SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   ----------

                                    FORM 10-Q
(Mark One)

   [X]     Quarterly Report Pursuant to Section 13 or 15(d) of the
           Securities Exchange Act of 1934

           FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2004

                                       OR

   [ ]     Transition Report Pursuant to Section 13 or 15(d) of the
           Securities Exchange Act of 1934

                         Commission File Number 1-12282

                             CORRPRO COMPANIES, INC.
             (Exact name of registrant as specified in its charter)

                 OHIO                                  34-1422570
    (State or other jurisdiction of                 (I.R.S. Employer
    incorporation or organization)                 Identification No.)

                    1090 ENTERPRISE DRIVE, MEDINA, OHIO 44256
               (Address of principal executive offices) (Zip Code)

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

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

              YES  X                 NO 
                  ---                   ---

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

              YES                    NO  X
                  ---                   ---

         As of November 8, 2004, 8,775,010 Common Shares, without par value,
were outstanding.

                                       1




                             CORRPRO COMPANIES, INC.

                                      INDEX

                                                                          Page
                                                                          ----
PART I.  FINANCIAL INFORMATION

ITEM 1.    Financial Statements

             Consolidated Balance Sheets                                     3
             Consolidated Statements of Operations                           4
             Consolidated Statements of Cash Flows                           5
             Notes to the Consolidated Financial Statements               6-16

ITEM 2.    Management's Discussion and Analysis of Financial
             Condition and Results of Operations                         17-36

ITEM 3.    Quantitative and Qualitative Disclosures
             About Market Risk                                              37

ITEM 4.    Controls and Procedures                                          37

PART II.  OTHER INFORMATION

ITEM 1.    Legal Proceedings                                                38

ITEM 2.    Unregistered Sales of Equity Securities and Use of Proceeds      38

ITEM 3.    Defaults Upon Senior Securities                                  38

ITEM 4.    Submission of Matters to a Vote of Security Holders           38-39

ITEM 5.    Other Information                                                39

ITEM 6.    Exhibits                                                         39

                                       2




PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                    CORRPRO COMPANIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)



                                                                           September 30,       March 31,
                                                                               2004              2004
                                                                            (Unaudited)         (Audited)
                                                                           -------------       ----------
                                                                                         
ASSETS
Current Assets:
  Cash and cash equivalents                                                  $    1,619        $    2,498
  Accounts receivable, net of allowance for doubtful accounts of
     $649 at September 30, 2004 and $729 at March 31, 2004                       29,017            24,139
  Other receivables, net                                                             --               768
  Inventories                                                                     9,987             9,807
  Prepaid expenses and other                                                      6,913             5,974
                                                                             ----------        ----------
    Total current assets                                                         47,536            43,186
                                                                             ----------        ----------

Property, Plant and Equipment, net                                                7,468             7,149

  Other Assets:
    Goodwill                                                                     14,906            14,560
    Other assets                                                                  7,620             7,974
    Deferred income taxes                                                           755               763
                                                                             ----------        ----------
       Total other assets                                                        23,281            23,297
                                                                             ----------        ----------
                                                                             $   78,285        $   73,632
                                                                             ==========        ==========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
    Short-term borrowings and current portion of long-term debt              $    8,186        $    5,279
    Accounts payable                                                             10,227            10,894
    Accrued liabilities and other                                                10,826            10,874
                                                                             ----------        ----------
       Total current liabilities                                                 29,239            27,047
                                                                             ----------        ----------

Long-Term Debt:
   Long-term debt, net of current portion                                        16,419            18,154
   Senior secured subordinated notes, net of discount
    of $4,010 at September 30, 2004 and $4,130 at March 31, 2004                  9,990             9,870
                                                                             ----------        ----------
       Total long-term debt                                                      26,409            28,024
                                                                             ----------        ----------

Other Long-Term Liabilities                                                       4,146             4,186

Warrants                                                                         21,492            16,830

Commitments and Contingencies                                                        --                --

Series B Cumulative Redeemable Voting Preferred Stock,
    without par value, liquidation value of $13,903, net of discount                274               274

Shareholders' Equity (Deficit):
   Common shares                                                                  2,306             2,276
   Additional paid-in capital                                                    46,177            46,266
   Accumulated deficit                                                          (51,334)          (50,555)
   Accumulated other comprehensive loss                                             123               (95)
   Common shares in treasury, at cost                                              (547)             (621)
                                                                             ----------        ----------
       Total shareholders' equity (deficit)                                      (3,275)           (2,729)
                                                                             ----------        ----------
                                                                             $   78,285        $   73,632
                                                                             ==========        ==========


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


                                       3



                    CORRPRO COMPANIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)



                                                                     For the Three                      For the Six
                                                                     Months Ended                       Months Ended
                                                                     September 30,                      September 30,
                                                             ----------------------------        ----------------------------
                                                                2004              2003              2004              2003
                                                             ----------        ----------        ----------        ----------
                                                                                                              
Revenues                                                     $   37,423        $   34,433        $   71,533        $   67,485
Operating cost and expenses:
   Cost of sales                                                 26,065            22,938            49,203            44,922
   Selling, general & administrative expenses                     8,208             7,888            16,593            15,864
                                                             ----------        ----------        ----------        ----------
Operating income                                                  3,150             3,607             5,737             6,699
Other income (expense):
   Change in fair value of warrants                               7,544                --            (4,662)               --
   Other income                                                     398                --               398                --
   Interest expense                                              (1,308)           (1,609)           (2,613)           (3,088)
                                                             ----------        ----------        ----------        ----------
Income (loss) from continuing operations
   before income taxes                                            9,784             1,998            (1,140)            3,611
Provision (benefit) for income taxes                                721               655               430             1,008
                                                             ----------        ----------        ----------        ----------
Income (loss) from continuing operations                          9,063             1,343            (1,570)            2,603
Discontinued operations:
   Gain (loss) from operations, net                                 791            (3,223)              791            (3,604)
   Loss on disposal, net of income taxes                             --                --                --               (46)
                                                             ----------        ----------        ----------        ----------
Net income (loss)                                                 9,854            (1,880)             (779)           (1,047)
Dividends attributable to preferred stock                           454                --               903                --
                                                             ----------        ----------        ----------        ----------
Net income (loss) available
   to common shareholders                                    $    9,400        $   (1,880)       $   (1,682)       $   (1,047)
                                                             ==========        ==========        ==========        ==========
Earnings (loss) per share - Basic:
   Income (loss) from continuing operations
    (net of dividends attributable to preferred stock)       $     0.35        $     0.16        $    (0.29)       $     0.31
  Discontinued operations                                          0.03             (0.38)             0.09             (0.43)
                                                             ----------        ----------        ----------        ----------
   Net income (loss) available
     to common shareholders                                  $     0.38        $    (0.22)       $    (0.20)       $    (0.12)
                                                             ==========        ==========        ==========        ==========
Earnings (loss) per share - Diluted:
   Income (loss) from continuing operations
    (net of dividends attributable to preferred stock)       $     0.04        $     0.14        $    (0.29)       $     0.28
  Discontinued operations                                          0.03             (0.34)             0.09             (0.39)
                                                             ----------        ----------        ----------        ----------
   Net income (loss) available
     to common shareholders                                  $     0.07        $    (0.20)       $    (0.20)       $    (0.11)
                                                             ==========        ==========        ==========        ==========
Weighted average shares -
   Basic                                                          8,453             8,408             8,448             8,408
   Diluted                                                       25,876             9,356             8,448             9,382



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


                                       4


                    CORRPRO COMPANIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                 (IN THOUSANDS)



                                                                          Six Months Ended
                                                                            September 30,
                                                                   ----------------------------
                                                                      2004              2003
                                                                   ----------        ----------
                                                                                       
Cash flows from operating activities:
  Net loss                                                         $     (779)       $   (1,047)
  Adjustments to reconcile net loss
    to net cash provided by continuing operations:
    (Gain) loss on discontinued operations                               (791)            3,650
    Depreciation and amortization                                       1,335             1,403
    Change in fair value of warrants                                    4,662                --
    Deferred income taxes                                                   1               (63)
    Gain (loss) on sale of assets                                          (9)               23
Changes in operating assets and liabilities:
        Accounts and notes receivable                                  (3,924)           (1,331)
        Inventories                                                      (124)             (729)
        Prepaid expenses and other                                       (895)             (673)
        Other assets                                                     (115)             (429)
        Accounts payable and accrued expenses                            (994)               51
                                                                   ----------        ----------
           Total adjustments                                             (854)            1,902
                                                                   ----------        ----------
           Net cash provided (used) by continuing operations           (1,633)              855
                                                                   ----------        ----------
Cash flows from investing activities:
  Additions to property, plant and equipment                             (758)             (306)
  Proceeds from disposal of property, plant and equipment                   1                74
                                                                   ----------        ----------
           Net cash used by investing activities                         (757)             (232)
                                                                   ----------        ----------
Cash flows from financing activities:
  Net borrowing from new revolving credit facility                      2,007                --
  Payment of senior secured notes                                      (1,136)               --
  Payment of old revolving credit facility and other debt                  --            (2,886)
  Net Proceeds from stock options                                          14                --
                                                                   ----------        ----------
           Net cash provided (used) by financing activities               885            (2,886)
                                                                   ----------        ----------
Effect of changes in foreign currency exchange rates on cash               (2)              216
                                                                   ----------        ----------

Cash provided by discontinued operations                                  628               136
                                                                   ----------        ----------

Net decrease in cash                                                     (879)           (1,911)
Cash and cash equivalents at beginning of year                          2,498             7,037
                                                                   ----------        ----------
Cash and cash equivalents at end of period                         $    1,619        $    5,126
                                                                   ==========        ==========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid (refunded) during the period for:
    Income taxes                                                   $       (4)       $      252
    Interest                                                       $    1,643        $    2,545



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


                                       5



                    CORRPRO COMPANIES, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE 1 - INTERIM FINANCIAL STATEMENTS

         The accompanying interim consolidated financial statements include the
accounts of Corrpro Companies, Inc. and its subsidiaries (the "Company"). All
significant intercompany accounts and transactions have been eliminated in
consolidation.

