private offering resulting in aggregate net proceeds
                to the Company in excess of $20.0 million;

            -   any liquidation, dissolution or winding-up of the Company,
                whether voluntary or involuntary; or

            -   the occurrence of certain bankruptcy and insolvency events.

         In addition, if then permitted by the holders of the senior
indebtedness and/or subordinated indebtedness, the Series B Preferred Stock
would be redeemable at the option of a majority of the holders of Series B
Preferred Stock upon the occurrence of any of the following events with respect
to the Company:

            -   the acquisition of 20% or more of the outstanding voting
                securities of the Company by any person or group, other than
                through the ownership or acquisition of the Series B Preferred
                Stock, the Purchaser Warrant, or the shares of Common Stock
                issued upon exercise of the Purchaser Warrant;

            -   a consolidation or merger involving the Company, other than a
                consolidation or merger under a transaction in which (i) the
                outstanding voting stock of the Company remains outstanding or
                (ii) the beneficial owners of the outstanding voting stock of
                the Company immediately prior to such transaction beneficially
                own less than 80% of the voting stock of the surviving entity
                immediately following such transaction;

            -   the sale, transfer, assignment, lease, conveyance or other
                disposition in one or a series of transactions in excess of 20%
                of the assets of the Company, or assets of the Company resulting
                in aggregate net proceeds to the Company in excess of $20.0
                million; or

            -   the aggregate amount of indebtedness of the Corporation is equal
                to or less than $2.0 million.

         Each share of Series B Preferred Stock shall entitle the holder thereof
to vote on all matters voted on by the holders of Common Stock, voting together
with the holders of Common Stock and all other voting stock of the Company as a
single class at all annual, special and other meetings of the shareholders of
the Company. Initially the Series B Preferred Stock will have approximately 51%
of the total voting power of the Company. Such percentage is subject to
adjustment based on shares outstanding in the future at any particular time. The
percentage of voting power is mathematically calculated as follows: In any vote
in which the holders of Series B Preferred Stock are entitled to vote with the
holders of Common Stock, each share of Series B Preferred Stock shall entitle
the holder thereof to cast that number of votes equal to the quotient of (i) the
product of (A) 1.0408, multiplied by (B) the total number of votes that may be
cast by the holders of all Post Transaction Fully Diluted Shares as of the
record date for such vote, divided by (ii) 13,000. Future issuances of voting
securities of the Company not contemplated in the securities purchase agreement
will proportionately reduce the voting power of the Series B Preferred Stock.

         In addition to the foregoing, the approval of the holders of a majority
of the outstanding Series B Preferred Stock, voting separately as a class, is
required to:

                                                                              48
<PAGE>

      -  amend, modify or alter any provision of the Amended Articles or the
         Amended Regulations that adversely affect the rights of the holders of
         the Series B Preferred Stock;

      -  consummate a merger or consolidation of the Company or sale in excess
         of 40% of the assets of the Company;

      -  consummate a liquidation, dissolution, winding up, recapitalization or
         reorganization of the Company;

      -  effect any material acquisition or series of acquisitions, joint
         venture or strategic alliance involving the Company;

      -  pay any dividends or distributions on, or make any other payment in
         respect of, any capital stock of the Company, except for dividends and
         distributions payable (i) on the Series B Preferred Stock or on any
         shares of capital stock of the Company ranking equal or senior to the
         Series B Preferred Stock, or (ii) to the holders of Common Stock in the
         form of additional shares of Common Stock;

      -  authorize, designate, sell or issue any capital stock or debt
         securities (other than, with respect to debt securities, any senior
         indebtedness) of the Company and/or its subsidiaries, except for (i)
         issuances of shares of Common Stock after the initial issue date of the
         Series B Preferred Stock issuable upon exercise of options or rights
         granted to directors, officers or employees of the Company under
         existing or future option plans of the Company, provided that the
         aggregate amount of such issuances do not exceed 15% of the Post
         Transaction Fully Diluted Shares, (ii) issuances of Common Stock upon
         exercise of the Existing Warrants or (iii) issuances of Common Stock
         upon exercise of the Warrants; or

      -  redeem or purchase any capital stock of the Company, except for (i)
         redemptions of Series B Preferred Stock contemplated by the terms of
         the Amended Articles, and (ii) payments to holder of the senior secured
         subordinate note upon exercise of its right to require the Company to
         redeem or repurchase the Warrant or the shares of Common Stock issuable
         upon exercise of the Warrant.

         The terms of the Series B Preferred Stock also provide that for so long
as at least 40% of the shares of Series B Preferred Stock issued at the Closing
remain outstanding, the holders of Series B Preferred Stock will have the right
to appoint a majority of the full Board of Directors.

         After the initial issue date of the Series B Preferred Stock, the
Company cannot issue or sell any capital stock or debt securities (other than
senior secured indebtedness of the Company) unless prior to such issuance or
sale, each holder of Series B Preferred Stock has first been given the
opportunity to purchase, on the same terms and conditions on which such
securities are proposed to be issued or sold by the Company, such holder's
proportionate share of 51% of the securities to be issued or sold by the
Company. Holders of Series B Preferred Stock will not have preemptive rights to
purchase:

      -  shares of Common Stock issued after the initial issue date of the
         Series B Preferred Stock upon exercise of options or rights granted to
         directors, officers or employees of the Company under existing or
         future option plans of the Company, provided that the aggregate amount
         of such shares does not exceed 15% of the Post Transaction Fully
         Diluted Shares;

      -  shares of Common Stock issuable upon exercise of the Existing Warrants;

      -  shares of Common Stock issuable upon exercise of the Warrants;

      -  shares of Common Stock issuable upon conversion of convertible
         securities of the Company outstanding on the initial issue date of the
         Series B Preferred Stock; or

                                                                              49
<PAGE>

      -  shares of Series B Preferred Stock issued in accordance with the terms
         of the Amended Articles.

         Shares of Series B Preferred Stock generally may be sold or otherwise
transferred to a single purchaser in one transaction involving all of the
outstanding Series B Preferred Stock. Any other sale or transfer of Series B
Preferred Stock must be approved by a committee of disinterested directors of
the Board of Directors, which consent may not be unreasonably withheld. If a
committee of disinterested members of the Board of Directors approves all future
transfers of Series B Preferred Stock, then such approval will be irrevocable
and be binding upon the Company as to any future transfer of Series B Preferred
Stock.

5. LEASES:

         The Company leases certain office and warehouse space and equipment
under operating leases and capital leases, which expire at various dates through
2012. Future minimum rental payments under long-term lease agreements are as
follows: $2,635 in 2005, $1,914 in 2006, $1,290 in 2007, $638 in 2008, $405 in
2009 and $702 after 2009 with a cumulative total of $7,584. In addition, the
Company rents other properties on a month-to-month basis.

         Total rental expense was $4,729, $4,745 and $3,926 for fiscal 2004,
2003 and 2002, respectively.

6. INCOME TAXES:

         Components of income (loss) from continuing operations before income
taxes as follows:

<TABLE>
<CAPTION>
                  2004        2003        2002
                --------    --------    --------
<S>             <C>         <C>         <C>
United States   $ (3,713)   $ (4,633)   $ (3,294)
Foreign            2,678        (132)      1,729
                --------    --------    --------
                $ (1,035)   $ (4,765)   $ (1,565)
                ========    ========    ========
</TABLE>

         Components of the provision for income taxes for continuing operations
by jurisdiction follow:

<TABLE>
<CAPTION>
                                2004        2003        2002
                              --------    --------    --------
<S>                           <C>         <C>         <C>
Current -- Federal            $     24    $     --    $     --
        -- State and local          --         120          --
        -- Foreign                 833         718       1,618
                              --------    --------    --------
                                   857         838       1,618
Deferred -- Federal                 --          --       9,351
         -- State and local         --          --         (56)
         -- Foreign               (281)     (1,201)        242
                              --------    --------    --------
                                  (281)     (1,201)      9,537
                              --------    --------    --------
                              $    576    $   (363)   $ 11,155
                              ========    ========    ========
</TABLE>

         Differences between the statutory United States federal income tax rate
(34%) and the effective income tax rate for continuing operations are as
follows:

<TABLE>
<CAPTION>
                                           2004        2003        2002
                                         --------    --------    --------
<S>                                      <C>         <C>         <C>
Federal income tax provision (benefit)
  at statutory rate                      $   (352)   $ (1,620)   $   (532)
State income taxes, net                       (82)         78         (36)
Foreign tax rate differential                (359)        686       1,182
Meals and entertainment                       151         169         178
Valuation allowance                         1,210         364      10,472
</TABLE>

                                                                              50
<PAGE>

<TABLE>
<S>                                      <C>         <C>         <C>
Other                                           8         (40)       (109)
                                         --------    --------    --------
Effective income tax                     $    576    $   (363)   $ 11,155
                                         ========    ========    ========
</TABLE>

