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

                                    FORM 10-K

|X|   ANNUAL  REPORT  PURSUANT  TO  SECTION  13 OR 15(D) OF THE  SECURITIES  AND
      EXCHANGE ACT OF 1934

For the fiscal year ended March 31, 2005

                                       or

|_|   TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR 15(D)  OF THE  SECURITIES
      EXCHANGE ACT OF 1934

For the transition period from __________________ to ____________________

Commission File Number 0-18684

                          COMMAND SECURITY CORPORATION
             (Exact name of registrant as specified in its charter)


              New York                                  14-1626307
  (State or other  jurisdiction of             (IRS Employer Identification No.)
   incorporation or organization)


   Lexington Park, Lagrangeville, New York                      12540
   (Address of Principal executive offices)                  (Zip Code)


Registrant's telephone number, including area code: (845) 454-3703

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.0001
par value

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 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 registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K |_|

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Act). Yes | | No |X|

The  aggregate  market  value of  common  stock  held by  non-affiliates  of the
registrant as of June 22, 2005 was approximately $7,861,327.

As of June 22, 2005, the registrant had issued and outstanding  7,779,878 shares
of common stock.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's  definitive  proxy  statement,  which will be filed
within 120 days of March 31, 2005, are incorporated by reference into Part III.

<PAGE>

                          Command Security Corporation

                           Annual Report on Form 10-K
                    For the Fiscal Year Ended March 31, 2005

                                TABLE OF CONTENTS

                                     PART I

1.    Business

2.    Properties

3.    Legal Proceedings

4.    Submission of Matters to a Vote of Security Holders


                                     PART II

5.    Market for the Registrant's Common Equity and Related Stockholder Matters

6.    Selected Financial Data

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

7A.   Quantitative and Qualitative Disclosures About Market Risk

8.    Financial Statements and Supplementary Data

9.    Changes in and Disagreements  with Accountants on Accounting and Financial
      Disclosure.

9a.   Controls and Procedures


                                    PART III

10.   Directors and Executive Officers of the Registrant

11.   Executive Compensation

12.   Security Ownership of Certain Beneficial Owners and Management

13.   Certain Relationships and Related Transactions

14.   Principal Accountant Fees and Services


                                     PART IV

15.   Exhibits, Financial Statements, Financial Statement Schedules and
      Reports on Form 8-K


                                       1
<PAGE>

                                     PART I

ITEM  1. BUSINESS

General

Command Security  Corporation  (the "Company")  principally  provides  uniformed
guard,  aviation  and  support  security  services  to  commercial,   financial,
industrial,  aviation and governmental  clients in the United States from its 28
operating  offices in  California,  Connecticut,  Delaware,  Florida,  Illinois,
Maine, Maryland, Massachusetts, New Jersey, New York, Oregon and Pennsylvania.

The  Company  operates  as a provider  of  security  services to a wide range of
clients that the Company has  categorized  into three  groups;  guard  services,
aviation services and support services. The latter includes services provided to
security services firms under administrative  service agreements and back office
support services provided to police departments.

The  guard   services   division   provides   its   services  to   governmental,
quasi-governmental,  health, educational and financial institutions, residential
and commercial property management, and industrial,  distribution, logistics and
retail clients. Guard services generated  approximately $28.9 million, or 36.2%,
of the  Company's  revenues  for the fiscal  year ended  March 31,  2005.  Guard
services include  providing armed and unarmed uniformed  security  personnel for
access  control,  mobile  patrols,  traffic  control,   security  console/system
operators, fire safety directors, communication,  reception, concierge and front
desk/doorman operations.

The aviation  services  division  provides  its services to airlines,  airports,
airport  authorities  and the  general  aviation  community.  Aviation  services
generated  approximately  $50.5 million, or 63.3%, of the Company's revenues for
the fiscal  year ended  March 31,  2005.  Aviation  services  include  providing
uniformed  guard  services to airport  and  airport-related  clients,  including
document verifiers,  skycaps,  wheelchair escorts,  general security and baggage
handling services.

The support services  division  provides its services to security services firms
and police departments. Support services generated approximately $.3 million, or
..4%,  of the  Company's  revenues  for the fiscal  year ended March 31, 2005 and
encompass back office support to three police departments and two administrative
service clients.

Operations

As a licensed  watch  guard and patrol  agency,  the  Company's  guard  services
division furnishes guards to its security service customers to protect people or
property  and to prevent  the theft of  property.  In this  regard,  the Company
principally  conducts  business by providing guards and other personnel who are,
depending  on  the  particular  requirements  of  the  customer,   uniformed  or
plain-clothed,  armed or unarmed,  and who patrol in marked  radio cars or stand
duty on the premises at stationary posts such as fire stations,  reception areas
or video monitors.  The Company's guards maintain  contact with  headquarters or
supervisors via car radio,  hand-held radios or cell phones.  In addition to the
more  traditional  tasks  associated  with access control and theft  prevention,
guards respond to emergency situations and report to appropriate authorities for
fires, natural disasters, work accidents and medical crises.

The Company  provides guard services to many of its  industrial,  commercial and
residential property management customers on a 24-hour basis, 365 days per year.
For these  customers,  guards  are on hand to  provide  plant  security,  access
control,  personnel  security  checks and  traffic  and  parking  control and to
protect  against  fire,  theft,  sabotage  and  safety  hazards.  Our  remaining
customers include retail  establishments,  hospitals and governmental units. The
services  provided  to these  customers  may  require  armed as well as  unarmed
guards.  The Company also provides  specialized  vehicle  patrol and  inspection
services and personal  protection  services to key  executives  and high profile
personalities from time to time.

The  Company's  aviation  services  division  provides  a variety  of  uniformed
services  for  domestic  and  international  air  carriers,  including  aircraft
security,  access control,  wheelchair  escorts,  skycaps,  baggage handlers and
uniformed guards for cargo security areas. In November 2001, the U.S. Government
made the  decision to  federalize  the  pre-board  screening  process at airport
locations  in the United  States and in  February  2002,  the  Federal  Aviation
Administration  (the "FAA") took over  responsibility for managing the contracts
with  security  services  providers,  including  the Company.  Completion of the
federalization  process was  achieved  by the U.S.  Government  set  deadline of
November 2002. The termination of the Company's contract for pre-board screening
at five airport  locations in the United  States has had a  significant  adverse
impact on the revenues and earnings of the Company's aviation services division.
Subsequently,  the  Company  has  replaced  a portion of the lost  revenue  with
alternative services to the airline industry,  such as document verification and
screened  baggage  services  and has  since  secured  work at four  new  airport
locations  -  San  Jose  (California),  Portland  (Maine),  Baltimore-Washington
(Maryland) and Portland (Oregon).

The nature of the  Company's  business  also subjects it to claims or litigation
alleging  that it is  liable  for  damages  as a result  of the  conduct  of its
employees or others.  The Company  insures against such claims and suits through
general liability policies with third-party  insurance companies.  Such policies
have limits of $5,000,000 per occurrence.  On the aviation related business, the
Company  currently has a policy with a  $30,000,000  limit per  occurrence.  The
Company   retains  the  risk  for  the  first  $25,000  per  occurrence  on  the
non-aviation  related policy which includes  airport  wheelchair  operations and
$5,000 on the aviation  related policy except $25,000 for damage to aircraft and
$100,000 for skycap and electric cart operations.

                                       2
<PAGE>

To ensure that adequate  protection  requirements have been established prior to
commencing service to a customer,  the Company evaluates the customer's site and
prepares a recommendation for any required changes to existing security programs
or  services.  Surveys  typically  include  an  examination  and  evaluation  of
perimeter controls,  lighting, personnel and vehicle identification and control,
visitor  controls,  electronic  alarm  reporting  systems,  safety and emergency
procedures,  key controls and security force manning  levels.  While surveys and
recommendations  are  prepared by the Company,  the  security  plan and coverage
requirements  are  determined  by  the  customer.   Operational  procedures  and
individual post orders are reviewed and/or  rewritten by the Company to meet the
requirements of the security plan, and coverage as determined by the customer.

In order to provide a high level of service  without  incurring  large  overhead
expenses,  the Company  establishes offices close to its customers and delegates
responsibility and decision making to its local managers. The Company's managers
each play an important  role as  highlighted  by their  responsibility  for both
service  quality  and  sales.  The  Company  believes  that in  most  situations
providing a single individual with responsibility for service quality and sales,
results in better  supervision,  quality control and greater  responsiveness  to
customer needs.

The Company generally renders its security guard services pursuant to a standard
form security services  agreement which specifies the personnel and/or equipment
to be provided by the Company at designated  locations and the applicable rates,
which  typically  are hourly  rates per person.  Rates vary  depending  on base,
overtime  and  holiday  time  worked,  and the term of  engagement.  The Company
assumes responsibility for a variety of functions, including scheduling for each
customer site, paying all guards and providing  uniforms,  training,  equipment,
supervision, fringe benefits and workers' compensation insurance. These security
services  agreements  also provide  customers  with  flexibility  by  permitting
reduction  or  expansion  of the guard force on  relatively  short  notice.  The
Company is responsible for preventing the interruption of security services as a
consequence of illness,  vacations or  resignations.  In most cases the customer
also agrees not to hire any security  personnel used by the Company for at least
180 days  after  the  termination  of the  engagement.  Each  security  services
agreement may be terminated by the customer or the Company,  typically  with not
less than  thirty  days  written  notice.  In  addition,  the  Company  may also
terminate  an agreement  immediately  upon default by the customer in payment of
monies due thereunder, or if the customer is involved in a bankruptcy or similar
event.

The Company has its own  proprietary  computerized  scheduling  and  information
system. The scheduling of guards, while time-consuming, is an important function
of any security  guard  company.  Management  believes the system  substantially
reduces the time a manager must spend on scheduling daily guard hours and allows
the Company to fulfill  customer needs by  automatically  selecting those guards
that fit the customer's requirements.

Employee Recruitment and Training

The Company  believes that the quality of its guards is essential to its ability
to offer  effective  and reliable  service,  and it believes  diligence in their
selection and training  produces the level of  performance  required to maintain
customer satisfaction.

The Company's  corporate policy requires that all selected  applicants for guard
positions  undergo  a  detailed   pre-employment   interview  and  a  background
investigation  covering such areas as employment,  education,  military service,
medical  history and,  subject to applicable  state laws,  criminal  record.  In
certain cases the Company employs psychological testing.  Personnel are selected
based  upon the  Company's  evaluation  of  their  physical  fitness,  maturity,
experience,  personality,  stability and reliability.  Medical  examinations and
substance  abuse  testing may also be performed.  Prerequisites  for all Company
guards  include a good  command  of the  English  language  and the  ability  to
communicate well and write a comprehensive  and complete  report.  Preference is
given to applicants with previous experience, either as a military or a civilian
security-police officer.

The  Company  trains  accepted  applicants  in  three  phases;   pre-assignment,
on-the-job and refresher training. Pre-assignment training covers topics such as
the  duties  and  powers of a  security  guard,  report  preparation,  emergency
procedures,  general  orders,  regulations,  grounds  for  discharge,  uniforms,
personal  appearance  and basic  post  responsibilities.  On-the-job  assignment
training covers specific duties as required by the post and job orders.  Ongoing
refresher  training is given on a periodic basis as determined by the local area
supervisor and manager.

The Company treats all employees and applicants for employment  without unlawful
discrimination as to race, creed, color,  national origin, sex, age, disability,
marital status or sexual orientation in all employment-related decisions.

Significant Customers

For the year ended  March 31,  2005,  Delta  Airlines  ("Delta")  accounted  for
approximately $12,604,000 of the Company's total revenue.

Several of the Company's aviation clients filed for bankruptcy protection during
fiscal 2005 and 2003. The aviation  industry  continues to struggle with various
challenges  including  the cost of security and higher fuel  prices.  Additional
bankruptcy  filings by aviation and  non-aviation  clients could have a material
adverse impact on the Company's  liquidity,  results of operations and financial
condition. The possibility of bankruptcy filings by Delta and Northwest Airlines
remain.  Certain  consequences  of such filings are discussed  below in "Item 7.
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations" in the "Outlook" section.

                                       3
<PAGE>

Competition

Competition in the security service  business is intense.  It is based primarily
on price,  quality of  services  provided,  scope of  services  performed,  name
recognition,  recruiting,  training and the extent and quality of security guard
supervision.  As the Company has expanded its  operations  it has had to compete
more  frequently  against larger  national  companies,  such as Securitas  North
America, the Wackenhut Corporation,  AlliedBarton Security and Guardsmark,  LLC,
which have substantially  greater financial resources,  personnel and facilities
than  the  Company.  These  competitors  also  offer a  range  of  security  and
investigative  services  which  are  at  least  as  extensive  as  and  directly
competitive  with,  those  offered by the  Company.  In  addition,  the  Company
competes   with   numerous   regional  and  local   organizations   which  offer
substantially all of the services provided by the Company.  Although  management
believes that,  especially  with respect to certain of its markets,  the Company
enjoys a  favorable  competitive  position  because of its  emphasis on customer
service,  supervision  and  training  and is able to compete on the basis of the
quality of its service,  personal  relationships  with customers and reputation,
there  can be no  assurance  that it will be able to  maintain  its  competitive
position in the security industry.

Government Regulation

The  Company is  subject to city,  county  and state  firearm  and  occupational
licensing  laws that apply to  security  guards and  private  investigators.  In
addition,  many states have laws requiring training and registration of security
guards,  regulating  the use of  badges  and  uniforms,  prescribing  the use of
identification  cards or badges,  and imposing minimum bond, surety or insurance
standards.  The Company may be  subjected to penalties or fines as the result of
licensing  irregularities  or the  misconduct  of one of its guards from time to
time in the ordinary course of its business.  Management believes the Company is
in material compliance with all applicable laws and regulations.

In the light of the September 11th tragedy, the U.S. Government passed a bill in
November 2001,  outlining  their proposal to federalize the pre-board  screening
process at all  airport  locations  within the United  States.  This  process of
federalization  has been  completed,  the impact of which is discussed  above in
"Item 1.  Business-Operations."  Also see "Item 7.  Management's  Discussion and
Analysis of Financial Condition and Results of Operations."

Employees

The Company has  approximately  70 employees  indirectly  attributable  to guard
services,  including supervisors and dispatchers,  100 administrative employees,
including the executive staff, and 3,130 hourly guards.

The Company's  business is labor intensive and, as a result,  is affected by the
availability of qualified personnel and the cost of labor. Although the security
guard  industry  is  characterized  by  high  turnover,   the  Company  has  not
experienced  any material  difficulty  in hiring  suitable  numbers of qualified
security  guards,  although,  when labor has been in short  supply,  it has been
required to pay higher wages and/or incur overtime charges.

Approximately  59% of the  Company's  employees  do not belong to a labor union.
Some of the  Company's  employees  in the  following  locations  are  members of
unions:  Chicago  and New York  City  guard  offices;  and John F.  Kennedy,  La
Guardia, Los Angeles and Philadelphia airport offices.  Together,  the unionized
employees  account for  approximately  41% of the  Company's  employees and work
under  collective  bargaining  agreements  with  the  following  unions:  Allied
International   Union,   Allied   Services   Division   of  the   Transportation
Communications  International  Union and Special & Superior Officers  Benevolent
Association.  Many of the  Company's  Chicago,  Los  Angeles  and New York  City
competitors are also  unionized.  Presently,  the Company is negotiating  with a
Union that wishes to represent the Company's  employees at  Baltimore-Washington
International   Airport.   The  Company  has   experienced   no  work  stoppages
attributable to labor disputes. The Company believes that its relations with its
employees are satisfactory.  Security guards and other personnel supplied by the
Company to its customers  are employees of the Company,  even though they may be
stationed regularly at the customer's business premises.