         The information furnished in the accompanying interim consolidated
financial statements has not been audited by independent accountants. In the
opinion of management, the interim consolidated financial statements include all
adjustments, consisting only of normal and recurring adjustments, necessary for
a fair presentation of the consolidated financial position, results of
operations and cash flows for the interim periods presented. The results of
operations for the six months ended September 30, 2004 are not necessarily
indicative of the results that may be expected for the fiscal year ending March
31, 2005, or any other period. The interim consolidated financial statements
should be read in conjunction with the Company's Annual Report on Form 10-K/A
for the fiscal year ended March 31, 2004.

         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 at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ materially from those estimates.

Stock-based compensation

         As permitted by the Statement of Financial Accounting Standard
("SFAS"), No. 123, "Accounting for Stock-Based Compensation," the Company
accounts for employee stock-based compensation in accordance with Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" and
the Financial Accounting Standards Board Interpretation No. 44, "Accounting for
Certain Transactions Involving Stock-Based Compensation, an interpretation of
APB Opinion No. 25" and related interpretations. Stock-based compensation
related to non-employees is based on the fair value of the related stock or
options in accordance with SFAS No. 123 and its interpretations. Expense
associated with stock-based compensation is amortized over the vesting period of
each individual award. The following table illustrates the effect on net income
(loss) and income (loss) per common share as if the Black-Scholes fair value
method described in SFAS No. 123 had been applied to the Company's stock option
plans:


                                       6






                                                              FOR THE THREE                       FOR THE SIX
                                                               MONTHS ENDED                       MONTHS ENDED
                                                               SEPTEMBER 30,                      SEPTEMBER 30,
                                                       ---------------------------        ----------------------------
                                                          2004             2003              2004              2003
                                                       ----------       ----------        ----------        ----------
                                                                                                
Net income (loss) available
  to common shareholders:
  As reported                                          $    9,400       $   (1,880)       $   (1,682)       $   (1,047)
  Deduct: Total stock-based employee
    compensation expense determined
    under fair value based method for all awards            1,009               96             1,030               246
                                                       ----------       ----------        ----------        ----------
    Pro forma income (loss) available
       to common shareholders                          $    8,391       $   (1,976)       $   (2,712)       $   (1,293)
                                                       ==========       ==========        ==========        ==========
Basic earnings (loss) per
    share available to common shareholders:
  As reported                                          $     0.38       $    (0.22)       $    (0.20)       $    (0.12)
  Pro Forma                                            $     0.34       $    (0.24)       $    (0.32)       $    (0.15)
Diluted earnings (loss) per share available
    to common shareholders:
  As reported                                          $     0.04       $    (0.20)       $    (0.20)       $    (0.11)
  Pro Forma                                            $     0.03       $    (0.21)       $    (0.32)       $    (0.14)


         Total stock-based employee compensation expense for the three and six
months ended September 30, 2004, was primarily comprised of stock options issued
to purchase 612 common shares at an exercise price of $2.55 per share, which
were immediately vested upon issuance, which occurred during the second quarter
of fiscal 2005 at a Black-Scholes fair value of $1.67 per share.

NOTE 2. ASSETS AND LIABILITIES HELD FOR SALE

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

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

         Statements of operations for discontinued operations for the three
months and six months ended September 30, 2004 and 2003 are shown below:


                                       7






                                                          For the Three                    For the Six
                                                          Months Ended                    Months Ended
                                                          September 30,                   September 30,
                                                    ------------------------        ------------------------
                                                      2004            2003            2004            2003
                                                    --------        --------        --------        --------
                                                                                             
Revenues                                            $     --        $  2,610        $     --        $  6,076
Operating cost and expenses:
   Cost of sales                                          --           2,003              --           4,687
   Selling, general & administrative expenses           (791)          3,764            (791)          4,738
                                                    --------        --------        --------        --------
Operating income (loss)                                  791          (3,157)            791          (3,349)
Loss on disposal                                          --              --              --              46
Interest expense                                          --              66              --             255
                                                    --------        --------        --------        --------
Income (loss) from discontinued operations
   before income taxes                                   791          (3,223)            791          (3,650)
Provision for income taxes                                --              --              --              --
                                                    --------        --------        --------        --------
Income (loss) from discontinued operations          $    791        $ (3,223)       $    791        $ (3,650)
                                                    ========        ========        ========        ========


         During the second quarter of fiscal 2005, the Company reversed
provisions for certain receivables totaling $791 related to the sale of the
Company's Middle East subsidiaries. The Company had previously taken provisions
against these receivables in discontinued operations. Collection of these
receivables occurred in September 2004 and October 2004. In addition, during the
first quarter of fiscal 2005, the Company collected a note receivable of $768 as
final payment for the sale of the Middle East subsidiaries.

         The Company did not allocate interest to discontinued operations in
fiscal 2005 and allocated interest to discontinued operations of $66 for the
three months ended September 30, 2003 and $255 for the six months ended
September 30, 2003, based on estimated proceeds from the discontinued operations
dispositions that were used to pay down the Company's then-outstanding Revolving
Credit Facility and Senior Notes. The interest rate used to calculate the
allocated interest expense was the weighted average interest rate of the
then-outstanding Revolving Credit Facility and Senior Notes.

         During fiscal 2004, the Company substantially completed the sale of its
Middle East subsidiaries after recording impairment charges relating to these
operations of $3,530. In March 2004, the Company recorded a remaining note
receivable for $768, which the Company collected in first quarter of fiscal
2005, for its Middle East subsidiaries. During the first quarter of fiscal 2004,
the Company sold its Asia Pacific operations for a net loss of $46 after taking
into account an impairment charge on net assets which was recorded during the
fourth quarter of fiscal 2003 totaling $1,575.

NOTE 3 - INVENTORIES




                                                  September 30,   March 31,
                                                       2004          2004 
                                                  -------------   ---------
                                                            
Inventories consist of the following:
   Component parts and raw material                 $  5,501       $  5,156
   Finished goods                                      4,486          4,651
                                                    --------       --------
                                                    $  9,987       $  9,807
                                                    ========       ========




                                       8

NOTE 4 - PROPERTY, PLANT AND EQUIPMENT




                                                            September 30,     March 31,
                                                                2004            2004
                                                            -------------     --------
                                                                        
Property, plant and equipment consist of the following:
         Land                                                 $    558        $    548
         Buildings and improvements                              6,233           6,153
         Equipment, furniture and fixtures                      17,137          17,242
                                                              --------        --------
                                                                23,928          23,943
         Less:  Accumulated depreciation                       (16,460)        (16,794)
                                                              --------        --------
                                                              $  7,468        $  7,149
                                                              ========        ========


NOTE 5 - EARNINGS PER SHARE

         Basic earnings per common share (EPS) is generally calculated by
dividing net income (loss) attributable to common shareholders by the weighted
average number of common shares outstanding. However, due to the Company's
issuance of warrants (see Note 12-- Series B Cumulative Redeemable Voting
Preferred Stock), which are considered to be a "Participating Security" by
Financial Accounting Standards No. 128 for Earnings Per Share (EPS)
calculations, EITF Topic D-95, Effect of Participating Convertible Securities on
the Computation of Basic Earnings, requires those securities to be included in
the computation of basic EPS if the effect is dilutive. Furthermore, Topic D-95
requires that the dilutive effect to be included in basic EPS may be calculated
using either the if-converted method or the two-class method. The Company has
elected to use the two-class method in calculating basic EPS. Also, in
accordance with the provisions of SFAS No. 128, "Earnings per Share," diluted
EPS for the periods with net income have been determined by dividing net income
available to common shareholders by the weighted average number of common shares
and potential common shares outstanding for the period. Also, diluted EPS for
periods with a net loss is calculated by dividing the net loss available to
common shareholders by the weighted average number of common shares outstanding.

         Basic earnings per share for the three months and six months ended
September 30 are calculated using the two-class method as follows:

Basic EPS - Two-Class Method:





                                                    FOR THE THREE               FOR THE SIX
                                                    MONTHS ENDED                MONTHS ENDED
                                                  2004         2003          2004          2003
                                                 -------      -------       -------       -------
                                                                              
Net income (loss) available
to common shareholders                           $ 9,400      $(1,880)      $(1,682)      $(1,047)

Less: Income (loss) from discontinued                791       (3,223)          791        (3,650)
Operations
                                                 -------      -------       -------       -------
                                                   8,609        1,343        (2,473)        2,603

Amount allocable to common shareholders (1)         34.5%       100.0%        100.0%        100.0%
                                                 -------      -------       -------       -------
Rights to undistributed income                   $ 2,970      $ 1,343       $(2.473)      $ 2,603
                                                 =======      =======       =======       =======

Basic earnings per share from continuing
operations                                       $  0.35      $  0.16       $ (0.29)      $  0.31
                                                 =======      =======       =======       =======

(1) Basic weighted average
   common shares outstanding                       8,453        8,408         8,448         8,408

Weighted average additional common shares
 assuming exercise of warrants                    16,051           --            --            --
                                                 -------      -------       -------       -------
Weighted average common equivalent
 shares assuming warrants exercised               24,504        8,408         8,448         8,408
                                                 =======      =======       =======       =======
Amount allocable to common shareholders             34.5%       100.0%        100.0%        100.0%
                                                 =======      =======       =======       =======




                                                            FOR THE THREE              FOR THE SIX
                                                            MONTHS ENDED               MONTHS ENDED
                                                        --------------------       ---------------------
                                                         2004         2003          2004          2003
                                                        -------      -------       -------       -------
                                                                                     
Net income (loss) available
to common shareholders                                  $ 9,400      $(1,880)      $(1,682)      $(1,047)

Less: Income (loss) from discontinued operations            791       (3,223)          791        (3,650)
                                                        -------      -------       -------       -------
                                                          8,609        1,343        (2,473)        2,603

Less: Change in fair value of warrants*                   7,544           --            --            --
                                                        -------      -------       -------       -------
                                                          1,065        1,343        (2,473)        2,603

Amount allocable to common shareholders                   100.0%       100.0%        100.0%        100.0%
                                                        -------      -------       -------       -------
Rights to undistributed income                          $ 1,065      $ 1,343       $(2,473)      $ 2,603

Diluted earnings per share from continuing operations   $  0.04      $  0.14       $ (0.29)      $  0.28
                                                        =======      =======       =======       =======
Weighted average common shares outstanding                8,453        8,408         8,448         8,408

Dilutive effect of assumed exercise
 of old lender warrants                                   1,220          815            --           868

Dilutive effect of warrants                              16,051           --            --            --
Dilutive effect of stock options                            152          133            --           106
                                                        -------      -------       -------       -------
Diluted weighted average shares outstanding              25,876        9,356         8,448         9,382
                                                        =======      =======       =======       =======


         *Six months ended September 30, 2004 not computed due to the effect 
being anti-dilutive.