         Temporary differences and carryforwards which give rise to deferred tax
assets and liabilities were comprised of the following at March 31, 2004 and
2003:

<TABLE>
<CAPTION>
                                               2004       2003
                                             --------   --------
<S>                                          <C>        <C>
DEFERRED TAX ASSETS
  Bad debts                                  $    183   $    208
  Other accruals                                  899        860
  Uniform cost capitalization                      19          9
  Accrued expenses                              1,031        473
  Pension and other benefit accruals              718      1,264
  Minimum tax credit                              557        557
  Federal net operating loss carryforwards      2,877      7,060
  State net operating loss carryforwards          772        772
  Other                                         1,573        835
                                             --------   --------
         Total deferred tax assets              8,629     12,038
</TABLE>

<TABLE>
<CAPTION>
                                            2004        2003
                                          --------    --------
<S>                                       <C>         <C>
DEFERRED TAX LIABILITIES
  Property, plant and equipment               (274)       (353)
  Other                                       (409)       (367)
                                          --------    --------
         Total deferred tax liabilities       (683)       (720)
                                                      --------
Valuation allowance                         (7,183)    (10,836)
                                          --------    --------
Total net deferred taxes                  $    763    $    482
                                          ========    ========
</TABLE>

         In fiscal year 2002, the Company established a full valuation allowance
for its net domestic deferred tax assets do to its recurring losses. The
valuation allowance was calculated in accordance with SFAS 109. The Company
intends to maintain a full valuation allowance on its net domestic deferred tax
assets including net operating loss carryforwards until sufficient positive
evidence exists to support a reversal of the remaining allowance.

         Undistributed earnings of foreign subsidiaries amounted to $17,745 as
of March 31, 2004. Deferred income taxes are not provided on these earnings as
it is intended that these earnings are indefinitely re-invested in these
entities.

         The Company had state net operating loss carryforwards and federal net
operating loss carryforwards, which expire through 2022. The Company also has
federal credit carryforwards relating to non-expiring alternative minimum tax
credits. As a result of the refinancing and recapitalization transaction Corrpro
experienced a change of control for income tax purposes as defined in U.S. tax
law. As such, our net operating loss carryforwards available for use are limited
as defined in section 382 of the U.S. tax code. Accordingly, the deferred tax
asset associated with the federal net operating loss carryforwards, was reduced
by $4,183, as well as the corresponding valuation allowance.

         Cash paid for income taxes totaled $1,394, $552 and $1,598 for fiscal
2004, 2003 and 2002, respectively.

7. EMPLOYEE BENEFIT PLANS:

         One of the Company's foreign operations has a contributory defined
benefit pension plan. Employees of such foreign subsidiary no longer accrue
benefits under the plan, however, the Company continues to be obligated to fund
prior period benefits. The Company funds the plan in accordance with
recommendations from independent actuaries. Pension benefits generally depend on
length of service and job grade.

                                                                              51
<PAGE>

         The following table sets forth the change in benefit obligation, change
in plan assets, funded status, Consolidated Balance Sheets presentation, net
periodic pension benefit cost and the relevant assumptions for the Company's
defined benefit pension plan at March 31:

<TABLE>
<CAPTION>
                                                      2004        2003
                                                    --------    --------
<S>                                                 <C>         <C>
Change in benefit obligation:
  Benefit obligation at beginning of year           $  5,168    $  3,816
    Service cost                                          --          --
    Interest cost                                        288         249
    Assumption change                                    540         771
    Effects of currency translation                      886         398
    Benefits paid                                        (88)        (66)
                                                    --------    --------
Benefit obligation at end of year                   $  6,794    $  5,168

Change in plan assets
  Fair value of plan assets at beginning of year    $  3,031    $  3,034
    Employer contributions                               253         193
    Benefits paid                                        (88)        (66)
    Effects of currency translation                      504         319
    Investment return                                    553        (449)
                                                    --------    --------
  Fair value of plan assets at end of year          $  4,253    $  3,031

Funded status                                       $ (2,541)   $ (2,137)

Amounts recognized in Consolidated Balance Sheets
  Accrued benefit liability                         $ (2,320)   $ (2,137)
  Minimum pension liability                             (221)         --
</TABLE>

<TABLE>
<CAPTION>
                                               2004       2003       2002
                                              ------     ------     ------
<S>                                           <C>        <C>        <C>
Net periodic pension benefit cost
  Service cost                                $   --     $   --     $   --
  Interest cost                                  288        247        218
  Expected return on assets                     (215)      (274)      (239)
  Net amortization and deferral                   --        749         17
                                              ------     ------     ------
Net periodic pension cost                     $   73     $  722     $   (4)

Weighted-average assumptions as of March 31
  Discount rate                                 5.25%       5.0%       6.0%
  Long-term rate of return on plan assets        6.5%       8.0%       8.0%
  Rate of increase in compensation level         N/A        N/A        N/A
</TABLE>

         The Company also maintains the Corrpro Companies, Inc. 401(k) Savings
Plan for all eligible employees in the United States under Section 401(k) of the
Internal Revenue Code. The Company may, at its discretion, make contributions to
the plan. In addition, the plan permits matching contributions. Effective
October 1, 2000, the Company began matching employee contributions with treasury
shares. For fiscal year 2004 and 2003, the Company issued 0 and 121 treasury
shares for the Company's matching portion. Total matching contributions in cash
and treasury shares totaled $0, $199 and $977 in fiscal 2004, 2003 and 2002,
respectively. Effective April 6, 2002, the Company suspended the Company match
and no matching contributions were made with respect to fiscal 2004.

         The Company has entered into an agreement with one of its former
executives, which provides, among other things, that such employee shall be
eligible to receive retirement income, with a lifetime survivor benefit, in an
amount equal to 50% of base salary. The Company has provided for this deferred
compensation benefit in the accompanying Consolidated Balance Sheets.

8. SHAREHOLDERS' EQUITY:

                                                                              52
<PAGE>

      Shareholder Rights Plan

         On July 23, 1997, the Company adopted a Shareholder Rights Plan and
declared a dividend of one Right on each outstanding common share of the
Company. Each Right would entitle shareholders to buy, upon certain triggering
events, one one-hundredth of a newly created Series A Junior Participating
Preferred Share at an exercise price of $75 (subject to certain adjustments).
The record date for the distribution was August 7, 1997.

         Subject to certain exceptions, Rights will become exercisable only
after a person or group acquires 20% or more of the Company's common shares or
announces a tender offer for 20% or more of the Company's common shares. The
Company's Board of Directors can redeem the Rights at $0.01 per Right at any
time before a person acquires 20% or more of the Company's common shares. If a
person or group acquires 20% or more of the Company's common shares, each Right
will entitle holders, other than the acquiring party, to purchase common shares
of the Company having a market value of twice the exercise price of the Right.
If, after the Rights have become exercisable, the Company merges or otherwise
combines with another entity, each Right then outstanding will entitle its
holder to purchase a number of the acquiring party's common shares having a
market value of twice the exercise price of the Right. The Plan also contains
other customary provisions and is similar to plans adopted by many other
companies. The Shareholder Rights Plan was terminated on March 30, 2004.

      Warrants

         On March 30, 2004, the Company completed a recapitalization that
resulted in the issuance of warrants to its Series B Preferred Stockholder (see
Note 3 - - Long-Term Debt) exercisable for 12,114 Common Shares. The warrants
are exercisable any time after March 30, 2004 until March 30, 2014. The warrants
are duly authorized, validly issued, fully paid and nonassessable shares, at a
purchase price of $0.001 per share. In addition, the warrant agreement provides
for the warrant to participate in dividend distributions, even if the warrant
has not been exercised. However, the warrant is not required to participate in
losses. Therefore, the warrant is considered to be a "Participating Security" by
Financial Accounting Standards No. 128 for Earnings Per Share (EPS)
calculations. This means that the warrant is included in the weighted average
share calculation only in periods in which the Company generates net income
available to common shareholders.

         On March 30, 2004, the Company completed a recapitalization that
resulted in the issuance of warrants to its Senior Secured Subordinated Note
holder (see Note 3 - - Long-Term Debt) exercisable for 3,937 Common Shares. The
warrants are exercisable any time after March 30, 2004 until March 30, 2011. The
warrants are duly authorized, validly issued, fully paid and nonassessable
shares, at a purchase price of $0.001 per share. The warrants have put rights to
redeem for cash after seven years or certain other conditions. The put price is
the fair market value of the common stock on the date of the exercise of the
put. In addition, the warrant agreement provides for the warrant to participate
in dividend distributions, even if the warrant has not been exercised. However,
the warrant is not required to participate in losses. Therefore, the warrant is
considered to be a "Participating Security" by Financial Accounting Standards
No. 128 for Earnings Per Share (EPS) calculations. This means that the warrant
is included in the weighted average share calculation only in periods in which
the Company generates net income available to common shareholders.