Service Marks

The  Company  believes  itself to be the  owner of the  service  marks  "Command
Security  Corporation",   "CSC"  and  "CSC  Plus"  design  for  security  guard,
detective, private investigation services and security consulting services.

The Company also believes  itself to be the owner of the trademark  "Smartwheel"
for the computer program for use in dispatching and tracking small vehicles such
as carts and wheelchairs at transportation terminals. The trademark was acquired
as part of United Security Group,  Inc.  acquisition.  In addition,  the Company
believes itself to be the owner of the service marks "STAIRS" and "Smart Guard."

ITEM  2. PROPERTIES

As of March 31, 2005, the Company owned and used in connection with its business
approximately 48 vehicles.

As of March 31,  2005,  the Company did not own any real  property.  It occupies
executive  offices at Route 55,  Lexington  Park,  Lagrangeville,  New York,  of
approximately  6,600 square feet with a base annual  rental of $105,600  under a
five-year  lease  expiring  September  30,  2010.  The  Company  also leases the
following offices:

                                       4
<PAGE>

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

Location
--------------------------------------------------------------------------------
2450 S. Atlantic Blvd.
Suite #207
Commerce, CA


8939 S. Sepulveda Blvd.
Suite #201
Los Angeles, CA


7841 Balboa Avenue
Suite 208
San Diego, CA


San Jose Int'l. Airport
1400 Coleman Ave.
Suites D24 & D25
Santa Clara, CA


1470 Barnum Avenue
Suite 304
Bridgeport, CT


100 Wells St.
#2E
Hartford, CT


2777 Summer Street
Suite 503
Stamford, CT


Suite 208 Wilson Bldg.
3511 Silverside Road
Concord Plaza
Wilmington, DE 19810


4901 N.W. 17th Way
Suite 504
Ft. Lauderdale, FL


800 Virginia Avenue
Suite 53
Ft. Pierce, FL

                                       5
<PAGE>


8181 NW 36th Street
Unit #21-A
Miami, FL


8452 South Stony Island
2nd Floor
Chicago, IL


780 Elkridge Landing Road
Suite 220
Linthicum Heights, MD


21 Cummings Park
Suite 224
Woburn, MA


186 Stafford St
Springfield, MA


2222 Morris Avenue
Union, NJ


52 Oswego Road
Baldwinsville, NY


2144 Doubleday Avenue
Ballston Spa, NY


Laguardia Int'l. Airport
United Hangar #2, Room 328 &329
Flushing, NY


JFK International Airport
175-01 Rockaway Boulevard
Jamaica, NY


17 Battery Place
Suite 223
New York, NY


22 IBM Road
Suite 105
Poughkeepsie, NY

                                       6
<PAGE>

Two Gannett Drive
Suite 208
White Plains, NY


5505 Main Street
Suite 2
Williamsville, NY


700 NE Airport Way
Suite B2420
Portland, OR


29 Bala Avenue
Suite 118
Bala Cynwyd, PA


2 International Plaza
Suite 242
Philadelphia, PA


We believe that our existing  properties  are in good condition and are suitable
for the conduct of our business.

ITEM  3. LEGAL PROCEEDINGS

Except as described  below,  the Company is not a party to any material  pending
proceedings, other than ordinary routine litigation incidental to its business.

The  nature of the  Company's  business  subjects  it to  claims  or  litigation
alleging  that it is  liable  for  damages  as a result  of the  conduct  of its
employees or others.  Except for such  litigation  incidental  to its  business,
other claims or actions that are not material and the lawsuits  described below,
there are no pending  legal  proceedings  to which the  Company is a party or to
which any of its property is subject.

The nature of the Company's  business is such that there is a significant volume
of routine  claims and lawsuits that are issued against it, the vast majority of
which never lead to  substantial  damages being awarded.  The Company  maintains
general liability and workers' compensation  insurance coverage that it believes
is appropriate to the relevant  level of risk and potential  liability.  Some of
the claims  brought  against the Company could result in  significant  payments;
however,  the exposure to the Company under general  liability is limited to the
first  $25,000  per  occurrence  on  the  non-aviation  and  airport  wheelchair
operations  related  claims and $5,000 per  occurrence  on the aviation  related
claims  except  $25,000  for  damage to  aircraft  and  $100,000  for skycap and
electric cart operations.  Any punitive damage award would not be covered by the
general liability  insurance policy. The only other potential impact would be on
future  premiums,  which may be  adversely  affected  by an  unfavorable  claims
history.

In addition to such cases,  the Company has been named as a defendant in several
uninsured  employment  related claims which are currently before various courts,
the EEOC or  various  state and  local  agencies.  The  Company  has  instituted
policies to minimize these  occurrences and monitor those that do occur. At this
time the Company is unable to determine the impact on its financial position and
results of  operations  that these  claims may have,  should the  investigations
conclude that they are valid.

ITEM  4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters  were  submitted to a vote of our  security  holders  during the last
quarter of our fiscal year ended March 31, 2005.

                                       7
<PAGE>

                                     PART II

ITEM  5.  MARKET  FOR THE  REGISTRANT'S  COMMON  STOCK AND  RELATED  STOCKHOLDER
      MATTERS

The  Company's  stock is quoted on the OTC  Bulletin  Board  Service,  under the
symbol  "CMMD.OB."  The  Company  intends to continue to comply with all capital
reporting requirements of the Securities and Exchange Commission.

The following table sets forth, for the calendar periods indicated, the high and
low sales  price for the Common  Stock as  reported  by the OTC  Bulletin  Board
Service, for each full quarterly period within the two most recent fiscal years.

Last Sales Price Period (1)                  Common stock market price
                                                High         Low
                                                ----         ---
2005
First Quarter                                  $1.69        $1.12
Second Quarter                                  1.70         1.21
Third Quarter                                   1.38         1.05
Fourth Quarter                                  2.20         1.31

2004
First Quarter                                  $1.20        $0.93
Second Quarter                                  1.20         0.90
Third Quarter                                   1.10         0.91
Fourth Quarter                                  1.70         1.02


(1) Reflects fiscal years ended March 31 of the year indicated.

The above  quotations do not include retail  mark-ups,  markdowns or commissions
and represent  prices between dealers and not necessarily  actual  transactions.
The past performance of the Company's  securities is not necessarily  indicative
of future performance.

As of June 3,  2005  there  were  approximately  210  holders  of  record of the
Company's  common stock.  The last sales price of the Company's  common stock on
June 22, 2005 was $1.80.

The  Company  has never  paid cash  dividends  on its common  stock.  Payment of
dividends  on  common  stock,  if any,  will be  within  the  discretion  of the
Company's Board of Directors and will depend,  among other factors,  on approval
of its principal lender,  earnings,  capital  requirements and the operating and
financial  condition  of the  Company.  At present,  the  Company's  anticipated
capital  requirements  are such that it intends to follow a policy of  retaining
earnings, if any, in order to finance, in part, the development of its business.

                                       8
<PAGE>

ITEM  6. SELECTED FINANCIAL DATA

The  financial  data  included in this table has been derived from the financial
statements as of and for the years ended March 31, 2005,  2004,  2003, 2002, and
2001, which have been audited by independent  certified public accountants.  The
information should be read in conjunction with "Item 7. Management's  Discussion
and  Analysis of Financial  Condition  and Results of  Operations"  and with the
financial statements and related notes included in the Report.


<TABLE>
<CAPTION>
                                                                     Statements of Operations Data
                                                                          Years Ended March 31,
------------------------------------------- ---------------- -------------- --------------- ------------- ---------------
In $ Thousands                                      2005            2004           2003           2002           2001
------------------------------------------- ---------------- -------------- --------------- ------------- ---------------
<S>                                                 <C>             <C>            <C>            <C>            <C>
Revenue                                             79,655          75,905         94,315         84,162         71,595
Gross Profit                                        10,523          10,960         19,558         13,805         11,805
Operating Income (Loss)                               (289)            195          3,266          1,752            328
Net Income (Loss)                                     (390)           (310)         1,327          2,376           (439)
Income (Loss) per common share                        (.06)           (.08)          0.14           0.38          (0.08)
Weighted average number
 of common shares                                7,302,738       6,287,343      6,287,343      6,287,343      6,287,343
------------------------------------------- ---------------- -------------- --------------- ------------- ---------------
</TABLE>

All of the above  statistics  are in $ thousands  except for "Income  (Loss) per
common share" and "Weighted  average number of common shares"  outstanding which
are expressed in $'s and number, respectively.

<TABLE>
<CAPTION>
                                                              Balance Sheet Data At March 31,
------------------------------------------- ---------------- -------------- --------------- ------------- ---------------
In $ Thousands                                        2005           2004           2003          2002           2001
------------------------------------------- ---------------- -------------- --------------- ------------- ---------------
<S>                                                   <C>            <C>            <C>           <C>            <C>
Working Capital                                       3,679          2,549          3,591         1,525          1,874
Total Assets                                         20,237         21,927         20,707        26,317         17,991
Short-term debt (1)                                   4,866          9,519          9,248        13,570          8,489
Long-term debt  (2)                                      81            221             88           291          1,801
Stockholders' equity                                  4,409          4,494          4,967         4,087          1,712
------------------------------------------- ---------------- -------------- --------------- ------------- ---------------
</TABLE>

(1)   The Company's short-term debt includes the current maturities of long-term
      debt,  obligations  under capital  leases and short term  borrowings.  See
      Notes 8, 9 and 17,  "Short-Term  Borrowings",  "Long-Term Debt" and "Lease
      Commitments",  respectively,  to  the  financial  statements  for  further
      discussion.

(2)   The Company's long-term debt includes the long-term portion of obligations
      under capital leases.

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

Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations should be read in conjunction with the Company's financial statements
and related  notes thereto  contained in this report.  In this  discussion,  the
words "Company", "we", "our" and "us" refer to Command Security Corporation.

The following can be interpreted as including  forward-looking  statements under
the  Private  Securities  Litigation  Reform Act of 1995.  The words  "outlook",
"intend", "plans", "efforts",  "anticipates",  "believes", "expects" or words of
similar import typically  identify such statements.  Various  important  factors
that could cause actual results to differ materially from those expressed in the
forward-looking  statements  are  identified  at the  end of this  Item  7.  The
Company's actual results may vary significantly from the results contemplated by
these forward looking statements based on a number of factors including, but not
limited to, availability of labor, marketing success, competitive conditions and
the change in economic conditions of the various markets the Company serves.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally  accepted  in the United  States  requires  us to make  estimates  and
judgments  that affect the reported  amounts of assets,  liabilities,  revenues,
expenses and related disclosure of contingent assets and liabilities. We believe
the following critical accounting policies affect our more significant judgments
and  estimates  used in the  preparation  of our  financial  statements.  Actual
results  may  differ  from  these  estimates  under  different  assumptions  and
conditions.

                                       9
<PAGE>

Revenue Recognition

The Company records revenues as services are provided to its customers. Revenues
consist  primarily of aviation and security  guard  services which are typically
billed at hourly  rates.  These rates may vary  depending on base,  overtime and
holiday time worked. Revenue for administrative services provided to other guard
companies are calculated as a percentage of the administrative  service client's
revenue and are  recognized  when  billings for the related  guard  services are
generated.

Trade Receivables

The Company  periodically  evaluates the  requirement  for providing for billing
adjustments  and/or  credit  losses  on its  accounts  receivable.  The  Company
provides for billing  adjustments  where  management  determines that there is a
likelihood of a significant  adjustment for disputed billings.  Criteria used by
management  to evaluate the  adequacy of the  allowance  for  doubtful  accounts
include,  among others, the  creditworthiness  of the customer,  current trends,
prior payment performance,  the age of the receivables and the Company's overall
historical  loss  experience.  Individual  accounts  are charged off against the
allowance as management deems them as uncollectible.

Insurance reserves

General   liability   estimated   accrued   liabilities  are  calculated  on  an
undiscounted  basis based on actual claim data and estimates of incurred but not
reported  claims  developed   utilizing   historical  claim  trends.   Projected
settlements  and incurred but not reported claims are estimated based on pending
claims, historical trends and data.

Workers'  compensation  annual  premiums  are  based on the  incurred  losses as
determined  at the end of the  coverage  period,  subject to minimum and maximum
premium.  Estimated  accrued  liabilities are based on the Company's  historical
loss experience and the ratio of claims paid to the Company's  historical payout
profiles.

Income taxes

Income taxes are based on income  (loss) for  financial  reporting  purposes and
reflect  a  current  tax  liability  (asset)  for the  estimated  taxes  payable
(recoverable)  in the current  year tax return and  changes in  deferred  taxes.
Deferred tax assets or liabilities are determined  based on differences  between
financial  reporting  and tax bases of assets and  liabilities  and are measured
using enacted tax laws and rates. A valuation  allowance is provided on deferred
tax assets if it is  determined  that it is more  likely than not that the asset
will not be realized.

OVERVIEW

Command Security  Corporation is a provider of uniformed  security services from
our  twenty-eight  operating  offices  in twelve  states  throughout  the United
States.  The biggest change to our business  occurred in fiscal year 2003,  with
the federalization of pre-board screening services by the U.S. Government at all
airports  located in the United  States.  This process was completed in November
2002 and resulted in the loss of significant revenues for the Company's aviation
services  division.  Although the Company partially replaced these lost revenues
during fiscal year 2003,  war in Iraq,  the SARS epidemic and a variety of other
factors have  adversely  affected the airline  industry and hence demand for our
aviation related  services,  which currently  accounts for  approximately 63% of
total revenues.  In reaction to the many challenges  facing the airline industry
currently,  we  have  had to cut  back  our  cost  base  to  attempt  to  remain
profitable, including the reduction in our sales force in the guard division. We
have  complemented  the efforts of our sales force with local branch  management
who have been incentivized to secure new business at stronger margins. We expect
that security  will  continue to be a key area of focus for the U.S.  Government
and that this will  provide  opportunities  for security  companies  such as the
Company  to bid and win  profitable  Government  contracts.  However,  we cannot
assure you as to the level of our success in this regard.

RESULTS OF OPERATIONS

Earnings

The  Company  reported a net loss for the fiscal  year ended  March 31,  2005 of
$390,255.  The loss  includes  approximately  $685,000 of costs  incurred by the
Company in connection with (i) the change in the Company's  management and Board
of Directors in August 2004,  and related legal fees and (ii) the payment by the
Company of certain  legal fees and  expenses  primarily in  connection  with the
conversion  of the  Company's  preferred  stock  into  common  stock by  certain
shareholders.

In fiscal year 2004,  the  Company  suffered a net loss of  $310,408.  The major
factors  contributing to this loss were higher workers'  compensation  insurance
costs  and  State  and  Federal  unemployment   insurance  rates.  The  workers'
compensation  costs  increased  primarily  due to a large  claim for a guard who
suffered serious  injuries working for a client in our Miami office.  The higher
unemployment   insurance   rates  were  caused  by  the  numerous   layoffs  and
terminations due to the  federalization  of pre-board  screening at all airports
located in the United States during fiscal year 2003.

                                       10
<PAGE>

Revenues

Revenues for the fiscal year ended March 31, 2005  increased by  $3,749,962,  or
4.9%,  to  $79,654,744  from  $75,904,782  in fiscal year 2004.  The increase is
primarily  due to higher  revenues of  approximately  $7,500,000 in the aviation
division from: (i) a contract with Delta Airlines which commenced in August 2003
and (ii) new airline customers at the Company's existing terminal  operations at
John F. Kennedy  International Airport in New York and Los Angeles International
Airport in  California.  The increase was partially  offset by lower revenues of
approximately  $4,200,000  due to  the  losses  in  the  prior  year  of:  (i) a
wheelchair  contract  at  Los  Angeles  International  Airport;  (ii)  temporary
security  guard strike work  associated  with a California  based grocery market
chain and (iii) an escort program transporting  international passengers without
United  States  visas  within  terminals  at  certain of the  Company's  airport
locations.