                                       9

         Certain stock options to purchase 3,127 and 3,121 common shares were
outstanding during the three and six months ended September 30, 2004,
respectively, and options to purchase 1,156 and 1,183 common shares were
outstanding during the three and six months ended September 30, 2003,
respectively. These options were not included in the computation of diluted
earnings per share because the options' exercise prices were greater than the
average market price of the common shares for the period and were therefore
anti-dilutive.

NOTE 6 - STOCK PLANS 

         The Company granted stock options to purchase 3,115 common shares under
the 2004 Long-Term Incentive Plan and 10 common shares under the 1997 Option
Plan and the Non-Employee Director Option Plan, during the six months ended
September 30, 2004 and 2003, respectively. During the six months ended September
30, 2004, 8 stock options were exercised at prices ranging from $0.63 to $1.69
per share. In addition, stock options previously granted to purchase 1,182 and
120 common shares at exercise prices ranging from $0.32 to $12.10 per share
expired or were forfeited, during the six months ended September 30, 2004 and
2003, respectively. 

NOTE 7 - COMPREHENSIVE INCOME

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


                                       10



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




                                                         SEPTEMBER 30,   MARCH 31,
                                                            2004           2004
                                                         -------------   --------
                                                                     
Translation adjustment                                       $ 278        $  60
Pensions                                                      (155)        (155)
                                                             -----        -----
                                                             $ 123        $ (95)
                                                             =====        =====


         Components of comprehensive loss consist of the following: 




                                                       Six Months Ended September 30,
                                                            2004            2003 
                                                           -------        ------- 
                                                                         
Net loss                                                   $  (779)       $(1,047)
Other Comprehensive income:
Translation adjustment                                         218            918
                                                           -------        ------- 
Total comprehensive loss                                   $  (561)       $  (129)
                                                           =======        =======


NOTE 8 - PRODUCT WARRANTIES

         In the normal course of business, the Company provides warranties for 
its products and services and indemnifies its customers for losses arising out 
of its activities.  Generally, the Company provides warranties that the 
products it distributes are free from defects in material and that its services 
are performed in accordance with applicable specifications.  In addition, the 
Company has certain indemnity obligations to its customers for losses arising 
out of its activities, either through express agreement or by operation of law.

         At September 30, 2004, accrued warranty costs were not material to the
consolidated balance sheets.

NOTE 9 - BUSINESS SEGMENTS

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

         Domestic Core Operations. The Company's Domestic Core Operations
segment provides corrosion control. It specializes in cathodic protection, which
is an electrochemical process that prevents corrosion in new structures and
stops the corrosion process in existing structures. The Domestic Core Operations
segment offers a comprehensive range of services in this area, including the
design, manufacture, installation, maintenance and monitoring of cathodic
protection systems, corrosion engineering, material selection, inspection
services, advanced corrosion research and testing. The Company provides these
products and services to a wide-range of customers in the United States in a
number of industries, including energy, utilities, water and wastewater
treatment, chemical and petrochemical, pipelines, defense and municipalities. In
addition, this segment provides coatings services to customers in the
entertainment, aerospace, transportation, petrochemical and electric power
industries, as well as the United States military. Finally, the Domestic Core
Operations segment includes a production facility in the United States that
assembles and distributes cathodic protection products, such as anodes,
primarily to the United States market. The Domestic Core Operations segment also
provide our pipeline customers with one-stop shopping for the preservation of
their pipeline systems through our 


                                       11



comprehensive offering of pipeline integrity, risk assessment and inspection
services, including assessment, surveys, inspection, analysis, repairs and
ongoing maintenance.

         Canadian Operations. The Company's Canadian Operations segment provides
corrosion control, pipeline integrity and risk assessment services to customers
in Canada that are primarily in the oil and gas industry. These customers
include pipeline operators and petrochemical plants and refineries. The Canadian
Operations segment has a production facility that assembles products such as
anodes and rectifiers.

         European Operations. The Company's European Operations segment provides
corrosion control products and services to customers in the petroleum, utility,
industrial, marine and offshore exploration and production markets, as well as 
to governmental entities in connection with their infrastructure assets.

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





                                         FOR THE THREE MONTHS ENDED        FOR THE SIX MONTHS ENDED
                                                SEPTEMBER 30,                     SEPTEMBER 30,
                                         --------------------------        --------------------------
                                           2004             2003             2004             2003
                                         ---------        ---------        ---------        ---------
                                                                                
Revenue:
  Domestic Core Operations               $  25,716        $  24,820        $  50,865        $  48,798
  Canadian Operations                        7,394            6,522           13,134           12,219
  European Operations                        4,313            3,091            7,534            6,468
                                         ---------        ---------        ---------        ---------
                                         $  37,423        $  34,433        $  71,533        $  67,485
                                         =========        =========        =========        =========

Operating Income:
  Domestic Core Operations               $   3,729        $   4,108        $   7,852        $   8,529
  Canadian Operations                        1,979            1,840            3,165            2,814
  European Operations                          400              382              536              735
 Corporate Related Costs and Other          (2,958)          (2,723)          (5,816)          (5,379)
                                         ---------        ---------        ---------        ---------
                                         $   3,150        $   3,607        $   5,737        $   6,699
                                         =========        =========        =========        =========





                                       12



NOTE 10 - REVOLVING CREDIT FACILITY AND SENIOR NOTES

         Long-term debt at September 30, 2004 and March 31, 2004 consisted of
the following:





                                                         SEPTEMBER 30,     MARCH 31,
                                                             2004            2004
                                                         -------------     ---------
                                                                       
Revolving Credit Facility                                      5,073           2,779
Term Loan                                                  $  19,364       $  20,500
Senior Secured Subordinated Notes,
due 2011, net of discount(1)                                   9,990           9,870

Other                                                            168             154
                                                           ---------       ---------
                                                              34,595          33,303
Less: current portion                                          8,186           5,279
                                                           ---------       ---------
                                                           $  26,409       $  28,024
                                                           =========       =========



(1). The Senior Secured Subordinated Notes are net of discounts of $4,010 at
September 30, 2004 and $4,130 at March 31, 2004.

         SENIOR SECURED CREDIT FACILITY. On March 30, 2004, the Company entered
into a $40,000 revolving credit, term loan and security agreement with
CapitalSource Finance, LLC ("CapitalSource") that expires on March 30, 2009.
Initial borrowings were used to repay existing indebtedness. The revolving
credit facility provides for a maximum principal amount of $19,500. Borrowings
under the revolving credit facility are limited to borrowing base amounts as
defined. The interest rate on the revolving credit facility is at prime plus
1.75%, which was 6.50% at September 30, 2004. The Company is also required to
pay an unused line fee of 0.75% on the unused portion of the revolving credit
facility and a collateral management fee of 0.50% based on the funded portion of
the revolving credit facility. The revolving credit facility includes a credit
sub-facility of $7,000 for the issuance of standby letters of credit. Standby
letter of credit fees are 3.0% on the undrawn face amount of all outstanding
standby letters of credit. At September 30, 2004, the Company had $5,073
outstanding under the revolving credit facility. The Company also had $6,284 of
outstanding letters of credit as of September 30, 2004. Total availability under
the revolving credit facility at September 30, 2004 was approximately $5,364,
after giving consideration to borrowing base limitations.

         The revolving credit agreement expires on March 30, 2009. However, in
accordance with EITF 95-22 "Balance Sheet Classification of Borrowings
Outstanding under Revolving Credit Agreements That Include both a Subjective
Acceleration Clause and a Lock-Box Arrangement", the Company is required to
classify all of its outstanding debt under the Revolving Credit Facility as a
current liability.

         The term loan facility provided for an original principal amount of
$20,500. The term loan bears interest at prime plus 3.5% subject to a floor of
7.5%. The term loan requires the Company to make monthly principal payments from
inception to March 1, 2009. Within each year, the amount of the monthly payments
is fixed, but the annual amount per year increases each year. In addition,
notwithstanding any other provisions in the revolving credit, term loan and
security agreement, the Company is required to pay 50% of its excess cash flow,
as defined, each year, starting with the year ending March 31, 2005, to further
pay down the term loan. At September 30, 2004, the outstanding balance on the
term loan was $19,364.


                                       13



THE COMPANY'S PAYMENTS UNDER THE AGREEMENT FOR EACH OF THE YEARS ENDED MARCH 31 
ARE SCHEDULED TO BE:




                      TOTAL        2005      2006     2007      2008      2009
                     ----------------------------------------------------------
                                                       
Term Loan, due 2009  $19,364      $1,364    $3,500   $4,000    $4,500    $6,000


         Borrowings under the revolving credit, term loan and security agreement
are secured by a first priority security interest in the Company's domestic and
Canadian accounts receivable, inventories, certain intangibles, machinery and
equipment and owned real estate. The Company has also pledged slightly less than
two-thirds of the capital stock of two of its foreign subsidiaries. The
agreement requires the Company to maintain certain financial ratios and places
limitations on its ability to pay cash dividends, incur additional indebtedness,
make investments including acquisitions, and take certain other actions. The
Company was in compliance with these covenants at September 30, 2004.