         During the quarter ended September 30, 2002, the Company issued
warrants to its lenders under its previous Revolving Credit Facility and Senior
Notes. The warrant issued to the Revolving Credit Facility lender permits the
lender to purchase 467 shares at a purchase price of $0.01 per share exercisable
any time after July 31, 2003 until September 23, 2012 and the warrant issued to
the Senior Notes lender permits the lender to purchase 467 shares at a purchase
price of $0.01 per share exercisable any time after July 31, 2003 until
September 23, 2012. For purposes of financial reporting, the warrants were
valued at $313 each and the aggregate amount of $626 increased paid-in-capital
and reduced short-term and long-term debt. In connection with refinancing and
recapitalization, effective March 30, 2004, the warrants were subject to certain
adjustments and as a result they each were adjusted upward by 227 shares
outstanding at a new adjusted exercise price of $0.00631.

                                                                              53
<PAGE>

9. STOCK PLANS:

         In June 1999, the Company adopted an Employee Stock Purchase Plan under
which employees have a systematic long-term investment opportunity to own
Company shares. Shareholder approval for such adoption was obtained on July 22,
1999. The Employee Stock Purchase Plan has been suspended.

         The Company has options outstanding under various option plans
including the 1997 Long-Term Incentive Plan (the "1997 Option Plan") and the
1997 Non-Employee Directors' Stock Option Plan (the "1997 Directors Plan"). The
Company's 1994 Corrpro Stock Option Plan (the "1994 Plan") and the 1994 Corrpro
Outside Directors' Stock Option Plan (the "Directors Plan") were terminated upon
adoption of the 1997 Option Plan and the 1997 Directors Plan. In addition, prior
to its initial public offering in September 1993, the Company issued stock
options under various arrangements.

         The 1997 Option Plan was adopted on April 28, 1997, subject to
shareholder approval, which was obtained on July 23, 1997. The 1997 Option Plan,
as amended, provides for the granting of up to 469 non-qualified stock options,
stock appreciation rights, restricted stock awards or stock bonus awards to
officers, key employees and consultants of the Company. In addition, the 1997
Option Plan provides that shares exercised, forfeited or otherwise terminated
under previously granted stock awards, other than awards under the 1994
Directors Plan, will also be available for grant under the new plan. The option
price per share will generally be the fair market value of the Company's common
shares on the date of grant and the term of the options will not exceed 10
years. The 1997 Option Plan will terminate on April 28, 2007. On April 30, 1998,
the Company adopted an amendment to the 1997 Option Plan increasing the number
of shares available for issuance by 300.

         The 1997 Directors Plan was also adopted on April 28, 1997. The 1997
Directors Plan provides for the granting of up to 63 non-qualified stock options
to current and future non-employee directors of the Company. Under this plan,
each non-employee director will annually be granted options to purchase 3 common
shares. The option price per share will be the fair market value of the
Company's common shares on the date of grant and the term of the options will be
10 years. The 1997 Directors Plan will terminate on April 28, 2007.

         In fiscal 2001, the Company adopted a plan whereby holders of stock
options covered under the 1997 Option Plan could surrender options previously
granted with the understanding that a like number of options would be granted no
sooner than six months after surrender. Accordingly, options for 654 shares with
exercise prices ranging from $5.25 to $14.96 were surrendered during December
2000. Subsequently, in June 2001, the Company reissued options for 648 shares
with a price of $2.55, the market price.

         Shares for issuance under equity compensation plans does not include
the Company's 2001 Non-Employee Directors' Stock Appreciation Rights Plan which
has not been approved by its shareholders. Under this plan, non-employee
directors received a one-time grant of vested stock appreciation rights as part
of their compensation for serving as directors. The stock appreciation rights
entitle each eligible director to be paid in cash, subject to the applicable
terms and conditions of the grant, on or after May 17, 2006, the amount of
appreciation in the fair market value of 10,000 Common Shares between May 17,
2001 and May 17, 2006. Currently, three such non-employee directors hold such
stock appreciation rights.

         Stock option activity for the Company during fiscal 2004, 2003, and
2002 was as follows:

<TABLE>
<CAPTION>
NUMBER OF SHARES                          2004      2003      2002
----------------                         ------    ------    ------
<S>                                      <C>       <C>       <C>
Options outstanding, beginning of year    1,399     1,303       757
Granted                                     108       270       676
Exercised                                   (35)       --        --
Expired, canceled or surrendered           (120)     (174)     (130)
                                         ------    ------    ------
Outstanding, end of year                  1,352     1,399     1,303
                                         ------    ------    ------

Exercisable, end of year                  1,226       270       305
</TABLE>

                                                                              54
<PAGE>

<TABLE>
<S>                                      <C>             <C>         <C>
Available for grant, end of year            289             248       1,014

Price range of options:
   Granted                               $ 1.52 to       $ 0.32 to   $ 1.30 to
                                         $ 1.69          $ 1.24      $ 3.05

   Exercised                             $ 0.32 to       N/A         $ 1.86
                                         $ 0.59

   Options outstanding, end of year      $ 0.32 to       $ 1.30 to   $ 1.86 to
                                         $13.78          $13.78      $13.78
</TABLE>

         Of the options shares outstanding at March 31, 2004, 1,183 shares
outstanding were in a price range of $0.32 to $3.75. The remaining 169 options
shares outstanding were at a price range from $4.00 to $13.78. As a result of
the change in control, 854 options vested.

10. BUSINESS SEGMENTS:

         In July 2002, the Company's Board of Directors approved a formal
business restructuring plan. The multi-year plan included a series of
initiatives to improve operating income and reduce debt by selling non-core
business units. The Company engaged outside professionals to assist in the
disposition of its domestic and international non-core business units. Prior to
the quarter ended September 30, 2002, the Company's non-core domestic and
international units were reported as the Other Operations and International
Operations reporting segments. Effective as of the quarter ended September 30,
2002, the Other Operations and the International Operations reporting segments
were eliminated and the non-core domestic and international units were reported
as discontinued operations. Prior-year financial statements were reclassified to
reflect these non-core units as discontinued operations, which were also
referred to as "assets and liabilities held for sale."

         In the second quarter of fiscal 2004, the Company's Board of Directors
removed our European Operations from discontinued operations. The Board
concluded that the Company's value would be enhanced by maintaining its European
presence rather than by selling the European Operations at this time, based in
part on the strength of the local management team, the similar characteristics
of the served markets, and the favorable prospects for this business. Therefore,
effective in the second quarter of fiscal 2004, the Company reported quarterly
and annual results of its European Operations in its continuing operations, and
prior-year financial statements have been reclassified to reflect its European
Operations as continuing operations.

         The Company has organized its operations into three business segments:
Domestic Core Operations, Canadian Operations and European Operations. The
Company's former non-core domestic, Middle East and Asia Pacific Operations are
reported as discontinued operations. Its business segments and a description of
the products and services they provide are described below:

         Domestic Core Operations. The Company's Domestic Core Operations
segment provides products and services, which include corrosion control,
coatings and pipeline integrity and risk assessment. The Company provides these
products and services to a wide-range of customers in the United States in a
number of industries, including energy, utilities, water and wastewater
treatment, chemical and petrochemical, pipelines, defense and municipalities. In
addition, this segment provides coatings services to customers in the
entertainment, aerospace, transportation, petrochemical and electric power
industries, as well as the United States military. Finally, the Domestic Core
Operations segment includes a production facility in the United States that
assembles and distributes cathodic protection products, such as anodes,
primarily to the United States market. Revenues relating to this segment totaled
$92,947 (or 72 % of consolidated revenues), $84,965 (or 72% of consolidated
revenues) and $101,781 (or 76% of consolidated revenues) during fiscal

                                                                              55
<PAGE>

2004, 2003 and 2002, respectively. The Domestic Core operations had goodwill of
$6,460 at March 31, 2004 and $6,397 at March 31, 2003.

         Canadian Operations. The Company's Canadian Operations segment provides
corrosion control, pipeline integrity and risk assessment services to customers
in Canada that are primarily in the oil and gas industry. These customers
include pipeline operators and petrochemical plants and refineries. The Canadian
Operations segment has a production facility that assembles products such as
anodes and rectifiers. Revenues relating to this segment totaled $24,071 (or 18%
of consolidated revenues), $19,254 (or 17% of consolidated revenues) and $21,277
(or 16% of consolidated revenues) during fiscal 2004, 2003 and 2002,
respectively. The Canadian operations had goodwill of $8,100 at March 31, 2004
and $6,946 at March 31, 2003.

         European Operations. The Company's European Operations segment provides
corrosion control products and services to customers in the petroleum, utility,
industrial, marine and offshore markets, as well as to governmental entities in
connection with their infrastructure assets. Revenues relating to this segment
totaled $13,066 (or 10 % of consolidated revenues), $13,403 (or 11% of
consolidated revenues) and $11,726 (or 8% of consolidated revenues) during
fiscal 2004, 2003 and 2002, respectively. The European operations had no
goodwill as of March 31, 2004 and 2003, respectively.