Revenues for the fiscal year ended March 31, 2004 decreased by  $18,409,733,  or
19.5%, to $75,904,782 from $94,314,515 for fiscal year 2003. The major component
of this decrease was the  federalization of pre-board  screening at all airports
located in the United  States in November  2002.  These  services  accounted for
approximately  $27,322,000  of fiscal year 2003  revenues.  Underlying  revenues
excluding these services  increased by approximately  $8,912,000,  or 13.3%, due
primarily to  additional  revenues from other  services  provided to the airline
industry and an increase of approximately  $2,000,000 in guard division services
reflecting  temporary  security guard strike work in California.  Guard division
revenues  decreased by $4,000 to  $30,216,000  from  $30,220,000  in fiscal year
2003, which reflects  termination of lower margin business,  partially offset by
the temporary higher margin security guard strike work in California which ended
in March 2004.

Gross Profit

Gross  profit for the fiscal year ended March 31, 2005  decreased by $437,143 to
$10,522,526  (13.2% of revenues) from $10,959,669 (14.4% of revenues) for fiscal
year 2004.  The decrease  was due mainly to: (i) the loss of temporary  security
guard strike work with a California  based  grocery  market  chain;  (ii) higher
state  unemployment  insurance rates as a result of layoffs of personnel in 2003
due to the federalization of aviation pre-board screening  services;  (iii) term
discounts with airline customers for prompt payment of accounts receivable; (iv)
lower gross profit  margins on aviation  services  contracts due to  competitive
pressures and (v) the loss of the wheelchair and escort program  contracts noted
above. Partially offsetting these decreases were lower workers' compensation and
vehicle related costs.

Gross profit for the fiscal year ended March 31, 2004 decreased by $8,597,987 to
$10,959,669  (14.4% of revenues) from $19,557,656 (20.7% of revenues) for fiscal
year  2003.  It is not  practical  to  ascertain  the gross  profit  performance
excluding the FAA revenues for pre-board screening, as several direct costs were
shared between FAA and non-FAA continuing services in the aviation division. The
overall  reduction  in the  profit  margin  was due to:  (i)  loss of  pre-board
screening  services in fiscal year 2003; (ii) new aviation services contracts at
lower gross profit  margins and (iii)  higher  workers  compensation  costs as a
result of a serious accident involving an employee.

The Company has an insurance  policy covering  workers'  compensation  claims in
States in which the Company performs services. Estimated accrued liabilities are
based on the Company's  historical  loss experience and the ratio of claims paid
to the Company's  historical  payout  profiles.  Charges for estimated  workers'
compensation  related  losses  incurred  and  included  in  cost of  sales  were
$3,257,608,  $3,630,004 and $2,252,921, for the years ended March 31, 2005, 2004
and 2003, respectively.

The nature of the  Company's  business  also subjects it to claims or litigation
alleging  that it is  liable  for  damages  as a result  of the  conduct  of its
employees or others.  The Company  insures against such claims and suits through
general liability policies with third-party  insurance companies.  Such policies
have limits of $5,000,000 per occurrence.  On the aviation related business,  as
of October 1, 2002, the Company  acquired a policy with a $25,000,000  limit per
occurrence. From October 17, 2003 to October 17, 2004, the Company had an excess
general  liability  insurance policy covering  aviation claims for an additional
$25,000,000  in the  aggregate.  As of October 1, 2004,  the Company  acquired a
policy with a $30,000,000 limit per occurrence. The Company retains the risk for
the first  $25,000 per  occurrence  on the  non-aviation  related  policy  which
includes airport wheelchair operations and $5,000 on the aviation related policy
except  $25,000 for damage to aircraft and $100,000 for skycap and electric cart
operations.  Estimated  accrued  liabilities  are based on specific  reserves in
connection  with existing  claims as  determined by third party risk  management
consultants and actuarial  factors and the timing of reported claims.  These are
all factored into estimated losses incurred but not yet reported to the Company.

General and Administrative Expenses

General and administrative  expenses decreased by $217,606 to $10,590,778 (13.3%
of revenues) for the fiscal year ended March 31, 2005 from $10,808,384 (14.2% of
revenues) in fiscal year 2004.  The decrease was  primarily due to lower payroll
and related  costs.  Included in general and  administrative  expenses  are: (i)
approximately  $685,000 of costs incurred by the Company in connection  with (a)
the change in the  Company's  management  and Board of Directors in August 2004,
and related  legal fees and (b) the payment by the Company of certain legal fees
and expenses  primarily  in  connection  with the  conversion  of the  Company's
preferred stock into common stock by certain  shareholders;  and (ii) a non-cash
charge for employee compensation cost in the amount of $106,400.

General and  administrative  expenses  decreased by  $2,824,996  to  $10,808,384
(14.2% of revenues) in fiscal year 2004, from $13,633,380 (14.5% of revenues) in
fiscal year 2003.  The  reduction  primarily  resulted from the removal of costs
associated  with  the  increase  in  revenues  in  fiscal  year  2002 and a cost
reduction program implemented in June 2003.

                                       11
<PAGE>

Provision for Doubtful Accounts

The  provision for doubtful  accounts  increased by $122,804 to $277,205 for the
fiscal year ended March 31, 2005 compared with $154,401 in fiscal year 2004. The
increase was primarily due to a $150,000  charge in October 2004 associated with
ATA Airlines filing for protection under Chapter 11 of the U.S.  Bankruptcy Code
and the effect of benefits  recorded in the prior year  period  associated  with
estimated recoveries on bankrupt customers' receivables.

The  provision  for doubtful  accounts  decreased by  $2,505,429  to $154,401 in
fiscal year 2004  compared to a charge of  $2,659,830  in fiscal year 2003.  The
cost for fiscal year 2003 was unusually high due mainly to aviation bankruptcies
and write-offs in balances on the closed national  accounts  division and closed
guard branches which were not considered recoverable.

The Company  periodically  evaluates the  requirement  for providing for billing
adjustments  and/or  credit  losses  on its  accounts  receivable.  The  Company
provides for billing  adjustments  where  management  determines that there is a
likelihood of a significant  adjustment for disputed billings.  Criteria used by
management  to evaluate the  adequacy of the  allowance  for  doubtful  accounts
include,  among others, the  creditworthiness  of the customer,  current trends,
prior payment performance,  the age of the receivables and the Company's overall
historical  loss  experience.  Individual  accounts  are charged off against the
allowance  as  management  deems them as  uncollectible.  It is not known if bad
debts will increase in future periods nor is it believed by management  that the
increase  during the fiscal  year ended March 31,  2005  compared  with the same
period of the prior year is necessarily indicative of a trend.

Bad Debt Recoveries

Bad debt  recoveries  decreased  for the  fiscal  year ended  March 31,  2005 by
$142,573 to $55,974 from  $198,547 in fiscal year 2004 due mainly to  recoveries
in fiscal year 2004 associated with airlines that filed for protection under the
bankruptcy laws in fiscal year 2003.

Bad debt  recoveries  increased in fiscal year 2004 by $196,601 to $198,547 from
$1,946 in fiscal year 2003. The bad debt recoveries  include $74,144 and $59,529
from the Air Canada and Hawaiian Airlines bankruptcies, respectively.

Interest Income

Interest  income,  which  principally   represents  financing  income  from  the
Company's  service  agreement  customers and interest  earned on trust funds for
potential future workers'  compensation  claims, for the fiscal year ended March
31, 2005 increased by $6,931 to $96,731 from $89,800 in fiscal year 2004.

Interest  income of $89,800  for fiscal year 2004 was  comparable  with the same
period of the prior year.

Interest Expense

Interest  expense for the fiscal year ended March 31, 2005  decreased by $56,658
to  $460,105  from  $516,763  in fiscal  year  2004.  The  decrease  principally
represents lower average outstanding  borrowings under the Company's  commercial
revolving  loan  agreement,  partially  offset by an  increase  in the  weighted
average interest rate.

Interest  expense of  $516,763  in fiscal  year 2004 was  $44,272  less than the
fiscal year 2003 charge of $561,035.  This  decrease was due  primarily to lower
average  borrowing on the line of credit and from a lowering of the base rate of
interest.

Equipment Dispositions

The  $4,848  loss on  equipment  dispositions  was due  mainly  to the sale of a
Company  vehicle to its former  Chief  Financial  Officer as provided for in his
Employment  Agreement with the Company.  Equipment  dispositions are a result of
vehicles,  office equipment and security equipment sold at prices above or below
book value.

The $12,667 gain on equipment dispositions  represents proceeds from the sale in
fiscal year 2004 of older equipment and vehicles in excess of book value.

Income Tax Benefit (Expense)

Income tax expense  decreased  from $91,543 in fiscal year 2004 to an income tax
benefit of  $267,450 in fiscal  year 2005 due to a  reduction  in the  valuation
allowance attributable primarily to net operating loss benefits. The Company has
determined based on its expectations for the future, that it is more likely than
not that future  taxable  income  will be  sufficient  to utilize  fully the net
deferred tax assets at March 31, 2005.

Management  believed that in fiscal year 2003,  the Company would be able to use
100%  of its net  operating  loss  carryover  for the  calculation  of the  2003
alternative  minimum tax; however,  only 90% of the net operating loss carryover
could be used  for this  calculation.  This,  along  with  various  state  taxes
resulted in a tax expense for fiscal year 2004 of $91,543.

                                       12
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

The Company pays employees and administrative service clients on a weekly basis,
while customers pay for services  generally  within 55 days after billing by the
Company.  In order to fund our payroll and operations,  the Company  maintains a
commercial revolving loan arrangement, currently with CIT Group/Business Credit,
Inc. ("CIT").

We believe that existing  funds,  cash generated from  operations,  and existing
sources of and access to financing are adequate to satisfy our working  capital,
capital  expenditure and debt service  requirements for the foreseeable  future.
However, in order to provide for greater financial flexibility and liquidity, we
may raise additional capital from time to time.

CIT Revolving Loan

The CIT  financing  agreement  (the  "Agreement")  has a term of 3 years  ending
December  12, 2006 and  provides  for  borrowings  in an amount up to 85% of the
Company's eligible accounts  receivable,  but in no event more than $15,000,000.
The Agreement also provides for advances  against  unbilled  revenue  (primarily
monthly invoiced  accounts) although this benefit is offset by a reserve against
all outstanding  payroll checks.  The revolving loan bears interest at the prime
rate, as defined, plus 1.25% per annum on the greater of: (i) $5,000,000 or (ii)
the average of the net  balances  owed by the Company to CIT in the loan account
at the close of each day during such month (see below).  Costs to close the loan
totaled  $279,963  and are  being  amortized  over the  three  year  life of the
Agreement.

At  March  31,  2005,   the  Company  had  borrowed   $4,522,355,   representing
approximately 61% of its maximum  borrowing  capacity based on the definition of
"eligible accounts receivable" under the terms of the Agreement. However, as the
business  grows  and  produces  new   receivables,   up  to  $10,477,645   could
additionally be available to borrow under the Agreement.

The Company relies on its revolving loan from CIT, which contains a fixed charge
covenant and various other financial and non-financial covenants. If the Company
breaches a  covenant,  CIT has the right to call the line  unless CIT waives the
breach.  GCM  Security  Partners  LLC's  ("GCM")  acquisition  of the  Company's
securities  owned by  Reliance  Security  Group plc  ("Reliance")  resulted in a
violation of a covenant restricting Reliance from selling such securities absent
CIT's consent,  and may be deemed a "change in control" of the Company requiring
CIT's  consent,  the  absence  of which may also be deemed to violate a covenant
under the Agreement. Further, the Agreement included covenants requiring William
C. Vassell, formerly the Chairman,  President and Chief Executive Officer of the
Company, to maintain ownership of at least 500,000 shares of voting common stock
of the Company and to remain as  Chairman  of the Board of  Directors  and Chief
Executive  Officer of the Company or actively  engaged in the  management of the
Company.  The  resignation  by Mr.  Vassell from all  positions he held with the
Company on  October  7, 2004 and his  agreement  to sell  400,000  shares of the
Company's common stock may also be deemed to violate the foregoing covenant.

In  September  2004,  the Company  received a Notice of  Default/Reservation  of
Rights letter from its lender CIT (the "Letter"). The Letter notified management
that the Company was not in  compliance  with the fixed charge  covenant for the
month of July 2004 and was also in violation of a  non-financial  covenant since
Mr. Vassell was no longer Chairman of the Board of Directors and Chief Executive
Officer of the  Company.  Further,  the Letter  advised that CIT was not at this
time  terminating  the  Agreement but was notifying  management  that:  (i) such
defaults and/or events of defaults (the "Defaults") exist, (ii) CIT at this time
did not intend to waive the  Defaults,  (iii) the Company  inform CIT of actions
taken or to be taken to remedy the Defaults,  (iv) effective September 1, 2004 a
default rate of interest of 2% over the bank rate of interest, as defined, would
be charged on all  obligations  under the  Agreement  and (v) all future  loans,
advances and other  extensions  of credit under the  Agreement  will be at CIT's
sole discretion in accordance with the provisions thereof.

On February 2, 2005,  the Company  received a Waiver and  Amendment  letter (the
"Waiver")  from CIT.  The  Waiver  confirms  that (i) the  Company's  previously
reported failure to comply with a fixed charge coverage ratio and a non-financed
covenant  related to the change in management and stock ownership of the Company
shall not constitute  defaults  and/or events of default under the Agreement and
(ii) CIT  waives  any and all  rights  they may  have to  accelerate  any of the
obligations  and  exercise  any  other  remedies  against  the  Company  or  the
collateral as a result thereof.

In addition,  CIT (i) rescinded and revoked the Letter  effective as of February
1, 2005 and (ii)  confirmed  that they will cease  charging  the default rate of
interest effective as of January 1, 2005.

Cash Flows

The following table summarizes our cash flow activity for the fiscal years ended
March 31, 2005, 2004 and 2003:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                       2005                    2004                       2003
                                                                       ----                    ----                       ----
-------------------------------------------------------- --------------------------- ------------------------ ----------------------
<S>                                                              <C>                      <C>                       <C>
Net cash provided by operating activities                        $ 8,042,604              $  2,169,247              $ 6,633,858
-------------------------------------------------------- --------------------------- ------------------------ ----------------------
Net cash provided by (used in) investing activities                   30,091                    31,320                  (60,972)
-------------------------------------------------------- --------------------------- ------------------------ ----------------------
Net cash used in financing activities                             (5,571,946)               (2,190,266)              (6,572,886)
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       13
<PAGE>

Investing

The Company finances vehicle purchases  typically over three years and insurance
through short-term  borrowings.  The Company has no present material commitments
for capital expenditures.

Financing

During the fiscal year ended March 31, 2005,  the Company  issued 260,000 shares
of common  stock upon the  exercise  of warrants  to  purchase  common  stock at
exercise prices ranging from $.75 to $1.03125 per share.  The proceeds from such
exercises  of $237,887  were  included in common  stock and  additional  paid-in
capital at March 31, 2005.

Working Capital

Working capital increased by $1,129,993 to $3,679,071 as of March 31, 2005, from
$2,549,078 as of March 31, 2004  primarily due to airline  customer  prepayments
received in advance of services to be performed at applicable airport locations.