         SENIOR SECURED SUBORDINATED NOTES. On March 30, 2004, the Company
entered into a $14,000 senior secured subordinated note and equity purchase
agreement with American Capital Strategies, Ltd. ("American Capital"). Initial
borrowings were used to repay existing indebtedness. The interest rate on the
senior secured subordinated notes is 12.5%. The notes do not require principal
payments and are due on March 29, 2011. The senior secured subordinated notes
are secured by a lien on the Company's Domestic and Canadian accounts
receivable, inventories, certain intangibles, machinery and equipment and owned
real estate and are subordinated in lien priority only to the liens in favor of
the senior lender. In addition, the holder of the senior secured subordinated
notes received a warrant to purchase 3,936 common shares at an exercise price of
$.001 per share. The warrant has a put right pursuant to which the holder may
require the Company to redeem the warrant for cash after seven years or upon the
occurrence of certain other conditions. The put price is the fair market value
of the common shares on the date of the exercise of the put. Valuations were
performed to determine the fair market value of this warrant at March 31, 2004
and at September 30, 2004. The fair market value at March 31, 2004 was $4,130
and at September 30, 2004 was $5,272. A non-cash adjustment of $1,142 was
recorded as an expense in the consolidated statement of operations for the six
months ended September 30, 2004 to record the change in valuation. This
adjustment was recorded as a liability on the Company's balance sheet. The fair
market value of the warrant is required to be updated on a quarterly basis. The
primary input into the calculation of this valuation is the market price of the
common shares. As the Company's stock price increases, the value of the warrant
will increase and as the stock price decreases, the value of the warrant will
decrease. The change in the value of the warrant will be recorded as income if
the stock price decreases or expense if the stock price increases in future
period quarterly results. This non-cash charge has the potential to cause
volatility in reported results in future periods. In addition, the warrant
agreement provides for the warrant to participate in dividend distributions,
even if the warrant has not been exercised. However, the warrant is not required
to participate in losses. Therefore, the warrant is considered to be a
"Participating Security" by Financial Accounting Standards No. 128 for EPS
calculations. This means that the warrant is included in the weighted average
share calculation only in periods in which the Company generates net income
available to common shareholders. As such, the Company's EPS calculations also
have the potential to be volatile. The senior secured subordinated note and
equity purchase agreement requires the Company to maintain certain financial
ratios and places limitations on its ability to pay cash dividends, incur
additional indebtedness, make investments including acquisitions, and take
certain other actions. The Company was in compliance with these covenants at
September 30, 2004.

         The Company believes that cash generated by operations and amounts
available under its credit facilities will be sufficient to satisfy its
liquidity requirements for at least the next twelve months.


                                       14



NOTE 11 - SERIES B CUMULATIVE REDEEMABLE VOTING PREFERRED STOCK

         On March 30, 2004, the Company entered into a securities purchase
agreement with CorrPro Investments, LLC ("CPI") providing for a $13,000 private
equity investment. The proceeds were used to repay existing indebtedness. Under
the terms of the securities purchase agreement, the Company issued 13 shares of
newly-created Series B Preferred Stock. In addition, the purchaser received a
warrant to purchase 12,114 shares of common shares at an exercise price of $.001
per share. Valuations were performed to determine the fair market value of this
warrant at March 31, 2004 and at September 30, 2004. The fair market value at
March 31, 2004 was $12,700 and at September 30, 2004 was $16,220. A non-cash
adjustment of $3,520 was recorded as an expense in the consolidated statement of
operations for the six months ended September 30, 2004 to record the change in
valuation. This adjustment was recorded as a liability on the Company's balance
sheet. The fair market value of the warrant is required to be updated on a
quarterly basis. The primary input into the calculation of this valuation is the
market price of the common shares. As the Company's stock price increases, the
value of the warrant will increase and as the stock price decreases, the value
of the warrant will decrease. The change in the value of the warrant will be
recorded as income if the stock price decreases or expense if the stock price
increases in future period quarterly results. This non-cash charge has the
potential to cause volatility in reported results in future periods. In
addition, the warrant agreement provides for the warrant to participate in
dividend distributions, even if the warrant has not been exercised. However, the
warrant is not required to participate in losses. Therefore, the warrant is
considered to be a "Participating Security" by Financial Accounting Standards
No. 128 for Earnings Per Share (EPS) calculations. This means that the warrant
is included in the weighted average share calculation only in periods in which
the Company generates net income available to common shareholders. As such, the
Company's EPS calculations also have the potential to be volatile. The
securities purchase agreement requires the Company to maintain certain financial
ratios and places limitations on its ability to incur additional indebtedness,
make investments including acquisitions, and take certain other actions. In
addition, the Series B Preferred Stock is redeemable at the option of the
holders of Series B Preferred Stock upon the occurrence of certain events, none
of which are probable as of September 30, 2004.

         The Series B Preferred Stock will accrue cumulative quarterly dividends
at an annual rate of 13.5%. In the event the Company does not maintain Earnings
Before Interest, Taxes and Depreciation ("EBITDA") as defined in the securities
purchase agreement, of $12.0 million for the twelve months preceding any
quarterly dividend payment date, the annual dividend rate will increase to 16.5%
for each subsequent calendar quarter during which the Company fails to comply
with such financial covenant. At September 30, 2004, the Company had EBITDA of
$11.9 million. The Company is negotiating a waiver from CPI for this violation
until December 31, 2004 and expects to receive the waiver in the third quarter
of Fiscal 2005. When the waiver is received, the annual rate will remain at
13.5% until December 31, 2004 at which time the Company must achieve an EBITDA
of $12.0 million or the rate will increase to 16.5%.

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

         The Series B Preferred Stock will rank, with respect to the payment of
dividends and rights upon liquidation, dissolution or winding up of the Company,
senior to the common shares and each other 


                                       15



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

         The liquidation preference of each share of Series B Preferred Stock is
$1,000 per share, plus any accrued and unpaid dividends thereon. The liquidation
value of the Series B Preferred Stock was $13,903 at September 30, 2004. In the
event of any voluntary or involuntary liquidation, dissolution or winding up of
the Company, the holders of Series B Preferred Stock will be entitled to receive
the liquidation preference per share of Series B Preferred Stock in effect on
the date of such liquidation, dissolution or winding up, plus an amount equal to
any accrued but unpaid dividends thereon as of such date before any distribution
or payment is made to the holders of Junior Stock.

NOTE 12 - PREVIOUS LENDER WARRANTS

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

         During the second quarter of fiscal 2005, a portion of these warrants
were exercised for 115 common shares. Subsequent to  the second quarter of
fiscal 2005, a portion of these warrants was exercised for approximately 210
additional common shares.



                                       16




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

OVERVIEW

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

         We provide a comprehensive range of corrosion control engineering
services, systems, equipment and materials, coatings services, and pipeline
integrity and risk assessment services to a wide variety of customers in the
North American and European infrastructure, environmental and energy markets,
including the U.S. government and its agencies. Our operations are organized
into three business segments by geographic region: Domestic Core Operations,
Canadian Operations and European Operations. Our former non-core domestic,
Middle East and Asia Pacific operations are reported as discontinued operations.

         Our specialty in the corrosion control market is cathodic protection,
which is an electrochemical process that prevents corrosion in new structures
and stops the corrosion process in existing structures. We offer a comprehensive
range of services in this area, including the design, manufacture, installation,
maintenance and monitoring of cathodic protection systems, corrosion
engineering, material selection, inspection services, advanced corrosion
research and testing. In addition, we offer a wide variety of coatings-related
services designed to provide our customers with longer coatings life, reduced
corrosion, improved aesthetics and lower life-cycle costs for their coated
structures. We also provide our pipeline customers with one-stop shopping for
the preservation of their pipeline systems through our comprehensive offering of
pipeline integrity, risk assessment and inspection services, including
assessment, surveys, inspection, analysis, repairs and ongoing maintenance.

A.   RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 2004 COMPARED TO 
     THE THREE MONTHS ENDED SEPTEMBER 30, 2003

         REVENUES. Revenues from continuing operations for the three months
ended September 30, 2004 totaled $37.4 million, compared with $34.4 million for
the year earlier period, an increase of $3.0 million, or 8.7%.

         Revenues for the three months ended September 30, 2004 relating to the
Domestic Core Operations totaled $25.7 million compared to prior-year results of
$24.8 million, an increase of $0.9 million or 3.6%. During the second quarter of
fiscal 2005, our U.S. south central region offices experienced revenue growth of
$0.4 million compared to the prior year period, which was attributable to a few
large contracts for engineering and construction work. In addition, our western
region offices experienced revenue growth of $0.3 million compared to the prior
year period, which was attributable to a few large contracts for construction
work and engineering work. During the second quarter of fiscal 2005, our
Commercial coatings division experienced revenue growth of $0.3 million compared
to the prior year period. These increases were partially offset by a $0.1
million decrease in our government coatings division for the second quarter of
fiscal 2005 compared to the prior year period, which was primarily due to the
cessation of a subcontract that was terminated by the U.S. Navy as a result of
problems with the prime contractor. Our office in Alaska was primarily supported
by one large contract. During the second quarter of fiscal 2005 we lost this
contract in a re-compete situation. Because of the loss of this contract, the
Alaska office will be closed in November 2004. In addition, the Company
anticipates that it will complete a large well casing project managed by our
Houston office in the fourth quarter of fiscal 2005. It is projected that this
well casing project will contribute $4.5 million in revenues in fiscal 2005.


                                       17



         Revenues for the three months ended September 30, 2004 relating to the
Canadian Operations totaled $7.4 million compared to prior-year results of $6.5
million, an increase of $0.9 million or 13.4%. Our Canadian Operations were
impacted by increased revenue levels in its corrosion monitoring divisions as
well as an increase in pipeline work, which were offset by decreased material
revenues.