         Financial information relating to the Company's operations by segment
are presented below:

<TABLE>
<CAPTION>
                                                             2004          2003          2002
                                                          ----------    ----------    ----------
<S>                                                       <C>           <C>           <C>
Revenue:
  Domestic Core Operations                                $   92,947    $   84,966    $  101,781
  Canadian Operations                                         24,071        19,254        21,277
  European Operations                                         13,066        13,403        11,726
                                                          ----------    ----------    ----------
                                                          $  130,084    $  117,623    $  134,784
                                                          ==========    ==========    ==========
Operating Income (Loss):
  Domestic Core Operations                                $   14,457    $   11,061    $   13,544
  Canadian Operations                                          4,153         3,634         2,850
  European Operations                                            947          (865)          908
  Corporate Related Costs and Other                          (11,027)      (11,870)      (12,989)
                                                          ----------    ----------    ----------
                                                          $    8,530    $    1,960    $    4,313
                                                          ==========    ==========    ==========
Total Assets:
  Domestic Core Operations                                $   26,133    $   30,780
  Canadian Operations                                         32,626        22,669
  European Operations                                          7,448         6,311
  Corporate Related Assets and Other (2004 as restated)        7,425         8,934
  Assets held for Sale                                            --         9,846
                                                          ----------    ----------
                                                          $   73,632    $   78,540
                                                          ==========    ==========
Capital Expenditures:
  Domestic Core Operations                                $     (560)   $     (282)   $     (511)
  Canadian Operations                                            (36)          (48)          (77)
  European Operations                                            (28)          (45)          (75)
  Corporate Related Capital Expenditures                         (88)          (21)           --
                                                          ----------    ----------    ----------
                                                          $     (712)   $     (396)   $     (663)
                                                          ==========    ==========    ==========

Depreciation and Amortization:
  Domestic Core Operations                                $    1,182    $    1,925    $    2,458
  Canadian Operations                                            247           281           677
  European Operations                                             82           103           115
  Corporate Related Depreciation and Amortization              2,130           821         1,007
                                                          ----------    ----------    ----------
                                                          $    3,641    $    3,130    $    4,257
                                                          ==========    ==========    ==========
</TABLE>

11. LEGAL MATTERS:

                                                                              56
<PAGE>

         MICHIGAN LITIGATION. On July 25, 2002, a summons and complaint was
issued to the Company by the Circuit Court for the County of Ingham, Michigan.
The action was commenced by Blogett Oil Company, Inc. and other owners and
operators of underground storage tanks systems on behalf of themselves and
others similarly situated. The complaint relates to a Michigan Department of
Environmental Quality ("MDEQ") regulatory proceeding previously described in our
reports filed with the Securities and Exchange Commission, or the SEC. The
complaint named both Corrpro and MDEQ. In the complaint, the plaintiffs sought
an unspecified amount of damages in excess of $25,000 from us. The plaintiffs
also sought injunctive relief prohibiting the MDEQ from declaring that
underground storage tanks upgraded by us do not meet the current requirement for
corrosion protection set forth by law. In October 2003, Corrpro and a steering
committee representing the class of plaintiffs reached an agreement, subject to
court approval, pursuant to which the class of plaintiffs agreed to settle all
outstanding matters between the class and us and to dismiss the case as to us
with prejudice. On October 29, 2003, the Circuit Court for the County of Ingham,
Michigan approved the settlement and dismissed with prejudice the litigation as
to the Company. The settlement amount itself was funded pursuant to applicable
policies of insurance maintained by the Company.

         ASSESSMENT STANDARD. During fiscal 2001, the Company discovered that a
former employee used an incorrect assessment standard in connection with the
evaluation of whether certain underground storage tanks located at as many as 67
sites were eligible for upgrade using cathodic protection. Such evaluations were
done using one of the approved assessment methodologies. The tanks at these
sites, which are located in five states, were subsequently upgraded using
cathodic protection, which arrests corrosion. These tanks are also subject to
ongoing leak detection requirements. Based on the Company's review of available
information and governmental records, the Company believes that there have not
been any releases from the affected tanks as a result of the actions of the
former employee. The Company has contacted, and in October and November 2000 met
with, officials from the Environmental Protection Agency ("EPA") and officials
from the corresponding environmental protection agencies of the five states
involved to discuss this matter. It is the Company's understanding that none of
the states nor the EPA intend to take any enforcement action as a result of the
use of the inaccurate standard by the former employee. The Company is currently
working with the states and the EPA to develop and implement field investigation
procedures to assess the current status of the affected sites. The Company has
completed field investigation procedures in two of the states in which affected
sites are located. The Company has been informed by one of the other states
that, based on continuing monitoring and leak detection procedures already
required to be performed by site owners and operators, no additional field work
procedures will be required in that state. There are no currently outstanding
claims or demands that have been asserted by any of the affected owners and
operators. Based on currently available information, including our experience in
the fieldwork conducted to date, the Company does not believe that the cost of
field investigation procedures for this matter will have a material effect on
its future operations, financial position or cash flows.

         AUSTRALIAN SUBSIDIARY ACCOUNTING IRREGULARITIES. The Company has been
involved in a class action lawsuit and was the subject of an SEC enforcement
proceeding arising out of accounting irregularities involving internal
misconduct in our Australian subsidiary. These proceedings are described in more
detail below.

         At least as early as October 2000, the then managing director and the
financial controller of Corrpro Australia Ptd., Ltd., a subsidiary of Corrpro,
were involved in knowingly misstating the financial results reported by the
Australian subsidiary to our corporate management to improve the reported
results of the Australian business. Such individuals are no longer employed by
the Company or the Company's subsidiaries and were named as defendants in a
complaint for permanent injunction and other equitable relief filed by the SEC
in the United States District Court for the Northern District of Ohio. The
former Australian employees are also subject to an investigation and other
proceedings commenced through the Australian Securities and Investments
Commission.

         The irregularities included erroneous journal entries to the Australian
subsidiary's general ledger that increased profit and net assets. Among other
things, the former Australian employees falsified invoices and credit notes and
made erroneous entries to subledgers including accounts payable, accounts
receivable, cost of goods sold and inventory. The former Australian employees
further recorded fictitious invoices in the former Australian subsidiary's
computerized accounting records, falsified credit notes from suppliers, and
created two different versions of the accounts receivable subledger. The former
Australian employees took steps to fabricate documents to be reviewed by our
independent

                                                                              57
<PAGE>

auditors.

         The Company's management discovered the accounting irregularities at
the Australian subsidiary in early calendar 2002 and upon discovery immediately
began an internal investigation, conducted under the direction of the Audit
Committee of our Board of Directors. The Australian Securities and Investments
Commission commenced an independent investigation of the accounting
irregularities in March 2002. The Company voluntarily disclosed this matter to
the SEC, which commenced a formal investigation in March 2002. The Company has
cooperated with both commissions.

         As a result of our discovery of the irregularities, the Company, by
means of our Form 10-K/A for the fiscal year ended March 31, 2002 filed with the
SEC on August 9, 2002, restated its previously issued audited financial
statements for the fiscal year ended March 31, 2001. The effect of its revisions
was to increase its loss and basic and diluted loss per share, respectively,
from $4.7 million and $0.61 to $8.3 million and $1.07 for the fiscal year ended
March 31, 2001. Consolidated stockholders' equity as of March 31, 2001 decreased
by approximately $3.8 million from amounts previously reported. Unaudited
quarterly financial information for the first three quarters of the fiscal year
ended March 31, 2002 and all four quarters of our fiscal year ended March 31,
2001 were also restated by means of such filing. Information concerning the
restated amounts applicable to each of the foregoing quarters is contained in
Note 12, Restated Quarterly Financial Information (Unaudited), Notes to
Consolidated Financial Statements included in Item 8 of our Form 10-K/A for the
fiscal year ended March 31, 2002 filed with the SEC on August 9, 2002.

         CLASS ACTION LAWSUIT. The Company is a defendant in a purported class
action suit filed on June 24, 2002, in the United States District Court,
Northern District of Ohio, Eastern Division. The complaint also names certain of
the Company's former and current officers and directors as defendants. The
lawsuit arises out of the accounting irregularities discovered in its Australian
subsidiary. The complaint was purportedly filed on behalf of all persons who
purchased the Company's common shares during the period April 1, 2000 through
March 20, 2002 and alleges violations of anti-fraud provisions of the federal
securities laws resulting in artificially inflated prices of our common shares
during the class period. The complaint seeks unspecified compensatory damages,
fees and expenses on behalf of the putative class.