The Company  experienced checks issued in advance of deposits (defined as checks
drawn in advance of future deposits) of $495,249 as of March 31, 2005,  compared
with $566,611 at March 31, 2004. Cash balances and book overdrafts can fluctuate
materially from day to day depending on such factors as  collections,  timing of
billing and payroll dates,  and are covered via advances from the revolving loan
as checks are presented for payment.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet  arrangements that are currently
material  or  reasonably  likely to be  material  to our  financial  position or
results of operations.

Contractual Obligations

The impact that our contractual obligations as of March 31, 2005 are expected to
have on our liquidity and cash flow in future periods is as follows:

<TABLE>
<CAPTION>
                                                                           Payments Due by Period
                                                ---------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------
                                        Total        Less than 1 Year         1-3 Years          3-5 Years       More than 5 Years
                                        -----        ----------------         ---------          ---------       -----------------
-------------------------------- ---------------- ---------------------- ------------------ ------------------ -------------------
<S>                                   <C>                     <C>               <C>                 <C>                 <C>
Long-term debt obligations            $   67,765              $  26,699         $   41,066          $      --           $       --
-------------------------------- ---------------- ---------------------- ------------------ ------------------ -------------------
Capital lease obligations                 67,538                 27,475             40,063                 --                  --
-------------------------------- ---------------- ---------------------- ------------------ ------------------ -------------------
Operating lease obligations            2,899,772                785,821          1,178,284            569,347             366,320
-------------------------------- ---------------- ---------------------- ------------------ ------------------ -------------------
Purchase obligations (1)                 516,333                 91,322            182,644            182,644              59,723
-------------------------------- ---------------- ---------------------- ------------------ ------------------ -------------------
Total                                 $3,551,408              $ 931,317         $1,442,057          $ 751,991           $ 426,043
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)   Purchase  obligations  include an agreement to purchase  uniform  cleaning
      services  that is legally  binding on the Company and that  specifies  all
      significant terms,  including fixed or minimum quantities to be purchased;
      fixed, minimum or variable price provisions; and the approximate timing of
      the transaction.

OUTLOOK

This section,  Management's Discussion and Analysis of Results of Operations and
Financial  Condition,  contains a number of forward-looking  statements,  all of
which are based upon current expectations.  Actual results may differ materially
and are qualified by the section below entitled "Forward Looking Statements".

Financial Results

Future  revenue will be largely  dependent  upon the  Company's  ability to gain
additional  revenues in the guard and aviation services  divisions at acceptable
margins while minimizing  terminations of existing clients.  The revenues of the
guard  division have  stabilized  over recent months after a reduction  over the
past few years as  contracts  with  unacceptable  margins  were  cancelled.  Our
current focus is on increasing  revenues while branch  managers work to sell new
business and retain  profitable  contracts.  The airline  industry  continues to
increase  its demand for services  provided by the  Company.  During the current
quarter,  the  Company's  aviation  services  division  has been  successful  in
obtaining  two new  service  contracts,  one of which  represents  a new airport
location for such division.

The Company is continuing  its attempts to secure  contracts from the Department
of Homeland Security and other government departments. The Company believes this
to be an area of opportunity over the next few years, given the heightened focus
on security in the United States.

                                       14
<PAGE>

Gross profit  margins  decreased  during the fiscal year ended March 31, 2005 to
13.2% of revenues  compared with an average gross profit margin of 14.4% for the
fiscal  year ended March 31, 2004  primarily  due to: (i) the loss of  temporary
security guard strike work with a California  based grocery  market chain;  (ii)
higher  state  unemployment  insurance  rates as a result of layoffs  due to the
federalization  of  pre-board  screening  services;  (iii) term  discounts  with
airline  customers for prompt payment of accounts  receivable;  (iv) lower gross
profit margins on aviation services  contracts due to competitive  pressures and
(v) lost  contracts  for a  wheelchair  operation  at Los Angeles  International
Airport and an escort  program  transporting  international  passengers  without
United  States  visas  within  terminals  at  certain of the  Company's  airport
locations.  Management  expects  gross  profit  to  remain  under  pressure  due
primarily to continued  price  competition.  However,  management  expects these
effects to be moderated by continued  operational  efficiencies  resulting  from
better  management of the Company's cost  structures  and workers'  compensation
experience ratings.

A cost  reduction  program was  instituted  in October 2004 which is expected to
reduce the  Company's  general and  administrative  expenses in future  periods.
Additional  cost  reduction   opportunities   are  being  pursued  as  they  are
determined.   However,  costs  associated  with  the  change  in  the  Company's
management and Board of Directors in August 2004,  including the  resignation of
the Company's former Chief Executive  Officer,  and related legal expenses;  and
the  payment by the  Company of certain  legal fees and  expenses  primarily  in
connection  with the  conversion  of the Company's  preferred  stock into common
stock by certain shareholders had an unfavorable impact on the Company's results
of operations for the fiscal year ended March 31, 2005.

The  aviation  division  represents  approximately  63% of the  Company's  total
revenues and Delta,  at annual  billings of  approximately  $12,604,000,  is the
largest customer of the aviation  division at approximately  25% of the aviation
division's  and  16% of  the  Company's  total  revenues.  Due  to the  existing
limitations  under  the  CIT  credit  line,  discussed  below,  the  Company  is
restricted from borrowing against Delta's accounts receivable. In the event of a
bankruptcy  by Delta,  Northwest  or another  airline  customer,  the  Company's
earnings  could be adversely  affected to the extent of the accounts  receivable
with such  airline(s),  as well as from lost future  revenues if such airline(s)
cease operations.  Liquidity would also be affected, but to a limited extent due
to existing limitations under the CIT credit line.

The  Company  is  concerned  about the  possibility  of Delta  and/or  Northwest
Airlines  filing  for  bankruptcy,  and to  reduce  exposure  to such  potential
bankruptcy  filings,  management proposed and Delta accepted during October 2004
an amendment to their contract whereby Delta shall pay the Company by electronic
funds transfer in advance without invoice on the last day of the month preceding
the month in which services will be performed at applicable  airport  locations,
as defined.  Such services with Delta are subject to a 3% term discount.  In the
event of a Delta and/or Northwest Airlines bankruptcy,  payments received in the
90 days prior to Delta and/or  Northwest's  filing for bankruptcy may be alleged
preferential  payments under the federal  bankruptcy rules and a demand could be
made on the Company to return some or all of the  payments  made by Delta and/or
Northwest within such 90-day period.  CIT has established  specific reserves for
all Delta, US Air and ATA Airlines accounts receivable; United Airlines accounts
receivable  in excess of $350,000;  Northwest  Airlines  accounts  receivable in
excess of $550,000,  $300,000  effective in June 2005; and an additional general
airline  reserve of  $1,000,000  thereby  reducing  the  Company's  current cash
availability  for  borrowing  by  approximately  $1,400,000.  As of the close of
business,  June 24, 2005,  the Company's  cash  availability  was  approximately
$3,100,000  which  is  believed  to be  sufficient  to meet  its  needs  for the
foreseeable future barring further increased reserves imposed by CIT.

We believe that existing  funds,  cash generated from  operations,  and existing
sources of and access to financing are adequate to satisfy our working  capital,
capital  expenditure and debt service  requirements for the foreseeable  future.
However,  in order to provide for greater  financial  flexibility and liquidity,
management is currently  evaluating  potential  additional sources of capital to
further strengthen the Company's balance sheet and cash availability.

Reliance's  sale of its securities in the Company makes the Company  eligible to
pursue  certain  federal  privatization  contracts for the provision of security
services  in the airline  industry.  No such  contracts  have,  to  management's
knowledge, been bid to date.

Forward Looking Statements

Certain of the statements contained in this Management's Discussion and Analysis
of Financial Condition and Results of Operations section of the Form 10-K and in
particular   those  under  the  heading   "Outlook,"   contain   forward-looking
statements.  These are based on current expectations,  estimates,  forecasts and
projections  about the  industry  in which the  Company  operates,  management's
beliefs, and assumptions made by management.  In addition, other written or oral
statements  that  constitute  forward-looking  statements  may be  made by or on
behalf of the Company.  While management believes these statements are accurate,
the Company's business is dependent upon general economic conditions and various
conditions  specific to the  industries  in which the Company  operates.  Future
trends and these factors could cause actual  results to differ  materially  from
the  forward-looking  statements that have been made.  These  statements are not
guarantees of future  performance and involve certain risks,  uncertainties  and
assumptions  that are difficult to predict.  Therefore,  the actual outcomes and
results  may  differ  materially  from what is  expressed  or  forecast  in such
forward-looking  statements.  The Company  undertakes  no  obligation  to update
publicly any forward-looking statements, whether as a result of new information,
future events or otherwise.

As provided for under the Private Securities  Litigation Reform Act of 1995, the
Company  wishes  to  caution  shareholders  and  investors  that  the  following
important  factors,  among others,  could cause the Company's actual results and
experience  to  differ   materially  from  the  anticipated   results  or  other
expectations  expressed  in the  Company's  forward-looking  statements  in this
report.

                                       15
<PAGE>

Airline Industry Concerns

Several of the Company's aviation clients filed for bankruptcy protection during
fiscal 2005 and 2003. The aviation  industry  continues to struggle with various
challenges  including  the cost of security and higher fuel  prices.  Additional
bankruptcy  filings by aviation and  non-aviation  clients could have a material
adverse impact on the Company's  liquidity,  results of operations and financial
condition. The possibility of bankruptcy filings by Delta and Northwest Airlines
remain.  Certain  consequences  of  such  filings  are  discussed  above  in the
"Outlook" section.

Regulation

The Company's  management assumes that the current regulation and federalization
of  pre-board  screening  services  provided by the Company will not be expanded
into other  areas such as general  security  and  baggage  handling  at aviation
facilities.  Such increased  regulation or federalization  would have a material
adverse impact on the Company's results of operations and financial condition.

Competition

The Company's  assumptions  regarding  projected results depend largely upon the
Company's ability to retain substantially all of its current clients.  Retention
is  affected  by  several  factors  including  but not  limited  to,  regulatory
limitations,  the quality of the services  provided by the Company,  the quality
and  pricing of  comparable  services  offered  by  competitors,  continuity  of
management  and  non-management  personnel.  There are  several  major  national
competitors with resources  greater than those of the Company which,  therefore,
have the ability to provide service, cost and compensation incentives to clients
and employees which could result in a loss of such clients and/or employees.

Cost Management

The Company's  ability to realize  expectations  will be largely  dependent upon
management and its ability to maintain margins, which in turn will be determined
in large part by management's  control over costs and increased  pressure on its
vendors to cut their  costs.  To a  significant  extent,  certain  costs are not
within the control of management  and margins may be adversely  affected by such
items as litigation  expenses,  fees incurred in connection  with  extraordinary
business transactions,  inflation,  labor unrest,  increased payroll and related
costs.

Collection of Accounts Receivable

Management  has no definite basis to believe that default in payment of accounts
receivable  by  the  Company's   aviation  and  security   guard   customers  or
administrative  service clients will occur.  However,  the aviation  industry in
general and Delta and Northwest Airlines,  in particular,  pose a high degree of
risk. Any such default by one or more  significant  clients due to bankruptcy or
otherwise,  could have a material  adverse  impact on the  Company's  liquidity,
results of operations and financial condition.

Catastrophic Events

The Company is exposed to potential claims for catastrophic events, such as acts
of terrorism,  or based upon  allegations that the Company failed to perform its
services in accordance  with  contractual or industry  standards.  The Company's
insurance   coverage  limits  are  currently   $5,000,000  and  $30,000,000  per
occurrence for guard and aviation  services,  respectively.  The Company retains
the risk for the first $25,000 per occurrence on the non-aviation related policy
which includes airport wheelchair  operations and $5,000 on the aviation related
policy  (except  $25,000  for damage to  aircraft  and  $100,000  for skycap and
electric cart operations).  The Terrorism Risk Insurance Act of 2002 established
a program within the United States  Department of the Treasury,  under which the
federal government shares,  with the insurance  industry,  the risk of loss from
future  "acts of  terrorism,"  as  defined  in the  Act.  The  Company  does not
currently maintain  additional  insurance coverage for losses arising from "acts
of terrorism".

These are  representative  of the factors  that could  affect the outcome of the
forward-looking  statements.  In addition,  such statements could be affected by
general  industry  and market  conditions  and growth  rates,  general  economic
conditions,  including interest rate fluctuations and other factors.  Additional
detailed  information  concerning  a number of factors  that could cause  actual
results to differ  materially from the information  contained  herein is readily
available in the Company's most recent  reports on Forms 10-K,  10-Q and 8-K and
any amendments thereto (all as filed with the Securities and Exchange Commission
from time to time).

ITEM  7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

During  the  fiscal  year  ended  March 31,  2005,  the  Company  did not hold a
portfolio of securities instruments for either trading or for other purposes.

The Company is exposed to market  risk in  connection  with  changes in interest
rates,  primarily in connection  with  outstanding  balances under its revolving
line of credit with CIT.  Based on the Company's  average  outstanding  balances
during the fiscal year ended March 31,  2005,  a 1% change in the prime  lending
rate would impact the Company's  financial position and results of operations by
approximately $44,000 over the next fiscal year.

                                       16
<PAGE>

ITEM  8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by this item is incorporated herein by reference to the
financial statements and schedule listed in Item 15 (a)(1) and (a)(2) of Part IV
of this Form 10-K Annual Report.

ITEM  9.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
      FINANCIAL DISCLOSURE

None.

ITEM  9a. CONTROLS AND PROCEDURES

The Company  maintains  "disclosure  controls and  procedures",  as such term is
defined  under  Exchange  Act Rule  13a-15(e),  that are designed to ensure that
information  required to be disclosed in the  Company's  Exchange Act reports is
recorded, processed,  summarized, and reported within the time periods specified
in the SEC's  rules and forms,  and that such  information  is  accumulated  and
communicated  to the Company's  management,  including its Chairman of the Board
and Chief Financial Officer, as appropriate, to allow timely decisions regarding
required disclosures.

We believe that a control  system,  no matter how well  designed  and  operated,
cannot provide absolute  assurance that the objectives of the control system are
met, and no  evaluation  of controls  can provide  absolute  assurance  that all
control  issues  and  instances  of fraud,  if any,  within a company  have been
detected.  Our  disclosure  controls  and  procedures  are  designed  to provide
reasonable assurance of achieving their objectives and our Chairman of the Board
and our Chief Financial Officer have concluded that such controls and procedures
are effective at the reasonable assurance level.

An evaluation was performed under the supervision and with the  participation of
management,  including  the  Company's  Chairman  of the  Board  and  its  Chief
Financial  Officer,  of the  effectiveness  of the design and  operation  of the
Company's  disclosure  controls and  procedures.  Based on that  evaluation  and
subject to the  foregoing,  the  Chairman  of the Board and the Chief  Financial
Officer concluded that our disclosure  controls and procedures were effective as
of March 31, 2005. There have been no changes in the Company's  internal control
over financial  reporting that occurred during the fourth quarter of fiscal 2005
that has materially affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting.

                                    PART III

ITEM  10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The names of the  executive  officers of the Company and their ages,  titles and
biographies  as of the date hereof is set forth under  "Directors  and Executive
Officers of the  Registrant" in the Proxy  Statement for its 2005 Annual Meeting
of Stockholders, which information is incorporated herein by reference.

ITEM  11. EXECUTIVE COMPENSATION

Information regarding the Company's  compensation of its named executives is set
forth under "Executive  Compensation" in the Proxy Statement for its 2005 Annual
Meeting of Stockholders, which information is incorporated herein by reference.

Information  regarding the Company's  compensation of its directors is set forth
under  "Director  Compensation  and  Stock  Ownership  Guidelines"  in the Proxy
Statement for its 2005 Annual  Meeting of  Stockholders,  which  information  is
incorporated herein by reference.