         Revenues from our European Operations for the second quarter of fiscal
2005 totaled $4.3 million compared to $3.1 million, in the prior-year period, an
increase of $1.2 million, or 38.7%. This increase was primarily due to
engineering work attributable to a large contract and the shipment of a large 
rectifier order in the second quarter of fiscal 2005.

         GROSS PROFIT. Consolidated gross profit margin was 30.4% for the three
months ended September 30, 2004 compared to 33.4% for the prior-year period. The
decrease in consolidated gross profit margin related to the following factors:

              o    Our commercial coatings office in Chicago experienced
                   operational and project problems resulting in $0.3 million in
                   losses. These project problems were resolved in the second
                   quarter of fiscal 2005, resulting in the closing of this 
                   office in November 2004.

              o    Our federal government coatings division for certain ship
                   classes was negatively impacted by the cessation of a
                   subcontract to a contract that was terminated by the U.S.
                   Navy as a result of problems with the prime contractor. These
                   problems caused scheduling issues that negatively impacted
                   our gross margin by approximately $0.1 million in the second
                   quarter of fiscal 2004. In response to the circumstances
                   involving this subcontract, the Company closed three offices
                   in August 2004 that primarily serviced that subcontract.


         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses totaled $8.2 million (21.9% of revenues) for the three
months ended September 30, 2004 compared to $7.9 million (22.9% of revenues) for
the prior-year period. Selling, general and administrative expenses for the
second quarter of fiscal 2005 included increases of $0.4 million related to
medical cost, $0.2 million related to increased compensation cost and $0.1
million related to management fees associated with the new investment group as
more fully described in "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations - Related Party Transactions" in
our Annual Report on Form 10-K/A for the year ended March 31, 2004. Decreased
professional fees expense of $0.2 million and decreases in other expenses
totaling $0.2 million partially offset these increases in selling, general and
administrative expenses.

         OPERATING INCOME (LOSS) FROM CONTINUING OPERATIONS. Operating income
from continuing operations totaled $3.2 million for the three months ended
September 30, 2004 compared to $3.6 million in the prior year period, a decrease
of $0.4 million. This decrease is primarily related to the negative effects on
our consolidated gross profit margin discussed above in the second quarter of
fiscal 2005 compared to the prior year period.


                                       18



         OTHER INCOME (EXPENSE). Other income (expense) in the second quarter of
fiscal 2005 totaled $6.6 million compared to $(1.6) million in the prior year
period, an increase of $8.2 million. Included in other income for the second
quarter of fiscal 2005 is a non-taxable, non-cash charge of $7.5 million for the
change in fair value of the warrants issued to the holders of our senior secured
subordinated notes and preferred stock. The primary input into the valuation of
these warrants is the market price of our common shares. As the market price of
our common shares increases, the value of these warrants will increase, and as
the market price of our common shares decreases, the value of these warrants
will decrease. As our stock price increases, the value of the warrant will
increase and as the stock price decreases, the value of the warrant will
decrease. The valuation of the warrants has the potential to cause volatility in
our reported results in future periods. In addition, included in other income is
a favorable currency translation adjustment of $0.4 million for debt held by our
Canadian Operations payable in U.S. dollars. This is because our Canadian 
Operations holds a portion of our consolidated debt. Our Canadian Operations 
has a portion of the revolving credit, term loan and senior secured 
subordinated notes. Also included in other income (expense) for the second 
quarter of fiscal 2005 was interest expense of $1.0 million and amortization 
of deferred financing costs of $0.3 million. The prior year second quarter 
included in other income (expense) interest expense of $1.5 million and 
amortization of deferred financing costs of $0.1 million.

         INCOME TAX PROVISION(BENEFIT). We recorded a provision for income taxes
of $0.7 million for the three months ended September 30, 2004 and 2003.
Provisions for our Canadian Operations and European Operations for the second
quarter of fiscal 2005 totaled $0.6 million and $0.1 million, respectively. Our
effective tax rate is based on the statutory rates in effect in the countries in
which we operate. We intend to maintain a full valuation allowance on our
domestic net deferred tax assets including net operating loss carryforwards
associated with losses generated prior to our refinancing and recapitalization
transaction. The change in fair value of the warrants issued to the holders of
our senior secured subordinated notes and preferred stock is not a taxable item.

         INCOME (LOSS) FROM CONTINUING OPERATIONS. Income from continuing
operations totaled $9.1 million in the second quarter of fiscal 2005 compared to
income from continuing operations of $1.3 million in the prior year period, an
increase of $7.8 million. This increase was primarily related to the change in
fair value of certain of our outstanding warrants, as described above.

         DISCONTINUED OPERATIONS. All of our discontinued operations were sold
prior to the end of our fiscal year ended March 31, 2004. Income from
discontinued operations for the second quarter of fiscal 2005 was $0.8 million,
which related to the collection of certain receivables associated with the sale
of our Middle East subsidiary. Loss from discontinued operations was $3.2
million for the second quarter of fiscal 2004.

         NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS. Net income totaled
$9.9 million for the three months ended September 30, 2004, which was further
reduced by $0.5 million for the accumulated dividend for preferred stock
bringing the net income available to common shareholders to $9.4 million
compared to a net loss available to common shareholders of $1.9 million in the
year earlier period, an increase of $11.3 million. The increase in net income
available to common shareholders was primarily attributable to a $7.5 million of
non-cash income relating to the change in fair value of certain of our
outstanding warrants, as described above in other income (expenses).

         Income per share on a fully diluted basis totaled $0.07 per share for
the second quarter of fiscal 2005, compared to a loss per fully diluted share of
$0.20 for the second quarter of fiscal 2004. The weighted average number of
shares used in calculating income per share is computed by using the weighted
average number of common shares and potential common shares outstanding for the
period. The weighted average number of shares used in calculating loss per share
is computed based on the number of common shares issued and outstanding. On
March 30, 2004, we completed our 


                                       19



recapitalization and refinancing transaction, which resulted in the issuance of
warrants exercisable for 16.1 million common shares. In accordance with
generally accepted accounting principles for "Participating Securities", these
warrants are to be included in the weighted average shares calculation only in
periods in which we generate net income available to common shareholders. Net
income available to common shareholders represents net income less the annual
preferred stock dividend payable to the holder of our Series B Cumulative
Redeemable Voting Preferred Stock.

         RESULTS OF OPERATIONS - SIX MONTHS ENDED SEPTEMBER 30, 2004 COMPARED TO
         THE SIX MONTHS ENDED SEPTEMBER 30, 2003

         REVENUES. Revenues from continuing operations for the six months ended
September 30, 2004 totaled $71.5 million, compared with $67.5 million for the
year earlier period, an increase of $4.0 million, or 6.0%.

         Revenues for the six months ended September 30, 2004 relating to the
Domestic Core Operations totaled $50.9 million compared to prior-year results of
$48.8 million, an increase of $2.1 million or 4.3%. The increase was primarily
related to a large well casing project managed by our Houston office that
generated $3.3 million in revenues for the six months ended September 30, 2004
compared to $2.6 million in the year-earlier period. During the six months ended
September 30, 2004, our Eastern Region offices experienced revenue growth of
$0.8 million compared to the prior year period, which was primarily attributable
to pipeline integrity work. In addition, our south central region offices
experienced revenue growth of $0.3 million compared to the prior year period,
which was attributable to a few large contracts for engineering and construction
work. During the six months ended September 30, 2004, our western region offices
experienced revenue growth of $0.6 million compared to the prior year period,
which was attributable to a few large contracts for construction work and
engineering work. Our federal government coatings division experienced revenue
growth of $0.4 million during the six months ended September 30, 2004 compared
to the prior year period. There were additional increased revenue levels
throughout other Domestic Core operating locations totaling $0.1 million for the
six months ended September 30, 2004 compared to the prior year period. These
increases were offset by our Alaska office, which experienced a decrease in
revenue levels of $0.5 million compared to the prior year period. Furthermore,
our commercial coatings division, experienced decreased revenue levels of $0.3
million for the six months ended September 30, 2004 compared to the prior year
period, primarily due to market weaknesses. Our office in Alaska was primarily 
supported by one large contract. During the second quarter of fiscal 2005 we 
lost this contract in a re-compete situation. Because of the loss of this 
contract, the Alaska office will be closed in November 2004. In addition, the 
Company anticipates that it will complete a large well casing project managed 
by our Houston office in the fourth quarter of fiscal 2005. It is projected 
that this well casing project will contribute $4.5 million in revenues in 
fiscal 2005.

         Revenues from our Canadian Operations for the six months ended
September 30, 2004 totaled $13.1 million compared to prior-year results of $12.2
million, an increase of $0.9 million or 7.4%. Our Canadian Operations were
impacted by increased revenues levels in its corrosion monitoring divisions as
well as increased pipeline work, which were offset by decreased material
revenues compared to the prior year period.

         Revenues from our European Operations for the six months ended
September 30, 2004 totaled $7.5 million compared to $6.5 million in the prior
year period, an increase of $1.0 million, or 15.4%. This increase was primarily
due to engineering work for a large contract and the shipment of a large 
rectifier order in the second quarter of fiscal 2005, which was partially 
offset by lower service revenues.


                                       20



         GROSS PROFIT. Consolidated gross profit margin was 31.2% for the six
months ended September 30, 2004 compared to 33.4% for the prior-year period. The
decrease in consolidated gross profit margin related to the following factors:

              o    Our commercial coatings office in Chicago experienced 
                   operational and project problems resulting in $0.4 million in
                   losses. These project problems were resolved in the second
                   quarter of fiscal 2005, resulting in the closing of the
                   office in November 2004.

              o    Our federal government coatings division for certain ship 
                   classes was negatively impacted by the cessation of a
                   subcontract to a contract that was terminated by the U.S.
                   Navy as a result of problems with the prime contractor. These
                   problems caused scheduling issues that negatively impacted
                   our gross margin by approximately $0.3 million in the first
                   six months of fiscal 2004. In response to the circumstances
                   involving this subcontract, the Company closed three offices
                   in August 2004 that primarily serviced that subcontract.

              o    Our commercial coatings division in Canada had one project
                   that negatively affected its gross profit margin by
                   approximately $0.1 million. This contract was completed in
                   the first quarter of fiscal 2005.

              o    Our European operations experienced a decline in its gross
                   profit margin of approximately $0.1 million due to a change
                   in the mix of business with less higher margin engineering
                   work as well as lower labor utilization rates.