         On or about May 27, 2003, the District Court granted, with prejudice,
the defendants' motions to dismiss the amended and consolidated class action
complaint. On June 24, 2003, the plaintiffs filed a notice of appeal to the
United States Circuit Court of Appeals for the 6th Circuit from the order of
dismissal. The Company is unable at this time to make a determination as to
whether a material adverse outcome is reasonably possible and whether an adverse
outcome would have a materially adverse affect on its operations or financial
condition.

         SEC ENFORCEMENT PROCEEDING. In connection with its investigation of
accounting irregularities at the Company's former Australian subsidiary, on
January 20, 2004, the SEC filed an civil injunctive action against the Company
in the United States District Court for the Northern District of Ohio Eastern
Division. The SEC's complaint alleged that the Company had inadequate internal
controls during fiscal year 2001 and the first three quarters of 2002. The
complaint also alleged that the Company violated certain reporting, record
keeping and internal control requirements. The complaint further alleged that,
although the Company discovered the fraud through its own investigation, the
Company failed to discover the falsification of the Australian financial
statements until February 2002 due to inadequate internal controls. Finally, the
complaint alleged that following the Company's discovery of these false
statements at its former Australian subsidiary, the Company undertook remedial
measures to strengthen its financial reporting policies and internal control
structure.

         The complaint alleged that, as a result of the foregoing, the Company
violated Section 13(a) of the Securities Exchange Act of 1934 (Exchange Act) and
Rules 12b-20, 13a-1 and 13a-13 thereunder, by filing financial statements that
contained false financial data. The complaint also alleges that the Company
violated Section 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act, by failing to
devise and maintain an adequate system of internal accounting controls.

         Simultaneously with the filing of the complaint, without admitting or
denying the SEC's allegations, the Company consented to the entry of a final
judgment permanently enjoining the Company from future violations of the
provisions of the federal securities laws described above. The Company also
agreed to certain undertakings designed to

                                                                              58
<PAGE>

ensure its compliance with the federal securities laws. These undertakings
require the Company to continue previously adopted remedial measures, and during
its fiscal years ending March 2004, 2005 and 2006, the Company is required to:

         -        engage a qualified outside firm to perform the internal audit
                  function or designate an employee director of internal audit
                  who would perform certain audit procedures and report directly
                  to the Audit Committee;

         -        require internal audit to prepare a confidential business
                  report at the end of the fiscal year describing certain
                  aspects of the audit preparation, procedures and findings; and

         -        maintain an anonymous hotline on which any activity affecting
                  the Company's financial results may be reported to the Audit
                  Committee.

         The Company will incur costs, which may be significant, in complying
with these undertakings.

         In determining to accept the Company's settlement offer, the SEC
considered that the Company undertook remedial actions and provided substantial
cooperation in the investigation. On January 27, 2004, the Company's offer of
settlement was approved and a final judgment was entered by the court.

         COMPLIANCE ORDER. In January 2003, the Company received a Consolidated
Compliance Order and Notice of Potential Penalty from the Louisiana Department
of Environmental Quality pursuant to which the department alleges that the
Company's foundry operations failed to submit required storm water monitoring
information as required by law. The alleged failure relates to periods
subsequent to the cessation of the Company's foundry operations. The Company has
appealed the matter and the department has agreed to engage an informal
resolution of the matter. Based on current available information, the Company
does not believe that it is reasonably possibly that this matter will have a
material effect on its future operations, financial position or cash flows.

         The Company is subject to other legal proceedings and claims from time
to time which arise in the ordinary course of business.

12. RELATED PARTY TRANSACTIONS:

         On March 30, 2004, we entered into a services agreement with Wingate
Partners III, L.P. ("Wingate Partners"), an affiliate of CorrPro Investments,
LLC. The services agreement provides that Wingate Partners agrees to consult
with the Board of Directors in such a manner and on such business and financial
matters as would be reasonably requested from time to time by the Board,
including financial advisory, management advisory, strategic planning,
monitoring and other related services, in exchange for which we will pay an
annual non-refundable services fee of $400 payable quarterly in advance, to such
persons designated by Wingate Partners. In lieu of paying any quarterly
installment of the services fee in cash, we may, at our option, or if we are
restricted from paying any such quarterly installment in cash under, or the
Board determines that payment of such quarterly installment in cash would result
in a default under, the terms of our new senior secured credit facility or
senior secured subordinated notes, delay payment and accrue any unpaid portion
of the services fee, without interest. The services agreement will have an
initial term of eight years, which term will automatically renew for successive
one year periods thereafter unless either party notifies the other of its desire
to terminate the services agreement.

                                                                              59
<PAGE>

                       SUPPLEMENTAL FINANCIAL INFORMATION

Quarterly Results of Operations (Unaudited):

         The following is a summary of the unaudited quarterly results of
operations of the Company for the fiscal years ended March 31, 2004 and 2003.
The sum of the quarterly per share figures does not equal annual per share
figures due to rounding.

<TABLE>
<CAPTION>
Three Months Ended                               06/30/03   09/30/03(6)    12/31/03   03/31/04      Total
-----------------------------------------------------------------------------------------------------------
(In Thousands, Except per Share Data)
<S>                                              <C>        <C>            <C>        <C>         <C>
Revenues                                         $ 33,052   $    34,433    $ 32,939   $ 29,660    $ 130,084

Operating income (loss)                             3,092         3,607       2,848     (1,017)       8,530

Net Income (loss) from continuing operations        1,260         1,343         647     (4,861)      (1,611)

Net income (loss)                                     833        (1,880)        442     (4,874)      (5,479)

Earnings (loss) per share -  - Basic:
    Income (loss) from continuing operations     $   0.15   $      0.16    $   0.07   $  (0.58)   $   (0.19)
    Net income (loss)                                0.10         (0.22)       0.05      (0.58)       (0.65)

Weighted average number of shares -  - Basic        8,408         8,408       8,420      8,436        8,419

Earnings (loss) per share -  - Diluted:
    Income (loss) from continuing operations     $   0.13   $      0.14    $   0.07   $  (0.58)   $   (0.19)
    Net income (loss)                                0.09         (0.20)       0.05      (0.58)       (0.65)

Weighted average number of shares -  - Diluted      9,383         9,356       9,361      8,436        8,419
</TABLE>

<TABLE>
<CAPTION>
Three Months Ended                             06/30/02(1)    09/30/02(2)(3)    12/31/02   03/31/03(4)(5)      Total
----------------------------------------------------------------------------------------------------------------------
(In Thousands, Except per Share Data)
<S>                                            <C>            <C>               <C>        <C>               <C>
Revenues                                       $    29,689    $       31,473    $ 31,781   $       24,680    $ 117,623

Operating income (loss)                                499             1,419       2,577           (2,535)       1,960

Net Income (loss) from continuing operations        (1,156)             (530)        419           (3,135)      (4,402)

Net income (loss)                                  (20,685)           (3,358)        449           (5,231)     (28,825)

Earnings (loss) per share -  - Basic:
    Income (loss) from continuing operations   $     (0.14)   $        (0.06)   $   0.04   $        (0.37)   $   (0.52)
    Net income (loss)                                (2.47)            (0.40)       0.05            (0.62)       (3.43)

Weighted average number of shares -  - Basic         8,350             8,403       8,408            8,408        8,387

Earnings (loss) per share -  - Diluted:
    Income (loss) from continuing operations   $     (0.14)   $        (0.06)   $   0.04   $        (0.37)   $   (0.52)
    Net income (loss)                                (2.47)            (0.40)       0.05            (0.62)       (3.43)

Weighted average number of shares - - Diluted        8,350             8,403       9,325            8,408        8,387
</TABLE>

(1)      Included in the first quarter of fiscal 2003 was goodwill impairment of
         $18,238

(2)      Included in discontinued operations in the second quarter of fiscal
         2003 was an asset impairment charge of $450

(3)      Included in continuing operations in the second quarter of fiscal 2003
         was an asset impairment charge of $450

(4)      Included in discontinued operations in the fourth quarter of fiscal
         2003 was a gain on sale of discontinued operations of $2,095

(5)      Included in discontinued operations in the fourth quarter of fiscal
         2003 was an asset impairment charge of $1,575

(6)      Included in discontinued operations in the second quarter of fiscal
         2004 was an asset impairment charge of $3,278

                                                                              60
<PAGE>

ITEM 9A. CONTROLS AND PROCEDURES

(a) Controls and Procedures.

         Following the commencement of an internal review of our accounting
records and procedures and the investigation initiated by our Audit Committee of
the Board of Directors in connection with the restatement process related to our
former Australian Subsidiary (the "Audit Committee Investigation"), we initiated
a significant restructuring plan. The multi-year plan included a series of
initiatives to improve operating income and reduce debt, including the sale of
non-core business units and use of the proceeds to reduce debt. These
activities, while critical to our successful restructuring, complicated our
ability to assess the overall effectiveness of internal controls.