ITEM  12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information regarding security ownership of certain beneficial owners, directors
and executive  officers is set forth under  "Common  Stock  Ownership of Certain
Beneficial  Owners and  Management"  in the Proxy  Statement for its 2005 Annual
Meeting of Stockholders, which information is incorporated herein by reference.

Information  regarding the Company's equity compensation  plans,  including both
stockholder  approved plans and non-stockholder  approved plans, is set forth in
the  section   entitled   "Executive   Compensation-Equity   Compensation   Plan
Information" in the Proxy Statement for its 2005 Annual Meeting of Stockholders,
which information is incorporated herein by reference.

ITEM  13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information  regarding  certain  relationships  and related  transactions is set
forth  under  "Certain  Relationships  and  Related  Transactions"  in the Proxy
Statement for its 2005 Annual  Meeting of  Stockholders,  which  information  is
incorporated herein by reference.

                                       17
<PAGE>

ITEM  14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information  regarding  certain principal auditor fees and services is set forth
under  "Principal  Accountant  Fees and Services" in the Proxy Statement for its
2005 Annual Meeting of Stockholders, which information is incorporated herein by
reference.

                                     PART IV

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

(a)


(1)  Financial Statements: Page Number From
                                                            This Form 10-K
                                                            --------------

     Independent auditor's report...........................    F-1

     Balance Sheets - March 31, 2005 and 2004...............    F-2

     Statements of Operations - years ended.................    F-3
     March 31, 2005, 2004 and 2003

     Statements of changes in stockholders' equity..........    F-4
     years ended March 31, 2005, 2004 and 2003

     Statements of cash flows - years ended.................    F-5 - F-6
     March 31, 2005, 2004 and 2003

     Notes to Financial Statements..........................    F-7 - F-19

(2)  Financial Statement Schedules:

     Schedule II - Valuation and Qualifying Accounts........    F-20

     Schedules  not  listed  above have been  omitted as either not  applicable,
     immaterial or disclosed in the Financial Statements or notes thereto.

(3)  Exhibits:

     A list of  exhibits  filed or  furnished  with this report on Form 10-K (or
     incorporated by reference to exhibits  previously filed or furnished by the
     Company) is provided in the Exhibit Index on page 20 of this report.


(b)  Reports on Form 8-K

A Form 8-K was  furnished  on  February  4,  2005,  under  Items  8.01 and 9.01,
relating to the Waiver and Amendment  letter to CIT  Group/Business  Credit Inc.
Financing Agreement dated February 2, 2005.

A Form 8-K was  furnished  on  February  18,  2005,  under  Items 2.02 and 9.01,
relating to financial results for the third quarter ended December 31, 2004.

                                       18
<PAGE>

                                   SIGNATURES

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

COMMAND SECURITY CORPORATION


Date: June 29, 2005

                        By:  /s/ Barry I. Regenstein
                             -----------------------------
                             Barry I. Regenstein
                             Executive Vice President and
                             Chief Operating 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 an on the dates indicated:

    Signature                         Title                         Date
    ---------                         -----                         ----

/s/ Bruce Galloway             Chairman of the Board            June 29, 2005
----------------------
Bruce Galloway


/s/ Barry I. Regenstein        Chief Financial Officer          June 29, 2005
----------------------
Barry I. Regenstein


/s/ Martin C. Blake, Jr.       Director                         June 29, 2005
----------------------
Martin C. Blake, Jr.


/s/ Robert S. Ellin            Director                         June 29, 2005
----------------------
Robert S. Ellin


/s/ Peter Kikis                Director                         June 29, 2005
----------------------
Peter Kikis


/s/ Thomas Kikis               Director                         June 29, 2005
----------------------
Thomas Kikis


/s/ Martin Wade, III           Director                         June 29, 2005
----------------------
Martin Wade, III

                                       19
<PAGE>

                          COMMAND SECURITY CORPORATION
                                  EXHIBIT INDEX

<TABLE>
<CAPTION>

Exhibit
Number                                                                        Exhibit Description
---------------------------------------------------------------------------------------------------------------------------
<S>     <C>                                                   <C>
3.1    Amended & Restated Articles                            Incorporated by reference to Exhibit of Incorporation 3.3 of
                                                              the form 10-K for the fiscal year ended March 31, 1993 (the
                                                              "1993 10-K").

3.2    By-Laws
                                                              Incorporated by reference to Exhibit 3.3 of the Form 10-K
                                                              for the fiscal year ended March 31, 1991 (the "1991 10-K").

3.3    Amendments to By-Laws                                  Incorporated by reference to Exhibit 3.3 of the Form 10-K/A
                                                              for the fiscal year ended March 31, 1994 (the "1994 10-K/A").

3.4    Certificate of Amendment of                            Incorporated by reference to Exhibit 3.4 of the Eighth
       Certificate of Incorporation                           Amendment to the Registration Statement filed on Form
                                                              S-1, File No. 33-75336 (the "S-1").

4.1    Specimen Stock Certificate                             Incorporated by reference to Exhibit 4.A to Amendment #1 to
                                                              Registrant's Registration Statement on Form S-18,
                                                              file number 33, 35007-NY (the "S-18").

4.2    Specimen Series A Preferred Stock Certificate          Incorporated by reference to Exhibit 4.2 of the Third
                                                              Amendment to the S-1.

10.1   Purchase and Sale Agreement dated                      Incorporated by reference to Exhibit 2.1
       February 24, 1996,  for the  acquisition               of the Form 8-K filed March 23, 1996.
       of United Security Group Inc.

10.2   CIT Group/Business Credit Inc. Financing               Incorporated by reference to Exhibit 10.41
       Agreement dated December 12, 2003                      of the Form 10-K for the fiscal year ended
                                                              March   31,   2004 filed on July 14, 2004.

11     Computation of Income Per                              Incorporated by reference to Note 11
       Share of Common Stock                                  of the Financial Statements.

14     Command Code of Ethics                                 Incorporated by reference to Exhibit 14
                                                              of the Form 10-K for the fiscal year ended
                                                              March 31, 2004 filed on July 14, 2004.

31     Certifications Pursuant to                             Exhibit 31 attached hereto.
       Rule 13(a)-14(a)/15(d)-14(a)

32     Section 1350 Certifications                            Exhibit 32 attached hereto.

99.1   Reliance Warrant                                       Incorporated by reference to Exhibit  99.14
                                                              of the Form 8-K filed September 27, 2000.

99.2   Registration Rights Agreement                          Incorporated by reference to Exhibit 99.22
                                                              of the Form 8-K filed September 27, 2000.

99.3   Audit Committee of the Board                           Incorporated by reference to Exhibit 99.23
       of Directors Charter and Powers                        of the Form 10-K for the fiscal year ended
                                                              March 31, 2001 filed on July 3, 2001.

99.4   2000 Stock Option Plan                                 Incorporated by reference to Exhibit 99.25
                                                              of the Form 10-K for the fiscal year ended
                                                              March 31, 2001 filed on July 3, 2001.

99.5   Blake Warrant                                          Incorporated by reference to Exhibit 99.27
                                                              of the Form 10-K for the fiscal year ended
                                                              March 31, 2001 filed on July 3, 2001.

99.6   Gordon Robinett Employment Agreement                   Incorporated by reference to Exhibit 99.31
                                                              of the Form 10-K for the fiscal year ended
                                                              March 31, 2004 filed on July 14, 2004.

99.7   Press Release dated June 29, 2005                      Exhibit 99.7 attached hereto.
</TABLE>

                                       20

<PAGE>

Independent Auditor's Report
on the Financial Statements

To the Board of Directors
and Stockholders of
Command Security Corporation

We have audited the accompanying  balance sheets of Command Security Corporation
as of March 31, 2005 and 2004, and the related statements of operations, changes
in stockholders' equity and cash flows for each of the three years in the period
ended March 31, 2005. Our audits also included the financial  statement schedule
II - Valuation and  Qualifying  Accounts.  These  financial  statements  and the
schedule are the responsibility of the Company's management.  Our responsibility
is to express an opinion on these financial statements and the schedule based on
our audits.

We conducted our audits in accordance  with the standards of the Public  Company
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 financial  statements  referred to above present fairly, in
all material respects, the financial position of Command Security Corporation as
of March 31, 2005 and 2004, and the results of its operations and its cash flows
for each of the three years in the period  ended March 31, 2005,  in  conformity
with accounting  principles  generally accepted in the United States of America.
Also, in our opinion, the related financial statement schedule,  when considered
in relation to the basic financial statements taken as a whole, presents fairly,
in all material respects, the information set forth therein.



                           /s/ D'Arcangelo & Co., LLP




June 27, 2005
Poughkeepsie, New York


                                       21
<PAGE>

Command Security Corporation
Balance Sheets
March 31, 2005 and 2004

<TABLE>
<CAPTION>
                                                                                                   2005                    2004
                                     ASSETS
<S>                                                                                         <C>                    <C>
Current assets:
 Cash and cash equivalents                                                                  $ 2,511,050            $    10,301
 Accounts receivable from guard service customers, less allowance for
   doubtful accounts of $275,223 and $282,822, respectively                                  12,452,428             15,471,135
 Accounts receivable from administrative service client customers, less
   allowance for doubtful accounts of $26,242 and $79,043, respectively                         623,529                607,115
 Accounts receivable disputed, net allowance for billing adjustment of
   $965,373                                                                                          --              1,965,006
 Prepaid expenses                                                                               788,045                936,454
 Other assets                                                                                 2,627,540                369,058
                                                                                            -----------            -----------
   Total current assets                                                                      19,002,592             19,359,069

Furniture and equipment at cost, net                                                            427,673                645,592
Intangible assets, net                                                                          174,896                270,217
Restricted cash                                                                                  72,010                107,676
Other assets                                                                                    560,255              1,544,855
                                                                                            -----------            -----------

    Total assets                                                                            $20,237,426            $21,927,409
                                                                                            ===========            ===========


                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
 Checks issued in advance of deposits                                                       $   495,249            $   566,611
 Current maturities of long-term debt                                                            26,699                361,540
 Current maturities of obligations under capital leases                                          27,475                 66,270
 Short-term borrowings                                                                        4,811,774              9,091,628
 Accounts payable                                                                               399,374                771,042
 Due to service companies                                                                       160,115                248,205
 Preferred dividends payable                                                                         --                 40,674
 Accrued expenses and other liabilities                                                       9,402,835              5,664,021
                                                                                            -----------            -----------
   Total current liabilities                                                                 15,323,521             16,809,991

Insurance reserves                                                                              423,449                402,290
Long-term debt, due after one year                                                               41,066                153,882
Obligations under capital leases, due after one year                                             40,063                 67,538
                                                                                            -----------            -----------
   Total liabilities                                                                         15,828,099             17,433,701
                                                                                            -----------            -----------

Commitments and contingencies (Notes 16, 17 and 18)

Stockholders' equity:
 Preferred stock, convertible Series A,
   $.0001 par value per share, 1,000,000
   shares authorized, 12,325 shares
   issued and outstanding in 2004, liquidation value of $2,033,682                                   --              2,033,682
 Common stock, $.0001 par value per share, 20,000,000 shares
   authorized, 7,779,878 and 6,287,343 shares issued and
   outstanding, respectively                                                                        778                    629
 Additional paid-in capital                                                                  10,348,582              8,009,175
 Accumulated deficit                                                                         (5,940,033)            (5,549,778)
                                                                                            -----------            -----------
   Total stockholders' equity                                                                 4,409,327              4,493,708
                                                                                            -----------            -----------

    Total liabilities and stockholders' equity                                              $20,237,426            $21,927,409
                                                                                            ===========            ===========
</TABLE>

See accompanying notes and auditor's report

                                       F-2
<PAGE>


Command Security Corporation
Statements of Operations
Years Ended March 31, 2005, 2004 and 2003

<TABLE>
<CAPTION>
                                                                               2005                2004                2003

<S>                                                                      <C>                 <C>                 <C>
Revenues                                                                $79,654,744         $75,904,782         $94,314,515
Cost of revenues                                                         69,132,218          64,945,113          74,756,859
                                                                        -----------         -----------         -----------

    Gross profit                                                         10,522,526          10,959,669          19,557,656
                                                                        -----------         -----------         -----------
Operating expenses
   General and administrative expenses                                   10,590,778          10,808,384          13,633,380
   Provision for doubtful accounts and notes                                277,205             154,401           2,659,830
   Bad debt recoveries                                                      (55,974)           (198,547)             (1,946)
                                                                        -----------         -----------         -----------
                                                                         10,812,009          10,764,238          16,291,264
                                                                        -----------         -----------         -----------

    Operating income (loss)                                                (289,483)            195,431           3,266,392
                                                                        -----------         -----------         -----------

Other income (expenses)
   Interest income                                                           96,731              89,800              89,499
   Interest expense                                                        (460,105)           (516,763)           (561,035)
   (Loss)gain on equipment dispositions                                      (4,848)             12,667              17,203
                                                                        -----------         -----------         -----------

                                                                           (368,222)           (414,296)           (454,333)
                                                                        -----------         -----------         -----------
    Income (loss) before income
     tax benefit(expense)                                                  (657,705)           (218,865)          2,812,059

Income tax benefit (expense)                                                267,450             (91,543)         (1,485,323)
                                                                        -----------         -----------         -----------

    Net income (loss)                                                      (390,255)           (310,408)          1,326,736

Preferred stock dividends                                                   (38,413)           (162,695)           (447,416)
                                                                        -----------         -----------         -----------

Net income (loss) applicable to common stockholders                     $  (428,668)        $  (473,103)        $   879,320
                                                                        ===========         ===========         ===========


Income (loss) per share of common stock
    Basic                                                               $      (.06)        $      (.08)        $       .14
                                                                        ===========         ===========         ===========
    Diluted                                                             $      n/a          $      (.08)        $       .14
                                                                        ===========         ===========         ===========

Weighted average number of common
 shares outstanding
    Basic                                                                 7,302,738           6,287,343           6,287,343
                                                                        ===========         ===========         ===========
    Diluted                                                               7,862,786           6,390,525           6,358,342
                                                                        ===========         ===========         ===========
</TABLE>

See accompanying notes and auditor's report

                                       F-3
<PAGE>

Command Security Corporation
Statements of Changes in Stockholders' Equity
Years Ended March 31, 2005, 2004 and 2003

<TABLE>
<CAPTION>
                                     Preferred           Common          Paid-In          Accumulated
                                       Stock             Stock           Capital            Deficit                Total
<S>                                  <C>                <C>             <C>               <C>                    <C>
Balance at March 31, 2002            $2,033,682         $    629        $8,619,286        $(6,566,106)           $4,087,491

Preferred stock dividends                                                 (447,416)                                (447,416)

Net income                                                                                  1,326,736             1,326,736
                                     ----------         --------       -----------        -----------            ----------

Balance at March 31, 2003             2,033,682              629         8,171,870         (5,239,370)            4,966,811

Preferred stock dividends                                                 (162,695)                                (162,695)

Net loss                                                                                     (310,408)             (310,408)
                                     ----------         --------       -----------        -----------            ----------

Balance at March 31, 2004             2,033,682              629         8,009,175         (5,549,778)            4,493,708

Preferred stock dividends                                                  (38,413)                                 (38,413)

Preferred stock conversion           (2,033,682)             123         2,033,559                                       --

Warrants exercised                                            26           237,861                                  237,887

Employee stock compensation                                                106,400                                  106,400

Net loss                                                                                     (390,255)             (390,255)
                                     ----------         --------       -----------        -----------            ----------