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses totaled $16.6 million (23.2% of revenues) for the six
months ended September 30, 2004 compared to $15.9 million (23.5% of revenues)
for the prior-year period. Selling, general and administrative expenses for the
six months ended September 30, 2004 included increases of $0.4 million related
to compensation cost, $0.6 million related to increased medical cost and $0.2
million related to management fees associated with the new investment group as
more fully described in "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations - Related Party Transactions" in
our Annual Report on Form 10-K/A for the year ended March 31, 2004. These
increases in selling, general and administrative expenses were offset by reduced
professional expenses of approximately $0.4 million and decreases in other
expenses totaling $0.1 million compared to the prior year period.

         OPERATING INCOME (LOSS) FROM CONTINUING OPERATIONS. Operating income
from continuing operations totaled $5.7 million for the six months ended
September 30, 2004 compared to $6.7 million in the prior year period, a decrease
of $1.0 million. This decrease is primarily related to the negative effects on
our consolidated gross profit margin discussed above and as well as slightly
increased selling, general and administrative expenses in the current fiscal
year compared to the prior fiscal year.

         OTHER INCOME (EXPENSE). Other expenses for the six months ended
September 30, 2004 totaled $6.9 million compared to $3.1 million in the prior
year period, an increase of $3.8 million. Included in other expenses for the six
months ended September 30, 2004 is a non-cash charge of $4.7 million for the
change in fair value of the warrants issued to the holders of our senior secured
subordinated notes and preferred stock. The primary input into the valuation of
these warrants is the market price of our common shares. As the market price of
our common shares increases, the value of these warrants will increase, and as
the market price of our common shares decreases, the value of these warrants
will decrease. As our stock price increases, the value of the warrant will
increase and as the stock price decreases, the value of the warrant will
decrease. The valuation of the warrants has the potential to 


                                       21



cause volatility in our reported results in future periods. In addition,
included in other income is a favorable currency translation adjustment of $0.4
million for debt held by our Canadian Operations payable in U.S. dollars. This 
is because our Canadian Operations holds a portion of our consolidated debt. Our
Canadian Operations has a portion of the revolving credit, term loan and senior
secured subordinated notes. Also included in other income (expense) for the six
months ended September 30, 2004, is interest expense of $2.0 million and
amortization of deferred financing costs of $0.6 million. The prior year period
included in other income (expense) interest expense of $2.8 million and
amortization of deferred financing costs of $0.3 million.

         INCOME TAX PROVISION(BENEFIT). We recorded a provision for income taxes
of $0.4 million for the six months ended September 30, 2004 compared to an
income tax provision of $1.0 million recorded for the year earlier period. In
the first quarter of fiscal 2005, we received a federal income tax refund of
$0.5 million due to the filing of an amended return for the fiscal year 1997.
This refund was offset by the provisions for our Canadian Operations and
European Operations for the six months ended September 30, 2004 of $0.8 million
and $0.1 million, respectively. Our effective tax rate is based on the statutory
rates in effect in the countries in which we operate. We intend to maintain a
full valuation allowance on our domestic net deferred tax assets including net
operating loss carryforwards associated with losses generated prior to our
refinancing and recapitalization transaction. The change in fair value of the
warrants issued to the holders of our senior secured subordinated notes and
preferred stock is not a taxable item.

         INCOME (LOSS) FROM CONTINUING OPERATIONS. Loss from continuing
operations totaled $1.6 million in the six months ended September 30, 2004
compared to income from continuing operations of $2.6 million in the prior year
period, a decrease of $4.2 million. This decrease was primarily related to the
change in fair value of certain of our outstanding warrants, as described above.

         DISCONTINUED OPERATIONS. All of our discontinued operations were sold
prior to the end of our fiscal year ended March 31, 2004. Income from
discontinued operations for the six months ended September 30, 2004 was $0.8
million, which related to the collection of certain receivables associated with
the sale of our Middle East subsidiaries. Loss from discontinued operations for
the six months ended September 30, 2003 was $3.7 million.

         NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS. Net loss totaled
$0.8 million for the six months ended September 30, 2004, which was further
reduced by $0.9 million for the accumulated dividend for preferred stock
bringing the net loss available to common shareholders to $1.7 million for the
six months ended September 30, 2004 compared to a net loss available to common
shareholders of $1.0 million in the prior year period, a decrease of $0.7
million. The increase in the net loss available to common shareholders was
primarily attributable to a $4.7 million non-cash charge relating to the change
in fair value of certain of our outstanding warrants, as described above in
other income (expenses) which was offset by $3.7 million of discontinued
operations losses in the prior year period.

         Loss per share on a fully diluted basis totaled $0.20 per share for the
six months ended September 30, 2004 compared to a loss of $0.11 per fully
diluted share in the prior year period. The weighted average number of shares
used in calculating loss per share is computed based on the number of common
shares issued and outstanding. On March 30, 2004, we completed our
recapitalization and refinancing transaction, which resulted in the issuance of
warrants exercisable for 16.1 million common shares. In accordance with
generally accepted accounting principles for "Participating Securities", these
warrants will be included in the weighted average shares calculation only in
periods in which we generate net income available to common shareholders. Net
income available to common shareholders represents net income less the annual
preferred stock dividend payable to the holder of our Series B Cumulative
Redeemable Voting Preferred Stock.


                                       22



B.       LIQUIDITY AND CAPITAL RESOURCES

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

         CASH FLOW. At September 30, 2004, we had working capital of $18.3
million, compared to $16.1 million at March 31, 2004, an increase of $2.2
million. This increase in working capital was due to a number of factors, the
most significant of which was the increase in accounts receivable as we have
entered our seasonally busiest time of the year. Accounts receivable increased
by $4.9 million and unbilled accounts receivable increased by $0.9 million for
the first six months of fiscal 2005. These increases were partially offset by a
decrease in cash of $0.9 million, an increase in the current portion of
long-term debt of $0.6 million and the collection of a note receivable related
to the sale of our Middle East subsidiaries during the six months ended
September 30, 2004. Accounts payable and accrued liabilities decreased $0.7
million in the first six months of fiscal 2005 which were funded by increased
short-term borrowings on our revolving credit facility.

         During the first six months of fiscal 2005, cash used by operating
activities totaled $1.6 million, compared to cash provided by operating
activities of $0.9 million in the same period of the prior fiscal year. The
overall decrease in cash generated from operating activities was primarily due
to the fact we had a large receivable that was collected from the sale of a
subsidiary totaling approximately $5.9 million in the prior year period. During
the first six months of fiscal 2005, our working capital was funded by $2.0
million of financing activities, which was offset by a $1.1 million reduction of
our senior secured debt. Capital expenditures, net of dispositions, for the
first six months of fiscal 2005 totaled $0.8 million compared to $0.2 million
during the prior year period.

         SENIOR SECURED CREDIT FACILITY. On March 30, 2004, we entered into a
$40.0 million revolving credit, term loan and security agreement with
CapitalSource that expires on March 30, 2009. Initial borrowings were used to
repay existing indebtedness. The revolving credit facility provides for a
maximum principal amount of $19.5 million. Borrowings under the revolving credit
facility are limited to borrowing base amounts as defined. The interest rate on
the revolving credit facility is at prime plus 1.75%, which was 6.50% at
September 30, 2004. We are also required to pay an unused line fee of 0.75% on
the unused portion of the revolving credit facility and a collateral management
fee of 0.50% based on the funded portion of the revolving credit facility. The
revolving credit facility includes a credit sub-facility of $7.0 million for the
issuance of standby letters of credit. Standby letter of credit fees are 3.0% on
the undrawn face amount of all outstanding standby letters of credit. At
September 30, 2004, we had $5.1 million outstanding under the revolving credit
facility and $6.3 million of outstanding letters of credit. Total availability
under the revolving credit facility at September 30, 2004 


                                       23




was approximately $5.4 million, after giving consideration to the borrowing base
limitations under the revolving credit facility.

         The revolving credit agreement expires on March 30, 2009. However, in
accordance with EITF 95-22 "Balance Sheet Classification of Borrowings
Outstanding under Revolving Credit Agreements That Include both a Subjective
Acceleration Clause and a Lock-Box Arrangement", we are required to classify all
of our outstanding debt under the Revolving Credit Facility as a current
liability.

         The term loan facility provided for an original principal amount of
$20.5 million. The term loan bears interest at prime plus 3.5% subject to a
floor of 7.5%. The term loan requires us to make monthly principal payments from
inception to March 1, 2009. Within each year, the amount of the monthly payments
is fixed but the annual amount per year increases each year. In addition,
notwithstanding any other provisions in the revolving credit, term loan and
security agreement, we are required to pay 50% of our excess cash flow, each
year, to further pay down the term loan. At September 30, 2004, the outstanding
balance on the term loan was $19.4 million.

         Borrowings under the revolving credit, term loan and security agreement
are secured by a first priority security interest in our domestic and Canadian
accounts receivable, inventories, certain intangibles, machinery and equipment
and owned real estate. We have also pledged slightly less than two-thirds of the
capital stock of two of our foreign subsidiaries. The agreement requires us to
maintain certain financial ratios and limits our ability to pay cash dividends,
incur additional indebtedness and make investments, including acquisitions, and
to take certain other actions specified therein. We were in compliance with
these covenants at September 30, 2004.

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

         SERIES B CUMULATIVE REDEEMABLE VOTING PREFERRED STOCK. On March 30,
2004, we entered into a securities purchase agreement with CPI pursuant to which
we sold 13,000 shares of our Series B Preferred Stock and a warrant to purchase
12,113,744 of our common shares to CPI for aggregate consideration of $13.0
million. We used these proceeds to repay our outstanding indebtedness. The
securities purchase agreement requires us to maintain certain financial ratios
and limits our ability to incur additional indebtedness, make investments,
including acquisitions, and to take certain other actions. In addition, the
Series B Preferred Stock is redeemable at the option of the holders of Series B
Preferred Stock upon the occurrence of certain events, none of which are
probable as of September 30, 2004.