         Since the inception of the Audit Committee Investigation, we have made
a number of significant changes that strengthened the internal controls over our
financial accounting, reporting and disclosure procedures (the "Reporting and
Disclosure Procedures"). These changes included, but were not necessarily
limited to, (i) communicating clearly and consistently a tone from senior
management regarding the proper conduct in these matters, (ii) strengthening the
North American financial management organizational reporting chain, (iii)
requiring stricter account reconciliation standards, (iv) updating and expanding
the distribution of our business conduct questionnaire, (v) requiring quarterly
as well as annual business units written representations, (vi) expanding the
financial accounting procedures in the current year, (vii) commencing a
comprehensive, team-based process to further assess and enhance the efficiency
and effectiveness of our financial processes, including support efforts which
better integrate current and evolving financial information system initiatives,
and addressing any remaining weaknesses, and (viii) establishing of an internal
audit function.

         We will continue the process of identifying and implementing corrective
actions where required to improve the effectiveness of our Reporting and Control
Procedures. Significant supplemental resources will continue to be required to
prepare the required financial and other information during this process. The
changes made to date as discussed above have enabled us to restate our previous
filings where required, as well as subsequently prepare and file the remainder
of the required periodic reports.

(b) Evaluation of Disclosure Controls and Procedures.

         Our Chief Executive Officer and Chief Financial Officer (the "Senior
Officers"), with the participation of other members of our management, have
evaluated the effectiveness of our disclosure controls and procedures (as such
term is defined in Rules 13a - 15(e) and 15d - 15(e) under the Exchange Act) as
of the end of the period covered by this Annual Report on Form 10-K/A. Based on
that evaluation, and subject to inherent limitations on the effectiveness of
internal controls as described below, the Senior Officers have concluded that to
their knowledge as of the end of the period covered by this Annual Report on
Form 10-K/A, our disclosure controls and procedures are effective in ensuring
that information required to be disclosed by us is recorded, processed,
summarized and reported within the time periods specified in the SEC's rules and
forms. There were no changes in our internal control over financial reporting
that occurred during our fourth fiscal quarter that has materially affected, or
is reasonably likely to materially affect, our internal control over financial
reporting.

         In reaching the conclusion set forth above, the Senior Officers
considered the restatement of the Company's financial statements as of and for
the fiscal year ended March 31, 2004 contained elsewhere in this Annual Report
on Form 10-K/A. The Senior Officers have concluded that the circumstances giving
rise to this restatement were not reflective of any weakness in our disclosure
controls and procedures, and that such disclosure controls and procedures were
operating effectively throughout the period covered by this Annual Report on
Form 10-K/A.

(c) Inherent Limitations on the Effectiveness of Controls.

         A control system, no matter how well designed and operated, can provide
only reasonable, not absolute, assurance that the objectives of the control
system are met. In addition, a control system is subject to implementation based
on the cost effectiveness of such controls. Further, because of the inherent
limitations in all control systems, including faulty judgments in decision
making or breakdowns resulting from simple errors or mistakes, no evaluation of
controls can provide absolute assurance that all control issues and instances of
fraud, if any, have been detected.

                                                                              61
<PAGE>

Additionally, controls can be circumvented by individual acts, collusion or by
management override of the controls in place. Over time, controls may become
inadequate because of changes in conditions, or deterioration of the degree of
compliance with the policies or procedures. Due to the inherent limitation of
control systems, misstatements due to error or fraud may occur and not be
detected. Given such inherent limitations, the Senior Officers and other members
of our management, do not expect our disclosure controls or procedures to
prevent all possible instances of error and fraud.

                                                                              62
<PAGE>

                                     PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

         (a)(1)   THE FOLLOWING CONSOLIDATED FINANCIAL STATEMENTS ARE
                  INCLUDED IN PART II, ITEM 8 OF THIS ANNUAL REPORT ON FORM
                  10-K/A:

                  Report of Independent Registered Public Accounting Firm

                  Consolidated Balance Sheets at March 31, 2004 and 2003

                  Consolidated Statements of Operations for the years ended
                  March 31, 2004, 2003 and 2002

                  Consolidated Statements of Shareholders' Equity (Deficit) for
                  the years ended March 31, 2004, 2003 and 2002

                  Consolidated Statements of Cash Flows for the years ended
                  March 31, 2004, 2003 and 2002

                  Notes to Consolidated Financial Statements

                                                                              63
<PAGE>

         (a)(3)   INDEX TO EXHIBITS:

<TABLE>
<CAPTION>
EXHIBIT
  NO.         EXHIBIT
-------       -------
<S>           <C>
3.1           Amended and Restated Articles of Incorporation of the Company. (1)

3.2           Amended and Restated Code of Regulations of the Company. (2)

4.1           Specimen certificate for the Common Shares. (3)

4.2           Amended and Restated Credit Agreement dated as of June 9, 2000
              among the Company, CSI Coating Systems, Inc. and the Lenders Party
              thereto. Other long-term debt agreements of the Company, except
              for Note Purchase Agreement, are not filed pursuant to Item
              601(b)(4)(iii)(A) of Regulation S-K. The Company will furnish
              copies of any such agreements to the Securities and Exchange
              Commission upon its request. (4)

4.3           First Amendment to Credit Agreement dated October 19, 2000
              relating to the Amended and Restated Credit Agreement dated as of
              June 9, 2000 among the Company., CSI Coating Systems, Inc. and the
              Lenders Party thereto. (12)

4.4           Letter Agreement dated October 19, 2000 relating to the Amended
              and Restated Credit Agreement dated as of June 9, 2000 among the
              Company., CSI Coating Systems, Inc. and the Lenders Party thereto.
              (12)

4.5           Second Amendment to Credit Agreement dated as of June 29, 2001
              relating to the Amended and Restated Credit Agreement dated as of
              June 9, 2000 among the Company., CSI Coating Systems, Inc. and the
              Lenders Party thereto. (12)

4.6           Third Amendment to Credit Agreement dated as of August 10, 2001
              relating to the Amended and Restated Credit Agreement dated as of
              June 9, 2000 among the Company, CSI Coating Systems, Inc. and the
              Lenders Party thereto. (13)

4.7           Fourth Amendment to Credit Agreement dated as of November 12, 2001
              relating to the Amended and Restated Credit Agreement dated as of
              June 9, 2000 among the Company, CSI Coating Systems, Inc. and the
              Lenders Party thereto. (14)

4.8           Fifth Amendment to Credit Agreement dated as of February 11, 2002
              relating to the Amended and Restated Credit Agreement dated as of
              June 9, 2000 among the Company, CSI Coating Systems, Inc. and the
              Lenders Party thereto. (15)

4.9           Sixth Amendment to Credit Agreement dated as of September 23, 2002
              relating to the Amended and Restated Credit Agreement dated as of
              June 9, 2000 among the Company, CSI Coating Systems, Inc. and the
              Lenders party thereto. (17)

4.10          Seventh Amendment to Credit Agreement dated as of November 1, 2002
              relating to the Amended and Restated Credit Agreement dated as of
              June 9, 2000 among the Company, CSI Coating Systems, Inc. and the
              Lenders party thereto. (18)

4.11          Eighth Amendment to Credit Agreement dated as of February 10, 2003
              relating to the Amended and Restated Credit Agreement dated as of
              June 9, 2000 among the Company, CSI Coatings Systems, Inc. and the
              Lenders party thereto. (24)

4.12          Ninth Amendment to Credit Agreement dated as of July 31, 2003
              relating to the Amended and Restated Credit Agreement dated as of
              June 9, 2000 among the Company, CSI Coating Systems, Inc. and the
              Lenders party
</TABLE>

                                                                              64
<PAGE>

<TABLE>
<S>           <C>
              thereto. (19)

4.13          Tenth Amendment to Credit Agreement dated as of October 31, 2003
              relating to the Amended and Restated Credit Agreement dated as of
              June 9, 2000 among the Company, CSI Coating Systems, Inc. and the
              Lenders party thereto. (20)

4.14          Eleventh Amendment to Credit Agreement dated as of January 31,
              2004 relating to the Amended and Restated Credit Agreement dated
              as of June 9, 2000 among the Company, CSI Coating Systems, Inc.
              and the Lenders party thereto. (21)

4.15          Note Purchase Agreement dated as of January 21, 1998 by and among
              the Company and The Prudential Insurance Company of America
              herein. (5)

4.16          Rights Agreement dated as of July 23, 1997 between the Company and
              Fifth Third Bank, successor Rights Agent. (6), including
              [Amendments 1 and 2 thereto].