Balance at March 31, 2005            $       --         $    778       $10,348,582        $(5,940,033)           $4,409,327
                                     ==========         ========       ===========        ===========            ==========
</TABLE>

See accompanying notes and auditor's report

                                       F-4
<PAGE>


Command Security Corporation
Statements of Cash Flows
Years Ended March 31, 2005, 2004 and 2003


                INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

<TABLE>
<CAPTION>
                                                                               2005                2004                2003
<S>                                                                     <C>                 <C>                  <C>
OPERATING ACTIVITIES
   Net income (loss)                                                    $  (390,255)        $  (310,408)         $1,326,736
   Adjustments to reconcile net income (loss) to net
    cash provided by operating activities:
    Depreciation and amortization                                           396,471             477,314             612,591
    Provision for doubtful accounts and
      notes receivable, net of recoveries                                   221,231             (44,146)          2,657,884
    Loss (gain) on equipment dispositions                                     4,848             (12,667)            (17,203)
    Deferred income taxes                                                  (267,450)                 --           1,300,000
    Insurance reserves                                                      (21,805)             (7,182)            124,249
    Changes in operating assets and liabilities:
      Accounts receivable                                                 4,746,068            (471,715)          1,744,185
      Prepaid expenses                                                    1,073,142             794,950             347,572
      Other receivables                                                  (2,313,596)           (843,583)           (170,765)
      Other assets                                                        1,271,930             209,234            (103,848)
      Accounts payable and other current liabilities                      3,410,110           2,317,340          (1,210,844)
      Due to administrative service clients                                 (88,090)             60,110              23,301
                                                                        -----------         -----------         -----------
        Net cash provided by operating activities                         8,042,604           2,169,247           6,633,858
                                                                        -----------         -----------         -----------


INVESTING ACTIVITIES
   Purchases of equipment                                                   (61,659)            (47,078)           (139,185)
   Purchase of intangible assets                                                 --                  --              (1,975)
   Proceeds from equipment dispositions                                      20,850              20,164              53,323
   Issuance of notes by administrative service client                            --                  --             (30,500)
   Principal collections on notes receivable                                 70,900              58,234              57,365
                                                                        -----------         -----------         -----------
    Net cash provided by (used) in investing activities                      30,091              31,320             (60,972)
                                                                        -----------         -----------         -----------


FINANCING ACTIVITIES
   Net repayments on line-of-credit                                      (4,275,669)             (7,814)         (2,866,081)
   Decrease in checks issued in advance of deposits                         (71,362)           (514,457)           (982,293)
   Debt issuance costs                                                           --            (277,988)                 --
   Proceeds from warrant exercises                                          237,887                  --                  --
   Principal payments on other borrowings                                (1,423,845)         (1,113,560)         (2,215,980)
   Principal payments on capital lease obligations                          (66,270)            (73,076)           (142,465)
   Payment of preferred stock dividends                                     (79,087)           (203,371)           (366,067)
   Employee stock compensation                                              106,400                  --                  --
                                                                        -----------         -----------         -----------
     Net cash used in financing activities                               (5,571,946)         (2,190,266)         (6,572,886)
                                                                        -----------         -----------         -----------

Net change in cash and cash equivalents                                   2,500,749              10,301                  --

Cash and cash equivalents, beginning of year                                 10,301                  --                  --
                                                                        -----------         -----------         -----------

Cash and cash equivalents, end of year                                  $ 2,511,050         $    10,301         $        --
                                                                        ===========         ===========         ===========
</TABLE>

See accompanying notes and auditor's report

                                       F-5
<PAGE>

Command Security Corporation
Statements of Cash Flows, Continued
Years Ended March 31, 2005, 2004 and 2003


1.    SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION

Cash paid during the years for:

                              2005                2004                2003

Interest                  $470,595            $516,763            $578,726
Income Taxes                45,328             229,063             100,000


2.    SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES

During the year ended March 31, 2004,  the line of credit with LaSalle  Business
Credit, Inc.  ("LaSalle") was terminated and replaced with a line of credit from
CIT Group/Business Credit, Inc. ("CIT"). The proceeds from CIT to LaSalle in the
amount of  $8,723,102  have been  excluded  from net  repayments  on the line of
credit, on the statements of cash flows presented.

During the year ended March 31, 2004, the Company  reclassified  $1,930,379 from
accounts  receivable in connection with the FAA disputed  billings.  This amount
has been excluded from the statements of cash flows presented.

During the year ended  March 31,  2003,  the Company  accrued  $600,000 in other
payables in reference to a dispute with the Office of General Services  ("OGS").
During the year ended March 31, 2004,  the Company  agreed to a settlement  with
the OGS in the same  amount.  A portion  of the  agreement  calls for 21 monthly
payments totaling  $527,000,  commencing  December 1, 2003. This amount has been
excluded  from the change in other  payables and proceeds  from  long-term  debt
financing on the statements of cash flows presented.

For the  years  ended  March 31,  2005,  2004 and 2003,  the  Company  purchased
transportation equipment with direct installment and lease financing of $47,270,
$162,417 and $29,355,  respectively.  These  amounts have been excluded from the
purchases of equipment and proceeds  from  long-term  debt on the  statements of
cash flows.

The Company may obtain short-term financing to meet its insurance needs. For the
years ended March 31, 2005,  2004 and 2003,  $924,733,  $910,104  and  $670,669,
respectively,  were  borrowed  for this  purpose.  These  borrowings  have  been
excluded from the statements of cash flows.

As of March 31, 2004 and 2003,  the  Company  accrued  dividends  of $40,674 and
$81,349,  respectively,  on its  Series A  convertible  preferred  stock.  These
charges to additional paid-in capital and credits to dividends payable have been
excluded from the statements of cash flows.

See accompanying notes and auditor's report

                                       F-6
<PAGE>

Command Security Corporation
Notes to Financial Statements
March 31, 2005, 2004 and 2003

1.    Business Description and Summary of Accounting Policies

The  following  is a  description  of  the  principal  business  activities  and
significant accounting policies employed by Command Security Corporation.

Principal business activities

Command  Security  Corporation  (the  "Company") is a uniformed  security  guard
service  company  operating  in  Connecticut,   California,  Delaware,  Florida,
Illinois,  Maine,  Maryland,  Massachusetts,  New Jersey,  New York,  Oregon and
Pennsylvania.  In  addition,  the Company also  provides  other  security  guard
companies  (administrative  service  clients) and police  departments in various
states with administrative  services,  such as billing,  collection and payroll,
for a percentage of the related gross revenue.

Estimates

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the financial  statements,  and revenue and expenses  during the years reported.
Estimates are used when  accounting  for certain  items such as  allowances  for
doubtful  accounts,  depreciation  and  amortization,   income  tax  assets  and
insurance  reserves.   Estimates  are  based  on  historical  experience,  where
applicable or other  assumptions  that management  believes are reasonable under
the circumstances. Due to the inherent uncertainty involved in making estimates,
actual results may differ from those estimates  under  different  assumptions or
conditions.

Revenue recognition

The Company records revenues as services are provided to its customers. Revenues
consist  primarily of security  guard  services  which are  typically  billed at
hourly rates. These rates may vary depending on base,  overtime and holiday time
worked.  Revenues for administrative  services provided to other guard companies
are calculated as a percentage of the  administrative  service client's revenues
and are recognized when billings for the related guard services are generated.

Cash and cash equivalents

The Company defines cash and cash equivalents as operating cash (non-restricted)
and highly liquid  investments  with maturities of ninety (90) days or less. The
carrying amounts of our cash equivalents approximate their fair values.

Furniture and equipment

Furniture and equipment are stated at cost.  Depreciation is generally  recorded
using the  straight-line  method over  estimated  useful lives of the  equipment
ranging from three to seven years.

Intangible assets

Intangible assets are stated at cost and consist primarily of customer lists and
borrowing costs which are being amortized on a straight-line basis over three to
five  years.   The  life  assigned  to  customer  lists  acquired  is  based  on
management's  estimate of the attrition  rate.  The attrition  rate is estimated
based on historical contract longevity and management's operating experience. We
test for  impairment  annually or when events and  circumstances  warrant such a
review. Any potential impairment is evaluated based on anticipated  undiscounted
future  cash  flows  and  actual  customer  attrition  in  accordance  with  the
provisions of Statement of Financial Accounting Standards ("SFAS") No. 144.

Advertising costs

The  Company  expenses  advertising  costs as  incurred.  Amounts  incurred  for
recruitment and general business  advertising were $37,375,  $33,159 and $77,114
for the years ended March 31, 2005, 2004 and 2003, respectively.

                                       F-7
<PAGE>

Command Security Corporation
Notes to Financial Statements, Continued March 31, 2005, 2004 and 2003

Trade receivables

The Company  periodically  evaluates the  requirement  for providing for billing
adjustments  and/or  credit  losses  on its  accounts  receivable.  The  Company
provides for billing  adjustments  where  management  determines that there is a
likelihood of a significant  adjustment for disputed billings.  Criteria used by
management  to evaluate the  adequacy of the  allowance  for  doubtful  accounts
include,  among others, the  creditworthiness  of the customer,  current trends,
prior payment performance,  the age of the receivables and the Company's overall
historical  loss  experience.  Individual  accounts  are charged off against the
allowance as management deems them as uncollectible.

Insurance reserves

General   liability   estimated   accrued   liabilities  are  calculated  on  an
undiscounted  basis based on actual claim data and estimates of incurred but not
reported  claims  developed   utilizing   historical  claim  trends.   Projected
settlements  and incurred but not reported claims are estimated based on pending
claims, historical trends and data.

Workers'  compensation  annual  premiums  are  based on the  incurred  losses as
determined  at the end of the  coverage  period,  subject to minimum and maximum
premium.  Estimated  accrued  liabilities are based on the Company's  historical
loss experience and the ratio of claims paid to the Company's  historical payout
profiles.

Income taxes

Income taxes are based on income  (loss) for  financial  reporting  purposes and
reflect  a  current  tax  liability  (asset)  for the  estimated  taxes  payable
(recoverable)  in the current  year tax return and  changes in  deferred  taxes.
Deferred tax assets or liabilities are determined  based on differences  between
financial  reporting  and tax bases of assets and  liabilities  and are measured
using enacted tax laws and rates. A valuation  allowance is provided on deferred
tax assets if it is  determined  that it is more  likely than not that the asset
will not be realized.

Income (loss) per common share

Under the  requirements  of SFAS No. 128,  "Earnings  Per  Share," the  dilutive
effect of potential common shares,  if any, is excluded from the calculation for
basic earnings per share. Diluted earnings per share are presented for the years
ended  March 31,  2004 and 2003  because of the effect the  assumed  issuance of
common  shares would have if the  outstanding  stock  options and warrants  were
exercised.

Accounting for stock options

In December 2002 the Financial  Accounting  Standards Board ("FASB") issued SFAS
No. 148, ("SFAS 148"), "Accounting for Stock-Based  Compensation-Transition  and
Disclosure",  an  amendment  of SFAS No.  123,  ("SFAS  123"),  "Accounting  for
Stock-Based  Compensation"  to provide  alternative  methods of transition for a
voluntary  change to the fair value based method of accounting  for  stock-based
employee compensation. Since SFAS 148 was adopted during fiscal year ended March
31,  2003,  the  Company  could  elect to adopt  any of the  three  transitional
recognition  provisions.  The Company has chosen to adopt the prospective method
of accounting for stock-based compensation. The adoption of SFAS 148 resulted in
a non-cash charge of $60,650 (net of tax benefit) for employee compensation cost
for the fiscal year ended March 31, 2005.

In December  2004,  the FASB issued SFAS No. 123  (revised  2004),  "Share-Based
Payment"  ("SFAS  123R"),  which  replaces  SFAS  123.  SFAS 123R  requires  all
share-based  payments to employees,  including grants of employee stock options,
to be recognized in the financial statements based on their fair values at grant
date and the  recognition  of the related  expense  over the period in which the
share-based  compensation  vest. The Company is required to adopt the provisions
of SFAS 123R effective July 1, 2005 and use the modified-prospective  transition
method.  Under the  modified-prospective  method,  the  Company  will  recognize
compensation  expense in the financial  statements issued subsequent to the date
of adoption for all share-based payments granted, modified or settled after July
1, 2005. The impact of the adoption of SFAS 123R cannot be predicted  because it
will  depend on  levels of stock  options  and any  other  forms of  share-based
payments granted in the future.

Fair Value

The fair value of the Company's  long-term debt is based on the borrowing  rates
currently  available  to the  Company for loans with  similar  terms and average
maturities.  At March  31,  2005 and  2004,  the fair  value of  long-term  debt
approximates its carrying amount.

                                      F-8
<PAGE>

Command Security Corporation
Notes to Financial Statements, Continued March 31, 2005, 2004 and 2003

Reclassifications

Certain   amounts  have  been   reclassified  to  conform  to  the  fiscal  2005
presentation. Administrative service revenues of $329,984, $336,010 and $331,854
for the years  ended  March 31,  2005,  2004 and 2003,  respectively,  have been
included with total revenue. Amortization of intangibles of $95,321, $83,093 and
$122,563 for the years ended March 31, 2005, 2004 and 2003,  respectively,  have
been   included   within   general   and    administrative    expenses.    These
reclassifications  had no effect on the Company's  financial position or results
of operations.

2.    Accounts Receivable Disputed

Accounts  receivable  disputed  in the  amount of  $1,965,006  net of a $965,373
billing  adjustment  for the years ended March 31, 2004  represents  the balance
reported  by the  Company,  as due from  the FAA in  connection  with  pre-board
screening  services rendered under a contract completed during November 2002. On
June 14,  2004,  the Company  collected  $1,965,000  from the  Defense  Contract
Management Agency in complete settlement of this dispute.

3.    Furniture and Equipment

Furniture and equipment at March 31, 2005 and 2004 consist of the following:

                                               2005                   2004

Transportation equipment                $   741,113            $ 1,003,272
Security equipment                          479,668                516,955
Office furniture and equipment            1,239,980              1,213,961
                                        -----------            -----------
                                          2,460,761              2,734,188
Accumulated depreciation                 (2,033,088)            (2,088,596)
                                        -----------            -----------

Total                                   $   427,673            $   645,592
                                        ===========            ===========

Depreciation  expense  for the years ended March 31,  2005,  2004 and 2003,  was
$301,150,  $394,221 and $490,028,  respectively,  and includes  amortization  of
assets  purchased  under capital lease  arrangements  in the amounts of $93,086,
$105,254 and $83,617 for each of the respective years then ended (see Note 17).

4.    Intangible Assets

Intangible assets at March 31, 2005 and 2004 consist of the following:

                                               2005                   2004

Customer list                             $  30,000              $ 211,293
Borrowing cost                              279,963                469,997
Goodwill                                     20,402                 20,402
                                          ---------              ---------
                                            330,365                701,692
Accumulated amortization                   (155,469)              (431,475)
                                          ---------              ---------
Total                                     $ 174,896              $ 270,217
                                          =========              =========

Amortization  expense  for the years ended March 31,  2005,  2004 and 2003,  was
$95,321,  $83,093 and  $122,563,  respectively.  During the year ended March 31,
2005, the Company  removed fully  amortized  customer lists and borrowing  costs
with initial  costs of $181,293 and $190,034,  respectively,  from its accounts.
Amortization  expense  for the  years  ending  March  31,  2006 and 2007 will be
$93,321 and $61,173, respectively.