         The Series B Preferred Stock accrues cumulative quarterly dividends at
an annual rate of 13.5%. In the event we do not maintain Earnings Before
Interest, Taxes and Depreciation ("EBITDA") as 


                                       24



defined in the securities purchase agreement, of $12.0 million for the twelve
months preceding any quarterly dividend payment date, the annual dividend rate
will increase to 16.5% for each subsequent calendar quarter during which we fail
to comply with such financial covenant. At September 30, 2004, the Company had
EBITDA of $11.9 million. The Company is negotiating a waiver from CPI for this
violation until December 31, 2004 and expects to receive the waiver in the third
quarter of Fiscal 2005. When the waiver is received, the annual rate will remain
at 13.5% until December 31, 2004 at which time the Company must achieve an
EBITDA of $12.0 million or the rate will increase to 16.5%.

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

         CONTRACTUAL OBLIGATIONS. The following table summarizes our contractual
obligations at September 30, 2004:




                                                                            PAYMENTS DUE BY PERIOD
                                                             -----------------------------------------------------
                                                            LESS THAN        1 - 3          4 - 5         AFTER 5
(IN THOUSANDS)                                 TOTAL         ONE YEAR        YEARS          YEARS          YEARS
                                              --------      ---------       --------       --------       --------
                                                                                           
Indebtedness:
  Revolving Credit Facility
     due 2009                                 $  5,073       $  5,073       $     --       $     --       $     --
  Term Loan, due 2009                           19,364          3,113         13,501          2,750             --
  Senior Secured Subordinated Notes (1)         14,000             --             --             --         14,000
  Other Debt Obligations                           168             --            168             --             --
  Management Fee                                 3,000            400          1,200            800            600
  Operating Leases                               6,805          2,816          3,108            731            150
                                              --------       --------       --------       --------       --------
Total Contractual Cash
    Obligations                               $ 48,410       $ 11,402       $ 17,977       $  4,281       $ 14,750
                                              ========       ========       ========       ========       ========



    (1) The Senior Secured Subordinated Notes are net of discount of $4,010 at
    September 30, 2004 as reported on the consolidated financial statements.

         We believe that cash generated by operations and amounts available
under our credit facilities will be sufficient to satisfy our liquidity
requirements for at least the next twelve months.

C. FACTORS INFLUENCING FUTURE RESULTS AND ACCURACY OF FORWARD LOOKING
INFORMATION

         This document includes certain statements that may be deemed
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These
forward-looking statements are based on management's expectations and beliefs
concerning future events and discuss, among other things, anticipated future
performance and revenues, expected growth and future business plans. Words such
as "anticipates," "expects," "intends," "plans," "believes," "seeks,"
"estimates" or variations of such words and similar expressions are intended to
identify such forward-looking statements. In addition, any forward-looking
statement speaks only as of the date on which such statement is made and we do
not undertake any obligation to update any forward-looking statements, whether
as a result of new information, future events or 


                                       25



otherwise. We believe that the following factors, among others, could affect our
future performance or the price and liquidity of our common shares and cause our
actual results to differ materially from those that are expressed or implied by
forward-looking statements, or diminish the liquidity of our common shares:

         OUR COMPLIANCE WITH THE LISTING STANDARDS AND REPORTING REQUIREMENTS OF
THE STOCK EXCHANGE ON WHICH OUR COMMON SHARES TRADE. We are required by the
American Stock Exchange to maintain certain listing standards and meet certain
reporting requirements in order for our common shares to continue trading and to
remain listed on the exchange. The exchange notified us in September 2003 that
we were not in compliance with the shareholders' equity requirement of its
continued listing requirements and that we should submit a plan to regain
compliance. In December 2003, the American Stock Exchange accepted the plan that
we submitted in accordance with its request. 

         On July 20, 2004, the Exchange notified us that we were not in 
compliance with additional thresholds of the shareholders' equity requirement 
and that we should submit a revised plan to regain compliance with the 
shareholders' equity requirement of its continued listing requirements.  In 
August 2004, we submitted a revised plan to regain compliance to the Exchange 
in accordance with its request.  There can be no assurances that the Exchange 
will accept our revised plan, or that we will be able to comply with our 
revised plan if accepted by the Exchange.  If the Exchange determines for any 
reason, including non-compliance with our plan, that our common shares should be
de-listed from the Exchange:

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

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

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

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

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

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

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

         OUR PRINCIPAL SHAREHOLDER IS A CONTROLLING SHAREHOLDER. As of March 31,
2004, CPI beneficially owned approximately 58.9% of our common shares, assuming
the exercise of its warrant to purchase an aggregate of 12,113,744 of our common
shares. In addition, CPI has the right to vote 51% of the voting power of
Corrpro and to elect a majority of our Board of Directors through its ownership
of our Series B Preferred Stock. As a result,


                                       26



CPI has the ability to determine the outcome of all matters requiring approval
by our shareholders, including the election and removal of directors and any
proposed merger, consolidation or sale of all or substantially all of our
assets. In addition, CPI could dictate the management of our business and
affairs. This concentration of ownership could have the effect of delaying,
deferring, or preventing a change in control, or impeding a merger or
consolidation, takeover, or other business combination that could be favorable
to our shareholders. This significant concentration of share ownership and
voting power may adversely affect the trading price for our common shares
because investors often perceive disadvantages in owning stock in companies with
controlling shareholders.

         OUR SHAREHOLDERS ARE EXPOSED TO DILUTION AND OTHER RISKS ASSOCIATED
WITH OUR OUTSTANDING WARRANTS AND OPTIONS. As of September 30, 2004, we had
outstanding:

         o    options to purchase an aggregate of approximately 3,277,924 shares
              of our common shares that were issued pursuant to our stock option
              plans; and

         o    warrants to purchase an aggregate of approximately 17,163,720
              shares of our common shares, which represents approximately 59.2%
              of our common shares on a fully diluted basis, that were issued in
              connection with financing arrangements.

         All of these warrants, which have nominal exercise prices, and many of
these options have exercise prices below the current market price of our common
shares. In addition, we may issue additional stock, warrants and/or options
pursuant to stock option plans or to raise capital in the future. Assuming the
exercise of all warrants and options, our current outstanding common shares
would represent approximately 29.5% of our common shares. The significant number
of common shares issuable upon exercise of these warrants and options could have
any or all of the following effects:

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

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

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

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

         o    incur additional debt and make certain investments or
              acquisitions;


                                       27




         o    incur or permit to exist certain liens;

         o    sell, lease or transfer assets; and

         o    merge or consolidate with another company.

         OUR LEVEL OF INDEBTEDNESS AND OTHER DEMANDS ON OUR CASH RESOURCES COULD
MATERIALLY AFFECT OUR OPERATIONS AND BUSINESS STRATEGY. As of September 30,
2004, we had approximately $38.4 million of total consolidated debt, net of debt
discount of $4.0 million. In addition, we have approximately $5.1 million
available under our new senior secured credit facility. Subject to the limits
contained in our new credit agreements and our other debt agreements, our total
consolidated debt could increase due to this additional borrowing capacity. In
addition to the debt service requirements on our outstanding debt, we have other
demands on our cash resources, including, among others, capital expenditures and
operating expenses. Our level of indebtedness and the significant debt servicing
costs associated with that indebtedness could significantly impact on our
operations and business strategy. For example, they could:

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

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

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

         o    limit our ability to borrow additional funds;

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

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

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

         THE MANNER IN WHICH WE ARE REQUIRED TO ACCOUNT FOR OUR OUTSTANDING
WARRANTS COULD IMPACT OUR RESULTS OF OPERATIONS. Under applicable accounting
rules and regulations, we are required to use marked-to-market accounting to
value our outstanding warrants. This accounting treatment will result in charges
and credits to our results of operations which are based on the market price for
our common shares. If the market price for our common shares on the last day of
our fiscal quarter is higher than that of the previous quarter, we are required
to take a charge against our earnings for that quarter. Conversely, if the
market price for our common shares on the last day of our fiscal quarter is
lower than that of the previous quarter, we are required to make a credit to our
earnings for that quarter. Due to the large percentage of our fully diluted
common shares that is issuable upon exercise of our outstanding warrants, the
changes to our reported earnings as a result of such accounting treatment could
be significant.


                                       28



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

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

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

         o    current and projected oil, gas and power prices;

         o    the demand for electricity;

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

         o    exploration, production and transportation costs;

         o    the discovery rate of new oil and gas reserves;

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

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

         o    local and international political and economic conditions;

         o    worldwide economic activity;

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

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

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

         o    technological advances.

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


                                       29



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

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

         o    terminate existing contracts;

         o    reduce the value of existing contracts;

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

         o    control and potentially prohibit the export of our products.

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

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

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

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

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

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

         OUR DEPENDENCE ON FIXED-PRICE CONTRACTS COULD ADVERSELY AFFECT OUR
OPERATING RESULTS. A substantial portion of our projects are currently performed
on a fixed-price basis. Under a fixed-price contract, we agree on the price that
we will receive for the entire project, based upon a defined scope, which
includes specific assumptions and project criteria. If our estimates of our
costs to complete the project are below the actual costs that we may incur, our
margins will decrease, and we may incur a loss. The revenue, cost and gross
profit realized on a fixed-price contract will often vary from our estimates
because of unforeseen conditions or changes in job conditions and variations in
labor and equipment productivity over the term of the contract. If we are
unsuccessful in mitigating these risks, we may realize gross profits that are
different from those originally estimated and reduced profitability or losses on
projects. Depending on the size of a project, these variations from estimated
contract performance could significantly impact our operating results for any
quarter or year. In general, our turnkey contracts to be performed on a
fixed-price basis involve an even greater risk of significant variations from
our 


                                       30



estimates. This is a result of the long-term nature of these contracts as well
as the interrelationship of the integrated services to be provided under these
contracts, whereby unanticipated costs or delays in performing part of the
contract can have compounding effects by increasing costs of performing other
parts of the contract.