4.17          Amendment dated June 9, 2000 to Note Purchase Agreement dated
              January 21, 1998. (4)

4.18          Amendment dated October 18, 2000 to Note Purchase Agreement dated
              January 21, 1998. (12)

4.19          Letter Agreement dated October 18, 2000 by and between The
              Prudential Insurance Company of America and the Company relating
              to the Note Purchase Agreement dated as of January 21, 1998. (12)

4.20          Amendment dated as of June 29, 2001 by and between The Prudential
              Insurance Company of America and the Company relating to the Note
              Purchase Agreement dated as of January 21, 1998. (12)

4.21          Letter Agreement dated July 31, 2003 by and between The Prudential
              Insurance Company of America and the Company relating to the Note
              Purchase Agreement dated as of January 21, 1998. (19)

4.22          Letter Agreement dated October 31, 2003 by and between The
              Prudential Insurance Company of America and the Company relating
              to the Note Purchase Agreement dated as of January 21, 1998. (20)

4.23          Letter Agreement dated January 31, 2004 by and between The
              Prudential Insurance Company of America and the Company relating
              to the Note Purchase Agreement dated as of January 21, 1998. (21)

4.24          Securities Purchase Agreement dated December 15, 2003 by and
              between the Company and CorrPro Investments, LLC. (22)

4.25          Note and Equity Purchase Agreement dated March 30, 2004 by and
              among the Company, CCFC, Inc., Ocean City Research Corp., Corrpro
              International, Inc. (collectively, "US Borrowers"), Corrpro
              Canada, Inc., Commonwealth Seager Holdings Ltd., and Borza
              Inspections Ltd. (collectively, "Canadian Borrowers"), and
              American Capital Financial Services, Inc., as Agent, and the
              Purchasers thereto. (23)

4.26          Form of Senior Secured Subordinated Note to the Note and Equity
              Purchase Agreement dated March 30, 2004 by and among the US
              Borrowers, and American Capital Financial Services, Inc., as
              Agent, and the Purchasers thereto. (23)

4.27          Form of Senior Secured Subordinated Note to the Note and Equity
              Purchase Agreement dated March 30, 2004 by and among the Canadian
              Borrowers, and American Capital Financial Services, Inc., as
              Agent, and the Purchasers thereto. (23)

4.28          Revolving Credit, Term Loan and Security Agreement dated March 30,
              2004 among the US Borrowers and Canadian Borrowers, and
              CapitalSource Finance LLC and other Lenders thereto. (23)
</TABLE>

                                                                              65
<PAGE>

<TABLE>
<S>           <C>
4.29          Form of Revolving Note to the Revolving Credit, Term Loan and
              Security Agreement dated March 30, 2004 between the US Borrowers,
              and CapitalSource Finance LLC and other Lenders thereto. (23)

4.30          Form of Revolving Note to the Revolving Credit, Term Loan and
              Security Agreement dated March 30, 2004 between the Canadian
              Borrowers, and CapitalSource Finance LLC and other Lenders
              thereto. (23)

4.31          Form of Term Note to the Revolving Credit, Term Loan and Security
              Agreement dated March 30, 2004 between the US Borrowers, and
              CapitalSource Finance LLC and other Lenders thereto. (23)

4.32          Form of Term Note to the Revolving Credit, Term Loan and Security
              Agreement dated March 30, 2004 between the Canadian Borrowers, and
              CapitalSource Finance LLC and other Lenders thereto. (23)

4.33          Security Agreement dated as of March 30, 2004 between the US
              Borrowers and American Financial Services, Inc., as Agent, for the
              Purchasers thereto. (23)

4.34          Security Agreement dated as of March 30, 2004 between the Canadian
              Borrowers and American Financial Services, Inc., as Agent, for the
              Purchasers thereto. (23)

4.35          Security Agreement dated as of March 30, 2004 between the Canadian
              Borrowers and CapitalSource Finance LLC, as Agent, for the Lenders
              thereto. (23)

4.36          Common Stock Purchase Warrant issued to Bank One, NA dated as of
              September 23, 2002. (17)

4.37          Common Stock Purchase Warrant issued to The Prudential Insurance
              Company of America dated as of September 23, 2002. (17)

4.38          Common Stock Purchase Warrant issued to CorrPro Investments, LLC
              dated as of March 30, 2004. (23)

4.39          Common Stock Purchase Warrant issued to American Capital
              Strategies, Ltd. dated as of March 30, 2004. (23)

4.40          Registration Rights Agreement dated as of September 23, 2002
              between the Company and Bank One, NA. (17)

4.41          Registration Rights Agreement dated as of September 23, 2002
              between the Company and The Prudential Insurance Company of
              America. (17)

4.42          Investor and Registration Rights Agreement by and between CorrPro
              Investments, LLC and the Company dated as of March 30, 2004. (23)

4.43          Amendment dated September 23, 2002 between the Company and The
              Prudential Insurance Company of America to the Note Purchase
              Agreement dated January 21, 1998. (17)

4.44          Services Agreement by and between the Company and Wingate Partners
              III, LP dated as of March 30, 2004. (23)

*10.1         Corrpro Companies, Inc. 2001 Non-Employees Directors' Stock
              Appreciation Rights Plan and form of Award Agreement. (16)

*10.2         1997 Long-Term Incentive Plan of Corrpro Companies, Inc. (7)

*10.3         Amendment to 1997 Long-Term Incentive Plan of Corrpro Companies,
              Inc. (8)

*10.4         1997 Non-Employee Directors' Stock Option Plan. (7)
</TABLE>

                                                                              66
<PAGE>

<TABLE>
<S>           <C>

10.5          Corrpro Companies, Inc. Employee Stock Purchase Plan. (9)

*10.6         December 2000 Stock Option Agreement Surrender form. (12)

*10.7         Form of Indemnification Agreement for certain Officers and
              Directors of the Company and schedule thereto. (10)

10.8          Form of Indemnification Agreement for certain Directors of the
              Company and schedule thereto.

10.9          Consulting Agreement dated April 1, 2003 by and between
              Commonwealth Seager Holdings Ltd. and Corrtech Consulting Group.
              (11)

*10.10        Employment Agreement effective March 31, 2004 by and between the
              Company and Joseph W. Rog.

10.11         Amendment and Termination Agreement by and between the Company and
              Joseph W. Rog.

10.12         Agreement and General Release by and between the Company and
              Joseph W. Rog effective as of May 3, 2004.

10.13         Employment Agreement effective as of May 3, 2004 by and between
              the Company and Joseph P. Lahey.

10.14         Form of Amendment and Termination Agreement by and between the
              Company and certain executive officers and schedule thereto.

10.15         Form of Amendment to Executive Officer Employment Agreement by and
              between the Company and certain executive officers and schedule
              thereto.

*10.16        Form of Executive Officer Employment Agreement by and between the
              Company and certain executive officers and schedule thereto. (10)

10.17         Waiver of Director's Compensation executed by Joseph W. Rog,
              effective May 3, 2004.

10.18         Form of Waiver of Director's Compensation effective March 30, 2004
              and schedule thereto.

*10.20        Company Incentive Option Plan as amended. (3)

*10.21        Company Deferred Compensation Plan. (12)

*10.22        Consulting Agreement dated January 26, 2001 by and between the
              Company and Neal R. Restivo. (12)

*10.23        Form of Change in Control Agreement entered into between the
              Company and certain of its executive officers and schedule
              thereto. (10)

21.1          Subsidiaries of the Company. (25)

**23.1        Consent of KPMG LLP.

**31.1        Certification of Chief Executive Officer pursuant to Rule
              13a-14(a) of the Exchange Act.

**31.2        Certification of Chief Financial Officer pursuant to Rule
              13a-14(a) of the Exchange Act.

**32.1        Certification of Chief Executive Officer pursuant to Rule
              13a-14(b) of the Exchange Act and 18 U.S.C. Section
</TABLE>

                                                                              67
<PAGE>

<TABLE>
<S>           <C>
              1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
              Act of 2002.

**32.2        Certification of Chief Financial Officer pursuant to Rule
              13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as
              adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
</TABLE>

----------------

*        Management contract or compensatory plan or arrangement identified
         pursuant to Item 15(a)(3) of this Annual Report on Form 10-K.

**       Filed herewith.

(1)      A copy of this exhibit filed as Exhibit 3.1 to our Current Report on
         Form 8-K filed April 14, 2004 is incorporated herein by reference.

(2)      A copy of this exhibit filed as Exhibit 3.2 to our Current Report on
         Form 8-K filed April 14, 2004 is incorporated herein by reference.

(3)      Copies of the exhibits to which this footnote applies were filed,
         respectively, as Exhibit 4.1 (Stock certificate specimen), and 10.25
         (Incentive Option Plan) to our Registration Statement on Form S-1
         (Registration No. 33-64482) and are hereby incorporated by reference.

(4)      Copies of the exhibits to which this footnote applies were filed,
         respectively, as Exhibits 4.3 (Amended and Restated Credit Agreement)
         and 4.6 (Note Purchase Agreement Amendment) to our Annual Report on
         Form 10-K for the period ended March 31, 2000 and are hereby
         incorporated by reference.

(5)      A copy of this exhibit filed as Exhibit 4.2 to our Quarterly Report on
         Form 10-Q for the quarterly period ended December 31, 1997 is
         incorporated herein by reference.