For the years ended March 31,  2005 and 2004,  respectively,  the balance of the
intangible  assets  represents  the value of  goodwill  in the amount of $20,402
which is not subject to  amortization  and net borrowing  costs in the amount of
$154,494  and  $247,815,  respectively,  which is subject to  amortization  on a
straight line basis over the life of the Company's financing agreement (see Note
8).
                                      F-9
<PAGE>

Command Security Corporation
Notes to Financial Statements, Continued March 31, 2005, 2004 and 2003

5.    Restricted Cash

Restricted cash represents  deposits for the benefit of the Company's  insurance
carrier as collateral for workers'  compensation claims. The Company's insurance
carrier released $36,817 from the restrictions in September 2004.

6.    Other Assets

Other assets at March 31, 2005 and 2004 consist of the following:

                                               2005                   2004

Workers' compensation insurance          $2,438,274             $1,339,608
Note receivable                                  --                 70,900
Other receivables                           321,654                331,426
Security deposits                           159,284                165,370
Deferred tax asset                          267,450                     --
Other                                         1,133                  6,609
                                         ----------             ----------
                                          3,187,795              1,913,913
Current portion                          (2,627,540)              (369,058)
                                         ----------             ----------
Total non-current portion                $  560,255             $1,544,855
                                         ==========             ==========

7.    Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities at March 31, 2005 and 2004 consist of the
following:

                                               2005                   2004

Payroll and related expenses             $3,242,696             $3,501,693
Insurance                                 2,279,948              1,495,987
Customer prepayments, net                 3,170,195                     --
Taxes and fees payable                      391,682                537,031
Accrued interest payable                     32,952                 43,442
Other                                       285,362                 85,868
                                         ----------             ----------

Total                                    $9,402,835             $5,664,021
                                         ==========             ==========

8. Short-Term Borrowings

Short-term borrowings at March 31, 2005 and 2004 consist of the following:

                                               2005                  2004

Line of credit                           $4,522,355            $8,798,024
Various insurance
 financing arrangements,
 interest at 5.55% and 5.86%
 for 2005 and 6.46% for 2004                289,419               293,604
                                         ----------            ----------

    Total                                $4,811,774            $9,091,628
                                         ==========            ==========

                                      F-10
<PAGE>

Command Security Corporation
Notes to Financial Statements, Continued March 31, 2005, 2004 and 2003

On December 12, 2003,  the Company  entered into a three year agreement with CIT
Group/Business   Credit,   Inc.   ("CIT")  under  a  financing   agreement  (the
"Agreement"),  which  provides for  borrowings  in an amount of up to 85% of the
Company's eligible accounts receivable,  as defined in the Agreement,  but in no
event more than  $15,000,000.  The Agreement also provides for advances  against
unbilled revenue  (primarily monthly invoiced accounts) although this benefit is
offset by a reserve against all outstanding  payroll checks.  The revolving loan
bears  interest at the prime rate,  as defined,  plus 1.25% per annum  (7.00% at
March 31, 2005) on the greater of: (i) $5,000,000 or (ii) the average of the net
balances owed by the Company to CIT in the loan account at the close of each day
during such month (see below).  Costs to close the loan totaled $279,963 and are
being amortized over its 3 year life.

At  March  31,   2005,   the  Company  had  borrowed   $4,522,355   representing
approximately 61% of its maximum  borrowing  capacity based on the definition of
"eligible accounts receivable" under the terms of the Agreement. However, as the
business  grows  and  produces  new   receivables,   up  to  $10,477,645   could
additionally be available to borrow under the Agreement.

The Company  relies on its revolving loan from CIT which contains a fixed charge
covenant and various other financial and non-financial covenants. If the Company
breaches a  covenant,  CIT has the right to call the line  unless CIT waives the
breach.

9.    Long-Term Debt

Long-term debt at March 31, 2005 and 2004 consist of the following:

                                               2005                   2004

Office of General
 Services (OGS) settlement,
 due August 2005,
 interest at 9% (a)                       $      --              $ 408,919

Various installment loans
 due at various dates
 through March 2008,
 with interest ranging
 from 4.5% to 8.75% (b)                      67,765                106,503
                                          ---------              ---------
                                             67,765                515,422
Current maturities                          (26,699)              (361,540)
                                          ---------              ---------

Total                                     $  41,066              $ 153,882
                                          =========              =========

(a) During  September  2003,  the Company  signed a note related to a settlement
with the Office of General  Services in the amount of $527,000.  The note called
for twenty-one  monthly payments in the amount of $27,217 including  interest at
9% per annum.  On December 29, 2004, the Company paid the remaining  outstanding
balance of $210,568 on such note.

(b)  Payable to General  Motors  Acceptance  Corporation  and Ford Motor  Credit
Corporation. The notes are collateralized by automobiles.

The  aggregate  amount of required  principal  payments of long-term  debt is as
follows:

Year ending: March 31, 2006                                       $ 26,699
             March 31, 2007                                         36,630
             March 31, 2008                                          4,436
                                                                  --------

Total                                                             $ 67,765
                                                                  ========

                                      F-11
<PAGE>

Command Security Corporation
Notes to Financial Statements, Continued March 31, 2005, 2004 and 2003

10.   Preferred Stock

The Board of Directors has been  authorized to issue  preferred  stock in series
and to fix the number, designation, relative rights, preferences and limitations
of each series of such preferred stock. Of the 1,000,000  shares  authorized for
issuance,  12,325 had been  designated as Series A Convertible  Preferred  Stock
("Series  A").  The  Series A  shareholders  were  entitled  to  receive  annual
dividends  equal  to 8% of  the  liquidation  value  of  their  shares,  payable
quarterly in cash. Upon liquidation or redemption the Series A shareholders were
entitled to $165 per share or  $2,033,682.  As of June 25, 2004,  the  preferred
stock was converted into 1,232,535 shares of the Company's common stock.

During  the  years  ended  March  31,  2005  and  2004,  $79,087  and  $203,371,
respectively,  in preferred  dividends were paid  representing  the  outstanding
accruals for  dividends  payable at March 31, 2004  together  with the June 2004
quarter  and  March  31,  2003  together  with the June  through  December  2003
quarters.

11.   Net Income (Loss) per Share

The following is a reconciliation  of the numerators and the denominators of the
basic and diluted  per-share  computations  for net income  (loss) for the years
ended March 31, 2005, 2004 and 2003:

<TABLE>
<CAPTION>
                                                    Income (Loss)                 Shares              Per-Share
                                                     (Numerator)               (Denominator)            Amount
<S>                                                   <C>                        <C>                  <C>
Year ended March 31, 2005
 Basic EPS                                            $ (428,668)                7,302,738            $    (.06)
 Options issued November 2000,
    February 2001, March 2002 and
    August 2004                                                                    560,048
                                                      ----------                 ---------

 Diluted EPS                                           $(428,668)                7,862,786            $     n/a
                                                      ==========                 =========

Year ended March 31, 2004
 Basic EPS                                            $ (473,103)                6,287,343            $    (.08)
 Effect of dilutive shares:
    Options issued February 2001
      and March 2002                                                               103,182
                                                      ----------                 ---------

 Diluted EPS                                          $ (473,103)                6,390,525            $    (.08)
                                                      ==========                 =========

Year ended March 31, 2003
 Basic EPS                                            $  879,320                 6,287,343             $    .14
 Effect of dilutive shares:
    Options issued February 2001
      and March 2002                                                                70,999
                                                      ----------                 ---------

 Diluted EPS                                          $  879,320                 6,358,342             $    .14
                                                      ==========                 =========
</TABLE>

Convertible  preferred stock  outstanding  during the years ended March 31, 2004
and 2003, and additional options and warrants outstanding during the years ended
March 31, 2004 and 2003,  respectively,  were excluded from the  computation  of
diluted EPS because the exercise price was greater than the average market price
of the common shares.

12.   Retirement Plans

In November, 1999, the Company adopted a qualified retirement plan providing for
elective  employee  deferrals  and  discretionary   employer   contributions  to
non-highly  compensated  participants.  The plan  does not  allow  for  employer
matching of elective  deferrals.  For the years ended March 31,  2005,  2004 and
2003, no discretionary amounts have been accrued or paid.

                                      F-12
<PAGE>

Command Security Corporation
Notes to Financial Statements, Continued March 31, 2005, 2004 and 2003

13.   Concentrations of Credit Risk

Geographic  concentrations  of credit risk with respect to trade receivables are
primarily in California with 26% and 22% and in the New York  Metropolitan  area
with  40%  and  55%  of  total  receivables  as of  March  31,  2005  and  2004,
respectively.  The  remaining  trade  receivables  consist of a large  number of
customers dispersed across many different  geographic regions.  During the years
ended March 31, 2005,  2004 and 2003,  the Company  generated  63%, 60% and 68%,
respectively,   of  its  revenue  from  aviation  and  related  services.  Trade
receivables due from the commercial  airline  industry  comprised 47% and 61% of
net  receivables  as of March 31,  2005 and 2004,  respectively.  The  Company's
remaining customers are not concentrated in any specific industry.

The Company maintains its cash accounts in bank deposit accounts, which at times
may exceed federally insured limits.  The Company has not experienced any losses
in such accounts.  The Company  believes they are not exposed to any significant
credit risk.

14.   Significant Customers

The Company operates as a provider of security guard services to a wide range of
industries which the Company has categorized into three groups;  guard services,
aviation  services  and support  services.  The latter  includes  revenues  from
administrative service agreements and back office support to police departments.

Net  revenues  for the groups  noted  above were as follows  for the three years
ended March 31:

                               2005                 2004               2003
------------------------------------------------------------------------------
Guard Services             $28,858,519           $30,047,546       $30,213,702
Aviation Services           50,466,240            45,521,225        63,768,959
Support Services               329,985               336,011           331,854
------------------------------------------------------------------------------

Total                      $79,654,744           $75,904,782       $94,314,515
------------------------------------------------------------------------------

For  the  year  ended  March  31,  2005,  one  airline  customer  accounted  for
approximately  $12,604,000 of the Company's  total  revenue.  For the year ended
March 31, 2004,  two airline  industry  customers  accounted  for  approximately
$6,913,000 and $6,810,000, respectively, of the Company's total revenue. For the
year ended March 31, 2003 one customer  accounted for approximately  $28,000,000
of the Company's total revenue,  which consisted  primarily of airport pre-board
screening  services.  The  contract  to provide  these  services  terminated  in
November 2002.

15.   Insurance Reserves

The Company has an insurance  policy covering  workers'  compensation  claims in
states that the Company performs  services.  Estimated  accrued  liabilities are
based on the Company's  historical  loss experience and the ratio of claims paid
to the Company's  historical  payout  profiles.  Charges for estimated  workers'
compensation  related  losses  incurred  and  included  in  cost of  sales  were
$3,257,608,  $3,630,004 and $2,252,921, for the years ended March 31, 2005, 2004
and 2003, respectively.

The nature of the  Company's  business  also subjects it to claims or litigation
alleging  that it is  liable  for  damages  as a result  of the  conduct  of its
employees or others.  The Company  insures against such claims and suits through
general liability policies with third-party  insurance companies.  Such policies
have limits of $5,000,000 per occurrence.  On the aviation related business,  as
of October 1, 2002, the Company  acquired a policy with a $25,000,000  limit per
occurrence. From October 17, 2003 to October 17, 2004, the Company had an excess
general  liability  insurance policy covering  aviation claims for an additional
$25,000,000  in the  aggregate.  As of October 1, 2004,  the Company  acquired a
policy with a $30,000,000 limit per occurrence. The Company retains the risk for
the first  $25,000 per  occurrence  on the  non-aviation  related  policy  which
includes airport wheelchair operations and $5,000 on the aviation related policy
except  $25,000 for damage to aircraft and $100,000 for skycap and electric cart
operations.  Estimated  accrued  liabilities  are based on specific  reserves in
connection  with existing  claims as  determined by third party risk  management
consultants and actuarial  factors and the timing of reported claims.  These are
all factored into estimated losses incurred but not yet reported to the Company.

Cumulative  amounts  estimated  to be payable  by the  Company  with  respect to
pending and potential  claims for all years in which the Company is liable under
its general  liability  retention and workers'  compensation  policies have been
accrued as  liabilities.  Such  accrued  liabilities  are  necessarily  based on
estimates; thus, the Company's ultimate liability may exceed or be less than the
amounts  accrued.  The methods of making such  estimates  and  establishing  the
resultant  accrued  liability  are  reviewed  continually  and  any  adjustments
resulting there from are reflected in current results of operations.

                                      F-13
<PAGE>

Command Security Corporation
Notes to Financial Statements, Continued March 31, 2005, 2004 and 2003

16.   Contingencies

The nature of the Company's  business is such that there is a significant volume
of routine  claims and lawsuits that are issued against it, the vast majority of
which never lead to  substantial  damages being awarded.  The Company  maintains
general liability and workers' compensation  insurance coverage that it believes
is appropriate to the relevant  level of risk and potential  liability.  Some of
the claims  brought  against the Company could result in  significant  payments;
however,  the exposure to the Company under general  liability is limited to the
first  $25,000  per  occurrence  on  the  non-aviation  and  airport  wheelchair
operations  related  claims and $5,000 per  occurrence  on the aviation  related
claims  except  $25,000  for  damage to  aircraft  and  $100,000  for skycap and
electric cart operations.  Any punitive damage award would not be covered by the
general liability  insurance policy. The only other potential impact would be on
future  premiums,  which may be  adversely  affected  by an  unfavorable  claims
history.

In addition to such cases,  the Company has been named as a defendant in several
uninsured  employment  related claims which are currently before various courts,
the EEOC or  various  state and  local  agencies.  The  Company  has  instituted
policies to minimize these  occurrences and monitor those that do occur. At this
time the Company is unable to determine the impact on the financial position and
results of  operations  that these  claims may have,  should the  investigations
conclude that they are valid.

The Company has employment  agreements  with its Executive Vice  President/Chief
Operating  Officer (COO) and its  Vice-President of Aviation (VP). The agreement
with the COO is for a three year period  expiring  September  2007. The terms of
the   agreement   call  for  severance   payments  and  specified   benefits  of
approximately $270,000 depending upon the reason for termination.  The agreement
with the VP is for a three year period  expiring  March 2006.  The terms of this
agreement call for severance  payments and specified benefits in the approximate
range of $175,000 - $200,000 depending upon the date of termination.

17.   Lease Commitments

The Company is obligated  under various  operating  lease  agreements for office
space, equipment and auto rentals. Rent expense under operating lease agreements
approximated  $952,166,  $947,539  and  $872,980,  for the years ended March 31,
2005, 2004 and 2003, respectively.

The Company leases certain  equipment and vehicles  under  agreements  which are
classified as capital leases. Most equipment leases have purchase options at the
end of the original lease term.  Cost and related  accumulated  depreciation  of
leased capital assets  included in furniture and equipment at March 31, 2005 are
$714,149  and  $625,421  and at  March  31,  2004  are  $762,083  and  $573,422,
respectively.

The future minimum payments under long-term non-cancelable capital and operating
lease agreements are as follows:

                                            Capital              Operating
                                            Leases                Leases

Year ending: March 31, 2006                $ 31,726             $  785,821
             March 31, 2007                  33,982                669,718
             March 31, 2008                   8,501                508,566
             March 31, 2009                      --                332,836
             March 31, 2010                      --                236,511
             Later years                         --                366,320
                                           --------             ----------
                                             74,209              2,899,772
Amounts representing interest                (6,671)                    --
                                           --------             ----------

Total                                      $ 67,538             $2,899,772
                                           ========             ==========

                                      F-14
<PAGE>

Command Security Corporation
Notes to Financial Statements, Continued March 31, 2005, 2004 and 2003

18.   Other Commitments

On March 31, 2004, the Company settled a dispute with a uniform cleaning service
which  calls for the  Company  to pay  $1,756  per week for 344 weeks or a total
amount of $604,133  ending in fiscal 2011.  The expense  recorded in  connection
with weekly payments under this agreement amounted to $87,800 for the year ended
March 31, 2005.