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

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

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

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

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

         o    the project may be terminated by the customer; and

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

         OUR PROFITABILITY CAN BE IMPACTED BY OUR MIX OF PRODUCTS AND SERVICES.
Given that our selling, general and administrative costs are largely fixed in
terms of dollars, our profitability is dependent upon the amount of gross profit
that we are able to realize. We typically generate higher gross profit margins
on pure engineering service projects than on those projects that include a
material or installation component. In addition, our gross profit margins can be
negatively impacted when we utilize subcontractors. Therefore, a shift in mix
from engineering services to more construction and installation type work or an
increase in the amount of subcontracting costs could have a negative impact on
our operating results. In addition, certain of the products that we sell have
gross profit margins that are considerably lower than our overall average gross
profit margin. A 


                                       31



shift in mix which results in a greater percentage of revenues relating to these
lower margin products would also have a negative impact on our operating
results.

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

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

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

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

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

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

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

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


                                       32



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

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

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

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

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

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

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

         THE LOSS OF ONE OR MORE KEY EMPLOYEES, OR FAILURE TO ATTRACT AND RETAIN
OTHER HIGHLY QUALIFIED PERSONNEL IN THE FUTURE, COULD DISRUPT OUR OPERATIONS AND
ADVERSELY AFFECT OUR FINANCIAL RESULTS. Our continued success depends on the
active participation of our key employees. The loss of our key personnel could
adversely affect our operations. We believe that our success and continued
growth are also dependent upon our ability to attract and retain skilled
personnel. We believe that our wage rates are competitive; however, a
significant increase in the 


                                       33



wages paid by other employers could result in a reduction in our workforce,
increases in the wage rates we pay, or both. If these events occur for any
significant period of time, our revenues and profitability could be diminished
and our growth potential could be impaired. Further, if we are unable to attract
and retain skilled workers, our business will be adversely affected. Our
operations depend substantially upon our ability to continue to retain and
attract project managers, project engineers, and skilled construction workers,
and equipment operators. Our ability to expand our operations is impacted by our
ability to increase our labor force. The demand for skilled workers in our
industry is currently high and the supply is limited. As a result of the
cyclical nature of the oil and gas industry as well as the physically demanding
nature of the work, skilled workers may choose to pursue employment in other
fields.

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

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

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

D. CRITICAL ACCOUNTING POLICIES

         The process of preparing financial statements in conformity with
accounting principles generally accepted in the United States requires
management to use assumptions and estimates, some of which are significant, to
determine certain of the reported values on our financial statements. Although
management bases its assumptions and estimates on historical experience and
other factors that management considers relevant, these assumptions and
estimates could change materially as conditions both within and beyond our
control change. As such, some accounting policies have a significant impact on
the amounts reported in these financial statements, in particular in the areas
of revenue recognition for construction and engineering contracts, determining
the allowance for uncollectible accounts, asset impairment and deferred tax
assets. A summary of our critical accounting policies can 


                                       34



be found in our Annual Report on Form 10-K/A for our fiscal year ended March 31,
2004 in Note 1 - Summary of Significant Accounting Policies, Notes to
Consolidated Financial Statements, and "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations - Critical Accounting
Policies."




                                       35




ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         In the normal course of business, our operations are exposed to
continuing fluctuations in foreign currency values and interest rates that can
affect the cost of operating and financing our business. We do not enter into
interest rate or foreign currency transactions for speculative purposes.

         During the first six months of fiscal 2005, we recorded a favorable
foreign currency translation adjustment of $0.2 million in our stockholders'
equity (deficit) related to net assets located outside the United States. This
foreign currency translation adjustment resulted primarily from the United
States dollar conversion of our Canadian and European Operations.

         Our primary interest rate risk exposure results from our variable
interest rates from our Senior Secured Credit Facility. If interest rates were
to increase 200 basis points (2%) from the rates at September 30, 2004 rates,
and assuming no changes in debt from the September 30, 2004 levels, the
additional annual expense would be approximately $0.5 million on a pre-tax
basis.

         Except as set forth above, we did not experience any significant
changes in interest rate or foreign currency exchange risk during the first six
months of fiscal 2005. Our interest rate and foreign currency exchange risk
exposure is described in more detail in "Item 7A. Quantitative and Qualitative
Disclosures About Market Risk" in our Annual Report on Form 10-K for the year
ended March 31, 2004.

ITEM 4. CONTROLS AND PROCEDURES

         Our Chief Executive Officer and Chief Financial Officer (the "Senior
Officers"), with the participation of other members of our management, have
evaluated the effectiveness of our disclosure controls and procedures (as such
term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange
Act of 1934) as of the end of the period covered by this Quarterly Report on
Form 10-Q. Based on that evaluation, and subject to inherent limitations on the
effectiveness of internal controls as described under "Item 9A. Controls and
Procedures" in our Annual Report on Form 10-K/A for the year ended March 31,
2004, the Senior Officers have concluded that to their knowledge as of the end
of the period covered by this Quarterly Report on Form 10-Q, our disclosure
controls and procedures are effective in ensuring that information required to
be disclosed by us is recorded, processed, summarized and reported within the
time periods specified in the SEC's rules and forms.

         There were no changes in our internal control over financial reporting
that occurred during our second fiscal quarter of 2005 that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.


                                       36



                           PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

         There have been no material changes in our legal proceedings as
disclosed in our Annual Report on Form 10-K for the year ended March 31, 2004.

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

         Not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

         Not applicable.

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

         The Registrant's annual meeting of shareholders was held on August 26,
2004. As of July 15, 2004, the record date fixed by the Board of Directors,
there were 8,450,442 common shares and 13,000 preferred shares entitled to
notice of, and to vote at, the meeting. The Company's Series B Preferred Stock
entitled CorrPro Investments, LLC to cast a number of votes that based on the
Company's current structure, represented 51% of the combined voting power of the
Company. This 51% of the combined voting power was the equivalent of 8,795,220
total shares. Combining the preferred share votes (8,795,220) with the common
share votes (8,450,442) resulted in the total voting power of 17,245,662 shares.
The Inspector of Election reported there were represented at the meeting the
holders of 15,131,331 shares of the capital stock of the Company, of which the
holders of 15,131,331 shares were represented by valid proxies, a majority of
the shares outstanding and entitled to vote at the meeting. Each matter voted
upon at such meeting and the number of shares cast for, against or withheld, and
abstained are as follows:

   1. ELECTION OF DIRECTORS.




Director Nominees                      For            Withheld
----------------------              ----------       ----------
                                                    
Joseph P. Lahey                     14,734,565        396,766
Jeffrey N. MacDowell                14,770,040        361,291
William R. Seelbach                 14,770,840        360,491
Stanford Springel                   14,727,240        404,091


   2. APPROVAL OF THE 2004 LONG-TERM INCENTIVE PLAN OF CORRPRO COMPANIES, INC.




                     For       Against    Abstained    Non-Vote
                  ---------    -------    ---------    ---------
                                              
                  9,847,116    643,367      40,996     4,599,852


         On August 26, 2004, the holder of our Series B Preferred Stock, acting
by written consent in lieu of a meeting convened for such purposes, elected Jay
I. Applebaum, James A. Johnson, Jason H. Reed and Emilio T. Pena as members of
our board of directors. On September 15, 2004, the 


                                       37



holder of our Series B Preferred Stock, acting by written consent in lieu of a
meeting convened for such purposes, elected Thomas P. Briggs as a member of our
board of directors.

ITEM 5. OTHER INFORMATION

         We are required by the American Stock Exchange (the "Exchange") to
maintain certain listing standards and meet certain reporting requirements in
order for our common shares to continue trading and to remain listed on the
Exchange. In September 2003, the Exchange notified us that we were not in
compliance with the shareholders' equity requirement of its continued listing
requirements and that we should submit a plan to regain compliance. In December
2003, the Exchange accepted the plan that we submitted in accordance with its
request. On July 20, 2004, the Exchange notified us that we were not in
compliance with additional thresholds of the shareholders' equity requirement
and that we should submit a revised plan to regain compliance with the
shareholders' equity requirement of its continued listing requirements. In
August 2004, we submitted a revised plan to regain compliance to the Exchange in
accordance with its request. There can be no assurances that the Exchange will
accept our revised plan, or that we will be able to comply with our revised plan
if accepted by the Exchange. If the Exchange does not accept our revised plan,
or if we are unable to comply with our revised plan if accepted by the Exchange,
the Exchange is likely to delist our common shares from the Exchange. Additional
risks and uncertainties regarding our compliance with the Exchange's continued
listing requirements and the effects if we do not maintain compliance are set
forth in "Item 2.C. Factors Influencing Future Results and Accuracy of Forward 
Looking Information" in this Form 10-Q.


ITEM 6. EXHIBITS

         For identification of the exhibits attached hereto, see the Exhibit
Index following the signature page of this Form 10-Q.



                                       38



                                   SIGNATURES


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



                                       CORRPRO COMPANIES, INC.
                                           (Registrant)



Date: November 15, 2004                 /s/ Joseph P. Lahey
                                       ---------------------------
                                             Joseph P. Lahey
                                               President
                                       and Chief Executive Officer



                                       /s/ Robert M. Mayer
                                       ---------------------------
                                              Robert M. Mayer
                                       Senior Vice President, Chief
                                             Financial Officer


                                       39



                                  EXHIBIT INDEX




EXHIBIT
  NO.             EXHIBIT
--------          -------
               

  31.1            Rule 13a-14(a) Certification of Chief Executive Officer

  31.2            Rule 13a-14(a) Certification of Chief Financial Officer

  32.1            Section 1350 Certification of Chief Executive Officer

  32.2            Section 1350 Certification of Chief Financial Officer


----------



                                       40