(6)      A copy of this exhibit filed as Exhibit 1.1 to our Registration
         Statement on Form 8-A filed August 7, 1997 is incorporated herein by
         reference.

(7)      Copies of the exhibits to which this footnote applies were filed,
         respectively, as Exhibits 4.4 (1997 Long-Term Inventive Plan) and 4.5
         (1997 Non-Employee Directors' Stock Option Plan) to our Registration
         Statement on Form S-8 filed October 24, 1997 (SEC File No. 333-38767),
         and are hereby incorporated by reference.

(8)      A copy of this exhibit filed as Exhibit 4.5 to our Registration
         Statement on Form S-8 filed January 19, 2000 (SEC File No. 333-94989)
         is incorporated herein by reference.

(9)      A copy of this exhibit contained in our Definitive Proxy Statement on
         Schedule 14A filed with the Securities and Exchange Commission on June
         16, 1999 is incorporated herein by reference.

(10)     Copies of the exhibits to which this footnote applies were filed,
         respectively, as Exhibits 10.2 (Change in Control Agreement) and 10.3
         (Indemnification Agreement) to our Quarterly Report on Form 10-Q for
         the quarterly period ended December 31, 2000, and are hereby
         incorporated by reference.

(11)     A copy of this exhibit filed as Exhibit 10.2 to our Annual Report on
         Form 10-K for the period ended March 31, 1998, and is hereby
         incorporated by reference.

(12)     Copies of the exhibits filed to which this footnote applies were filed,
         respectively, as Exhibits 4.3 (First Amendment to Credit Agreement),
         4.4 (Letter Agreement), 4.5 (Second Amendment to Credit Agreement), 4.9

                                                                              68
<PAGE>

         (Amendment to Note Purchase Agreement), 4.10 (Letter Agreement), 10.7
         (Deferred Compensation Plan) and 10.8 (Consulting Agreement) to our
         Annual Report on Form 10-K for the period ended March 31, 2001 and are
         hereby incorporated by reference.

(13)     A copy of this exhibit filed as Exhibit 4.3 to our Quarterly Report on
         Form 10-Q for the quarterly period ended June 30, 2001 and is
         incorporated herein by reference.

(14)     A copy of this exhibit filed as Exhibit 4.2 to our Quarterly Report on
         Form 10-Q for the quarterly period ended September 30, 2001 and is
         incorporated herein by reference.

(15)     A copy of this exhibit filed as Exhibit 4.2 to our Quarterly Report on
         Form 10-Q for the quarterly period ended December 31, 2001 and is
         incorporated herein by reference.

(16)     A copy of this exhibit filed as Exhibit 4.9 to our Annual Report on
         Form 10-K for the period ended March 31, 2002 is hereby incorporated by
         reference.

(17)     Copies of the exhibits filed to which this footnote applies were filed,
         respectively, as Exhibits 4.1 (Bank One Purchase Warrant), 4.2
         (Prudential Purchase Warrant), 4.3 (Bank One Rights Agreement), 4.4
         (Prudential Rights Agreement), 10.1 (Sixth Amendment to Credit
         Agreement) and 10.2 (Prudential Amendment) to our Quarterly Report on
         Form 10-Q for the quarterly period ended September 30, 2002 and is
         incorporated herein by reference.

(18)     A copy of this exhibit filed as Exhibit 10.1 to our Quarterly Report on
         Form 10-Q for the quarterly period ended December 31, 2002 and is
         incorporated herein by reference.

(19)     Copies of the exhibits filed to which this footnote applies were filed,
         respectively as Exhibit 10.1 (Ninth Amendment to Credit Agreement), and
         10.2 (Letter Agreement) to our Current Report on Form 8-K filed August
         14, 2003, and are incorporated herein by reference.

(20)     Copies of the exhibits filed to which this footnote applies were filed,
         respectively as Exhibit 10.4 (Tenth Amendment to Credit Agreement), and
         10.5 (Letter Agreement) to our Quarterly Report on Form 10-Q/A for the
         quarterly period ended September 30, 2003, and are incorporated herein
         by reference.

(21)     Copies of the exhibits filed to which this footnote applies were filed,
         respectively as Exhibit 10.1 (Eleventh Amendment to Credit Agreement),
         and 10.2 (Letter Agreement) to our Current Report on Form 8-K filed
         February 10, 2004, and are incorporated herein by reference.

(22)     A copy of this exhibit filed as Exhibits 10.1 to our Current Report on
         Form 8-K filed December 12, 2003 is incorporated herein by reference.

(23)     Copies of the exhibits filed to which this footnote applies were filed,
         respectively as Exhibits 10.4 (Note & Equity Purchase Agreement), 10.6
         and 10.7 (form of Senior Secured Subordinated Note), 10.10 (Revolving
         Credit, Term Loan and Security Agreement), 10.11 and 10.12 (form of
         Revolving Note), 10.13 and 10.14 (form of Term Note), 10.8 and 10.9
         (American Financial Services, Inc. Security Agreement), 10.15
         (CapitalSource Finance, LLC Security Agreement), 10.1 (CorrPro
         Investments, LLC Warrant), 10.5 (American Capital Strategies, Ltd.
         Warrant), 10.2 (Investor & Registration Rights Agreement), and 10.3
         (Services Agreement) to our Current Report on Form 8-K filed April 14,
         2004, and are incorporated herein by reference.

(24)     A copy of this exhibit filed as Exhibit 4.11 to our Annual Report on
         Form 10-K for the period ended March 31, 2003 is incorporated herein by
         reference.

(25)     A copy of this exhibit filed as Exhibit 21.1 to our Annual Report on
         Form 10-K for the period ended March 31, 2004 is incorporated herein by
         reference.

                                                                              69
<PAGE>

         (b)      REPORTS ON FORM 8-K:

                  During the quarter ended March 31, 2004, we filed four Current
                  Reports on Form 8-K.

                  On February 10, 2004, a Current Report on Form 8-K was filed,
                  under Item 5, announcing that we had secured an extension of
                  the maturity date of our previous revolving credit facility
                  and obtained a deferral of a significant scheduled principal
                  payment due under our previous senior notes.

                  On February 26, 2004, a Current Report on Form 8-K was filed,
                  under Item 5, announcing that we had called a special meeting
                  of shareholders to vote on proposals relating to our
                  refinancing and recapitalization plan and furnished, under
                  Item 12, announcing our operating results for the third
                  quarter and the nine months ended December 31, 2003.

                  On March 10, 2004, a Current Report on Form 8-K was filed,
                  under Item 5, announcing that Institutional Shareholder
                  Services had issued a formal recommendation to its
                  institutional clients that they vote in favor of the proposals
                  relating to our refinancing and recapitalization plan.

         On March 23, 2004, a Current Report on Form 8-K was filed, under Item
         5, announcing that our shareholders voted to approve the proposals
         relating to our refinancing and recapitalization plan and filed, under
         Item 11, announcing that we had issued a notice to our executive
         officers and directors concerning a stock trading blackout in
         connection with a change in the record keepers for our 401(k) Savings
         Plan.

         (c)      EXHIBITS

                  See "Index to Exhibits" at Item 15(a) above.

                                                                              70
<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of Section 13 of 15(d) of the Securities
and Exchange Act of 1934, the registrant has duly caused this Form 10-K/A for
the fiscal year ended March 31, 2004 to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                       CORRPRO COMPANIES, INC.

August 12, 2004                        By: /s/ Joseph P. Lahey
                                           ------------------------------------
                                           Joseph P. Lahey
                                           President and Chief Executive Officer

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

August 12, 2004                        /s/ Joseph P. Lahey
                                       ----------------------------------------
                                       Joseph P. Lahey
                                       President and Chief Executive Officer
                                       (Principal Executive Officer)

August 12, 2004                        /s/ Robert M. Mayer
                                       ----------------------------------------
                                       Robert M. Mayer
                                       Senior Vice President and
                                       Chief Financial Officer
                                       (Principal Financial and
                                       Accounting Officer)

August 12, 2004                        /s/ James A. Johnson
                                       ----------------------------------------
                                       James A. Johnson
                                       Chairman of the Board of Directors

August 12, 2004                        /s/ Jay I. Applebaum
                                       ----------------------------------------
                                       Jay I. Applebaum, Director

August 12, 2004                        /s/ Jason H. Reed
                                       ----------------------------------------
                                       Jason H. Reed, Director

August   , 2004
                                       ----------------------------------------
                                       Joseph W. Rog, Director

August 12, 2004                        /s/ C. Richard Lynham
                                       ----------------------------------------
                                       C. Richard Lynham, Director

August 12, 2004                        /s/ Harry W. Millis
                                       ----------------------------------------
                                       Harry W. Millis, Director

August 12, 2004                        /s/ Neal R. Restivo
                                       ----------------------------------------
                                       Neal R. Restivo, Director

August   , 2004
                                       ----------------------------------------
                                       Warren F. Rogers, Director

                                                                              71