The required future minimum payments under the agreement are as follows:

Year ending: March 31, 2006                                       $ 91,322
             March 31, 2007                                         91,322
             March 31, 2008                                         91,322
             March 31, 2009                                         91,322
             March 31, 2010                                         91,322
             Later years                                            59,723
                                                                  --------

Total                                                             $516,333
                                                                  ========

19.   Stock Option Plan and Warrants

In November 2000, the Company's Board of Directors and stockholders approved the
adoption of a qualified stock option plan. Under the option plan,  substantially
all employees are eligible to receive  options to purchase up to an aggregate of
500,000  shares at an exercise  price which  cannot be less than the fair market
value of the shares on the date the options are  granted.  In February  2001 and
August 2004,  options to purchase 225,000 and 200,000 shares,  respectively,  of
common stock were issued and in April 2002, August 2003 and April 2004,  options
to purchase 50,000, 20,000 and 75,000 shares,  respectively,  were cancelled due
to  terminations of employment.  The outstanding  options are exercisable at any
time before January 31, 2011, at $.75 per share.

On May 21, 2004, GCM Securities  Partners,  LLC ("GCM")  purchased from Reliance
Security Group,  plc ("Reliance")  securities  which included:  (i) a warrant to
purchase  150,000  shares of the Company's  common stock at an exercise price of
$1.03125  per  share  and (ii) a  warrant  to  acquire  2,298,092  shares of the
Company's  common  stock at an  exercise  price of $1.25 per share.  In November
2004, the Company received  proceeds of $154,687 in connection with the exercise
of the warrant to purchase  150,000  shares of the Company's  common stock.  The
remaining outstanding warrants expire on November 12, 2005.

On August 30, 2004 (the "Effective  Date"),  the Company issued stock options to
the Chief Operating  Officer (the "Executive") to purchase 500,000 shares of the
Company's  common  stock at an  exercise  price of $1.35 per share.  The options
vest,  and may be exercised by the Executive  with respect to 200,000  shares on
the Effective  Date and  commencing  one year after the Effective  Date,  12,500
shares per month through August 2007.

In March 2002, the Company issued  warrants for 10,000 shares of common stock to
each of three of the Company's directors at an exercise price of $.82 per share,
the fair market value at the time of the grant.  In February  2005,  the Company
received  proceeds  of $8,200 in  connection  with the  exercise  of warrants to
purchase  10,000 shares of the Company's  common stock.  The remaining  warrants
expired on February 28, 2005.

In March 2002, the Company issued warrants for 100,000 shares of common stock to
individuals associated with a consulting agreement at an exercise price of $.75.
During the three months ended March 31, 2005, the Company  received  proceeds of
$75,000 in connection with the exercises of warrants to purchase  100,000 shares
of the Company's common stock.

                                      F-15
<PAGE>

Command Security Corporation
Notes to Financial Statements, Continued March 31, 2005, 2004 and 2003

Certain of the option and warrant  agreements contain  anti-dilution  adjustment
clauses.

The  following is a summary of activity  related to all Company stock option and
warrant arrangements:

<TABLE>
<CAPTION>
                                                 Options                           Warrants
                                       ----------------------------      ----------------------------
                                          Exercise       Number of          Exercise        Number of
                                           Price           Shares             Price           Shares
                                       --------------    ----------      ---------------    ---------
<S>                                    <C>      <C>       <C>            <C>       <C>      <C>
Outstanding at March 31, 2002          $.75  -  $1.25     1,237,959      $.82  -   $1.25    2,682,577

    Issued                                                                .75                 100,000
    Expired                             .75                 (50,000)
                                       --------------    ----------      ---------------    ---------

Outstanding at March 31, 2003           .75  -   1.25     1,187,959       .75  -    1.25    2,782,577

    Issued
    Forfeited                           .75  -   1.25    (1,032,959)
                                       --------------    ----------      ---------------    ---------

Outstanding at March 31, 2004           .75                 155,000       .75  -    1.25    2,782,577

    Issued                             1.35                 700,000
    Exercised                                                             .75  -    1.03     (260,000)
    Forfeited                           .75                 (75,000)     1.25                (204,485)
    Expired                                                               .82                 (20,000)
                                       --------------    ----------      ---------------    ---------

Outstanding at March 31, 2005          $.75  -  $1.35       780,000     $1.25               2,298,092
                                       ==============    ==========      ===============    =========
</TABLE>

At March 31,  2005  there  were  780,000  and  2,298,092  options  and  warrants
outstanding, respectively, exercisable at prices ranging from $.75 to $1.35, and
3,298,092 shares reserved for issuance under all stock arrangements.

Significant  option and  warrant  groups  outstanding  at March 31, 2005 and the
related weighted average exercise price and life information are as follows:

<TABLE>
<CAPTION>
                                                                                Weighted             Weighted
                                     Options/             Options/              Average              Average
   Range of                          Warrants             Warrants              Exercise            Remaining
Exercise Price                      Outstanding          Exercisable            Price              Life (years)
---------------                     -----------          -----------            --------           ------------
<C>                                  <C>                  <C>                  <C>                   <C>
$.75  -  $1.350                        780,000              360,000              $1.288                8.13

     1.250                           2,298,092            2,298,092               1.250                 .62
                                     ---------            ---------

$.75  -  $1.350                      3,078,092            2,658,092               1.260                2.52
                                     =========            =========
</TABLE>

As discussed in Note 1, the Company  adopted the  provisions of SFAS 148 for the
fiscal year ended March 31, 2003.  Beginning  April 1, 2002, the Company adopted
the fair value recognition  provisions of SFAS 123,  "Accounting for Stock-Based
Compensation", prospectively to all employee awards granted, modified or settled
after April 1, 2002. For the fiscal year ended March 31, 2005, the fair value of
stock  options  granted  is  estimated  on the  date  of  the  grant  using  the
Black-Scholes  option  pricing model and  amortized  ratably to expense over the
options'  vesting  periods.  Because the estimated value is determined as of the
date of grant,  the actual  value  ultimately  realized by the  employee  may be
significantly different.

The weighted  average  estimated  value of employee stock options granted during
fiscal  year 2005 was $.38.  The value of  options  granted  in fiscal  2005 was
estimated at the date of grant using the following weighted average assumptions:
dividend  yield of 0.00%;  stock price  historical  volatility  factor of 42.9%;
expected  life of 3 years;  and risk-free  interest rate of 3.64%.  There was no
cost related to stock-based employee  compensation included in the determination
of net income  (loss) for the fiscal  years  ended March 31, 2004 and 2003 since
there were no employee awards granted during these years.

                                      F-16
<PAGE>

Command Security Corporation
Notes to Financial Statements, Continued March 31, 2005, 2004 and 2003

In December  2004,  the FASB issued SFAS No. 123  (revised  2004),  "Share-Based
Payment"  ("SFAS  123R"),  which  replaces  SFAS  123.  SFAS 123R  requires  all
share-based  payments to employees,  including grants of employee stock options,
to be recognized in the financial statements based on their fair values at grant
date and the  recognition  of the related  expense  over the period in which the
share-based  compensation  vest. The Company is required to adopt the provisions
of SFAS 123R effective July 1, 2005 and use the modified-prospective  transition
method.  Under the  modified-prospective  method,  the  Company  will  recognize
compensation  expense in the financial  statements issued subsequent to the date
of adoption for all share-based payments granted, modified or settled after July
1, 2005. The impact of the adoption of SFAS 123R cannot be predicted  because it
will  depend on  levels of stock  options  and any  other  forms of  share-based
payments granted in the future.

20. Income Taxes

Income tax  benefit  (expense)  for the years  ended  March 31  consists  of the
following:

<TABLE>
<CAPTION>
                                              2005                2004               2003
Current:
<S>                                       <C>              <C>                <C>
  Federal                                 $     --         $   (76,203)       $        --
  State and local                               --             (15,340)          (185,323)
                                          --------         -----------         ----------
                                                --             (91,543)          (185,323)
                                          --------         -----------         ----------
Deferred:
  Federal                                  207,875                  --         (1,020,000)
  State and local                           59,575                  --           (280,000)
                                          --------         -----------         ----------
                                           267,450                  --         (1,300,000)
                                          --------         -----------         ----------
     Income tax benefit (expense)         $267,450         $   (91,543)       $(1,485,323)
                                          ========         ===========         ==========
</TABLE>

The  differences  (expressed  as a  percentage  of pretax  income)  between  the
statutory federal income tax rate and the effective income tax rate as reflected
in the accompanying statements of operations are as follows:

                                             2005          2004          2003

Statutory federal income tax rate            34.0          34.0          34.0
State and local income taxes                  9.8           9.8           9.8
Valuation allowance and reserves              1.8          16.7           7.0
Permanent differences                        (4.9)        (18.5)          2.2
Other                                          --           (.2)          (.2)
                                            -----         -----         -----

  Effective tax rate                         40.7%         41.8%         52.8%
                                            =====         =====         =====

                                      F-17
<PAGE>

Command Security Corporation
Notes to Financial Statements, Continued March 31, 2005, 2004 and 2003

The  significant  components of deferred tax assets and  liabilities as of March
31, 2005 and 2004 are as follows:

<TABLE>
<CAPTION>
                                                                  2005               2004
<S>                                                        <C>                <C>
Current deferred tax assets:
  Accounts receivable                                      $    38,185        $    64,953
  Accrued expenses                                             106,207            102,835
  Contingency reserves                                          11,610            187,445
                                                           -----------        -----------
                                                               156,002            355,233
Valuation allowance                                           (140,216)          (355,233)
                                                           -----------        -----------

    Net current deferred tax asset                         $    15,786        $        --
                                                           ===========        ===========

Non-current deferred tax assets (liabilities):
  Equipment                                                $   (76,614)       $   (77,399)
  Intangible assets                                            606,973            710,236
  Self-insurance                                               182,083            172,985
  Workers compensation reserve                                 195,158             67,243
  Net operating loss carryover                               1,042,484            639,102
  Income tax credits                                            84,790             84,790
  Employee stock compensation                                   45,750                 --
                                                           -----------        -----------
                                                             2,080,624          1,596,957
Valuation allowance                                         (1,828,960)        (1,596,957)
                                                           -----------        -----------

    Net non-current deferred tax asset                     $   251,664        $        --
                                                           ===========        ===========
</TABLE>

The  valuation  allowance  increased by $16,986  during the year ended March 31,
2005 and decreased by $89,270 and $20,377  during the years ended March 31, 2004
and 2003, respectively. The Company has determined based on its expectations for
the future,  that it is more likely than not that future  taxable income will be
sufficient  to utilize  fully the net  deferred  tax  assets at March 31,  2005.
Federal net operating loss carryforwards were approximately  $2,424,381 at March
31,  2005.  This  amount may be limited on an annual  basis due to the change in
ownership during the fiscal year. They begin to expire in 2010.

The Company has wage tax credits in the amount of $8,587 that expire in 2018 and
alternative  minimum  tax  credits in the amount of  $76,203  that  carryforward
indefinitely.

21.   Related Party Transactions

In addition to an annual directors fee of $10,000  effective  September 2004 and
payment of fees for attending  board meetings in the amount of $1,000,  for each
meeting  attended,  for the years ended March 31, 2005,  2004 and 2003,  various
former directors  received fees for their services on various  committees of the
Company.  The expenses paid in connection with services  rendered for committees
by such former directors amounted to $33,253, $77,201 and $101,855 for the years
ended March 31, 2005, 2004 and 2003, respectively.

                                      F-18
<PAGE>

Command Security Corporation
Notes to Financial Statements, Continued March 31, 2005, 2004 and 2003

22.   Quarterly Results (unaudited)

Summary  data  relating to the results of  operations  for each  quarter for the
years ended March 31, 2005 and 2004 follows:

<TABLE>
<CAPTION>
                                                                       Three Months Ended
                                             --------------------------------------------------------------------
                                               June 30           Sept. 30            Dec. 31            March 31
                                             -----------        -----------        -----------        -----------
<S>                                          <C>                <C>                <C>                <C>
Fiscal year 2005
 Guard service revenue                       $19,087,924        $20,373,272        $20,172,717        $19,690,847
 Administrative service revenue                   80,823             81,899             84,907             82,355
                                             -----------        -----------        -----------        -----------
   Total revenue                              19,168,747         20,455,171         20,257,624         19,773,202
                                             -----------        -----------        -----------        -----------
 Gross profit                                  2,379,967          2,932,873          2,821,125          2,388,561
 Net income (loss)                              (440,048)          (112,862)           183,997            (21,342)
 Net income (loss)
   per common share (basic)                        (0.08)             (0.02)              0.02               0.00
   per common share (diluted)                        n/a                n/a               0.02               0.00

Fiscal year 2004
 Guard service revenue                        16,491,557         18,897,778         20,521,150         19,658,287
 Administrative service revenue                   82,268             85,658             88,803             79,281
                                             -----------        -----------        -----------        -----------
   Total revenue                              16,573,825         18,983,436         20,609,953         19,737,568
                                             -----------        -----------        -----------        -----------
 Gross profit                                  2,744,478          3,003,986          2,800,971          2,410,234
 Net income (loss)                              (134,977)           247,207             25,134           (447,772)
 Net income (loss)
   per common share (basic)                        (0.03)              0.03               0.00              (0.08)
   per common share (diluted)                        n/a               0.03                n/a              (0.08)
</TABLE>

The fourth quarter 2005 loss includes:  (i) an accrual in the amount of $210,315
arising  from the  payment by the  Company of  certain  legal fees and  expenses
primarily in connection  with the  conversion of the Company's  preferred  stock
into  common  stock by  certain  shareholders  and (ii) a  non-cash  charge  for
recognition of employee stock compensation cost in the amount of $60,650 (net of
tax benefit).

The fourth quarter 2004 loss includes a decrease in provisions for contingencies
in the amount of $238,000 relating to the removal of an estimated  liability for
which a valid  agreement  did not  exist.  Also,  an  accrual  in the  amount of
$146,280 was recorded  during the quarter ended  December 31, 2003 in connection
with a severance payment made to the former Chief Financial Officer.


                                      F-19
<PAGE>
Schedule II

                          COMMAND SECURITY CORPORATION

                  SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
                                                              Against
                                                              Amounts
                                                               Due to                                                Uncollectible
                                 Balance at    Charged to  Administrative  Charged                     Accounts         Balance
                                 Beginning     Costs and      Service      to Other                    Written         at End of
                                 of Period      Expenses      Clients      Accounts     Recoveries       Off            Period
                                 ----------    ----------  --------------  ---------    ----------    ----------     -------------
<S>                              <C>             <C>         <C>            <C>            <C>          <C>             <C>
Year ended March 31, 2005:
Deducted from asset accounts:
   Allowance for
     doubtful accounts
     receivable - current
     maturities                  $  361,865      $277,205    $(52,800)      $(17,185)      $55,974      $211,646        $  301,465

   Allowance for
     billing adjustments            965,373                                  965,373

Year ended March 31, 2004:
Deducted from asset accounts:
   Allowance for
     doubtful accounts
     receivable - current
     maturities                   2,432,337       154,401      43,015         43,752       198,547     2,113,093           361,865

   Allowance for
     billing adjustments          1,000,000                                   34,627                                       965,373

Year ended March 31, 2003:
Deducted from asset accounts:
   Allowance for
     doubtful accounts
     receivable - current
     maturities                     383,110     2,659,830      62,315        114,640         1,946       785,612         2,432,337

   Allowance for
     billing adjustments                                                   1,000,000                                     1,000,000
</TABLE>

See auditor's report

                                      F-20